Hawassa University

College of Law and Governance

Department of Development Management

(Graduate Program)

Course Title: Development Project P l a n n i n g a n d Management (Gads 522)

Project Proposal on Bee Keeping & Honey Processing Industry

Prepared by: Muhaba Jabir--------- ID.No GPDMR/0011/12

Summited to Dr Siva Kumar

October, 2020
Hawassa University Ethiopia

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 Table of Contents page
acronoms ............................................................................................................................................... 3
Executive Summary .............................................................................................................................. 4
1. INTRODUCTION ............................................................................................................................. 5
2. Objectives: - this project is intended: - .............................................................................................. 6
3 .Goal and Future Implementations .................................................................................................... 6
4. Advantages of beekeeping as an income generation activity ........................................................... 7
5. Considered factors for success ......................................................................................................... 7
6. Product Description ........................................................................................................................... 8
7. Economic Environment ..................................................................................................................... 8
Table 1 ............................................................................................................................................... 9
7.1 Trade and investment .................................................................................................................. 9
Table2 .............................................................................................................................................. 10
Table3 .............................................................................................................................................. 10
7.2 Potentials of Producing diversified honey bee products ........................................................... 11
8. Economic benefits ........................................................................................................................... 11
9. Demand Projection and Plant Capacity ........................................................................................... 11
Table 4 ............................................................................................................................................. 12
9.1 Demand Projection for Processed Honey .................................................................................. 12
Table 5. ............................................................................................................................................ 12
9.2 Plant Capacity ........................................................................................................................... 12
10. Pricing and Market Regulation...................................................................................................... 13
10.1Pricing and Distribution ........................................................................................................... 13
10.2. Market regulation ................................................................................................................... 13
11. Incentives and opportunities for the our investment ..................................................................... 13
11.1 Incentives ................................................................................................................................ 13
12. Expected Challenges ..................................................................................................................... 13
13. Financial analysis of the project .................................................................................................... 13
14. Building and Civil Works ............................................................................................................. 14
Table7. Estimated investment Cost ................................................................................................. 15
16. Machinery and Equipment Required for the Plant ........................................................................ 15
17. Man power Requirement ............................................................................................................... 15
18. Materials and Inputs ...................................................................................................................... 16

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 Table.8 ............................................................................................................................................. 16
19. Utilities .......................................................................................................................................... 17
Table9 .............................................................................................................................................. 17
Table 10. .......................................................................................................................................... 17
19.1 Production Process .................................................................................................................. 17
19.2 Honey Processing Steps .......................................................................................................... 18
20. Beeswax ........................................................................................................................................ 18
Recovering wax - larger scale ............................................................................................................. 18
21. Financial Assumptions .................................................................................................................. 19
22. Financial analysis .......................................................................................................................... 20
23. Cash Flow Statement ..................................................................................................................... 21
24. Measure of project worthiness ...................................................................................................... 22
25. Loan Repayment Schedule ............................................................................................................ 22
26. Income Statement .......................................................................................................................... 23
27. CONCLUSIONS ........................................................................................................................... 25

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ACRONOMS
E.C Ethiopia Calendar
WTO world Trade organization
ULO (local name of silitegn in English Meaning best)
HMF Hydroxyl-Methyl-farfel.
NPV Nat present value
BR Benefit ratio
SEPDA South nation nationality people Region
EU European Union
SNNPR Southern Nation Nationalities people Region
SNNPRG Southern Nation Nationality people Region Government
USD United State Dollar

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Executive Summary
1 Project name
2 Project owner
3 Nationality
4 Project Location
5 Product type
6 Land Requirement
7 Construction period
8 Risks
7 Total Capital
8 Employment
9 Production programme
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BEE KEEPING & HONEY PROCESSING
UNIT
Ulo cooperative members
Ethiopian
S/N/N/P/R/S, Siltie Zone Worabe town
Products of beekeeping are honey and wax. The
products are consumed in the state.
5000m2
2 years
The rule of the government, national and global
market condition.
The total investment cost of the project is to birr
11830000out of the total investment birr (70%)
is allocated for fixed investment cost and (30%)
is for initial working capital. out of the total
investment capital requirement source of
finance is 8281000(70%) to be financed from
bank loan and 3549000(30%) from the
promoter.
The total manpower require for the plant will be
17 employees at full capacity
Start operation at 70% of its installed capacity,
which will grow to 80% in the second year .Full
capacity production will attained in third year
1. INTRODUCTION
Bee keeping is practiced on specific lines and heavily extracted with art billing bees and
grubs are destroying threw combs. Bees are accommodated in artificial leaves, where they
live comfortably within easy reach of the beekeeper for examination and extraction of
surplus lovely, after keeping of sufficient lovely in the combs for the bees. Beekeeping is an
essential activity, which is predominant during the months from March- May. For
Beekeeping, Italian Bees are mostly available everywhere in India.
The best-known primary products of beekeeping are honey and wax. The products are
consumed in the state. Traditionally honey is considered the major beekeeping product. Wax
has played a considerable role in only a few parts of the world and even less known.
However, with increasing knowledge about beekeeping and an awareness of the beneficial
aspects of many bee products, the use and demand for other products is increasing. The
inclusion of natural bee products in cosmetics, medicines and foods has improved consumer
appeal. While such appeal is not always based on scientific evidence, more and more studies
confirm at least some of the traditionally claimed benefits of primary bee products.

Ethiopia is a Federal Democratic Republic comprising ten regional states and two city
administrations. Its population is about 100.5 million according to the most recent World
Bank estimates (2019). The country is home to more than 80 ethnic groups, most of which
are found in SNNPR. Over 80% of the population lives in rural areas. Siltie Zone is located
in the northern part of SNNPRs. People in Siltie Zone peoples mostly live in rural part of the
locality; whose life is based on agriculture. According to the 2007 National census the total
population size of the Zone in 2017 is projected to be 1,017,557. Out of the total population
87% are settled in the rural areas by engaging in agricultural livelihood and animal breeding.
Food crops include enset, potatoes, teff, maize, beans, barley, wheat and sorghum are
significant cash crops. The total area of the Zone is estimated to be 3047.83
km2.Geographically, the zone is located between 380 12'E – 380 30' E longitude and 70 30'
N– 80 07' N latitude (DoSZFE, 2005 bulletin). Worabe, is the capital town of Siltie zone, and
173 km away from Addis Ababa on the Addis Ababa to Hosanna road. Likewise, it is also

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202 km away from SNNPR capital, Hawassa. Its administrative division rests on 10
woredas, and 3 town administration.

In addition to this Silite people traditionally uses honey and locally experienced with honey
producing. According to these opportunities we planned to construct this project study and
to check the market, technical and financial feasibility of this project.
The promoter is very ambitious and committed to realize the project. Hence, promoter
expects to get the necessary support from the local administration to make the project to be
operational. Looking at the past trends and permit issues by the government to the
construction of proposed project in our zone of major urban area of the country especially in
worabe town one can easily conclude that moment is more like to continue. Besides, the
government policies and initiatives for the private sector investment are very promising that
motivate to engaged in honey processing industry.

2. Objectives: - this project is intended: -

 To increased access to honey and wax product
 To improve market and supply honey and bee services to the public.
 To export products to different foreign countries.
 To aware the community about beekeeping and conservation.
 To improve the lifestyle of honey workers and generate work opportunity for
unemployment peoples.
 Motivate to use pure natural products.

3 .Goal and Future Implementations

Our mission is to continue to grow as a co-operative in products, services, members, and
educational programs. Out initial steps include being successful with one product for sale:
wholesale pure honey. Worabe ULO Honey plans to begin feral swarm relocation.
Additionally, our co-operative plans to shift away from buying wholesale honey from a
supplier and generating honey from our own hives. Over the next year, we plan to be solely
dependent on our own production of honey without the use of a supplier. This will help us
generate a larger net profit to continually grow in additional products and services. At this
point in time, our co-operative will be defined as a manufacturing and export products to
foreign country and getting a lot of dollars.

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4. Advantages of beekeeping as an income generation activity
 Beekeeping requires less time, money and infrastructure investments.
 Honey and bees wax can be produced from an area of little agricultural value.
 The Honey bee does not compete for resources with any other agricultural enterprise.
 Bee keeping has positive ecological consequences. Bees play an important role in the
pollination of many flowering plants, thus increasing the yield of certain crops such
as sun flower and various fruits.
 The honey industry has to be considered the farming of honeybees, harvesting, and
processing of honey followed by packaging and then distribution or supply to the
consumer market. We are exporting the products to different country in this case our
countries get a number of dollars.

5. Considered factors for success

Individuals considering entering the honey industry must carefully consider the following
factors:
Political and social stability of our zone
 Access to wide market
 Macroeconomic stability and rapid growing economy
 Collect Consistent quality of honey from listed or registered suppliers
 Availability of skilled manpower through the value chain
 Looking for and networking with better price market destination areas
 Build the technical capacity of beekeepers and technology supply (improved
beekeeping equipment's, packaging materials) to producers and processors as well.
 Awareness creation on importance and impact of producing quality and safety honey
 To guide and governed by honey and beeswax national strategic plan and other
related rules and regulation.
RISKS: The rule of the government, national and global market condition.

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6. Product Description
According to the Quality and Standard Authority of Ethiopia (QSAE), honey is determined
as the natural sweet substance produced by honeybees from the nectar of blossoms which
honeybees collect, transform and combine with specific matter of their store and leave in the
honey comb to ripen and mature.
Honey consists essentially of different sugars, predominantly glucose and fructose. Honey
also contains protein, amino acids, enzymes, organic acids, mineral substances, etc. Honey
varies in colour from nearly colourless to dark brown. The flavour and aroma of honey vary
but are usually derived from its plant origin.
Honey is used as a nutrient food and commonly used also in pharmaceutical. In Ethiopia,
honey is widely employed for the preparation of favourite national drink called "karibo",
"kineto" "tej" and for food in the 5 form of bread spread or as a sweetener in home baking
and medication. The products that this business aims to produce and market primarily are
different types of honey including forest honey, Getem(locally) and also unique coffee
honey.
Beeswax is one of the most valuable and an oldest bee product to be used by man-kind. It is
a complex mixture of hydrocarbons (sugars) and lipids (fats).
Beeswax is primarily used for the formation of comb foundation sheet to enhance the
development of beekeeping industry. Besides bees wax is used for the production of the
candle, locally (t-wife), for the development of new products in various fields such as
cosmetics, foods, pharmaceuticals and other industrial applications.

7. Economic Environment
Ethiopian government currently formulated the next 10year developmental goal to carry
forward the important strategic directions in maintaining the fast-growing economy and the
country's economy is projected to grow at an average one digit annually.
Worabe Ulo Honey Industry main Plan developed the plan indicates siltie zone to be
competitive in the domestic and national market of honey, wax and other high-value hive
products.
Honey production from current approximate 10,000 ton to 20,000 tons and wax from 500
tons to 1,000 tons by the end of, 2015 E.C.

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Table 1: Estimated Average Honey Production from the three Beehives types in kg
Bee hive type Yearly average production
2012 E.C 2014 E.C 2015 E.C
All type of beehives (number) 500000 550,000 525,000

Total production(Kg) 4,515,295 4,966,825 4,741,060

Traditional beehives (number) 53546 58,900.6 56,223.3
Production (Kg) 4,222,655 4,644,921 4,433,788
Intermediate bee hives (no.) 3604 3,964.4 3,784.2
Production(Kg) 63,164 69,480.4 66,322.2
Modern beehives 12,837 14,120.7 13,478.85
Production(Kg) 229,504 252,454.4 240,979.2

7.1 Trade and investment

Combined with the low entry barrier including, start-up capital, the return on investment in
honey production appears quite attractive. The combination of honey and wax production
leads to the realization of significant profit levels. Afore-mentioned does not even include
the value of crop pollination.
Currently, there is about 16 honey and ten beeswax processing and exporter companies
actively involved in the business.
By 2015e.c budget year about 675 tons of honey and 520 weights of beeswax were exported
to the foreign market and earned a total of 2.31million and 4.75 million American dollars
respectively. Other hive Products like Royal Jelly, Pollen & bee venom are also in very high
demand globally. However, these products have never been reprinted in Ethiopian context
(Ayalew&Gezahegn, 1991)

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Table2: Exported Honey with Destination Countries and Amount in Tons
Country
2005(2012/13) 2006(2013/14) 2007(2014/15) 2008(2015/16)
1 Sudan 0.6 258 194.27 109.41
2 Norway 6 299.4 184.4 251.32
3 UK 0.05 36.42 21.48 70.81
4 Saudi 13 8.35 2.88 7.29
5 Germany - 20.88 107.06 68.64
6 Yemen 0.25 55.67 37.39 13.92
7 Japan 342 1 44.44 14.8
8 Italy - 20.88 21.38 -
9 Somalia 0.3 35.44 40.78 -
Total 362.2 739.98 654.08 536.19
Source CSA. 2014 and Ethiopian Custom authority and EMDIDI 2016 Annual report.

Table3; Exported Beeswax with Destination Countries and Amount in Tons

No Countries Years
2005 2006 2007 2008
(2012/13) (2013/14) (2014/15) (2015/16

1 Germany 183 161.5 262.02 55.37

2 Japan 51 59 121 42.37
3 U.S.A 88 70.5 105.36 94.87
4 U.K 63 25.7 32 23.37
5 Italy - - - 34
6 Canada - - - 17.37

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 Total 385 316.7 520.38 267.67
Source CSA.2014 and Ethiopian Custom authority and EMDIDI 2016 Annual report

7.2 Potentials of Producing diversified honey bee products

Our product differentiation or upgrading is one of the strategies to ensure price
competitiveness.
There is an enormous potential for diversification of bee products that creates a wider
opportunity for the Worabe town, Siltie zone or in a country and exporters to mobilize
substantial foreign earning through exporting diversified high-value bee products.
Even though the best known primary products of beekeeping are honey and wax, but pollen,
royal jelly, bee venom, the bee colony and their larvae are also to be regarded as marketable
bee products.
I think the zone administration, development partners, and other concerned actors have to
promote beekeeping as a sustainable form of agriculture and develop a commitment to build
the technical and material capacity of the subsector industry; this helps to maximize the
production and to improve and ensure the quality as well.

8. Economic benefits
The project can create employment for 17 persons. In addition to supply of the domestic
needs, the project will generate Birr 1.3 million in terms of tax revenue. Moreover, the
Government can collect employment, income tax and sales tax revenue. The establishment
of such factory will have an opportunity for the expansion of high market transactions with
hotels, cake products and soon foreign exchange saving effect to the country by substituting
the current import.

9. Demand Projection and Plant Capacity

In related with population growth, urbanization and economic growth of the country there is
the increasing demand for table honey consumption in Worabe town. Currently Ethiopia

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entered in EU market in honey and wax, the organic honey has a high demand in developed
countries and there will also be the more alternative market outlets.
Ethiopia is a strategic location to international market access and the country is exhaustively
working to be the member of world Trade Organization (WTO).There is a market demand
for Ethiopian honey and beeswax with the most destination countries of Norway, Germany,
Japan,
Table 4: Honey and Beeswax Production Projection on GTP II Plan in
tons
No Products Production Year
2008/2016 2009/2017 2010/2018 2011/2019 2012/2020
1 Honey 1030 1238 1338 139 1667
2 Beeswax 390 400 420 560 580

9.1 Demand Projection for Processed Honey

Demand for processed honey is influenced by population growth, economic growth and
income urbanization and, demand for pressed honey in the domestic market is assumed
High quality organic Worabe Ulo honey and beeswax has a sustainable demand in abroad
market and production of other valuable beehive products for export market is an
opportunity for the our business.
Table 5.Projected Demand of Processed Honey in tons
Demands 2016 2017 2018 2019 2020 2021
Total demand 481 1103 1698 5350 8738 9468
1 Domestic 65 103 143 168 170 173
2 Export 516 1100 1655 2265 3610 5295

9.2 Plant Capacity

The annual production capacity of the proposed plant in its full capacity is about 150 tons of
honey. Production capacity is based on a schedule of 300 working days per annum and day
the project is assumed to start operation on the first year with 70 % of its full capacity that is
210 tons the full capacity production will be attained in the third year and thereafter.

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10. Pricing and Market Regulation

10.1Pricing and Distribution

The price of honey varies according to its colour, purity and season; also vary across the
destination areas.
Quality honey that produced from improved hives has on the average price of 200-250 birr
/kg in the domestic market depends on honey type and season. And the crude honey average
price of 150-200 birr in based on location and season.

10.2. Market regulation

The company has planned to develop honey and beeswax marketing legal framework, and
the preparation stage has already started. Having national marketing legal framework for
honey and beeswax has an opportunity for the processing industries to have sustainable and
legally registered suppliers.

11. Incentives and opportunities for the our investment

11.1 Incentives
Financial loan is incentive that the government has planned to avail loan based on 30 per
cent equity and 70 per cent bank loan.
12.2 Opportunities in our industry
The government and community commitment on mass watershed development along all
apiculture potential regions has a great contribution on boosting honey and other bee
products. There is a market demand for our organic honey and beeswax on abroad market
destinations.

12. Expected Challenges

Even though there are a wide potentials and opportunities to invest on our industry there
are challenges among the limitation of laboratory service to test quality and safety of honey
and beeswax.

13. Financial analysis of the project

The financial requirements regarding investment and running costs of honey and beeswax
industry like, beekeeping materials honey and wax purifications machinery are less

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expensive compared to other livestock investments. Honey production investment is an
investment that can run with minimal cost and affordable to many governments and
economic agents. There is no need from multiple building and sophisticated high cost
machinery. The government has encouraged investors by availing loan with 30percent
equity and 70percent. Also the governments provide lease financing for machineries and
other processing materials.

14. Building and Civil Works

Worab Ulo honey processing plant approximately requires a total of 5000m2 area of land out
of which 2875 m2 is a built-up area which includes, raw material receiving and storage,
Processing, final product storage, loading unloading, office, cafeteria, toilet and washing
room, etc.
Assuming construction rate of Birr 5000 per m2, the total cost of construction is estimated to
be Birr 800,000. The total cost, for 80 years with a cost of Birr 2 per m2, is estimated at Birr
600.The total our investment cost for land, building and civil works is determined at Birr
1,038,625.
Table6. Building and Construction
SN Description Land requirement(m2) Unit cost(m2) Total cost

1 Production hall 1025

1.1 Work shop 925 300 277500
1.2 Inspection and packing room 100 300 3000
2 Warehouse 950
2.1 Raw material and inputs 475 300 142500
2.2 Finished products 475 300 142500
3 Office and show room building 400 300 120000
4 store 250 200 50000
5 Ground weighting place 125 100 12500
6 Waste accumulation 125 100 12500
7 Green area 2125 50 53125
Total 5000 1,038,625
15. Machinery and Equipment

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The machinery and equipment required by the project will be procured from foreign and
local sources. The total cost of machinery and equipment is estimated to be Birr 2,000,000.

Table7. Estimated investment Cost

No Items Unit Quantity Remark
Building and Civil work birr 2,750,000 Assumed that Machineries
2 Machinery and Equipment Birr 2,000,000 and vehicle were imported duty
3 Land lease value Birr 30,000
4 Isuzu vehicle Birr 650,000
5 Wanted working capital Birr 2,875,000
Total 8,305,000

16. Machinery and Equipment Required for the Plant

For honey processing and packaging For beeswax processing
1. Liquefier 1. Beeswax extractors machine
2. Filter press 2. water boiler machine
3. Falling film Evaporator 3. wax cooling containers
4.Storage/settling tank 4. packaging
5. Water circulation pump 5. Pallet /stands
6. Pre-heating tank
7. Processing tank
8. Cooling tank/condenser
9. Moisture condensing tank
10. Honey circulation SS gear pump
11. Control panel, Level indicators,
12.pressure gauges, temperature gauges,
13. Packing machines
14. Labeling machine
15. Working tables

17. Man power Requirement

The proposed project will require 17 employees of whom 7 permanent and 10 temporary
production workers and the annual labour cost of the project is estimated to be 597,600 Birr
Table.7: List of labour with their salary.
No. Position Quantity Salary
Per month Per annum
1 General manager 1 5000 60000

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2 Personnel 1 3000 36000
3 Secretory 1 2000 24000
4 Purchaser 1 3000 36000
5 Sales man 1 3000 36000
6 Accountant 1 3000 36000
7 Machine operator and maintenance 1 5000 60000
8 Production worker 4 4000 192000
9 Internal quality control 1 4000 48000
10 Guard 2 1000 24000
11 Driver 1 2000 24000
12 Cleaner 2 900 21600
Total 17 35900 597600

18. Materials and Inputs

Table.8 List of materials and inputs for production
No Items Unit Quantity Unit Total cost Remark
measure price in birr
1 Crude honey Kg 93750 80 7,500,000
2 Sanitary chemicals Kg - - 5000
3 Glass jars Pc 1000 15 15000
Plastic containers Pc 100 300 30000
Drums for bulk honey Pc 200 100 20000
Lids Pc - - 6000
Cartons pc - - 3000
Glue 2000
Labels Pc - - 4000
Total cost 7,585,000

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19. Utilities
Electric power and water are the two basic utilities required by the plant.

Table9. Annual estimated utility cost

No Description Estimated Cost in birr
1 Electric power 40,000
2 Water 4000
3 Furnace oil 25,000
Total 69,000
Table 10.Summary of Production cost
No Items Cost in birr Remark
1 Utilities 69,000
2 Labour /Salary 1,540,500
3 Maintenance and repair 80,000
4 Administration cost 20,000
5 Overhead cost 15,000
6 Depreciation 230,000
7 Total 1,954,500

19.1 Production Process

Honey contains pollen, dust, bee body parts and air bubbles, which tend to include
granulation (crystallization). Heating the honey to 45 Co to dissolve the crystals present in
honey can retard the granulation. Filtration then removes part of pollen, foreign particles and
wax. To prevent fermentation and to destroy yeasts, honey is heated to a temperature of 65
Co -70 Co for specified time. Proper temperature control and heating time is a most
important factor in honey processing activity.
Excessive heating increases the quantity of Hydroxyl-Methyl-farfel (HMF) which is
desirable only at standard level of 20-40gm/kg of honey. High temperature also affects the
colour and flavour of honey. Honey is then cooled before it is packed to keep it for a longer
period without contamination and granulation.

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19.2 Honey Processing Steps
a) Filtration to remove wax, foreign particles after heating honey to 5 °c. It may be noted that
heating up to 45°c (below the melting point of beeswax) is required to decrease the Viscosity
of honey.
b) Honey is then heated to 60 °c -65 °c for 10 to 15 min and passed in to a falling film
Evaporator. Vacuum is simultaneously applied to boil the water in honey at a lower
temperature so that moisture is separated which can be collected separately. This procedure
also helps in destroying yeasts.
c) Cooling the honey to atmospheric temperature and storing in closed vessel for 24-48
hrs.Is the next step. Storing honey for period of 24-28 hours is necessary to allow air bubbles
to go out. Honey is then packed and sealed immediately.
There are honey and beeswax processing machineries and equipment that are imported and
used by processors and exporter companies in the country. There is also locally one
company is emerging to produce processing machineries (Afesol Engineering plc).

20. Beeswax
From the total 250 tons of raw honey about 30 ℅ could be raw wax that is 50 tons the
average rendering recovery of pure beeswax could be 70 ℅. Based on this assumption the
our company could produce 35 tons of pure beeswax per annum.
During beeswax processing, dark honeycombs should first be soaked in water to remove non
wax components (honey, pollen …etc.). Otherwise, while melting the wax emulsion is
formed in the water reducing wax quality. As wax contains un combined fatty acids that
react the metals of which the equipment is made and change the wax colouring (e.g. iron
colours wax in brown, zinc in dark-blue, copper - in green), that facilitates emulsion
formation and deteriorates wax quality.
So, it is necessary to use technological equipment produced from non-corrosive materials,
enamelled metals, aluminium, wood or ceramics. Water mixed with wax is removed by long
settling of melted wax.

Recovering wax - larger scale

Centrifuge – honey from the uncapping machine and extractor is pumped through the
centrifuge.

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The wax is then melted and poured into moulds. If necessary, you can heat the wax to 70°c
and keep it at that temperature for 48 hours. This will allow you to remove any remaining
dirt or debris by skimming the top and straining the liquid wax into moulds.
The length of settling depends on the degree of wax pollution and its temperature. Beeswax
withstands the atmospheric influence and not liable to damage of moth that is common in
raw wax materials. It retains its properties, content and quality under long storage and
heating.
The our project could be expected to reimburse the gross investment cost by two consecutive
production years By the assumption projected income statement, the project will start
generating profit in the first year of operation. Important ratios such as profit to total sales,
and return on total investment show an increasing trend during the life-time of the project.
The income statement and the other indicators of profitability show that the project is viable.

21. Financial Assumptions

Selling price
Honey ----------------------------birr 150 per kg
Beeswax---------------------------birr 250 per kg
Revenue
Honey --- 100,000kg x150 birr = birr 15000 000
Beeswax ---- 15000kg x250birr = birr 3750000
Assumed total revenue = birr 18,750,000 on the first year of production
Assumed total production cost = birr 11,830,000
Honey and bees wax loss is assumed to be only by 1% of the total purchased in the first
year.
Interest rate of a bank is assumed to be 12 %.
Financial Assumptions
Selling price
Honey -----------------------------birr 150 per k
Beeswax---------------------------birr 250 per kg
Revenue
Honey --- 100,000kg x150 birr = birr 15000 000
Beeswax ---- 15000kg x250birr = birr 3750000
Assumed total revenue = birr 18,750,000 on the first year of production

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Assumed total production cost = birr 11,830,000
Honey and bees wax loss is assumed to be only by 1% of the total purchased in the first
year.
Interest rate of a bank is assumed to be 12 %.

22. Financial analysis

Selling price
Honey -----------------------------birr 150 per kg
Beeswax---------------------------birr 250 per kg
Revenue
Honey --- 100,000kg x150 birr = birr 15000 000
Beeswax ---- 15000kg x250birr = birr 3750000
Assumed total revenue = birr 18,750,000 on the first year of production
Assumed total production cost = birr 11,830,000
Honey and bees wax loss is assumed to be only by 1% of the total purchased in the first
year. Interest rate of a bank is assumed to be 12 %.
Income statement for the next five years
Income statements
Sales------------------------------------------------------------------18750000
Less purchase of honey and bees----------------6920000
Gross profit---------------------------------------------------------11830000
Less Fixed and operational expense
Salary expense-----------------------------------------597600
Incentives-----------------------------------------------59760
Packaging expense------------------------------------202500
Depreciation--------------------------------------------230000
Promotion and advertisement exp. ----------------30000
Rent expense-------------------------------------------116666
Overhead expense------------------------------------67500
Interest expense----------------------------------------1345050
Utility expense----------------------------------------69000
Subtotal-------------------------------------------------------------2718076
Net income before tax-------------------------------9111924

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 Provision tax (35%) ----------------------------------3189173.4
Profit after tax----------------------------------------5922750.6
Worabe ULO Honey factory will generate a total of net profit 5,922,750.6 for the first year
of the project by paying government provision tax 3,189,173.4 and interest income birr
1,345,050.00 for the loan provided.

23. Cash Flow Statement

Particulars Pre Year
operating 1st year 2and year 3rd year 4th year 5th year
Cash in flow period
Own equity 3,736,250
Loan received 11,298,750
Cash sales 21,475,000 29,411,110 49,040,770 49,040,770 49,040,770
Total Cash 14,945,000 21,475,000 29,411,110 49,040,770 49,040,770 49,040,770
inflow
Cash outflow
Investment 11,806,250
Purchase of 4,877,650 6,682,381 11,159576 11,159576 11,159576
honey& wax
Packaging& 405,000 546750 710,775 710,775 710,775
materials
Salary 660,000 986,050 995,460 995,460 995,460
Depreciation 460,000 395,560 390,995 390,995 390,995
Overhead cost& 530,000 674,295 1,104,616 1,104,616 1,104,616
other esp.
Interest expense 1,345,050 1,076,040 807,030 538,020 269,010
Loan repayment 2,241,750 2,241,750 2,241,750 2,241,750 2,241,750
Total Cash 11,806,250 10,519,450 12,602,826 17,410,202 17,141,192 16,872,182
outflow
Net cash flow 3,138,750 10,955,550 16,808,284 31,630,568 31,899,578 32,168,588
Beginning cash 3,138,750 14,094,300 30,902,584 62,533,152 94,432,730
balance
Ending Cash 14,094,300 30,902,584 62,533,152 94,432,730 126,601,318

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 Balance

24. Measure of project worthiness

Net Present Value (NPV) and Benefit ratio (BCR) computation at 12% discount rate
Year Investment Gross Cost Discount Present Gross Discount Present
(opertprod.cost) factor Value(birr) Benefit(birr) factor Value(birr)
0 11,806,250 11,806,250 1.000 11,806,250 1.000
1 3,400,050 0.893 3,036,245 16,597,350 0.893 14,821,434
2 3,678,695 0.797 2,931,920 22,728,729 0.97 18,114,797
3 4,008,876 0.712 2,854,320 37,881,194 0.712 26,971,410
4 3,739,866 0.636 2,378,555 37,881,194 0.636 24,092,439
5 3,470,856 0.567 1,967,975 37,881,194 0.567 21,478,637
Total 30,104,593 24,975,265 152,969,661 0.734 105,478,717

Net Present Value (NPV)

NPV = Present value of gross benefit - Present value of gross cost
= 105,478,717 - 30,104,593
= 75,374,124
The net present value is greater than zero. There for this honey and bee wax processing
project is accepted.

Benefit- Cost Ratio (BCR)

BCR = Present Value of gross benefit
Present Value of gross cost
= 105,478,717
30,104,593
= 3.05
The ratio is greater than one. This means that the project owner will recover the investment
and can get good return on its implementation.

25. Loan Repayment Schedule

Year Principal Outstanding Instalment due payable Interest at 12% Total Payment

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1 11,208,750 2,241,750 1,345,050 3,586,800

Rticulars Year 1 Year2 Year 3 Year 4 Year 5

2 8,967,000 2,241,750 1,076,040 3,317,790

3 6,725,250 2,241,750 807,030 3,048,780
4 4,483,500 2,241,750 538,020 2,779,770
5 2,241,750 2,241,750 269,010 2,510,760
Total 0 11,208,750 4,035,150 15,243,900

26. Income Statement

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Cash sales 18750,000 23,437,500 33,984,375 33,984,375 33,984,375
Costs and Expenses 0 0 0 0
Purchase of honey and beeswax 6920000
8,650,000 12,542,500 12,542,500 12,542,500
Gross profit 11830000 0 0 0 0
Fixed & operational costs
14,787,500 21,441,875 21,441,875 21,441,875
Salaries 597600 0 0 0 0
Benefits(incentives) 59760 747,000 1,083,150 1,083,150 1,083,150
Packaging & other materials 202,500 74,700 108,315 108,315 108,315
Depreciation 230,000 253,125 367,031 367,031 367,031
Promotion and Advertisement 30000 287,500 416,875 416,875 416,875
Lease/ rent payment 116666 37,500 54,375 54,375 54,375
Overhead cost 67500
145,833 211,458 211,458 211,458
Interest 1,345,050 84,375 122,344 122,344 122,344
Utilities 69,000 0 0 0 0
Subtotal operating expenses 2718076 1,681,313 2,437,904 2,437,904 2,437,904
Net Income 9111924 86,250 125,063 125,063 125,063
Prr Tax 3189173.4 3,397,595 4,926,513 4,926,513 4,926,513
Net Income After Tax 5922750.6 11,389,905 16,515,362 16,515,362 16,515,362

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27. CONCLUSIONS
As it is known Ethiopia has huge investment potentials for honey processing industry
subsector, and the climatic condition is favourable for growing different vegetation and
crops which are an excellent source of nectar and pollen that are used as a raw material for
beekeeping industries.
Mass watershed development along all over the country and organic forest coffee
development at the southern and western part of the country have great opportunities to
promote honey bee industry and to boost bee hive products.
The financial analysis of this honey processing investment pre-feasibility study shows that
the project is worth profitable and acceptable as the discounted measures of the project
worth shows positive trend if investors are engaged in the area.
The environmental impact from the honey production operation is minimal. One of the co-
operative's objectives is to emphasize conservation. As a result, the group will do everything
to keep the operation as environmentally conscious as possible. The jars that will be utilized
will be made out of recyclable glass instead of chemically altered plastics. In addition, honey
production is completely fulfilled by bees which are fundamental for the upkeep of all
natural resources. Bees play a crucial role in pollination of plants and trees as they utilize the
flower's pollen and nectar to create honey. The electrical usage will also be minimal since
electricity will only be utilized in the extraction phase of the self-produced honey. The co-
operative will be using nearby suppliers to ensure a small carbon footprint from the delivery
trucks. Overall, Cape Flats Honey & Bee Services honey jar production will have a very low
environmental impact while benefiting from the pollination brought upon by bees.

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