Professional Documents
Culture Documents
1. Background
Engaging in an export business in Ethiopia is a good business venture; export from the country is
growing and the government also encourages the sector. Ethiopia's main export product is coffee;
the country is credited to be the birth place of coffee and it has long been its major export
product. Not only that, coffee plays a central role in the Ethiopian social fabric.
Coffee is an important cash crop for millions of farmers in more than 50 countries. Coffee is the
second largest commodity in world trade after petroleum with an annual trading volume of US $
40 billion. Ethiopia is one of the largest producers, exporters and consumer of coffee. Farmers
grew coffee out of curiosity. From the mid-seventies, coffee was grown as a commercial crop
and nurseries were also established for commercial purposes.
Our company is involving in this business; the export business has advantage to a number of
parties including the promoters, clients, government, suppliers, banks, insurances, end users and
creates job opportunities on the communities. It also holds a special place as a foreign exchange
earner for our country. Now, in the world market, the demand of organic coffee with reduced
amount of caffeine, growing in same climate from Ethiopia.
We have a mission to build long term relationships with our customers and clients and provide
exceptional customer services by pursuing business through innovation and advanced
technology.
- Develop long-term relationships with our customers worldwide and Local wholesalers
and resellers
- Successfully compete in the Coffee an sesame market specificaly in Europe, Asian
countries and U.S. markets.
- Become successful in the import industry and solve the market problems in
Ethiopia.
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Obsidya Industrial and Trading Plc 2021
- Secure contracts with major wholesalers in the European, Asian and U.S. Market
- Develop prosperous business relationships with these wholesalers
- The long-term goal, within five years:
- Establish a strong market presence
- Becoming successful in the export industry of coffee and sesame and magnify the image
of our country in the world market.
- Solve the currency problem of our country.
- Become a successful supplier of goods in Ethiopia and solve the current problem of the
country involve in the import of food supplements like Edible oil, wheat, sugar and in
the construction sector involving in the import of cement and reinforcing steel bars.
Objectives
- Create jobs
- Achieve the largest market share in the city for imported products
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Obsidya Industrial and Trading Plc 2021
- Bringing the new facility to maximum production within three years of operation.
- Increasing our profit margin with the use of improved technology in the new facility.
- Increased growth
- Increased profits
- Tax advantages
- Improved competitiveness
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2. Company Summary
Obsidya Industrial and Trading has extended its business functionalities in different industry
sectors of Import Export Business, Hotel (5 star Luxury hotels), Real Estate, Roasted and Grand
Coffee Export.
Apart from the above sectors, we have started exporting of different high quality Ethiopian origin Oil
Seeds, Pulses, Cereals and Arabica Coffee. Our ceaseless pursuit to provide quality services and prompt
facilities are guided by the values of professionalism, honesty and efficiency. We are highly committed to
provide excellent service to our buyers with quality product at reasonable market price to build
sustainable business relationship and to ensure mutual satisfaction.
Oilseeds, Pulse and Coffee are the top exportable commodities in Ethiopia. Ethiopia has
remained the principal producer of Coffee, Oil Seed and Pulse in the world. It has exported more
than 230,931 Mt Coffee, 260,173.00 of Oil Seeds, 458,631.00 Mt of Pulses to the global market
in 2018/2019.
We are competing with hundreds of local and international companies which offer same kind of
products to the global market. Professionalism, product quality, delivery time, creativity are
among the non-price factors which help us to gain competitive advantages over competition. The
company will actively participate in any international conferences, exhibitions, or food fairs in
order to promote its image and promote its products.
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3. Our Commodities
Commodities we Export
- Sesame seeds
- Niger seeds
- Linseed
Coffee
- Sidama
- Yirgachefe
- Jimma
- Guji
- Lekemt
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Sunflower Seed
Peanut
Incense
Spices
cum
in
- seed
Drie
d
ging
er
-
Tur
meri
c
-
Blac
k
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Pulses
4. Market Analysis
4.1 Market overview – Sesame Seed
Coffee, Oilseeds, Pulse and Spices are the top exportable commodities in Ethiopia.Ethiopia have
remained the principal producer of Coffee, oil seed and pulse in the world. It has exported more
than 230,931 Mt Coffee, 260,173.00 of Oil Seeds , 458,631.00 MT of Pulses and 11,575.40 M
tons of to the global market in 2018/2019. Market trend indicates that oilseeds export grows on
average by 4% in quantity and by 18% by value for the last five years.
The value of consumption of the global sesame seeds was USD 6,559.00 Million in 2018, which is
projected to reach USD 7,244.90 million by 2024 with a growth of 1.7%. Changing consumption
patterns, increase in consumption of sesame seeds & by products in emerging economies
especially China and India, increasing health awareness Growth in use of specialty oils e.g.
sesame oil or health claims, especially in European countries, growth in use of sesame seeds as
foods for snacks and confectionary is resulting in higher demand for sesame seeds. However,
price fluctuations and allergies associated with the commodity are holding back the growth of
Sesame seeds.
4.1.1 Sesame Exporting and Importing countries
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Sesame seed majorly cultivated in tropical and subtropical regions of Asia and Africa. WTO data
points that Ethiopia and India were the two largest exporters of Sesame Seed accounting for
about 50% of the global sesame export on 2017. Over the last few years, other sesame producing
Africa countries has exhibited steady growth in the sesame export markets.
Among the Sesame importing countries, China holds the largest share of international trade. In 2017,
China imports approximately10 Million tons of Sesame from several countries accounting about
64% of the world Sesame seed imports. Japan is the second largest sesame imports and accounts
for 10% of the word sesame Imports. Israel, Korea, Turkey, Vietnam and India are also among
the top 7 importers of Sesame.
4.2 Market overview – Pulses
Pulses are grown virtually every corner of the globe. In the past decades, global pulse production has
grown rapidly. In the past ten years alone, the world has produced between 50 and 60 million
tons of pulses each year.
As of the 2018, the world’s biggest producers of pulses were India, Canada, Mynamar, China,
Nigeria, Brazil, Australia, USA, Russia and Tanzania, while the world’s most important pulse
exporters also include Argentina, France, Ethiopia and Turkey. Overall there were nearly 173
countries in the world that grew and exported pulses between 2010 and 2017.
India, China, Pakistan, USA and Egypt are among the top five importers of Pulses in the world.
4.3 Market overview – Coffee
Global Purchase of imported coffee totaled an estimated US $ 30.2 billion in 2019. Brazil, Vietnam,
Colombia Indonesia and Ethiopia are the top five coffee exporters of the world. United State,
Germany, France, Italy and Japan purchased 19.4%, 10.7%, 9.1%, 5.4% and 4.1% respectively
of the total coffee imports. Beside the above countries, the fastest growing markets for coffee
since 2017 were Russia, Poland, Netherland and South Korea.
5. Competition Analysis
Ethiopian has been in the oilseeds and pulses market for more than a decade. Volume of export has
been tremendously increasing year after year. Ethiopia now becomes the home of aromatic,
sweet, and tasty agro commodities. For example Ethiopia has satisfies 18.9 % of sesame seeds
demand in the global market. However, large numbers of countries have been also supplying
similar products to the global market. In recent years strong competition are coming from new
emerging countries from Africa. Nigeria has become the main suppliers of sesame seeds to the
global market. It specially dominates the Japanese and Turkey’s Market. It satisfies 28.2% of the
Japan’s sesame demand and 45.6% of demand of Turkey sesame consumption. Similarly,
Tanzanian has become the fastest growing suppliers of sesame seeds to the Chinese and Japan
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Market. Another very important competitor to Ethiopian sesame seeds is Sudan. Sudan
Contributes 8.8% and 10.2% of sesame supply to Chinese and Turkey’s market respectively.
Competition becomes stronger and stronger years in years out. So the government in collaboration
with the private exporters should make all the necessary effort to promote the unique features of
Ethiopian sesame in the global market.
As a company, we are competing with hundreds of local and international companies which offer
same kind of products to the global market. Contract discipline, quality, delivery time, state of
the art cleaning machine and personal promotion are among the non-price factors which help us
to gain competitive advantages over competition.
The company will also find ways in reducing cost of production, increasing quality, and shortening
the delivery time in order to win the competition.
In order to differentiate our products, one is coffee, which is a commodity, from the product offering
of competitors, all beans are guaranteed fresh and are shipped within seven days of preparation.
In addition all beans are sorted at ninety percent screen 18 and above compared to the industry
standard eight five percent screen of 17 and above. The beans shipped by Obsidya are guaranteed
fresh. In addition, all of the farms from which Obsidya purchases coffee adhere to
environmentally sound farming practices and avoid the use of pesticides and chemicals in crop
production.
In the export of roasted coffee we will have different grades of roasting which are suitable for
different kind of demands.
6. Marketing Plan/Strategy
6.1 Product/Service Strategy
Millions of tons of Coffee, Oil Seeds and Pulses almost same characteristics are traded in the
international market. However, Ethiopian agro commodities have some unique features which
are not found in other agro commodities produced by other countries. For example humera type
is well known by its features including aromatic, sweetness, white, and uniform size. It is highly
desirable for production of bakery products, tahini, and so on. Similarly, wollega type is reach in
oil and hence used for oil crushing.
We use these unique features of the product as basis of competition and promotion to increases our
annual sales. Moreover, the company will compete on non- price factors such as quality
(supplying high purity level or as per specification, New Crop Commodities), delivery time,
absence of weight shortages, and clean documents, Create service excellence and
professionalism. Besides, food safety, quality control system, traceability are important product
attributes for western customers. We start to take care quality during purchasing of the
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commodity, during cleaning and repackinging, and moving cargoes to port of loading. Purity
level will be one of our distinguishing product features. Through the following strategies we will
provide quality oil seeds pulses and coffees.
- Improve market intelligence: competitive power can be increased by knowing the market,
the buyer as well as the competitors.
- Improve the knowledge about the required product characteristics: color, protein, oil
content, fatty acid composition, taste, etc.
- Providing more attention to the Purchasing and cleaning process
6.2 Pricing Strategy
We set price for our product which is sufficient to cover costs incurred for production and
distribution. Moreover, price of the product should include fair profit margin. Hence we calculate
price based on cost plus pricing approach. That is, we summarize all fixed & variable costs for
production & distribution and add some amount as a profit margin to estimate the price. In fact
as per current International agro commodities market, Ethiopian sellers are usually price takers.
Hence our pricing strategy will be as per bellows.
forwarding agents. We also consider low-priced freight rate, short transit time, container
availability, vessel availability, customer request on choosing shipping lines.
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provides the foundation to establish a long term strategic partnership which makes demand more
stable, certain, and predictable. Therefore, the company will allocate adequate amount of budget
in order to pay a personal visit to 5-10 visits to major buyers of our product.
Moreover, importers of our product will be invited to visit our facilities, production process, and
offices. Additional contacts with potential importers will be established and maintained through
personal contact. Direct mail, in the form of personal letters will also be used to
communicate with existing and potential clients.
7. SALES STRATEGY
7.1 Sales projection-Export
The company plans to aggressively work to export high sales volume in the coming fiscal years.
Currently, the company has planned to export 1.4% of the annual export volume oil seeds and
pulses of the country (Ethiopia) (on average Ethiopia exports around 718,804 MT of oil seed and
pulses per annum). We have undertaken all the necessary preparation to achieve its sales target.
Besides, we also plan to export 345.6 MT of Coffee Beans.
The following scenarios would enable to achieve our sales targets.
1. Warehouse and cleaning facilities will enable us to meet an ever increased demand of storage
requirements at all circumstances. We can store all our products and clean as per our customer
requirement. Hence, it will enable us to supply our product timely, avoid cleaning cost and any
kind of product misuse and to generate additional cleaning and renting incomes.
2. One of the essential elements in the export supply chain is transport. Transport plays a crucial
role in facilitating the movement of cargoes from point of production to point of consumption.
Taking this into consideration the company has planned to acquire 6 heavy duty trucks. It uses its
own trucks to ship cargoes from ECX warehouse to company’s warehouse and thereby to port of
loading. Having its own trucks helps the company to fast circulation of financial assets; reduce
cargo delivery time and transportation costs.
3. Loan facility is our back bone to perform our plans. Hence we plan to work in collaborate with
Dashen Bank.
In summary, adequate storage and cleaning capacity, transport vehicles and is strong financial
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resources enable the company capable to expand sales of its exportable items in the coming
fiscal years.
Given the above prevailing situation, the company has projected that sale of 9,713.60 metric tons of
Coffee, Oil seeds and Pulses with a total value of USD 9,060,076.00 in new fiscal year. We
believe that the company has all the required facilities and capabilities to meet its sales target.
The following table shows that projection of sales for the new fiscal year July 2020-June 2021.
The following table indicates planned export sales for this year.
SALES AND PURCHASE PLAN FOR 2020/2021- FOR MONTH 01 Sep/2021 - 30 Dec/2021
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1 Castor Seed
2 Pigeon Pea
3 Lupin Seed
4 Black Bean
5 Black Cumin
6 Turmeric
TOT
A
L
Costs related to production and distributions are estimated based on the projected sales. Table 2
shows summary of costs which will be incurred to meet the above stated sales projection. The
table clearly shows essential elements of cost of goods sold. Purchasing costs, Cleaning Cost,
Packaging Cost, Fumigation Cost, Weight and Quality inspection cost, transportation, Local and
outward forwarding cost, and reject costs make a significant part of the total costs of goods. A
small reduction on these costs would significantly reduce the costs of production & distribution.
If we simply accumulate whatever cost we incur and add a profit margin to estimate price it will be
higher than the market price. In order to increase the profit margin we shall work on the cost part
of the pricing formula.
We will strategically see when and how much should we purchase during the seasons. A 20-30 Birr
reduction per metric ton during purchase of the commodities would help to save a million birr
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per annum. We will make all the necessary effort to increase sales turnover in order to reduce
annual interest costs. If we keep one quintal of the commodities in inventory for one month we
pay an interest costs. So interest rate is a variable cost which depends on the number of days that
the birr is tied with inventory in the warehouse. If we try to reduce the number of days a birr is
tied with inventory we can also reduces the cost of capital that we incur. So by increasing the
turnover of sales we can significantly reduce interest cost and thereby the unit cost of the
product.
Another important variable that we should look in to in the pricing formula is the amount of reject
we consider in order to calculate the unit price. The amount of reject to be generated during the
cleaning process depends on the quality/grade of the commodity we purchases. Purchasing a low
quality of products as an input for cleaning would result in a high percentage of reject and
thereby increases amount of reject cost that will go in to the product cost. On the other hand, the
higher the quality of the commodity to be purchased and used in the cleaning process the lesser
the amount of the reject and cost. So the amount of reject cost we incur depends on the quality of
the commodity that go in to the cleaning process. So, one of our company culture will be buying
high quality products so as to exceed our customers' expectations and thereby reduce reject costs.
We use the following assumptions as basis for developing the cost of goods sold schedule.
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Assumptions
OPERATIONAL COSTS PER
QUNTAL
DescPulses Coffee
r
i
p
t
i
o
n
Cleaning (Hand Picked Quality)
Cleaning (Soretx Cleaned Quality)
Cleaning (Machine Cleaned Quality)
Polish
Bag
Loading Unloading
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Inspection
Fumigation
Local Transport
Transport from A.A Djibouti
Local Forwarding
Outward Forwarding
Commission
Bank Interest
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We will purchase commodities through ECX for commodities under ECX and from farmers for non-
ECX commodities. We should maintain appropriate balance on our ECX accounts and we should
transfer purchasing fund for farmers to be able to execute purchasing at a proper time so as to
minimize suffering from low- quality products and expensive price and to be able to timely
deliver our export commitments.
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The following table shows that projection of purchase of commodities for the new fiscal year July
2020-June 2021.
RSKB
LSKB
PINTO BEAN
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COFFEE BEAN
RKB
CREAM BEAN
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SOYA BEAN
CASTOR SEED
PIGEON PEA
LUPIN SEED
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BLACK BEAN
BLACK CUMIN
TURMERIC
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309,876,929.41 30,160,112.00
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As volume of operation increases additional employees will be needed to fill vacant posts that will
be available in documentation, logistics and marketing functions. Other laborers shall also be
permanently employed to work in the area of cleaning, warehousing, transportation and security.
The following table outlines our personnel plan for the new fiscal year 2019/220. We plan to hire
qualified export officer, Warehouse Supervisor, Coffee Advisory (part-timer) and motorist in
new fiscal year E.C. Additional staff can be added in the future based on our export performance
and human resource requirements.
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9. Conclusion
Finally the following conditions will support us to meet our export sale projected planes.
- Well established export logistics- Well constructed warehouses with a cleaning facility
and 3 trackers (expected to be 6 in the near future) which help us to speed up movement
of cargoes from ECX warehouse to our warehouse and thereby port of loading.
- Wide network of contact with existing and/or potential customers and established long-
term relationship with some big customers to generate repeat business
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