Project Proposal for Organic Fertilizer Production – March 2024

CONTENTS
1. EXECUTIVE SUMMARY....................................................................................................................................... 1
2. THE PROBLEM STATEMENT AND PROPOSED SOLUTION .................................................................................. 2
3. METHODOLOGY AND FINDINGS........................................................................................................................ 3
4. Study limitations and Findings .......................................................................................................................... 4
5. The Need for Organic Fertilizer ......................................................................................................................... 5
6. Market status .................................................................................................................................................... 7
7. Technical Study.................................................................................................................................................. 9
Organic Fertilizer Production Process ................................................................................................................... 9
Machinery and Equipment Requirement & Setup ................................................................................................ 9
8. Project Inputs & Production ............................................................................................................................ 10
Estimated Total Project Investment .................................................................................................................... 10
9. ESTIMATED REVENUE ...................................................................................................................................... 11
10. Citations Used ............................................................................................................................................. 12

I
EXECUTIVE SUMMARY
Project Purpose: Organic Fertilizer Production

Business Type: Manufacturing

Business Activity: Collection of Raw Materials, Production, Packaging, & Distribution

Raw Materials: More than 90% raw materials can be locally sourced

Business Site: In Regional States Oromia, South, or Amhara

Project site demand:

Total Investment Capital: ETB 260 Million

Estimated Total Revenue: ETB 567 Million

Social and Economic Benefits: will create forward linkage with the agricultural sector, farmers, agricultural
research centres, commercial farms, and it also creates a business and employment opportunity for high number of
skilled and non-skilled work force. It decreases the forex import demand of the chemical fertilizer by increasing soil
fertility and substituting the need as well as generates income for the Government in terms of tax revenue.

Environmental Impact: It is an environmentally friendly and a potential green star project

1
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
THE PROBLEM STATEMENT AND PROPOSED SOLUTION
THE PROBLEM STATEMENT

The challenges of the increasing usage of inorganic fertilizer, which resulted in soil quality deterioration, less
productivity and increasing the need for more fertilizer which finally results in much more expense to the
agricultural sector and devastating result to the environment. Creating a soil recovery mechanism while keeping the
agricultural production level at its level or better is the required solution.

PROPOSED SOLUTION

As it is proven across multiple parts of the world using organic fertilizers and crop rotation mechanisms can result
in a very productive soil.

From the proposed solution we can derive the organic fertilizers production business and the feasibility study shall
be conducted to assess the project feasibility.

2
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
METHODOLOGY AND FINDINGS
This project shall be assessed using data from primary and secondary sources. The local data on the project can be
collected from central statistics agency, Ethiopian ministry of agriculture, agricultural experts, and some farmers
within short distance from the capital city. The international and general data can be collected from online sources.

METHODOLOGIES:

D ATA COLLECTION

• Interviews
• Printed data (CSA, MoA,etc)
• Collecting secondary data from online sources

D ATA ANALYSIS

• Analysing both the primary and secondary data

S UMMARIZING THE FINDINGS AND OUTLINING THE LIMITATIONS

• Findings
• Limitations

3
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
STUDY LIMITATIONS AND FINDINGS
Due to lack of interviewees and adequate budget for the interview data collection we have skipped the interview
data collection method. The collection of data from Central Statistics Agency is also skipped at this stage to save
time. The data collection is limited to online available sources both from national and international sources.

For this specific study the researcher’s observation of the effect of using chemical fertilizer on soil productivity at
multiple locations across the nation have shown that there is significant effect of the NPK fertilizers in soil’s loosing
of productivity over the years.

According to study made by (Phad, 2023) Chemical fertilisers are man-made materials that are
applied on crops to supply vital nutrients for development and yield. In order to fulfil the demands of
an expanding population and boost crop yields, they are frequently utilised in modern agriculture.
Nevertheless, applying chemical fertilisers to soil can have both beneficial and detrimental effects.
On the plus side, by supplying vital minerals like nitrogen, phosphorous, and potassium, chemical
fertilisers can boost crop yields and enhance plant growth. This enables farmers to feed a larger
population by producing more food on the same area of land. On the other hand, the health of the soil
may suffer from the overuse or incorrect application of chemical fertilisers. Overuse of chemical
fertilisers can result in nutrient imbalances, compaction of the soil, and soil acidification.
This may eventually result in lower agricultural yields, a decrease in soil fertility, and a rise in the
danger of soil erosion and runoff. Additionally, applying chemical fertilisers may be harmful to the
ecosystem.
(Phad, 2023) had also suggested some mitigating mechanisms to multiple soil problems arising from
chemical fertilizers usage and the top recommendation is to use organic fertilizers.
In addition, other study by (Pahalvi et al., 2021) has pointed out the effects of continued usage of chemical
fertilizers. Even if the study has acknowledged the increase crop productivity due to the usage of chemical
fertilizers, but it also pointed out its effect in altering soil physicochemical and biological properties.
Nonetheless, the ongoing use of chemical fertilisers is to blame for the reduction in the amount of soil organic
matter (SOM) and the deterioration of agricultural soil quality. Overuse of chemical fertilisers results in
hardened soil, decreased fertility, air, water, and soil pollution, as well as a reduction in vital soil and mineral
nutrients, all of which pose environmental risks.

From the researcher’s personal observation in recent years the Ethiopian farmers across the nation
has faced similar incidents of soil fertility loss, acidification, and generally deterioration of
agricultural soil quality which resulted in lowering of crop production or more chemical fertilizer
demand to produce at equivalent level of the previous years.

4
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
THE NEED FOR ORGANIC FERTILIZER
Multiple studies have identified the application of organic fertilizers to agricultural lands in
conjunction with other solutions would solve the soil productivity issue. It also creates a sustainable
agricultural practice that will to the environmental well-being of the agricultural ecosystem.
According to (Ethiopia: Agricultural Land 2020 | Statista, 2022) in 2020, Ethiopia possessed over
38.5 million hectares of arable land, making up more than 34% of the nation's total geographical area.
In general, over the reviewed period, more land was utilised for animal production and crop
cultivation.
Another study by (Sori et al., 2021) has shown that It is estimated that about 40% of the total arable
land of Ethiopia is affected by soil acidity [13]. Of this land area, about 27.7% is moderately acidic
(pH in KCl 4.5–5.5) and about 13.2% is strongly acidic (pH in KCl < 4.5).
A total of 15.4 million hectares of land need medium and high intervention to regain the soil fertility
and productivity. The most widely used solutions forwarded in improving soil fertility are adding
lime to the soil, using organic fertilizers, crop rotation, and alternating/cyclic use of agricultural land
for grazing and other agricultural use.
(Jitto & Nakbanpote, 2023) underlined the potential benefits of organic fertilisers as readily available
mineral sources that have a modest concentration of vital minerals for plants. They have the ability
to lessen issues related to synthetic fertilisers. They lessen the need for frequent synthetic fertiliser
applications to preserve soil fertility. They preserve the nutritional balance necessary for crop plants
to grow healthily by releasing nutrients into the soil solution gradually. They also serve as a
productive source of energy for soil microorganisms, which enhance crop development and soil
structure.
The application of organic fertilizers which are made of organic contents can be an ideal solution
towards soil fertility and sustainable crop productivity. Frequent application of organic fertilisers not
only provides nutrients but also raises the levels of organic matter in the soil, enhancing its physical
characteristics such as drainage, tilth (the structure and ease of tillage) and water-holding capacity.
According to the study by (Chala & Gurmu, 2017) the combined analysis of 2 consecutive crop
seasons indicated that integrated application of organic and inorganic fertilizer mix 50% Vermi
Compost- VC (4.8 t ha -1 ) and 50% recommended N and P rate (34.5 kg ha-1 N and 30 kg ha-1 P)
have given the maximum grain and biomass yield of Tef (3144 kg ha-1 and 12562 kg ha-1
respectively) followed by the full recommended N and P rate (2846 kg ha-1 and 11833 kg ha-1 ). But,
considering the economic feasibility of input use, the application of 33% of each of the organic
fertilizers i.e. vermicompost, conventional compost and farmyard manure (based on N equivalent
5
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
rate), has been found to be economical to be recommended on Vertisols of the study area and similar
agro-ecologies.

6
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
MARKET STATUS
Ethiopia Imports of Fertilizers was US$1.3 Billion during 2022, according to the United Nations COMTRADE
database on international trade. Ethiopia Imports of Fertilizers - data, historical chart and statistics - was last updated
on February of 2024.

Fertilizer holds significant importance as a strategic commodity in Ethiopia’s import lineup. In preparation for the
approaching harvesting season, the country has invested over one billion dollars to secure approximately 14 million
quintals of NPS, NPSB and Urea fertilizers. This expenditure accounts for 6.5% of Ethiopia’s annual import bill.

In recent years, the delivery of fertilizers to small-scale farmers has faced significant disruptions. The global
fertilizer trade, which has already been affected by economic constraints before 2021, has now been further impacted
by the global energy crisis resulting from the Russia-Ukraine conflict. These two countries, along with Belarus, play
crucial roles as major players in the global fertilizer industry.

With the consideration of the annually growing use land for agriculture and agricultural related works, the
acidification and loss of productivity of soil due to increased use of chemical fertilizers is expected to increase. For
our assumption of the organic fertilizer demand of the estimated acidification affected 15.4 million hectares of
land if we start using organic fertilizers over 1 million hectares of land and if we assume application of 9.6
tonnes of organic fertilizer per hectare, we can have an estimated 9.6 million tonnes of organic fertilizers need
per annum. With a forecasted 4.4% growth of agricultural land expansion annually we can expect the organic
fertilizer demand for the coming 5 years to look like:

Agricultural Land Size with acidification Organic Fertilizer Demand

Year
problem in Million Hectares in 000' Tonnes
2024 15.4 3,003.48
2025 16.1 3,135.63
2026 16.8 3,273.60
2027 17.5 3,417.64
2028 18.3 3,568.02

7
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
 Organic Fertilizer Demand Demand Captured in 000'
Year Price in USD
in 000' Tonnes Tonnes
2024 3,003.48 195.03 65,530,486.35
2025 3,135.63 203.61 68,413,827.75
2026 3,273.60 212.57 71,424,036.17
2027 3,417.64 221.92 74,566,693.76
2028 3,568.02 231.69 77,847,628.29

8
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
TECHNICAL STUDY
Organic Fertilizer Production Process

Organic
Crushing Mixing Drying Granulation Cooling Screening Packaging
materials
Process Process process Process Process process process
fermentation

Machinery and Equipment Requirement & Setup

9
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
PROJECT INPUTS & PRODUCTION

Estimated Production Capacity

S.No Hourly Daily Annually
1 1.2 T/Hr 96 29,760.00

Estimated Total Project Investment

S.No Project Inputs Quantity UoM Price in USD Total In ETB

1 Machinery & Equipment 10 Set 30,000 17,025,000.00
2 Building & Construction 1 Lump Sum 10,000,000.00
3 Manpower 100 head count 10,000,000.00
4 Raw Material 170,239,104.00
207,264,104.00
5 Pre-Production Expenditure 10,363,205.20
6 Working Capital 42,489,141.32
260,116,450.52
TOTAL INVESTMENT

10
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
ESTIMATED REVENUE
Estimated Annual Revenue from 1% of the Total Market Size

Total Annual Production Unit Price

S.No Total Revenue in ETB
in Ton USD/T

1 29,760.00 336 567,463,680.00

11
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com
CITATIONS USED
Chala, G., & Gurmu, G. (2017). Effect of organic and inorganic fertilizers on growth and yield of

TEF (Eragrostis TEF) in the central Highlands of Ethiopia. African Journals Online, 27(1),

77–88. https://www.ajol.info/index.php/ejas/article/view/150356/139932

Ethiopia: agricultural land 2020 | Statista. (2022, September 29). Statista.

https://www.statista.com/statistics/1303945/agricultural-land-in-ethiopia/

Jitto, P., & Nakbanpote, W. (2023). Food waste management in Thailand for sustainable

development. In Elsevier eBooks (pp. 117–136). https://doi.org/10.1016/b978-0-323-95278-

1.00021-8

Pahalvi, H. N., Rafiya, L., Rashid, S., Nisar, B., & Kamili, A. N. (2021). Chemical fertilizers and

their impact on soil health. In Springer eBooks (pp. 1–20). https://doi.org/10.1007/978-3-

030-61010-4_1

Phad, N. M. (2023). Chemical fertilizers and their impact on soil health. Journal of Emerging

Technologies and Innovative Research (JETIR), 10(4), 428–432.

https://www.jetir.org/papers/JETIRFW06056.pdf

Sori, G., Iticha, B., & Takele, C. (2021). Spatial prediction of soil acidity and nutrients for site-

specific soil management in Bedele district, Southwestern Ethiopia. Agriculture & Food

Security, 10(1). https://doi.org/10.1186/s40066-021-00334-5

12
SEWMAN CONSULTING PLC
Addis Ababa, Ethiopia P.o. Box 21013/1000 Tel: +251-911780257 Email: support@sewmanconsulting.com