MOHAMED HUSEN OUMER

INTEGRATED FARM PRODUCTION

BUSINESS PLAN
ONER: - MOHAMED HUSEN
MAY 2025
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 Table of Contents
Table of Contents ........................................................................................................................................ 1
Project Executive summary and Introduction ......................................................................................... 3
1.1 Executive summary ........................................................................................................................... 3
The project summary: ................................................................................................................................ 4
1.2. Introduction ...................................................................................................................................... 5
1.2.1 Objectives of the project ................................................................................................................ 6
1.2.2 Background of the promoter .................................................................................................... 7
1.2.2. Study of the project site ................................................................................................................ 7
1.2.3 Location and site of the project .................................................................................................... 8
Description of Location .......................................................................................................................... 8
Altitude .................................................................................................................................................... 8
Soil ............................................................................................................................................................ 8
Rain fall .................................................................................................................................................... 8
Temperature ............................................................................................................................................ 8
Availability of labor ................................................................................................................................ 9
Basic facility services .............................................................................................................................. 9
Technical study Infrastructure (electric power, road, and telephone services) ................................ 9
1.2.4. Socio economic benefits ................................................................................................................ 9
1.2.5. Sowt Analysis............................................................................................................................... 10
1.2.6 Key success Factors (KSF) .......................................................................................................... 10
2. Land preparation to Processing....................................................................................................... 11
2.1 Land preparation..................................................................................................................... 11
2.2 Production ....................................................................................................................................... 11
3. Environmental impact assessment ............................................................................................. 12
Risk Management ................................................................................................................................. 13
Hazard idetification .............................................................................................................................. 13
Risk Identificaton .................................................................................................................................. 14
Risk Assessment .................................................................................................................................... 14
Risk Control .......................................................................................................................................... 14
Docmenting the Process ....................................................................................................................... 15
Monitoring and Reviewing .................................................................................................................. 15

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 4. Organizational Structure and Man Power Plan ....................................................................... 15
4.1 Man Power Plan ...................................................................................................................... 16
5. Land use plan ............................................................................................................................... 17
6. Market Analysis ........................................................................................................................... 18
6.1 coffee Production and Market ................................................................................................ 18
6.2 Decaffeinated Green Coffee ........................................................................................................... 18
6.3 Sesame Production and Market ............................................................................................. 19
6.4 Ethiopia Rice production and Marketing.............................................................................. 21
7 Financial Analysis ........................................................................................................................ 24
7.3 Investment project fund Source and shares .......................................................................... 24
7.4 Fixed cost Analysis .................................................................................................................. 25
7.4.1 Fixed material cost .............................................................................................................. 25
7.4.2 Cost of Human Resource ................................................................................................................. 26
7.4.3 Cost of Utility and Admin ............................................................................................................... 27
7.4.4 Cost of Farm Equipment’s .............................................................................................................. 28
7.4.5 Farm Land Clearance Cost ............................................................................................................. 28
7.5 Variable Cost Analysis ............................................................................................................ 29
7.5.1 Materials cost ........................................................................................................................... 29
7.5.2 Labor cost ................................................................................................................................. 29
7.5.3 Transport cost .............................................................................................................................. 30
7.6 Project Cost Summery ............................................................................................................ 30
8 Revenue Estimation ..................................................................................................................... 31
9 Financial Cost Benefit Analysis .................................................................................................. 31
9.1 Project Financial Profitability ................................................................................................ 31
9.2 Project Payback Period and IRR ........................................................................................... 32
9.3 Loan Repayment Schedule ..................................................................................................... 32
I. ANNEXS ............................................................................................................................................ 33
2. Table of Cash flow ............................................................................................................................ 34
3. Discounted Net Benefit ..................................................................................................................... 36
4. Table of Internal Rate of Return Calculation ................................................................................ 36
5. Project schedule ................................................................................................................................ 37

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 Project Executive summary and Introduction

1.1 Executive summary

Mohamed Husen Integrated farm is owned by Mohamed Husen Oumer who have more than
10 years’ work experience in different government and non-government sector. The farm has
planned to produce coffee, sesame and Rice which are among one of the main export and food
crop of the country. The farm will be established and managed in modern way that can be
example to other farms and the local farming community. The 200 hectare land will produce
coffee, sesame and rice for export and additionally vegetables and fruits can also be produce
as subsidiary. The farms 10 years feasible study shows that the project will have 7.4 million
sales at the first year, 200 million ETB sales at the fifth year and will make a total sales of
more than 2.7 billion ETB with in the 10 years. The net profit from the project is about 1.1
billion birr and it will pay about 500 million ETB tax for the nation. The discounted net
benefit (discounted at 19%) analysis shows that the project has 190 million net benefits at
the end of tenth year. In addition to direct benefits, the project will have also different social,
microeconomic and macroeconomic benefits. As the products are export commodity exporting
the sesame and Rice will earn about 3 million USD. The project will create 50 permanent and
about 100 seasonal jobs for the local community.

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 The project summary:

KEY INFORMATION HIGHLIGHTS OF THE PROJECT

Proposed Project Mohamed Husen integrated farm production

Name of the promotor Mohamed Husen Oumer

Contact +2519

Status of the project New

Location of the project SWEPR, Bench sheko Zone, Guraferda woreda, Kuja
kebele

Land Requirement 200 hr.

Project capital 54,000,000

Owners contribution with 25% 13,500,000

Bank loan 70% 40,500,000

Man power 50 permanent and 100 seasonal

Vision ➢ To be one of the leading finest roosted coffee exporter

➢ To be internationally recognized coffee export firm.
➢ Create partnerships with coffee importers
➢ To establish modern coffee processing, roosting and
grinding plants
➢ export of a value-added product coffee roasting,
Long term goals ➢ Expand company’s technology to other food products
manufacturing such as chocolate and other finished
product
Keys to Success ➢ Produce the finest and innovative quality product
➢ Creative marketing and sales strategies
➢ develop positive partnerships

Duration of the Project contract 35 years

PBP (PAY BACK PERIOD) 7 years

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1.2. Introduction

The Ethiopian economy is heavily dependent on agriculture. The sectorcontributes about 48 per
cent of the country’s GDP, while accounting for 90 per cent of foreign exchange earnings, 85 per
cent of employment and 70 percent of the raw material requirements of local industries
Ethiopia is a prominent global coffee producer as well as consumer. According to the Central
Statistical Agency of Ethiopia (2015), the country produced 420 million kilograms of coffee beans
and consumed up to about 220 million kilograms (IOC, 2016), that is, more than half of its
total production. Ethiopia is the birth place of coffee.

The word “coffee” is taken from the name of an administrative region, “Kaffa”, where coffee
was discovered and where it grows wild. According to legend, a goat herder named Kaldi noticed
how frisky his goats became after eating coffee berries. He then decided to try some Ethiopia is
not only the home of coffee but it also possesses 99.8 per cent of Arabica’s genetic diversity, which
enables it to produce different coffee types with a vast range of inherent characteristics that make
them unique and distinctive.

The Arabica coffee that is produced by other countries is derived from aboutfour to five gene
bases, taken from Ethiopia. The rich genetic resource pool could be attributed to the different
coffee growing agro-ecological zones and natural factors such as rainfall, shade, altitude, climate
and soil. Coffee grows in almost all the administrative regions of Ethiopia under different
conditions ranging from the semi-savanna climatic condition of the Gambela plain (500ma.s. l) to
the continuously wet forest zone of the South Western region (2200ma.s. l). Ethiopia’s vast genetic
resource is more precious than any other; an example is that Arabica is 95 percent self-pollinating
and in-breeding as opposed to Robusta, which is cross-pollinating. Moreover, the huge genetic
resource pool is valuable in that it may be used to meet the need for high-yield, disease-resistant
and preferred traits such as low caffeine or caffeine-free coffee

As the national and international demand for food oil is increasing many investors are now
establishing oil factories that use oil seeds like sesame as raw materials. Beans are also
become one of the main export crops from Ethiopia. Sesame production in MY

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2020/21(October-September) is projected at 255,000 metric tons (MT), which declined by
25,000 MT over the previous year’s estimate and is mainly attributable to reduction in
acreage. Total area for sesame production is estimated at 520,000 hectares (HA), down by 13
percent compared to the prior year. The contraction in sesame acreages is driven by shifts in
production of alternative food crops, namely sorghum. During 2020/21 crop year, sesame
farmers in major growing regions have switched to planting sorghum. The increased demand
for oil seeds as the oil price escalation both locally and nationally is initiating many investors
to establish oil processing industries in Ethiopia. These factories are always in shortage of
raw materials and also the amount of oil seeds exported from Ethiopia is decreasing form
time to time.

Rice is among the most important grain legumes produced by small-scale farmers, both for
subsistence and cash. They are usually intercropped with complementary crops such as
maize, sorghum, and enset owing to increasing population pressure on agricultural land and
paired nutrient needs in the soil. On average, Rice account for 16.3 percent of pulse
production in Ethiopia (2005-2012), and are mainly produced in the lowlands and in the Rift
Valley areas, where they are a source of income, employment and food. Rice is also one of the
export commodities. This project plan will study the detail of agronomic, economic and social
feasibility of producing and marketing sesame and Rice in Bench Sheko zone for the
implementation of the intended project.

1.2.1 Objectives of the project

The project will identify the agronomic, social and economic feasibility of production and
marketing of coffee, sesame seeds and Rice in Bench Sheko zone, Guraferda Woreda by
Mohamed Husen Oumer.

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 1.2.2 Background of the promoter

Mohamed Husen Oumer has been engaged in different business sectors for last 10 years and growing
successfully with their business. The man was previously the agent of Ethio telecom In South west region
in Bench Sheko Zone Mizan Aman town and now the He is working in different private business. Mohamed
Husen was also developed strong business relations with many companies which are source of supply,
banks and manufacturers that is one of his assets to run business easily. He will try to use all of his formerly
build business and social capital to manage that farm in a economically feasible, socially acceptable and
environmental friendly way.

1.2.2. Study of the project site

Bench Sheko zone is one of the 6 Zones in the South western Ethiopia Peoples Region
(SWEPR). Bench sheko is bordered on the by east Omo Zone, on the west by the Gambella
Region, on the north by Keffa and. The capital city of Bench Maji is Mizan-Aman.

The main crops in this Zone include coffee, rice, maize, godere (Taro root), and enset, while
sorghum, and barley are cultivated to a significant extent. Although cattle, shoats and
poultry are produced in limited numbers, meat and milk are very much appreciated. Cash
crops include fruits (bananas, mango, and abucado pineapples oranges) and spices (e.g.
coriander, and ginger); honey is also an important source of income in the zone. However,
coffee is the primary cash crops. The woreda where the investment project is found in
Guraferda, this woreda is known for its crop production specially rice, maize and sorghum in
addition to many other cash crops. The district is one of the few identified area in Ethiopia
as belt for rice production. The woerda is also potential for sesame production. The woreda
has suitable weather condition, fertile soil and ample rainfall that suits for agricultural
production. The woreda has relatively good infrastructure including the asphalt road that
pass from Mizan to Dimma.

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1.2.3 Location and site of the project

Description of Location

The investment project will be located in SWEPR, Bench Sheko Zone, Guraferda woreda which
is about 35 k/m away from the zone tawon Mizan Aman. This area is very appropriate for the
proposed project as it has the following agro ecological and other conditions:

Altitude

The altitude for the project will be low land area ranging 800-1600 meters and its topography is
gently flat of slops and it is very convenient for the proposed project .

Soil

The soil is dominantly black soil and clay soil with organic matter, good structure well drained
deep and normal in it’s PH. As the diffrent facts indicates, the surrounding areas of the proposed
location, there is vigorously growing areas of healthy sesame, rice, Maize, sorghum and spices
and vegetables. Evidences show that the soil indeed possesses underground water, a very high
fertility level and appropriate for the proposed productions.

Rain fall

Annual rain fall of the zone and the woreda is the part of south west Ethiopia which is known
by its rain distribution that varies form 1601-2000 mm.Where precipitation is less and enables the
country to harvest with fixed time of the year.so, this kind of rain fall distribution is appropriate
for the proposed agricultures types. However, due to the climate change nowadays we are
observing some unseasonal and erratic rain in the area, recommending we have to have
supplementary irrigation facility.

Temperature

These proposed agricultures products grows best in the medium and dry environment. The zone
and woreda , ideal temperature for these products is considered 15-33oc and the investment site is
within this range.

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Availability of labor

The major source of labor power is identified from the surrounding areas. source of manpower
for this investment will be local youth and women laborers.More over according to labor and
wage policy any investor can mobilize labors from place to place with out any restriction with
efficient economic manner and standard benefit of the workers the invester can will bring
labor power from the neighboring areas.

Basic facility services

Basic facility services such as road access, electricty, health centers, water and
telecommuination are available in the woreda. In addition to this the farm will introduce and
use modern agricultural techonologies and systems for the surrounding socitey.

Technical study Infrastructure (electric power, road, and telephone services)

Currently, the Ethiopian electric power corporation has stretched hydroelectric power lines
to the rular area. The area where the coffee plant is gonging to establish is near to the the
main electricty line this means there the power supply in the woreda and all the area. So
that it is easy to assess electriccty to the planned site. The required power to run the
warehouse and machines will be easily stretched to the site. In addition to this the project
will have its own power generator. Regarding water source the project will use two options:
underground water and streams from distance throgh genretor power. Regarding road there
is access of all whether gravel road starching from Deberework Town. There is Mobile and
telephone services in the area and these make the site very important to run the project
efficiently.

1.2.4. Socio economic benefits

The farm will produce field crops and vegetables using modern agricultural technologies to
enhance productivity and efficiency. The unit productivity of the land will be as high as the
maximum research findings for each crop. The farm will service as a model for experience sharing
and training the frames in the area and as s demo site to try new agricultural technologies and new
varieties. The produced crops and vegetables will be processed and managed using improved
methods and technologies to keep quality, durability and sale at better price.

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 ➢ Provide large number of work opportunities to local people
➢ Enable local farmers understand and use new technologies
➢ Create market opportunity for other farmers
➢ Enable the nation get more foreign currency and income tax
➢ Create value chain among farmers, and traders

1.2.5. Sowt Analysis

Strength Weakness

➢ Long year experience in agriculture ➢ Lack of experience in irrigated farm

and agribusiness management
➢ Working with local Government and
the community

Opportunity Threat

➢ Increasing demand for organic ➢ Relatively weak competitive position of

products with less environmental developing country suppliers and less
impact. response of developed country for developing
➢ Increased need for food crops both in country.
national market and international ➢ Fluctuating prices on the world market for
market. agricultural products.
➢ High foreign consumer preference of ➢ Intense competition with existing and new
organic food. producers
➢ Lack of important technologies and inputs
on market

1.2.6 Key success Factors (KSF)

• Good agro-climatic conditions of the environment, Conducive government policy for

agricultural sector, skill and commitment of the owner and technology intervention.
There would-be customer has ample experience in coffee trading business. The project

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 is to be managed by skilled and professional labor which is easily obtained from the
area.
• The pricing of agricultural crops especially of food crops is increasing both at domestic
and international market.
• Conducive government policy that can prioritize and give due concern for the
development of agricultural sector, export commodity and import substitute.
• Government initiative for mechanization and modern agriculture.

2. Land preparation to Processing

2.1 Land preparation

The 200 ha farm land will be first in designed 2 farm blocks of 100 hectare each, office block,
warhorse and processing area, residence area, and other important fields. The blocks will have a
strip areas with trees and the remaining farm field will be first cleared form all trees and debris.
The irrigation cannels will be built to irrigate 200 hectares of the land. Out of the total land 200
ha will be dedicated for cultivation, infrastructures, resident areas and others. The prepared land
will be used for the field coffee, crop, vegetables and fruit trees will also use as shade. The swampy
areas, water shade within 20 meter form the river and other important for conservation will be
conserved.

2.2 Production

The main products of the farm will be coffee, sesame and rice grain production for export, agro-
industries and local consumption. The production method, productivity and processing and
marketing of each product is studied and summarized in the agronomy and post-harvest document
developed separately. As every crop has its own production season and prime of life the land can
be used in a way that can enhance the productivity of land by using a land can produce two or
more times every year.

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 3. Environmental impact assessment

As per the federal investment policies for sustainable agriculture development designing strategies
with regard to protecting the working environment. It is an important issue that needs to be
considered by every development project. Ministry of environmental protection encourages
agriculture investment enterprise to use environmental management system that improves
compliance, environmental degradation and pollution, in all development activities in the country.

The environmental impact of growing, processing and transporting coffee from plant site to market
center in Ethiopia is becoming a series concern. More than 90% of the environmental impact of,
processing, the harvested coffee in Ethiopia is due to the impact of waste management. Thus
assessment of the local impact of coffee processing industries and thus, undertaking a series of
measures to prevent contaminantion of the environment and the ecosystem is important.

Based on the Ethiopian environmental impact assessment guideline document (2000 E.c), the
degree of change in an environment resulting from the effect of an activity on the
environment, whether desirable or undesirable. Impacts may be the direct consequence of an
organization’s activities or may be indirectly caused by them. Based on diffrent evidinces in
Ethiopia, there are about 1,263 industrial enterprises in Ethiopia. The majority of them are in
manufacturing and processing, including textiles, chemicals, metal, leather, food and beverage,
paper and printing, sugar, tobacco, wood-working, construction and mining. Industrial activity is
concentrated mainly in and around Addis Ababa, accounting for about two thirds of the
manufacturing value added (MVA). This has resulted in a major water pollution problem in Addis
Ababa. The limited number of project specific river basin studies carried out so far by government
bodies, have indicated that industrial/urban pollution of water resources is a problem especially
in the Awash and Rift Valley Lakes Basin. Furthermore, the new economic policy
adopted by the government is envisaged to encourage the acceleration of local as well as
foreign investment in the industrial and agricultural economic sectors of the country. The expected
rapid development will have both positive and negative impacts. The economic development will
improve the standard of living of citizens. However, the associated pollution could outweigh the
benefits, particularly in Ethiopia which has poor infrastructure for public health and environmental
protection. A proper monitoring mechanism incorporating design, operations, and shutdown of
industrial plants needs to be established. EPA therefore formulated a checklist for the

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manufacturing and processing industries. Environmental issues that were raised by EPA have
been incorporated into this document and applied for this coffee farm.

Risk Management

Based on the risk mangement docments and measures for diffrent economic actvties the following
points and informations will be good back ground for planned industry. Informatins are summrized
from diffrent docments.Risk management is recognized as an integral part of good management
practice. It is an interactive process consisting of steps, which, when undertaken in sequence,
enable continual improvement in decision making. Risk management is the term applied to a
logical and systematic method of establishing the context, identifying, analyzing, treating,
monitoring and communicating risks associated with any activity, function or process in a way
that will enable organizations to minimize losses and maximize opportunities. Hazards and risks
are not the same thing. A hazard is an act or condition that has the potential to cause damage to
plant or eequipment, or result in an illness or injury. Hazards can be categorized by the type of
outcome, energy exchange process or geographic location, e.g. manual handling hazards, slips and
trips, laundry hazards. A risk is the likelihood of a specific consequence occurring. Risks are
usually expressed in terms of likelihood and consequences. In many cases the terms ‘hazard’ and
‘risk’ are used interchangeably, however, remember that hazard has a more general application
and risk a specific application. Risk management has 3 main stages, risk identification, risk
assessment and risk control. In many cases in the early phase of identifying risk, we may in fact
be looking to identify all the risks associated with a particular activity or process, in which case
the activity is more properly referred to as hazard identification, risk assessment and then risk
control. Mostlly risk mangemant involves the following 6 steps:

Hazard idetification

This is the process of examining each work area and work task for the purpose of identifying all
the hazards which are “inherent in the job”. Work areas include but are not limited to machine
workshops, laboratories, office areas, agricultural and horticultural environments, stores and
transport, maintenance and grounds. Tasks can include (but may not be limited to) using screen
based equipment, audio and visual equipment, industrial equipment, hazardous substances and/or

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dangerous goods, teaching/dealing with people, driving a vehicle, dealing with emergency
situations, construction, etc.

Risk Identificaton

Once a hazard to health and safety has been identified, the risk associated with that hazard must
be examined. As a prelude to Risk Assessment, it is useful to identify factors that may be
contributing to the risk. A review of existing health and safety information, such as local workplace
accident records and / or information about the hazard / risk that is available from authoritative
sources (e.g. the ACT Work Safety Commissioner’s office, the ACT Office of Regulatory
Services, or other Australian or international health and safety jurisdictions or sources), will assist
in understanding the risk associated with the hazard in question.

Risk Assessment

It is then necessary to evaluate the likelihood of an injury occurring along with its probable
consequences. Risk assessments are therefore based on 2 key factors:

1) the likely severity or impact of any injury/illness resulting from the hazard and
2) the probability or likelihood that the injury/illness will actually occur. A simple risk
matrix, which cross references likelihood and impact, enables risks to be assessed
against these two factors

Risk Control

Urgent action is required for risks assessed as Critical or High risks. The actions required

may include:

1) instructions for the immediate cessation of the work, process, activity, etc.
2) nisolation of the hazard until more permanent measures can be implemented.

Documented control plans with responsibilities and completion dates may need to be
developed for Moderate risks. Having established the relative importance of dealing with the
identified risk, the risk control hierarchy ranks possible risk control measures in decreasing
order of effectiveness. Risk control measures should always aim as high in the list as

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practicable. Control of any given risk generally involves a number of measures drawn from
the various options.

Docmenting the Process

Documenting the process will help ensure that identified control measures are implemented in the
way that they were intended. It will also assist in managing other hazards and risks that may be in
some way similar to ones already identified and dealt with.Adequate record keeping of the risk
management process will also help demonstrate to the Office of Regulatory Services, or in
litigation, that you have been actively working to ensure safety at your workplace. Records should
show that the process has been conducted properly including information about the hazards,
associated risks and control measures that have been implemented.

Monitoring and Reviewing

Whichever method of controlling the hazard is determined, it is essential that an evaluation of its
impact on the use of the equipment, substance, system or environment is carried out to ensure that
the control does not contribute to the existing hazard or introduce a new hazard to the area. It is
also essential that all people concerned be informed about the changes and where necessary
provided with the appropriate information, instruction, training and supervision as are reasonably
necessary to ensure that each worker is safe from injury and risks to health. It is also recommended
that after a period of time the area supervisor carry out a review of the system or control to
determine its suitability. Hazard identification and risk assessment and control are ongoing
processes. Make sure that you undertake a hazard identification and risk assessment and control
process when there is a change to the workplace, including when work systems, tools, machinery
or equipment changes occur, or simply when the existing process was done some time ago and is
potentially out of date or no longer valid. Based on the above informaton regarding risk the
industry plant will desigen every sefty measures,and make the working envaronmet free from risk.

4. Organizational Structure and Man Power Plan

An investment like agricultural development enterprise is primarily established to attain the

objective of profit making goal. To attain such objective organizational management is
crucial. The overall management of the investment farm will be carried out by the manager
is directly responsible for the owner. Under farm manger there will be integrated
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departments that link each other and holds different activities of the farm. The
Organizational structure of the integrated farm can be seen in the following diagram.

General
Manager

Farm one Fram Financ Technolo Marketin

Manager Two and gy and g and
Manager Admin Mechani Sells
zation Head
Chief Chief
Chief Chief
Agronom Agronom
Agronomist Agronomist Chief
ist ist HR
ACC

Chart1: Organizational structure

4.1Man Power Plan

To attain certain specific objectives within given budget and period of time skilled man power and
integrated plan is very important. This project needs different integrated and experienced man
power. This group of peoples and departments in group will undertake interrelated and coordinated
activities based on their qualification. For personal satisfaction and organizational profit the
organization and management are effectively carried out the comprehensive planning, adequate
organization and management. There will be qualified, experienced and independent farm manager
and the technical management team. The project manager will be assisted by dependable division
heads and qualified experts’. Manger

General manger: Responsible for the all the technical, admin and finance and marketing activities
of the whole farm.

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Internal auditor: Report to general manger and perform the balance and check of farm internal
activates

Office assistance: Report to the general manager and perform the office day to day activates.

Farm Manager: Report to the general manger and holds sub farm mangers and processing units. It
performs farm technical activates starting from seedling harvesting and processing activities.
Admin and Finance Head: Report to the general manger and perform general finance and HR
activates and performance of the farm.

Marketing and Sells: This team is responsible for promotion, marketing and sells activity
coordination.

5. Land use plan

The farm establishment should start from the camp and infrastructure development. At the first
stage the internal road, office, resident and gust house, electric and water facilities will be built
and established. The land will be fully cultivated in 4 years. The field crop production will start at
the first year then the remaining land will be cultivated using irrigation and rain feed.

No Crop Year

1 2 3 4

1 Coffee 30 70 100 150

2 Sesame 10 15 25 25

3 Rice 10 15 25 25

Total 50 100 150 200

Table 1: First four year Land development plan

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 6. Market Analysis

6.1coffee Production and Market

The Ethiopian government in collaboration with regional state let the coffee market to be governed

by free market and international price. This boosts coffee farmer’s real income which in turn

stimulates increased production and quality. According to trade minister 2015 annual report

Arabica coffee is the largest leading crop by production, coverage and trade in the world. The Area

under production in the woreda is still inconstant growth where as the demand of the crop for

coffee beverage consumption is also increasing. In Ethiopia, the production supply of coffee was

reached 5.73% (180000 tons) in 2015 in volume in the world market and 2% export from world

export share; which rank 5th and 12th respectively.

The local demand for roasted and milled coffee is supplied through localproduction and import.
On the other hand the local market for decaffeinated coffee; extracts and concentrates of coffee
and soluble or instant coffee is largely met through import. The finding on the trend in the past
supply of the products under consideration is summarized below

6.2 Decaffeinated Green Coffee

Ethiopia produces a small amount of decaffeinated green coffee; whic isexclusively targeted at
export market. On the other hand, the country imports insignificant amount of the product. During
the period 2002—2007, the average annual import was about 1.47 tons valued at Birr 29,997.
However, during the recent six years (2008--2015), import of decaffeinated green coffee has
increased to7.15 tons in average per annum; valued at Birr 794,335.

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 6.3 Sesame Production and Market

The selected products have relatively better market demand and sustainable potential
buyers with purchasing power. As the national and international demand for food oil is
increasing many investors are now establishing oil factories that use oil seeds like sesame as
raw materials. Beans are also

Sesame seed production in MY 2020/21(October-September) is projected at 255,000 metric

tons (MT), which declined by 25,000 MT over the previous year’s estimate and is mainly
attributable to reduction in acreage. Total area for sesame production is estimated at 520,000
hectares (HA), down by 13 percent compared to the prior year. The contraction in sesame acreages
is driven by shifts in production of alternative food crops, namely sorghum. During 2020/21 crop
year, sesame farmers in major growing regions have switched to planting sorghum. The impact of
COVID-19 pandemic on supply chain disruptions and weakening food supplies contributed
significantly to the shift in productions. Ethiopia held a national campaign calling for farmers to
focus on planting food crops to address anticipated food security challenges posed by the
pandemic, and many sesame farmers in the states of Amhara and Tigray switched to sorghum
cultivation to minimize the pandemic’s effect on local food supplies. Some farmers have also
planted alternative crops such as rice and sunflower seeds in expectation of better price returns.
Those sesame productions costs have steadily increased over the past years with a decline in yield
have pushed some producers to explore cultivating other oilseed crops with better profit margins.
Although pest and disease did not affect sesame productions, conflicts erupted in Tigray while
tensions along the Sudanese border during the harvest season affected logistics and supply.
COVID-19 and military conflicts in the sesame growing regions affected the mobilization of casual
laborers. 1 Post revised production estimate for MY 2019/20 down to 280,000 MT to reflect actual
export figures. In addition, the revised production figure has taken into account adjustments on
beginning and ending stock levels. Looking forward sesame seed production in MY 2021/22, the
likely is trend downward due to persistent conflict and border tension near major growing areas.
Farmers may also cut sesame seed planting for continue transitioning to alternative crops including
sorghum, mung beans, rice, and sunflower seeds. With an improved security situation, the
reduction in sesame seed plantings could be offset by expanding commercial productions in
regions such as Oromia, Benshangul Gumuz, Southern Nations, Nationalities, and People (SNNP)

19
and the newly established region, South West Ethiopian People Region(SWEPR) and Somali.
Sesame seed is one of the most widely produced oilseed crop, representing 30 percent of Ethiopia’s
oilseed production. Production is mainly concentrated in the northern and northwestern Ethiopia,
bordering Sudan and Eritrea. According to the Ministry of Trade and Industry (MOTI), 44 percent
of the national sesame seed production comes from Amhara, followed by Tigray (31 percent), and
Oromia (13 percent); the regions of Benshangul-Gumuz, SNNP, and Gambela account,
respectively, for 9, 2, and 1 percent of total production. 1 Sesame seed farming attracts about
500,000 seasonal laborers at all stages of production, from land preparation to harvest collection.
4 Although Ethiopia is one of the major global producers and exporters of sesame seed, the country
faces a growing challenge to both supply and demand. On the one hand are the supply pressures
of diminishing productivity levels, pests, disease, lack of easy access to modern technology, and
rising production costs while on the other (demand side) are easy entry for new traders, market
distortion, international price instability, highly concentrated export market, and strong
competition abroad. These constraints threaten Ethiopia’s sesame seed growth potential and unless
farmers, traders, and the government strategically address these challenges, the country could
decline in its longer-term competitive position. Consumption MY 2020/21 consumption is
projected at 57,000 MT, down 4,000 MT over the previous year. Current domestic consumption
is small as compared to production, and consumption is expected to rise in the future thanks to
local and international demand.

Domestic demand for sesame, especially in local food processing industry is projected to grow
as new integrated agro-industries and edible oil industrial facilities open. Sesame hulling,
roasting, and further processing and production of various value-added products is set to
expand in the agro-industrial parks. This said, the rising popularity of sesame seeds as an
important ingredient in various cuisines and application in the pharmaceutical and medical
industry will drive up global demand for it. This international trend should continue due to
increasing health consciousness, growing number of vegans, and burgeoning demand for
specialty foods like tahini, hummus, halva, and etc. Growth of other niche segments that
produce sesame-based foods is also expected to increase demand in the future.

Trade Sesame seed exports are forecast to reach 213,000 MT in MY 2020/21, declining
slightly by 1,000 MT from the previous year’s actual figure. This decrease in exports is due
to the estimated contraction in production and anticipated growth in the local processing

20
industry. Ethiopia is one of the key players in the global market for sesame seed and remains
a major exporter. However, annual export volume has been falling at cumulative average
growth rate (CAGR) of 8.1 percent over the past decade. Industry experts mention that
international price volatility, currency fluctuations, excessive speculations, distortion of local
market price, illicit trade, and squeezed productivity levels are the main reasons for the
deteriorating export trade performance during the previous years. Now the country is facing
great stress of foreign currency shortage as result of the war in the north, security problems
elsewhere and related international pressures. Expanding production of export crops like
sesame is considered as one of the way forward to solve the shortage of currency.

6.4 Ethiopia Rice production and Marketing

Several factors have influenced the emergence of rice as an important food security crop and
strategic commodity in Ethiopia over the past three decades. These are related to (i) the trend in
the expansion of rice production linked with agro-ecological suitability and existing potential, (ii)
the compatibility of rice in local farming systems and traditional foods, (iii) the economic
incentives of rice production (comparative advantage), (iv) the rapid increase in domestic rice
consumption and the associated burden on foreign currency due to rice imports and (v) the
favorable public policy environment and support of development partners. These factors are
discussed in more detail below. It is estimated that the country is endowed with about 30 million
ha of land, of which 5.6 million ha are categorized as highly suitable and another 25 million ha as
suitable for rain-fed rice production. In addition, about 3.7 million ha are deemed as suitable for
irrigated rice production. These are distributed around the ten river basins in the country.
Following the successful agrarian changes linked with rice in the Fogera Plain, the recent
expansion of rice production in different regions demonstrates the agro-ecological suitability of
the crop and its overall potential across the country. The National Rice Research and Development
Strategy (NRRDS) recognizes seven regional rice research and development hubs.

These are:

1) Fogera Hub: this area includes the west central highlands of Amhara Region mainly
covering Achefer, Dembia, Fogera, Gonder, Metema, Takusa and Zuria districts as main
niches.

21
2) Pawi Hub: this is an area covering northwest lowland areas of Amhara and Benshangul
Gumuz Regions – mainly Dangur, Jawi and Pawi districts.

3) Abobo Hub: this covers niche areas in Gameblla regional state – mainly Abobo and Etang
districts.

4) Gura Fereda Hub: this covers rice-producing areas in the south and southwest lowlands of
Nationalities, Southern Nations, and Peoples’ Region – primarily Beralee, Gura Ferda,
Menit, Omorate and Weyito districts.

5) May Tsebri Hub: this covers the rice-producing area in the northwest part of Tigray
Region.

6) Gode Hub: this covers the southern part of Somali Region – mainly those areas engaged in
irrigated rice.

7) Chewaka Hub: this is one of the major rice-producing areas covering the south west
highlands of Oromia Region which include East and West Wellega, Illuababora and Jimma
Zones.

The economic incentives of rice production The economic incentives that rice production provides
to farmers emanate from factors such as the productivity levels versus traditional crops such as
teff, the growing demand for rice in domestic markets and the relatively high unit price it fetches
compared to other cereals. In addition, rice provides the possibility of production on fields once
defined as ‘wasteland’ (due to their waterlogged state during the main growing season). The
diverse by-products of rice (straw, bran and husk) have additional economic benefits and are used
in animal feed and as fuel. 3.4 Rice imports and the burden on foreign currency Ethiopia has
experienced rapid economic growth over the last decade. This transformation has been driven by
government investments in agriculture, infrastructure and rural services; leading to substantial
increases in cereal yields (FDRE 2016). The country remains dependent on the export of selected
agricultural commodities; mainly coffee (US$836 million), oil seeds (sesame) (US$363 million),
dried legumes (US$109 million), sheep and goat meat (US$95 million) and, in recent years, cut
flowers (US$232 million) (in 2018 dollars, OEC 2020). Recent trends also show that the export of
industrial products is growing steadily, though their contribution remains modest. All imports
require foreign currency generated from the export of this limited range of commodities. In this
regard, the government has provided different types of export incentives; including incentives to
enhance domestic production of imported commodities such as fibre crops, oil crops and rice. Rice
imports have increased substantially in the last decade, reaching just over 300,000t and costing the

22
country close to US$200 million in 2018. In addition, a substantial amount of the imported product
is low-grade broken rice (mainly from India), which is used in flour production and represents
about 20 per cent of the total value of imported rice.1 3.5 Public policy environment and support
of development partners In 2007, the federal government declared rice a ‘millennium crop’ in
recognition of its productivity and its potential to contribute to food security in the country. Since
then, a number of rice-specific public and private measures have been put in place. The first and
most important were the developments of the development strategy in 2010 and the Rice Seed
Sector Development Strategy in 2017, which together have played a crucial role in guiding public
policy on rice. The national rice research and development (R&D) efforts at federal and regional
level, including (i) the governance of the implementation of the strategy, (ii) identification of
priority investment areas and (iii) the setting of targets to ensure self-sufficiency and for later-stage
rice export. The implementations of the NRRDS and later the RSSDS are coordinated by a
National Steering Committee supported by a National Technical Committee (NTC). The NSC is
chaired by the State Minister of Agriculture and the members were drawn from both federal and
regional bureaus of agriculture, research institutes, private actors and development partners. To
facilitate the smooth operation of the steering committee, a National Rice R&D Secretariat was
established within the Ministry of Agriculture in 2010. The Secretariat has been managed by a
policy advisor to the Ministry assigned by the Japan International Cooperation Agency. The NTC
is comprised of experts from federal organizations, including the Ethiopian Institute of
Agricultural Research (EIAR), the Ministry of Agriculture 12 Working Paper 044 | October 2020
and Natural Resources (MoANR), the Agricultural Transformation Agency (ATA), the
Agricultural Economics Society of Ethiopia and a number of key development partners including
and Mennonite Economic Development Associates (MEDA). At regional level, the rice focal
persons are assigned by their respective Bureaus of Agriculture to link the works of the NSC and
NTC with the regions. Although this arrangement has been in place since 2010, its effectiveness
is reported to vary considerably depending on the attention the specific State Minister at federal
level or the focal person at regional level pays to the rice sector at the given time. This implies the
need to further institutionalize the organizational setup with well-defined roles and responsibilities
in order to ensure commitment and accountability. The Fogera case – and the recognition that the
country needs to become more self-sufficient in domestic rice production – has led the government

23
of Ethiopia to establish a National Rice Stakeholder Platform in 2020 to guide policy and
investment.

These initiatives have increased the country’s connections to new ideas, information and
innovations for enhancing rice R&D and helped reinforce national policy commitments to rice
sector development. The area under domestic rice production has increased significantly over the
past decade. This growth can be linked with area expansion as well as productivity gains.
Production has expanded from the lowland areas of the Fogera Plain to upland and irrigated areas
with the introduction of suitable rice varieties for these agro-ecologies. In collaboration with Africa
Rice and IRRI, the national research system has released 35 improved rice varieties 20 for rain-
fed upland, 10 for rain-fed lowland, and seven for irrigated rice ecosystems. The limited
distribution of these new varieties has contributed to modest but important productivity gains, with
the national average increasing from 1.6t/ha in 2001 to 2.8t/ha in 2018; a rise of nearly 43 per cent
and a growth rate of well over 2 per cent per year. According to data from the Central Statistics
Agency (CSA), average national rice production increased from 71,320t in 2008 to 171,8500t in
2019. This is significant, but still not sufficient to keep pace with growing demand. 4.2 Trends in
rice imports Rice imports to Ethiopia have increased substantially in recent years. Rice imports
grew from 22,500t in 2008 to 533,620t in 2019. This shows an increase in foreign currency
payments of US$12.07 million in 2008 to around US$186.2 million in 2019. There are four main
types of rice imported into the country; all of which are recognised by the Ministry of Trade and
ERCA. These are (i) broken rice (unpolished rice which has been milled to remove the hull from
the kernel while retaining the rice bran layer and the germ), (ii) husked brown rice. The production
of rice form the farm in consideration will contribute in two ways. Firstly, by substituting imported
rice, and second by exporting portion of the production.

7 Financial Analysis

7.3 Investment project fund Source and shares

The investment activity needs total cost of 54 million ETB, out of this owner equity is about
(25%) 13.5 million and the (75%) which is 40.5 million ETB will be covered from bank loan.
The farm project will keep all the rules and regulations and strong professional supervision
and advice of bank. The loan which can be got from bank should be planned on the standard

24
time table and repayment period. The term of loan is long term which should repay within 7
years.

No Source of fund % Allocated(Million ETB) % Allocated

1 Owners’ equity 13,500,000 25

2 Bank loan 40,500,000 75

Total 54,000,000 100

Table 10: investment project fund Source and shares

7.4Fixed cost Analysis

7.4.1 Fixed material cost

The farm project will have different varieties of cost items. These costs are classified based on the
nature of the cost in relation to the project. Fixed costs are costs that will be incurred for the project
purpose but can contribute for the project for more than one year. These types of costs should be
calculated in a way that can assume only the cost of one year. This is done through calculating cost
of depredation.

No Items Quantity Unit price Total Cost Service Depreciation

Period cost per year
in
years

1 Tractors 6 4000000 24000000 10 2400000

2 Seeding 2 800000 1600000 10 160000

machines

3 Processing 1 45000000 45000000 15 4500000

machine

4 Service car 2 4600000 9200000 5 920000

25
 5 Motor bike 2 300000 5 30000
150,000.00

6 Truck 1 4000000 10 400000

4,000,000.00

7 Store building 1 8000000 10 800000

8,000,000.00

8 Residence 2 4000000 10 400000

house 2,000,000.00
buildings

9 office building 2 2000000 10 200000

1,000,000.00

10 Power 2 2000000 5 200000

Generator 1,000,000.00

11 bean balance 3 120000 5 12000

40,000.00

12 Office 1 1500000 5 150000

furniture and 1,500,000.00
electronics

Total 72,090,000 101,720,000 10,172,000

Table: fixed martial cost

7.4.2 Cost of Human Resource

Human resource is the back bone of the project. This includes the management, the technical team
and supportive staff. The salary of staff and pension are considered in cost estimation. The project
will pay about 8.9 million per year and this is fixed cost.

Position quantity Education Unit Monthly Annual pension Total

and Monthly salary Salary
Experience Salary

1 G.manager 1 Bsc 20,000 20,000 240,000 24,000 264,000

2 Office assistant 3 Level 4 7,000 21,000 252,000 25,200 277,200

26
 3 Agronomists 8 BSc 15,000 120,000 1,440,000 144,000 1,584,000

4 Finance and 1 BSc 10,000 10,000 120,000 12,000 132,000

Admin

5 Farm Supervisors 2 BSc 7,000 280,000 3,360,000 336,000 3,696,000

6 processing 6 Bsc 7,000 42,000 504,000 50,400 554,400

officers

6 HR officer 3 BSc 5,000 15,000 180,000 18,000 198,000

7 procssing experts 4 BSc or 7,000 28,000 336,000 33,600 369,600

Level 4

8 Store keeper 4 BSc 7,000 28,000 336,000 33,600 369,600

9 Accountant 2 BSc 7,000 14,000 168,000 16,800 184,800

10 Casher 4 BSc 5,000 20,000 240,000 24,000 264,000

11 Drivers 4 Based on 3000 12000 144000 14000 158000

levels

11 Operator 5 Mechanic 4,000 40,000 480,000 48,000 528,000

12 Guards 13 certificate 2,000 40,000 480,000 48,000 528,000

Total 60 103,000 678,000 8,136,000 813,600 8,949,600

7.4.3 Cost of Utility and Admin

No Items Unit Unit Cost Quantity Total Cost
1 communication Month 20000 12 240000
Refreshment and
2 Accommodation Month 150000 12 1800000
stationery and
3 documentation Month 15000 12 180000
Training and experience
4 sharing Round 400000 4 1600000
5 Fuel and lubricants Round 100000 12 1200000
Total 2220000

27
7.4.4 Cost of Farm Equipment’s
S.No Item Quantity Unit cost Total cost Service Annual cost
years share

1 Spade 50 550 27,500.00 5 5,500.00

2 chemical spraying 200 2000 400,000.00 5 80,000.00

tank

3 Hoe 30 100 3,000.00 5 600.00

4 Rake 20 250 5,000.00 3 1,666.67

5 wheel Barrow 50 1,200 60,000.00 3 20,000.00

6 Meter 20 100 2,000.00 3 666.67

7 Axe 50 300 15,000.00 5 3,000.00

8 Machete 600 4000 2,400,000.00 3 800,000.00

9 Flatting rasp 20 200 4,000.00 3 1,333.33

10 Geso 5 150 750.00 10 75.00

8,850.00 2,917,250.00 912,841.67

7.4.5 Farm Land Clearance Cost

Land clearance activity is the process of removing unwanted trees, bushes and any other obstacles
form the farm land to make the land suitable for cultivation with mechanization. The expected
farm land is a land with gentle slope, grass land with some bushes and trees. Therefore the land
clearance work is expected to be easy and can be done using a machine to uproot unwanted trees
and business. The estimated cost is 5000 birr per hectare at total cost of 10,000,000 ETB.

28
 7.5Variable Cost Analysis
7.5.1 Materials cost

The farm will use bulk volume of agricultural inputs like chemical fertilizers, improved sesame,
Rice, other types of herbicide and pesticide chemicals. The table presented next shows each
volume of agricultural inputs. These inputs are used as per the amount of land cultivated or covered
by each crop.

No. Items Unit quantity unit cost total cost

1 Seeds Qt 2400 10000 24,000,000

2 Soil fertilizer Qt 3000 3000 9,000,000

4 Herbicides and pesticides Ha 800 3000 2,400,000

chemicals

5 Bags Pieces 60000 30 1,800,000

6 Fuel and lubricants Role 1 600000 600,000

7 Spar parts Packs 700000 120,000

Total 37,920,000.00

7.5.2 Labor cost

The Farm is partially mechanized as it will use some machines for cultivation and land preparation.
The manpower is one of the main sources of power for the farm. Specially sowing and weeding
needs bulk amount of labor. Harvesting and trashing can be done in both options mechanically or
manually depending on the convenience. The costs are considered manually for time being and
used interchangeably.

no Items Unit Pph quantity unit cost total cost

1 Sowing Ha 4 1600 200 1280000

29
 2 Weeding Ha 10 1600 200 3200000

3 IPM round 5 30 200 30000

5 Harvesting Ha 10 1600 200 3200000

6 Trashing qt 1 60000 30 1800000

7 loading unloading qt 1 60000 25 1500000

8 other post-harvest packs 1 40 30000 1200000

Handling works

Total 12,210,000

7.5.3 Transport cost

Transportation consumes considerable amount of cost form the total farm cost. Transporting
inputs to the farm and products to market is the main cost in the transport category.
Transportation planned to consume more than 30 million ETB annually. If the farm manages
to buy its own truck this will reduce the transportation cost and also make easy the farm
activity.

Cost Items Qt Quantity unit cost total

1 Rice seed Qt 1200 400 480000
2 Sesame Seed Tq 1200 500 600000
3 Fertilizer Qt 6000 250 1500000
4 Other Inputs Qt 80000 120 9,600,000
5 product transportation Qt 60000 300 18,000,000
Total 30,180,000
Table: cost of transportation

7.6 Project Cost Summery

The total cost of the project will be about 15 million of which 9.9 million is fixed cost and 5.3
is variable cost.

No Fixed Cost Description Amount

1 Fixed assets 94,720,000
2 HR 8,949,600
3 Fixed equipment cost 2,917,250
4 Utility and Accommodation 2,220,000
Total 70,806,850

30
 Variable cost
Farm inputs and consumable
3 materials 30,920,000
4 Labor 12,210,000
5 Transport 20,180,000
7 Consumable materials -
Total of Variable cost 80,310,000
Total cost 131,039,187
Contingency 3,922,337
Grand Total cost 137,039,187
Table: Cost Summary

8 Revenue Estimation

The farms main two products are sesame and white Rice. The sesame will be produced on the 900
hectare of the land and white Rice on the remaining 900 hectare. The 1800 hectare will be fully
covered with in seven years. That means the farm will produce at its fully capacity starting form
the third year. The farm will diversify vegetable and fruits which will be planted in detail plan of
the farm management and land use plan after the lad is obtained. The total income from sells of
the main grains will be about 2.7 billion (look at the Revenue estimation table under Annex)

9 Financial Cost Benefit Analysis

9.1Project Financial Profitability
The cost benefit analysis is the main part of the project plan to see if the project is feasible financial
to invest on. This project cost-benefit analysis shows that the project is profitable within the five
years period. The project fixed cost is about 116 million and the variable cost is about 80 million
ETB. However after the initial investment the variable cost will increase with some percentage the
project has advantage of fixed assists which will be used for more than 10 years. As the table below
shows, the project will cover its first investment at fourth year and earn about 127 million at the
fifth year. The project will have a net benefit of 199 million ETB after discounting at rate of 19%
for the first 10 years. The project will make total sales of 1.6 billion ETB within the 10 years, earn
net profit of and will also pay 500 million ETB tax for the country (look at the cash flow statment
estimation table under Annex)

31
 9.2Project Payback Period and IRR
One of the project viability checking tools is the payback period. This helps us to know when the
project can refund back all its first investment cost. Form the financial analysis we see that after
discounting at 19% this project has a payback period of 4 years which is very good. The IRR
calculation also shows the project IRR of 58% which is very far from the considered discount rate,
19% showing the project is feasible (look at the Internal Rate of Return calculation table under
Annex)

9.3Loan Repayment Schedule

The project will use a bank loan of about 101,250,000 ETB at interest rate of 19% for 10 years.
The repayment will start form the first year as the farm can earn income by selling crops produced
form the first year. Table on the next page shows the detail of the loan repayment schedule.

Enter values
Loan summary
Loan amount 40,500,000
Scheduled payment 23,335,220.07
Annual interest rate 19.00 %
Scheduled number of payments 10
Loan period in years 7 Actual number of payments 10
Number of payments per year 1 Total early payments 0
Total interest 132,102,200.72
Start date of loan 1/12/2025
Optional extra payments

Pmt. Payment Beginning Scheduled Extra Cumulative

Total Payment Principal Interest Ending Balance
No. Date Balance Payment Payment Interest

$ $ $ $ $ $ $
1 1 1/12/2026 23,335,220.07 - 23,335,220.07 4,097,720.07 19,237,500.00 97,152,279.93 19,237,500.00
$ $ $ $ $ $ $
2 2 1/12/2027 23,335,220.07 - 23,335,220.07 4,876,286.89 18,458,933.19 92,275,993.04 37,696,433.19
$ $ $ $ $ $ $
3 3 1/12/2028 23,335,220.07 - 23,335,220.07 5,802,781.39 17,532,438.68 86,473,211.65 55,228,871.86
$ $ $ $ $ $ $
4 4 1/12/2029 23,335,220.07 - 23,335,220.07 6,905,309.86 16,429,910.21 79,567,901.79 71,658,782.08
$ $ $ $ $ $ $
5 5 1/12/2030 23,335,220.07 - 23,335,220.07 8,217,318.73 15,117,901.34 71,350,583.06 86,776,683.42
$ $ $ $ $ $ $
6 6 1/12/2031 23,335,220.07 - 23,335,220.07 9,778,609.29 13,556,610.78 61,571,973.76 100,333,294.20
$ $ $ $ $ $ $
7 7 1/12/2032 23,335,220.07 - 23,335,220.07 11,636,545.06 11,698,675.02 49,935,428.71 112,031,969.21

32
 I. ANNEXS
1. Table of Revenue Estimation

Items year 1 year 2 year 3 year 4 year5 year6 year7 year8 year9 year10 Total

1 land covered with

coffee 40 40 40 40 200 200 200 200 200 200 -

productivity in ton 0.6 0.6 0.8 1 1 1 1 1 1 1

Total production in
Ton 60 60 240 400 600 800 900 900 900 900

Unit cost per tons 90000 90000 95000 99000 100000 100000 110000 110,000 110,000 110,000

total sales from

Sesame (Million
ETB) 5.4 5.4 22.8 39.6 60.0 80.0 99.0 99.0 99.0 99.0 5,400,604

2 land covered with

crop 100 100 200 300 300 300 300 300 300 300

productivity in ton 3 3 3.5 4.0 4.0 5.0 5.0 5.0 5.0 5.0

Total production in
Ton 300 300 1,050 1,600 2,400 4000 4500 4500 4500 4500

Unit price per tons 50,000 50,000 52,000 55,000 60,000 70,000 80,000 90,000 90,000 90,000

Income from Rice in

Million ETB 15.00 15.00 54.60 88.00 144.00 280.00 360.00 405.00 405.00 405.00 15,002,157

33
 Total income in
Million ETB 20.4 20.40 77.40 127.60 204.00 360.00 459.00 504.00 504.00 504.00 204.4

Table: sales plan

2. Table of Cash flow

cost Items Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Totals

A. Cost: Cash
outflow: (ETB)

Fixed cost 24,258,85 25,889,53 27,727,68 29,802,93 32,149,647 34,807,751 37,823,733 41,251,795 45,155,241 49,608,124
0 5 9 7

fixed assets 10,172,00 10,172,00 10,172,00 10,172,00 10,172,000 10,172,000 10,172,000 10,172,000 10,172,000 10,172,000
investment 0 0 0 0

Salary 8,949,600 9,844,560 10,829,01 11,911,91 13,103,109 14,413,420 15,854,762 17,440,239 19,184,262 21,102,689
6 8

Equipment 2,917,250 3208975 3529872. 3882859.7 4271145.72 4698260.29 5168086.32 5684894.96 6253384.45 6878722.90
5 5 5 8 7 6 2

Cost of Admin 2,220,000 2664000 3196800 3836160 4603392 5524070.4 6628884.48 7954661.37 9545593.65 11454712.3
and Utility 6 1 8

Variable costs 17,958,00 19,279,80 28,208,70 34,302,33 48,614,103 80,310,000 87,120,000 95,832,000 105,415,20 115,956,72
0 0 0 0 0 0

Material cost 9,480,000 9,954,000 14,220,00 14,931,00 21,330,000 37,920,000 41,712,000 45,883,200 50,471,520 55,518,672
0 0

Labor cost 2,442,000 2,686,200 4,029,300 4,432,230 4,875,453 12,210,000 12,210,000 13,431,000 14,774,100 16,251,510

Transportatio 6,036,000 6,639,600 9,959,400 14,939,10 22,408,650 30,180,000 33,198,000 36,517,800 40,169,580 44,186,538
n 0

34
A3. Financing - 21,383,95 19,676,34 17,644,28 15,226,128 12,348,528 12,348,528 12,348,528 12,348,528 12,348,528
Cost 3 0 0
(recurrent
Expenses)

A. Total Cash 42,216,85 66,553,28 75,612,72 81,749,54 95,989,878 127,466,27 137,292,26 149,432,32 162,918,96 177,913,37 1,117,145,49
Outflow: (A = 0 8 8 7 9 1 3 8 2 4
A1 + A2 + A3)

Total Cost in 42 67 76 82 96 127 137 149 163 178 1117

Million ETB

B. Benefit: 0
Cash inflow:
(ETB)

total sales from 5.4 5.4 22.8 39.6 60.0 80.0 99.0 99.0 99.0 99
sesame (M
ETB)

Total Income 15.0 15.0 54.6 88.0 144.0 280.0 360.0 405.0 405.0 405.0
form Rice(M
ETB)

Total Cash 20.4 20.4 77.4 127.6 204.0 360.0 459.0 504.0 504.0 504.0 2700 -
inflow(from
sales of Agri
products) in M
ETB

C. Net Cash -21.8 -46.2 1.8 45.9 108.0 232.5 321.7 354.6 341.1 326.1 1,664
inflow ( B - A):
(ETB) in M
ETB

35% Tax in M 16 38 81 113 124 119 114 605

ETB

35
Net Profit in 30 70 151 209 230 222 212 1,124
M ETB

Table 21: Financial flow statement

3. Discounted Net Benefit

Items
D/rate 1.1900 1.4161 1.6852 2.0053 2.3864 3.3793 5.6947 11.4198 27.2516 92.0918
Income 20 20 77 128 204 360 459 504 504 504
discounted
Income 17 14 46 64 85 107 81 44 18 5 482
Expense 42 67 76 82 96 127 137 149 163 178
Discounted
Expense 35 47 45 41 40 38 24 13 6 2 291
DNB -15 -27 33 87 164 322 435 491 498 502 191

4. Table of Internal Rate of Return Calculation

D/rate 1.5800 2.4964 3.9443 6.2320 9.8466 24.5810 96.9551 604.2257 5,949.5573 146,246.0890
Income 20 20 77 128 204 360 459 504 504 504
discounted
Income 13 8 20 20 21 15 5 1 0 0 102
Expense 42 67 76 82 96 127 137 149 163 178
Discounted
Expense 27 27 19 13 10 5 1 0 0 0 102
DNB -6 -6 58 114 194 355 458 504 504 504 0

36
 5. Project schedule
N0. Activities Months 2017 E.C
Aug Sep. Oct. Nov. Dec Jan Feb. Mar. Apr. May Ju. Jul.

1 Land acquisition
2 Site clearance
3 Land preparation
and sowing

4 Construction of
important facilities

s5 Farm management
works
6 Harvesting

37
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