PROJECT PROPOSAL FOR FRUIT AND

VEGETABLE FARMING

PROMOTED BY:-HALAL PLC

 PROJECT LOCATION: CHOCHE LAMI
KEBELE,GOMA DISTRICT, JIMMA ZONE, OROMIA
REGIONAL STATE

Contents
1. Executive summary..............................................................................................................................2
2 Introduction..............................................................................................................................................3
2.1 General Background..........................................................................................................................3
2,2. Project Objectives............................................................................................................................5
2.1 General Objective..............................................................................................................................5
2.1.1 Specific objective........................................................................................................................5
2.3 Project description.............................................................................................................................6
2.5 The significance of the project...........................................................................................................7
2.6 Project Location.................................................................................................................................8
3. MARKETING ASPECT................................................................................................................................9
3.1. Description of the Product...............................................................................................................9
3.2. Market Analysis.............................................................................................................................10
3.3. The Demand-Supply Gap...............................................................................................................10
3.4 Future market or Demand of fruits and vegetables.........................................................................11
3.5 Target customers.............................................................................................................................11
3.6. Marketing promotion and strategy................................................................................................12
3.7. Competition...................................................................................................................................12
3.8. The project facilities and Services plan...........................................................................................12
3.9. Justification of the project..............................................................................................................14
4. TECHNICAL AND PRODUCTION ASPECT.................................................................................................16
4.1 The Vegetable Production Flow.......................................................................................................16
4,2. Raw material...................................................................................................................................20
4.3. Machinery and Equipment.............................................................................................................20
4.4. Farm Size and Production Schedule................................................................................................21
4.2. Civil Engineering Cost...............................................................................................................21
JAN,2021
5. FINANCIAL REQUIREMENT AND ANALYSIS............................................................................................22
 5.1. Fixed Capital...................................................................................................................................22
5.2. Working Capital..............................................................................................................................24
5.2.1. Operating Expense at full Capacity..........................................................................................24
5.2.1 Operating Expense....................................................................................................................25
5.2.3. Summary of investment cost.......................................................................................................26
5.3. Financial Analysis............................................................................................................................27
a. Underlying Assumption.................................................................................................................27
5.3. Financial analysis and Statements..................................................................................................28
5.3.2. Sources of Fund.......................................................................................................................28
5.3.3. Depreciation Schedule.............................................................................................................28
5.4. Financial Statement........................................................................................................................29
5.4.1. Income loss/statement..............................................................................................................29
5.4.2. Cash flow Statement................................................................................................................30
Appendix 1: Sells forecast..........................................................................................................................31
Annex 2. operating cost.............................................................................................................................32
Annex.3 income statement.......................................................................................................................33
Appendix 4 : discounted cash flow............................................................................................................34
Annex 5 undiscounted cash flow...............................................................................................................35

List of table
Table 1 Tomato production in year in ethiopia.........................................................................................12
Table 2:Future Demand.............................................................................................................................13
Table 3 Raw material requirement............................................................................................................24
Table 4 Land use plan................................................................................................................................24
Table 5 Production schedule.....................................................................................................................25
Table 6 Land development, buildings and Construction............................................................................26
Table 7 Machinery and Equipment............................................................................................................27
Table 8 Vehicle..........................................................................................................................................27
Table 9 Office equipment..........................................................................................................................28
Table 10 Man Power requirement and salary expense.............................................................................28
Table 11 Operating Expense......................................................................................................................29
Table 12 Preservice expense.....................................................................................................................30
Table 13 Summary of Total initial investment cost....................................................................................30
Table 14 Source fund.................................................................................................................................32
 Table 15 Depreciation Schedule................................................................................................................32
Table 16 Bank Repayment schedule..........................................................................................................32
Table 17 income/loss statement.................................................................................................................33
Table 18 Cash flow Statement...................................................................................................................34

1. Executive summary
PROJECT OWNER Halal PLC

PROJECT TITLE Fruit and Vegetables Farming

LAND REQUIREMENT 50 ha

PROJECT AREA Oromia region, Jimma zone,Gomma woreda, ,Choche

Lami Kebele

PRODUCTION CAPACITY

PRODUCTS TO BE PRODUCED
Avocado,Tomato,Onion

MARKET Domestic

COST OF THE PROJECT

PROJECT LIFE 10 YEARS

NUMBER OF WORKING DAYS 365 DAYS

FINANCIAL VIABILITY ( AT 10% DISCOUNT RATE )

ANALYSIS RESULT

THE PROJECT IS TECHNICALLY FEASIBLE, FINANCIALLY AND COMMERCIALLY VIABLE

AS WELL AS SOCIALLY AND ECONOMICALLY ACCEPTABLE. HENCE, THE PROJECT IS
WORTH IMPLEMENTING.
2 Introduction
2.1 General Background
The horticultural sector in Ethiopia is growing strongly. Major part of this growth is created by
investments in the floriculture sector. Recently more and more interest from the Dutch private
sector is shown in the Ethiopian fruits and vegetable sector. In the slipstream of the floricultural
boom already more than ten, export fruit and vegetable producers have been established in
Ethiopia, ranging from tomatoes to passion fruit and green beans to table grapes. The Ethiopian
government, private sector associations (EPHEA) and donors (USAID, SNV, CFC) have
identified potentials for the further development of the fruit and vegetable sector in Ethiopia both
for the domestic and export market. Also in the Ethiopian-Netherlands Horticultural Partnership,
technical support to the development of the fruit and vegetable sector has been prioritized. A
number of actors and donors have already started activities in the area of technical production
assistance, post-harvest handling and compliance to international standards.

Although horticultural crops are important for health and economy the amount and mode of
production are still weak in Ethiopia. Horticultural crops can be differentiated as fruit (permanent
crops) and vegetables (short season crops). Accordingly, permanent crops are long term crops
that occupy the field planted for a long period of time and largely harvested every year and do
not have to be replanted for several years after each harvest. These include tree crops such as
coffee, Enset, Chat, oranges, Mangoes, Bananas, papaya, Avocados…etc. The trees that yield
fruits like orange, Mangoes, Papayas, and others are known as fruit trees (CSA, 2001/02).
Ethiopia has a comparative advantage in a number of horticultural commodities due to its
favorable climate, proximity to European and Middle Eastern markets and cheap labor.
However, the production of horticultural crops is much less developed than the production of
food grains in the country. On average more than 2,399,566 tons of vegetables and fruits are
produced by public and private commercial farms, this is estimated to be less than 2 percent of
the total crop production. According to recent information obtained from the Central Statistics
Authority, the total area under fruits & vegetables is about 12,576 hectares in 2011. Of the total
land area under cultivation in the country during the same year, the area under fruits and
vegetables is less than one percent (i.e. 0.11%), which is insignificant as compared to food crops.

At present, many private commercial farms & private farmers are producing fruits and
vegetables both for domestic and export markets in the country. Processing plays an important
role in the conservation and effective utilization of fruits and vegetables. It converts perishable
fresh products to more durable processed products in cases of sluggish markets or when there is
profit- generating demands for processed products. It also helps in generating rural employment.
Besides, processed fruits and vegetables are sources of foreign exchange earnings. In Ethiopia,
the number of fruits and vegetables processing industries is limited. Currently, there are only 5
fruits and vegetable processing plants in the country. These plants presently process limited
products: tomato paste, orange marmalade, vegetable soup, frozen vegetables, and wine. Most of
the processing plants fall in the small-scale processing unit’s category. In general, processed
products are mainly geared to domestic markets.

The major source of growth for Ethiopia is still conceived to be the agriculture sector. Hence,
this sector has to be insulated from drought shocks through enhanced utilization of the water
resource potential of the country, (through the development of small-scale irrigation, water
harvesting, and on-farm diversification) coupled with strengthened linkages between agriculture
and industry (agro-industry), thereby creating a demand for agricultural output.

In line with the above, different regions of the country are working hard so as to promote
irrigated agriculture and boost agricultural production both in quantity and quality
2,2. Project Objectives

2.1 General Objective

The major goal of this project is to contribute towards the growth of the Agricultural sector. Its
specific objectives include the following.

2.1.1 Specific objective

 To construct and develop quality and quantity product that enable to provide standard goods
to consumer.
 To undertake trading and other refuted business activities that enable to generate a reasonable
to the invested capital.
 To develop modern business centre that would provide quality product on standard.
 To create employment opportunities.
 Contribute towards the eradication of poverty.
 To establish economically viable, socially acceptable and environmentally friend farm.
2.3 Project description

Horticulture covers a wide range of products which can be grouped into vegetables, herbs,
mushroom, and flowers. Jimma Zone has great potential and suitable natural resources for the
production of these groups of horticultural crops. In fact, this project refers to only essential
fruits & vegetable production which includes cabbage, Garlic, tomato, pepper and onion. These
products can be supplied as green and fresh, chilled or frozen and packed depending on the
market location and requirement. Combining different kinds of vegetable production create a
better opportunity for crop rotational practices and give the advantage of utilizing common
faculties such as washing, cleaning cooling and storage facilities. Plus marketing fruits &
vegetables facilitate an increase in marketable volume by attracting more customers.

The Jimma Zone has large areas and water resources suitable for the production of fruits and
vegetables. Compared to cereals, pulses and oil crops, fruits and vegetables are very high in
productivity per unit of land which can play a substantial role to increase the food supply area.
With a growing urban population, which is totally market dependent, and the current food supply
shortage, expansion in fruit and vegetable production will play a significant role in increasing the
food supply of the zone.

Planned land use on farm site includes the construction of the house for residence and store,
planting of different verities of permanent and annual tree and crop species. Specifically:
Avocado species (25 ha) and 3 ha land area set for vegetable production, 3 ha for construction
and environmental protection/conservation. Besides production, the organization also plant tree
species within farm like following irrigation and drainage channel.

On the other hand, unbalanced and inadequate nutritional status of the people is still a central
problem in the zone. Deficiency of essential food elements, such as protein, vitamins, and
minerals are widely observed as basic food intake is below the minimum requirement in the area.
Increase in blindness due to ΄Vitamin A΄ deficiency is an alarming circumstance in the country.
Therefore, fruits and vegetables are important sources of vitamins and minerals.
2.4 Project Rationale

Agriculture is the cornerstone of the development policy of the Government of Ethiopia.

According to the Rural Development Policy and Strategy document, the basic ingredient and
resource the country has for agricultural development is the abundant land and labor. Most of the
western lowlands are endowed with water resources are virgin and fertile. Up to recently, the
areas were not developed due to lack of capital and technology. Therefore, there is a strong
commitment from the government to make these fertile lands available for investors that have the
capital and technology to develop.

The existing promising investment opportunities, the demands of goods need along with
relatively sound investment support made by the government in such kinds of feasible projects,
compelled the project promoter to initiate the multipurpose oriented business project to be
established. Despite the promising business opportunities, the trend on such kinds of investment
found to not enough. Therefore, the existing shortage or absence in the supply of these products,
along with its better location and infrastructure access, the escalating trend of urbanization and
business activities, thus it is with such reason that this project is identified and proposed and
assumed to be more profitable.

In general, the country’s privatized and free market economy; good governance creates a
favorable environment for the development of investment for private investors.

2.5 The significance of the project

The envisaged project deemed to add to the economic development of the region in general in
specific with following ways:

A. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from different
business organizations and individuals. Among the different forms of taxes, business income
taxes, payroll income tax and VAT are collected from undertaking business activities. Therefore,
the farm will serve as sources of revenue for the city.
 B. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self employment or employment in other
organization. Hence, this project will hire 473 individuals during operation period.

2.6 Project Location, Background and Required Land

I. Location: - The license area is located in Oromia Regional State, Jimma Zone,Gomma
district Choche Lami kebele. The total land required for this investment is 60
hactares.Gomma district extends between 70 40-80 04 north latitudes and 360 17’-360 46’
east longitudes. It is bordered with Gumaye district north, Limmu kossa distrct in east,
Manna district in southeast, with Seka chokersa in south and Gera district in west. It is
situated in the central of the zone.Because of geographical location(i.e. near to the largest
market centers like Jimma and Agaro towns) the district has a great advantage for
accessing the local products to the market and creates ideal condition for provision of the
demanded commodities to the local communities. It has a total surface area of 936.58
Km2 993657.72 hectar that accounted 4.8 % of the total area of jimma Zone. currently the
district is divided in to 36 Pas and (three urban centers(with over 14262
population,Gembe,Limu shayi and (chochee towens) Agaro towen is the capital of the
district.The Proposed project site is located near choche town at a distance of 4
Km.Choche town is found at 10 km of main asphalt road Jimma to beadle and it have24
hour electricity,telecom service,and clean water.
II. Relief: The present land configuration of the district is the result of tertiary volcanic (Acidic
volcanic &Basaltic flow). The largest part of the district areas belong part of western Oromiya
lowland.The district has two different altitudes: the vast northern, central and the eastern part that
lies with elevation between 1500 and 2000 m.a.s.1 (88%) are characterized by undulating land .
The western part of the district lies with altitude 2000 m.a.s.1 (12%) act as a watershed for
Dedesa Rivers.The lower elevation of the district is found on the northeast part of the
district (in the Dedesa River Basin having 1450 m.a.s.L) and its altitude increasing
toward the western direction. Mount Beko Beriso with height 2280 m.a.s.L is the
remarkable peak in the district. The lowest elevation of the district is 1450 m.a.s.L in the
Dedesa River Valley
III. Drainage The total are Gomma district is fallen in the dedesa river basin. Awetu,,Naso,
Tamsa, Malka hinda,Dogaja,Loga and Colombo are the major perennial rivers that drain
to dedesa rever.The project will use _______river for irrigation.The district does not have
lakes.
IV. Climate Most parts of the district belongs to low land (Gomojii) sub- tropical (Bada-
dare) and cool (baddaa) Agro-climates. Gamojii, Badda-dare and baddaa agaro-climates
do respectively constitute 4%,88% of the district area.The vast area of the district annual
rain fall varies between 1700mm-2100mm. the maean anwal temperature ranges between
15co to 22co
V. Soil: The major soils categories of Gomma distrit are Orthic Acrisols,Dystric Nit sols and
Chromic & pellic verti soils. Orthic Acrisols (10%) Dystric Nistosols, and choromic &
pelli vertcols(80%) Orthic Acricols cover the district soils. Dystric Nitosols do confine
the central, southern nand eastern portion of the district. All the soils types have good
agricultural potentialities.
3. MARKETING ASPECT
3.1. Description of the Product
In horticulture, vegetables are herbaceous plants that are edible in whole or part. Parts usually
eaten include roots, stems, tubers, leaf bases/petioles, entire leaves, flowers, immature and
mature fruit. Vegetables are important in the human diet because they are rich in vitamins and
minerals and supply fiber and bulk and are cheap source of protein. In Ethiopia, vegetables are
usually eaten with enjera, pasta and different eaten materials.

In Ethiopia, the most commonly grown vegetables consist of annual crops which include
solanaceous, crucifers, cucurbits, bulb crops and other indigenous vegetables. In the south west
part of Ethiopia specifically known by have large vegetable production area and have type IV
climate wherein rainfall is more or less distributed throughout the year.

Specifically, the products to be marketed include: potato, cabbage, pepper, onion, garlic and
tomatoes. These products include not just vegetables but spices as well.

Vegetable production holds potentials as an economic of the country for rural families from the
nutrition standpoint and augmentation of the farm family income. Besides, its diversity and
compatibility in most cropping systems, it requires little investment especially for a typical
subsistence farmer. Government action programs on selected vegetables have shown promise of
being profitable. Vegetables contain rich sources of Vitamin A, C, thiamin, niacin and other
elements essential for human health.
3.2. Market Analysis

Fresh and Processed Fruits and vegetables have a large domestic market in Ethiopia,
significantly higher than the exported volumes. The size of the Ethiopian population is currently
estimated at about 100 million. This is a strong indication of the existence of large potential
demand for fresh fruit and vegetable crops in the country. The other customer of Ethiopian fresh
fruits and vegetables is processing plants, i.e., tomato processing plants and vegetable canning
factories which require tomato and various types of vegetables for processing. The demand for
fruit on the local market is high. This is a strong indication of the existence of investment
opportunities in fruit supply for the local market

Ethiopia exports fresh fruits and vegetables to the international markets. The major markets for
Ethiopian fresh fruits and vegetables are the European Union, the Arab countries and the
regional markets. Thus, there is a reliable demand for these Ethiopian products during a
particular period and a great volume. Therefore there is a strong business image for vegetables
and fruit markets.

3.3. The Demand-Supply Gap

There has been a significant growth in the number of local and international trades across the
country. This increase is mainly associated with the stimulation of economic activist and partly
due to an increase in the demand of fruit and vegetable production. Even though there is a lack of
quantitative estimates that depict the actual demand and also the annual growth rate commercial
facilities are scarce in the region. As a result there is a large gap between the developed and that
of the supply for fruit and vegetable production hence this project would not face any problem of
demand scarcity for it market and it would provide good goods to customers.

The price of fruits and vegetables is volatile and seasonal. Generally, fruits and vegetables are
much cheaper in rainy seasons. However, even in the rainy seasons the average price of fruits
and vegetables at major towns is estimated on average at birr 25 and 15 per kg respectively. It is
based on cost and competitors price.

Table 1 Tomato production in year in ethiopia

2009 2010 2011

 Tomato 951,920Kg 1,509,352 Kg 1,558,240 Kg
Mixtures 339,039 Kg 980,419 Kg 1,237,883 Kg
Source: Ethiopian Customs Authority

3.4 Future market or Demand of fruits and vegetables

The future demand for fruits and vegetables is promising due to two main factors. First, an
increase in population in general and urbanization, in particular, is expected to amplify the
domestic consumption of fruits and vegetables. At the same time, an increase in income
inevitably improves the per capita consumption of fruits and vegetables in the future.
Consequently, with a conservative growth rate of 3% per annum, the future demand for
vegetables is forecasted as shown below.
Table 2:Future Demand

Year Projected Demand (qts)

2006 100,000
2007 103,000
2008 106,423
2009 109,615
2010 112,904
2011 116,291
2012 119,780
2013 123,373
2014 127,074
2015 130,886
2016 134,698
2017 139,198

3.5 Target customers

The target customers of this envisaged project include:-

 The surrounding community

 District ,regional and federal government
 Agricultural research institutes
 Agricultural technology and equipment suppliers
 Ginning factories
 Agro-processing factory
3.6. Marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing strategies
for the project is consistently rendering quality service to its tenants. Due emphasis must be
placed on improving quality of service. The major marketing strategies to promote the project
and gain considerable market share include:

 Advertising through different means focusing on the existing service and products.
 Promote in association to the key location and nearby business
 Working on sustained promotional work.
 Working on public relations to reach and influence key personas and organization with a
capacity of making decision.
 Keeping the quality of its service/ product and consistently improving with changing
situations.

 Seasonal discount pricing different others customer centric marketing strategies will be
used by the farm.

3.7. Competition

There are different forms of competition that may face the envisaged Fruit and vegetable farm.
These are price and non-price based competition. Moreover, there are different competitors that
will compete with the project either directly or indirectly. But the Fruit and vegetable farm under
discussion has diversified marketing strategies that could enable it to Cope up with the different
competitors in the market. Moreover, it will frequently conduct competitors research which
focuses on, the strength and the weaknesses, the different competitors’ strategies, the techniques
they use in rendering the service, their customer handling methods, and others.

3.8. The project facilities and Services plan

In order to provide Fruit and vegetable farm of a high standard, it has been planned to construct
and develop the infrastructure and facilities that would viable to meet the requirements of an
international standard farm. Accordingly, various facilities will be constructed phase by phase
starting with the most needed ones that are essential to commence the operation of its farm
activities.
Since the project will be engaged in Fruit and vegetable the main sources of its annual revenue
would be from the domestic and international product sell. Based on the market price of Fruit
and vegetable in the area, the envisioned project set the fair price (Before VAT) for its product.

Feature of the sector

Agriculture is the backbone of the economy and the most volatile sector mainly owing to its
dependency on rainfall and the associated seasonal shocks that affect productivity. More than
85% of the Ethiopian population depends on agriculture for their livelihood. Within the context
of the Ethiopian economy, the Agriculture sector traditionally includes economic activities such
as crop and livestock production in which the crop sector has been the major driving element.

The Ethiopian economy is basically comprised of smallholder farming as well as medium and
large scale commercial farming. Relatively speaking, commercial farms are not significant in
terms of area cultivated and volume of production, even though the role has slightly increased in
view of the recent phenomena associated with the establishment of flourishing cut flower farms
in the country which is largely dominated by foreign investment.

Ethiopia is potentially a wealthy country, endowed with abundant resource conducive to

agricultural development such as fertile soil and good rainfall over large regions. Agriculture
accounts for the lion share of the foreign exchange earnings. The sector contributes about 90% of
the total export of commodities. The country’s industrial development programs are closely tied
to value-added processing of agricultural outputs with equal emphasis to both large & medium
scale as well as small scale manufacturing industries. The sector registered significant growth for
the last four consecutive years due to good climatic condition accompanied by increasing crop
productivity through agriculture input intensification and area expansion.

Beneficiaries

The country will get a contribution to its national income through domestic consumption and
export. This project will provide employment opportunity to the local population, this will raise
the living standards of the people working in this project, and they also learn the latest
technologies in crop production and also make use of them in their own farm. The regional
government will also generate revenue in the form of land rent will be an additional source of
income on land resources. The company, which is making an investment on the land and doing a
lot of agricultural production (fruit and vegetable) activities in developing the land will be
benefitted in terms of return on their investment during the lease period.

Past and Present intervention

Fruit and vegetable production project has a technically strong, knowledgeable and experienced
team to execute the project on time. With the vast knowledge base in agri-business activities, the
company has tangible experience in making this project a success. Conflict in the area may retard
plan of project.

3.9. Justification of the project

Ethiopia has huge investment potentials for agricultural development. Currently, investment in
the agriculture sector is found to be more attractive and profitable in diverse sub-sectors ranging
from food products, industrial raw materials to bio-fuel. The agriculture sector accounts for 47%
of the Gross Domestic Products of the country, provides 85% of employment and 90% of foreign
currency earning.

Moreover, the country has a huge market potential for crop and livestock produced with
comparative advantage to the Middle East, Europe, and Asia. For the past five consecutive years,
the agriculture sector was growing faster with more than 11% average annual growth. In addition
to the contribution to the national growth, the growth has triggered the increase in the domestic
market has for both livestock and food crops.Looking at the agro-climatic condition i.e. average
temperature, rainfall, physic-chemical properties of the soil and the distribution of the rainfall
give an indication that the proposed land is suitable for cultivation of various crops but especially
fruit and vegetables. The physic-chemical properties of the soil indicated in the information
sheet provide further confidence for the success of the project. Moreover, the planning on the
financial part of the project i.e. investment, cash flow, return on investment, profitability and the
cost-benefit ratio will show a positive trend.The expertise in the marketing of farm-produced in
the international market will provide an additional benefit to improve the financial health of the
organization. The statistic indicated in the financial report will provide us confidence in the
project. It justifies the investment and returns on the investment.
Support for the project

The financial support i.e., the equity infusion in the form of cash and kind for this project on
investments shall be received from promoters. The company shall receive equity infusion in the
form of cash or kind from any of these mentioned companies hereby for its project. The
company shall take the financial support in the form of project loan from either development
bank of Ethiopia or commercial bank of Ethiopia. In addition to our in-house team, we are also
interacting with the Ethiopian Institute of Agriculture Research to get timely support and
valuable advice in this project based on their experiences.

We are also expecting support from Agricultural office and responsible government officials for
identification of suitable land and facilitation of the documentation and import of farm
machinery and equipment, farm inputs for the success of this project. It appears to be a joint
project of Fruit and vegetable production farm project and Ministry of Agriculture, Government
of Ethiopia, as we need lots of support from the Ministry of Agriculture at various level of
implementation of activities in this project. Without their help and support, it will not be
possible to make this project a success.
4. TECHNICAL AND PRODUCTION ASPECT
Overview
Halal PLC Vegetable and Fruit farm project grow a variety of vegetables such as Tomatoes and
Onion and fruit like Avocado in open fields and in green houses. If you are a close observer of
the vegetable farming industry, you will agree that the industry is anticipated to increase due to
increasing consumer health consciousness, which has led to increasing demand for fresh
produce. While per capita fruit and vegetable consumption has increasing recent time, the price
of vegetables has increased as consumers demand premium, fresh vegetables. So also, the
number of both small and large farms has been

increasing. Small, local farms are benefiting from the organic, local movement, while large,
commercial farms are improving labor efficiency. Going forward, players in the vegetable and
fruit farming industry will continue to increase revenue generation for their business. The
Vegetable Farming industry is indeed a fast – growing industry that is pretty much active in all
countries of the world. As a matter of fact, The Netherlands has some of the largest greenhouses
where vegetables are cultivated in the world. That is the scale of food production in the country
so much so that in 2000 alone, greenhouses occupied about 10,526 hectares, or 0.25 percent of
the total land area.

One thing is certain when it comes to vegetable and fruit farming, if you are able to conduct your
market research and feasibility studies before choosing a location for cultivating your vegetable
and fruit you are likely not going to struggle to grow the vegetable farming business and also
sell your vegetables because there are always food processing companies and consumers out
there who are ready to buy from you.

Lastly, with vegetable and fruit farming it will pay you not and sell them for consumption in
farm markets to retailers and consumers. You can as well start a complimentary business like
vegetable processing plant to package your vegetables to save cost. The bottom line is that if you
have enough farm land (space) and you are interested in maximizing vegetable farming, you are
sure going to make huge profits from the business.
Product MIX

A. Avocado
Avocado is a member of the Lauraceae family.It is one of the most important commercial
fruits for both local and export markets. Mature fruits are mostly available from Mar. – Sep.
(small volumes Oct.-Feb.). It is eaten raw (ripe) and also flavors soups, ice cream and
milkshakes. It has high protein, several minerals (Zinc & Selenium) and Vitamins (A, C &
E). Avocado oil is easily digestible, largely unsaturated and has low sugar content.

B. Tomato

Tomato is one of the most essential parts of every day diets as it helps for healthy
digestion and blood circulation systems. One medium sized tomato can provide about
28 % of vitamin C of the recommended dialy intake, contains potassium which is
beneficial for blood pressure control and cardiovascular disease prevention, vitamin K1
which is important for blood coagulation and bone health, B9-vitamin which is
important for normal tissue growth and cell function. Table 1 shows the ingredient in a
typical 100 grams red, ripe and raw tomatoe. Studies have shown that increases the
proportion of tomatoe in everyday diet reduces the risk of developing heart disease,
diabetes and cancer diseases. Tomatoes can be taken in different forms such as cherry
tomatoes, stewed tomatoes, stewed tomatoes, raw tomatoes, soups, juices and purees.

In Ethiopia, commercial tomato cultivatoastsits in 1980 in the upper Awash covering

production area of 80 ha by Merti Agroindus for both domestic and export consumption.
The cultivated area for tomatoes increased to 833 ha by the year 1993 and later on the
cultivation spread towards other parts of the country. Eventhough from 1994 up to
now the cultivated area reached to 7237 ha with a total production of 555,142 tons,
given good climatic conditions of Ethiopia this production is very low and the local
demand is not met efficeiently.
4.1 The Vegetable Production Flow
While production and cultural practices vary from one type of vegetable to another, the general
cultural practices for vegetable production discussed below apply:

a. Land Preparation

Prepare the field at least one month before planting by plowing and harrowing the area for
several times. Follow each plowing with harrowing to efficiently prevent weeds from growing.
Prepare furrows at a distance required by each vegetable type to be grown. For wet season
cropping, prepare raised beds instead of furrows. In low and mid elevation areas, make deep
furrows with 0.5m wide. In high elevations, seed beds are prepared according to the width
requirement of each type of vegetable.

b. Seedling Production

Seedling production is necessary for those proposed vegetables which cannot be directly seeded
like tomato, eggplant, cabbage and others. These can be produced through seed bed methods and
tray methods. Seed bed methods require incorporation of manure and rice hull ash or wood ash
for better seedling growth results.

c. Planting and Transplanting

after the seedling is matured for planting and transplanting, all of the proposed vegetables for the
project are transplanting and planting. There are vegetables that can be either sown directly in
soil or be transplanted. Direct seeding is carried out by broadcasting or by sowing the seeds in
row, then covering the seeds through spreading additional top soil.

To facilitate transplanting, there is a need to water the seed beds and gently uprooting the
seedlings and transplant it in lower at a distance required by each type of the vegetables,

d. Fertilization and Weeding

Applying the newly transplanted vegetable seedling with starter solutions using organic
fertilizers at the rate of 2t/gallon of H2O. However, there are vegetables that requires larger
application of organic fertilizer at planting to be followed with side dressing applications
especially on the vegetative stages of the grown vegetables. Fertilizers are best applied after
weeding to facilitate maximum utilization of NPK contents of fertilizers by the plants.

e. Trellising/ Vine Training/ Pruning

For those creeping and climbing vegetables, use trellis to protect the fruits from rotting and
malformation. Construct vertical and overhead trellis using Ipil-ipil or bamboo poles, abaca
twines or straw wires are done.

f. Pest Management and Maintenance

An integrated pest and disease management is encouraged nowadays. IPM can be applied by
pruning and burning old infected leaves at regular intervals. Virus spread can be prevented by
using healthy seeds. Avoid nematode damage through crop rotation and use of organic manure.

Another method for pest management is to use botanical pesticides or soap solutions which is
found effective to control aphids and cabbage looper worms. Hot pepper extracts are sprayed to
leafy vegetables (petchay/lettuce) to control damping off, soft root and club root diseases.
Today’s generation of farmers used organic pesticides in controlling the occurrence of peace and
disease of plants.

g. Harvesting

Harvesting is done when vegetables have reached its full maturity growth stage. Some vegetables
are harvested with mature, green or fully ripened fruits or harvesting is done just before fruits are
fully ripe or when the peduncle starts to dry up (e.g., squash). Some mode of harvesting is done
according to the number of days after planting (DAP) or when 75% of the leaves turn yellow or
leaves would begin to fold over (e.g., garlic).

Train the vines on the vertical trellis (e.g., bitter gourd). Lateral shoots may be pruned leaving
only the main vine. Removing all female flowers below the overhead trellis enhanced full
development of well-formed fruits.
4,2. Raw material
The main raw material required for the proposed vegetable farming is;

 Seedlings; the seeds for the proposed vegetable farm will be purchased from mellkesa
Agricultural research institute,
 Compost; will be acquired from local farmers, this includes animal manure
 Organic fertilizer: the main organic fertilizers used for the project will be DAP and urea
 Water: water also required as the main raw material for the project it will be used nursery
development, irrigation purpose and for sanitation of the product.

Table 3 Raw material requirement

vegetable Area fertilizer kg/ha total fertilizer (kg)

Tomato 17 100 1500
Onion 15 100 1500
Avocado 15 100 1500
Total 47 4500

4.3. Machinery and Equipment

Basically, the planting and harvesting of vegetable do not require much machinery and
equipment. Tractor is used while preparing the land for the first planting period and therefore,
the envisaged project shall use hired tractor while preparing the land. The plant however, needs
to acquire 12 medium capacity water pumps and the associated equipments for irrigation
purpose. In addition, small agricultural tools such spade, rakes, disks, auger, mower, sprayers
and etc are required. The cost of the machinery and equipment is estimated to be Birr
427,940.00. The water pumps and equipments can be purchased from local suppliers

4.4. Farm Size and Production Schedule

a. Farm size

The total farm size allocated for the proposed vegetable project is 47 ha. In which the owners
have rural land use certification from the wereda Land Administration and Use office. The main
products of the proposed project Vegetable farming will be tomato, onion, garlic, cabbage and
red pepper.

Table 4 Land use plan

vegetable Area
 Tomato 17
Onion 15
Avocado 15
others 3
Total 60

3.1 Seasonal calendar for selected vegetable

Table 5 Production schedule

Month Mar Apr May Jun Ju Aug Sep Oct Nov Dec Jan Feb
l
1 Order seedlings/ seed x x X x
2 Preparing soil x x x x x X x x x x x x
3 Planting & staking x x x x x X x x x x x x
4 Watering x x x x x x x x x x x x
5 Weeding, thinning, pest x x x x x x x x x x x x
control,
6 Fertilizing
7 identify and select size for x x x x x x x x x x x x
harvesting
Periods of low (-) and high + + + + + + + + + + + +
market prices (+) for this
product?
Periods with labor shortage at - - -
the farm (-) and with labor
surplus at the farm (+)?
Periods with enough water (+) - - - + + + + + + + - -
and with shortage of water (-)
Seasonal variation in variety of + + + + + - - - - + + +
veg available

4.2. Civil Engineering Cost

The proposed project will undertake Storage, Office and irrigation canal development. To under
take the construction the proposed project uses locally available raw materials. The Total coast
required for the construction is 6,249,100.00 birr.
5. FINANCIAL REQUIREMENT AND ANALYSIS
The financial resource is a prime resource for undertaking any activities. Hence for
implementing the project is a total of 16,096,664.10 ETB is required. From this 30%
4,828,999.23 birr will be covered by the promoter of the project while the rest 70%
11,267,664.87 will be covered through loan from bank at the prevailing interest rate. Therefore
the said amount of finance is needed for undertaking the following.

5.1. Fixed Capital

A. Land development, buildings and Construction

The total land area required for coffee washing plant is 50 ha. The cost of buildings and
construction is estimated at 5,537,140.00 while the cost of farm development is 705,000 detailed
financial requirement presented in the following table.

Table 6 Land development, buildings and Construction

S. Description of works UO Area Unit coast Total Coast in

N M Birr
1 land preparation & site devt ha 47 15,000.00 705,000.00
  office and residence m2 1000 1,500.00 1,500,000.00
  Werehouse m2 3000 1,300.00 3,900,000.00
  green area, garage & parking ha 1.4 5,100.00 7,140.00
2 Irrigation system & infra structure devt ha 2 15,000.00 30,000.00
  Design and supervision     100,000 100,000
1st Year land lease & (10%) down     6960 6,960.00
4
payment
Total   50.0   6,249,100.00
 
0
 C. Machinery and Equipment

The total cost of machinery and equipment is estimated at 427,940.00 birr.

Table 7 Machinery and Equipment

S Unit cost in
Description Measurement Qty Total cost in Birr.
N Birr
1 Plow No 3 5,000 15,000.00
2 spade, No 2 200 400.00
  waterpump No 2 10,000 20,000.00
3 Rakes No 2 450 900.00
4 Disks No 2 100,000 200,000.00
5 Mowe No 2 5,000 10,000.00
6 sprayers No 4 5,000 20,000.00
7 weighting scale No 3 15,000 45,000.00
8 Harrow No 3 800 2,400.00
9 Carabao No 3 6,000 18,000.00
10 Bolo No 3 180 540.00
11 Shovel No 2 300 600.00
12 Hoe No 2 300 600.00
13 Pail No 3 300 900.00
14 Scythe No 2 300 600.00
15 Knife No 2 250 500.00
16 Kegs No 5 500 2,500.00
23 Referigirater No 3 30,000 90,000.00
  Total       427,940.00
Vehicle

Table 8 Vehicle

SN Description UOM Qty Unit Cost in Total cost in Remark

Fr. Birr
1 Isuzu   2 1,000,000.00 2,000,000.00
2 Pickup   1 1,500,000.00 1,500,000.00
3 Tractor Unit 1 1,000,000.00 1,000,000.00
  Total       4,500,000.00
 C. Office Equipment
Table 9 Office equipment

SN Description Measurement Qty Unit cost in birr Total cost in Birr

1 Managerial tables Unit 1 3,600.00 3,600.00
2 Managerial chairs Unit 1 2,000.00 2,000.00
3 Office table with Unit 1 3,000.00 3,000.00
chair
  Desktop Computer   1 20,000.00 20,000.00
6 Shelf Unit 1 4,500.00 4,500.00
9 Fax & Telephone Unit 1 2,500.00 2,500.00
machine
  Total       35,600.00

5.2. Working Capital

5.2.1. Operating Expense at full Capacity
a. salary Expense
The project will create job opportunity for more than 167 labor force. From the total employee
17 are permanent and 150 are causal workers that are planned to be drawn from local
community.The proposed manpower requirement and the estimated annual labor cost including
fringe benefits is presented in the table below.

Table 10 Man Power requirement and salary expense

S Position No Qualification Monthly Annual

N salary in salary in Birr
Birr
1 project manager 1 Agronomist 5000 60000
2 Marketing 1 BA in 3000 36,000
management
3 Agronomy 2 Diploma in 3500 84,000
accounting
4 Guards/Security 2 Basic 1000 24,000
5 Qualty control 1 Horticulture 3000 36,000
6 field workers 5   1500 90,000
7 machine 2 auto machanics 1500 36,000
operater
8 Driver 3 10 completed 2000 72,000
9 causal labourers 150 capable 30*50 702,000
  Total 16     1,140,000
7
   Benefit (20%)       228,000
  Grand Total       1,368,000
5.2.1 Operating Expense
Table 11 Operating Expense

S List of Items List of Items Annual cost Assumptions

N in birr Used
1 material cost for Seedling Seedling 200,000.00  
Coast
2 labor cos of sedling   100,000.00  
3 labour cost of   100,000.00  
Transplanting
4 Fertilizer DAP & Urea 500,000  
5 Chemical   300,000.00  
6 Labour coast of land   100,000.00  
preparation
7 material cost of Labour 100,000.00  
harvesting
8 Transportation coast   100,000.00  
9 Stationery supplies Stationery 1,200.00 100 br/month
supplies
10 Promotional Cost Promotional 10,000.00 Lump sum
Cost annual cost
11 Property Insurance Property 62,491.00 1% of the
Insurance building
12 Cleaning Supplies Cleaning 8,000.00 100 br. Per
Supplies month
13 Electric consumption Electric 5,000.00 20000KWH By
consumption Br.0.4736
14 Fuel Fuel 300,000.00 3000 lit per
year by Br. 21
15 Oil & Iubricants Oil & 30,000.00 10% of fuel
Iubricants cost
16 Telephone & fax Telephone & 18,000.00 1500 per month
fax
17 Repair expense Repair 78,000.00 2% of building
expense cost
18 Miscellaneous costs Miscellaneous 20,000.00 1000 per month
costs
  Total Total 2,032,691.00  
5.1.1. Pre-service Expenses
Table 12 Preservice expense

SN Description Cost in birr

1 Project proposal & EIA 20,000.00
2 Licensing fee and others
  Total 20,000.00

5.2.3. Summary of investment cost

The total initial investment cost of the project including working capital is estimated at Birr
16.096 million. The major breakdown of the total initial investment cost is shown in Table 13.

Table 13 Summary of Total initial investment cost

SN Description Cost in Birr

1 Land, building & construction 6,249,100.00
2 machines & Equipments 427,940.00
3 Vehicle 4,500,000.00
4 Office Equipment 35,600.00
  Total fixed investment cost 11,212,640.00
6 Salary expense 1,368,000.00
7 Operation Expense 2,032,691.00
8 Pre service Expense 20,000.00
  Total Working capital 3,420,691.00
  Sub total 14,633,331.00
11 Contingency (10%) 1,463,333.10
  Total initial investment capital 16,096,664.10
5.3. Financial Analysis

a. Underlying Assumption
The financial analysis of Vegetable and Fruit farming is based on the data provided in the
preceding chapters and the following assumptions.

A. Construction and Finance

Land Preparation Period 6 months

Source of Finance 40 % Equity and 60 % Loan

Tax Holidays 2 Years

Bank Interest Rate 12 %

Discount for Cash Flow 18 %

Based on Land Rent Rate of

Value of Land ANRS

Spare Parts, Repair & Maintenance 3 % of the Fixed Investment

B. Depreciation

Building 5%

Machinery and Equipment 10%

Office Furniture 10%

Vehicles 20%

Pre-Production (Amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Spare Parts In Stock and Maintenance 30 Days

Accounts Receivable 30 Days

Cash In Hand 30 Days

Accounts Payable 30 Days

5.3. Financial analysis and Statements
5.3.1. Underlying Assumption

5.3.2. Sources of Fund

The source of fund to finance the project is planned to be from two sources. These are
promoter’s equity and bank loan. The loan is expected to be obtained from one of the local
lending institutions. Since the project is expected to take some times to repay all its debts, the
bank loan is assumed to obtain on long term credit basis. Taking the financial position of the
promoters into account, equity contribution and bank loan to finance the total investment outlays
of the project are assumed to be 30% and 70% respectively. Accordingly, the total financial
requirement from the two sources will be.

Table 14 Source fund

Owners 4,828,999.23
30%
equity
Bank loan 70% 11,267,664.87
Total 100% 16,096,664.10
5.3.3. Depreciation Schedule
Table 15 Depreciation Schedule
Original Value in Depreciation rate in Depreciation /year in
SN Description
Birr % Birr
1 Construction and Building 6,249,100.00 10 624,910.00
Bldg. machines &
2 427,940.00 10 42,794.00
Equipments
3 Vehicle 4,500,000.00 5 225,000.00
4 Office Equipment 35,600.00 10 3,560.00
  Total 11,212,640.00   896,264.00

5.3.4. Bank Repayment schedule

Table 16 Bank Repayment schedule

year Principal intrest rate(8.5%) Total annual year ending
payment Payment in balance
ETB
11267664.8
0      
7
1126766.48 10140898.3
1 957751.514 2084518.001
7 8
2 1126766.48 861976.3626 1988742.85 9014131.89
 7 6
1126766.48 7887365.40
3 766201.2112 1892967.698
7 9
1126766.48 6760598.92
4 670426.0598 1797192.547
7 2
1126766.48 5633832.43
5 574650.9084 1701417.395
7 5
1126766.48 4507065.94
6 478875.757 1605642.244
7 8
1126766.48 3380299.46
7 383100.6056 1509867.093
7 1
1126766.48 2253532.97
8 287325.4542 1414091.941
7 4
1126766.48 1126766.48
9 191550.3028 1318316.79
7 7
10   95775.1514   0

5.4. Financial Statement

5.4.1. Income loss/statement

Project revenue and production costs are listed and compared to see whether the project generate
profits or not. Starting from first year of the project operation, the project will generate a
reasonable amount of net profit for the owners throughout its life period. Profit and loss
statement shows that the project will generate net profit of ETB 8,972,833.44in the first year and
increase to ETB 14,309,161.26 in the fourth year of the project life and hence it is found to be
profitable.
Table 17 income/loss statement
Revenue Year 1 Year 2 Year 3 year 4 year 5
Sell 18,080,000.00 18,080,000.00 18,080,000.00 25,416,000.00 26,140,000.00
Expenses          
Salary Expense 1,368,000.00 1,368,000.00 1,368,000.00 1,368,000.00 1,368,000.00
Operating Expenses 2,032,691.00 2,032,691.00 2,032,691.00 2,032,691.00 2,032,691.00
Deprecation Bld. Machineries ,Equiq 896,264.00 896,264.00 896,264.00 896,264.00 896,264.00
& vehicle
Interest Expense3 957,751.51 861,976.36 766,201.21 670,426.06 574,650.91
Lease payment4 6,960.00 6,960.00 6,960.00 6,960.00 6,960.00
Total Expense 5,261,666.51 5,165,891.36 5,070,116.21 4,974,341.06 4,878,565.91
Profit before Tax 12,818,333.49 12,914,108.64 13,009,883.79 20,441,658.94 21,261,434.09
Tax (30%) 3,845,500.05 3,874,232.59 3,902,965.14 6132497.682 6378430.227
Net profit 8,972,833.44 9,039,876.05 9,106,918.65 14,309,161.26 14,883,003.86
5.4.2. Cash flow Statement
Table 18 Cash flow Statement

Year Year 0 Year 1 Year 2 Year 3 year 4

Equity Capital 4828999.23        
Loan principal 11267664.87        
18,080,000.0
Net sale 0 18,080,000.00 18,080,000.00 25,416,000.00
0
18,080,000.0
Total Cash in flow 16,096,664 18,080,000.00 18,080,000.00 25,416,000.00
0
Cash payment          
Salary Expense 0 1,368,000.00 1,368,000.00 1,368,000.00 1,368,000.00
Investment 11,212,640 0 0 0 0
Pre operating
20,000 0 0 0 0
Expense
Operating Cost 0 2,032,691.00 2,032,691.00 2,032,691.00 2,032,691.00
Loan repayment 0 2,084,518.00 1,988,742.85 1,892,967.70 1,797,192.55
Lease payment 0 6,960.00 6,960.00 6,960.00 6,960.00
Tax payment 0 3,845,500.05 3,874,232.59 3,902,965.14 6,132,497.68
Total payment 11,232,640.00 7,969,669.05 7,902,626.44 7,835,583.83 9,969,341.23
10,177,373.5
Cash surplus/ deficit 4,864,024.10 10,110,330.95 10,244,416.17 15,446,658.77
6
10,177,373.5
Cumulative cash flow 35,024.87 10,110,330.95 10,244,416.17 15,446,658.77
6
Appendix 1: Sells forecast

Yea Tomato Avocado onion total sel

r
Marketable Price/k Total Marketable Price/k Total Marketable Price/k Total  
g yield g g

1 2250000 8.00 18000000.00 0 0.00 0.00 10000.00 8.00 80000.00 18080000.00

2 2250000.00 8.00 18000000.00 0.00 0.00 0.00 10000.00 8.00 80000.00 18080000.00
3 2250000.00 8.00 18000000.00 0.00 0.00 0.00 10000.00 8.00 80000.00 18080000.00
4 2250000.00 10.00 22500000.00 352000.00 8.00 2816000.0 10000.00 10.00 100000.0 25416000.00
0 0
5 2250000.00 10.00 22500000.00 352000.00 10.00 3520000.0 10000.00 12.00 120000.0 26140000.00
0 0
6 2250000.00 10.00 22500000.00 352000.00 10.00 3520000.0 10000.00 12.00 120000.0 26140000.00
0 0
7 2,250,000.00 12.00 27000000.00 352000.00 10.00 3520000.0 10000.00 12.00 120000.0 30640000.00
0 0
8 2,250,000.00 12.00 27000000.00 352000.00 10.00 3520000.0 10000.00 15.00 150000.0 30670000.00
0 0
9 2250000.00 12.00 27000000.00 352000.00 10.00 3520000.0 10000.00 15.00 150000.0 30670000.00
0 0
10 2,250,000.00 12.00 27000000.00 352000.00 10.00 3520000.0 10000.00 15.00 150000.0 30670000.00
0 0
Appemdix 2 operating cost
Operating years of the project
Description 1 2 3 4 5 6 7 8 9 10
A. Direct cost                    
Raw Material Cost 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522
Sub-total 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522
Total Direct cost 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522 2,031,522
B. Indirect cost                    
  Wages and Salary 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400 1,562,400
  Repair and Maintenance 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00 78,000.00
  Property Insurance 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60 61,321.60
  Utility 0 0 0 0 0 0 0 0 0 0
  Land lease 6,960 6,960 6,960 6,960 6,960 6,960 6,960 6,960 6,960 6,960
  Advertising and 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
Promotion
  Miscellaneous Expense 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
Total operating cost 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203
Appendix 3: income statement
Operating years of the project
Description 1 2 3 4 5 6 7 8 9 10
Sales
Revenue 18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 30,640,000 30,640,000 30,670,000 30,670,000
Less: 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203
Operating
cost
Income 14,309,797 14,309,797 14,309,797 21,645,797 22,369,797 22,369,797 26,869,797 26,869,797 26,899,797 26,899,797
before
Depreciatio
n and
interest
Less: 1,008,559.7 907,703.76 806,847.79 705,991.81 605,135.84 504,279.87 403,423.89 302,567.92 201,711.95 100855.9734
interest 3
Income 13,301,237 13,402,093 13,502,949 20,939,805 21,764,661 21,865,517 26,466,373 26,567,229 26,698,085 26,798,941
before
Depreciatio
n
Less: 0 0 919,570 919,570 919,570 919,570 919,570 919,570 919,570 919,570
Depreciatio
n
Profit /Loss 13,301,237 13,402,093 13,502,949 20,939,805 21,764,661 21,865,517 26,466,373 26,567,229 26,698,085 26,798,941
Before Tax
Less: Tax 3,990,371.1 4,020,627.9 4,050,884.7 6,281,941.50 6,529,398.29 6,559,655.08 7,939,911.87 7,970,168.66 8,009,425.46 8,039,682.25
(30%) 2 1 0
Net Profit 9,310,865.9 9,381,465.1 9,452,064.3 14,657,863.4 15,235,262.6 15,305,861.8 18,526,461.0 18,597,060.2 18,688,659.4 18,759,258.5
or Loss 5 3 1 9 7 5 3 2 0 8
After Tax
Appendix 4 : discounted cash flow
Investmen
Project Life years
Description t Year
0 1 2 3 4 5 6 7 8 9 10
INFLOW                      
Net sales
0 18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 26,140,000 26,140,000 26,140,000 26,140,000
revenue
TOTAL
0 18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 26,140,000 26,140,000 26,140,000 26,140,000
INFLOWS
OUTFLOW
                     
S
Investment 11,795,70
cost 0 - - - - - - - - - -
Operating
0 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203
cost
Income tax 0 3,990,371 4,020,628 4,050,885 6,281,941 6,529,398 6,559,655 7,939,912 7,970,169 8,009,425 8,039,682
TOTAL
11,795,70
OUTFLOW 7,760,574 7,790,831 7,821,088 10,052,145 10,299,601 10,329,858 11,710,115 11,740,372 11,779,629 11,809,885
0
S
NET CASH 10,319,425.6 10,289,168.8 10,258,912.1 15,363,855.3 15,840,398.5 15,810,141.7 14,429,884.9 14,399,628.1 14,360,371.3 #########
FLOW -1120940 8 9 0 0 1 2 3 4 4 #
      NET PRESENT VALUE (NPV) 79,462,672.05
      INTERNAL RATE OF RETURN (IRR) 920.75%
      DISCOUNTED PAYBACK PERIOD (DPBP) 3.9years

Appendix 5 undiscounted cash flow

 Project Years
Investment
Year Operating years
Description 0 1 2 3 4 5 6 7 8 9 10
INFLFOWS                      
Inflow Funds                      
Own Equity 5,085,175                    
Long-term
Loan 11,865,409 0 0                
Inflow
Operations   18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 20,000,000 20,000,000 20,000,000 20,000,000
Sales revenue 0 18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 20,000,000 22,000,000 22,000,000 22,000,000
TOTAL
INFLOWS 16,950,584 18,080,000 18,080,000 18,080,000 25,416,000 26,140,000 26,140,000 20,000,000 20,000,000 20,000,000 20,000,000
OUTFLOWS                      
Investment
cost 11,795,700 0 0 0 0 0 0 0 0 0 0
Operating cost 0 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203 3,770,203
Financing Cost                      
· 1,186,541 1,186,541 1,186,541 1,186,541 1,186,541 1,186,541 1,186,541
Principal 0 0 0 0
·Interest 0 1,008,560 907,704 806,848 705,992 6,529,398 504,280 403,424 302,568 201,712 100,856
Income Tax 0 3,990,371 4,020,628 4,050,885 6,281,941 605,136 6,559,655 7,939,912 7,970,169 8,009,425 8,039,682
TOTAL
OUTFLOWS 11,795,700 8,769,134 8,698,535 8,627,936 11,944,677 12,091,278 12,020,679 13,300,080 13,229,481 13,167,881 13,097,282
NET CASH
FLOW 0 9,310,866 9,381,465 9,452,064 13,471,323 14,048,722 14,119,321 6,699,920 6,770,519 6,832,119 6,902,718
BEGINNING
CASH
BALANCE 0 0 9,310,866 18,692,331 28,144,395 41,615,718 55,664,440 69,783,761 76,483,681 83,254,200 90,086,319
ENDING
CASH
BALANCE 0 9,310,866 18,692,331 28,144,395 41,615,718 55,664,440 69,783,761 76,483,681 83,254,200 90,086,319 96,989,037