Professional Documents
Culture Documents
project promoter:
bedasa ejiGu
project location:
oromia reGion, ilu abba bora Zone, mettu Woreda, baroy
Gebisa kebele Gandose locality
(091-1009-467)
consultant: hamen consultancy service plc
mobile phone: (0911-896-145)
nekemte, ethiopia
november, 2020
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Table of Contents
Executive Summary of the Project ................................................................................. iv
1. Introduction ................................................................................................................ 1
2. Background ................................................................................................................. 1
2.1. Avocado Production in Ethiopia ...................................................................................... 2
2.2. Avocado Production and Management practices in Ethiopia .......................................... 3
2.3. Constraints of Avocado Production in Ethiopia............................................................... 3
2.4. Avocado Marketing in Ethiopia ....................................................................................... 4
2.5. Spices Sector in Ethiopia.................................................................................................. 6
2.6. Development and socio-economic objectives .................................................................. 7
2.7. Income distribution and poverty ...................................................................................... 7
3. Project Goal, Objectives and Rationales.................................................................. 8
4. The project Area Description .................................................................................... 8
4.1. Physical Features .............................................................................................................. 8
4.2. Economic Base ................................................................................................................. 9
4.3. Population....................................................................................................................... 10
4.4. Vegetation ...................................................................................................................... 10
4.5. Infrastructure and Institutions ........................................................................................ 10
5. The Project Out puts, Activities and Inputs .......................................................... 11
5.1. Project Description ......................................................................................................... 11
5.2. project objectives............................................................................................................ 11
5.3. Types of technology Use ................................................................................................ 11
5.4. Production Capacity ....................................................................................................... 11
5.5. Land Use Plan and Action Plan...................................................................................... 12
6. Market Prospects ..................................................................................................... 12
6.1. Demands and Main Customers ...................................................................................... 12
6.2. Competition analysis and Selling Prices ........................................................................ 12
6.3. Marketing Strategies ...................................................................................................... 13
7. Organizations and Administration of the project ................................................. 14
7.1. Business Form ................................................................................................................ 14
7.2. Organization Structure of the Project ............................................................................. 14
7.3. Manpower Requirement with Qualification................................................................... 14
8. Stakeholders and partners ...................................................................................... 15
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9. Financial Study ......................................................................................................... 16
8.1 Financial Requirements .................................................................................................. 16
8.2. Forecasted Production........................................................................................................ 20
83 Forecasted Sales Revenues .................................................................................................. 20
8.4. Depreciation calculations ................................................................................................... 20
8.5 Loan Repayment Schedule and Interest Expense ............................................................... 20
8.6 Forecasted Income Statement ............................................................................................. 21
8.7 Forecasted Cash Flow Statement ........................................................................................ 21
8.8 Forecasted Balance Sheet ................................................................................................... 21
8.9 Overall Financial Assessment ............................................................................................. 21
10. Environmental Impact Analysis ............................................................................. 23
11. Conclusion and Recommendation .......................................................................... 24
Annex ................................................................................................................................ 25
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Executive Summary of the Project
1. Project Name Fruits Production Project
16. Recommendation The project is economically, financially and socially feasible. For
instance, financially, the project’s IRR is 56% which is greater
than discount rate (11.5%) and NPV is equal to Br.
73,862,678
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1. Introduction
Tropical and sub-tropical fruit can make a significant direct contribution to the subsistence of
small-scale farmers by providing locally generate nutritious food that is often available when other
agricultural crops have not yet been harvested. Fruit are a versatile product that, depending on
need, can be consumed within the household or sold. Marketing fresh and processed fruit
products generates income which can act as an economic buffer and seasonal safety net for poor
farm households. Diversification into fruit production can generate employment and enable small-
scale farmers to embark on a range of production, processing and marketing activities to
complement existing income-generating activities (Clarke, et.al, 2011). The avocado (Persea
Americana) is a native of Central America and the West Indies.
The tree is evergreen, though heavy leaf fall may occur during profuse blossoming and when the
tree is affected by root rot. The growth habit varies from tall and upright to well-shaped and
spreading. Fruit of the cultivated species vary greatly in size, shape, color, texture and flavor. The
edible part of the fruit-the flesh between the seed and the skin varies in color from cream to
yellowish green. When ripe the flesh should have the consistency of soft butter. The fruit has one
seed. The fruit is unique in that it will not ripen until harvested and may be left on the tree for some
time (depending on variety) after reaching maturity. Avocados contain from 5 to 40% oil, the
percentage varying with the variety, growing area and seasonal conditions. Only ripe olives have
higher oil content. The therapeutic value of avocado oil is related to its fatty acid composition.
Avocados contain many vitamins, particularly the B complex and vitamins A and E, as well as folic
acid and iron. They contain no cholesterol (Agfact H6.1.1 2003). Avocado’s global production has
now reached more than 3.8 million metric tons (FAOSTAT, 2010).
2. Background
Ethiopia is agro-ecologically diverse and has a total area of 1.13 million km2. Many parts of the
country are suitable for growing temperate, sub-tropical or tropical fruits. For instant, substantial
areas in the southern and south-western parts of the country receive sufficient rainfall to support
fruits adapted to the respective climatic conditions. In addition, there are also many rivers and
streams which could be used to grow various fruits. Ethiopia has a potential irrigable area of 3.5
million ha with net irrigation area of about 1.61 million ha, of which currently only 4.6 % is utilized
(Amer, 2002). Fruits have significant importance with a potential for domestic and export markets
and industrial processing in Ethiopia. The main fruits produced and exported are banana, citrus
fruits, mango, avocado, papaya and grape fruits (Zeberga, 2010). According to Mauro (2006),
Ethiopia’s international involvement in horticultural trade and production is growing at rate of 7
percent per year by creating better opportunity to compete on lucrative export market.
Owing to these realities, with its shortest introduction to Ethiopia, these days the crop is produced
in several countries where Ethiopia stands the 10th leading producer and 6th most important
consumer in the world (FAOSTAT, 2010). Avocado was first introduced to Ethiopia in 1938 by
private orchardists in Hirna and Wondo-genet and production gradually spread into the countryside
where the crop was adapted to different agro-ecologies (Edossa, 1997; Woyessa and Berhanu,
2010; and Zekarias, 2010). Avocados are second in total volume of production, next to banana, in
Ethiopia (Joosten, 2007). Annual avocado production in Ethiopia is 25,633.16 tons. The crop is
now produced by 1,149,074.00 farmers countrywide who collectively farm more than 8938.24 ha
of land (CSA, 2012/13). Absence of improved varieties, avocado and mango production is
exclusively based on distribution of mixed materials; consequently the local seed system has come
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out as best-bet arena and is now a common route for seedling dissemination ( Ayelech , 2011).
According to Mulat (2000) the largest constraints in Ethiopian agricultural markets are the limited
number of traders that have a scarce amount of capital together with a large number of farmers,
which leaves the farmers with a weak bargaining power. Furthermore, limited information systems,
poor transportation, high handling costs and an underdeveloped sector are other limitations on the
market. According to W.Garedew (2010) even though avocado has economically and socially play
a significant role its production is confronted by a number of constraints; - this are Degeneration of
fruits, Disease problem and absence of agronomic practices. According to Susanna and Amanda,
2014 In Ethiopia No value adding activities of avocado take place at the farmer, broker or
wholesaler level in the supply chains and the products are sold unprocessed. The value of the fruits
increases when the products move closer to markets with high demand.
Despite relatively early establishment, the avocado industry in Ethiopia is in its infancy and has
not yet utilized the immense potential of this crop. In the context of increasing the high value
production of agricultural commodities, fruit tree and perennial crops play an important role. This
commodity group includes tropical nuts, fruit trees, grapes, bananas, mango, pineapple, papaya,
passion fruits, apples and others. Except table banana, tropical fruit trees like mango, avocado and
the like were not well known and considered as diet by most Ethiopians (Yilma, 2009). However,
Yilma (2009) indicated that the expansion of state farms in the past command economy
and the prevailing expansion of private investors in different regions of the country have
contributed a lot on the introduction of fruits as business. Avocado is a fruit from a tree that has
a variable growth and development, reaching a height of 10 to 12 meters in its natural habitat
Avocado trees may grow at different altitudes. Such habitat is classified as subtropical-tropical.
The tree has a ligneous trunk that can reach up to 80 cm to 1 m in diameter in trees that are 25 to
30 years old (raceme), that can be axillaries or terminal. Avocado trees can be seeded or grafted.
The seeded trees produce fruit after approximately 8 years and grafted trees, being the most
common propagation method, produce fruit after only 2 years. Besides the longer juvenile period
the seeded trees also have a larger risk of losses in yield and quality. The avocado trees could need
irrigation during dry periods but not during rain seasons. Root rot is the most common failure in
avocado production and too much irrigation is one of the causes of this. According to CSA
(2012/2013) the total cultivated area for Avocado in Ethiopia is 8938.24 hectares and production
256331.64 quintals more area coverage is expected in the south-western and other parts of the
country due to more conducive climatic and edaphic factors.
Table 1 Summary of major fruit crops produced in Ethiopia in 2012/2013 cropping season
According to Birhanu (2013) Constraints hindering the development of avocados are found in all
stages of the production chain. At the farmlevel, lack of clean disease-free seedlings and grafted
seedlings has compelled farmers to use inferior and low yielding varieties. Storage facilities are
scarce all along the chain and absence of collective bargaining power has forced individual farmers
to accept unfavorable deals. According to Zekarias (2010) Major productions constraints are:-
Vegetative growth: Most of the farmers reported that their avocado trees show only vegetative
growth rather than giving yield at their fruit bearing stage Falling down of fruits before they are
mature, Pest problem There are no improved agronomic practices Longetivity: Farmers are very
much disappointed by the longer time avocado takes to bear fruit and Inadequate extension
activities undertaken on avocado. W.Garedew,(2010) also indicated that even though avocado has
economically and socially play a significant role its production is confronted by a number of
constraints ;- this are Degeneration of fruits ,Disease problem and absence of good agronomic
practices.
The major export markets for fruits for Ethiopia are the surrounding countries Djibouti, Sudan and
Somalia and the main products exported to these countries is non-graded fresh fruits Whereas,
higher valued fresh produce that includes graded and pre-packed are exported to the United Arab
Emirates, United Kingdom and the Netherlands. about 85% of the fruits are exported to Djibouti
and the second export market destination is the Emirates (EHDA, 2011). In general, the main
products for export were citrus, bananas and mangoes (EHDA, 2011). Avocado is channeled from
producers to local collectors, Cafeteria and whole sellers and finally to Addis Ababa market
through these channel middle men buys all avocado fruits from the farmers at a lower price and
sells them in the market at higher price (Zekarias, 2010). According to Birhanu (2013) the avocado
industry operated under an unregulated environment. Prices were exclusively determined by traders
negotiating with farmers at time of procurement. Over supply of fruit is the principal reason for
price declines which affect farmers.
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2.4.1. Marketing Constraints
Marketing constraints are related to prices and demand for the products, market information,
communication, storage and perish ability of the products. According to Mulat (2000) the largest
constraints in Ethiopian agricultural markets are the limited amount of traders that have a scarce
amount of capital together with a large amount of farmers, which leaves the farmers with a weak
bargaining power. The horticulture products in Ethiopia are mainly produced by smallholder farms,
and a small amount of state-owned farms (Emana & Gebremedhin, 2007). Lack of market to absorb
the production; large number of middlemen in the marketing system; absence (weakness) of
marketing institutions safeguarding farmers' interest and rights over their marketable produces (e.g.
cooperatives); lack of coordination among producers to increase their bargaining power; imperfect
pricing system of traders was a major problem to producers. Traders charge low price at peak
supply periods which is not based on the real demand and supply interaction .this implies, the
middlemen decide on the price of fruit products. Producers cannot negotiate since they may be
denied even a low price and their products could be liable to rotting, since it is perishable, and lack
of semi-processing industries (yimer, 2015). According to Ayelech, (2011) Absence of organized
institution and system group marketing has made traders in a better position to dominate the
pricing. Changing the attitudes of farmers is a crucial factor in improving the marketing
performance of households. According to Zekarias (2010) major constraints for Avocado marketing
Low price for product, low bargaining power to influence their due to poor economy and perish
ability nature of the product.
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2.5. Spices Sector in Ethiopia
The Ethiopian varied agro ecology supports growing of a wide variety of crops in general and spice
crops in particular. As a result the country hosts several indigenous common and exotic spice crops,
which are cultivated widely since the time immemorial. Spice crops are produced in various regions
of the country and predominantly by small farmers as a cash crop traded primarily in domestic
markets, but with increasing success also entering foreign markets. The spice sub-sector has an
immense potential for economic development and poverty reduction through creation and
expansion of employment opportunities and distribution of income and foreign exchange earnings.
However despite all the potentials and opportunities of having such a long history and variety of
them with a diversified conducive agro-ecology base, the spice sub-sector potential remained
unexploited. The subsector is still not organized, low in productivity and inefficient. The production
of all the different types of spices, especially the technique employed by smallholders is mainly
based on traditional ancient knowledge that has been inherited and transferred from generations to
generations. Producers seldom use modern technologies such as farming tools and new techniques
and inputs like pesticide, fertilizer and improved seeds. Moreover, the production system is based
on rain-fed agriculture; therefore the supply of spices is unsustainable because of the vulnerability
of the crops to possible droughts. In most cases mixed unplanned cropping is performed and
normally smallholder farmers do not allocate enough land for the production of spices.
Thus, the objective of this investment project proposal is well anchored to, and aligned with the
national socioeconomic development of the country. The detail project rational and objectives are
explained under section three “rationale and Objectives of the project”.
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3. Project Goal, Objectives and Rationales
To address the problems identified on section 3 above this investment proposal is calling for
allocation of land for Avocado and different spices production, processing recognizes that:
The domestic consumption of both fruits and spices has increased significantly in recent
years;
National fruits and spices production does not meet the rapidly growing demand;
Smallholder output is inadequate and most fruits consumption is met by importing;
There has been a call for our smallholder and investors to concentrate on increasing
production and productivity to meet the growing food and export demands;
Past production increases depended largely on an expansion of area planted rather than on
increasing average yields per hectare continued to be low by international standards whereas
this project aims at meeting such standards;
Such project with the aim of enhancing production and productivity of fruits (Avocado), and
spices will minimize the current national budget deficit caused as a result of importing food
items on one hand and generate foreign currency by promoting exports of Avocado and
spices on the other hands.
Implementation of this commercial Avocado and spices production project is expected to
Mettu, so that the outputs of this project will become the inputs for the processing factors.
As Mettu town is expected to be the commercial center of the south western Ethiopia, this
project will have access to lucrative international market. The railroad and airport which is
on the process of implementation will facilitate the transportation of the products safely and
swiftly.
4.1.3. Climate
The Climate of the District is characterized by high land (83%) and lowland (17%). The climate of
the project area is influenced by its location and elevation. The project site is placed in the low
altitude with an elevation of approximately 2575 meters above sea level. The area lies in the warm
humid sub-tropical climate zone. The main rainy seasons run from June to late September with
heavy rainfall occurring between July and August.
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4.1.4. Soils
Soil Characterization and Suitability Analysis: The majority of the proposed project site is a flat
land with an average slope lying between 0-5 percent. The soils are mainly dominated by dark
reddish brown and loamy having a good infiltration capacity. It was observed that the soils are well
drained and there is no problem of water logging. The project site has an effective soil depth of over
20 cm. Erosion hazard is very low in the project area.
Oxen are the main source of power for peasant farming & farmer with no farm oxen is considered
as poor. A farmer having a pair of ox can feed himself & his family if he/she possesses enough
farmland. Saving capacity depends on what they produce & amount they obtain. To produce large
amount of crop, farmers should possess fertile land, farm oxen, improved seed, fertilizer, credit
facility & know how or technical service regarding recent agricultural technologies. Besides; the
farm oxen needs medical care & uninterrupted follow up not to be attacked by a serious animal
diseases.
4.2.2. Livestock
Like in most peasant smallholder societies in the Oromia region, livestock play a key role in day-to-
day life of the Mettu woreda society. Livestock play a key role in day-to-day life of the society,
especially in the peasant sector. They provide meat & milk, transport, manure, skin & hide &
furnish regular & easily realizable cash income. But in contrast to the size of the livestock
population, physical & value productivity is low.
In this project area oxen are the main source of power for peasant farming and hence a farmer with
no farm oxen is considered as poor. A farmer having a pair of ox is expected to feed himself and his
families provided that he possesses enough farmland. Saving capacity of the society is again the
function of their production capacity, which in turn, is the functions of oxen and farm sizes, both of
which are declining from time to time in this area. Besides, the farm oxen need medical care and
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treatment, the cost and availability of which is again the major challenges for the smallholder
farmers. As a result, the average number of farm oxen per household has been decreasing from time
to time thereby leaving the smallholder farmers at very precarious situation.
4.2.4. Industry
Industry is a group of productive enterprises or organizations that produce or supply goods,
services, or sources of income. There is no medium and large-scale industries found in the district
and there is a data problem on small scale manufacturing industries.
4.3. Population
Population size, compositions, its spatial distribution and some other demographic and socio-
economic data are very important for planning, monitoring and evaluation of various development
programs. The total population size of the district is estimated to be 91,039 out of these 50,849 are
males and 40,200 are females. However, as the number of oxen per household are gradually
decreasing owing to the animal diseases and farm sizes is getting smaller and smaller due to
increasing population, there has been a trend of increasing rural to urban migration in search for
alternative non-farm income employment opportunities. Hence, this project is expected to create job
opportunities for these potential migrants at their nearby village and hence alleviate the pushing
factor for migrations.
4.4. Vegetation
About 19.5 percent of Metu District and its surrounding areas have been covered with forests both
natural and manmade forests. The lower part of the District is covered with lowland woodlands,
bush and Acacia trees (Acacia abyssinica). The dominant land cover of the project area is bushes.
There are also significant acacia woodlands. The project area is partly flat area and some of its part
is sloppy ranging from 3-5% covered by bushes, scattered acacia species and grazing land.
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5. The Project Out puts, Activities and Inputs
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5.5. Land Use Plan and Action Plan
The following table shows the proposed land use and crops for which the land is to be used.
Table 1: Land use plan for 200 hectares
Land allocated to Land Use and Development Plan
Land
allocation
(%)
Crop type Crop name 1 2 3 4 5 6 7 8 9 10 to 25
Fruit Avocado 110 110 110 110 110 110 110 110 110 110 55%
Grapes 50 50 50 50 50 50 50 50 50 50 25%
Apple 35 35 35 35 35 35 35 35 35 35 18%
Total crop land 195 195 195 195 195 195 195 195 195 195 98%
Construction Plots 1 1 1 1 1 1 1 1 1 1 0.50%
Total Farm Area 196 196 196 196 196 196 196 196 196 196 98%
Forest Area 4 4 4 4 4 4 4 4 4 4 2%
Total Investment area 200 200 200 200 200 200 200 200 200 200 100%
As the above table shows, the total farm land is allocated to production of demanded Avocado and
various high valued spices items such as: Fruit (60 percent of the land to be covered by Avocado);
Spices (38 percent of the land to be covered by Pepper, Ginger and Others). The construction plots
are expected to cover only 1 hectare and the remaining land 2 percent is reserved for forest
coverage (at least 2 percent of the allotted land for investment as per the Oromia Rural Land use
and Administration Proclamation No. 130/ 2007, which will be 9 hectares).
6. Market Prospects
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year and accordingly we have full projections for the selling price per quintal of each product
presented under sub-section 9 (projections of revenues).
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7. Organizations and Administration of the project
Note that this organizational structure depicts the overall flows of accountability and reporting
structure of the project staffs.
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Table 2. Manpower Requirement (with qualifications, number and estimated monthly salaries in
Birr)
Staffs with position No Profession/Qualification Monthly Annual Salary
Require Salary (Birr)
d (Birr)
General Manager 1 MSc Agronomy/Related 7,000 84,000
Farm Manager 1 Bsc in Plant science /Horticulturist 6,000 72,000
Marketing officer 1 BA in Marketing 5,500 66,000
Administration 1 BA in Management 6,000 72,000
Forman 3 Diploma in relevant field 5,000 180,000
Clerk/Accountant 1 Diploma &above in relevant field 4,500 54,000
Time Keeper 3 Diploma &above in relevant field 2,500 90,000
Tractor Operators 2 4th /5th grade license and 10th/12th 5,000 120,000
complete
Farm Guards 4 8th /10th complete 1500 72,000
Store keepers 2 Diploma in relevant field 3,000 72,000
Secretary 1 Diploma in relevant field 2,500 30,000
Cashier 1 Diploma in relevant field 3,500 42,000
Cooks 3 10th /12th complete 1,500 54,000
Cleaners/Janitors 3 10th complete 1,200 43,200
Driver 3 4th /5th grade license and 10th /12th 3,000 108,000
complete
Sub-Total 30 1,159,200.00
Note that the employees’ salary is expected to increase by a minimum of five per cent each year.
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9. Financial Study
In this section, both the cash outflow requirements and the projected inflows are projected and
analyzed.
8.1 Financial Requirements
The yearly financial requirements of the project are classified as capital costs, operating costs and
working capital requirements as follows.
Investment on farm machineries and equipments: - The following table shows the specifications of
the selected machineries from the proforma invoices attached to this report.
Farm tools: - in addition to the above-mentioned farm machineries, the following farm tools are
also identified with their respective current unit prices. However, as these items are diverse in kind
and in significant in terms of cost per unit, the costs are forested based on the current market price
without the need to collect proforma invoices.
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Table 5. Farm tools with their respective per unit cost and quantities needed
S.N0 Items Quantity Units cost Total cost
1 Chemical Sprayer 2 1500 3,000
2 Sickles 100 250 25,000
3 Axes 60 100 6,000
4 Tape meter (100 m) 10 650 6,500
5 Wheel borrow 5 3,500 17,500
6 Shovel 10 180 1,800
7 Weighing scale 3 25,000 75,000
8 Washing Machine 2 250,000 500,000
9 Vacuum Pump 1 125,000 125,000
10 Saw 10 160 1,600
11 Cutlass or Machete 3 40,000 120,000
12 Spade hoe 10 900 9,000
13 Local hand hoe 20 70 1,400
14 Spade 30 98 2,940
15 Digging fork 50 400 20,000
16 Trovel 4 500 2,000
= Estimated cost of farm tools (in Birr) 916,740
Office Equipments: - the following table shows the prices of office equipments at the time of
preparing this project proposal.
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8.1. 2. Project Operating Costs
Here, the operating costs refer to these costs which are not included in the project capital costs and
hence are not subjected to periodical depreciation. These costs include such costs as labor costs;
costs for equipment operations and maintenance such as fuel cost and repair and maintenance costs;
depreciation costs; utilities expenses such as water bills, electricity bills and telephone charges;
employee’s salaries; and others miscellaneous expenses.
Labor costs: - In order to determine the periodical labor cost of the project, first we need to
determine labor required to cultivate a hectare of each crop in each project year. Accordingly, the
following are our procedure to determine the labor requirement of the project:
1. First, we started from our land use and cropping pattern proposd throughout the life of the
project as depicted by table 1 land use plan of 200 hectares specified above.
2. Second, we have determined the labor requirements of each crop per hectare per year by the
types of operations throughout the project life as shown by table 7 (annexed). Labor
requirement is expressed in terms of work-day, which is to mean the time devoted by one
person during one day (usually eight hours).
3. Thrid, we have determine the total labor requirement of each crop per year by multiplying the
labor requirement of per hectares by their corresponding total hectares of land planned to plant
each crop (table one). This is represented by table 7 (annexed).
4. Fourth, we have summed the total labor requirement of each crop in each year so as to
determine the annual total labor requirement of the project.
5. Finally, the average wage per day of labor is multiplied by the total labor requirement of the
project for each year. We have taken Birr 81.00 as the average wage per day per worker
applicable to the project location. The average wage per work-day is projected to increase by
minimum of 5 percent each year. This is determined by considering the change in the labor
markete price over the past few years.
Supplies costs: - such costs include costs for technological inputs such as fuel cost for the tractors,
fertilizers, seeds, office supplies and other chemicals. Table 9 (annexed) shows the detailed
calculations of these cost items, the summary of which is Birr 1,396,875 annual supplies cost. As
usual, we expect these cost items to increase by a minimum of 5 per cent per year. This is presented
by table 12 (annexed).
Repair and maintenance costs: - Operating costs for operations and maintenance of machineries
and equipment is taken to be 2 percent of the initial investment costs starting from its second year
after acquisition until end of tenth year, after which the rate would be 10 percent. Accordingly, table
8 (annexed) shows the detailed calculation of this cost item which is summarized to be Birr
391,878 starting from the second year of the project operation to tenth year. This is presented by
table 13 (annexed).
Utilities expenses: - these include such periodical costs as incurrence of liabilities (payments of
cash) for water bills, electricity bills, fuel consumptions and telephone expanses. Although such
types of expenses are changing with the volumes of operations, it is forecasted that a minimum of
Birr 412,500 forecasted for the first year of project operation, which is expected to increase by a
minimum of 5 percent per year. This is presented by table 14 (annexed).
Miscellaneous Expense: - are other operating expense for which it is neither economical nor
convenient to give specific account code and hence should be merged together under
“miscellaneous expense” includes entertainment expense, employee benefits, litigation expense and
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others. Similar to the utilities expense, such expenses are estimated to be Birr 1,199,153 for the first
year and expected to increase at least by 5 percent per year. This is presented by table 14 (annexed).
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8.2. Forecasted Production
In order to estimate the per hectare production of each crop, we have utilized opinions of experts in
the field of agronomists. Accordingly, table 17 (annexed) shows the projected output in quintal
from each crop proposed to be cultivated over the first ten years of the project life.
Note that the projections are based on the expert opinions in the field as well as per the
recommendations of east Wollega zone agriculture office, and experienced investors & seed
multipliers enterprises. In essence, if the project is to be implemented and run in accordance with
the recommendations of the experts, these projections are supposed to be achievable. Here, it is
expected that as the project operates for more number of years, there is advantage of getting lessons
from the past years and hence the latter years’ output per year is expected to increase accordingly.
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8.6 Forecasted Income Statement
Forecasted income statement shows just the summary reports of all revenues earned and costs
expired (expense incurred) during each period. Accordingly, Table 22 (annexed) shows the
forecasted income statement of the project over the first ten years of the project life. Note that the
farm project will have substantial net income starting from its first year of operation. It is evident
that that this project is financially viable.
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Furthermore, the project has the following financial performance measured in different investment
decision criteria. The following table shows the summarized project financial viability test just for
the first ten years of the life of the project. Note that these figures would have been much larger if
we consider the entire life of the project since most of the capital expenditures of the project are
supposed to be committed at the beginning of the years while most net cash inflows are expected
during the later life of the project. However, these figures are still indicators of financial
attractiveness of the project. Detail calculation is presented by table 25 (annexed).
Net Present Value (NPV): - is the sum of present values of all the cash flow both positive and
negative that are expected to occur over the life of the project. The formal selection criterion for the
NPV measure of project worth is to accept all independent projects with a positive NPV when
discounted at the opportunity cost of capital. In this project case, given the project has positive
value of Birr 73,862,678; it means that the project would contribute Birr 73,862,678 towards the
wealth maximization of the owner’s wealth and hence it is viable.
Benefit Cost Ratio (BCR): - The benefit-cost ratio is defined as the ratio of the discounted values of
benefits to the discounted value of costs. A ratio of at least one is required for acceptability and the
ratio of one indicates that the NPV of zero at a particular discount rate. In our case BCR of Birr
1.52 shows, for every one Birr invested in this project, the return would be 1.52 Birr, which is
highly remarkable figure.
Net Benefit Cost Ratio (NBCR): - this ratio is defined as the ratio of net present value to the
present value of cost. A ratio greater than zero (0) is needed for the project to be financially
acceptable; in our case the ratio of 0.52 is in excess of the hurdle rate required to make the project
financially viable (the project is magnificent in terms of this criteria also).
Internal Rate of Return (IRR): - is the maximum interest that a project could pay for the resources
used if the project is to recover its investment and operating costs and still break even. It measures
opportunity cost of capital tied up in the investment. In this project case, IRR is 56 percent which is
extraordinarily large compared with the minimum cost of capital of 11.5 per cent. Hence, we can
safely conclude that the IRR of the project is extraordinarily high and hence indicates project
viability.
It should be recalled that the various investment decision criterion we have considered above
involve predicting values for each of the various elements entering into the definition of volume of
output sold, selling price, required investment, labor costs per unit; maintenance costs of machines,
profit, and so forth. However, as these values are based on certain assumptions, they may change in
unfavorable direction thereby making projects less attractive than when it was planned. Thus,
22 | P a g e
switching value measures the value an element of a project would have to reach as a result of a
change in an unfavorable direction before that project no longer meets the minimum level of
acceptability as indicated by one of the measures of project worth. In this case we ask, by how
much an element would have to change in an unfavorable direction before the project would no
longer meet the minimum level of acceptability as indicated by one of the measures of project
worth. In other words, in sensitivity analysis, we ask how sensitive is the project’s estimated
financial and economic benefits to increase in costs, fall in price and extension of implementation
periods?
In our case, since BCR is 1.52, it means that cost can rise by 52 percent at which the BCR will
become exactly 1.0 and hence the decision will be indifference. However, any rise in cost beyond
52 percent keeping sales revenues constant will lead the BCR to be below 1.0 and hence the
decision will be to reject the project on this ground. But it is unlikely to expect such increase in
operating costs keeping selling prices of these products constant. Thus, the 52 percent margin of
safety is large enough to guarantee for the stability of the above decision criteria. Similarly,
1 1
revenues can keep dropping up to 1 = 1 = 1-0.6579= 0.342 which is roughly
BCR 1.52
equals to 34 percent, keeping the cost elements constant. Any drop in sales by more than 34 percent
may lead the project to rejection region. However, given the past few year trends, the price of these
items has been increasing at increasing rate and hence expected to increase over the next many
years partly due to increasing demand to these outputs and partly due to increasing general trend in
commodity prices. Overall, when evaluated both in terms of cost and revenue, the project has
sufficient margin of safety to guarantee the stability of the determined investment decision criteria
above. Thus, it is can be safely concluded that the project is financially viable.
More importantly, the projects aim at reversing the environmental degradation trends widely
observable in the area by breaking the nexus between poverty and degradations. In essence, the
projects aim at solving the key problem area by breaking the nexus between rural poverty, natural
resource management and climate change mainly by creating alternative and more lucrative income
source for the local resource poor smallholder farmers, who, otherwise should depend on the natural
resource bases and hence causes the degradations. The project promoters believe:
environment and natural resource degradation are often a direct cause of rural poverty;
rural poverty often exacerbates environment and natural resource degradation; and
Climate change increases the vulnerability of rural people and the ecosystems they depend
on for their livelihoods.
Thus, opening alternative source of income by creating job opportunities within the project can
relieve the current pressure on the rural land in the project area. Besides, the project promoters are
fully aware of the Oromia Rural Land use and Administration Proclamation No. 130/ 2007, which
force any investor to cover at least 2 percent of the allotted land area by indigenous trees.
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11. Conclusion and Recommendation
Overall, the projects have the following merits which would justify the need for giving priority in
its finance:
The strategic objectives of the projects are highly consistent with the national development
objective which calls to “sustainably increase rural incomes and national food security,
which embodies the concepts of producing more, selling more, nurturing the environment,
eliminating hunger and protecting the vulnerable against shocks.
These projects are expected to create job opportunities for these potential migrants at their
nearby village and hence alleviate the pushing factor for migrations.
The projects aim at utilizing locally available technologies so as to encourage the backward
and forward linkage of the project and hence contribute towards the realization of
Agricultural Development Led Industrialization (ADLI) strategy of the country.
Finally, the projects will largely contribute towards the national economic development by
contributing to National GDP. GDP contribution originating from the agriculture sector has
more power of poverty reduction than other sectors (a one percent GDP growth rate
originating in agriculture sector has more potential for poverty reduction than two percent
GDP growth rate originating from the service sector).
Recommendation: - considering the viability of the project, as aforementioned, the project is
recommended for implementation.
24 | P a g e
Annex
Table. 7 Labor requirement per Hectares of each crop
Project life in years
Crop and Operation 1 2 3 4 5 6 7 8 9 10 to 25
Avocado Land preparation 20 15 15 15 15 15 15 15 15 15
Planting 50 50 50 50 50 50 50 50 50 50
Weeding (2X) 40 40 40 40 40 40 40 40 40 40
Chemical application (2X) 15 15 15 15 15 15 15 15 15 15
Harvesting 40 40 40 40 40 40 40 40 40 40
Total 165 160 160 160 160 160 160 160 160 160
Grapes
Land preparation 20 15 15 15 15 15 15 15 15 15
Planting 12 12 12 12 12 12 12 12 12 12
Weeding (2X) 24 10 10 6 6 6 6 6 6 6
Chemical application (4X) 15 15 15 15 15 15 15 15 15 15
Harvesting (2X) 20 20 20 20 20 20 20 20 20 20
Total 91 72 72 68 68 68 68 68 68 68
Apple
Land preparation 20 15 15 15 15 15 15 15 15 15
Planting 15 15 15 15 15 15 15 15 15 15
Weeding (2X) 24 10 10 6 6 6 6 6 6 6
Chemical application (2X) 12 12 12 12 12 12 12 12 12 12
Harvesting 30 30 30 30 30 30 30 30 30 30
Labor per season 101 82 82 78 78 78 78 78 78 78
Labor requirement is expressed in terms of work-day, which is to mean the time devoted by one person during one day (usually eight hours).
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Table 8. Estimated yearly repair and maintenance expenses Repair and maintenance
Items costs Rate
Store and bathing room 1,950,000.00 0.02 39,000.00
New John Deere 6100D Mfwd Tractor (Mexico Origin) 2,765,577 0.02 55,311.54
Brand New Toyota Hilux Double cab 2,300,000 0.02 46,000.00
Trailer 660,000 0.02 13,200.00
Truck 3,450,000 0.02 69,000.00
Seed Sorting, Packing & distributing 8,000,000 0.02 160,000.00
Chemical Sprayer 3,000.00 0.02 60.00
Sickles 25,000.00 0.02 500.00
Axes 6,000.00 0.02 120.00
Tape meter (100 m) 6,500.00 0.02 130.00
Wheel borrow 17,500.00 0.02 350.00
Shovel 1,800.00 0.02 36.00
Weighing scale 75,000.00 0.02 1,500.00
Saw 1,600.00 0.02 32.00
Cutlass or Machete 120,000.00 0.02 2,400.00
Spade hoe 9,000.00 0.02 180.00
Local hand hoe 1,400.00 0.02 28.00
Spade 2,940.00 0.02 58.80
Digging fork 20,000.00 0.02 400.00
Trovel 2,000.00 0.02 40.00
Laptop Computer 76,500.00 0.02 1,530.00
Printers 7,600.00 0.02 152.00
Shelf 15,000.00 0.02 300.00
Managerial Chairs 47,500.00 0.02 950.00
Guest Chairs 15,000.00 0.02 300.00
Computer tables 15,000.00 0.02 300.00
Total Repair and Maintenance costs 391,878.34
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Table 9. Total Labor requirement and cost of the project
Years 1 2 3 4 5 6 7 8 9
Avocado Labor per Ha (table 7) 165 160 160 160 160 160 160 160 160
Land area (table 1) 110 110 110 110 110 110 110 110 110
Sub-total labor required 18150 17600 17600 17600 17600 17600 17600 17600 17600
Grape Labor per Ha (table 7) 91 72 72 68 68 68 68 68 68
Land area (table 1)* 50 50 50 50 50 50 50 50 50
Sub-total labor required 4550 3600 3600 3400 3400 3400 3400 3400 3400
Apple Labor per Ha (table 7) 101 82 82 78 78 78 78 78 78
Land area (table 1) 35 35 35 35 35 35 35 35 35
Sub-total labor required 3535 2870 2870 2730 2730 2730 2730 2730 2730
Total Labor required per ha 26235 24070 24070 23730 23730 23730 23730 23730 23730
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Table11. Project Input supplies costs calculated
1. Avocado Production (110 Ha)
Unit Amount needed Cost (Birr)
Fertilizers: per Ha Total per unit Total
1 DAP kg 100 11000 15 165,000.00
2 UREA kg 150 16500 11 181,500.00
3 Pesticides L 4 440 350 154,000.00
4 Seeds kg 25 2750 18 49,500.00
5 Input transportations kg 10 1100 0.5 550.00
6 Output transportations kg 600 66000 0.5 33,000.00
7 Packing materials Pcs 70 7700 10 77,000.00
Sub-total 660,550.00
2. Grapes & Apple (85 Ha)
Unit Amount needed Cost (Birr)
Fertilizers: Per Ha Total Per unit Total
1 DAP kg 100 8500 15 127,500.00
2 UREA kg 100 8500 12 102,000.00
3 Pesticides L 4 340 350 119,000.00
4 Seeds kg 100 8500 15 127,500.00
5 Input transportations kg 10 850 0.5 425.00
6 Output transportations kg 600 51000 0.5 25,500.00
7 Sacking materials Pcs 16 1360 10 13,600.00
8 Sub-total 515,525.00
Total operating input supplies costs (excluding tractor related costs) 1,176,075.00
Table 11. Tractor related annual operating costs per year
1. Avocado (110 Ha)
Requirements Fuel consumption Fuel Price
Descriptions Unit Per Ha Total Per hour Total Per Litter Total
Tractor Operations T/H
1 Ploughing T/H 2 360 20L 2200 20.00 Birr 39600
2 Discing & harrowing T/H 2 360 20L 2200 20.00 Birr 39600
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3 Ridging T/H 2 360 20L 2200 20.00 Birr 39600
Sub-total 118,800.00
2. Grapes and Apple (85 Ha)
Requirements Fuel consumption Fuel Price
Descriptions Unit Per Ha Total Per hour Total Per Litter Total
Tractor Operations T/H
1 Ploughing T/H 2 226 20L 1700 20.00 Birr 34000
2 Discing & harrowing T/H 2 226 20L 1700 20.00 Birr 34000
3 Ridging T/H 2 226 20L 1700 20.00 Birr 34000
Sub-total 102,000.00
Total tractor related supplies cost per year 220,800.00
Total supplies costs 1,396,875
T/H refers to time requirement for a tractor to accomplish each of the
specified activity
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Table 14. Miscellaneous and utilities expense per year
years 1 2 3 4 5 6 7 8 9 10
Utilities Expense 412,500 433,125 454,781 477,520 501,396 526,466 552,789 580,429 609,450 639,923
Other Operating expense 1,199,153 1,259,110 1,322,066 1,388,169 1,457,577 1,530,456 1,606,979 1,687,328 1,771,694 1,860,279
Table 17. Forecasted production of each crop over the first 10 years
Crops 1 2 3 4 5 6 7 8 9 10
Avocado Land area in Ha 110 110 110 110 110 110 110 110 110 110
Output per Ha (quint) 96 96 96 96 96 96 96 96 96 96
Total Output (quint) 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560
Grapes Land area in Ha 50 50 50 50 50 50 50 50 50 50
Output per Ha (quint) 25 25 25 25 25 25 25 25 25 25
Total Output (quint) 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250
Apple Land area in Ha 35 35 35 35 35 35 35 35 35 35
Output per Ha (quint) 30 30 30 30 30 30 30 30 30 30
Total Output (quint) 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050
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Table 18. Projected selling price of (at the farm gate price in Birr per quintal)
Crops 1 2 3 4 5 6 7 8 9 10
Avocado 1200 1,260 1,323 1,389 1,459 1,532 1,608 1,689 1,773 1,862
Grapes 4000 4,200 4,410 4,631 4,862 5,105 5,360 5,628 5,910 6,205
Apple 900 945 992 1,042 1,094 1,149 1,206 1,266 1,330 1,396
Table 19 Projected annual Sales revenues from each Crop (at the farm gate price in Birr)
Crops 1 2 3 4 5 6 7 8 9 10
Avocado Price (Birr) 1200 1,260 1,323 1,389 1,459 1,532 1,608 1,689 1,773 1,862
Production (quint) 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560 10,560
Sales (Birr) 12,672,000 13,305,600 13,970,880 14,669,424 15,402,895 16,173,040 16,981,692 17,830,777 18,722,315 19,658,431
Grapes Price (Birr) 4,000 4,200 4,410 4,631 4,862 5,105 5,360 5,628 5,910 6,205
Production (quint) 1250 1250 1250 1250 1250 1250 1250 1250 1250 1250
Sales (Birr) 5,000,000 5,250,000 5,512,500 5,788,125 6,077,531 6,381,408 6,700,478 7,035,502 7,387,277 7,756,641
Apple Price (Birr) 900.0 945.0 992.3 1,041.9 1,094.0 1,148.7 1,206.1 1,266.4 1,329.7 1,396.2
Production (quint) 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050 1,050
Sales (Birr) 945,000 992,250 1,041,863 1,093,956 1,148,653 1,206,086 1,266,390 1,329,710 1,396,195 1,466,005
Total Sales revenues 18,617,000 19,547,850 20,525,243 21,551,505 22,629,080 23,760,534 24,948,561 26,195,989 27,505,788 28,881,077
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Table 20. Estimation of annual depreciation expenses Economic Depreciation Depreciation expenses
Life rate
Items costs
Store and bathing room 1,950,000.00 40 0.025 48,750.00
48,750
New John Deere 6100D Mfwd Tractor (Mexico Origin) 2,765,577 7 0.142857 395,082.04 1,611,688.76
Brand New Toyota Hilux Double cab 2,300,000 7 0.142857 328,571.10 1,562,938.76
Trailer 660,000 7 0.142857 94,285.62
Sino Truck model ZZ1257S4641W, 9720cc, HP 371 3,450,000 5 0.1 345,000.00
32 | P a g e
Table 21. Projected periodical loan repayment and interest expense
Years 1 2 3 4 5 6 7 8 9 10
Principal loan outstanding at
20,704,990.15 18,634,491 16,563,992 14,493,493 12,422,994 10,352,495 8,281,996 6,211,497 4,140,998 2,070,499
beginning
Periodical loan repayments 2,070,499.01 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499
Outstanding Loan at the end 18,634,491.13 16,563,992 14,493,493 12,422,994 10,352,495 8,281,996 6,211,497 4,140,998 2,070,499 0
Periodical interest expense 1,966,974.06 1,770,277 1,573,579 1,376,882 1,180,184 983,487 786,790 590,092 393,395 196,697
Total periodical payment 4,037,473.08 3,840,776 3,644,078 3,447,381 3,250,683 3,053,986 2,857,289 2,660,591 2,463,894 2,267,196
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Table 23. Projected Annual cash Flow Statement (all in Birr)
Years 1 2 3 4 5 6 7 8 9 10
1. Cash flows of Operating activities:
Cash Inflows:
Collections from Sales 18,617,000 19,547,850 20,525,243 21,551,505 22,629,080 23,760,534 24,948,561 26,195,989 27,505,788 28,881,077
Cash Outflows:
Salaries payment 1,159,200 1,217,160 1,278,018 1,341,919 1,409,015 1,479,466 1,553,439 1,631,111 1,712,666 1,798,300
Wages payment 1,757,745 1,612,690 1,693,325 1,752,876 1,840,520 1,932,546 2,029,173 2,130,631 2,237,163 2,349,021
Repair & maintenance - 391,878.34 411,472.26 432,045.87 453,648.17 476,330.57 500,147.10 525,154.46 551,412.18 578,982.79
Utilities Expense 412,500 433,125 454,781 477,520 501,396 526,466 552,789 580,429 609,450 639,923
Supplies Expense 1,396,875 1,466,719 1,540,055 1,617,057 1,697,910 1,782,806 1,871,946 1,965,543 2,063,821 2,167,012
Miscellaneous Expense 1,199,153 1,259,110 1,322,066 1,388,169 1,457,577 1,530,456 1,606,979 1,687,328 1,771,694 1,860,279
Interest payment 1,966,974 1,770,277 1,573,579 1,376,882 1,180,184 983,487 786,790 590,092 393,395 196,697
Income Tax (30%) 3,156,719 2,907,460 3,163,977 3,437,904 3,715,042 4,031,186 4,330,683 5,111,085 5,435,231 5,772,634
Working capital 364,168 255,227 247,897 280,383 294,403 309,123 324,579 340,808 357,848 0
Total cash outflows 11,413,333 11,313,646 11,685,169 12,104,756 12,549,695 13,051,866 13,556,525 14,562,182 15,132,681 15,362,848
Net cash provided by operation 7,203,667 8,234,204 8,840,073 9,446,748 10,079,385 10,708,668 11,392,036 11,633,807 12,373,107 13,518,229
2. Cash flows of investing activities:
Cash inflows:
Cash Outflows:
Project construction costs 4,805,000
Projected farm machine cost 17,175,577
Projected farm tools cost 916,740
Projected office equipments 391,600
Total cash outflows 23,288,917
Net cash used by investing -23,288,917
3. Cash flows of Financing:
cash inflows:
Owners' equity 8,873,567
Bank loans 20,704,990
Total cash inflows 29,578,557
Cash outflows:
Repayments of loans 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499 2,070,499
Net cash flows by financing 27,508,058 -2,070,499 -2,070,499 -2,070,499 -2,070,499 -2,070,499 -2,070,499 -2,070,499 -2,070,499 -2,070,499
Total N et cash flows 9,743,433 6,163,705 6,769,574 7,376,249 8,008,886 8,638,169 9,321,537 9,563,308 10,302,608 11,447,730
Cumulative cash flows 9,743,433 15,907,137 22,676,711 30,052,961 38,061,846 46,700,015 56,021,552 65,584,860 75,887,468 87,335,198
34 | P a g e
Table 24 Projected Balance sheet of the project (in Birr)
Years 1 2 3 4 5 6 7 8 9 10
Assets
Current asset
Cash (cumulated) 9,743,433 15,907,137 22,676,711 30,052,961 38,061,846 46,700,015 56,021,552 65,584,860 75,887,468 87,335,198
working capital (cumulated) 364,168 619,395 867,292 1,147,675 1,442,078 1,751,201 2,075,780 2,416,588 2,774,436 2,774,436
Total current assets 10,107,601 16,526,532 23,544,003 31,200,636 39,503,924 48,451,216 58,097,332 68,001,447 78,661,904 90,109,634
Fixed asset
Project construction costs 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000 4,805,000
Projected accu. depren -48,750 -97,500 -146,250 -195,000 -243,750 -292,500 -341,250 -390,000 -438,750 -487,500
Projected farm machine cost 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577 17,175,577
Projected accu. depren -1,562,939 -3,125,878 -4,688,816 -6,251,755 -7,814,694 -9,377,633 -10,940,571 -12,503,510 -14,066,449 -14,066,449
projected farm tools cost 916,740 916,740 916,740 916,740 916,740 916,740 916,740 916,740 916,740 916,740
Projected accu. depren -93,668 -187,336 -281,004 -374,672 -468,340 -562,008 -655,676 -749,344 -843,012 -936,680
projected office equipments 391,600 391,600 391,600 391,600 391,600 391,600 391,600 391,600 391,600 391,600
Projected accu. depren -35,320 -70,640 -105,960 -141,280 -176,600 -211,920 -247,240 -282,560 -317,880 -353,200
Total fixed assets 21,548,240 19,807,564 18,066,887 16,326,210 14,585,533 12,844,856 11,104,180 9,363,503 7,622,826 7,445,088
Total assets 31,655,841 36,334,096 41,610,890 47,526,846 54,089,458 61,296,072 69,201,511 77,364,950 86,284,730 97,554,722
Liability
Bank Loan 18,634,491 16,563,992 14,493,493 12,422,994 10,352,495 8,281,996 6,211,497 4,140,998 2,070,499 0
Capital
Owners' equity 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567 8,873,567
Retained earning 5,862,478 12,646,552 20,029,165 28,050,940 36,719,371 46,125,472 56,230,399 68,156,263 80,838,468 94,307,947
Total capital 14,736,045 21,520,119 28,902,732 36,924,507 45,592,938 54,999,040 65,103,966 77,029,830 89,712,036 103,181,515
Total Liability + Capital 33,370,536 38,084,111 43,396,225 49,347,501 55,945,433 63,281,036 71,315,463 81,170,828 91,782,535 103,181,515
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Table 25. Projected Annual cash Flow Statement from Operations (all in Birr)
years 1 2 3 4 5 6 7 8 9 10
Cash flows of Operating
activities:
Cash Inflows:
Cash collections from
18,617,000 19,547,850 20,525,243 21,551,505 22,629,080 23,760,534 24,948,561 26,195,989 27,505,788 28,881,077
revenues
Cash Outflows:
Salaries payment 1,159,200 1,217,160 1,278,018 1,341,919 1,409,015 1,479,466 1,553,439 1,631,111 1,712,666 1,798,300
Wages payment 1,757,745 1,612,690 1,693,325 1,752,876 1,840,520 1,932,546 2,029,173 2,130,631 2,237,163 2,349,021
Repair & maintenance - 391,878 411,472 432,046 453,648 476,331 500,147 525,154 551,412 578,983
Utilities Expense 412,500 433,125 454,781 477,520 501,396 526,466 552,789 580,429 609,450 639,923
Supplies Expense 1,396,875 1,466,719 1,540,055 1,617,057 1,697,910 1,782,806 1,871,946 1,965,543 2,063,821 2,167,012
Miscellaneous Expense 1,199,153 1,259,110 1,322,066 1,388,169 1,457,577 1,530,456 1,606,979 1,687,328 1,771,694 1,860,279
Interest payment 1,966,974 1,770,277 1,573,579 1,376,882 1,180,184 983,487 786,790 590,092 393,395 196,697
Income Tax (30%) 3,156,719 2,907,460 3,163,977 3,437,904 3,715,042 4,031,186 4,330,683 5,111,085 5,435,231 5,772,634
Working capital 364,168 255,227 247,897 280,383 294,403 309,123 324,579 340,808 357,848 -
Capital cost 23,288,917
Total cash outflows 34,702,250 11,313,646 11,685,169 12,104,756 12,549,695 13,051,866 13,556,525 14,562,182 15,132,681 15,362,848
Net cash provided by
(16,085,250) 8,234,204 8,840,073 9,446,748 10,079,385 10,708,668 11,392,036 11,633,807 12,373,107 13,518,229
operation
PVC 31,983,641 10,427,324 10,769,741 11,156,457 11,566,539 12,029,370 12,494,493 13,421,366 13,947,171 14,159,307
PVB 17,158,525 18,016,452 18,917,274 19,863,138 20,856,295 21,899,110 22,994,065 24,143,768 25,350,957 26,618,505
NPV (14,825,115) 7,589,128 8,147,533 8,706,681 9,289,755 9,869,740 10,499,572 10,722,402 11,403,785 12,459,197
PVC 141,955,409.68
PVB 215,818,087.87
NPV 73,862,678.18
BCR 1.52
NBCR 0.52
IRR 56%
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