1.

EXECUTIVE SUMMARY

Project Initiator: Moges Yimer Beyene coffee producer and Exporter. Coffee plantation development project is initiated by the Moges Yimer
Beyene coffee producer and Exporter.
The purpose of the newly initiated project will require 1000 hectares of land for the purpose of coffee development just as Moges Yimer Beyene
coffee producer and Exporter coffee project farming.
Project cost: The total estimated cost of the coffee and spices project is 39,838,130.00 birr. 30% of the project cost (11,951,439.00 birr) shall be
covered by the owner and the rest 70% (27,886,691.00) birr shall be secured from bank loan.
Land Requirement: The planned development project requires 1000 hectares of land for its project. The land shall be used for the development
of coffee for the purpose of export.
Work opportunities
: The planned project shall provide work opportunities for 51 permanent and for 400 temporary workers – a total of 451
employees.

1
 2. INTRODUCTION

Ethiopia is the third largest country in Africa with a total area of about 113 million hectares and with a total population of about 100 million, of
the total land mass, about 85% of the population lives in rural areas while the remaining 15% dwell in urban centers. The labor force, between
15-65 years of age, represents about 50% of the total population. About 50% of the land area is regarded to b
agricultural production. However, only less than 15% this potential area has been cultivated. Of the cultivated area, more than 95%
smallholder farming and the rest is under commercial farms. Thus, there is a reason to believe that Ethiopia is endowed with vast and potential
of agricultural development.
Agriculture dominates the Ethiopian economy accounting for about 50% of GDP, 85% of the employment and about 90% of the export reaming.

2
Of the agricultural GDP crop production accounts for about 60% and livestock accounts for about 30%. The most common crops produced in
Ethiopia are Wheat, Barley, Maize, Teff, Sorghum, Pulses, Oil crops, Fruits, vegetables and coffee. As to crop production, despite its contribution
and the countries natural endowment productivity of the sector is by far below potential. This is because lack of the e
agricultural implements, in addition to this, importance of private sector that can recognize a coordinated roll of all factors of production (labor,
capital, entrepreneur ability etc) was not given a room to take part in the development process during the past regimes.
To overcome the problem related to produce good quality coffee bean and sesame grain that satisfy the customer ’s interest, efforts shou
made towards developing the agricultural sector. This needs a shift from traditional and backward method of production to a new and scientific
method of production system that requires a coordinated roll of all factors of production. In this process, it is the private sectors should be pushed
and encouraged by the government through adopting a favorable economic policy that allows the sector to play active role in the development
process without capital ceiling. In recognition of the important of the agricultural sector and understanding the major reasons behind th
s t a t e o f t h e d e v e l o p m e n t o f t h e c o u n t r y, t h e E t h i o p i a n g o v e r n m e n t h a s e m e rg e d w i t h f r e e m a r k e t e c o n o m i c s t r a t e g y a n d t h e a d
economic policy, which acknowledges the role, and importance of the private sectors investment. This economic policy is promulga
various initiatives for those who want to invest their resources and knowledge in any profitable sector. Initiated by this favorable conditions, the
promoter of this project Moges Yimer Beyene coffee producer and Exporter
coffee plantationand production in Bench Sheko Zone ,Guraferda
Woreda,Alenga Kebele. This business plan tries to explain the necessary information like description of the area, project technical consideration,
total investment capital, source of fund and other basic economic points relevant to the project. Detail information on each point is given in the
subsequent pages.

3
4
 3. OBJECTIVES

3.1 GENERAL OBJECTIVE

To established and produce quality Arabica coffee for export market
3.2 SPECIFIC OBJECTIVES OF THE PROJECT
The Moges Yimer Beyene coffee producer and Exporter coffee plantation project has identified several objectives for the business:

Become a leading supplier of Arabica coffee for the world market.

Reach the point of sustainable profitability.

To create employment opportunity for the people of project area,

To introduce and promote modern farming system in the area,

5
 4. VISION, MISSION OF THE PROJECT

4.1 Vision
The Project’s vision is ‘to be the quality coffee producer farm preference in Ethiopia.

6
 4.2 Mission

It is the Moges Yimer Beyene coffee producer and Exporter coffee plantation development mission to become the leading provider of Arabica
coffee to the world market. This will be accomplished by providing quality product at fair prices while exceeding customer's expectations.

4.3 PROMOTER BACKGROUND

Moges Yimer Beyene coffee grower production & exporter one of those coffee and spice producer. The owner of the farm/ AtoMogesYimer / is
residentof Addis Ababa Region an Ethiopian
. Although the promoter has good experience in agriculture, He has a good deal of experience in
project management. Moges’s coffee&spice grower, producer & exporter was established 2001.Founder Company MogesYimer is 74 years old &
has more than 40 years of coffee production &business experience.
The project is located in south west Ethiopia peoples regional state; Bench-sheko Zone. It is found at a distance of about 606 KM from Addis
Ababa and 46 km from Bench-sheko Zone capital Mizan Aman Town. The total land to be developed by the developer is623 ha. The land
provided by the government for a lease period of 45 years. The road from Addis Ababa to Mizan Aman (about 560km) is asphalt. The project is
located about 46 km from Mizan Aman. The road condition is asphalt up to the woreda capital.
The project area is found at an average altitude
1,200of
meters above sea level and over 95% of the land shows about 3-5% slope gradient
indicating a well-drained forest nature soil.
The climatic conditions in the project area exhibit the type of moist Kolla Agro-ecological zone. Like most of the areas in South-west Ethiopia
the area covers by forest.It has a longer rainy season/1750-2000ml/ as compared to those in other area of the country.

7
The company does have own coffee estate. His company has total 1004 ha of coffee land in south west Ethiopia peoples regional state, Bench
sheko zone,Gurafarda district Wojemita&Fajeka rural village in Ethiopia. It has registered & licensed by Ethiopian government as coffee grower
& exporter. It produces Arabica coffee under shade. The coffee grown in his farm washed Bebeka & sun dried Jimma. Our farm in Wojemita,
1004 ha of land found in altitude 1100-1300 M.asl and produce organic &Utzcertified coffee. The company farm in Fajeka 55 ha of land found in
altitude1100-1350M asl& produce conventional sundried coffee. The company own 1 pulper 1 huller machineries’ &4 coffee product w
houses.
Organic certified coffee ,Organic & Utz certified coffee, Conventional coffees with traceability ,
Total production 500 tons ,Total area of cultivation 1059 ha ,
A n n u a l c e r t i f i e d o r g a n i c c o f f e e p r o d u c t i o n f r o m Wo j e m i t a f a r m 4 5 5 t o n s o f w h i c h 2 7 3 t o n s w a s h e d & 1 8 2 t o n s s u n
c o n v e n t i o n a l c o f f e e p r o d u c t i o n f r o m F
association/AFCA/,BCSOKO-Guarantee/GMBH/ Utz certified
4.4 THE PROJECT AREA
The 1000 hectare of land planned for the expansion project will be secured from in South west Regional State in Bench Sheko Zone, Guraferda
Woreda, Alenga kebele. As the vast area of land site is considered neither as a forest area nor as farmers farm land theowner expects will th
zonal trade and industry department hand him the requested 1000 hectares from this reserved area.

4.5 .FEASIBILITY STUDY

The ensure the project makes profit and grow sustainably to benefit all stakeholders, before deciding to engage in the investment, Moges Yimer

8
B e y e n e c o ff e e p r o d u c e r a n d E x p o r t e r c o ff e e p r o j e c t f a r m i n g . u n d e r t a k e s f e a s i b i l i t y s t u d y o f t h e p l a n n e d p r o j e c t s u c h a s a v a i l a
p o w e r , a v a i l a b i l i t y o f l a n d i n c l u d i n g e x p

4.6 AVAILABILITY OF LAND

It is expected that Moges Yimer Beyene coffee producer and Exporter coffee project farming site so far considered neither as a forest area nor as
farmers farm land. The altitude of this particular project shall range between 1150 – 1200 meters above sea level, the temperature of the project
area to fall between 18oc to 28oc and the rainfall to be adequate for coffee plantation, the project area to have fertile, friable, loamy soil with more
than 1.5m depth, The topsoil to be predominantly dark brownish in color with a slightly sour ph.

4.7 AVAILABILITY OF MAN POWER

The fa rm requi res bot h direc t and i ndirect man power. T he dire ct ma npowe r, in addi tion t o the di rect f
management process, farm supervisors, and other agricultural professional as well as experienced farm clerks. As Bench Sheko is one of the few
zones in the region that is known to have cheap labor, the farm will utilize existing manpower in the zone. The presence of MizanTepi University
w i l l p r o v i d e s t h e p r o j e c t o w n e r t o r e c r u

9
 5. MARKET OPPORTUNITIES & SUPPLY AND DEMAND ANALYSIS

Coffee is produced in more than 50 developing countries providing income for approximately 25 million small holder producers and employing
an estimated 100 million people. The bulk of the world’s coffee, however, is produced in Latin America. Ethiopia is among the top 10 Coffee
producing country and Africa's top producer. Average world coffee production in year 1977 to 1986 was 5.05 million tons, In years 1987 to 1996
it increased to an average of 5.76 million tons and in years 2000/01 to 2011/12 it increased to 7.875 million tons.

Table1. World Coffee Production and Consumption

Quantity (000 tons)
Demand/
Years Production Consumption The Gap
2000/01 6,780 6,718 62
2001/02 6,449 6,796 -347
2002/03 7,327 6,917 410
2003/04 6,251 7,087 -836
2004/05 6,927 7,348 -421
2005/06 6,657 7,479 -822
2006/07 7,709 7,873 -164

10
2007/08 7,126 8,123 -997
2008/09 7,645 8,284 -639
2009/10 7,271 8,101 -830
2010/11 8,063 8,163 -100
2011/12 7,875 8,086 -211
Average 7,173 7,581 -408
Source: International Traw
d ew cwe. nt rt ar de ,e f o r u&
mw. owrwg . i n t e r a c e n . o r g / e s h o p, /Lwaes ltc U
ompd
e a t e d Tohne: I T C ’ s M a g a z i n e a n d
Publications & Products. Geneva, Switzerland
5.1 Consumption
About one quarter of world production is consumed in producing countries and the vast majority of export goes
Producing countries such as Latin America coffee producing countries consume about 72%, Asia and Pacific 18% and Africa consumes about
10% of the total consumption of coffee by producing countries. In Ethiopia, half of the coffee is consumed by Ethiopians and the country leads
the continent in domestic consumption. Out of the importing countries consumption, 24% are consumed by the USA, 46% by Western Europe,
8% by Eastern Europe and Asia accounts about 14%. Although the top five consumers are the USA, Brazil, Germany, Japan and France whiles
the Nordic countries have the world’s highest coffee consumption per capita.
5.2 Demand and Supply Gap
As coffee is an internationally traded commodity, the analysis of key marketing variables would not be meaningful unless the global situation is

11
considered. For this reason, the three most important marketing variables – supply, demand, and prices for coffee will be analyzed in line with
their corresponding situation at global market. Current experience by importing countries is such that their annual import is the summation o
coffee supplied by different producing countries in the world. There is no single supplier of coffee committed to supply for a given importing
country. In similar manner, there is no single importer which exclusively import from a specified supplier. For this reason, it would be difficult
to actually determine the demand for a specific importing country from a given supplying country. However, it is possible to show the general
demand trend of Ethiopian coffee by focusing on the world situation – world aggregate.
Aggregate world demand is the summation of - coffee consumption by producing countries & by importing countries in the world. As it is shown
i n t h e t a b l e a b o v e , t h e r e i s a h u g e g a p b / n w o r l d d e m a n d a n d w o r l d s u p p l y f o r c o ff e e . E x c e p t i n t h e y e a r s 2 0 0 0 & 2 0 0 3 , t h e n e g
indicated in the other 8 years would show the demand deficit in those respective years. This would imply that the increase in annual production
is driven by annual increase in effective demand by importing countries. Considering the demand for Ethiopian Coffee, the increase in demand
by those 8 major buyers of Ethiopian coffee, which totally absorb about 52% of Ethiopian coffee, has been increasing by a higher rate than the
increase in production by the former. While annual production growth, on average, in Ethiopia is 5.16%, the demand for Ethiopian major buyers
has increased up to 20%, in the past 10 years. According to the data provided by ICO (International Coffee Organization), annual import fo
USA has increased by 20%, German by 15%, France, Italy, and Japan by 6%, and Canada by 3%. Considering trade statistics of the past five
years, one can see that more than 41% of the world export goes only to three importing countries in the world: USA 20%, German 14.5%, and
Japan 6.5%. Moreover, recent studies in the area reveal that Ethiopian coffee has never suffered from lack of buyer in the world market. What is
supplied to the world market is fully absorbed by importing countries provided there is no quality problem. Thus, provided the righ

12
offered and prices are attractive, there are plenty of opportunities for getting more demand in the world market (in both established an
markets).
The emergence of new coffee consumers is another factor affecting the world demand for coffee. Recent information from ICO report depicts
that China has decided to significantly shift from tea consumption towards coffee. There are also other Asian countries following the same trend.
This is the resultant effect of aggressive promotion made by ICO since few years in the past.
The increase in coffee consumption by producing countries is another factor affecting demand for coffee, for aggregate demand is com
against aggregate supply by world producers. India (the second largest in population in the world) has declared to double coffee consumption in
the coming 5-10 years, ICO report June, 2010. Ethiopia, through its consumption about 44% of the total annual production, is ca
among the largest coffee drinking countries in the world – 3rd in Africa and 15th in the world as far as coffee pr
concerned. This could be regarded as an opportunity with regard to absorbing such a significant proportion of its production; serves as a shock
absorber particularly in case world demand for coffee fails because of unknown reasons.
5.3 Target Market Identified for this Project
Currently, there are more than 50 importers of Ethiopian coffee in the world. Out of the these importing countries, only 8 are known
major buyers, namely; U.S.A., Italy, France, Belgium, Germany, Saudi Arabia, Japan, and Sudan. On average, these countries import about 52%
of total Ethiopian coffee exports. As it is the case elsewhere, the major importers of Ethiopian coffee has increased their annual import from 1%
up to 20% over those years ranging from 2002-2009.
Since 2005 coffee prices have been increasing and reached the highest in a decade. As consumers in India and China develop a taste for the drink

13
and the demand in Eas t Europe, Rus sia and Brazil increased, prices are likely to keep rising. Moreover, someth
developed markets. Europeans, Americans and Japanese are switching to higher-quality coffee. Discerning consumers now demand authenticity:
they want stories about where their coffee beans come from. Therefore, the best coffees will increasingly be differentiated, like fine wines and
spirits , and sold at previously unthinkable prices . Currently, the world is moving from instant-coffee powder to luxury beans. Gou
specialist roasters have pushed up expectations. Governments, activists and “ethical” coffee suppliers have worked to get higher prices. All this
is good news for coffee farmers in Ethiopia. Altitude, climate, soil and genetic diversity give the country an inherent advantage in qua
compared to lower-grade Latin American coffee. About 90 percent of Ethiopian coffee production is premium or organic coffee. An agreement
signed last year between Starbucks, the world's biggest coffee chain, and the Ethiopian government has been touted as a big step forward. As a
result, commercial coffee farms would gain a lot from these opportunities. Sales of organic, fair trade, rain forest alliance, forest, and other brand
sales of natural and washed of Ethiopia is increasing.
The fact that a Specialty Coffee Association of America (SCAA); signing an agreement with the Ethiopia Commodity Exchange (ECX), in June
2010 is an added opportunity for specialty coffee producers in Ethiopia.
In addition to the major importers of Ethiopian coffee, through its other marketing company in Australia (BEK Coffee International), the owner
has established a new market segment in Australia and South East Asia market with emphasis on Bench Sheko Coffee.

14
 6. PROCESS OF COFFEE PRODUCTION

6.1 Land Development

The activities of land development include bush clearing; tree felling, chopping and uprooting of stems roots. Trash removals, leveling, heaping
and ridge constriction are also parts of this activity.

6.2 Seedling Preparation

The nursery site of the farm is to be located at the centers of the planting fields; on a flat areas and gentle slope not greater than 5%. It is planned
to be in proximity where permanent sources of water for irrigation is available. The project intends to purchase CBD resistant, viable and healthy
seeds from State Coffee Farms and Coffee Research centers of EARI; and will establish nurseries with the best growing conditions to produce
vigorous and healthy seedlings. Seedlings will be raised in poly tube methods.
Varietal Selection is the basic point to be considered before Seedling preparation. The success of any modern coffee plantation highly depends on
the kind of the variety. Variety selection is just like working a good foundation for high story buildings. Having recognized the importance o
variety selection, the promoter has already established a good relationship with – Bebeka Coffee Plantation, Office of Agriculture, and Jimma
National Coffee Research Center.

15
The varieties selected for this project will be based on the recommendations of the above institutions, and considering the ecological suitability
of the area, CBD-resistant and high quality coffee lines.
6.3 Coffee Planting
The coffee planting operation will spread over two months i.e. June and July.

6.4 Young Coffee Maintenance

The operations involved in the maintenance of young coffee up to 4 years after planting are capping and pruning for multiple stem formation,
infilling of dead trees, slashing, weeding and mulching. In addition paths & tracks will have to be maintained and trees guarded from destruction
by wild animals certain amount of per tree of compost, DAP and UREA are applied for fertilizing the young trees.
6.5 Mature coffee maintenance
T h e m a t u r e c o f f e e t r e e s i . e . 4 y e a r s o l d o r m o r e w i l l n e e d a l l t h e c u l t u r a l p r a c t i c e s o f y o u n g c o ff e e e x c e p t c a p p i n g b u t m o r e
additional coffee practice is picking. Some activities like composting and weeding and mulching will require more manpower than the youn
coffee trees.

16
6.6 Harvesting and Processing
The harvesting and processing operation comes first in the 4th year of operation, which is expected, from September to December every year. The
production from the project is expected to be 100% sundried.

6.7 Thin piece picked

The entire crop is harvested at one time. This can either be done by machine or by hand. In either case, all of the cherries are stripped off of the
branch at one time.
6.8 Selectively preferred
Merely the ripe cherries are harvested and they are picked individual by hand. Pickers rotate among the trees every 8-10 days, choosing only the
cherries which are at the peak of ripeness. Because this kind of harvest is labor intensive, and thus more costly, it is used primarily to harvest the
finer Arabica beans.
In Most coffee-growing countries, there is one major harvest a year; though in countries like Colombia, where there are two flowerings a year,
there is main and secondary crop. A good picker averages approximately 100 to 200 pounds of coffee cherry a day, which will produce 20 to 40
pounds of coffee beans. At the end of a day of picking, each worker’s harvest is carefully weighed and each picker is paid on the merit of his or
her work. The day’s harvest is then combined and transported to the dispensation stand.
6.9 IMMODERATION THE CHERRIES
Even as there are several coffee species, most coffee is made from the seed or bean of either Coffee Arabica (Arab
canephora (Robusta coffee). Arabica trees normally produce berries 8-15 mm in diameter, and Robusta produce berries approximately 10 mm in

17
diameter. Commercially, Robusta is regarded as having inferior quality to Arabica coffee and is used mainly as filler in instant coffee ble
Coffee berries are picked when they ripen to bright deep red color, though there are a few cultivars that ripen to a deep yellow color. The coffee
or green bean lies within the fruit, and is surrounded by the parchment membrane, pulp or mucilage and outer skin. Coffee processing i
home i s ve ry tim e cons uming. S m all-s ca le proce ss ing e quipme nt is now avail able in A us tral ia. Equi pment is als o avai labl e from
Kingdom at considerable expense. Processing involves six main steps outlined below.
6.10 The dry system
The age-old technique of dispensation coffee and is still used in many countries where water resources are limited. The freshly picked cherries
are simply spread out on huge surface to dry in the sun. In order to prevent the
cherries from spoiling, they are raked and turned throughout the
day, then covered at night, or if it rains, to prevent them from getting wet. Depending on the weather, this process might continue for seve
weeks for each batch of coffee. When the moisture content of the cherries drops to 11 percent, the dried cherries are moved to warehouses.

6.11 In Wet Procedure

In wet procedure dispensation, the Hull is detached from the coffee cherry after harvesting and the bean is dried with only the parchment skin
left on. There are several actual steps involved. Firs the freshly harvested cherries are passed through a pulping machine where the skin and pulp
is separated from the bean. The pulp is washed away with water. Usually to be dried and used as mulch. The beans are separated by weight as
they are conveyed through water channels, the lighter beans floating to the top, while the heavier, ripe beans sink to the bottom. Next they are
passed through a series of rotating drums which separate them by size. After separation, the beans are trans

18
fermentation tanks, depending on a combination of factors such as the condition of the beans. The climate and the altitude they will remain in
these tanks for anywhere from 12 to 48 hours. The purpose of this process is to remove the slick layer of mucilage (called the parenchyma) that
is still attached to the parchment; while resting in the tanks, naturally occurring enzymes will cause this layer to dissolve. When fermentation is
complete the beans will feel rough, rather than slick, to the touch. At that precise moment, the beans are rinsed by being sent through additional
water channels. They are then ready for drying.
6.12 Drying the beans
If the beans have been processed by the wet method, the pulped and fermented beans must now be dried to approximately 11 percent moisture to
properly prepare them for storage. These beans, still encased inside the parchment envelope (the endocarp), can be sun dried by spreading them
on drying tables or floors, where they are turned regularly. Or they can be machine dried in large tumblers, once dried these beans, referred to as
parchment coffee, and are warehoused in sisal or jute bags until they are readied for sell abroad.

6.12.1 Milling the beans

Previous to it is exported parchment coffee is processed in the following manner; Machines are used to remove the parchment layer from wet
processed coffee.
6.12.2 Hulling
Equipments are used to remove the parchment layer (endocarp) from wet processed coffee. Hulling dry processed coffee refers to removing the
entire dried husk the exocarp, Mesocarp & endocarp of the dried cherries.

19
6.12.3 Polishing
An optional process in which any silver that remains on the beans after hulling is removed in a polishing machine.
While polished beans are considered superior to unpolished one, in reality there is little difference between the two.
6.12.4 GRADING & SORTING
Previous to being exported, the coffee beans will be even more precisely sorted by size and weight. They will also be closely evaluated for color
flaws or other imperfections.
Typically, the bean size is represented on a scale of 10 to 20. The number represents the size of round holes diameter in terms of 1/64’s 0f an
inch. A number 10 bean would be the approximate size of a hole in a diameter of 10/64 of an inch and a number 15 bean, 15/64 of an inch. Beans
are sized by being passed throng passed through a series of different size a series of different sized screens. They are also sorted pneumatically
by using an air jet to separate heavy from light beans. Next defective beans are removed. Though this process can be
sophisticated machines, in many countries, it is done by hand while the beans move along an electronic conveyor belt. Beans of unsatisfactory
size, color, or that are otherwise unacceptable, are detached.
This strength includes over-fermented beans, those with insect damage or that are unshelled. In many countries, this process is done b
machine and hand, insuring that only the finest quality coffee beans are exported.
6.12.5 Tasting the coffee
By each stage of its production, coffee is repeatedly tested for quality and taste. This process is referred to as cupping and usually takes place in a
room specifically designed to facilitate the process. First, the taster usually called the cupper carefully evaluates the beans for their overall visual

20
quality. The beans are then roasted in a small laboratory roaster, immediately ground and infused in boiling water, the temperature of which is
carefully controlled. The cupper “noses” the brew to experience its aroma an integral step in the evaluation of the coffee’s quality, After letting
the coffee rest for several minutes, the cupper “breaks the crust” by pushing aside the grounds at the top of the cup. Again the coffee is nosed
before the tasting begins. To taste the coffee, the cupper “slurps” a spoonful with a quick inhalation. The objective is to spray the coffee evenly
over the cupper’s taste buds, and then “weigh” it before spitting it out. Samples from a variety of batches and different beans are tasted daily
Coffee is not only analyzed this way for their inherent characteristics and flaws, but also for the purpose of ble
determining the proper roast. An expert cupper can taste hundreds of samples of coffee a day and still taste the subtle differences conne
them.
6.13 EXPORTING THE BEANS
Milled beans, currently referred to as green coffee, are ready to be loaded onto shipped for transport to the importing country. Green coffee is
shipped in either jute or sisal bags which are loaded into shipping containers, or it is bulk shipped inside plastic-lined containers. About seven
million tons of green coffee is produced world each year.
6.14 Transporting processed clean coffee
At the initial stages the project will use rented vehicles to transport coffee from the farm area to the local sites as well as processin
Transport to port is considered to be through hiring external transport facilities.

21
 7. Land Use Plan and production capacity
The project under reference has a total area of 1000 ha for coffee plantation. Full plantation of 1000 ha with coffee seedling.

Table1: Land use plan of the project

Developed /ha/ Year Total

22
 1 2 3 4
1 Coffee 333 ha 555 ha 703 ha 1000 ha 1000 ha
Total 333 ha 555 ha 703 ha 1000 ha ha

7.1 Production capacity

As shown on table:1 above it is expected that Moges Yimer Beyene coffee producer and Exporter coffee project farming is going to undertake is
coffee and spices farming for the purpose of supplying the product to foreign markets. Th
from the farm is shown on table 7 below.
Table2 Annual production capacities for Moges Yimer Beyene coffee producer and Exporter coffee project farming.
Year Description L a n d Expectedt o T o t a l ba n n eu a l e x p e c t e d
developed /ha/ yield /ha yield(qt)
YEAR 4 Coffee 333 8 2,664
YEAR 5 Coffee 555 8 4,440
YEAR 6 Coffee 703 10 7,030
YEAR 7 Coffee 1000 11 11,000
YEAR 8 Coffee 1000 11 11,000

7.2 ANNUAL REVENUES FROM PRODUCT SALES

23
A s s h o w n o n Ta b l e : 1 a b o v e , a t f u l l s c a l e d e v e l o p m e n tM
, oi tg ei s aYsi smuemr e Bd e tyheant e f co or f f e e p r o d u c e r a n d E x p
coffee project farming collects 11,000 quintals of coffee per year at full operation.
The expected annual revenue from the sales of coffee is shown on table 3 below.
Table: 3 Annual production capacity for Moges Yimer Beyene coffee producer and Exporter coffee project farming.

Year Crop harvested (qt)T o t Price/qt

a l Revenue
a from
n salesn u a l
expected yield
YEAR 4 Coffee 2,664 17,500 46,620,000.00

YEAR 5 Coffee 4,440 17,500 77,700,000.00

YEAR 6 Coffee 7,030 17,500 123,025,000.00

YEAR 7 Coffee 11,000 17,500 192,500,000.00

YEAR 8 Coffee 11,000 17,500 192,500,000.00

7.3 Calendar for the main activities of the project

The main activities to be accomplished and the tentative schedules for implementing the activities is shown below

24
 Table: 4. Time table of the farm
Time table for implementing main activities of the projec t

Description Starting dat e Complete date

P r e p a r a t i o n a n d Feb,2022
s u b m i s s March,2022
i o n o f b u s i n e s s
plan
Acquiring land Jan,2023 Feb ,2023
Development of infrastructure March ,2023 April ,2023
L a n d c l e a r i n g , l oApril
w ,i2023
n g , cMay,2023
u l t i v a t i o n , a n d
harvesting
Production and sales May ,2027 -

25
 7.4 SITUATIONAL & SWOT ANALYSIS
Table 5: SWOT analysis and strategy development
STRENGTH STRATEGY

Sales & Marketing – Currently M

h oal idns t laai rng easnt d g r o w m a r k e t s h a r e b y i m p r o v i n g

market share from the export items m a r ke t i ng a nd p r om ot i on s bo t h wi t hi n a nd ou t o f

the country.

L o c a t i o n - s u i t a b l e a g Provide
r o - equality
c o l products
o g y inf olarge
r amount
c o f ftoeattract
e

26
p r o d u c t i o n a n d u n d e r c o n s t r u c t ithe
o ncoffee
o f abuyer
sphalt

road national coffee market centers

S k i l l s – k n o w l e d g e , s k i l l s a n d Train
e x p e and
r i e ndevelop
c e o f staff to deliver superior quality

m a n a g e r s i n r u n n i n g s u c c e s of
s f products
u l c o and
f f eservices
e farm

businesses previously

F i n a n c i a l – o w n e r s ’ a c c e s sFund
3 0training,
% t o marketing
financial

resources and strong cash flow from operations

WEAKNESS STRATEGY

L o c a t i o n – c a p p e d c a p a c i tInvestigate
y d u e thet o option
l i m of
i t negotiating
ed acquisition of

investment land. additional land from adjoining area.

OPPORTUNITY STRATEGY

E c o n o m y – We l l p o s i t i o n e d t o t a k e a d E
v axnpt aagne d m a r k e t i n g a n d p r o m o t i o n a n d m a i n t a i n

of a strong economy, low interest rates and highprices at current market levels

disposable income

P h y s i c a l F a c t o Increase
r s - advertising
p u to b attract
l i newc clients
t r a n s p o r t a n d

infrastructure in the direction of progress

27
 8. ORGANIZATIONS AND MANAGEMENT
T h e o rg a n i z a t i o n a l s t r u c t u r e o f t h e p r o j e c t w i l l b e d e s i g n e d b a s e d o n h o w b e s t t h e s e r v i c e s c o u l d r e a c h t h e s e r v i c e s s e e k e r s w
e x p e n s e s a n d h i g h e f f i c i e n c y. T h e p r o j e c t i s f u l l y o w n e d a n d m a n a g e d b y G e n e r a l M a n a g e r o f t h e p r o j e c t w h o
experienced person to run the business. Besides the project will be adequately staffed with qualified and experienced pers
effectively execute their duties and responsibilities.
9. FINANCIAL ANALYSIS OF THE PROJECT

9.1 Capital Expenditure

Capital expenditure is equivalent to the total financial requirements of the project. In other words, they are initial investment outlays required to
enter operational stage. These capital expenditures are constituted of fixed investment costs and initial working capital.

9.2 Source of capital Expenditures

The above forecasted project capital is planned to be raised from two sources. These two sources are the promoter's equity contribution and loans
from Ethiopia development Bank. The promoter of the project plans to raise 30% of the total capital while the remaining 70% assumed to b
obtained from the Ethiopia development Bank. In summary, the promoter's contribution and Ethiopia development Bank will be; Equity capital
11,951,439.00 birr, Bank loan 27,886,691.00 birr, total investment capital 39,838,130.00 birr.

28
 9.3 FIXED INVESTMENT
Fixed investment costs are expenditures on the required fixed assets. The major components of fixed costs are constituted of expenditure
machinery and equipment. The rest will go to construction of civil works and the acquisition of office facilities. According to estimates made by
this project70.9% fixed cost will be Birr 28,245,234.00
Table 6: Fixed Investment of the Project

29
No Type of fixed Investment cost Unit Quantity Unit Cost Total Cost

A Machinery and Equipment

1 Tractor Pcs 1 2,500,000 2,500,000
2 Hulling machines Pcs 1 1,000,000 1,000,000
3 pulping machines Pcs 1 1,000,000 1,000,000
4 Chemical Sprayer Pcs 200 1000 200,000
5 Farm Tools Bulk - - 300,000
6 Generator Pcs 1 500,000 500,000
7 Workshop Equipments Set - - 250,000
Sub Total 5,750,000.00
B Building and Civil Works
1 Office M2 1000 1500 1,500,000
3
2 Residential houses M 3000 1,806.3 5,418,734
3
3 Launge and M 400 1000 400,000
3
4 Workshop M 400 1000 400,000
2
5 Pack house M 600 1000 600,000
2
6 Shed house for pulping machines M 400 1000 400,000
7 Input Store M2 400 1000 400,000
2
8 Coffee Store M 1000 1500 1,500,000
2
9 Fermentation tank M 200 2000 400,000
10 Water recirculation system 2,000,000
11 Construction of lagoons No 3 60,000 180,000
12 Reserve weir construction M3 100 2000 200,000

30
13 Machinery Shed M2 200 400 80,000
14 Generator/ Pump House M2 240 1000 240,000
15 Shower and Toilet M2 9 500 4,500
16 Guard House M2 200 500 100,000
17 Access and Farm Road Km 10 200,000 2,000,000
Sub Total 15,823,234.00
C Vehicles
1 Pick-up (D4D) Pcs 2 2,000,000 4,000,000
2 Track Pcs 1 2,200,000 2,200,000
Motor Cycle Pcs 2 150,000 300,000
Sub Total - - - 6,500,000.00
D Office Equipments
Chairs No. 32 500 16,000.00
Tables No. 32 1000 32,000.00
Computer No. 4 10,500 42,000.00
Printer No. 2 10,000 20,000.00
Shelf No. 6 5,000 30,000.00
Safe box No. 8 4000 32,000.00
Sub Total 172,000.00
Total 28,245,234.00

31
9.4 Working Capital
Working capital is part of annual operating costs and is required to make the project operational. Except for some operational costs whose yearly
expenses were taken as they are, some limited Monthly expenses were taken to forecast the working capital requirement of the project. Working
capital include all project expenses other than fixed investment
. They are expenditures to be spent on annual operating items. As it will be seen
l e t t e r s i n t h i s d o c u m e n t , w o r k i n g c o s t s i n t h e y e a r o f t h e p r o j e c t l i f e a r e11
e s, t5i9m2a, 8t e9d6 .bt0oi0r br e2 9 . 1 % o f t h e t o t a l c a p i t a l . I n
estimating operating costs, it has been tried to depend on current market information and on the experiences of similar projects.
Table 7: Summary of production cost
No Description Value birr
1 Daily Labor 7,560,000.00
2 Coffee Seed 100,000.00
3 Fertilizer DAP 450,000.00
4 Urea 390,000.00
Packing Material 20,000.00
5 Fuel, Oil and Lubricant 450,000.00
6 Salary 1,654,800.00
7 Other operating costs 968,096.00
Total 11,592,896.00

32
 Table 8 : Manpower Requirement of The project
No Description Quantity Monthly Annual Payment
Salary

1 General Manager 1 10,000 120,000

2 Farm Manager 1 7500 90,000
3 Administration Financial Manager 1 7500 90,000
4 Unit Farm Head 4 4500 216,000
5 Accountant 2 4500 108,000
6 Foremen 10 2,500 300,000
7 Secretary 1 2500 30,000
8 Purchaser 1 2500 30,000
Table
9 9: Cashier
Depreciation Schedule 1 2500 30,000
No
10 Description
Seales person Original
1 value Rate
2500 Depreciation
30,000
11 Storekeeper 2 2500 60,000
12 Chief Mechanic (Br.)
1 %3500 Per year
42,000

1 13 Assistant Mechanic
Machinery and equipments 2
5,750,000.00 102500 60,000
575,000.00
2 14 Truck Driver
Construction and Civil works 2
15,823,234.00 5 2,500 60,000
791,161.7.00
15 Pick-up Driver 2 2,000 48,000
3 Vehicles 6,500,000 10 650,000.00
16 Electrician 2 1800 43,200
4 Office furniture’s 172,000 10 17,200.00
17 Tractor Operator 2 2000 48,000
18
Total
Water Pump Operator 2 1400
1,242,200.00
33,600
19 Assistance Tractor Operator 2 1,500 36,000
20 Guards 10 1000 120,000
21 Office Boy 1 1000 12,000
22 Cleaners 4 1000 48,000
Sub Total 51 1,654,800.00
23 Temporary worker 400×70×270days 70/day 7,560,000.00
Sub Total 400 7,560,000.00 33
Total 451 9,214,800.00
34
Table 10: Other operating costs of the project
No Description Annual cost Assumptions used
1 Repair and maintenance
∙ Machinery and farm equipments 115,000 2% of original value
∙ Construction and Civil works 158,232.34 1% of original value
∙ Vehicles 130,000 2% of original value
∙ Office furniture’s 1,720 1% of original value
2 Stationery and office supplies 72,000 Birr6,000 /month
3 Par time and Traveling 99,480 5% of Annual salary
4 Land rent 49,000 1000 ha x 49Br.
5 E-mail, Telephone, Fax and Postage 24,000 2,000 Br./month
6 Audit, license and legal fee 25,000 25,000 Br/ year
7 Miscellaneous expenses 16,000 4000 Br./month
Total cost 690,432.00

Table 11: Summary of Investment cost

No. Description Total Cost (Br.)

1 Machinery and Equipment 5,750,000.00

2 Building and Civil Works 15,823,234.00
3 Vehicles 6,500,000
4 Office Equipments 172,000.00

35
 Total fixed Investment Cost 28,245,234.00
5 Working Capital 11,592,896.00
Total Initial Investment Cost 39,838,130.00

10. . FINANCIAL EVALUATION

T h e p l a n n e d i n v e s t m e n t c o s t n e e d e d t o r u n t h e p r o j e c t w i l l b e s e c u r e
3 9 , 8 3 8 , 1 3b0i.r0r 0 r e q u i r e d t o r u n t h e p r o1 j1e, c9 t5, 1 3, 40 3%b9i.or0r 0 w i l l b e c o n t r i b u t e d b y t h e p r o m o t e r a n d t h e
27,886,691.00birr from bank loan.

36
11. FINANCIAL AND ECONOMIC ANALYSIS
Table: 12.1 Assumptions used in the financial evaluations of Moges Yimer Beyene coffee producer and Exportercoffee project farming
Construction period 2 year
Source of finance 30 % equity 70 % loan
Loan duration 5 years
Tax holidays 5 years
Bank interest 9.5%
Depreciation 10% in the initial year with 1% decrease per year
there after
Repair and maintenance 5% of the total farm machinery & equipment and
buildings
F a r m i n g Incur
m 5%a additional
t e r cost i aeach
l year
s a n d
inputs
Labour cost Incur 5% additional cost each year
Utilities Incur 5% additional cost each year
Tax 20% of the gross profit
Work in progress 270 days 270 days
Cash in hand 5 days

37
 Accounts payable 30 days

12. LOAN REPAYMENT SCHEDULE

As mentioned above 70% of the investment cost or birr 27,886,691.00birr will be secured from loan granting banks. Depending on t
duration and the rate of interest, the project may consider for securing the loan it requires for its develo
development bank of Ethiopia and the various private banks in the country would be considered as options for securing the loan.
Table:13 Loan repayment schedule
Loan Duration: 5 Years
Number of Payments: 60
Interest Rate: 9.5%
Monthly Payment: 464778.18Birr

Year Beginning Balance Principal payment Interest Payment Total payment

0 27,886,691.00

38
 1 22,309,352.8 5,577,338.2 2,649,235.645 8,226,573.85
2 16,732,014.6 5,577,338.2 2,119,388.516 7,696,726.72
3 11,154,676.4 5,577,338.2 1,589,541.387 7,166,879.59
4 5,577,338.2 5,577,338.2 1,059,694.258 6,637,032.46
5 00 5,577,338.2 529,847.129 6,107,185.33

Note: the proceed is assumed to be granted with six months elegance period; hence a
slight variation in the loan schedule is predictable

39
 13. PROFITABILITY

Based on the projected income statement, the project will generate profit beginning
from first year of operation. Annual government tax will also grow during the life of
the project. The detail analysis is tabulated below

Table 14. Profit or Loss projection

Y-5 Y-6 Y-8
on Y-0 Y-1 Y-2 Y-3 Y-4 Y-7
ome - - - - 46,620,000.00 77,700,000.00 123,025,000.00 192,500,000.00 192,500,00
- - - - - - - - -
st 28,245,234.00 - - -
Costs 11,592,896.00 - - - 11,592,896.00 11,592,896.00 11,592,896.00 11,592,896.00 11,592,896.
tion - - - - 1,242,200.00 1,242,200.00 1,242,200.00 1,242,200.00 1,242,200.0
nce - - - - 690,432.00 690,432.00 690,432.00 690,432.00 690,432.00

rest - - - - 2,649,235.645 2,119,388.516 1,589,541.387 1,059,694.258 529,847.12

15,644,916.52 13,525,528.00 13,525,528.00 13,525,528.

ense 39,838,130.00 16,174,763.65
ofit - - - - 30,445,236.35 62,055,083.48 109,499,472.00 178,974,472.00 178,974,47
% - - - - 6,089,047.27 12,411,016.696 21899894.4 35,794,894.4 35,794,894
fit - - - - 24,356,189.08 49,644,066.784 87,599,577.6 143,179,577.6 143179577.

Remark: There is No revenue from Year 1 to year 3 (2023-20214.Environmental

Impact assessment

14.1 Environmental Dimensions of Coffee production

The way coffee is grown and processed has profound environmental importance both
locally and internationally. This section focuses on four themes intimately related and
which the project will put measures in place: biodiversity and conservation of forest
ecosystems; agro-chemical use; water pollution from coffee processing; and soil
quality. Each of these factories is critical to the environment and the quality of coffee.

14.2 Biodiversity &Conservation of forest ecosystems

Deforestation trends are serious throughout the coffee-producing lands of Africa and
Latin America. Ethiopia is one of the coffee producing countries in the world where

40
high deforestation rates are encountered. By the late 1980s, for example, only an
estimated one-fourth of the primary moist tropical forest has been cleared for the
purpose of different agricultural activities including coffee and cereals.

Bench Sheko´s forests are critical in protecting the atmospheric dynamics, water
quality, and wildlife species, as well as economically as reservoirs of germplasm
which has multiple applications for food, medicine, and industrial products. To
preserve the Biodiversity & Conservation of forest ecosystems, the project will
employ a method of Traditional shade coffee systems.

Traditional, shade coffee production has been shown to be highly beneficial to

biodiversity conservation in tropical forest ecosystems. In South west Ethiopia,
traditional coffee covers very significant areas with closed canopy, fauna and flora
species unique to the zone.

Traditional coffee is often integral to agro-forestry systems in which tree species are
cultivated together with the coffee and other agricultural commodities. Where
geographic and market conditions are favorable, economic returns can be achieved
through sustained-yield timber production in association with coffee. Agro-forestry
systems, including those involving coffee, have potential to enhance the economic and
ecological stability of the area.

By providing an alternative to deforestation, traditional coffee systems constitute an

important check against greenhouse gas emissions that contribute to global warming.

41