Diary Advanced Business Plan

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA
LIVESTOCK AND FISHERIES SECTOR DEVELOPMENT PROJECT
Federal Democratic Republic of Ethiopia
Ministry of Agriculture
Livestock and Fisheries Sector Development Project
Sub-project Profile
Prepared by Hiwot Milk Collection & Processing union and Galema Milk
Marketing Cooperative
Draft version
<Bole>, 2020
1
Table of Contents
i. Sub-project idea...........................................................................................................................2
1. Executive summary.............................................................................................................................7
a. Buyer background............................................................................................................................8
b. Seller background............................................................................................................................8
c. assessment report...............................................................................................................................9
3 Sub-project profile/productive partnership content.........................................................................9
a. Objectives of this partnership..........................................................................................................9
C. Support required...............................................................................................................................10
4. Implementation plan...........................................................................................................................14
a. Management and governance.......................................................................................................14
b. Operational plan................................................................................................................................15
5. Environmental and social management plan.......................................................................................19
6. Financial history and plan....................................................................................................................20
a. Financial history and analysis........................................................................................................20
7. Sub-project outcome............................................................................................................................26
a. Results framework.........................................................................................................................26
b. Quarterly milestones.....................................................................................................................28
8. Annex...................................................................................................................................................29
Annex 8.1: Signed Commercial Contract...........................................................................................29
Annex 8.2: Environmental and Social Management Plan....................................................................1
Annex 8.3: Detailed Financial Plan.......................................................................................................4
2
i. Sub-project idea
<Insert/attach the sub-project idea submitted to Woreda Project Coordination Unit /WPCU/.>
This sub-project idea is jointy made by Hiwot Milk Collecting and processing union (hereafter refered to
as buyer) and Galema milk marketing cooperative (seller) (hereafter refered to as seller) and submitted
to Woreda Project Coordination Unit (“WPCU”), for increaing productivity and commercialization of
buyer and seller in Dairy value chain.
Details of the s/P idea is as following.
Organization (s) Name: Hiwot Milk Collecting & Processing Union

Regional State/Zone/Woreda: Addis Ababa, Bole,10
Buyer address Phone: xxxxx
Contact Person Name: Hiwot Kassahun
Phone: xxxxx
Email: xxxxxx
Organization (s) Name: Galema Milk Marketing Cooperative
Regional State/Zone/Woreda: Oromia, Oromia special
zone,Finfine Zuria.
Seller address
Phone:xxxx
Contact Person Name: Obbo Dereje Jira
Phone: xxxx
Email: xxxx
To provide high quality, affordable and nutritious milk and milk
products to the local market, create market access to the local
Vision
dairy farmers, while offering an integrated dairy support services
and creating job opportunity
Rationale for request The Demand for processed milk has been increasing at 20%
annually over the past two years and is expected to continue
growing. Processor recognized the opportunity, but it is in short of
getting reliable and continues supply of quality milk.
The fact that the dairy farmers ae geographically scattered and

lack bulking capacity, led to inability to access the market.
Therefore, they are not linked to the wider value chain to benefit
from the market. Now this partnership can bridge the gap by
enhancing the capacity of collection centers.
The productive partnership secures a supply of required quality

and quality milk to the processor (buyer) and help cooperative
(seller) run a profitable milk collection business. At the same time
to enable the processor (buyer) benefits from the regular supply of
milk in term of both required quality and quantity and benefit
from the profit. Cooperative members benefit from the guaranteed
regular sale of milk all year round and from transfer of knowledge
and access to inputs and services provided.
3
 Milk marketing cooperative is involved in bulk collecting

of raw milk from its members at established collection
centre with cooling facilities
 The milk fulfilling the required quality will be collected at
the collection centre
 The buyer transports the milk from collection centres to
the processing plant
 The processing plant develop products such as pasteurized
milk, yogurt, cheese, and other dairy products and
distributed to local markets (supermarkets, shops, hotel,
restaurants and institutional buyers)
 Supplying of required quality and quality milk to the
processor (buyer) help cooperative (seller) run a profitable
milk collection business. At the same time to enable the
Sub-project idea
processor (buyer) benefits from the regular supply of milk
in term of both required quality and quantity and benefit
from the profit.
 Cooperative members benefit from the guaranteed regular
sale of milk all year round and from transfer of knowledge
and access to inputs and services provided by the buyer.
 The development of these ancillary services lead the
cooperative to engage in the input supply business. Given
the training farmers tend to improve their utilization of
good animal husbandry practices to increase the quantity
of milk production. At the same time the cooperative
members could enhance the use of AI for cross breeding
to increase milk productivity.
Expenses  Milk processing house 300 m2

Infrastructure  Milk bulking centre and storage 300 m2
3,135,000
Incremental Vehicle (ISUZU),
goods & Lacto-scan,
Lactometer Milk cans or bulk container
equipment
Water reservoir,10,000
Aluminum cans (40 and 50 Liter)
Refrigerator (400 liter)
Chiller (2000litre)
Cream separator 500 liter per hour
Churner 40 liter per hour
Cheese maker with accessories 30kg/hr.
Weighing scale
Yoghurt cup filling and celling machine
Pasteurizer
4
Yogurt making machine

Packing machine for pasteurized milk
Plate for printing
Generator
lockers
4,425,300
 Milk handling and processing
Training
100,000
 Detergent
 Gloves
 Cleaning material
 Alcohol
 Plastic for packing
Incremental  Labels
critical inputs  West treatment
 Health and safety protection
 Dressing materials
 Lockers for office workers
1,028,500
Provision of skill knowledge and input and

Buyer
services reqired by the seller. It shares risk and
ensured simple and secure transaction.
Beneficaries Land for the collection center,

housing,store,water and labour contribution.
Seller Provides high customer attention and strengthen
further potential development for higher business
relationship.
 Increase in production and productivity of milk

 Increase in the sale volume of milk by both the seller and
the buyer
Expected outcome of sub-
 Employment created for unemployed youth
project idea components
 Women empowerment ensured
 Improve poor nutritional status in the society
>= 24
Sub-project idea timeline <= 3 mth 3 – 6 mth 6 – 12 mth 12 – 24 mth
mth
We, buyer, and seller, have jointly prepared and submitted this sub-project idea on January 30, 2020.
We hereby endorse it and submit it to near-by Bole Woreda Project Coordination Unit office.
5
For buyer (s)
Name: Hiwot Milk collecting & Processing Union
Signature: ________________
For seller (s)
Name: Galema Milk Marketing Cooperative
Signature: _______________
For official use only
Received by WPCU: ______________________
Name: ________________________
Date: _________________________
6
1. Executive summary
<Write this section last.Commit a short paragraph ofkey points from each chapters.
Overview of productive partnership members Productive partnership content Implementation
plan Environmental and social management plan Financial plan Sub-project outcome> of
productive partnership members Productive partnership content
A productive partnership is established between Galema milk marketing cooperative (seller) and Hiwot
milk collection & processing union as a buyer in 2019. This productive partnership is prepared to
materialize a sub-Project (milk collection & processing union) based on commercial contract. The
agreement includes quantity and quality of milk to be supplied every day and the price to be paid by the
buyer per liter of milk. Dairy cooperative is mainly involved in bulk collecting of raw milk from its
members. The milk supplied by the members are received at collection center in the morning and in the
evening. The buyer transports the milk from collection centers to Hiwot processing plant found at Addis
Ababa. The implementing agency approved the partnership between Hiwot milk collection & processing
union (Buyer) and Galema milk marketing cooperative (seller). Nevertheless, the support of the sub-
Projects is directed to the Union. While the advantage for the seller is the assurance of regular and
guaranteed market to collect their milk. It is expected that the buyer aimed at generating total annual
revenues of 34,800,000 by 2021, from sales of 1,080,000.00 litre milk and other products and aimed at
increase of 5% each year for the next three years and increase its total annual revenue to 35,300,000 ETB
by 2023 while the productivity of the cooperative members increases by 5% which enlarge the milk
supply (sale) and generate annual revenues of 30,240,000.00 ETB by 2021 and 31,040,000 by2023.
2. Overview of productive partnership members
Introduce members of the productive partnership. Among others, specify their name, year of
establishment, cooperative member size and other basic information. (Use one paragraph)>
Members of the productive partnership are Hiwot milk collecting and processing union(buyer) and
Galema milk marketing cooperative (seller) established year in 2019. The cooperative is found in Finfine
Zuria Woreda and 09 keble while the buyer (the union) is located in Addis Ababa, Woreda 10. The union
was established in a year 2018 with three primary cooperatives having similar objectives. The main
objective of the union during its establishment was to process the milk so as to minimize the high
transaction cost and reduce milk price fluctuations. Meanwhile, the cooperative created to provide inputs
such as feed, veterinary and AI services to its members. Cooperative had an initial capital of 34,000 birr
which grown to 120,000 ETB by year 2018. The members of the cooperative are 240 by the year 2019 of
which 42% are Women and youth. Membership is open to any dairy farmers who live in Woreda, has at
least two crossbreed dairy cow and capable of paying a registration fee.
7
a. Buyer background
Elaborate the buyer in depth. Focus on its vision and key successes. (Use one paragraph)>ttrade history,
more importantly inputs bought last year and plan for next year. (Use one paragraph)><List roadblocks
that will potentially hinder the buyer from purchasing/acquiring the product amount stated above. (Use
one paragraph)> Elaborate the buyer in depth. Focus on its vision and key successes. (Use one
paragraph)
The union was established as a cooperative society with proclamation no.985/2016 since October
2018.The purpose of establishment is to process pasteurized milk and milk Products. The processing plant
locates in Addis Ababa. It supply pasteurized milk and milk products to the population of Addis and the
neighboring areas. Its objective is to provide high quality, affordable and nutritious pasteurized milk and
milk products to the local market and create market access to the local dairy farmers. It aimed to
contribute unemployment reduction through creating job opportunity. The Union is involved in provision
of services and inputs to milk supplier dairy farmers includes quality feed supply on credit and payments
deducted from milk sold to the union, training on quality milk production, dairy nutritional and farm
managements, female’s farmer empowerment through providing training on farm management and
Provide seed for forage.
The union have adopted modern technology with the majority of its output being pasteurized milk in
packs of 500 ml and other products. The plant has the capacity to process daily 10,000 liter of raw milk
and produce pasteurized milk and milk products such as cheeses, butter, cream, skimmed milk, and
yogurt. The union produces pasteurized milk, yoghurt, cheese and butter with annual production capacity;
58,000 liters of yoghurt; 2880 kg of cheese; 540,000 liters of raw milk; and 18,000 liters of cream. The
market out lets are all supermarkets, small and large shop, Restaurants, Hotels, Coffee shop,
Governmental institutions. It has planned to increase its sale by 5% for next year. The market out lets are
all supermarkets, small and large shop, Restaurants, Hotels, Coffee shop, Governmental institutions.
The processing union relies on a good milk supply and collection systems need to be put in place. The
union faces a challenge of reliable supply of quality milk in the milk shade. For this reason, it has
partnered with Galema milk marketing cooperative which guarantee supply of at least 3000 litter of milk
per day from 240 of its members at competitive price Moreover, at it stand now, the union also lack
technical, managerial, marketing skills and shortage of capital that potentially hinder the buyer from
marketing the stated amount capacity. So, this requires substantiated support and would benefit the union
for expansion strategy and further growth.
b. Seller background
<Elaborate the seller in depth. Focus on its vision and key success. (Use one
paragraph)><Describe production and trade history; more importantly produced
products and outputs sold last year and plan for next year. (Use one paragraph)>
<List roadblocks that will potentially hinder the seller from producing and selling the
stated amount above.>
8
It has been established in a year 2015 with vision to be the preferred milk marketing cooperative in
buying, collecting and selling of raw milk, while offering an integrated dairy support services to its
members. It also aimed at sustainably empower members by providing competitive price, timely
payments, training, farm inputs, and services. With focus on minimizing the high transaction cost and
seasonal price fluctuations.
Cooperative had an initial capital of 34,000 birr grown to 120,000 ETB by year 2018. The membership
increased from 55 in the year 2016 to 240 by the year 2018. Moreover, the cooperative has plan to
provide inputs and services including quality feed supply, provision of veterinary and AI services to its
members and expect total revenue of ETB 800,000 for the year 2023. The membership is open to any
dairy farmers who has at least 2-3 crossbreed dairy cows and live in nearby kebele and capable of paying
a registration fee and buys at least one share from the organization.
The cooperative is formally registered by law. Reduction of demand for milk during fasting season and
high cost of animal feeds are among the major challenges faced by the cooperative members. For this
reason, it has partnered with Hiwot Milk Collection and Processing Union which provides a chance to
supply of at least 3000 litter of milk per day.
c. assessment report
In accordance to Eth-GAP assessment guideline
3 Sub-project profile/productive partnership content
a. Objectives of this partnership
<Explain objective of the productive partnership to be established. The objective can be

derived from production/trade target set by seller and buyer. (Use one paragraph)>
 The overall aim of the productive partnership is to secure a supply of required quality and
quality milk to the processor (buyer) and help cooperative (seller) run a profitable milk
collection center business.
 It is expected that the productivity of the cooperative members (the seller) increases by
5% which enlarge the milk supply (sale) of the cooperative by 5% generate annual
revenues of 30,240,000 ETB by 2021 and 31,040,000.00 ETB by 2023.
 The buyer has planned to increase its sale by 5% for next year from baseline year sale of
2019) generating annual revenues of 34,800,000.00 ETB by 2021 from sales of
1,080,000.00 litres milk and other products within the cluster.
9
b. Signed commercial contract
<Briefly describe the content of commercial contract. More importantly, mention

product size and amount of money involved. Also, reference the signed version in annex
8.1. (Use one paragraph)>
The commercial contract entered between the cooperative (seller) and the milk collection and processing
union (buyer). The contract articulates the services that each partner agreed to provide. The cooperative
(seller) agreed to supply 3000 litter of the required quality of milk per day. The buyer (the processing
union) agreed to buy 3000 litter of milk and transport the milk from the collection center every day. Both
parties agreed on the pricing and payment modes as per the commercial agreement. The price of the seller
is 28 ETB, and the buyer uses 30 ETB. These accounts daily transaction of $84,000 ETB.
In addition, the union supply feed, and other services when needed. The description of the milk in the
contract include quantity agreed (volume), volume tolerance (+/-), in quality inspection the milk quality
must be conducted during delivery by seller. A product that does not meet the requirements is considered
as substandard and cannot be accepted by the buyer. When there is a delay in the delivery of the product
caused by buyer, the seller is entitled to liquidate damages to the product and/or recover extra costs
incurred. Penalty shall be calculated based on an annual interest rate of 9.5%, constantly compounded for
every day of delivery delay. Buyer bears all costs and risks involved in transportation. Buyer is required
to facilitate transportation to the destination. Buyer will be responsible to cover any cost involved in
unloading of the product at point of delivery
C. Support required
<Summarize what the sub-project support entails. Bucket required supports in to
infrastructure, training, services, critical inputs and goods and equipment.>
<Clearly explain how the requested infrastructure contributes to the realization of the
partnership objective. It should not exceed 40% of total subproject budget.>
This sub-project was estimated to have a milk collection and processing capacity of 3000 liters
per day with packing of the dairy products. Accordingly, the following costs are estimated for
infrastructure, equipment, input, and training.
The Infrastructure cost is 34.66 % of the Projects’ contribution. The cost of infrastructure mainly includes
the construction of milk processing house (300 m2) and storage & milk bulking centre (300 m 2) with
standard approach. (see detail budget below)
Milk processing house 300 m2
N Specification Measurement Amount Unit Total Source of Budget

o unit price price
LFSDP Contribution
1 Blocket Number 4500 16 72000 72000
2 Cement Quintal 200 700 140000 140000
10
3 Iron (Fero) 16 mm Number 120 900 108000 108000

7 Stone Meter cube 400 400 160000 160000
8 Sand Meter cube 500 400 200000 200000
9 Wood for roofing Number 200 160 32000 32000
10 Galvanized iron Number 200 260 52000 52000
sheet
11 Milk reception Number 4 45,000 180000 180000
houses
12 Nails kg 20 100 2000 2000
13 Labor cost Lumpsum 1 120,000 120000 120000
14 Transport and Lumpsum 1 25,000 25000 25000
loading unloading
15 Land preparation Lumpsum 1 60,000 60000 60000
for construction
17 Door Number 1 24,000 24000 24000
18 Windows Number 2 12,000 24000 24000
19 Electrification Lumpsum 1 70,000 70000 70000
20 Sewerage system Lumpsum 1 50,000 50000 50000
Total 1425000 1,305,000 120000
Contingency 142500 142500
G. Total 1,567,500 1447500 120000
Milk bulking center and storage 300 m2
N Specification Measurement Amount Unit Total Source of budget

o unit price price
LFSDP Contribution
1 Blocket Number 4500 16 72000 72000
2 Cement Quintal 200 700 140000 140000
7 Stone Meter cube 400 400 160000 160000
8 Sand Meter cube 500 400 200000 200000
9 Wood for roofing Number 200 160 32000 32000
10 Galvanized iron Number 200 260 52000 52000
sheet
11 Milk reception Number 4 45,000 180000 180000
houses
12 Nails kg 20 100 2000 2000
13 Labor cost Lumpsum 1 120,000 120000 512000 68800
14 Transport and Lumpsum 1 25,000 25000 25000
loading unloading
11
15 Land preparation Lumpsum 1 60,000 60000 60000

for construction
17 Door Number 1 24,000 24000 24000
18 Windows Number 2 12,000 24000 24000
19 Electrification Lumpsum 1 70,000 70000 70000
20 Sewerage system Lumpsum 1 50,000 50000 50000
Total 1425000 1,356,200 68800
G. Total 1,567,500 1,498,700 68800
<Clearly explain how the requested training contributes to the realization of the
partnership objective. Sum of training and services should not exceed 30% of total
subproject budget.>
Training in all improved good practices identified (Eth-GAP2) for both the seller and the buyer would be
provided through the FFS and FBS approaches covering supported by farmer’s exchange. The training
contributes to the realization of the partnership objective through Providing extension service on good
hygienic and quality milk handling and processing (See detail budget below).
N Measurement Unit Source of Budget

Specification Amount Total price
o unit price
LFSDP Contribution
1 Milk handling Lumpsum 100,000 100000
and processing
Total 100000
explain how the requested critical input contributes to the realization of the partnership
objective. It should not exceed 10% of total subproject budget>
Critical input enables the union for adoption of improved technology to realize the partnership
objective. The requested critical input contributes to the achievement of the partnership objective
through enabling access for inputs including disinfectant utilities, cleaning materials, clothing for
workers, plastic for packing, labels, and waste treatment for safety. (See detail budget below)
N Measuremen Amoun Unit Total Source of budget

Specification
o t unit t price price
LFSDP Contribution
1 Detergent Packet 10 1000 10,000 10,000
2 Gloves Packet 12 600 7,200 7,200
3 Cleaning material Package 10 1000 10,000 10,000
4 Alcohol liter 24 200 4,800 4,800
12
5 Plastic for packing packet 10 1000 10,000 10,000

6 Labels Lumpsum 1 10,00
10,000 10,000
0
9 West treatment Lumpsum 1 93,00
93,000 93,000
0
9 Health and safety protection Lumpsum 1 80,00
80,000 80,000
0
10 Dressing materials Number 2200 300
 Boots,
(230x15person=3450
)
 Overall
(450x15=6750
 Glove, (4500 pieces
660,000 660,000
x5birrx2=45000
 Cape
(60x15persons=900
 Eyeglass
(120x15=1800)
 Mask (50x15=750)
11 Lockers for office workers Lumpsum 1 50000 50,000 50,000

Total 935000 935000
G. Total 1,028,50 1,028,50
0 0
<Clearly explain how the requested goods and equipment contribute to the realization of
the partnership objective. It should not exceed 20% of total subproject budget>
Investment on requested goods and equipment identified by ET- GAP assessment enable the union
adoption of improved technology. This would allow the realization of the partnership objectives. The
investment required to the goods and equipment permit the union to access milk collection and processing
equipment; Vehicle for transportation, Lactometer, Lactoscane, milk cans balance, refrigerator, chiller,
cream separator, churner, cheesemaker, yoghurt making machine, packing machine for pasteurized milk
and plate for printing. (See the detail budget below).
N Specification Measurement Amount Unit Total Source of Budget

o unit price price
LFSDP Contribution
1 Vehicle (ISUZU) Number 1 1,400,000 1,400,000 1,400,000
2 Lactometer Number 5 1000 5,000 5,000
3 Lactoscane Number 1 50000 50,000 50,000
4 Water reservoir Number 1
50,000 50,000
(10,000) 50000
5 Water reservoir Number 1
30,000 30,000
(5,000litrs) 30,000
13
6 Aluminum cans Number 50 5000

250,000 250,000
40 liter
7 Aluminum cans Number 50
50 liter 6000 300,000 300,000
8 Refrigerator (400 Lumpsum 2
64,000 64,000
liter) 32,000
9 Chiller (2000litre) Number 1 500,000 500,000 500,000
10 Cream separator Number 1
500 liter per hour 170,000 170,000 170,000
11 Churner 40 liter Number 1
per hour 50,000 50,000 50,000
15 Cheese maker Number 1
with accessories
30kg/hr 30,000 30,000 30,000
16 Weighing scale Number 3 3000 9,000 9,000
17 Yoghurt cup Lumpsum 1
filling and celling 40,000 40,000 40,000
machine
18 Pasteurizer Number 1 300,000 300,000 300,000
19 Yoghurt making Number 1
machine 400,000 400,000 400,000
20 Packing machine Number 1
for pasteurized 40,000 40,000 40,000
milk
20 Plate for printing Number 1 85,000 85,000 85,000
21 Generator Number 1 150,000 150,000 150,000
22 lockers Lumpsum 1 100000 100,000 100,000
Total 4,023,000 4,023,000
G. Total 4,425,300 4,425,300
Summary of total budget and budget proportion for the four entry points for Milk collection and
Processing at advanced level summarized as;
s.n Expenses (entry point) Total expense Source of budget

LFSDP Contribution
1 Infrastructure 3,135,000 2,946,200 188,800
2 Equipment 4,425,300 4,425,300
3 Input 1,028,500 1,028,500
4 Training 100,000 100,000
Total 8,688,800 8,500,000 188,800
4. Implementation plan
14
a. Management and governance
<In this section explain what the roles and responsibilities looks at high-level for productive partnership
members. Remember to note that detailed roles and responsibilities of each partners can be found on
the commercial contract. (Use one paragraph)
The roles and responsibilities cooperative in productive partnership consists of implementing technical
specifications and input to be provided by the buyer. The buyer shall expend the finance supported by
LFSDP for its intended purpose and shall deliver the product as per defined specification and
quantity.Inaddition, buyer union has responsibility in the productive partnership which includes provision
of technical training and finance support for input purchase. Up on delivery of the product as per defined
standards, the buyer receives the product and issue goods receiving note to cooperative describing its
amount and quality. When there is a delay in the delivery of the product caused by buyer, the seller is
entitled to liquidate damages to the product and/or recover extra costs incurred. Incase if the seller refuses
to deliver the milk to the buyer, he may sue the seller for damages for non-delivery and the seller must
pay back the price of the milk to the buyer which he had received in advance. Buyer bears all costs and
risks involved in transportation. Buyer is required to facilitate transportation to the destination. Buyer will
be responsible to cover any cost involved in unloading of the milk at point of delivery.
b. Operational plan
i. Sub-project activity plan
<List high-level implementation activities of sub-project supports. Explain the step-by-

step approach (from procurement, installation to management and follow up).
Remember to include all activities, definite timetable and responsible body.>
15
No Activities Start date End date Responsible Remark

0 Establish a S/P Management 12/15/2020 1/5/2021 Coop agency
Committee (SPMC) &PCU
01 Procurement plan submission 1/6/2021 1/15/2021 SPMC
02 Approval of the plan 1/16/2021 1/ 30/2021 Coop agency
&PCU
1 Infrastructure
1.1 Procurement for milk processing 2/01/2021 2/16/2021 SPMC
house, milk bulking centre and
storage
1.2 Construction of milk processing 2/17/2020 4/17/2020 PCU
house, milk bulking centre and
storage
2 Critical Equipment
2.1 Procurement of critical Equipment 2/01/2021 2/16/2021 SPMC
(Vehicle, Lactometer, Lacto scan,
milk cans balance, refrigerator,
chiller, cream separator, churner,
cheesemaker, yoghurt making
machine, packing machine for
pasteurized milk and plate for
printing and generator)
2.2 Installing equipments and 3/17/2021 3/30/2021 PCU
Transporting inputs
3 Critical Input
3.1 Procurement of inputs (disinfectant 2/01/2021 2/16/2021 SPMC
utilities, cleaning materials, clothing
for workers, plastic for packing,
labels, and waste treatment for safety)
4 Training
4.1 on good hygienic and quality milk 02 /02/2021 05/05/2021 Coop agency
handling and processing &PCU
4.2 Follow ups 02/02/2021 05 /05/2021 PCU
ii. General administration plan
<Besides to sub-project support, list high-level activities required to increase productivity

of seller and transacted goods for buyer. Since productive partnerships materialize
through signed commercial contract, leverage sections from the contract.Below are
potential issues that have tobe raised and should be summarized here. (Use one
paragraph).>
<Marketing and sales plan: This section is intended only for the buyer. It aims to create
strong buyer, and in turn ensures sustainable demand for seller’s product.
In this paragraph, discuss target market. Include high-level estimation of market size
and market trend. Furthermore,describe types of people and businesses most likely to be
buyer’s customers.
Expend this section to give clear picture of who are the competitors, what is the level of
competition, what are the strength and weakness of buyer’s competitors and other
related issues.
16
This section indicates estimated inventory levels, distribution plan, pricing strategy and
sales forecast (sales forecast could be derived from commercial contract).>
Since productive partnerships materialize through signed commercial contract agreement, any issues need
to be resolved within the framework of the agreement. Any potential issues need to be discussed among
themselves and solve in it time. The Implementing agency should act to resolve issues raised by both
seller and buyer with the presence of witness in time. Both parties must come to an agreement on any new
schedule of a delay reports. A market price will be used as a reference to determine the price for the
product in each of the deliveries within the contract in each stage of delivery.
The key to success of the business model is reliable high-volume supply. The scale of operations is
important because the milk collection center can reduce cost of operation. The scale of operation in milk
supply increases as soon as farmers access to market which is trusted to pay better prices. Membership
growth and commitments increases the volumes of milk. This enables the cooperative to negotiate longer
term contracts. For this reason, farmer ownership is a key element of the business strategy.
There are increasingly higher demands for better quality milk. Quality control at farm level can be
ensured by Provide training and extension service on good milk quality Control Practices. It is maintained
using efficient milk collection, cooling & chilling to prolong milk shelf life. Milk quality assurance is one
of the critical and priority issues in the partnership agreement. Developing quality assurance is ensured by
undertaking standard quality tests up on the collection of raw milk. Poor quality milk which will be
rejected. Other important measures include cleaning schedules for buildings, equipment, remove wastes
from collection rooms and training of the operators in correct personal hygiene and milk handling
techniques. Inventory control is ensured by the predetermined agreement with the buyer. Keeping milk
supply to order sizes as milk is highly perishable and require refrigerated storage and high care. Quality
of milk and dairy products are affected by different factors that can make the food unsafe including poor
handling, poor storage conditions, naturally occurring toxins found in the food itself, contaminated water,
pesticides and drug residues and lack of adequate temperature control. Milk that deviates in composition,
taste, and smell from normal milk receives a lower quality rating.
The collection center practices standardized safety procedure. In addition, payment is made based on
weights and quality test results. After tested and approved the amount delivered is recorded and a receipt
issued showing the amount delivered that day. Processors is confident that the MCC have adequate
controls over the quality of the raw milk supply. The processor collects the milk by own vehicle from
MCC to the processing plant. Shared value of the partners in building trust through standard operations
and business practices enhance the performance of the PP.
The union as the processor increases the price of milk based of the fat percentage and the quality of milk
delivered by smallholder farmers. During the long fasting period of Ethiopian Orthodox religion (for
56day from mid-February to mid-April), the farm did not decrease the price of milk. The farm also
involved in processing of the collected milk into different dairy products like pasteurized milk, yoghurt,
soft cheese, and butter.
The payment policy adopted is all inclusive because different customers prefer different payment options
as it suits them but at the same time, we will ensure that we abide by the financial rules and regulations of
government. Here are the payment options will make available to clients.
 Payment via bank transfer
 Payment via online bank transfer
 Payment via check
17
 Payment via bank draft

 Payment via mobile money
Marketing and sales plan (Plan Demand)
This part of the business is dealing with mechanisms of delivering final products to the target market. The
major products in which the business is going to supply to market may include milk, butter, cheese,
cream, and calf
The major products are Pasteurized Fresh Milk, Yoghurt, cheese, butter, and cream. The business is
situated in a highly populated area which is Addis Ababa. There is growing number of in the chain
supermarkets and small shops which are situated close to communities. There is a population growth, and
this is supported by the number of new housing development. The business uses appropriate approaches
that can help to distribute dairy products to the different segments of the market. Cost effective marketing
channels which are effective simultaneously by satisfying demand of the customer will be adopted.
The marketing research result verified that milk production potential in the Woreda is high, but it was
evident that marketing of milk is a critical issue. The Woreda produces approximately 5,965,000 liters of
milk per year which is one of the highest milk productions in the Woredas of the Zone.
Once the collection and processing center is operational, response from farmers in the region is expected
to be positive. The Buyer is expected to collect and process 3000 liter of quality milk per day during peak
production season which enhances its capacity and control over the milk supply chain.
The demand for processed milk has been increasing at 20% annually over the past two years in Addis
Ababa and nearby areas and is expected to continue growing at the same rate in the next 5 years future.
As a matter of fact, entrepreneurs are encouraged by the government to embrace commercial dairy
farming.
There are different private milk processing companies who compete with the buyer to purchase milk from
small scale dairy farmers in the Cluster. Due to strong competition especially with those which could not
collect huge volume of milk. This has bought the processer under capacity performance by 1000 liters.
The competitor companies purposively increase the price of milk to attract more farmers in the past. The
market survey indicated that the productive partnership which is created increases its competitive capacity
by ensuring regular supply of quality milk. Moreover, by offering input for the cooperative members
ensure the high production and sustainable supply.
The processing union plan to increase its sale by 5% for next year. It is distributing the milk products in
bulk to shop, supermarkets, minimarket, and institutional buyers such as hoteliers, and restaurants. The
products are sold to distributers with 2-birr margin. The distribution is done by the company vehicle with
cooling system. It has kept wider distribution in the city to ensure that the position attract more
consumers.
Good profits in the milk processing is mainly due to efficient supply of required quality milk. In view of
this, MCC with a standard bulking and cooling operations are critical. Over and above, the use of
18
productive partnership with contact agreement perfected the marketing strategy. The business will adopt
the following strategies in marketing.
 Introduce our business using brochure to potential consumers, such as hotels and restaurants and
 Place adverts on both print (newspapers and magazines) and electronic media platforms
 List the Processing Union and the cooperative on yellow pages (local directories)
 Attend related agriculture and food expos, seminars, and business fairs
 Leverage on the internet and social media platform to promote the business: Instagram,
Facebook, twitter, YouTube
 The services of a local radio station and local newspaper will be used.
 Busines vehicles will also be branded
 Install billboards on strategic locations
 Engage in direct marketing or do a door-to-door marketing
Monthly Sales forecast for the year 2021 in(000s)

Meskerem
Sales forecast Megabit
Miyazia
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Sene
Tir
<Year>
Milk
Volume (liter) 45 45 45 45 45 45 45 45 45 45 45 45
Value 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350 1350
Milk Prducts 45 45 45 45 45 45 45 45 45 45 45 45
Value 1550 1550 1550 1550 1550 1550 1550 1550 1550 1550 1550 1550
Personnel: Brief description on number of employees and high-level assignment of roles,
Personnel Number Role

Director 1 Provide visionary and strategic leadership for
the organization
Factory Manager/Supervisor 1 Oversee all process of activities at the union
diary processing
Record officer and storekeeper 1 Record the amount supplied and the payment
and store management
Processor/Technician/ 3 Responsible for managing and controlling the
equipment that process the milk and the
production line
19
Milk collection workers 2 Testing &Collecting milk from the members

at MCC
Drivers 2 Drives the business vehicles for collection of
raw milk and distribution of products
Drivers Assistant 2 Assist the drivers
Cleaners 2 Maintain the sanitation of the working area
Guards 2 Guarding the Milk collection and processing
centre
Total 16
5. Environmental and social management plan
<Before starting to develop ESMP, answer the following questions.

Will the sub-project or business plan: Yes No
cause any large-scale physical disturbance of the site or the 
surroundings
cause significant involuntary displacement of people or social 
disturbances, involuntary loss of assets
disrupt the quality or quantity of water in a waterway shared with 
other nations
cause degradation of critical natural habitats 
affect important physical and cultural resources (historical, 
religious, archaeological sites and monuments)
cause any loss of biodiversity 
affect any vulnerable or underserved groups 
Implemented in or around non-viable commune centers (CCs) 
If the answer to all of the above questions is “No” then proceed to the next step (financial plan).
If on the contrary the answer to any one of the questions is “Yes”, then prepare ESMP as
outlined on Environmental and Social Management Framework Manual, 2017 pg. 120-123.
Attach all the details on Annex 8.2 and summarize key ideas as below format.
Subproject
Potential Mitigation Start End Remark
activities Responsibility Cost
Impacts Measure(s) date date
Infrastructure
Pre-construction
Construction
Op & main.
Training
Critical inputs
Critical equipment
20
Services
6. Financial history and plan
a. Financial history and analysis

<Provide last year sales from commodity in topic of the buyer. Also note that balance sheets,
income statement and business income tax returns for the past two years is provided on the
appendices.>
The capacity of the raw milk to be collected per time will determines the total cost of setting up
the business. Besides the amount or cost will depend on the approach and scale to undertake.
Income statement projection

Income statement
Seller Buyer
projection
<Year 2021 2022 2023 2021 2022 2023
Revenue
30,240,000.0 30,240,000.0 30,240,000.0
Milk volume sale 16,200,000 16,200,000 16,200,000
0 0 0
Milk products sale 18,600,000 18,600,000 18,600,000
Dairy feed and vet
150,000 800,000 250,000.00 500,000.00
drug sale
30,240,000.0 30,390,000.0 31,040,000.0
Total revenue 34,800,000 35,050,000 35,300,000
0 0 0
Fixed investment
Rent
Land
Other rent
Cost o building &
3,135,000.00
infrastructure
Cost of Goods &
4,425,300.00
equipments
Total investment
7,560,300.00
cost
Fixed cost
Interest on fixed

investment
Depreciation on 190,000.00 190,000.00 190,000.00
21
equipment 200,000.00 200,000.00 200,000.00

Depreciation on
building 3,800.00 3,800.00 3,800.00 15,000.00 15,000.00 15,000.00

Labour cost
52,000.00 52,000.00 52,000.00 100,000.00 100,000.00 100,000.00
Total Fixed Cost 245,800.00 245,800.00 245,800.00 335,000.00 335,000.00 335,000.00
Variable cost

Raw Milk
22,000,000 22,000,000 225,000,000 22,500,000 24,500,000 24,500,000
Critical Inputs 1,028,500.00
Training 100,000.00
Utilities
Electricity 24,000.00 24,000.00 28,800.00 25,000.00 30,000.00 35,000.00

Water
1,000.00 1,000.00 1,000.00 2500 3500 2000
Cleaning /testing
materials 7,200 7,200 7,200 8000 10000 15000
Feed and vet drug 40,000 20,000
Total Variable Cost

22,032,200 22,072,200 22,057,000 23,664,000 24,543,500 24552000

Total Cost Incurred 23,318,000.0 22,302,800.0 31,224,300.0 24,887,000.0
22,278,000 0 0 0 24,878,500 0

Total returns
7,962,000.00 7,072,000.00 8,737,200.00 3,575,700.00 10,171,500 10,413,000
Tax 1,194,300 1,060,800 1,310,580 536,355 1,525,725 1,561,9500
Net returns income
tax reduced 6,677,000 6,011,200 7,426,620 3,039,345 8,645,775 8,851,050
I. Projected Balance Sheet
22

Balance Sheet
Seller
Buyer
<Year – Year>
2021
2022
2023
2021
2022
2023
Current assets
23

Cash
30,240,000.00
30,240,000.00
30,240,000.00
34,200,000.00
34,200,000.00
34,200,000.00
Petty cash
126,000
135,00.00
150,236.00
1,200,000.00
1,500,000.00
1,947,000.00
24
Inventory
42,000
45,000
54,500

Pre-paid expenses

120,000
120,000
132,000
Current assets
30,408,000.00
30,285,000.00
30,444,736,00
35,520,000.00
35,820,000.00
36,279,000.00
25
Fixed assets

Leasehold

26
Property & land

2,000,000.00
2,500,000.00
2,500,000.00
3,000,000.00
3,000,000.00
3,000,000.00
Renovations/improvements

Furniture &fitout
2500
2500
2500
3000
2910
2822.7
27
Vehicles

1,500,000.00
1,350,000.00
1,315,000.00
Equipment/tools
190,000
180,500.00
171,475.00
150,000.00
145,500.00
146,135.00
Computer equipment
10,000
9700
9409
20,000.00
20,400.00
28,818.00
28
Others

Total assets
32,610,500.00
32,977,700.00
33,128,120.00
40,193,000.00
40,338,810.00
40,771,775.70
Current/short-term liabilities

29

Credit cards payable

Accounts payable
60,000.00
61500.00
61200.00
95,004.00
95,600.00
92,000.00
30
Interest payable

Accrued wages

Income tax
4,561,200
4,600,000
31
4,650,000

5,436,000

5,500,000
5,550,000
Long-term liabilities

Loans

150,000
140,000
85,000
32
Total liabilities
4,621,200.00
4,661,500.00
4,711,200.00
5,681,004.00
5,735,600.00
5,677,000.00
Net assets (Net worth)

27,989,300.00
28,316,150.00
28,416,920.00
34,511,996
36,603,210
35,094,775.7
ii. Projected cash-flow Buyer
33
Cash flow
Hamle
Nehase
Meskerem
Tikemt
Hidar
Tahsas
Tir
Yekatit
Megabit
Miyazia
Gnbot
Sene
<Year>
Cash receipts

Cash sales
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
Returns and allowances

34

Collections on accounts receivable

Interest, other income

Owner contributions

Total cash receipt (000)

2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
35
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
Total cash available (000)
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000
2,900,000

Operating cash out

Materials and supplies
2,708
2,708
2,708
2,708
2,708
2,708
2,708
2,708
2,708
2,708
2,708
2,708
Rent
52,500
52,500
52,500
52,500
52,500
52,500
52,500
52,500
52,500
52,500
36
52,500
52,500
Salary
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
36,000
Payroll
21,000
21,000
21,000
21,000
21,000
21,000
21,000
21,000
21,000
21,000
21,000
21,000
Outside services

Supplies (office and operating)
250
250
250
250
250
250
250
250
250
250
37
250
250
Repairs and maintenance

Utilities
3500
3500
3500
3500
3500
3500
3500
3500
3500
3500
3500
3500
Car, delivery and travel
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
110,000
Accounting and legal
2500
2500
2500
2500
2500
2500
2500
2500
2500
2500
2500
38
2500
Advertising

Income Tax
435,000
435,000
435,000
435,000
435,000
435,000
435,000
435,000
435,000
435,000
435,000
435,000
Others

Non-operating cash-out

Loan principal payment

39

Capital purchases
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
120,000
Members withdrawal

Total cash paid out
783458
783458
783458
783458
783458
783458
783458
783458
783458
783458
783458
783458
40
Cash on hand (end of month)

2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
2,116,542
41
7. Sub-project outcome
a. Results framework
Hiwot Milk Collecting and Processing Union (Buyer)
Galema Milk Marketing Cooperative (Seller)
Data Acquisition, Analysis, Use and

Performance Indicators Baseline & Targets
Reporting
Data
Indicator Definition Frequenc
Disaggregated Collection Responsible
Indicator (& unit of y& Baseline s/Ps targets
by Methods/S Body
measurement) Schedule
ources
GOAL: < Improved Milk productivity and commercialization through adopting nutrition, gender sensitive and climate smart improved
production system””
Indicator 1: Increase in -10 %Increment Milk Survey Biannually PCU
Milk productivity
productivity/cow /day
Indicator 2: increase in -10%Increase in Milk

production supply volume
Indicator 3: % of women in ‐ Amount of milk

productive age who consumption per week
consumed milk
Indicator 4: Environmental ‐ 10% Union members

safeguard enhanced who mastered climate
smart good practices
OUTCOME 1: <Best practices to be applied by seller and buyer, and subsequent production and productivity enhancement”
Improved utilization of ‐ number of good animal ‐ Survey Biannuall PCU
good animal husbandry husbandry practices y
practices adopted
The use of improved quantity ‐ quality improved inputs ‐
of quality inputs and services and services used
The use of improved ‐ number of improved ‐ ‐
technology technologies adopted
Assumption:
Output 1:
‐ Cooperative members ‐ Number of training and ‐
trained in all improved trainees
good practices identified
(Eth-GAP2)
Output 2:
- kg of dairy inputs have been ‐ Amount of inputs in ‐
distributed Kg/litters
Output 3:
-Dairy extension and ‐ number of -
veterinary services have been beneficiaries
provided to all members access the
services
OUTCOME 2: <Increase in sales of products by seller and buyer”
-Membership growth number of ‐
cooperative
COMMERCIAL CONTRACT
members
-the use of improved number of ‐
technology technologies
adopted
-Product diversification Number of ‐
products
-Multiple distribution Number of places ‐
of distribution
-Promotion Number of ‐
promotion
methods used
-Quality assurance Number of quality ‐
measurements
‐ Access to better prices. Price differences ‐
Assumption:
Output 1:
Procurement of milk -Volume/ Number
collection and milk quality
of equipment
control equipments, buckets,
tanker, balance
measurement,
Desktop/laptop, Printer and
Cell phone
Output 2:
Construction of milk ‐ Number house
processing house and storage and storage
& bulking center
Procurement of critical ‐ Number and

inputs and installation of Volume of inputs
one Steel equipment milk
Cooler of 3500 litter capacity
equipment
OUTCOME 3:<Improvement on environmental and social safeguard practices”

‐
Output 1:
‐
Output 2:
‐
43
COMMERCIAL CONTRACT
Output 3:
‐
b. Quarterly milestones
<Refer Sec. 4.B (operational plan) for quarterly milestones>
2021 2022
No Cost component
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
1 Infrastructure
2 Training
3 Critical inputs
4 Critical equipment
8. Annex
Annex 8.1: Signed Commercial Contract
<Insert/attachsigned commercial contract.>
44
COMMERCIAL CONTRACT
I. ARTICLE ONE
Description of seller and buyer
This contract of sale is made this _________ day of ___________, 20xx between:
__________________________Primary Cooperative/Union/Private entity (hereinafter called Buyer),

address: Region __________Zone ___________ Woreda ___________ City/town __________ Kebele
________ Phone No __________ Fax No ____________ PoBOX ________________,
, and __________________________ Farmers’ Primary Cooperative/union (hereinafter called ‘Seller’),

address Region __________Zone ___________ Woreda ___________ City/town __________ Kebele
________ Phone No __________ Fax No ____________ PoBOX ________________
Now therefore, the two contracting parties agree on the following terms and conditions:
II. ARTICLE TWO

Description of the product
a) The description of the product is as follows
‐ Product name_____________________
‐ Quantity agreed (weight/number/volume)_____________________
‐ Weight/number/volume tolerance (+/-)_____________________
‐ Quality inspection: Product quality must be conducted during delivery by seller
‐ Grading and certification specifications
‐ Origin (location) ______
‐ Production year/month/week/day______
b) A product that does not meet the requirements of the above clause is considered as substandard and
cannot be accepted by the buyer.
III. ARTICLE THREE
Contract period
a) The first phase of this contract agreement covers a period of _______ years/months and the contract
agreement will be effective from the date signed by both parties.
‐ Start date ______
‐ End date______
‐ Terms of extension ______
45
COMMERCIAL CONTRACT
b) This contract may be extended for the next _________ years/months based on the agreement of the
two parties
IV. ARTICLE FOUR
Buyer responsibilities
a) The buyer shall provide the following services to the seller while the product is being produced,
packed and/or processed. <Section optional>
‐ Capacity building: <technical training and others>
‐ Finance: <pre finance support for input purchase>
‐ Input provision: <TBD>
‐ Extension support: <TBD>
‐ Packaging materials:<TBD>
b) Up on delivery of the product as per defined standards, the buyer shall receive the product and issue
goods receiving note to seller describing its amount and grade.
c) From the reported price, Buyer pay an additional ______ ETB/unit/liter/kg as a premium for
delivering according to the quality specified in terms of this contract.
d) When there is a delay in the delivery of the productcaused by buyer, the seller is entitled to liquidate
damages to the product and/or recover extra costs incurred. Unless the parties agree otherwise, the
penalty shall be calculated based on an annual interest rate of 9.5%, constantly compounded for every
day of delivery delay.
e) Buyerbears all costs and risks involved in transportation. Buyer is required to facilitate transportation
to the destination. Buyer will be responsible to cover any cost involved in unloading of the product at
point of delivery. <Seller could also be responsible. If so, remove the article>
V. ARTICLE FIVE
Seller responsibilities
a) Seller shall implement technical specifications and input provided by the buyer.
b) Seller shall expend the finance provided by buyer for its intended purpose
c) Seller shall refund all the finance provided by buyer
d) Sellerbears all costs and risks involved in transportation. Selleris required to facilitate transportation
to the destination. Seller will be responsible to cover any cost involved in unloading of the product at
point of delivery.<Buyer could also be responsible. If so, remove the article>
e) Seller shall deliver the product as per defined packaging material and packaging size
VI. ARTICLE SIX
46
COMMERCIAL CONTRACT
Product grading, sampling and delivery
a) Representative sample of _______ unit/liter/kg is taken for each delivery of _____ unit/liter/kg.
b) Same representative sample will be given to the buyer, kept with the seller and to be kept with a
neutral body.<Article optional>
c) Following to product grading as stated in art(6.a), seller delivers the product in the presence of buyer
and seller representatives
d) Delivery shall take place at ____________________
e) Seller shall deliver in _____ phases:
‐ First delivery ____ Kg/number/litter on this date of ________
‐ Second delivery ____ Kg/number/litter on this date of ________
‐ Third delivery ____ Kg/number/litter on this date of ________
f) The seller shall not be liable for any loss or damages of the supplied goods after the delivery.
g) The Seller must report any delays in delivery with an acceptable reason and recommend proposed
schedule change. The Implementing agency will act to resolve the issues raised Seller and Buyer with
the presence of the Witness representative must come to an agreement on any new schedule within
_____ days of a delay report.
VII. ARTICLE SEVEN
Pricing mechanism
a) A market price will be used as a reference to determine the price for the product in each of the
deliveries within this contract in each stage of delivery.
b) As per art (7.a) market price refers to price indicator released by ________________________ on the
delivery day and city
c) Price discovery mechanism: <TBD>
d) As per art (7.a) final price is determined by adding ____ % from the reference price
e) Not with standing to art (7.b), ________ ETB/unit/liter/Kg is the floor price
f) Buyer shall issue payment through authorized Cheque or money transferred to seller’s bank account
_______________________ of ___________________ bank.
g) Buyer shall issue payment as per the payment schedule defined below
‐ Down payment of __________________________________ __________ days after first
delivery
‐ Second payment of __________________________________ __________ days after second
delivery
47
COMMERCIAL CONTRACT
‐ Final payment of __________________________________ __________ days after third
delivery
h) Late payment shall result in penalty of the buyer of X% of the agreed price per day as a liquidated
damage
i) Buyer isn’t obliged to issue payment for product it doesn’t receive
j) Seller have the right to request and receive payment for delivered product as per the payment
schedule stated hereinabove.
VIII. ARTICLE NINE
Force majeure and hardship
a) Force Majeure shall mean any event of an unforeseeable and irresistible character than hinders the
performance of obligations under this Agreement, and justifies the postponement, interruption, or
termination of this Agreement without liability for the seller. As soon as possible after the occurrence
of Force Majeure, and within not more than fifteen (15) days, the seller shall give notice and full
particulars in writing to buyers of such Force Majeure. If the seller is thereby unable, wholly or in
part, to perform its obligations and meet its responsibilities under this Agreement, the buyer shall then
have the right to cancel this Agreement by giving, in writing, seven (7) days’ notice of termination to
the seller.
b) Other party that the failure was due to force majeure as provided in the Civil Code.
c) A party seeking to be relieved of liability on grounds of force majeure shall, as soon as the
impediment and its effects upon its ability to perform become known to that party, give notice to the
other party of such impediment and its effects on its ability to perform, together with all appropriate
supporting documents. Notice shall be given if and when the event of force majeure ceases. Failure to
give either notice or such documents makes the party thus failing liable to damages for loss which
otherwise could have been avoided.
d) Where the impediment is temporary i.e. where the impediment does not necessarily have the effect of
rendering performance impossible and could end within a period of 30 days (unless the parties agree
hereafter some other period), then the period of performance shall be extended until the impediment
has ended, or the of the said period, whichever is the earlier.
If performance is still impossible on expiry of this period, or if and as soon as performance becomes
definitively impossible, either party shall be entitled to terminate this Contract upon notice to the
other
48
COMMERCIAL CONTRACT
IX. ARTICLE EIGHT
Dispute settlement methods
a) In the case of disputes, the parties shall try to resolve the dispute amicably with the assistance of the
implementing agency. In the event the Seller and the Buyer are unable to amicably settle any matter
in dispute between them, the Seller and the Buyer agree to final and binding arbitration of all claims.
b) Any dispute subject to arbitration under this clause shall be settled in accordance with the Ethiopian
Civil Code. The arbitrators sitting in any arbitration shall abide by the terms of this Agreement in
resolving any dispute submitted to arbitration.
c) During the pendency of arbitration or judicial proceedings, the Seller and the Buyer shall continue to
abide by the terms and conditions of this lease.
d) Unless decided by Seller and Buyer otherwise, place of arbitration shall be at the office of trade and
market development bureau of each region.
e) Both the Buyer and Seller have the freedom to use the following documents as evidence in any legal
proceedings.
‐ Quality inspection report produced by implementing agency
‐ Pricing determination reports prepared by the implementing agency
‐ Payment statement developed by bank;
‐ Delivery report prepared by the buyer;
‐ Copy product buying and Selling Contract
X. ARTICLE TEN
Handling Damages
a) In the event of non-performance, the aggrieved party may recover damages from the defaulting party
b) If the Buyer does not pay a sum of money when it falls due, the Seller is entitled to interest upon that
sum from the time starting from 5 days after payment is due. Unless the parties agree otherwise, the
penalty shall be calculated based on an annual interest rate of 9.5%, constantly compounded for every
day of payment delay. The Seller has the right to initiate dispute resolution proceedings to recover
any losses if the delay has exceeded 30 days.
c) When there is a delay in the delivery of the commodity by Seller, the Buyer is entitled to liquidate
damages after the 5th day of delay. Unless the parties agree otherwise, the penalty shall be calculated
based on an annual interest rate of 9.5%, constantly compounded for every day of delivery delay. The
Buyer has the right to initiate dispute resolution proceedings to recover any losses if the delay has
exceeded 30 days.
XI. ARTICLE ELEVEN
49
COMMERCIAL CONTRACT
Arbitration
a) This Agreement and any dispute arising there from shall be exclusively governed by general
principles of Ethiopian law.
b) The Parties shall use their best endeavors to settle amicably any dispute, controversy or claim
between the parties arising out of or relating to this Agreement, or the breach, termination, or
invalidity thereof (Dispute).
c) Where the Parties wish to seek such an amicable settlement through conciliation the conciliation
shall take place according to such other procedure as may be agreed between the Parties.
d) Unless any Dispute is settled amicably in accordance with clause 11 (c) above with 60 days after
receipt of one party of the other party’s request for such amicable settlement, such Dispute, shall be
referred by either party to If the dispute that arises between the contracting parties in connection
with the agreement shall not settled by amicable rather of the part can take to the appropriate
court of Law in Ethiopia.
XII. ARTICLE FOURTEEN
Termination of contracts
Either party may, by notice to the other party, terminate this Contract where the other party:
a) Fails to pay any sum or deliver the commodity by the date or fails to comply with the terms and
conditions of this contract.
b) Is unable to fulfill its contractual obligations by reason of bankruptcy or liquidation proceedings,
or any other suspension or stoppage of its activities.
XIII. ARTICLE THIRTEEN
Amendments
Any amendments to this contract shall only be valid if effected through a formal written amendment
signed by buyer and seller.
In witness whereof, the understanding have affixed their signature to this agreement, prepared in two
copies, ______________, Ethiopia
Signatures
50
COMMERCIAL CONTRACT
Buyer
Name of the Primary cooperative/Union/Private entity: ___________________
Name of the representative:_______________________
Title: _______________________
I ____________________________ on behalf of _________________________ hereby confirm my

_________ has the capacity and will agree to meet the requirements stated in the terms of the contract
effective month ______ 20xx.
Seller
Name of the Primary cooperative/Union: ___________________
Name of the representative:_______________________
Title: _______________________
I ____________________________ on behalf of _________________________ hereby confirm my

_________ has the capacity and will agree to meet the requirements stated in the terms of the contract
effective month ______ 20xx.
Witness
Name of the Organization: Name of the Name of the

Implementing agency (XXXX) representative:___________ representative:___________
____________ ____________
Name of the
representative:___________ Title: Title:
____________ _______________________ _______________________
Title: Name of the Organization:

_______________________ ___________________
Name of the Organization:

___________________
51
I ____________________________ on behalf of _________________________ hereby confirm
my _________ has will act as a witness for any conflict that may arise during the contract period.
Annex 8.2: Environmental and Social Management Plan
Description of the sub-project:In this section, present a condensed description of those aspects of
the subproject likely to cause environmental effects. It should be described in terms of its basic
activities-series of activities to carry out laboratory analysis, location, layout, and schedule (in
terms of the project life cycle).
Use this paragraph to describe type, nature, need and location of the sub-project. In addition,
describe size or magnitude of operation, including any associated activities required by or for the
subproject and detail drawings showing subproject layout, activities of subproject and others if
applicable.
Description of the environment:A clear description of the delineation of the study area within
which impacts must be considered is described in this paragraph. Use maps where applicable.
Once the study area is well defined, studies to gather the baseline conditions for valued
environmental components (that may be significantly impacted by the sub-project) must be
developed and presented in the following section.
Description of the adverse impacts:predicted adverse environmental and social impacts for
which mitigation is required should be identified and briefly summarized. Remember to cross-
reference to the environmental and social assessment report described above.
Description of mitigation measures: identify feasible and cost effective measures to reduce
potentially significant adverse environmental and social impacts to acceptable levels. Refer to
ESMF manual pg. 55 for list of potential mitigation measure.
According to proposed impact mitigation measurement, referring the following documents
would be vital.
- Resettlement policy framework (LFSDP, 2017, Pg. 60 - 64)
- Social assessment report (LFSDP. 2017, Pg.36 - 55)
user
Description of monitoring program: Environmental performance monitoring should be designed

to ensure that mitigation measures are implemented,and summarized in the following template.
Res.
Cost
Subproject Parameters Measurements Frequency body (equipme
Monitoring (Incl.
activities to be Location (Incl. methods & of nt &
objective equipment) review individual
Monitored Measm’t and s)
reporting)
Infrastructure
Pre-
construction
Construction
Op & main.
Training
Critical inputs
Critical
equipment
Services
Implementation schedule and reporting procedure:
Start End
No Activities Frequency Responsible
date date
1 <Insert mitigation measure>
1.
1
1.
2
1.
3
1.
4
1.
5
2 Reporting progress and results
2.
1
2.
2
2.
3
53
user
2.
4
2.
5
3 Monitoring results
3.
1
3.
2
3.
3
3.
4
3.
5
Cost estimates and source of funds

No Activities Frequency Cost Source of funds
1 <Insert mitigation measure>
1.
1
1.
2
1.
3
1.
4
1.
5
54
user
Annex 8.3: Detailed Financial Plan

<Insert/attach authenticated balance sheets, income statement and business income tax returns
for the past two years.>
55
Projected Income Statement: Buyer
Meskerem
Megabit
Miyazia
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Sene
Income
Tir
Statement
<Year>
Revenue
Milk sale
1,350,00 1,350,00 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000 1,350,000
0 0
Milk
products 1,550,00 1,550,00
sale 0 0 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000 1,550,000
Total
revenue 2,900,00 2,900,00 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000 2,900,000
0 0
Cost of
sales
Milk sale
8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00 8,925.00
Milk
products 22,313 22,313 22,313 22,313 22,313 22,313 22,313 22,313 22,313 22,313 22,313 22,313
Total cost
of sales 31,238 31,238 31,238 31,238 31,238 31,238 31,238 31,238 31,238 31,238 31,238 31,238

Gross
Profit 2,868,76 2,868,76 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762 2,868,762
2 2

Expenses
Rent
52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500
Salary
36000 36000 36000 36000 36000 36000 36000 36000 36000 36000 36000 36000
Payroll
21000 21000 21000 21000 21000 21000 21000 21000 21000 21000 21000 21000
Outside
services
Supplies
user
Meskerem
Megabit
Miyazia
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Sene
Income
Tir
Statement
<Year>
(office and 250 250 250 250 250 250 250 250 250 250 250 250
operating)
Repairs
and
maintenanc
e
Utilities
3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500 3500
Car,
delivery 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000 110,000
and travel
Accounting ..
and legal 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500
Advertising
Interest
Depreciatio
n 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Others
Income Tax
435,000 435,000 435,000 435,000 435,000 435,000 435,000 435,000 435,000 435,000 435,000 435,000
Total
expenses 710,750 710,750 710,750 710,750 710,750 710,750 710,750 710,750 710,750 710,750 710,750 710,750

Net Profit
2,158,01 2,158,01 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012 2,158,012
2 2
57
Projected Income Statement: Seller
Income
Meskerem
Megabit
Miyazia
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Statement
Sene
Tir
<Year>
Revenue
Raw milk
2,520,000 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,000 2,520,00 2,520,000
0 0 0 0 0 0 0 0 0
Total
revenue 2,520,000 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,000 2,520,00 2,520,000
0 0 0 0 0 0 0 0 0
Cost of
sales
Raw Milk
50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total cost
of sales 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000

Gross
Profit 2,470,000 2,470,00 2,470,00 2,470,00 2,470,00 2,470,00 2,470,00 2,470,00 2,470,00 2,470,000 2,470,00 2,470,000
0 0 0 0 0 0 0 0 0

Expenses
Rent
31,667 31,667 31,667 31,667 31,667 31,667 31,667 31,667 31,667 31,667 31,667 31,667
Salary
10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Payroll
6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0 6,000.0
Outside
services
user
Income
Meskerem
Megabit
Miyazia
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Statement
Sene
Tir
<Year>
Supplies
(office and 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0 250.0
operating)
Repairs
and
maintenanc
e
Utilities
2,080.0 2,080.0 2,080.0 2,080.0 2,080. 2,080.0 2,080. 0 2,080.0 2,080.0 2,080.0 2,080.0 2,080.0
Vehicle,
delivery
and travel
Accounting
and legal 208.0 208.0 208.0 208.0 208.0 208.0 208.0 208.0 208.0 208.0 208.0 208.0
Advertising
Interest
Depreciatio
n 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00 35000.00
Others
Income Tax
378,000.0 378,000. 378,000. 378,000. 378,000. 378,000. 378,000. 378,000. 378,000. 378,000.0 378,000. 378,000.0
0 0 0 0 0 0 0 0 0
Total 463,205 463,205 463,205 463,205 463,205 463,205 463,205 463,205 463,205 463,205 463,205 463,205
expenses
Net Profit 2,006,795 2,006,79 2,006,79 2,006,79 2,006,79 2,006,79 2,006,79 2,006,79 2,006,79 2,006,795 2,006,79 2,006,795
5 5 5 5 5 5 5 5 5
59
Projected Balance Sheet: Buyer
Miyazia
Mesker
Megabi
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Balance Sheet
Sene
em
Tir
t
<Year>
Current assets
2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00 2,900,00
Cash 0 0 0 0 0 0 0 0 0 0 0 0
Petty cash 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000
Inventory
Pre-paid expenses 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000
3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00 3,020,00
Total current 0 0 0 0 0 0 0 0 0 0 0 0
Fixed assets
Leasehold
rent 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500
Renovations/improvemen
ts
office and operating 250 250 250 250 250 250 250 250 250 250 250 250
vehicle delivery and travel 103,000 103,000 103,000 103,000 103,000 103,000 103,000 103,000 103,000 103,000 103,000 103,000
Equipment/tools 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500
Computer equipment 833 833 833 833 833 833 833 833 833 833 833 833
Others
Total fixed 189,083 189,083 189,083 189,083 189,083 189,083 189,083 189,083 189,083 189,083 189,083 189,083
Total assets 3,
209,083 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08 3,209,08
user
Miyazia
Mesker
Megabi
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Balance Sheet
Sene
em
Tir
t
<Year>
3 3 3 3 3 3 3 3 3 3 3
Current/short-term
liabilities
Accounts payable 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917 7,917
Interest payable
Accrued wages
Income tax 453,000 453,000 453,000 453,000 453,000 453,000 453,000 453,000 453,000 453,000 453,000 453,000
Others
Loans 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500 12,500
Others
Total liabilities 437,417 437,417 437,417 437,417 437,417 437,417 437,417 437,417 437,417 437,417 437,417 437,417
2, 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66 2,771,66
Net assets (Net worth) 771,666 6 6 6 6 6 6 6 6 6 6 6
61
Projected balance sheet: Seller
Miyazia
Megabi
Mesker
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Balance Sheet
Sene
em
Tir
t
<Year>
Current assets
2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00 2,520,00
Cash 0 0 0 0 0 0 0 0 0 0 0 0
Petty cash 10,500 10,500 10,500 10,500 10,500 10,500 10,500 10,500 10,500 10,500 10,500 10,500
Inventory 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500 3,500
Pre-paid expenses
2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00 2,534,00
Total current asset 0 0 0 0 0 0 0 0 0 0 0 0
Fixed assets
Leasehold
Rent 51,667 51,667 51,667 51,667 51,667 51,667 51,667 51,667 51,667 51,667 51,667 51,667
Renovations/improvemen
ts
Office and operation 350 350 350 350 350 350 350 350 350 350 350 350
vehicle delivery and
travels
Equipment/tools 25,833 25,833 25,833 25,833 25,833 25,833 25,833 25,833 25,833 25,833 25,833 25,833
Computer equipment 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Others
Total fixed assets 87,850 87,850 87,850 87,850 87,850 87,850 87,850 87,850 87,850 87,850 87,850 87,850
2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85 2,621,85
Total assets 0 0 0 0 0 0 0 0 0 0 0 0
Current/short-term
liabilities
Accounts payable 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000
Interest payable
Accrued wages
Income tax 380,100

user
Miyazia
Megabi
Mesker
Nehase
Yekatit
Tikemt
Tahsas
Hamle
Gnbot
Hidar
Balance Sheet
Sene
em
Tir
t
<Year>
380,100 380,100 380,100 380,100 380,100 380,100 380,100 380,100 380,100 380,100 380,100
Others
Loans
Others
Total liabilities 385,100 385,100 385,100 385,100 385,100 385,100 385,100 385,100 385,100 385,100 385,100 385,100
2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75 2,236,75
Net assets (Net worth) 0 0 0 0 0 0 0 0 0 0 0 0
63

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FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

LIVESTOCK AND FISHERIES SECTOR DEVELOPMENT PROJECT

Federal Democratic Republic of Ethiopia

Livestock and Fisheries Sector Development Project

Details of the s/P idea is as following.

Organization (s) Name: Hiwot Milk Collecting & Processing Union

The fact that the dairy farmers ae geographically scattered and

The productive partnership secures a supply of required quality

 Milk marketing cooperative is involved in bulk collecting

Expenses  Milk processing house 300 m2

Yogurt making machine

Provision of skill knowledge and input and

Beneficaries Land for the collection center,

 Increase in production and productivity of milk

For buyer (s)

Name: Hiwot Milk collecting & Processing Union

For seller (s)

Name: Galema Milk Marketing Cooperative

For official use only

Received by WPCU: ______________________

2. Overview of productive partnership members

In accordance to Eth-GAP assessment guideline

3 Sub-project profile/productive partnership content

a. Objectives of this partnership

<Explain objective of the productive partnership to be established. The objective can be

b. Signed commercial contract

<Briefly describe the content of commercial contract. More importantly, mention

N Specification Measurement Amount Unit Total Source of Budget

3 Iron (Fero) 16 mm Number 120 900 108000 108000

Milk bulking center and storage 300 m2

N Specification Measurement Amount Unit Total Source of budget

15 Land preparation Lumpsum 1 60,000 60000 60000

N Measurement Unit Source of Budget

N Measuremen Amoun Unit Total Source of budget

5 Plastic for packing packet 10 1000 10,000 10,000

11 Lockers for office workers Lumpsum 1 50000 50,000 50,000

N Specification Measurement Amount Unit Total Source of Budget

6 Aluminum cans Number 50 5000

s.n Expenses (entry point) Total expense Source of budget

Total 8,688,800 8,500,000 188,800

a. Management and governance

i. Sub-project activity plan

<List high-level implementation activities of sub-project supports. Explain the step-by-

No Activities Start date End date Responsible Remark

<Besides to sub-project support, list high-level activities required to increase productivity

 Payment via bank draft

Marketing and sales plan (Plan Demand)

Monthly Sales forecast for the year 2021 in(000s)

Sales forecast Megabit

Personnel: Brief description on number of employees and high-level assignment of roles,

Personnel Number Role

Milk collection workers 2 Testing &Collecting milk from the members

5. Environmental and social management plan

<Before starting to develop ESMP, answer the following questions.

6. Financial history and plan

a. Financial history and analysis

Income statement projection

equipment 200,000.00 200,000.00 200,000.00

Total Variable Cost

I. Projected Balance Sheet

Property & land

Credit cards payable

I ____ on behalf of _ hereby confirm my

I ____ on behalf of _ hereby confirm my