FISSEHA AMHA SPICE PRODUCTION AND COMERCIAL MARKETING FARM (PLC)

GENA BOSA SPIC PRODUCTION, PROCESSING AND MARKETING COMMERCIAL FARM

Investment Feasibility study

September/2016

OWNER- Ato Fisseha Amha Weldeyeis

0
CONTENTS
ACRONYMS ................................................................................................................................................ 3
1. EXECUTIVE SUMMARY .............................................................................................................................. 4
1.1 PURPOSE OF REPORT ........................................................................................................................ 4
1.2 DESCRIPTION OF THE INVESTMENT BUSINESS ................................................................................... 4
1.3 RATIONAL BEHIND THE PROJECT ........................................................................................................ 5
1.4 INVESTMENT CAPITAL ......................................................................................................................... 5
1.5 LAND AND CONSTRUCTIONS .............................................................................................................. 5
1.6 SOCIO-ECONOMIC JUSTIFICATIONS .................................................................................................... 6
1.7 RECOMMENDATIONS.......................................................................................................................... 6
2. PROJECT BACKGROUND INFORMATION ............................................................................................... 7
2.1 COMPANY / APPLICANT ...................................................................................................................... 7
2.2 Promoter’s Profile ....................................................................................................................... 8
2.3 Location of Project: ................................................................................................................... 8
2.4 Purpose of the project ................................................................................................................ 8
2.5 BUSINESS OBJECTIVES ......................................................................................................................... 9
2.6 PROJECT STRATEGY ............................................................................................................... 10
3. MARKET OVER VIEW ............................................................................................................................... 10
3.1 ETHIOPIA SPICES AND PRODUCTIONS .............................................................................................. 10
3.2 SPICES EXPORT OF ETHIOPIA ............................................................................................................ 11
3.3 DEMAND PROJECTIONS .................................................................................................................... 12
3.4 THE MARKET PROSPECT (DEMAND – SUPPLY GAP).................................................... 13
3.5 M A R K E T S U P L Y.......................................................................................................................... 14
4. TECHNICAL STUDY ................................................................................................................................... 15
4.1 PROJECT LOCATION ................................................................................................................ 15
4.2 Physical and natural condition of project site ................................................................. 15
4.2.1 Topographic Features ....................................................................................................... 15
4.3 COVERED AREA REQUIREMENT OF FARM AND COST ...................................................................... 18
4.4 CAPACITY AND PRODUCTION PLAN .................................................................................................. 18
4.5 PROCESS FLOW GINGER and TURMERIC PRODUCTION ................................................................... 19
4.6 DESCRIPTION OF GINGER PRODUCTION ........................................................................................... 20
4.6.1 AGRONOMICAL PROFILE .......................................................................................... 20

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 4.7 WASHING AND DRYING PROCESSING OF GINGER AND TURMERIC ................................................. 25
4.8 OPERATING ACTIVITIES ..................................................................................................................... 26
4.8.1 PRE-OPERATING ACTIVITIES ....................................................................................................... 26
4.8.2 Land Development ............................................................................................................. 26
4.8.3 Land Preparation........................................................................................................................ 26
5. HUMAN RESOURCE AND TRAINING REQUIREMENT........................................................ 27
51 HUMAN RESOURCES REQUIREMENTS ............................................................................ 27
5.2 ORGANIZATIONAL STRUCTURE .......................................................................................... 27
5.3 MAN POWER REQUIREMENT ............................................................................................................ 28
6. FINANCIAL STUDY .......................................................................................................................... 29
6.1.1 FINANCIAL BUDGET OF THE INVESTEMENT ........................................................ 29
6.3 FINANCIAL VIABILITY .............................................................................................................. 30
6.3.1 INCOME STATEMENT ...................................................................................................... 30
6.3.2 CASH FLOW STATEMENT AND BALANCE SHEET ................................................ 31
6.3.3 PAY BACK PERIOD............................................................................................................ 31
6.3.4 INTERNAL RATE OF RETURN ....................................................................................... 31
6.3.5 NET PRESENT VALUE (NPV).......................................................................................... 31
6.3.6 Sensitivity analysis ............................................................................................................ 32
7. ENVIRONMENTAL IMPACT ASSESSMENT ............................................................................. 32
8. CONCLUSIONS AND RECOMMENDATIONS .......................................................................... 33

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ACRONYMS
ADLI Agricultural Development-Led Industrialisation

ECX Ethiopian Commodity Exchange

ETB Ethiopian Birr

FDRE Federal Democratic Republic of Ethiopia

GDP Gross Domestic Product

GTP Growth and Transformation Plan

ha Hectare

KA(s) Kebele Administration(s)

KM Kilo Meter

GSPPMCF GENA BOSA SPIC PRODUCTION, PROCESSING AND

MARKETING COMMERCIAL FARM

m.a.s.l. Meters above sea level

mm Millimetre

MoARD Ministry of Agriculture and Rural Development

MoFED Ministry of Finance and Economic Development,

oC Degree Cellicious

PIF Policy and Investment Framework (of Ethiopian

Agricultural Sector)

PLC Private Limited Company (Pvt. Ltd. Co)

Qtl(s) Quintal(s)

USA United States of America

USD United States Dollars

Page 3 of 43
1. EXECUTIVE SUMMARY

1.1 PURPOSE OF REPORT

The present investment feasibility study plan is established with view to

establish new large Scale Spice Farm Production and Marketing by GENA BOSA
SPIC PRODUCTION, PROCESSING AND MARKETING COMMERCIAL FARM
PLC investment land of 200 ha at Gena Bosa wordea of Dawro Zone, SNNPR
Regional States. This summary highlights the key points of feasibility business
plan and investment requirements.

1.2 DESCRIPTION OF THE INVESTMENT BUSINESS

The investor is planning to invest on the production of exportable quality spices
including but not limited to Ginger, Turmeric, and Cumin etc. These crops are
currently one of the major export crops in Ethiopia and the project is in line with
government interest and policy which focuses on market oriented agricultural
production. It is also in line with agricultural strategy of the SNNPR government
and contributes to the recent undertakings of the t on agricultural development
corridors plan.

The proposed project is will specialize on commercial farm production of export

standard Spices. The modern commercial farm targets export market after
production of the products at the investment land studied by the investor of 15
ha. The commercial farm yearly average production capacity within 200 ha of
land an average of 14,400 tons per annum. The proposed investment area for
the envisage project found at SNNPR Regional state, Dawero Zone, Gena Bosa
Woreda ,at the specific locality known as Bele kebela specific project area
Angela. Location of the Project area is situated between 6° 10΄N and 37°10΄ E,
Longitude; and, Latitude

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1.3 RATIONAL BEHIND THE PROJECT
The some of the rational for establishment of the envisage farm with modern
mechanized commercial farm infrastructures and post-harvest packaging facility
for the export market are,

Policy: Government five years strategic plan, which promotes new investment in
agro-industrial sector and specially encourages commercial farm products of
fruits, Spices, and oil seeds which directly or indirectly contributes to import
substitution and exportable ones.

Labor: There is plenty of skilled and semi-skilled labor in Ethiopia. The country
has a good education system that churns out a number of graduates in most key
professions at all levels.

Availability of raw materials: The improved variety of seed which has higher
demand at domestic and international market farming materials are available at
seed enterprise and research centers

Market: High market demand supply gap and availability of 200 ha of suitable
land at the envisages project target area.

1.4 INVESTMENT CAPITAL

The total capital investment cost of the project is estimated to be Br 5.09 million.
The part of the cost will be covered through bank loan of .1.52 million birr for
financing the project on equity to debit ratio of 30:70 the balance of the
investment cost will be financed by promoter.

1.5 LAND AND CONSTRUCTIONS

The project required a total area of 200 ha. The project area will be used for
construction of farm store, processing shade, other buildings, and farm
production of project.

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 1.6 SOCIO-ECONOMIC JUSTIFICATIONS

 The project is expected to transfer improved spice production management skills

to the surrounding farmers through the demonstration effect of the farming and
partly through the employment opportunity to be generated The project will
employ 11 workers in permanent employment bases for more than 950 casual
laborers every year.
 The Federal as well as the Regional governments would also receive substantial
amount of revenue in the form of different taxes including profit tax. The project
will at average will generate tax revenue of 1.5 million birr per annum

1.7 RECOMMENDATIONS
All the aforementioned facts discussed above and the feasibility study on
market, technical, financial, and social point of view proves the project is viable
business plan and one of the government's priorities, which contributes for the
government strategy on development worth deserving encouragement and
support from the pertinent government offices.

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 2. PROJECT BACKGROUND INFORMATION
2.1 COMPANY / APPLICANT
2.1.1 Name of Owner
2.1.2 Nationality:
2.1.3 Owner(s):
2.1.4 Type of business:
2.1.5 Full Address : Addres
2.1.6 Project Name:
2.1.7 Status of the Project:
2.1.8 Proposed Site:
2.1.9 Specific location:
Size of proposed land:
Total estimated capital:
Legal Form of organization:
Registering office:
Taxpayer Identification No.:
Right of Occupancy:
Contract Period:
Page 7 of 43
FISSEHA AMHA SPICE PRODUCTION AND COMERCIAL
MARKETING FARM (PLC)
Ethiopian (i.e. Registered with the Investment Office of
SNNPRs )
Mr. FISSEHA AMHA
Spices Production (Turmeric & Ginger)
Tel.: 0462213103
Mobile: 09360112162
E-mail: : fissehaamha@Gmail.com
GENA BOSA SPICE PRODUCTION, PROCESSING AND
COMERCIAL MARKETING FARM (GSPPCF)
New
Gena Bosa Worede Bele keble, Dawero Administrative
Zone, SNNPRS
Within the rural areas surrounding Bele Kebele
Angela Sub cluster
200 ha
8,193,708 Million Birr
P.L.C.
SNNPRS Investment Beraua
0008947331
Lease agreement
10 years (2016-2025)
2.2 Promoter’s Profile
The anticipated “Gena Bosa Spice Production, processing and Commercial
Farming Project” is initiated by the newly established FISSEHA AMHA SPICE
PRODUCTION AND COMERCIAL MARKETING FARM (PLC) which is owned by Mr.
Fisseha Amha Weldeys was born in Ethiopia and currently have a Ethiopian
citizenship. In view of his education and work experiences, A very reputable
professional in the field of Personal and Businesses management, holding BSc
degree in Business management. He has worked in several agricultural
development organizations, particularly personal management & Hwasa Road
and transport office particularly vehicle inspection Process co-ordinate. Currently
he has a wealth of experience in managing its own businesses. General Manager
Galaxy drivers Training institute and Danichle Girls Empowerment and women
capacity building project manager which working in finance management and
administrations

2.3 Location of Project:

The area identified for implementing the anticipated project is located in the
Dawro Zone of SNNPR, within Dawro administrative Zone in Gena Bosa. In terms
of geographic coordinates, Gena Bosa Wereda is situated between 6° 10΄N and
37°10΄ E, Longitude; and, Latitude

2.4 Purpose of the project

This profile envisages the establishment of a commercial farm production of
spices by applying good agricultural practices and management standards at the
farm area of 200 ha and marketing the product to export market and domestic.
The overall goal of the project is to contribute towards the economic development
of Ethiopia through using the existing investment opportunities in the Country
and taking advantage of the expressed policy incentives that emphasize on
greater commercialization of agriculture and enhancing private sector
development. The project’s main objective is to implement an agricultural
investment project using intensive mechanized farming for the production of

Page 8 of 43
 export-focused spices production; which primarily involves Turmeric & ginger.
Turmeric & ginger cultivation with high standards and quality of production;
while ensuring optimal economic returns as well as socially and environmentally
acceptable production system that will attain full production level within Ten
years starting from the 2017 production season.

Production capacity: Export standard spices of 500 tones /annum of various

Spices.

2.5 General OBJECTIVES

 The business objectives of the envisaged farm are profitable production of Spices
and marketing the product for local market, domestic market
 As a business firm one of objective of the Company is to earn reasonable income
from the demand supply gap exists in the sector at large and at the regional
markets.

2.5.1 Specific Objectives

. The specific objectives of the project are:

 The production of washed Spics in a socially and environmentally acceptable

way;

 To make Spice traceable through transparent and accountable processing;

 To raise the standard and quality of Spice through collaboration with the
SNNPR’s marketing and cooperative organizations;

 To allocate 2% of our profit to reinvest in the project area; and, create jobs.

Page 9 of 43
 2.6 PROJECT STRATEGY

Constructing a project farm building as per EUREGAP / ISO 14001 regulations

and commercial farm building standards

 Procures machineries and equipment.

 Recruit and train workers
 Setting up of the production, harvesting, packaging, and marketing system.
 Set up and a qualified and efficient management and technical staff recruited.

3. MARKET OVER VIEW

3.1 ETHIOPIA SPICES AND PRODUCTIONS

The use and cultivation of spices goes back to the beginnings of history. They
are commonly obtained from flowering plants. Owing to its varied topography
and climate, Ethiopia is home to different plants species that grow on its
highlands and rift valley. Out of the 6,000 species of vascular plants that grow in
Ethiopia, 12 percent are endemic. Ethiopia is a homeland for many spices, such
as korarima (Aframonum Korarima), long pepper, Black cumin, white
cumin /Bishops weed (‘Nech azmud’)/, coriander and ginger. Though the
agricultural survey of Central Statics of Ethiopia doesn’t include all spices.
Information from Ethiopian Export Promotion Agency /Ministry of Trade and
Industry -2003 (Survey of the three major spice producing Regions) shows area
covered by the spices was 121.937 ha and annual production reaches
282,691.9tone / annum

S/ Commodit Region National

N y
SNNPR Oromiya Amhara
Area(Ha) Production Area Production Area(Ha) Prod Area(Ha) Produ
(tones) (Ha) (tones) (tones) (tens)
1 Ginger 20,546 231 121.00 315 - - 20,667 231,111
2 Pepper 16,951 8,572 7,638 6,674 24,709 14,852 73,887 30,098
3 Cummins 64 14.10 3,901. 1,812.50 5,244.00 4,061 9,209 5,887
4 Korerima 4,575 5,593 42.00 32.60 - - 4,617. 5,625
5 Fenugreek 162 59.70 2,437. 880.50 8,474.00 3,261 11,073 4,201

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 6 Turmeric 483 3,946 18.00 16.00 - - 1,003. 3,962
7 Long pper 754.00 1,499 - - - - 754 1,499
8 Coriander 6.00 3.60 465.00 234.00 - - 471 237.20
9 chilies 58.00 26.40 - - - - 58.00 26.40
10 Cardamo 41.00 2.10 - - - - 41.00 21.00
m
11 others 152.00 24.30 5.00 - - - 157.00 24.30
total 43,729 250,538. 14,672 9,664 38,427 22,174 121,937 282691
Source: Ethiopian Export Promotion Agency /Ministry of Trade and Industry (Survey of the three major spice producing
Regions)
Table 3-1 Annual Productions of Spices in Ethiopia

3.2 SPICES EXPORT OF ETHIOPIA

Ethiopia produces various types of spices. However, the utilization of the sub
sector’s potential for generation of export earnings from natural as well as agro
processed products has remained very small. The export of spices has in general
been showing increasing trend in volume and value terms. /See Figure 1 above/.
During the period1 2009-2015, the cumulative average growth rate of 25.6% and
25.3% in volume and value terms respectively.

Figure 3-1: Spice Export of Ethiopia

The details of the major export volume and value of spices from Ethiopia for the
period 2005/06-2009/10, is presented in the Table 5 below.

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Table 3-2: The Volume and Value Percentage Distribution of Spice Export by
Type: 2005/06- 2009/2010 Volume in Tons and Value in '000 USD

No Type Volume FOB Price Share of Top

Value % ranking
1 Ginger 47189 38090 77.06 1
2 Cumin seed 5293 8364 8.65 2
3 Coriander 2219 1639 3.62 3
4 Turmeric 5528 4403 9.03 4
5 Pepper 1003 2534 1.64 5
total 61223 55039
In terms of volume, the export of ginger accounted for the lion share of 71% of
total spice export for the period 2005/06-2009/10, followed by turmeric (8.3%),
and cumin (7.9%). In value terms, ginger claimed a higher share of 62% of total
spice export, followed by cumin seed (13.7%), turmeric (7.2%) and pepper (4%).

3.3 DEMAND PROJECTIONS

Assuming supply was driven by demand, the average annual supply, which
constitutes domestic production and imports, is considered as the effective
demand for the product. Demand for the product is increasing with population
growth, urbanization, expansion of education and other social services. A
conservative estimate of 15% rate of growth is therefore adopted in estimating
the demand for the product.

year Demand(Tones/Year)
Ginger Turmeric Pepper
2012 14822 3492 52468
2013 17786 4190 56141
2014 21343 5028 60070
2015 25612 6034 64275
2016 30735 7241 68775

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2017 36881 8689 73589
1018 44258 10427 78740
2019 53109 12512 84252
2020 63731 15014 90149
2021 76477 18017 96460
Source :- Consultant Calculations ( RDBCS)
Table 3-3 Demand Projections (Tons)

3.4 THE MARKET PROSPECT (DEMAND – SUPPLY GAP)

The interaction of demand supply is summarized in table below through demand

– supply gap of products by types for ginger and turmeric for export market level
are calculated as shown below

year Ginger Turmeric

Demand Gap Demand Gap
2012 19482 6765 4769 3384
2013 23378 10661 5723 4338
2014 28053 15336 6868 5483
2015 33664 20947 8249 6857
2016 40397 27680 8902 8505
2017 48476 35759 11868 10483
1018 58172 45455 14241 12856
2019 69806 57089 17290 15705
2020 83767 71050 20508 19123
2021 100520 87803 24609 23224
Table 3-4 Demand – supply gap (Tons), Source: Consultant Analysis Results

The Demand – Supply analysis shows that there exists a wide range of market
that enables this upcoming project to sale its produce without any problem.

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 3.5 Market Supply
The supply of various crops depends upon harvesting season. A good harvest
will result in large quantity of products availability in the market. In Ethiopia
90% of spices are harvested in November to February .Seasonal availability
calendar of the above spices of the plants is as below:

Table 3.5: -Bar diagram showing periods of harvesting of Spices at Ethiop

Segment/Products Months
Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec
Chill pepper
Ginger
Turmeric
Black cumin
Cardmon

The medium used for supply mechanism of whole spices from grower to
consumer. Whereas most prevailing marketing channels for supply to end
consumer are as follows.

 Grower- Local Trader- Wholesaler - Retailer - Consumer

 Grower –Local Trader- Comm. Agent -Processor - Retailer - Consumer
 Grower – Local Trader- Comm. Agent – Value Addition Processor –Exporter-
Consumer

Page 14 of 43
4. TECHNICAL STUDY

4.1 PROJECT LOCATION

Gena Bosa woreda capital, Bele keble is found in SNNPR Regional State, Dawro
Zone, and located 279 from Hwassa, the regional capital of SNNPRS. The area
lies within the Give and Wajibi rivers.. Major crops grown around Gena Bosa
area are Coffee and cereals such as teff, barley, wheat, maize, sorghum, and
root crops like potato and sweet potato and vegetables such as cabbage, spinach
and onion as cash crops. Annual crops are predominant and rain-fed agriculture
is mainly practiced using draught power. Total human population of this area is
285,176.

. The land proposed to be developed is found in SNNPR regional state, Dawro

Zone, Gena Bosa Woreda at the specific locality known as Bele Kebele. The area
found at Gena Bosa. In terms of geographic coordinates, Gena Bosa Wereda is
situated between 6° 10΄N and 37°10΄ E, longitude; and, latitude. With an
altitudes ranging from 1900 to 2600 meters above sea level (masl). The localities
of Angela keble is technically feasible for raifed spices farm production as it full
files spice production metrological, land quality requirements.

4.2 Physical and natural condition of project site

4.2.1 Topographic Features

The project site is located within the Give river and Wajebi River. The topographic
features of the proposed project area are characterized by flat to gently sloping terrain.
The average altitude of the project area is 1700 to 26oo m.a.s.l; with general land
gradient of 2.5 to 3.5 %. The project area in the woreda is categorized as Kolla (20%),
Woinadega (50%) and Dega (21%). Out of the total area of 76,888 ha, crop land accounts
for 48,975 ha, and the rest 7440, 5160, and 1320 ha are forest land, grazing land and
land for other purposes, respectively. It generally drains towards a Give stream located
on the eastern side of the proposed land. The topography of the project area generally
indicates availability of favourable opportunity for low cost installation of infrastructures
and land preparation requirements.

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• Climate

The climatic conditions of the project area could be broadly categorized as sub-
tropical, warm sub humid moist lowlands. According to traditional classification
of agro-climatic zones in Ethiopia; and, considering the high rainfall, medium
altitude (above 1400 m.a.s.l.); the project area might be classified as ″wet worm″.
The specific features of the project area in terms of temperature and rainfall
patterns are described below.

 Temperature
According to the climatic data obtained from the Ethiopian Meteorology Agency
(wlayata); the average minimum and maximum temperatures of the project area
are 25.97 o C and 32.19 o C respectively. The Table and Figure below provide
the details of the variations in the average temperature of the area over the
months of the year.

Figure 4.1: Average maximum and Minimum Monthly Temperatures (oC) of the project
area

50
40
Av. Max. Temperature (oC)
30
20 Av. Min. temperature (oC)
Temperature (o C)

10
0
Jan Feb Mar Apr MayJun Jul Aug SepOct Nov Dec

Months
 Rainfall Trend
Source: Ethiopian Meteorology Agency, Dawero Branch

The project area has average annual rainfall of 1254.55 mm; which is higher
than the average precipitation requirements of most field crops. The monthly
rainfall distribution of the Wereda shows that the area has a mono-modal
rainfall pattern where the wet months are May – October, during which 95.77%
of the annual rainfall occurs. As described in Table 2 and Figure 2 below, the
wettest months are June – September; accounting for 79.43% of the annual

Page 16 of 43
 rainfall; where the highest rainfall amounts occur in August (291.79 mm). On the
other hand, the driest months are December and January.

Figure 4.2: Monthly Rainfall Distribution of the project area ( Dawro Zone)
300

Average Rainfall (mm)

250
200
150
100
50
0
Ja M Ma Jul Sep No
Months

Source: Ethiopian Meteorology Agency, Dawro Branch

 Soil Conditions of the Project Area

Results of soil sample analysis from the project area indicate that the major soil
textures are clay and sandy loam with strong coarse structure. The PH of surface
soil ranges from 7.1 - 7.9, which implies moderately alkaline soils. These soils
are chemically and physically suitable for cotton, soybean and sesame
cultivation. In addition, the proposed investment area refers to well drained soils
that occur on almost flat to gentle slope. The proportion of the land is suitable to
most of annual crops. The result sheet for chemical and physical analysis soil
samples from the project area are summarized in the following table.

Table 4.3: Chemical and Physical Analysis Soil samples from the project area

Cla Na K Ca Mg CEC
PH EC Sand Silt Soil Bas.Sa T.N O.C C/N Av.P.Ol.
y cmol(
H2O ds/m % % Type cmol(+)/Kg % % % ppm
% +)/Kg
7.9 0.308 26 26 48 Clay 0.24 1.41 22.16 9.05 52.73 62 0.145 0.965 7 7.6
Sandy
7.6 0.028 74 12 14 0.03 0.50 6.43 2.09 10.67 85 0.069 0.959 14 1.00
Loam
7.1 0.010 24 22 54 Clay 0.09 0.59 14.37 5.56 28.36 73 0.097 0.938 10 0.52

Source: National Soil Testing Center

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4.3 COVERED AREA REQUIREMENT OF FARM AND COST
To determine the building and other infrastructure requirement of the envisage
farm projects, Standards and Regulation of Commercial Farms Set up and
Regulation of Organic Certifications Requirements have been revised

BUILDING Unit Quantity

Processing Shad M2 600
Drying Shad M2 120
Packing Shad M2 162
Main Store + Office M2 170
Tractor Shad M2 40
Guard House M2 28
total M2 1120
Table 4-1 Building Requirements (Sq.m2)

The cost estimated of Building structure cost is 1,816,840 Birr The details
breakdown and others details on floor area shown at the supporting plan and
bill of quantities.

4.4 CAPACITY AND PRODUCTION PLAN

The total land to be developed by the project is 200 hectares for spice farming
.The proposed production plan is as follows .The farm output is expected to be
about 80% of the full capacity at the initial year and grown to 100% after second
year onwards

Description of the product Production Year

Y-1 Y-2 Y-3 Y4-10
Ginger 60 100 100 80
Turmeric 100 1oo 100 120
Area(Ha) 160 200 200 200
% (coverage) 80 100 100 100

Page 18 of 43
 Table 4.2 CAPACITY AND PRODUCTION PLAN

• Products & Revenue:

The planned Production & Expected Revenue: Dry Ginger producing yearly
capacity of 790 qut, 1200 qut and 1150 qut during the first to three years and
from 4 t0 10 years 1200 qut annually during respectively. The production
expected to increase. Based on export market the revenue earned out of the sales
of washed dry ginger 5,060,000, 50,060,000, 7,250,000 and 9,000,000,000 Birr
form 1 to 3 and 4 to10 year respectively.

Similarly dry turmeric producing yearly capacity of 920 qut, 9200 qut, 1000 qut
during the first to three years and 900 qut from 4 to ten years annually
respectively. The production expected to increase. Based on export market the
revenue earned out of the sales of washed dry turmeric 8,400,000, and
9,000,000 Birr for 4 to 10 year respectively, details at annexure: 2.4.

4.5 PROCESS FLOW GINGER and TURMERIC PRODUCTION

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4.6 DESCRIPTION OF GINGER PRODUCTION

4.6.1 AGRONOMICAL PROFILE

Ginger (Zingiber Officinale): Ginger is originated in South East Asia. Major ginger
producing Country: India, China, Taiwan, Nigeria, etc. Its fresh or dry rhizomes
are esteemed for their aroma, flavor and pungency, widely used in Culinary
Purpose in ginger bread, biscuit, cakes, puddings, in production of ginger beer,
ginger wine etc. Ginger belongs to the family Zingiberaceae, is slender, perennial
herb, usually grown as annual (30-40 cm) tall, and has robust branched
rhizomes borne horizontally near the surface of the soil bearing leafy shoots close
together. Aerial pseudo stem bears 8-12 leaves (regularly arranged in two
opposite rows on either side of the stem). The dominant spices that can be grown
in the country in general and SNNPR in particular are: Coriander, Fenugreek,
Ginger, Korerima, Timiz( long pepper substitute), Turmeric…etc. Despite all the
opportunities and other favorable conditions for the production and value adding
of spices and herb in SNNPR, the attention given to the business is not much
comforting.

SNNPR is the biggest producer of ginger in the country and dried ginger is an
important export crop. Ginger is customarily sun-dried on the ground without
washing. It is required to support the adaptation of appropriate washing
tools/facilities which suit the local conditions by farmers. To change the current
practice of drying, it is absolutely necessary for farmers to get better prices
(incentive) worth doing extra work. It is also necessary to build up an assured
business relation between farmers and quality-conscious buyers in which
farmers’ incentive are realized.

4.6.1.1 Ecological requirement

It is mainly cultivated in the tropics; thrives best in hot, moist climate; no shade
required, open sun preferable for ginger production. Altitude: from sea level to
1500 masl; annual rainfall 1500 - 3000 mm; temperature: (dry) 28 - 350C. Soils:
Grows best in soil rich in organic material, medium loams with a good supply of

Page 20 of 43
humus particularly. Virgin soils rich in humus found ideal for ginger. In Ethiopia,
coffee soils or forest soils of south and south-western Ethiopia found good for
ginger production. The field for ginger production should not be sloppy since
erosion will expose rhizomes

4.6.1.2 Site Selection

For an adequate success rate at plant establishment, it is important to establish

the crop in a weed-free bed with proper soil texture. Proper soil fertility and
moisture levels during the growth of the crop will be key determinants of crop
quality and yield.

4.6.1.3 Planting and Propagation

Planting is done in March. Ginger & Turmeric are universally prorogated from
cuttings of rhizome, known as bits. Bits are made from mother rhizomes having
3-5 cm in length, 15-20 g weight and at least one sound bud. A seed rate of 15-
20 qt/ha applied before plating bits will be teetered with fungicides. Spacing 25-
40 cm and 15-20 cm between rows and plants respectively

Propagation

Ginger and Turmeric are propagated by portions of rhizomes known as seed

pieces/seed setts. Seed setts can be stored in different ways in the different
localities.

a. Field preparation: Clearing, tilling and remove all the roots, plant remains and
make the soil very fine. Remove any obstacle that could impede rhizome
expansion. Get ready the land before rainfall starts

b. Preparing propagation material: For planting carefully preserved seed

rhizomes are cut into small pieces 2.5 – 5.6 cm long, weighing 28 - 56 g each
having at least one good bud.

Page 21 of 43
c. Planting Time: Fresh yield of ginger (Q/h) at different planting months. From a
research the planting time for ginger crop is proved to be in March and April.

d. Land preparation: Flat land or prepared bed; the second one more suitable for
rain fed area.

e. Spacing: 15 cm 30 cm for rain fed area, depends on the soil fertility.

f. Seed rate: 25Q/h and the seeds should be free of Fusarium root rot.

Ginger is depleting plant, mono cropping increases the fertilizer requirement and
cost incurring and cause yield reduction disease development, so crop rotation is
necessary.

4.6.1.4 Manure and Fertilizers

FYM or well rotten cattle dung at the rate of 25-30 t/ha at plating Inorganic
fertilizer ranges 100 120 kg of and 75-80 kg per hectare of DAP and Urea
Respectively.

4.6.1.5 Plant Protections and Weed Managements

• First mulching at the time of planting with quick rotting green leaves 10-12 t/h
and after 90 days.

• Two weeding are generally given to the ginger crop First weeding is done before
the second mulching. It repeated depending on the intensity of weed growth or at
an interval of 40-65 days. During hoeing, every care should be taken that the
rhizomes should not be disturbed, injured or exposed.

• To control shoot borer and leaf roller the spray of Very conducive to weed
growth, mulching is good practice for adequate weed control. Hand weeding and
applying herbicide (2,4-D) are also useful.

Page 22 of 43
4.6.1 .6 Harvesting and Yields

Harvesting varies depending on the purpose of harvest: For production of

preserved ginger- harvested before the rhizomes are fully mature about 7
months after planting; for the production of ginger and turmeric 8 - 9 months
after planting. When leaves begin turn yellow, stem begin lodging, use forks to
dig the rhizomes, remove thin roots, tops, wash the rhizomes and prepare in
the form required (peeling without peeling for drying). Yield varies from country
to country, in Ethiopia 180 Q/h to a maximum of 250 Q/h.

Harvesting types

a. Fresh (green) ginger: consumed as vegetable, harvested immature or matur

b. Preserved ginger (syrup): rhizomes are cut in desired sections, peeled, shaped,
graded and preserved in salt or sugar

c. Dried ginger: harvested rhizomes that developed full aroma, flavor and
pungency, can be used for extraction of oleoresins by solvent extraction and
essential oil by distillation process

Harvesting periods

 For fresh ginger, the crop should be harvested fifth months onward after
plantings
 Foe preserved ginger, 5-78 months of planting
 For dried spices 8-9 months after plantings when leaves starts yellowing
 ( at full maturity)

Yields per plant range from 2 to 7 kg. Per plant yields of young ginger may be 1–
3 kg, but fields grown solely for young ginger may be planted at twice the
planting density (plants per unit area) compared with spacing for mature ginger
production. Globally, large producers normally reach yields of 40–50 MT/ha, and
some growers reach yields of up to 70 MT/ha. Because ginger accumulates a

Page 23 of 43
large bulk of its final weight during the later months prior to reaching maturity,
early harvests result in lower yields. For the envisaged project 230 qt/ ha for
Ginger and 180 qut/ha for Turmeric as take as expected yields

4.6.1.7 Infrastructures
Road:

Generally, the project area can be accessed by all weather roads up to its
wereda town. Gena Bosa 24km Dawro Zone, is located at 279 km away from
Hawass town and connected with all-weather roads. Out of the 11 PAs of , 6 PAs
have access to all weather roads while 5 PAs have dry season roads.

Electric Power

The wereda town of Gena Bosa of the project area has access to hydroelectric
power.

Water Resources

Generally, shallow well and boreholes are the main sources of water supply in
the Gena Bosa woyede. Currently, access to safe drinking water is not a
significant problem in the project area. However, the Water Resource Bureau and
other stakeholders in collaboration with the community has established different
safe water generating schemes such as hand dug well, hand pump, developing
spring water, deep well and shallow well to alleviate the problem,

Telecommunication

According to the data collected from the Bureau of Finance and Economy, the
wereda town and 11 PAs in the project area have access to different telephone
services, such as, wire line, mobile telephone service, and wireless.

Page 24 of 43
Financial Institutions

There are no government or private banks in the project district. However, the
project can get bank services from the nearby town of Gena Bosa which is found
at a distance of 14 km. There is one bank in Gena Bosa town.

Health Services:

The project area can get hospital service from the closest Dawro hospital located
24 kms from Gena Bosa town

4.7 WASHING AND DRYING PROCESSING OF GINGER AND TURMERIC

Washed rhizomes dried on drying bed or cemented open place, which is clean.
Care should be taken to have uniform drying of the rhizomes. Keeping the
rhizomes at home at night 6 - 8 days 7 - 12% moisture. Grading: 1st quality:
white and bigger rhizomes, free of fungus and extra substance. Low grade:
shrink, black. Marketing for dried ginger and Turmeric: different types of
preparation Clean peeled, Rough peeled, Coated or unpeeled. Package: Pack
with sack, Ventilated storage, Check if stored for longer.

Washing Soaking in water => Rough wash by hands => Wash with brush
=> Separation by cleanness : a) Clean or b) Not yet clean
a) Clean roots => Drying
b) Not yet clean roots => Wash with pump + nozzle => Drying
Drying Sun drying on concrete slab, wire-mesh tables and plastic sheets.
Turn around after 7 – 10 days and collect dried roots (small size)
selectively.
Keep dried roots in warehouse for several days to cool down, then
weighing and bagging.

Page 25 of 43
 4.8 OPERATING ACTIVITIES

4.8.1 PRE-OPERATING ACTIVITIES

During the implementation period, the different activities likely to be undertaken

have been classified as follows on the basis of activities category and schedule
in six months period as shown in the activity chart shown at table below.

ACTIVITES MONTHS
1 2 3 4 5 6
Building and Site Work Construction
Farm Machinery Purchase
Farm tools and auxiliary machinery
Purchase
Manpower recruitment
Training to technical staff
Farm Inputs Purchase
Farm site preparation
Preparation to Production
Commencing Production
Table 4.4: PRE-OPERATING ACTIVITIES

4.8.2 Land Development

The main production process of sesame farm will be started with land
development activities, such as land clearing and surveying (for land parceling
and access/ farm road marking). The land development activities are expected to
be undertaken by machinery and equipment such as Bulldozers, and surveying
instruments. These machinery and equipment are expected to be rented from
other enterprises.

4.8.3 Land Preparation

Generally, land development for sesame production is followed by land

preparation. It comprises ploughing and harrowing. Ploughing operation may be

Page 26 of 43
omitted after the first year operation and be replaced by minimum or no tillage
practices. Sowing follows harrowing with fertilizer application. For this purpose,
tractors with various bottoms like disc plough, disc harrows and planters and
fertilizer drillers are employed in general.

Land preparation for soybean and sesame is similar to that of simple farming
crops like ginger. They can be achieved by one ploughing, disking and
harrowing. The sowing time varies from place to place. The best time for sowing
in tropical and subtropical regions is just after the rains are well started, i.e. from
the end of May to early July. The crops should always be sown in rows.

Table 12: Operation Plan of the Project

Sr. Year 1 Year 2 Year 3 Year 4 (ha)

No Major Activities (ha) (ha) (ha)
1 Clearing 200 200 200 0
2 Plowing 200 200 200 200
3 Harrowing 200 200 200 200
4 Fertilizing 200 200 200 200
5 Sowing/planting 200 200 200 200
6 Weeding 200 200 200 200
7 Harvesting 200 200 200 200
Table 4.5: Operation Plan of the Project

5. HUMAN RESOURCE AND TRAINING REQUIREMENT

51 HUMAN RESOURCES REQUIREMENTS

Operating labor, supervisory and managerial staff requirement are given in the
finical assumptions sections below the labor and supervisory requirement is
based on 300 the days of the year.

5.2 ORGANIZATIONAL STRUCTURE

The owner will follow the performance and guidance, but the business will be
managed by an experienced three functional structures. The organizational
structure is depicted in the organization chart, figure 5.1

Page 27 of 43
 Figure 5.1 Organization Structure

5.3 MAN POWER REQUIREMENT

The farm works will demand a total of nine perm ant employs as per the skill,
qualifications, and budget details at the table below.

S/N Title/Designation Educational level No of persons Salary

Month Annual
s
Management Staff Requirement
1 Farm manager BSC In horticulture Experience 2 1 3000 36000
years
2 Store keeper 10+3 Property Management 1 1200 14000
Sub total 50000
Production Staff
3 Forman !0+3 in agriculture 2 1200 28800
4 Time keeper Experience 1 1500 18000
5 Tractor Operator Operator 2 1 1900 22800
6 Fuel and lubricant Experience 1 500 6000
assistant
7 Farm Guards Reading and writing 4 400 19200
Sub total 94800
Grand Total 145200

Table: 5.1 Man Power requirement

Page 28 of 43
 6. FINANCIAL STUDY

6.1PROJECT INVESTMENT COST AND WORKING CAPITAL REQUIREMENTS

The total cost of project including working capital is estimated at ET. Birr
8,193,708.00 million. Broad break-up of the above cost under various heads
is given below

6.1.1 FINANCIAL BUDGET OF THE INVESTEMENT

a. Total Investment Cost

The total investment cost of the proposed agricultural enterprise is estimated at Bir 4,955,288.
The fixed investment component is estimated at about Birr 880,748 and the pre-production
expenditure is 1,530,040. The following table briefly summarizes the total investment cost of the
project.

Description ET BIRR
INVESTEMENT COST
infrastructure Cost 280800
Civil work & Buildings 1,530,040

Land Development 880,748

Auxiliary Machinery 752,000

Tools and Accessories 84,960

Vichels (FSR-Care) 1,341,780

Furniture & Fixture 84,960

Total Capital Costs 4,955,288

Table 5.2: Summary of Investment Costs for the project

b. Operating cost

The total operating cost is estimated at Birr 3,238,420.00 for ten years project life. Operating
costs are recorded on a year basis. Summary of operating costs are presented on the following
table

Table 5.2: Summary of Operating/ working Capital Costs the project

Page 29 of 43
 Initial Working Capital
Raw Materials 2,126,600.00
Auxiliary material and package 613,400.00

345,000.00
Casual Labor at preparation line
Salary and Wage Production Staffs) 145,000.00
Utilities 8,420.00

Total Working Capital 3,238,420.00

6.2 MEANS OF FINANCE

The promoter of the project has planned to finance the project through a long-
term loan from the Development Bank of Ethiopia; and, partially from own
contribution. The debt equity ratio is assumed to be 70:30. The following table
briefly summarizes the project financing by source of funds.

Table 5.3: Project Investment and Working cost by Source of the Fund

Description Source of Fund

Equity Contribution Bank Loan Total
INVESTMENT COST 1486586.40 3468701.60 4955288
WORKING COST 971526 2266894 3238420
Total Cost 2458112.40 5735595.60 8193708
% Share 30.00% 70.00%

6.3 FINANCIAL VIABILITY

6.3.1 INCOME STATEMENT

It may be seen from the profitability estimates that the unit would earn a net
profit after taxation of ET Birr1, 832,895 during the first years of operation at
80% of the capacity. The net profit after tax will increase gradually from to ET.
Birr 5,716,078 in the second year when the unit expects to achieve 100%
utilization of capacity. On the above basis, there is adequate generation of funds
out of the farm operation to service the repayment of term loan and interest
liabilities, as also to meet additional requirement of margin money for working

Page 30 of 43
capital in the second and subsequent years. Further, adequate surplus cash is
available with the unit for promoter withdrawal. Annexure-3-1

6.3.2 CASH FLOW STATEMENT AND BALANCE SHEET

Cash flow on hand at a given period in time (i.e., projection) is critical component
of a business initiative. The cash flow is positive starting Year one. The cash end
balance clearly shows that the accumulated or free cash fund is sufficient to
finance the expansion activities, strengthen the farm and invest on the
establishment of other services.

6.3.3 PAY BACK PERIOD

The computation of the payback period is given at Annexure - 4. The pay- back
period works out to 3 years on the basis of profit after tax. The pay- back period
would be much less in case calculated on the basis of profit before tax.

6.3.4 INTERNAL RATE OF RETURN

Internal rate of return calculations are given at Annexure-4, IRR of the project
based on 10 years life span, works out to 53%, and 41%, which is quite
reasonable.

6.3.5 NET PRESENT VALUE (NPV)

The NPV is calculated by subtracting the present value of all the costs incurred
for the project from the present value of the stream of benefits. As shown below,
the resulting NPV value is greater than zero; which implies that the project is
acceptable (profitable).

PVC = ∑PVc = 81,915 PVB = ∑PVb = 41,127

Therefore: NPV= ∑PVc - ∑PVb = 40,788

This is critical stage for paying out dividends to shareholders who have invested
in the business enterprise. Nevertheless, the payment of dividend is delayed
until the enterprise fully pays out its loan (both interest and principals)
Page 31 of 43
6.3.6 Sensitivity analysis
Risk and Uncertainty:

The following risks and uncertain incidents that might affect the project could
occur during operating period of the project. If the global economic crisis and
inflation is prolonged and intensified, it will affect the project cost benefits
analysis. Besides, it may also affect the production cost and both inland and
offshore markets. Due to natural calamity or due to draught fluctuation result
failure pre mature rhizome or long period of rain will be problems of ginger and
turmeric washing and drying process.

7. ENVIRONMENTAL IMPACT ASSESSMENT

This project is designed to cultivate and promote the production of high value
ginger and turmeric crops, by maintaining the existing environmental system. It
also intends to protect the environment from the possible risks. Thus, in order to
establish environmental friendly farming, the new project site has been
thoroughly scrutinized particularly for its soil character, vegetation cover and
agro ecology to identify the expected negative impacts of the development.

The major expected threats identified due to the overall development farming
activities are soil depletion and loss of plantation cover in some undulated land
form areas. Therefore, the environmental management plan that will be realized
by the company is using soil improving crops through intercropping and shad
planting system. In addition buffer plantation tree are going to be planted in
order to protect from soil erosion and minimize the misbalance effect of agro
ecology.

In addition to cropping system and tree plantation programs, soil improving and
conservation practices as well as adopting good farming management activities
will be practiced including planting of cover crops, drainage structure and terrace
making. Furthermore the project will apply integrated pest management which is
more environmentally friendly form of pest control than the traditional pesticides

Page 32 of 43
as its goal is to reduce pesticide use to a minimum by using a variety of less
impact means with pesticides only as a last choice

8. CONCLUSIONS AND RECOMMENDATIONS

Based on the framework set out in this feasibility study the following conclusions
were made regarding the feasibility of proposed small scale Spice farm
productions enterer prize.

• A market opportunity was identified for the domestic sales and export market.
The demand and export trend confirms the products are marketable

• The analysis of technical feasibility of the proposed farm enterprise revealed

that the machinery, equipment’s, production facilities and services and the
human resource could be integrated for efficient Spice production farm
productions.

• The analysis on financial feasibility of the proposed enterprise revealed that

based on the assumptions made, the enterprise is profitable. The enterprise is
projected to have a healthy cash flow and is viable over long term. The positive
financial feasibility is, however, dependent on stable inflation and macro-
economic conditions. The profitability of the farm can be further increased By
using alternative energy costs.

Based on the framework set out in this feasibility study where feasibility is
assessed in three core areas, it can be concluded that the proposed farm
enterprise is feasible. The results of the feasibility study, however, are heavily
dependent upon the assumptions made during the study and other operating
environments (political, environmental and economic conditions) remain relatively
stable.

Page 33 of 43
ANNEXTURE-1

1. PROJECT INVESETMENT

1.1 LAND AND SITE DEVELOPMENT

LAND DEVELOPMENT
Cost Item Units Qan. Unit Cost Total Cost(Birr)
Land Lease Payment Per year ha 200 70 140,000.00
Site Clearing and Uprooting 149,000.00
Administration and Study Cost Ls 60,000.00
Sub-Total 349,000.00

1.2 AUXILIARY MACHINERY AND UTILIES

Auxiliary Machinery and Accessories

Description of Work Specification unit Qty set cost total cost

Semi Mounted Tanker 10000Lt ser 1 37,000.00 37,000.00

Sprayer Pressurized set 2 30,000.00 60,000.00

Polishing machine set 2 40,000.00 80,000.00

Washing and Peeling set 2 33,000.00 66,000.00

Generator 15Kva set 2 122,000.00 244,000.00

Others Ls 15,000.00 15,000.00

Grand total with VAT 502,000.00

1.3 PRELIMINARY AND PREOPERATIVE EXPENSES

Farm Tools and Accessaries

Sigle
Descriptio of Work Specfiction Unit Qty cost Total Cost
Wheel barrow No 50 300 15000
Shovel No 100 35 3500
Sickle No 60 40 2400
Forke No 79 40 3160
Axe No 20 300 6000
Manual Knap Sack 20Lt No 4 500 2000

Page 34 of 43
 Weighing Scale No 2 5000 10000
Rack No 100 80 8000
Hoe 60 65 3900
others 31000
Grand total with VAT 84960

1.4 PRELIMINARY AND PREOPERATIVE EXPENSES

Furnture and Texture

Descriptio of Work Unit Qty Single Cost Tota cost
Table and chair se 1 4500 4500
Waiting Chair pcs 2 8000 16000
Shelf and other Drawers set 1 4000 4000
others 60460
Grand total with VAT 84960

1.5 SUMMARY OF THE CAPTAL COST OF THE PROJECT

Description ET BIRR
INVESTEMENT COST
Infrastructures Cost 280800
Civil work & Buildings 1,530,040

Land Development 880,748

Auxiliary Machinery 752,000

Tools and Accessories 84,960

Vichels (FSR-Care) 1,341,780

Furniture & Fixture 84,960

Total Capital Costs 4,955,288

Initial Working Capital

Raw Materials 2,126,600.000

Auxiliary material and package 613,400.000

Casual Labor at preparation line 345,000.000

Salary and Wage Production Staffs) 145,000.000

Utilities 8,420.000

Total Working Capital 3,238,420.000

CAPITAL INVESTMENT + WC
8,193,708

Page 35 of 43
ANNEXTURE- 2 INCOM STATEMENT ASSUMPTION AND DETAILS

2.1 OPERATING EXPENSE ASSUMPTIONS

Operating Expenses for the project and there basis are taken as follows
Description Basis Basis
CONSTRUCTION AND FINANCE
Construction period 1 years 1year
Bank interest 10% 10%
Discounted cash flow 10% 10%
Source of finance 30% equity and 70% loan
ECONOMIC ASSUMPTIONS
Utilities price growth 10%
Material price growth rate 5%
Wage Growth Rate 5%
Tax rate 35%
EXPENSE
Salaries Expenses As per Salary Estimations

Staff Benefits 20% of Payroll

Insurance 1% of Eqp. Cost
Administrations expense 5% of Sales
Farm Production 50% of Sales
Selling Expenses 5 % of Sales

Page 36 of 43
 2.2 INTEREST CALCULATION (Birr)

Total Investement 8193708

Long Term Interst
Rate 10%
Percent Finaanced 70%
Loan Amount 5735596
Loan Tearm 10
Year 1 2 3 4 5 6 7 8 9 10

Beginning Balance 5,735,596 5,511,871 5,265,774 4,995,067 4,697,289 4,369,734 4,009,423 3,613,081 3,177,105 2,697,531

Interest 573,560 551,187 526,577 499,507 469,729 436,973 400,942 361,308 317,710 269,753

Principal 223,725 246,097 270,707 297,778 327,555 360,311 396,342 435,976 479,574 527,531
Annual
Payment/EMI(P+I) 797,284 797,284 797,284 797,284 797,284 797,284 797,284 797,284 797,284 797,284

Ending Balance 5,511,871 5,265,774 4,995,067 4,697,289 4,369,734 4,009,423 3,613,081 3,177,105 2,697,531 -

2.3 DEPRECIATION CALCULATION (Birr’000)

Rate ( % ) 0 1 2 3 4 5 6 7 8 9 10
Decription 1-2 3-10
Infrastructures costs 5% 5% 0 0 0 0 0 0 0 0 0 0 0
Civil works & Buildings 5% 5% 1,530 77 77 77 77 77 77 77 77 77 77
Land Devolpmen 20% 20% 0 0 0 0 0 0 0 0 0 0 0
Machinery & Auxillary 10% 12% 752.0 75 75 75 75 75 75 75 75 75 75
Furniture & Fixture 10% 10% 84.96 8 8 8 8 8 8 8 8 8 8
Motor Vehecele 10% 10% 0 0 0 0 0 0 0 0 0 0 0
Pre-production costs 20% 20% 0 0 0 0 0 0 0 0 0 0 0
Total 2,367 160 160 160 160 160 160 160 160 160 160

0
 2.4. REVENUE PROJECTIONS AND ASSUMPTIONS
Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Years
Revenu e

Turemeric
Washed Turemeric Qut/year
(Tones/Year) 920 920 1,000 900 900 900 900 900 900 900
Price (birr/fercula) 1,100 1,100 1,450 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
Revenu-1 5,060,000 5,060,000 7,250,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000
5,060 5,060 7,250 9,000 9,000 9,000 9,000 9,000 9,000 9,000

Ginger
Washed Ginger (Qut/Year) 790 1,200 1,150 1,200 1,200 1,200 1,200 1,200 1,200 1,200
Price (birr/fersula) 1200 1200 1300 1400 1500 1500 1500 1500 1500 1500
Revenu-2 4740000 7200000 7475000 8400000 9000000 9000000 9000000 9000000 9000000 9000000
4740 7200 7475 8400 9000 9000 9000 9000 9000 9000

Summary of Production Revenue

GingEr
Reveue 5,060 5,060 7,250 9,000 9,000 9,000 9,000 9,000 9,000 9,000
Expensse 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192
0.03% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
turmeric
Reveue 4,740 7,200 7,475 8,400 9,000 9,000 9,000 9,000 9,000 9,000
Expensse 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192 1.6192
0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%
Total Revenu
Reveue 8193,708 12,260 14,725 17,400 18,000 18,000 18,000 18,000 18,000 18,000
Expensse 3.2384 3.2384 3.2384 3.2384 3.2384 3.2384 3.2384 3.2384 3.2384 3.2384

0.03% 0.03% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02%

Page 1 of 43
 ANNEXTURE-3 FINANCIAL PROJECTION
3.1 PROJECTED INCOME STATEMENT

INCOME STATEMENTS
Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Gross revenue 8193,708 12,260 14,725 17,400 18,000 18,000 18,000 18,000 18,000 18,000
GINGER PRODUTION
Raw Materils 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063
Auxilury materisl and pacakge 307 307 307 307 307 307 307 307 307 307
Casual Labor at preparation line 172.5 172.5 173 172.5 173 173 173 173 173 173
Labour ( Production Staffs) 73 73 73 73 73 73 73 73 73 73
Utilites 4 4 4 4 4 4 4 4 4 4
Sub-total of processsing plant cost 1,619.2 1,619 1,619 1,619 1,619 1,619 1,619 1,619 1,619 1,619
TUREMERIC
Raw Materils 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063 1,063
Auxilury materisl and pacakge 307 307 307 307 307 307 307 307 307 307
Casual Labor at preparation line 173 173 173 173 173 173 173 173 173 173
Labour ( Production Staffs) 73 73 73 73 73 73 73 73 73 73
Utilites 4 4 4 4 4 4 4 4 4 4
Sub-total of farm operating cost 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2 1,619.2
Toal Operating Cost 3,238.4 3,238 3,238 3,238 3,238 3,238 3,238 3,238 3,238 3,238
Gross margin 6,562 9,022 11,487 14,162 14,762 14,762 14,762 14,762 14,762 14,762
General administration & selling expenses
Salary and wage 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5 72.5
Utilites 4.21 4.21 4.21 4.21 4.21 4.21 4.21 4.21 4.21 4.21
Repairs & renewals 24 25 27 28 29 31 31 31 31 31
Travel and perdime 12 13 15 16 18 19 21 23 26 28
Stationary and printing 8 8 9 9 10 10 11 11 12 12
Marketing Expensses 98 123 147 174 180 180 180 180 180 180
Insurance expense 25 26 27 29 30 32 33 35 37 38

Page 2 of 43
 Professional fees (legal, audit, etc.) 12 13 13 14 15 15 16 17 18 19
Depreciation expense 160 160 160 160 160 160 160 160 160 160
Amortization expense 0 0 0 0 0 0 0 0 0 0
Miscellaneous expense 12 13 13 14 15 15 16 17 18 19
Total of Adm and Selling Exp 427.81 457.66 487.88 520.54 532.82 539.49 545.05 550.98 557.31 564.08
Earnings before interest and taxes 6,134 8,564 10,999 13,641 14,229 14,222 14,217 14,211 14,204 14,198
Less interest expense 574 538 498 454 407 354 296 232 162 85
Pre-tax income 5,560 8,026 10,501 13,187 13,822 13,868 13,921 13,978 14,042 14,113
Cumulative pre-tax income (NOL) 5,560 13,587 24,087 37,274 51,096 64,964 78,885 92,863 106,906 121,018
Taxes 1,946 2,809 3,675 4,615 4,838 4,854 4,872 4,892 4,915 4,939
Earnings before taxes 5,560 8,026 10,501 13,187 13,822 13,868 13,921 13,978 14,042 14,113
Less taxes 1,946 2,809 3,675 4,615 4,838 4,854 4,872 4,892 4,915 4,939
Net income 3,614 5,217 6,825 8,571 8,984 9,014 9,048 9,086 9,127 9,173

Groos Profit Margine 67% 74% 78% 81% 82% 82% 82% 82% 82% 82%
Net profit Margine 36.88% 42.55% 46.35% 49.26% 49.91% 50.08% 50.27% 50.48% 50.71% 50.96%
Operting Profit Margine 57% 65% 71% 76% 77% 77% 77% 78% 78% 78%

3.2PROJECTED BALANCE SHEET

Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10

Assets
Cash 8,974 11,898 16,757 23,184 31,302 39,890 48,485 57,056 65,601 74,117 82,602

Inventory - 0 0 0 0 0 0 0 0 0 0

Accounts receivable - 490 613 736 870 900 900 900 900 900 900
Total current assets 8,974 12,389 17,370 23,920 32,173 40,790 49,385 57,956 66,501 75,018 83,502
Gross property, plant & equipment 4,955 4,955 4,955 4,955 4,955 4,955 4,955 4,955 4,955 4,955 4,955
Less: Accumulated depreciation
expense - -160 -320 -481 -641 -801 -961 -1,121 -1,282 -1,442 -1,602
Net property/equipment 4,955 4,795 4,635 4,475 4,314 4,154 3,994 3,834 3,674 3,514 3,353
Total assets 13,929 17,184 22,005 28,395 36,487 44,945 53,380 61,790 70,175 78,531 86,856
Initial
Liabilities balance Year 1 Year 2 Year 3 Year 4 Year 5 Year6 Year 7 Year 8 Year 9 Year 10

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 Accounts payable - 0 0 0 0 0 0 0 0 0 0

Notes payable/short-term debt - 0 0 0 0 0 0 0 0 0 0

Total current liabilities - 0 0 0 0 0 0 0 0 0 0

Long-term debt from 5,736 5,376 4,980 4,544 4,065 3,538 2,959 2,321 1,620 849 0
Shareholders equity 8,194 11,808 17,025 23,850 32,422 41,406 50,421 59,469 68,555 77,682 86,856
Total long-term debt and
shareholders equity 13,929 17,184 22,005 28,395 36,487 44,945 53,379 61,790 70,175 78,531 86,856
Total liabilities 13,929 17,184 22,005 28,395 36,487 44,945 53,380 61,790 70,175 78,531 86,856

3.3 STATEMENTS OF CASH FLOWS

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Net income 3,614 5,217 6,825 8,571 8,984 9,014 9,048 9,086 9,127 9,173
Plus depreciation 160 160 160 160 160 160 160 160 160 160
Less increase in inventory - (0) - - - - - - - - -
Less increase in accounts - (490) (123) (123) (134) (30) - - - - -
receivable
Plus increase in accounts - 0 - - - - - - - - -
payable
Cash flow from operations - 3,284 5,254 6,862 8,598 9,115 9,175 9,209 9,246 9,288 9,333
Less investment (4,955) - - - - - - - - - -
Cash flow from operations and (4,955) 3,284 5,254 6,862 8,598 9,115 9,175 9,209 9,246 9,288 9,333
invests
Plus net new equity capital raised 8,194 - - - - - - - - - -
Less dividends paid - - - - - - - - - - -
Plus net new long-term debt 5,736 (360) (396) (435) (479) (527) (580) (638) (701) (771) (849)
Plus net new bank borrowings - - - - - - - - - - -
Cash flow from ops, invests, and fin 8,974 2,924 4,858 6,427 8,119 8,588 8,595 8,571 8,545 8,516 8,485
Beginning cash balance - 8,974 11,898 16,757 23,184 31,302 39,890 48,485 57,056 65,601 74,117
Ending cash balance 8,974 11,898 16,757 23,184 31,302 39,890 48,485 57,056 65,601 74,117 82,602

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 ANNEXURE-4 FINALNCIAL EVALUATIONS

4.1 NET PRESENT VALUE (NPV)

PROJRCT WORTH MAESURE ( NPV, IRR, PB ) AFTER TAX . Birr '000’

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10

Cash flow (4,955) 3,284 5,254 6,862 8,598 9,115 9,175 9,209 9,246 9,288 9,333
PV factor 100% 90.09% 82.64% 75.13% 68.30% 62.09% 56.45% 51.32% 46.65% 42.41% 38.55%
PV of cash flow (4,955) 2,959 4,342 5,156 5,872 5,659 5,179 4,726 4,313 3,939 3,598
NPV 40,788
IRR ( After Tax ) 99%
Cash flow (4,955) 3,284 5,254 6,862 8,598 9,115 9,175 9,209 9,246 9,288 9,333
Cumulative cash (4,955) (1,671) 3,583 10,446 19,043 28,158 37,333 46,541 55,787 65,075 74,408
Pay Back Period 4.00 Years 25 Months
4.2 INTERNAL RATE OF RETURN Birr “000”
PROJRCT WORTH MAESURE ( NPV, IRR, PB ) AFTER TAX . Birr '000
Year 0 1 2 3 4 5 6 7 8 9 10
Cash flow (4,955) 3,284 5,254 6,862 13,213 13,952 14,028 14,081 14,139 14,202 14,273
PV factor 100% 90.09% 82.64% 75.13% 68.30% 62.09% 56.45% 51.32% 46.65% 42.41% 38.55%
PV of cash flow (4,955) 2,959 4,342 5,156 9,025 8,663 7,919 7,226 6,596 6,023 5,502
NPV 58,455
IRR ( After Tax ) 108%
Cash flow (4,955) 3,284 5,254 6,862 13,213 13,952 14,028 14,081 14,139 14,202 14,273
Cumultaive cash (4,955) (1,671) 3,583 10,446 23,659 37,611 51,640 65,720 79,859 94,061 108,334

Pay Back Period 4.00 Years 20 Months

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