Fasil Teka Dry Coffee Processing Industry

Project Proposal

October 2022
Table of Contents

Executive Summary ................................................................................................................... 3

1. Introduction ........................................................................................................................ 4

2. Description of Business ...................................................................................................... 4

3. Goals and Objectives .......................................................................................................... 5

3.1 Goals................................................................................................................................. 5

3.2 Objectives ......................................................................................................................... 5

4. Location .............................................................................................................................. 5

5. Project Investment Costs .................................................................................................... 6

5.1 Land, Building Construction and Civil Work .................................................................. 6

5.2 Machinery and Equipment ............................................................................................... 6

5.3 Office Furniture and Equipment ...................................................................................... 7

5.4 Salary and Wedge............................................................................................................. 8

5.5 Operating Cost.................................................................................................................. 9

5.6 Pre-business Cost ........................................................................................................... 10

5.7 Summary of Total Initial Investment Cost ..................................................................... 10

6. Marketing and Competitors .............................................................................................. 11

7. Marketing Strategy ........................................................................................................... 11

8. Promotion Strategy ........................................................................................................... 12

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Executive Summary

Fasil Teka Dry Coffee Processing Industry is a new business that will offer dry coffee hulling

services for coffee supplies in Hambela Woreda. The proposed project belongs to Fasil Teka

Delelegn, which aims to participate in coffee plantations. Currently, coffee production in

Hambela woreda is increasing in response to the growing demand for Hambela Coffee, which

is known for its full coffee production. Fasil Teka dry coffee processing industry has a good

market opportunity as the current coffee supply exceeds the processing capacity of the existing

industry. Therefore, there is a new trend of shipping to neighboring Woredas for hulling

purpose. Taking advantage of these opportunities, the owners intended to establish a dry coffee

processing industry in the heart of the production area. It will start in the next harvest season

and this industry will surpass its competitors by being close to the place of production and

using technologically advanced machinery, providing relatively low service costs and

employing trained personnel.

The total investment of the project, including working capital, is estimated at 18,995,000

million birr. 80% of it belongs to the owner and the remaining 20% is from the bank loan. The

total land area required for the proposed project is 1.5 hectares of land and the owner of the

project has a rural land certificate from Hambela Wamena Woreda Management and

Exploitation Department. Moreover, the proposed project will create 6 permanent jobs and

100 temporary jobs for local people. The proposed coffee planting project aims and strives for

this economic advantage to achieve the planned profit from the dry coffee processing industry

with adequate focus on selection of coffee product types, production processes, harvesting,

storage and processing.

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1. Introduction

Ethiopia is the largest exporter of Arabica coffee in Africa with over $310 million. Small

private coffee plantations account for about 90% of the country's coffee, with large state-owned

plantations accounting for the remainder. Determining the area of land for coffee cultivation is

difficult because the plots are fragmented and intermingled with other crops. However, it is

estimated that Ethiopia has more than 320,000 hectares of coffee trees. Annual production is

200,000-250,000 tons depending on weather and price. About 35% of the total production is

consumed locally. The Ethiopian government is encouraging private investment in the coffee

industry, hoping that this will lead to the expansion of large commercial plantations and

improved quality and productivity. Therefore, this project aims to implement a coffee

processing investment project using modern dry coffee processing methods, producing high

quality coffee and contributing to the economic development of Ethiopia.

2. Description of Business

Fasil Teka Dry Coffee Processing Industry is a new business that will offer dry coffee hulling

services for coffee supplies in Hambela Woreda. The proposed project belongs to Fasil Teka

Delelegn, which aims to participate in coffee plantations. The company will use modern

processing machinery with high standards and processing quality to ensure favourable

economic, social and environmental benefits.

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3. Goals and Objectives

3.1 Goals

The overall goal of this project is to capitalize on Ethiopia's existing investment opportunities,

while leveraging the announced policy incentives that emphasize promoting the transformation

of Ethiopia's economy into an industry-based economy and private sector development, to

contribute to Ethiopia's economic development.

3.2 Objectives

The main objective of this project is to implement an agricultural investment project using

modern dry coffee processing methods to produce high quality coffee.

The specific objectives of the project are:

 To establish and develop financially viable dry coffee hulling plant

 To meet the ever-increasing demand for better quality coffee

 To create job opportunities and provide dry coffee hulling services to local coffee

farmers, coffee traders and coffee cooperatives

4. Location

The proposed project will be located in Hambela Worwda, Guji zone, Oromia Region.

Currently, coffee production in Hambela woreda is increasing in response to the growing

demand for Hambela Coffee, which is known for its full coffee production.

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5. Project Investment Costs

5.1 Land, Building Construction and Civil Work

Description Unit Quantity Unit Cost (ETB) Total Cost (ETB)

Land leas m2 6000 10.2 61,200

Buildings and civil works m2 400 2550 1,020,000

Supervision and other 50,000

Sub Total 1,131,200

5.2 Machinery and Equipment

Unit Cost Total Cost

Description Measurements Quantity
(ETB) (ETB)

Coffee processing 420,000

Unit 1 420,000
machine

Coffee site Set 1 450,000 450,000

Generator (10K VA) Unit 1 200,000 200,000

Electrician toolbox Set 1 80,000 80,000

Plumbers tools kit Set 1 12,500 12,500

Double pickup vehicle Unit 1 2,500,000 2,500,000

FSR vehicle Unit 1 2,420,000 2,420,000

Fire extinguisher Unit 5 20,000 100,000

Sub Total 6,182,500

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5.3 Office Furniture and Equipment

Unit Cost Total Cost

Description Measurements Quantity
(ETB) (ETB)

Managerial tables Unit 2 3,500 7000

Managerial chairs Unit 2 2,500 5000

Officer tables and chairs Unit 6 1,500 9000

Secretarial tables and

Unit 1 1,500
chairs 1,500

Computer with printer Unit 2 15,000 30,000

Shelf Unit 2 1,500

3000

File holder Unit 1 500

500

Guest chairs Unit 3 1000 3000

Fax and telephone 5,500

Unit 1 5.500
machine

Others 3,000

Sub Total 67,500

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5.4 Salary and Wedge

Monthly Annual Salary

Description Qualifications Quantity
Salary (ETB) (ETB)

General manager BA in business 1 5000 60,000

Service supervisor BA in plant science 1 3000 36,000

Secretary 10+2 secretarial science 1 1,500 18,000

HRM officer 10+2 in HRM 1 1,500 18,000

Accountant Diploma in accounting 1 15,000 18,000

Guard/security Well experienced 2 1,500 48,000

Purchaser Level IV in marketing 1 1500 18,000

Certified in general 18,000

Electrician 1 1500
electricity

Calisher Well experienced 3 2000 24,000

Food stuff Certified in food cooking 2 2500 60,000

Cleaner Well experienced 4 1200 48,000

Driver Grade 8th and above 3 1500 18,000

Grade 10+well 38,400

Load coffee 4 1200
experienced

Coffee cargo of cars Well experienced 2 1500 18,300

Sub Total 440,780

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5.5 Operating Cost

List of Items Annual Cost (ETB) Assumption Used

Audit and legal fee 16000 4000 ETB per quarter

Stationery supplies 6000 500 ETB per month

Promotional cost 20,000 -

Property insurance 72,000 1% of the building

Sanitation expense 12,000 1000 ETB per month

Uniform 2,000 250 per person (for 8 person)

Electric conception 5000 ELPA

Fuel 38000 2000 lit per year by Br. 19

Oil and Lubricants 3800 10% of fuel cost

Telephone and Fax 14400 1200 per mouth

Repair expense 144000 2% of total building cost

Miscellaneous costs 30000 2500 per month

Sub Total 363,200

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5.6 Pre-business Cost

Description Unit Unit Price (ETB) Total Cost (ETB)

Registration and formation of the 25,000
LS 5000
company
Consultant fees while project LS 3000 90,000
Working expense, travel expense, 120,000
LS 1,500
legal expense etc.

Sub Total 235,000

5.7 Summary of Total Initial Investment Cost

Description Cost (ETB)

Land divert and initial building construction 1,131,200

Machinery equipment 6,182,500

Office equipment 67,500

Total fixed investment cost 7,381,200

Inventory and (working capital or coffee purchase) 8,675,320

Salary expense 440,780

Operation expense 363,200

Pre service expense 235,000

Total working capital 1,038,980

Sub total 17,095,500

Contingency (10%) 1,899,500

Grand Total (Total Initial Investment Cost) 18,9995,000 ETB

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6. Marketing and Competitors

Although Ethiopia has some investors in coffee processing market, there is still a lot of room

for new businesses. Most importantly, there is room for new businesses that understand the

need for quality service and customers demand. In this industry, customers choose suppliers

based on the products, prices, and services available. A supplier may offer products at the right

price, but fail to provide the level of service that customers demand. Fasil Teka dry coffee

processing industry has a good market opportunity as the current coffee demand exceeds the

processing capacity of the existing industries. Taking advantage of these opportunities, the

owners intended to establish a dry coffee processing industry in the heart of the production

area. This industry will surpass its competitors by being close to the place of production and

using technologically advanced machinery, providing relatively low service costs and

employing trained personnel.

7. Marketing Strategy

 Our primary marketing strategy is to work one-on-one with our distributors and customers

to ensure supply needs are met and help develop unique marketing plans.

 We prioritize customer service and make it a key component of our marketing plan. We

believe that providing customers with what they want and how they want it, is the key to

repeat business. We want to build a close relationship with our agents and customers, so

we want to focus on face-to-face sales and building accounts.

 We tightly integrate all marketing and sales activities to provide a consistent image of the

company and the positioning of our products and services. We will build this image

around our name and highlight the quality coffee products and services behind this name

to our customers.

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 Attend as many regional conventions and trade shows as possible to ensure we will

provide the latest information on market trends and customer needs to support our

marketing initiatives and product knowledge.

8. Promotion Strategy

 Relationships with coffee distributors and sellers are key to the success of this business.

Providing quality products that can be customized to meet the specific needs of customers

in specific geographic areas will be our most important advertising tool.

 Our business endeavors to send news releases to local media, press and food magazines

to get our products and company in front of our customers.

 Publish a monthly newsletter to existing potential customers. This newsletter will

highlights new and current trends in the industry and offers special promotions and sales.

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