Zembaba Honeybee Products

Development and Marketing

Cooperative Union

Business and Marketing Plan

(January 2011 - December 2014)

Submitted to OXFAM GB

March, 20011

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 Table of Content

I. Executive Summary………………………….
…………………………………………,.4

II. Background & Introduction………………….

………………………………………….5

II.1. Background…………………………………….
…………………………………5

II.2. Description of the proposed business………….………………………...5

II.3. Beneficiaries………………………………………………………………6

II.4. Legal considerations…………………………...…………………………6

II.5. Existing organizational management and key personnel………………6

II.6. Vision……………………………………………………………...............7

II.7. Business Objectives……………………………………………………....7

II.8. SWOT Analysis…………………..……………………………………...8

III. Existing
Products………………………………………………………………..............9

III.1. Honey………………………………………………………………
………9

III.2. Beeswax…………………………………………………………………...9

IV. Planned Enterprise Activities……………………………………………………......…

10

IV.1. The major activities………………………………………….

……….....10

IV.2. The production plan…………………………………………………….11

IV.3. Proposed Organizational Structure…………………………...………..14

V. Market
Analysis………………………………………………………………………...15

V.1. Honey………………………………………………………………
……15
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 V.2. Beeswax………………………………………………………….............16

V.3. Beehives………………………………………………………….............17

V.4. Veils Gloves…………………………………………………………..…18

VI. Target Market

Analysis…………………………………………………………............18

VI.1. Honey processors and exporters………………………..

……………….18

VI.2. Local beekeepers…………………………………………………..…….19

VI.3. Rural women …………………………………………………………...19

VI.4. The national market…………………………………………………….19

VII. Marketing Strategy………………………………………………………………….20

VII.1. Product
positioning……………………………………………………..20

VII.2. Workmanship…………………………………………………………...21

VII.3. Pricing policy……………………………………………………………21

VII.4. Distribution policy……………………………………………………... 21

VII.5. Advertising and promotion……………………………………………..21

VIII. Funding Sources……………………………………………………………………21

VIII.1. Honey and beeswax marketing………….

……………………………...21

VIII.2. Workshop/Enterprise…………………………………………..............22

IX. Financial Analysis………………………...……………………………………...…

22 9.1. Workshop/Enterprise.…..
……………………………………………...22

9.2. Honey and beeswax…………….……………………………………….22

9.3. Economic and social benefits…………………………………………...23

X. Premises……………………..
…………………………………………………………..23

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XI. Summary & Conclusions…….……………………………………….
……………...23

Part I – Business Plan

I. Executive Summary

This business plan is prepared for Zembaba Honeybee Products Development and
Marketing Cooperative Union’s planned investment in the production and supply
of modern frame hives and protective clothes (veils and gloves) as well as bees
products (honey and wax) marketing. Engaging in this business enables the Union
first to generate substantial income which will be a foothold for its existence in
business and secondly to produce and deliver workshop/enterprise products
(beehives, veils and gloves) for market primarily to its members and then to non-
members at reasonable cost which ultimately leads to boost the production and
productivity of honey and develop and sustain the gendered value chain.

The enterprise will start operation at 80% capacity the first and 85% the second
year. It will continue at 90% capacity from the third year onwards. Accordingly,
the enterprise will produce 20,700 beehives, 13,800 veils and 10,350 pairs of
gloves during the plan period. Apart from making profit, the enterprise will help
the Union to fulfill its mission of supporting smallholder beekeepers through
availing technology, production techniques and reducing transaction costs.

The total investment cost of the business is estimated at Br. 3,641,018 out which
EDP grant will be 41%, loan 57% and the Unions equity 2%. The result of the
financial analysis revealed that the business would be financially viable and liquid
to smoothly finance the planned operations. The net profit ranges between Br.
144,539 in year one and Br. 313,034 during the fourth year. The cumulative cash
balance is also highly positive starting from year one.

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 This document is organized in two main sections. Section one provides
introduction and background information, project goals and objectives, project
development and management plan, market analysis and marketing strategy. The
second section provides information on financial feasibility study including fund
allocation, costs of production, profit and loss statement, cash flow analysis,
balance sheet.

II. Background and Introduction

2.1. Background

Zembaba Honeybee Products Development and Marketing Cooperative Union

was established in May 2006 as the first commodity specific and specialized
union in the Amhara Region. Unlike other unions that have multipurpose
objectives, Zembaba is engaged only in collection and marketing of bees products
(honey, beeswax, etc.). Currently it is an apex of nine primary cooperatives with a
membership of 3810 (746 or 20% women) beekeepers; established and registered
legally by the regional Cooperative Promotion Agency. The nine member primary
cooperatives have formed the union with a total capital of 101,000 Birr. In the
past three years, with the support of development actors like SoS Sahel and
aligning with government‘s extension program, the union has played a significant
role in popularizing and commercializing beekeeping. Some of the achievements
include purchase and sale of 22.5 and 2.8 tons of honey and wax respectively
from its members to national market. The total value of the transactions during
this period was Birr 700,000. The Union has played a very important role in
changing the attitude of beekeepers such as through organizing various trainings
in collaboration with NGOs. As a result, government has put honey as one of the
major commodities with emphasis to unleash the potential and promote export
market. The honey produced by the nine cooperatives has a brand name called
AMAR, which means honey from the Amhara Region.

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 AMAR honey - a product of Zembaba Cooperative Union

2.2. Description of the Proposed Business

The Union held its general assembly meeting in September 2009 and decided to
diversify its engagement beyond collection and marketing of honey and wax.
With the goal of improving the quality and quantity of honey products produced
and marketed in the region, the board identified and proposed production and
marketing of inputs (modern beehives, beehive stand, veils, gloves, etc).

Presently, modern beehives and beekeeping gears are in short supply and are very
expensive for local beekeepers in the region. The major suppliers of these
beehives are small and micro enterprises engaged in general woodworks. The
products produced are characterized as poor in terms of workmanship and quality.

2.3. Beneficiaries

The project will directly benefit small holder farmers and women in the region:
 By creating employment opportunity as carpenters for 6 small
holder farmers most of which are women.
 By making arrangements with the Bureau of Agriculture which
buys the beehives and other inputs from the Union to give priority
in its credit provision to union members in general and women in
particular.
 Creating access and opportunity to improved beekeeping
technology for 3,810 smallholder farmers (of which 746 female)
organized under 9 primary cooperatives.
 Access to financial services and markets to improve income from
the scheme.
 Promote a sense of ownership of the newly established
enterprise/workshop.
 Support to about 400 new women beekeepers to benefit from the
technology and increase income and employment.

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2.4. Legal considerations

Zembaba Cooperative Union is legally registered as business entity by the

Amhara Region cooperative Promotion Agency on June 28, 2006, under article 9
of proclamation number 147/98. The union is legally incorporated and a bylaw,
which governs the management of the Union.

2.5. Existing Organizational Management/Key Personnel

The board of directors of Zembaba Cooperative Union is composed of nine

people; representing each member cooperatives. The board members have
substantial experience in beekeeping, coordination and leadership skill at primary
cooperatives level. The board decides on overall policy direction of the union, the
overall business management and operation, approves honey products purchasing
and marketing plans and budget allocations.

The board meets once in three months and discuses on the overall activities and
progress of the union. The day-to-day activities of the union is handled by a
general manager, selected and appointed by the board. The union has currently
one accountant, one secretary/cashier, one store keeper and two guards who are
responsible to the general manager.

The general manager, Ato Berihun Amsalu, has a BA degree in agri-business

management and 4 years of extensive experience in cooperative organization and
management. He is committed and keen to take the union forward and make it a
profitable organization.

The Cooperative Promotion Agency (a government agency with a mandate for

promotion and expansion of cooperatives), particularly the Agency Director, Ato
Aderaw Dagnew, is very keen and supportive of the union in its honey production
and marketing activities.

2.6. Vision

The ultimate vision of the Union is to reduce poverty and offer more economic
opportunities and power to beekeepers in the Amhara Region of Ethiopia,
particularly for women youth. The allied long term vision of the business and the
project is to have steady and profitable business of apiculture inputs production;
owned and operated by the Union. Enhancing participation, leadership and
ownership of women across the gendered value chain is also the socio-cultural
vision of the project.

The vision of the enterprise for the coming five years is to become the leading
producer and supplier of inputs for the beekeeping sub-sector in Amhara Region
by producing marketing beehives, veils and gloves starting from 2012. The
Union/Enterprise will arrange/coordinate with the Regional Bureau of Agriculture

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 regarding the distribution/retail activities to involve and benefit women
beekeepers/self-help groups in zonal towns of the region.

2.7. Business Objectives

2.7.1. Overall Objectives

The overall objectives of the project are:

a. Increase income and leadership capacity of rural women through
promoting participation in beekeeping activities and cooperative
management roles.
b. Enhancing the quality and quantity of smallholder’s bee products through
improved technology.
c. Develop a profitable, self-sustained and leading enterprise in the
production and supply of quality apiculture inputs at affordable prices.

2.7.2. Specific Objectives

The specific objectives of the enterprise are:

a. Increase income of beekeepers, particularly women, by 30 percent during

the business development period.
b. Ensure participation and benefits to increase welfare substantially for local
women in beekeeping business and within the enterprise without
compromising the profitability and sustainability;
c. Strengthen the organizational and business management capacity of the
union and the primary cooperatives,
d. Create enabling environment for 10,000 smallholder beekeepers and
increase their income by up to 30 percent through introducing modern
beekeeping practice.
e. Produce and market 20,700 modern beehives, 13,800 veils and 10,350
gloves within the plan period mainly to member beekeepers on credit basis
giving priority to women by making credit arrangements with the
Regional Bureau of Agriculture.

2.8. SWOT Analysis

Strength: Good organizational set-up (own office, storage facilities and semi
processing equipment at a cooperative level), already producing and selling honey
in the domestic market under an established brand known as “AMAR”, obtained
organic certification from BCS Oko Garantie in German, established website, and
signed sales contract agreement with Ambrosia PLC to supply semi processed
honey and beeswax.

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 Weaknesses: Lack of modern business experience, absence of product
diversification (as the union has been engaged only on honey and beeswax
marketing), limited organizational and institutional management skills,
insufficient and even lack of funds for honey marketing activities, few members
compared to potential, production of inferior quality honey and limited
participation of smallholder women in beekeeping activities as well as in the
Union’s leadership.

Opportunities: Readiness and willingness of smallholder farmers to transform

from traditional to modern beekeeping practices, existence of strong government
extension services and political support, availability of technical assistance
services from development partners, such as Oxfam and SOS Sahle, potential to
accommodate increased bee colonies and high demand of honey in the global
and national market.

Threats: Use of pesticides for crop might negatively impact bee colonies, (until
the full scale implementation of law is implemented), weak coordination among
stakeholders, lack of technical knowledge and experience in production,
processing, management and quality assurance practices and absence of strong
competitor from the private sector.

III. Existing Products

3.1. Honey

High quality honey can be distinguished by fragrance, taste, and consistency.

Ripe, freshly collected, high quality honey should flow from a knife in a straight
stream, without breaking into separate drops at 20 °C. After falling down, the
honey should form a bead. The honey when poured should form small, temporary
layers that disappear fairly quickly, indicating high viscosity. If not, it indicates
excessive water content (over 20%) of the product. Honey with excessive water
content is not suitable for long-term preservation.

In jars, fresh honey should appear as a pure, consistent fluid and should not set in
layers. Within a few weeks to a few months of extraction, many varieties of honey
crystallize into a cream-colored solid. Some varieties of honey, including tupelo,
acacia, and sage, crystallize less regularly. Generally, honey is classified by the
floral source of the nectar from which it was made. Honeys can be from specific
types of flower nectars, from indeterminate origin, or can be blended after
collection.

The honey being produced by the member cooperatives of Zembaba Union fits all
the above characteristics in terms of quality. The scattered nature of the member
cooperatives in the various parts of the region which also vary in their vegetative
resources and ecological endowment has resulted in their honey having own
distinct fragrance and taste. Since the Union makes arrangements with clients to

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 go and collect from the source cooperatives, those who do not want to blend can
have them unadulterated with others depending on their choice.

3.2. Beeswax

Beeswax is a natural wax produced by honeybees of genus Apis in their beehives.

It is mainly esters of fatty acids and various long chain alcohols. Typically, for a
honey beekeeper, 10 kg of honey yields 1 kg of wax.

Honey bees use the beeswax to build honeycomb cells in which their young are
raised and honey and pollen are stored. For the wax-making bees to secrete wax,
the ambient temperature in the hive has to be 33 to 36 °C (91 to 97 °F). To
produce their wax, bees must consume about eight times as much honey by mass.
It is estimated that bees fly 150,000 miles, roughly six times around the earth, to
yield one pound of beeswax (530,000 km/kg). When beekeepers extract the
honey, they cut off the wax caps from each honeycomb cell with an uncapping
knife or machine. Its color varies from nearly white to brownish, but most often a
shade of yellow, depending on purity and the type of flowers gathered by the
bees. Wax from the brood comb of the honey bee hive tends to be darker than
wax from the honeycomb. Impurities accumulate more quickly in the brood
comb. Due to the impurities, the wax has to be rendered before further use.

The honey produced in the Amhara Region mostly comes from traditional
beehives. The yield of beeswax is usually higher (10%) when honey is produced
in traditional hives since the honeycomb is totally removed from the hive together
with the honey while harvesting. The color of the wax varies from white to yellow
of many shades depending on the area and flowering season. The increased use of
modern beehives is expected to decrease the beeswax output since the yield from
such hives is observed to be very low (2-5%).

White beeswax from Dangla area of west Gojam

IV. Planned Enterprise Activities

4.1. The major activities to be carried out to realize the objectives are

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 a. Establish and develop production facilities for beekeeping inputs
(frame hives, gloves, veils and other accessories)
b. Select and train youth (mostly women) in wood and metal works
technology, specializing in beehive production
c. Select and train women (mainly beekeepers) on production of
protective clothes (veils and gloves) by linking them with technical
service providers
d. Secure land for building and constructing production workshop in
Bahirdar City
e. Equip workshop with the necessary tools, machines and materials
useful for the production process
f. Identify sources for raw materials and production tools and
equipment and carry out procurement
g. Develop management and operation guide for production of
standardized beekeeping inputs (hives, accessories)
h. Develop product appropriate distribution modality using the
Bureau of Agriculture and involving cooperatives and women self
help groups.
i. Develop product promotion and marketing plan
j. Build management and leadership capacity of the Union through
mentoring activities

4.2. The Production Plan

Modern bee keeping equipment comprises of beehives, Bee smoker, Queen

Excluder, Wax press, Honey extractor and Protective clothing. However, the
enterprise will focus on the production and distribution of modern beehives, veils
and gloves. As indicated above, the enterprise will produce 20,700 beehives,
13,800 veils and 10,350 pairs of gloves during the plan period.

4.2.1. Workshop

The production workshop facility requires a total of 1,000m2 area of land, of

which 270 m2 is built-up area, which includes production workshop, storage area
for raw material, storage room for finished products and office and toilet facilities.
It will have sufficient workspace to accommodate the various equipments and
machinery used for the production.

To ensure maximized efficiency and product output, the workshop design and
layout considers a line system of production (mass production) in which a product
is manufactured in a step-by-step process as it moves continuously past an
arrangement of workers and machines. In this system, each worker repeats one or

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 a few related tasks that use the same tool to perform identical or near-identical
operations on a stream of products. This is to be compared to a craft production
system in which the craftsman must bustle about a shop, getting parts and
assembling them. He must locate and use many tools many times for varying
tasks.

4.2.2. Production Program

At the initial stage of the production period, the enterprise requires some time to
get used and adjusted to the production process. Therefore, in the first and second
year of production, the capacity utilization rate will be 80% and 85%,
respectively. In the third year and after, a 90% capacity is envisaged to be attained

4.2.3. Machinery and Equipment

The list of machinery and equipment needed for the production is listed in the
operation management guide section of the plan. The plant needs a minimum of
one vehicle (pick-up) for transportation of finished products and for office
activities.

4.2.4. Training Requirements

The enterprise is currently training six carpenters (2 female and 4 male youth)
selected from member cooperatives. The specialized training is focused on
making modern beehive and essential components in line with the above
explained production arrangement.

4.2.5. Proposed Location

The Union’s headquarter is located in Bahir Dar City of the Amhara Region,
occupying about 500 sq. m. plot of land. The office was built by SOS Sahel.
The proposed location for the establishment of the production workshop is
Bahirdar city.

4.2.6. Land, Building and Civil Works

The Union has requested the Regional Government a 1000m2. plot of land to
construct a workshop for producing the proposed apiary inputs. Efforts are
underway to locate and identify a suitable location for the production workshop.
Of the total required land, 270 m2 is built-up area, which includes manufacturing
area, raw material stock area, finished products storage, offices etc.

4.2.7. Beehive Production

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 The enterprise will be producing Langstroth hives. The major components are
the hive stand, the brood box, the supers (where the combs are located and surplus
honey is stored), and the inner cover. Each part of the hive is essential for a
healthy, self-sustaining colony.

Its theoretical annual production at full capacity is estimated to be 6,000 hives.

However, in practical terms, the rate of capacity utilization is estimated to be 80%
the first year, 85% the second year and 90% thereafter. Due to shortages of
suitable locally produced raw materials, imported wood of cedar, pine or cypress
will be used for the production.

Four alternative types of hives will be produced to increase chances of

affordability. The mother box plus two supers (three box hive) with metal stand
will cost the maximum which is Br. 1,053 per hive while mother box with one
super (two box hive) and a metal stand will cost Br. 942. Mother box with two
supers (three box hive) without a metal stand will cost Br. 677 while mother box
with one super (two box hive) without a metal stand will cost Br. 566.

Modern (Langstroth) beehive and its internal parts to be manufactured at Zembaba Union Workshop

4.2.8. Veils and Gloves

The enterprise will train and hire two female tailors for the production of veils and
gloves. The veils will be made with combinations of cloth, nylon or wire mesh that
zip onto a coverall.

Gloves are made of cloth, leather or plastic and often have a gauntlet base that
extends almost to the elbow, usually ending with an elastic band.

About 3,200 to 3,600 veils and 2,400 to 2,700 pairs of gloves are planned to be
produced annually.

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4.3. Proposed Organizational Structure

The following diagram depicts the proposed organizational and management

structure of the enterprise.

As shown in the above organizational structure, the Union is proposed to have

three departments, five divisions and one unit operating under the general
manager. The three departments are Workshop/Enterprise, Marketing and Sales
and Administration and Finance.

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 The Workshop Department will have two divisions, namely Technical
Supervision and Quality Control and Repair and Maintenance. Line production
approach will be employed to bring production efficiency and productivity of the
workshop.

The Marketing and Sales Department will be responsible for marketing and sales
of Beehives, Gloves, Veils, and Honey Products. The accounting and financial
management and the cashier are under the Administration and Finance
Department.

The board of Zembaba Cooperative Union requires to have clearly and distinctly
stated roles and responsibilities together with the union manager as well as the
management of the functional departments (Workshop/enterprise Manager and
the head of Marketing and Sales Department).

The general manager’s routine administrative work will be handled by the head of
Finance and Administration Department, who will be hired when the volume of
work justifies in the future.

V. Market Analysis

5.1. Honey

According to the 2008 Central Statistics Authority (CSA) Annual Abstract, about
5.1 million beehives exist in the country, of which about 95 percent are
traditional. Out of this total, the Amhara Region’s share is about 1 million hives
producing about 20 percent of the country’s total output. According to CACC
(2011) census, about 7,000,000 kg (7,000 tons) of honey was estimated to be
produced in the region annually.

Traditionally, about 97 percent of its production goes to market usually destined

to urban areas with the bulk of it targeting the capital Addis Ababa. In Mercato
(the largest open market in Africa) there is a special area dedicated for Amhara
Region (Gojam) honey which is called Gojam Veranda. This is the place where
all honey buyers (especially the Tej houses) and honey sellers meet to effect their
transactions. The honey of other regions does not have such an established outlet
and usually traders go and collect the honey from the various regions to pass it
over to wholesalers/retailers/processors/exporters or to sell it in their shops which
could be scattered around Merkato or other hard to locate places.

In general, honey does not seem to have any marketing problem especially due to
some recent developments in the local and global markets. The introduction of
new buyers like Ambrosia PLC opened new opportunity for honey producers not
only in the Amhara region but all over the country. Ambrosia PLC is a recently

15
 established joint venture company (French and Ethiopians) engaged in honey
processing and marketing both for the domestic and international markets. It has a
capacity to process 10.4 quintals per hour (83.2 quintals in eight hour day and
about 25,000 quintals/yr) in its processing plant located in Debreberhan. The
amount could double if it works in two shifts. Ambrosia’s request for a trade loan
of Birr 60,741,984 from the Development Bank of Ethiopia was approved
recently which will significantly raise its honey purchasing capacity. It gives trade
loans to cash-short clients to be settled when they deliver the honey. Though not
equal to Ambrosia’s capacity other processors which have been operating so far
still continue to do their activities expanding the marketing opportunity.

Ambrosia PLC has a good network both in the domestic and international
markets. France, the country of the joint venture participants, is the administrative
and distribution hub for international marketing of honey. Ambrosia PLC’s
concern is that there will not be sufficient quantity of honey in Ethiopia to use its
huge processing plant at full capacity.
Also the quality of honey produced from tradition practices is very low due to the
inferior technology used to make hives and lack of knowledge on beekeeping
techniques. The average honey harvest from traditional bee keeping does not
exceed five kg per harvest which would create a supply gap unless the use of
modern beehive is expanded.

The price of honey has been extremely volatile recently. Price has gone from 25
Birr/kg to 55 Birr/kg in a span of three years. This is partly due to demand and
supply and partly due to the speculative nature of beekeepers and traders. The
speculative aspect can be dealt with by giving proper price information just like
what is being done for coffee, sesame, and haricot beans. Not much can be done
with the interplay of demand and supply as it comes either from production
shortfall or increased demand due to unexpected developments.

5.2. Beeswax

Ethiopia was the fourth biggest exporter of beeswax in 2003 being excelled by
China, Germany and France only. The quantity exported was 402 tons which was
less than 10 percent of its estimated total production. According to the data
obtained from FAOSTAT, the total world import during the same period was
11,949 tons of which China supplied 5,213 tons (44%). The biggest importers
were again Germany (2,363 tons), France (1,243 tons), United Kingdom (721
tons), etc. Ethiopia’s exports in 2004 and 2005 were 525 and 304 tons
respectively with its share in the international market being almost the same.

The Amhara Region’s maximum possible production of beeswax ranges from 500
to 700 tons annually (10% of the total honey production of the region). However,
though the exact quantity that is being supplied is not known, it is assumed that

16
 due to wastage and problems in the collection process, only a small percentage
reaches the desired markets.

Similar to that of honey, Ambrosia PLC is also interested in beeswax trade. It

recently signed a contract to purchase 170 tons of wax. That is almost 50 percent
of the quantity the country is annually exporting. Other traditional buyers include
16 companies registered as exporters of beeswax in the country. However, with
the exception of four, the others are not active. Three of the 4 are reported to be
principal exporters, of which Ghion Industrial and Commercial plc is the largest
followed by Baobed plc and BWAP Export plc, respectively. The former (Ghion
Industrial & Commercial plc) accounted for about 50% of the beeswax export of
the country in 2003. Lack of supply is mentioned as one of the problems in the
beeswax trade of the country. Increased supply of the Amhara Region and that of
Zembaba Cooperative Union does not seem to face any demand problem.

5.3. Beehives

Out of one million beehives in the Amhara Region, over 95 percent are
traditional. This situation shows that the market for modern beehives is still
untapped. The yield difference between the modern and the traditional beehives is
so significant (between 15 to 25 kgs per hive per year or three to five time that of
the traditional) that farmers will easily find it unwise not to change the old method
of production. However, lack of awareness, high cost of production, limited
capacity, etc. are some of the major constraints regarding the expanded use of
these hives.

So far, there is no workshop in the region and probably in the country which is
exclusively dedicated to producing beehives only. The practice up to now has
been for the Regional Bureau of Agriculture to enter into an agreement with
carpenters engaged in general woodworks organized by the Small and Micro
Enterprise Agency to produce a certain quantity of hives. These hives will then be
distributed to farmers through the extension system of the Bureau being sold
either in cash or credit.

The annual demand of the Bureau of Agriculture and Rural Developments is huge
sometimes reaching over 40,000 hives per annum. The budget allocated for apiary
inputs procurement is about Birr 10,000,000 (Ten Million birr). However, the
hives produced and supplied by micro enterprises were found to be of poor
quality and without standardized specifications. As a result most of the products
were rejected for poor quality and delayed delivery.

Almost all of the micro and small enterprises engaged in woodworking are
primarily focused on furniture making and other housing construction inputs
(doors, windows, etc.). They consider production of hives as a temporary side
business. Furthermore, lack of specialized training or expertise makes them more

17
 lenient to follow specifications in making hives which resulted in rejections and
contract cancellations.

5.3.1. Projected Demand for beehives

The demand estimation made on the previously developed business plan is

adopted as effective demand estimate for frame hives for years 2011 to 2020.

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Demand 56,000 58,000 62,000 65,000 69,000 72,000 76,000 80,000 85,000 90,000

5.4. Gloves and Veils

Compared to other bee races, African honeybees are very aggressive in defending
their territories. Four geographical races are reported to exist in different
ecological zones of the region. These are: 1. Apis mellifera monticola, 2. Apis
mellifera bandasii, 3. Apis mellifera jemenitica and 4. Apis mllifera scutellata.
The first two are widely distributed in the region and they are much gentler than
the rest. Though these bees are comparatively gentle the risk of being attacked is
still very high especially when they are provoked which makes protective
mechanisms a necessity.

Currently, beekeeping farmers are using various clothes and all types rugs which
are not very convenient to perform their task. The availability of good quality and
long-lasting gloves and veils would be quite a welcome development and could
easily be accepted by the beekeeping farmers not only in the region but also all
over the country as there is no such known establishment catering for that need.
Similar measures can be used like the modern beehives to increase awareness and
affordability.

VI. Target Market Analysis

The Union has a wide range of opportunities in targeting several market

segments. Its semi-processed table honey can target local consumers directly and
also processors which produce processed honey both for domestic and export
purposes.

6.1. Honey Processors and Exporters (Ambroisa)

The first target markets for semi-processed honey are businesses engaged in
honey processing and exporting. One of such businesses is Ambrosia PLC.

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 Ambrosia PLC is a recently established joint venture company (French and
Ethiopians) engaged in honey processing and marketing both in the domestic and
international markets. It has a capacity to process 10.4 quintals per hour (83.2
quintals in eight hour day and about 25,000 quintals/yr) in its processing plant
located in Debreberhan 130 km north-east of Addis Ababa. The amount could
double if it begins operating in two shifts.

Others like Yeshi Mar, Beza,Tadele, etc. are growing in importance. While supply
agreements can be signed with these specialized businesses, the Union can plan to
be involved in processing, wholesaling, retailing and export activities in the long-
run.

6.2. Local beekeepers

The Union’s primary target market for workshop products (hives, gloves and
veils) are member cooperatives themselves. The Union currently has 3,810
members distributed over 9 cooperatives. There are close to 40 other honey
producing cooperatives that could sooner or later be members of the Union. The
other 40 honey producing cooperatives can be accessed through the Bureau of
Agriculture and Rural Development which buys beehives for cash and sells them
to farmers on credit both to members and non-members.

6.3. Rural Women (Household Heads)

Traditionally, beekeeping was considered to be a man’s job because usually hives

were kept far from villages and in forests. Modern hives, however, are usually
placed at homesteads and the transformation of beekeeping from traditional to
modern beekeeping will open-up more opportunities for women enhancing their
participation in the economic development activities. In this regard, the products
of the enterprise will play a leveraging role in gender balancing which at the same
time creates a big demand for its products as the rural women constitute 50% of
the rural population. Therefore, this is one of the target markets which the Union
will give its maximum attention to develop, which is also in line with the
objectives of the Government, Oxfam GB and other donors.

6.4. The National Market

The national market for honey and workshop products could be beekeepers and
honey marketers in other regions. This market could be tapped by opening sales
offices, participating in bids and agricultural trade fairs, etc.

The Union shall experiment and use the best marketing strategy depending on the
situation. It should make the product available at the target markets in desired

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 quantities. Promotional work should be a continuous activity to increase
awareness about the availability and quality of products.

VII. Marketing Strategy

Quality and standard products, adequate supply, timely delivery and affordability
are the key factors in marketing the Unions products. Based on these key assets,
the marketing strategy for honey and inputs marketing will focus on targeting
member cooperatives, smallholder bee farmers in the region, development
partners, domestic and international honey processors and exporters as well as
beekeeping inputs retail chains and stores.

Though the experience is short, many farmers have come to realize that being
organized in cooperatives has helped them in defending their business interest in
honey marketing and in improving production as well. Since Agunta Cooperative
Union paid dividends twice in its five years of existence, they also know that they
can have a share of the profit unlike their dealings with individual traders.
The marketing mix includes effective promotion of products through product
positioning and branding, advertising and networking, provision of information
and package deals to domestic and international exporters and competitive pricing
in relation to the dictates of the market while at the same time ensuring the
financial viability of the business.

The overall marketing Strategy will based on:

Quality product, affordable price and timely delivery. Competitive pricing

consistent with the differentiation objective, i.e., to provide added value for a
reasonable rate as opposed to discounting and devaluing the products and
services.

Advertising on mass media, via print ads in trade publications, direct mail
campaigns to existing and prospective customers, personal selling in the local
markets.

Participation in significant local and national events assists to promote and

develop business opportunities and good working relationships with stakeholders.

7.1. Product Positioning

The Amhara Region and specifically certain sub-regions like Gojam are known
for their good quality honey and tej for generations. There are even popular songs
sung widely praising these places for their good quality and excess quantity of
honey. The AMAR brand name supported by intensive promotional work should
exploit this opportunity in creating a certain positive perception and image in the
minds of customers. In cases where the Union’s products are used as inputs for

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 further processing, arrangement can be made in which the source can still be
promoted.

7.2. Workmanship

The Bureau of Agriculture and Rural Development and the beekeeping

community in general have a very big concern regarding the quality of apiary
inputs that are being produced and supplied by micro and small enterprises in the
Amhara Region.

The Union’s specialization in producing beehives and associated products with

standard specification and the specialized training of carpenters should be
marketed as assurances of quality to potential stakeholders.

7.3. Pricing policy

The union’s pricing approach shall be consistent with the differentiation

objective, i.e., to provide added value for a reasonable rate as opposed to
discounting and devaluing products and services.

7.4. Distribution policy

In the short and medium terms, beehives and protective cloths can be distributed
through the Bureau of Agriculture and Rural Development and member
cooperatives. In the long run, however, other alternatives such as using wholesale
and retail business outlets and chains should be looked into for marketing and
distribution activities of apiary inputs as well as honey and beeswax.

7.5. Advertising and Promotion

Public relation and promotional activities need to be greatly enhanced through

advertising and promotion works. The advertising and promotion activities shall
include print ads in trade publications, distribution of promotional brochures to existing
and prospective customers and personal selling in the local markets.

VIII. Funding Sources

8.1. Funding for the honey marketing

The total working capital requirement for honey and beeswax marketing is Birr
5,615,323.00. This funding will be available to the union from Ambroisa PLC as advance
payment for future supply of honey and beeswax products ( Refer to the contract
agreement between the Union and Ambroisa PLC).

8.2. Workshop/Enterprise

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 The total investment required to set up the workshop is estimated to be Br.
3,641,018, of which 41% (Br. 1,493,840) comes from grant, 57% (Br. 2,075,378)
from loan and 2% (Br. 71,800) comes from the Union’s equity.

IX. Financial Analysis

The financial study of the workshop/enterprise and that of the project (honey and
beeswax) are presented in Part II of this Business Plan. According to the financial
study, both the enterprise and the honey and beeswax marketing are profitable,
liquid and viable.

9.1. Workshop/ Enterprise

The total revenue from the three workshop products is estimated to be Br.
4,136,960 the first year, Br. 4,395,520 the second year and Br. 4,654,080 from the
third year onwards.

The net profit of the enterprise will be Br. 144,539 the first year, Br. 184,499 the
second year, Br. 253,678 the third year, Br. 283,396 the fourth year and Br.
313,034 the fifth year.

The net inflow ranges from Br. 373,924 to Br. 16456 during the first and fifth
year while the rang of the cumulative cash flow is from Br. 373,924 to Br.
781,975 during the same period.

9.2. Honey and Beeswax

The estimated working capital for honey and beeswax is estimated to be Br.
5,615,323.

An average net profit of Br. 353,561 per annum is expected from honey and
beeswax operation during the plan period.

The forecast regarding the honey and beeswax activities shows a cumulative net
inflow of Br 353,310 at the beginning and Br. 2,017,805 at the end of the project
period. ( See detail calculations and assumptions in Part II of the Plan)

9.3. Economic and Social Benefits

The project would create employment for 28 persons and the government would
collect an average of Birr 286,598 per annum in tax revenue.

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X. Premises
The headquarters of Zembaa Honeybee Products Development and Marketing
Cooperative Union is located in Bahir Dar City of the Amhara Region on about
500 sq. m. plot of its own. The office which it uses now as headquarters was built
gratis by SOS Sahel. The union has requested the Regional Government a 1000
sq. m. plot to construct a workshop to produce its apiary inputs. The Government
has agreed to provide this plot and effort is now underway to identify a suitable
area for this purpose.
While the Union plans to buy and sell up to 1,500 quintals of honey and beeswax
every year, it does not have any store of its own. All the storage and primary
processing activities are planned to be done in stores that belong to the primary
cooperatives which are scattered all over the region. Even the processing is done
by the employees of these primary cooperatives and there is no quality control
staff that represents the Union’s interest. What is more, they can sell these
products to any buyer they get. Under these circumstances, the primary
cooperatives see very little contribution (value added activity) by the Union and
this could make their relationship very loose, which affects their commitment and
loyalty to the union. There should be a long-term plan to construct a big store on
the 1000 m2 plot which would enable the Union to take responsibility of its stock
and perform value added activities under its own control.
X. Summary & Conclusions
Zembaba Honeybee Products Development and Marketing Cooperative Union is
established in line with the Government’s Poverty Reduction and Rural
Development Strategy and Oxfam GB’s Enterprise Development Framework.

Following the board’s 2009 decision, in addition to streamlining and boosting the
production and marketing of honey and beeswax, establishment of beehives and
accessories workshop have been identified as one of the major components of
promoting the income and livelihood of the beekeeping community in the region.
The proposed workshop will be established on a 1000 sq. m. of land to produce
modern beehives (frame hives), veils and gloves. The theoretical capacity of the
workshop is to produce 6000 hives, 4000 veils and 3000 pairs of gloves per year.
However, in practice the machines are expected to operate at 80% capacity the
first year, 85% the second year and 90% from the 3 rd year onwards. This way, a
total of 20,700 beehives, 13,800 veils and 10,350 pairs of gloves will be produced
during the plan period the first being a year of construction and establishment. No
demand problem is expected for these products. Under the present arrangement
The Bureau of Agriculture and Rural Development is almost the sole buyer of the
apiary inputs (mainly beehives) in the Amhara Region. It buys from micro and

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small enterprises in cash and distributes them to small holder beekeepers on
credit. It allocates about Birr 10,000,000 annually from its food security budget to
buy and distribute beehives. Members of the primary cooperatives of the Union
qualify to benefit from this undertaking and arrangement can be made to give
priority to women regarding the Union’s products. The same arrangement can be
made regarding the distribution and sales of the products to be conducted through
women as agents in wholesale and retail activities. The Bureau is expected to
accept this idea as gender equality is enshrined by the Bureau as well as by the
Union.

A total of 6,350 quintals of honey and 110 quintals of beeswax will be collected,
processed and sold during the plan period. Ambrosia PLC is the major if not the
sole buyer of these products. Ambrosia PLC has a capacity of processing from
25,000 to 30,000 quintals of honey per year with a big marketing network both in
the domestic and international markets. Its trade loan request of Br. 60,740,984
was approved by the Development Bank of Ethiopia on January 11, 2011 which
boosts its capacity to give cash advance to cash needy suppliers like Zembaba
Cooperative Union.

Both businesses of honey and beeswax and the enterprise/workshop products are
profitable, liquid and viable. Based on the financial analysis shown in Part II of
this document, the average net profit for the enterprise/workshop and honey and
beeswax activities are estimated to be Bir 235,829 and Br. 353,561 respectively.
The cumulative range of net cash inflows for both the enterprise/workshop and
honey and beeswax are also calculated to be Br. 373,924 to Br. 781,975 and Br.
353,310 to Br. 2,017,805 respectively. Therefore, the establishment of the
enterprise and marketing of honey and beeswax is justifiable both from the
aspects of social and financial considerations.

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