Contents PAGE

B. Executive Summary ............................................................................................................................. 3

1. INTRODUCTION .................................................................................................................................... 4
1.1 PROJECT OBJECTIVES ....................................................................................................................... 5
1.2 National Level Objective ........................................................................................................................ 5
1.3 Secterial and Community Level Objectives............................................................................................ 5
1.4. Project specific objective includes: ........................................................................................................ 6
1.7. Technology Utilization ...................................................................................................................... 7
1.8 Project Rationale ................................................................................................................................. 7
1.9 Summary of Ownership and Project Concept ......................................................................................... 8
2. OVERALL BENEFITS ............................................................................................................................ 9
2.1. Direct Social Benefit .............................................................................................................................. 9
2.2 Economic Benefits .................................................................................................................................. 9
3. MARKET ANALYSIS ........................................................................................................................... 10
3.2. Basics Concepts Wheat Marketing in Ethiopia.................................................................................... 11
3.3. Wheat marketing actors and their linkages .......................................................................................... 11
3.4. Structure conduct and performance analysis of wheat market............................................................. 12
4. TRADE BALANCE AND VARIATION............................................................................................... 15
4.1. Grain Processing and Trading Business............................................................................................... 16
4.2. Grain Processing and Trading Business............................................................................................... 16
4.3.2. Business S.W.O.T. Analysis ............................................................................................................. 17
4.4. Socio-Economic impact of the project ................................................................................................. 18
4.5. Sales projections .................................................................................................................................. 20
4.6. Cost assumptions ................................................................................................................................. 21
4.7. Financing plan Investment plan ........................................................................................................... 22
4.8. Operations Risks .................................................................................................................................. 25
4.9. Risks mitigation strategies .................................................................................................................. 25
A.BACKGROUND INFORMATION

1, Project name:…………...… grain store

2, Project Type:……………… grain store Trade

3, Nationality……………….. Ethiopia

4.Owner………………….:….ChernetMamoTereda
5,Project location: Addis Ababa City Administration, Nifas Silk Lafto Sub-city Woreda2
6,AreaRequired:…………..800m2
7. Total investment Cost: 20,879,200 ETB is required from this amount 30% or
6,263,760ETB from owner equity and the rest 14,615,440 of 70% from bank loan.
8. Employment opportunity: 24 individuals on permanent 5 on casual basis
B. Executive Summary

The sources the fund are contributions of Chernet Mamo Tereda Company owners and loan from
bank. The total amount of money required for the project is ETB 20,879,200 of which 70% of
this amount is from bank while the remaining 30% is owners’ contributions

The production of major food grains is forecast to remain at record levels in MY 2024/2225
assuming
favorable weather conditions and proactive governmental efforts. In the previous three years,
governmental investment has been significant in improved seeds, fertilizer supply, and
mechanization
support. For the last three years, rainy season volumes and distribution patterns have shown
improvement, service including mechanization, favorable weather conditions, and positive
rainfall in the, Western and central highlands of the country’s grain producing areas. Desert
locust infestation affects sorghum production in the mid highland parts of the rift valley and
pastoral land in the north and southeastern regions. The infestations on other cereals grown on
the highland and mid highland areas were negligible except in some limited areas. This is due to
mitigation efforts by the government, farmers, local, and international partners.
1. INTRODUCTION
Agriculture plays an important role for increasing the growth domestic products (GDP) of the
world, which accounts 31.3% (CIA, 2014); more than 60 percent of the world’s population
depends on agriculture for survival (FAO, 2015). Form this, Latin America and sub Saharan
Africa covers the highest percentage (90%) so that the economy of most African countries is
depending on the agriculture. In Ethiopia, it, contributes about 43% of GDP, generates 90% of
export value and supply 70% of the industrial raw materials for domestic industries (MoA, 2011;
Abdu et al., 2016). Therefore, the agricultural sector is crucial for the overall performance of the
many countries’ economy, especially developing countries like Ethiopia. From agricultural
production and marketing activities, cereal crop production and marketing is highly practiced in
the world. According to FAO (2018), the total output of cereal crops in 2017 was 2650.5 million
tons, which is increased by 2.4% from previous year; and from these 410.9 million tons of cereal
crops in the world were traded in the world cereal markets. In the same year, Africa’s
contribution to the world output was 7.03% (about 186.37 million tons) (FAO, 2017). Cereal
crop production and marketing play a central role, contributes about 30 percent of the national
GDP (Diao et al., 2007). Cereal grains are the single most important source of calories to a
majority of the world population, developing countries (60%) and developed countries (30%)
(WHO, 2003; M. Awika, 2011). In Ethiopia, cereal crop production and marketing contributes a
great role in its economic growth and development, which creates rural employment
opportunities (about 60%); more than 40% of a household’s food expenditure is covered by the
income obtained from cereals (Rashid, 2010). Rice, wheat and maize are the three most
important food crops from cereal crops produced in the world, contributing more than half of all
calories consumed by human beings (M. Awika, 2011). Wheat (Triticumaestivum L.) is one of
the globally produced and marketed cereal crops, which covers 15% of the total sowing areas of
cereal crops in the world (Kiss, 2011). It is an important industrial and food grain, which ranks
second among the most important cereal crops in the world, after rice and traded internationally
(FAO, 2009; Najafi, 2014; Falola et al., 2017). Importance of wheat production in world
economy is proven by its share of 15% from 1500 million hectares arable land in the world
(Kiss, 2011). Wheat production and consumption is grown rapidly as a result of income growth
and rapid urbanization in Sub-Saharan Africa (produce 30% of their domestic requirements)
(Sultan, 2016). Ethiopia is the second largest wheat producers in Sub-Saharan Africa next to
South Africa, with a potential expansion to 1.3 million hectare (Nigussie et al., 2015;
Haregewoin et al., 2018). In Ethiopia, wheat is one of the most cereal crops in terms of the area
of land allocated (1.6 million hectares), volume produced (3.9 million tons) and the number of
farmers engaged in its production (4.7 million farmers) with a productivity of 2.4tone per hectare
(CSA, 2014; ATA, 2014). The highlands of the central, south-eastern and northwest parts of the
country are the main wheat growing areas of Ethiopia; and regionally, wheat production comes
from Oromia (57.4%), Amhara (27%), SNNP (8.7%) and Tigray (6.2%) of the national
production (CSA, 2014). But nearly all wheat, except few governments owned large-scale
(state).

1.1 PROJECT OBJECTIVES

The Company has planned to achieve set of objectives by implementing the envisaged
business operations with enhanced agro-processing technology and creating availability of
value-added agricultural commodities as easiest as in the domestic market places. Hence,
implementation of the underlying project has intended to attain set of objectives at three (3)
different levels:

1.2 National Level Objective

The proposed project if it implemented will contribute to the attainment of the national
government strategies on eradicating poverty in the country and contributed to the
attainment of Millennium Development Goals (MDGs) of the United Nations. The project
could even fill the gap of the increasing demand for diversified value-added agricultural
products in the domestic market place which in turn enables to play a significant role for
import substitution strategy forwarded by the government.

1.3 Secterial and Community Level Objectives

 To contribute on employment condition of the country in general and business area in
particular Sectorial and Community Level Objectives
 to widen the establishment of commercial level grain processing operations in the
areas and encourage potential access to capitalization.
  To create quality processed pulse and other crops product development and
potential/direct market access for small-holder farmers in different regions
 To enhance the entrepreneurial skills and knowledge among the community. increase
present level of pulses market supply and help augment the per capita income
 To contribute on the overall attainment of the national strategy as an Agri-industrial focus
project
 To eventually use the modern technology for heightening the level of community
awareness on the huge potential of processed pulses market. and consumption trends
among domestic community in Ethiopia.

1.4. Project specific objective includes:

 To enhance production of value added tradable agricultural commodities, especially
beans and pulses by using modern technology with annual capacity about 2000
tons/year.
 Primarily to produce and supply all-level processed pulses Legume Grains (Pulses) in
the local market places and eventually for global market
 To enhance the technical skills and thereby increasing the accessibility of product
marketing by small-holder pulse farmers in targeted regional areas. attain target profit
earnings that allow the company for further investment expansion in other regional
areas
 To embark on a sustainable plan to achieve reliable sources of Pulses and other farm
products continuously availed for domestic market which in turn contributes to import
substitution plan of the nation

1.5. VISION STATEMENT

Becoming one of high quality, reputable and profitable grain store in Ethiopia through being a
multifaceted company committed in providing maximum satisfaction of domestic and global
market demand.
1.6. MISSION STATEMENT

The mission of the company is to own well-establish and modern Agro-processing

technology which enables to operate towards the sustainable community development strategies,
Accordingly, the ultimate goal is to implement attainable production and supply of top
quality value added farm products for national and international markets.

1.7. Technology Utilization

The key factors that underpin enterprise growth are labor, land, capital, entrepreneurial spirit and
innovation. In particular, it was innovation and entrepreneurial drive that provided the motivating
power for Taiwan’s economic miracle. Today, new business development continues to depend
on the flexibility and vigor of Taiwan’s SMEs. In more concrete terms, innovation can take one
of five forms: the development of new products or the improvement of existing products, the
introduction of new methods of production, the development of new markets, the identification
of new sources of raw materials or semi-finished products, and the establishment of new forms
of industrial organization.

There are also relevant national and local institutions around the district with which we will work
in collaborations.
 Addis Ababa city Administration farmers and urban agriculture development
commission.
 Lafto Sub City and Woreda farmers and urban agriculture development commission.
 Lafto Sub City and Woreda Land Use and Administrative Authorities.
 Lafto Sub City and Woreda Enterprises.
 Financial Institution and Banks.

1.8 Project Rationale

In many countries great importance is attached to pulses for human consumption especially with
a view to their richness in protein. The aim of industrial processing of pulses is to prepare
the agricultural produce for human consumption that is promoting perfectly hygienic products of
attractive appearance to market requirements, keeping a constantly high quality standard. The
processed pulses are either sold to consumers or delivered to the food industry for further
processing to produce tinned foods or any other refined ready-made meals. Processing of pulses
also helps to store the material to be sold in post-harvest season and also used to maintain
food reserve for period of food shortages. Basically, there is a vast area of suitable land for
the production of agricultural commodities including pulses in the country which makes sourcing
of selected products easily possible for purposive demands. Agriculture contributes about 75% to
80% of Ethiopia’s export income and supplies raw material for manufacturing but many agreed
that due to underdevelopment of the sector and an obsolete trade system, the sector is not rapidly
changing. Hence, strategically to improve the situation necessary attention should be given to
sector development by taking the following investment opportunities in to account. The diverse
climatic conditions of Ethiopia are suitable for the commercial crop products of different type in
almost all regional states of the Country.

1.9 Summary of Ownership and Project Concept

The business promoter Mr. Chernet Mamo Tereda is an entrepreneurial minded person who
has acquired a long years of pertinent work experiences on multiple service business
lines, such as: Construction, Transport Business, Import-Export and Wholesale trade of
goods along with other related services in the country. Hence, considering his ample
experience from the provision of similar and related trading services in previous years, the
business promoters have captured a considerable market from Residing Community, Corporate
entities and individual customers. The business will also keep the needs and preferences of its
customers in mind while implementing the proposed agro-processing operations and
attaining its goal of service business operations with widen market share. Basically, the
founder has modern business personality

who wisely working with local Government offices, corporate business operators,
Financial Service providers, etc. Hence, with this management potential the company has a plan
to operate in full capacity by availing value-added agricultural products which mostly in demand
for domestic and export markets. Accordingly, the envisaged Integrated Agro-processing
activity is successfully operating under national investment category as Agro-Industrial
(Manufacturing) Operations that strategically intended to undertake all-level beans and
pulses processing and trading. The business has envisaged enhancing its current capacity of
agro-industrial operations by raising additional working capital financing estimated to about
ETB 20,879,200 for purchase of sufficient raw materials from domestic market and which to
be processed and supplied to domestic market destination.

2. OVERALL BENEFITS

2.1. Direct Social Benefit

Basically, the strategic plan of the company is to provide project related training to indigenous
people to help broaden their skills, identify new product uses and build market access. Hence, the
most desirable effects of the projects will greatly improve the living condition of the people
specifically more on the increase of farmer’s family income which will afford them to
basic access on health services, better education of their children and access to
employment opportunities. The project will strengthen the engagement of communities
with private sectors and build community capacity in leadership and entrepreneurship.

2.2 Economic Benefits

The project will improve a positive impact on the national economy in general and increase in
per capita income of the households as well as the income of pulses producing vicinities in
particular, Furthermore, it will contribute to foreign currency saving by playing a role on
national import substitution strategy along with potential opportunity for hard-currency
earnings by exporting best quality value-added farm products, especially processed legume
grains of Ethiopian variety.
 3. MARKET ANALYSIS
3.1. GENERAL OVERVIEW OF THE COUNTRY

Ethiopia has a large domestic market of over 110 million people, making it the second most
populous country in Africa after Nigeria. Over the last decade, Ethiopia has had one of the
fastest growing economies in the world, with average annual growth rates ranging from 7% to
12% (depending on data sources). In 2019, Ethiopia’s real Gross Domestic Product (GDP)
expanded by 7.7 percent, and is expected to grow by 8.5% in 2020, according to the World
Bank. The business climate is undergoing significant changes with broad policy reforms
implemented under the new leadership. The agriculture sector has historically been the
engine of the Ethiopian economy, but it has recently given way to the expansion of the service
sector. The National Bank of Ethiopia (NBE) notes agriculture, industry and services have
contributed 35%, 27% and 39% to GDP respectively during the year 2017/18, whereas changes
were computed as 36.3%, 31% and 43.8% to GDP in 2018/2019. The agriculture sector’s share
of GDP share by more than 27% between 2010 and 2019, while the service sector’s share grew
by 32% during the same period. The construction industry, particularly roads, railways, dams,
industrial parks and homes, is the main driver of growth in the industrial sector,
contributing more than half of the sector’s growth. Service sector growth is dominated
by expansion in communication and transport services, hotel and restaurant businesses, as
well as wholesale and retail trading. Ethiopia faces a growing trade deficit with total imports
steadily increasing on average by 12.5% per year during the previous 10 years. The rise in
imports has exacerbated the trade deficit, which ballooned from $3.6 billion in 2010 to $14
billion deficit in 2018/2019. Concerned by the widening trade balance, the Government of
Ethiopia works to suppress imports and took other macroeconomic measures in recent year,
which has resulted in a slight narrowing of the trade deficit to $12.41 billion in 2018/19.
Ethiopia’s total merchandise exports were $2.84 billion in 2018/2019, while imports for the same
period were $15.28 billion, a 3% decrease from the previous year.
3.2. Basics Concepts Wheat Marketing in Ethiopia
Wheat is produced mainly for consumption in Ethiopia and its trend is increasing. Besides its
consumption, it also used for markets; it contributes to 80% of the total marketed quantity of
cereal production; there is a large demand-supply gap. Smallholder farmers market their wheat
produce only 20% of production and 80% of their total production are used for consumption; the
per capital share of quantity consumed in pastoral areas, humid low highlands, small and large
cities are 20%, 1%, 6% and 9% of all food consumptions respectively (World Bank, 2012,
Berhane et al., 2011; FAO, 2013; USDA, 2013). In Ethiopia, wheat is exported to and imported
from abroad for gaining the advantage; but the importing and exporting quantity and value are
unbalanced. Currently importing wheat and distributing to millers in subsidized form is to
stabilize the wheat price and finally to cease it by producing and selling more (Mamo et al.,
2017). Therefore, promoting the commercial oriented wheat production to so as to increase its
production and selling is crucial to cease imported subsidy. The following table shows the
exported and imported quantity and its value.

3.3. Wheat marketing actors and their linkages

Wheat marketing actors are those who participate in production, processing, transporting, and
marketing of wheat in the cereal markets. The chain actors can be categorized as direct/main
actors (actors who are directly participated in the market chain) and indirect/supportive actors
(actors who provide supports to the main actors either financially or none-financially). The main
actors in the chain include producers, processor, assembler, wholesaler, retailers, consumers
whereas the indirect actors are financial institutions, governments, NGOs (KIT, 2008; Solomon
et al. 2017).

A. Producers: these are the main actors who participate in the production of wheat; and are
the first link in the wheat market chain. Each activity in wheat producer market chain
function associated with its costs, namely land preparation, planting activities, fertilizer
application, weeding and harvesting. The main roles of the producers are producing the
wheat produce and sell to the next actors in the nearest markets. According to different
 study, producers are supplying and selling their produce to the next different actors
(either to processor or wholesaler or retailer or consumer etc.) since they are the first link
in wheat market chain.
B. Processors: Wheat processer converts wheat into wheat flour and barn, flour into
biscuits, pasta, macaroni and bread that add value to the product and to satisfy market
requirement. Wheat processer purchase domestically produced wheat at market price
from traders and farmers, and imported wheat at subsidized price from government. They
sell former one to wholesalers and retailers at market price and distribute later one to
bakeries at subsidized fixed price.
C. Wholesalers: are the actors who buy a large volume of wheat and its products to resell to
the other next actors. They buy wheat grain mainly from individual farmers, some
collectors/small traders and a few other wholesalers with in the country and sell grain to
individual farmers, processors, collectors and other wholesalers (Sultan, 2016).
D. Retailers: these market actors are located at the end of marketing chain, directly
servicing the ultimate consumers of the marketing system. They perform numerous
marketing functions such as buying, processing, storing, selling and other functions
related to marketing.
E. Consumers: are those who bought wheat and its products for consumption. Marketing
channel is a business structure of interdependent organizations involved in the process of
making the product or service available for consumption starting from product origin
(Kotler and Armstrong, 2003). It is important to provide a systematic
information/knowledge about the flow of goods and services starting from production to
final destination. Different scholar’s results showed that the marketing channels of wheat
looks like the following: The identified ten different wheat marketing channels are listed
below as follows

3.4. Structure conduct and performance analysis of wheat market

Wheat market structure Market structure is the characteristics of the organization of a market
which seem to influence strategically the nature of competition and pricing behavior within the
market. It can be analyzed by the number of buyers and sellers within the system, degree market
concentration, product differentiation, market integration, market transparency and or market
information, and barriers to entry and exit (Wolday and Eleni, 2003; Pender et al., 2004).
Market concentration of wheat in Ethiopia Market concentration is the number and size of
distribution of sellers and buyers in the market (Kohls and Uhl, 2002; Solomon et al., 2017). In
determining degree of market concentration, the objectives of the firm, barriers of entry,
economics of scale and assumption of the rival firm’s behaviour are important (Schere, 1980).
For an efficient market, there should be sufficient number of firms (buyers and sellers); firms of
appropriate size are needed to fully capture economies of size; there should be no barriers to
entry into and exit from the market and should have full market information (Tadesse, 2011). To
measure the wheat market concentration, CR4 ratio, Herfindhal Hirschman index, Gini
coefficient methods can be used. But using concentration ratio (CR4) is better so that in order to
measure the market concentration of wheat in this review, CR4 is focused. A CR4 of over 50% is
generally considered as strong oligopoly; CR4 between 33% and 50% is generally considered a
weak oligopoly and a CR4 of less than 33% is un-concentrated market (Kohls and Uhl, 1985).
According to Mohammed (2011), the average market concentration of wheat (CR4) in Alaba
Qulito Market of Halaba Special Woreda, Southern Ethiopia, is 71.5%, which was oligopolistic
market, indicating the existence of market imperfection. Similarly Sultan (2016) found that the
market concentration ratio of wheat in Sinana District, Bale Zone, Oromia Region, Ethiopia, was
88.7% of the total amount of wheat sold in market during peak production season at Robe town,
indicated that the market structure is oligopoly market. In contrast to these, Hailu Negash (2010)
found that the market concentration ratio (CR4) of wheat in Mekele market, Tigray, was 22.31%,
indicates competitive market. Besides this other study reveal that the average market
concentration was 27.54%, indicated that the market structure was weakly competitive markets
(Gebremeskel et al., 1998).

Wheat market transparency (Flow of wheat market information) Degree of market transparency
is the reliability of market information that the market participants have to make decisions
regarding to marketing activities. According to Hailu (2010), degree of market transparency can
be evaluated using perfect information flow, sources of information, proper standards and
grades, measuring tools accuracy, unfair practices. Having market information is crucial for
enhancing market performance by improving the knowledge of buyers and sellers concerning
supply and demand. Although it is crucial, there was no organized system to provide reliable
market information to all market participants. Thus, traders obtained the market information
through telephone, brokers, neighbors, friends, discussion with other traders, and personal
observation. About 42% and 19% of sample traders in Halaba Special Woreda, Southern
Ethiopia, obtained price information through telephone and from other traders; the remaining
39% of traders obtained price information through telephone, brokers, discussion with other
traders, and personal observation (Mohammed, 2011). According to Sultan Usman (2016),
98.3% of the farmers obtained market information from other farmers through exchanging
information each other and about 70% of information was acquired from traders in Sinana
District, Bale Zone. But the traders provide the information for farmers, which was not up-to
date and mostly not true. Generally, the market information is the main problems in wheat
markets in many areas of Ethiopia. But if market participants do not have perfect market
information, the market structure is tempted to market imperfection. Therefore, the market
structure of wheat in Ethiopia is not perfectly competitive market.
 4. TRADE BALANCE AND VARIATION

Ethiopia faces a growing trade deficit with total imports steadily increasing on average by
12.5% per year during the previous 10 years. The rise in imports has exacerbated the trade
deficit, which ballooned from $3.6 billion in 2010 to $14 billion deficit in 2017/18. Concerned
by the widening trade balance, the Government of Ethiopia works to suppress imports and
took other macroeconomic measures in recent year, which has resulted in a slight narrowing
of the trade deficit to $12.41 billion in 2018/19. Ethiopia’s total merchandise exports were
$2.84 billion in 2018/2019, while imports for the same period were $15.28 billion, a 3%
decrease from the previous year. The Ethiopian birr is a not a convertible currency, and
private sector allocation to foreign exchange (U.S. dollars) is determined by the National
Bank of Ethiopia (NBE). The NBE operates within the context of a large trade deficit and the
need to meet sovereign debt obligations stemming from government infrastructure projects
funded by foreign debt, which enjoy priority in allocation of foreign currency. According to the
NBE annual report (2018/19), 34.5 % of total imports ($5.27 billion) was spent on capital goods
and 31% ($4.7 billion) on consumer goods. U.S. exports to Ethiopia in 2018 amounted to
$1,310,886,716, a 49% increase from that of last year, accounting for 9.4% of Ethiopia’s total
imports. In 2018/19, Ethiopia's major exports included coffee (29.5%), oil seeds (14.9%), pulses
(9.5%), Chat (9.3%), cut flowers (8%), and gold (3.5%) which total export earnings value
declined by 2.3% from the previous year. Depressed commodity prices are the leading cause of
this drop in exports. Major destinations for Ethiopia's exports in same years were: Asia 39.8%
(of which China accounted for 22.3%), Europe 28.7% and Africa 20.9%. accordingly, the
United States was Ethiopia’s leading export market representing 9.9% of total exports,
registering a 2% increase from the previous year. On the other hand, the vast majority of
Ethiopia’s imports come from Asia (64.2%) followed by Europe (19.3%), the United States
(9.4%) followed by Africa (7%). Imports from China accounted for 39.3 (a drop of over 10%
from the same period last year) followed by Kuwait (12.6%), India (10.1.8%), USA (9.4%) UAE
( 5.4%) Japan (5.3%) and Saudi Arabia (3.6%). U.S. exports to Ethiopia increased by 2.4%, a
successive two years increase in a row. U.S. Exports to Ethiopia are primarily aircraft sales,
construction equipment,
4.1. Grain Processing and Trading Business
4.1.1 Business plan report

Agricultural machinery, farming, and engineering services. Aircraft and aviation parts
represented a majority of total U.S. exports to Ethiopia. Based on previous trend and data
reported by Ecofin Agency for on status of current export revenue that reached $1.3 billion
during the first half of FY2019/20, the total export revenue will meet up to 10% increase as
compared to the same period in the previous year. According to the Trade Ministry, the
improvement was spurred by good performances in the sales of coffee, cereals, textiles,
oilseeds, spices, flowers, leather, and other products exported to 137 countries. On the other
hand, sales of gold, livestock, pharmaceuticals, milk, meat, honey, and chemical and
construction products declined. Thus, in order to intensify foreign trade operations, Ethiopia is
considering a series of measures, including the establishment of a digital platform for
identification and the granting of business licenses and permits.

4.2. Grain Processing and Trading Business

Business plan report improvements in planting techniques could double overall cereals and
pulses production to two million tons over a period of five years. This gain in productivity would
not only increase smallholder income by 40 to 70 percent per hectare, but would also
ensure greater food security through meeting domestic demand. In addition, Ethiopia could
expand its foreign market presence through increased production levels, which will lead to
at least doubling of its current volume annual exports performance. Even under
conservative assumption of proportionate increase in domestic consumption and export,
doubling production will result in at least doubling of export earnings by 12.5% each
yea. If the domestic production remains at the current level, export earnings will be far greater

4.3. Pulses Subsector (Production, Consumption and Trade)

4.3.1. Pulse Crops Production Trend (Global Vs Ethiopia)

Global Level Production Pulses crop varieties were co-domesticated together with cereal crops.
Due to their nutritional importance, their use in animal feed production and their nitrogen
fixation characteristics, pulses continue to be cultivated for human and livestock
consumption and as part of a crop rotation strategy with cereal crops. Pulses crops are
adapted to different kinds of agro-climatic conditions and can grow in both subtropical and
temperate climates. In addition, many pulses varieties are drought resistant and can endure poor
soil fertility. These factors contribute to the prevalence of pulses cultivation around the world.
Globally, pulses are the second most planted crop after grasses crop (mainly cereals) in terms of
acreage, with over 85 million hectares of pulses harvested in 2018/19. In the same year,
78.4 million tons of pulses were produced globally. Global production of pulses and other
grain legumes has been increasing by an average of 2.15% per year since 1990 (FAO-Online
Database, Nov. 2021.

4.3.2. Business S.W.O.T. Analysis

Strengths; High experience of the business owner has been in
grains food business in Chernet Mamo Tereda for more than 8 years, and more especially he
understands very well the market in Addis Ababa City. Hence she got a Strong &
trustful network as well as a committed team to achieve the business objectives
this will lead our capacity and experience to do so;

Weaknesses; less capacity in collection of grains food since it is a seasonal operation.

Opportunities;

---Free and liberalized market in East African Community

---Good volume of production of grains food in the region;

-----Government’s policies that reinforce the Crop intensification Market available: grains food
is a daily meal in ChernetMamoTereda therefore our products are highly demanded in Addis
Ababa City and in whole ChernetMamoTereda in general. Our share in market will be just a
mere portion. The high demand will allow us have a less fluctuated price on the market.
Threats;

Eastern province is a frequent victimized region by drought, it looks as unstable region regarding
the crop seasons.
 4.4. Socio-Economic impact of the project
Grains food is the main crops grown by a large number of households and
provides major income to them. Almost every ChernetMamoTeredan farmer grows grains
food; at least maize and beans. This business will assist the Farmers partners
to acquire skills through trainings on grains food farming, harvesting,
handling, income generating and management. The economic impacts are
foreseen through activities: employment opportunities during the grains food.

Collection process.

Employment will be also generated in transportation, drying, cleaning and stocking. All
payments will be done through UMURENGE SACCO or Ban que Popular, where some
amounts will be saved by beneficiaries. We hope that with income generated from this business
beneficiaries (farmers,employees and others.) will be able to pay their health insurance (Mutuelle
de santé), school materials and school fees, as well as all of what they need (basic
needs). In addition to that, quality food will be available in the area.

Production assumptions

Prior to tackle the assumptions, we want to report the last three years
production; the table below shows the Company production of 3 last years:

CASHFLOW FOR LAST 3 YEARS

CASH INFLOW 2024 2025 2026

SALES 34,648,360 38,324,000 48,000,000
TOTAL CASH INFLOW 34,648,360 38,324,000 48,000,000
CASH OUTFLOW
COST ON PRODUCTS 25,040,000 28,600,000 33,000,000
TOTAL MARGIN 3,608,360 3,724,000 4,000,000
OTHER COSTS
RENT 504,900 561,000 660,000
SALARY AND WAGES 734,400 816,000 960,000
TRANSPORT AND
1,927,800 2,142,000 2,520,000
COMMUNICATION
AMORTIZATIONS 1,150,000 2,400,000 3,400,000
OTHER CHARGES 83,240 203,600 416,000
FINANCIAL COSTS 2,437,323 2,816,000 2,236,995
TOTAL OTHER COSTS 1,837,663 1,938,600 2,192,995
BENEFITS BEFORE TAX 20,770,697 24,785,400 27,807,005
TAX ON INTERESTS (18%) 3,738,725 4,461,372 5,005,261
BENEFITS AFTER TAX 17,031,972 20,324,028 22,801,744

The table above shows our production business turnovers the last three fiscal
years. We used to hire warehousing services from others, factor that affects our
products in quality and price. Our business development is in range of 17%
year-to-year, which is very interesting progress. We expect to uphold this rate
during the coming years with our own new and well equipped warehouse,
“ETHIOPIA Grains Market”. Therefore, all the assumptions for coming years are
based on the projected volumes of grains food that we plan to raise basing on
the experience we realized this year 2016. Revenues and expenditures are also
expected from the quantities of grains food.

PRODUCTION
PROJECTION
YEAR 2025 2026 2027 2028 2029

QTY OF MAIZE IN KG 3,750,000 3,937,500 4,331,250 4,764,375 5,479,031

QTY OF BEANS IN KG 3,150,000 3,307,500 3,638,250 4,002,075 4,602,386
QTY OF SORGHUM IN KG 4,650,000 4,882,500 5,370,750 5,907,825 6,793,999
TOTAL 11,550,000 12,127,500 13,340,250 14,674,275 16,875,416
The table above shows the volume of grains food to be corrected. Even if we know that we can
add more items, we want to limit ourselves on just 3items i.e. Maize, beans and sorghum. We are
aware that the collection of grains food depends on the annual production, our capacity of
farmers’ mobilization and competition, therefore we expect to increase 5% our collection the
first two years, 10% the following two years and then 15% by the fifth year. In case of shortage
due to natural threats we expect to compliment our quantities from neighboring countries.

4.5. Sales projections

According to the above assumptions we expect to generate income from the collected quantities of grains
food. The table below shows the expected income that will be generated within five coming years.

SALES PROJECTION

YEAR 2025 2026 2027 2028 2029

QTY OF MAIZE IN KG 2,812,500 2,953,125 3,248,438 3,573,281 4,109,273
Unit Price 60 70 80 90 100
S/TOTAL INCOME (ETB) 168,750,000 206,718,750 259,875,040 1,089,850,78 4,109,273,00
1
QTY OF BEANS IN KG 2,362,500 2,480,625 2,728,688 3,001,556 3,451,790
Unit Price 80 90 100 110 120
S/TOTAL INCOME (ETB) 189000000 272868800 330171160 414214800
223256250

QTY OF SORGHUM IN 3,487,500 3,661,875 4,028,063 4,430,869 5,095,499

KG
Unit Price 50 60 70 80 90
S/TOTAL INCOME (ETB) 174375000 219712500 281964410 354469520 458594910
TOTAL INCOME (ETB) 532125000 649,687,000 814708250 1774491461 872,809,710

The table above shows the increment in our business sales. However, the table shows the
variation in figures, this means that, according to the experience, we project the variations of the
annual production and the grains food price on regional market and of course on local market.
4.6. Cost assumptions
To produce such quantities, production cost is needed. We have made some assumptions on the costs
of grains food purchase, transportation and processing, as well as additional cost.

BUSINESS COST CALCULATION PROJECTION

YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

QTY OF
MAIZE IN 2,812,500 2,953,125 3,248,438 3,573,281 4,109,273
KG
Unit cost 60 70 80 90 100
S/TOTAL
1,088,957,46
INCOME 632,812,500 693,984,375 795,867,188 911,186,719
1
(ETB)
QTY OF
BEANS IN 2,362,500 2,480,625 2,728,688 3,001,556 3,451,790
KG
Unit cost 80 90 100 110 120
S/TOTAL
1,035,536,90 1,242,644,28
INCOME 708,750,000 781,396,875 900,466,875
6 8
(ETB)
QTY OF
SORGHUM
3,487,500 3,661,875 4,028,063 4,430,869 5,095,499
IN
KG
Unit cost 95 105 115 125 135
S/TOTAL
INCOME 351,562,500 413,437,500 535,992,188 607,457,813 760,215,586
(ETB)
Purchased
grains food
8,662,500 9,095,625 10,005,188 11,005,706 12,656,562
QTY
(Kgs)
S.TOTAL 1,693,125,00 1,888,818,75 2,232,326,25 2,554,181,43 3,091,817,33
COST (ETB) 0 0 0 8 4
2.
PROCESSIN
G COST
Transportation 12,993,750 13,643,438 15,007,781 16,508,559 18,984,843
Other services
(fuels,
electricity, 8,662,500 9,095,625 10,005,188 11,005,706 12,656,562
packing
fees,..)
Personnel 17,325,000 22,739,063 25,012,969 27,514,266 31,641,405
expenses
Other
operating 10,395,000 10,914,750 12,006,225 13,206,848 15,187,875
expenses
Taxes (Local
150,000 150,000 150,000 150,000 150,000
authorities)
S.TOTAL
49,526,250 56,542,875 62,182,163 68,385,379 78,620,686
(ETB)
TOTAL 1,742,651,25 1,945,361,62 2,294,508,41 2,622,566,81 3,170,438,02
COST 0 5 3 6 0
Financial cost 10,941,120 9,847,008 8,752,896 7,658,784 6,564,672
GROSS
TOTAL 1,753,592,37 1,955,208,63 2,303,261,30 2,630,225,60
3,177,002,69
COST 0 3 9 0
(ETB)

4.7. Financing plan Investment plan

The following tables show the Total Initial investment in the construction of
maize grinding plant:

Investment for construction

ITEM AMOUNT (in birr)
Construction of Warehouse hangar & Equipments 3,879,200
Construction of offices 380,000
construction of Storage for pre-processed grains (drying room) 760,000
Quality & Pest control equipment 1,650,000
Electricity multiphase line and generator 840,000

TOTAL 7,509,200

The table above shows that the investment needed for only maize milling plant construction and
equipment is in birr—15,509,200

--. However, to have a running warehouse wholesaling business, demands more than buildings
and equipment.
Total investment plan
DESCRIPTION COST
Preliminary Expenses (land acquisition and
2,000,000
terracing)
7,509,200
Warehouse buildings

Equipments, Furniture and quality control

1,720,379
machines
9,649,621
Working Capital for the beginning

20,879,200
TOTAL

Currency is ETB

The table above shows all the required investment needed for the first year. In order to be able to
function during the first business year the fund of ETB 20,879,200

is required.

Investment funds structure

the following tables show the Total Initial investment to start ETHIOPIAGrains
Market:
AMOUNT OWNER'S
ITEM From Loan
(ETB) SHARE
1. Land acquisition 2,000,000 600,000 1,400,000
2. Buildings 3,879,200 1,163,760 2,715,440
Construction of offices 380,000 114,000 266,000
construction of Storage for pre-processed
grains (drying 760,000 228,000 532,000
room)
Quality & Pest control equipment 1,650,000 495,000 1,155,000
Electricity multiphase line and generator 840,000 252,000 588,000
S/Total buildings 9,509,200 2,852,760 6,656,440
3. Equipments, Furniture and quality control
1,720,379 516,113.7 1,204,265.3
machines
4. Working Capital for the beginning 9,649,621 2,896,986.3 6,759,634.7
Total 20,879,200 6,263,760 14,615,440,
Percentage 100% 30% 70%
Currency is Birr

The table above shows that the investment needed for having a running
warehouse wholesaling business is ETB 20,879,200 The owner’s equity is
equivalent to 36%, (See the detailed Bills of Quantities on the appendix)

Financial ratios of the Business

PROJECTED CASH
FLOW
YEAR YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
CASH INFLOW
Opening balance - 25,904,257 52,326,428 68,770,555 75,487,210
Investment Capital 20,879,200 0 0 0
Total Sales 81,500,000 86,162,500 97,120,000 105,587,375 115,334,163
TOTAL CASH
119,833,077 125,066,757 132,446,428 145,357,930 150,821,372
INFLOW
CASH OUTFLOW
Investment
20,879,200 0 0 0 0
expenditure
Total production Cost 152,592,370 165,208,633 180,261,309 191,225,600 198,002,692
Tax paid 5,308,331 6,531,696 7,414,564 8,645,119 8,699,665
TOTAL CASH
157,900,701 171,740,329 187,675,873 199,870,719 206,702,357
OUTFLOW
CUMULATIVE NET
CLOSING 189,303,027 347,979,964 520,826,709 703,407,190 892,710,217
BALANCE
Currency is Birr

Net Present Value: Investment of ETB 20,879,200 With a discount rate of

25% and a span of 5 years, the resulting positive NPV of the above project is
ETB 55,880,985 which indicates that pursuing the above project may be
optimal.
Internal Rate of Return (Annualized IRR): 48.7% Payback Period: 1 year
Average Annual Cash Flow: ETB 74,254,765

Risks/Constraints Analysis Market risks

There are a few areas of risk within the grains food industry. First and foremost
is drought. Drought causes significant decreases in demand for corn grinding because
there is little to grind. In these cases to mitigate the losses we shall have to
gather big quantity of grains at times of plenty and selling it at times of
scarcity.

4.8. Operations Risks

An operational risk is that one or more staff can fail to collect the targeted
quantity and fail to bring back the balance funds, and create expenses and/or
downtime. This will be addressed by ensuring the maintenance procedures are
followed correctly and timely, by working directly with farmers’ cooperatives
that can use their funds and be paid back directly on every delivery at our
warehouse. In addition to proper system maintenance, operations manager will
bridge the farmers’ cooperatives to nearest financial institutions which can
lend them the funds and be reimbursed at each delivery.

4.9. Risks mitigation strategies

The risk analysis process is an important aspect of business recovery planning.
The probability of a disaster occurring in an organization is highly uncertain.
The owner should also develop written, comprehensive business recovery plans
that address all the critical operations and functions of the business.
The plan should include documented and tested procedures, which, if followed,
will ensure the ongoing availability of critical resources and continuity of
operations. A business recovery plan, however, is similar to liability insurance. It provides
a certain level of comfort in knowing that if a major catastrophe occurs, it will
not result in financial disaster for the owner Insurance, by itself, does not
provide the means to ensure continuity of the owner’s operations, and may compensate for the
incalculable loss of business during the interruption or the business that never returns.