Morita (w1)

1.
Summary
Project Initiator: Morita Private Limited Company Coffee development expansion project is
initiated by the owner Mr. Kundisa Farik and Asasahagn Kundisa they are Ethiopian and residing in
1
MORITA PRIVATE LIMITED COMPANY COFFEE DEVELOPMENT EXPANSION PROJECT
MIzan Aman. Before planning to initiate this coffee and spices expansion project, Morita Private
Limited Company Coffee development expansion project has been investing in coffee development
in Bench Maji zone South Bench Morita district on a total of 301 hectares of land they were granted
from Bench Maji zone investment office before 1996 EC.
The purpose of the newly initiated expansion project will require 500 hectares of land for the
purpose of coffee development just as Morita Private Limited Company Coffee development
expansion project have been investing on coffee for the past 10 years on a total of 301 hectares of
land he has been granted for this purpose.
1.1 Profile of the promoter:
 Morita Private Limited Company Coffee development expansion project owners has
Ethiopian elders, that lived in Bench Maji Zone (MizanTeferi) and currently investing in
coffee and spices and on hotel development in Guraferda district and in Mizan Aman
respectively. Hence he is familiar with the newly initiated coffee and spices expansion
project.
 After completely developed the 138 hectares of land he has been granted for the coffee and
spices development, Morita Private Limited Company Coffee development expansion
project has currently seeking additional 500 hectares of land for the purpose of expanding
the farm to a total of 801 hectares.
 Morita Private Limited Company Coffee development expansion project has the owner and
Manager of the already established coffee farm located in South Bench and also the service
providing the country to export.
1.2 Project cost:
KUNDISA FARIK
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The total estimated cost of the coffee and spices expansion project is 22,500,000 birr. 30% of the
project cost (6,750,000 birr) shall be covered by the owner and the rest 70% (15,750,000) birr shall
be secured from bank loan.
1.3 Land Requirement:
The planned development project requires 500 hectares of land for its expansion. The land shall be
used for the development of coffee for the purpose of export.
1.4 Work opportunities:
The planned expansion project shall provide work opportunities for 15 permanent and for 1000
temporary workers – a total of 1015 employees.
KUNDISA FARIK
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2. Introduction
Ethiopia, the birthplace of coffee, is among the top 5 coffee producer and the seventh largest
exporter worldwide. It is the largest coffee producer and exporter in Africa. Coffee is the backbone
of Ethiopia’s economy. Coffee export accounts for a high significant portion of the country’s hard
currency earnings. Moreover, coffee provides an important source of income for a large portion of
the population and is an important source of tax revenue to the Ethiopian government. The
country’s coffee sector is highly dependent on international prices with export affected by the
structure and workings of the world coffee market. Hence, it is imperative to understand that
Ethiopia is competing with countries that have the abilities and the will to easily adopt innovative
low-cost production and marketing systems. From 2010 to 2012 Ethiopia on average exported only
45.4 % of its production (ICO). This mainly is attributed to lack of marketing infrastructure and
producers’ capacity in integrating production with their marketing activity. While Ethiopian Coffee
varieties are widely known, Bench Maji zone coffees are not fairly represented in the global market
landscape. Shimelis Demisse Coffee &Spice expansion project is initiated to address this central
issue by employing an innovative approach that integrates coffee production with its marketing and
distribution arm formed in the target market. The Operation is directed and owned by the owner
who has demonstrated tremendous achievement in his in his previous coffee and spices
development projects. As part of its wide reaching strategy, he plans to develop 162 hectares of
coffee and spices expansion land in Bench Maji Zone within south Bench Morita district where
they have been developing coffee for the last several years.
The project is planned to run by dividing it in to a number of phases; with each phase to comprise
land development, Seedling Preparation, coffee planting, young coffee maintenance, mature coffee
maintenance, harvesting, processing and Transporting, exporting etc activities as per its business
plan.
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3. MAIN OBJECTIVES OF THE PROJECT:
 Production of good quality coffee& Spice intended for direct export market;
 Generate foreign currency earnings through export of the company’s coffee and by
promoting the regions’ coffee to its network of export customers;
 Create new export market to the region by using the farm as a demonstration ground
for foreign importers to visit and commit to a long term import contract to the
region’s coffee;
 To create an employment opportunity to the region;
 To promote knowledge transfer to other local producers so that their coffee
production is integrated with their export marketing activities and;
 Maximizing the owners’ earnings and ensure net profit is reinvested in Ethiopia
Given the above stated objective I believe the region recognizes the potential of the project in
bringing not only foreign currency to the country but also business expertise, employment creation
and knowledge transfer.
4. THE PROJECT AREA

The 500 hectare of land planned for the expansion project will be secured from in Southern Nations
and Nationalities Regional State in Bench Maji Zone South Bench District. As the vast area of land
located aside to the original investment site is considered neither as a forest area nor as farmers
farm land the owner expects will the zonal trade and industry department hand him the requested
105 hectares from this reserved area.
5 Feasibility study
The ensure the project makes profit and grow sustainably to benefit all stakeholders, before
deciding to engage in the investment, Morita Private Limited Company Coffee development
expansion project undertakes feasibility study of the planned project such as availability of man
power, availability of land including expansion sites, accesses to road, electricity, telephone, and so
on.
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5.1 Availability of land.
It is expected that Morita Private Limited Company Coffee development expansion project receives
land for the investment from the vast area of land located aside to the original investment site so far
considered neither as a forest area nor as farmers farm land. The altitude of this particular project
shall range between 1500 – 1800 meters above sea level, the temperature of the project area to fall
between 18oc to 28oc and the rainfall to be adequate for coffee plantation, the project area to have
fertile, friable, loamy soil with more than 1.5m depth, The topsoil to be predominantly dark
brownish in color with a slightly sour ph.
5.2. Availability of Man power
The farm requires both direct and indirect man power. The direct manpower, in addition to the
direct farm labor, requires head, farm management process, farm supervisors, and other agricultural
professional as well as experienced farm clerks. As Bench Maji is one of the few zones in the
region that is known to have cheap labor, the farm will utilize existing manpower in the zone. The
presence of MizanTepi University will provides the project owner to recruit skilled labor and
professional required to run the project.
6. MARKET OPPORTUNITIES & SUPPLY AND DEMAND ANALYSIS

Coffee is produced in more than 50 developing countries providing income for approximately 25
million small holder producers and employing an estimated 100 million people. The bulk of the
world’s coffee, however, is produced in Latin America. Ethiopia is among the top 10 Coffee
producing country and Africa's top producer. Average world coffee production in year 1977 to
1986 was 5.05 million tons, In years 1987 to 1996 it increased to an average of 5.76 million tons
and in years 2000/01 to 2016/17 it increased to 7.875 million tons.
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Table1. World Coffee Production and Consumption

Quantity (000 tons)
Demand/
Years Production Consumption The Gap
2000/01 6,780 6,718 62
2001/02 6,449 6,796 -347
2002/03 7,327 6,917 410
2003/04 6,251 7,087 -836
2004/05 6,927 7,348 -421
2005/06 6,657 7,479 -822
2006/07 7,709 7,873 -164
2007/08 7,126 8,123 -997
2008/09 7,645 8,284 -639
2009/10 7,271 8,101 -830
2010/11 8,063 8,163 -100
2011/12 7,875 8,086 -211
Average 7,173 7,581 -408
Source: International Trade centre, www.tradeforum.org&www.interacen.org/eshop/welcome, Last Updated on: The ITC’s
Magazine and Publications & Products. Geneva, Switzerland
6.1 Consumption
About one quarter of world production is consumed in producing countries and the vast majority of
export goes to developed countries. Producing countries such as Latin America coffee producing
countries consume about 72%, Asia and Pacific 18% and Africa consumes about 10% of the total
consumption of coffee by producing countries. In Ethiopia, half of the coffee is consumed by
Ethiopians and the country leads the continent in domestic consumption. Out of the importing
countries consumption, 24% are consumed by the USA, 46% by Western Europe, 8% by Eastern
Europe and Asia accounts about 14%. Although the top five consumers are the USA, Brazil,
Germany, Japan and France whiles the Nordic countries have the world’s highest coffee
consumption per capita.
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6.2 Demand and Supply Gap
As coffee is an internationally traded commodity, the analysis of key marketing variables would not
be meaningful unless the global situation is considered. For this reason, the three most important
marketing variables – supply, demand, and prices for coffee will be analyzed in line with their
corresponding situation at global market. Current experience by importing countries is such that
their annual import is the summation of coffee supplied by different producing countries in the
world. There is no single supplier of coffee committed to supply for a given importing country. In
similar manner, there is no single importer which exclusively import from a specified supplier. For
this reason, it would be difficult to actually determine the demand for a specific importing country
from a given supplying country. However, it is possible to show the general demand trend of
Ethiopian coffee by focusing on the world situation – world aggregate.
Aggregate world demand is the summation of - coffee consumption by producing countries & by
importing countries in the world. As it is shown in the table above, there is a huge gap b/n world
demand and world supply for coffee. Except in the years 2000 & 2003, the negative sign indicated
in the other 8 years would show the demand deficit in those respective years. This would imply that
the increase in annual production is driven by annual increase in effective demand by importing
countries. Considering the demand for Ethiopian Coffee, the increase in demand by those 8 major
buyers of Ethiopian coffee, which totally absorb about 52% of Ethiopian coffee, has been
increasing by a higher rate than the increase in production by the former. While annual production
growth, on average, in Ethiopia is 5.16%, the demand for Ethiopian major buyers has increased up
to 20%, in the past 10 years. According to the data provided by ICO (International Coffee
Organization), annual import for USA has increased by 20%, German by 15%, France, Italy, and
Japan by 6%, and Canada by 3%. Considering trade statistics of the past five years, one can see that
more than 41% of the world export goes only to three importing countries in the world: USA 20%,
German 14.5%, and Japan 6.5%. Moreover, recent studies in the area reveal that Ethiopian coffee
has never suffered from lack of buyer in the world market. What is supplied to the world market is
fully absorbed by importing countries provided there is no quality problem. Thus, provided the
right quality offered and prices are attractive, there are plenty of opportunities for getting more
demand in the world market (in both established and new markets).
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The emergence of new coffee consumers is another factor affecting the world demand for coffee.
Recent information from ICO report depicts that China has decided to significantly shift from tea
consumption towards coffee. There are also other Asian countries following the same trend. This is
the resultant effect of aggressive promotion made by ICO since few years in the past.
The increase in coffee consumption by producing countries is another factor affecting demand for
coffee, for aggregate demand is compared against aggregate supply by world producers. India (the
second largest in population in the world) has declared to double coffee consumption in the coming
5-10 years, ICO report June, 2010. Ethiopia, through its consumption about 44% of the total annual
production, is categorized among the largest coffee drinking countries in the world – 3rd in Africa
and 15th in the world as far as coffee producing countries are concerned. This could be regarded as
an opportunity with regard to absorbing such a significant proportion of its production; serves as a
shock absorber particularly in case world demand for coffee fails because of unknown reasons.
6.3 Target Market Identified for this Project
Currently, there are more than 50 importers of Ethiopian coffee in the world. Out of the these
importing countries, only 8 are known to be major buyers, namely; U.S.A., Italy, France, Belgium,
Germany, Saudi Arabia, Japan, and Sudan. On average, these countries import about 52% of total
Ethiopian coffee exports. As it is the case elsewhere, the major importers of Ethiopian coffee has
increased their annual import from 1% up to 20% over those years ranging from 2002-2009.
Since 2005 coffee prices have been increasing and reached the highest in a decade. As consumers in
India and China develop a taste for the drink and the demand in East Europe, Russia and Brazil
increased, prices are likely to keep rising. Moreover, something new is happening in developed
markets. Europeans, Americans and Japanese are switching to higher-quality coffee. Discerning
consumers now demand authenticity: they want stories about where their coffee beans come from.
Therefore, the best coffees will increasingly be differentiated, like fine wines and spirits, and sold at
previously unthinkable prices. Currently, the world is moving from instant-coffee powder to luxury
beans. Gourmets and specialist roasters have pushed up expectations. Governments, activists and
“ethical” coffee suppliers have worked to get higher prices. All this is good news for coffee farmers
in Ethiopia. Altitude, climate, soil and genetic diversity give the country an inherent advantage in
quality as compared to lower-grade Latin American coffee. About 90 percent of Ethiopian coffee
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production is premium or organic coffee. An agreement signed last year between Starbucks, the
world's biggest coffee chain, and the Ethiopian government has been touted as a big step forward.
As a result, commercial coffee farms would gain a lot from these opportunities. Sales of organic,
fair trade, rain forest alliance, forest, and other brand sales of natural and washed of Ethiopia is
increasing.
The fact that a Specialty Coffee Association of America (SCAA); signing an agreement with the
Ethiopia Commodity Exchange (ECX), in June 2010 is an added opportunity for specialty coffee
producers in Ethiopia.
In addition to the major importers of Ethiopian coffee, through its other marketing company in
Australia (BEK Coffee International), the owner has established a new market segment in Australia
and South East Asia market with emphasis on Bench Maji Coffee.
7. PROCESS OF COFFEE PRODUCTION
7.1 Land Development
The activities of land development include bush clearing; tree felling, chopping and uprooting of
stems roots. Trash removals, leveling, heaping and ridge constriction are also parts of this activity.
7.2 Seedling Preparation
The nursery site of the farm is to be located at the centers of the planting fields; on a flat areas and
gentle slope not greater than 5%. It is planned to be in proximity where permanent sources of water
for irrigation is available. The project intends to purchase CBD resistant, viable and healthy seeds
from State Coffee Farms and Coffee Research centers of EARI; and will establish nurseries with
the best growing conditions to produce vigorous and healthy seedlings. Seedlings will be raised in
poly tube methods.
Varietal Selection is the basic point to be considered before Seedling preparation. The success of
any modern coffee plantation highly depends on the kind of the variety. Variety selection is just like
working a good foundation for high story buildings. Having recognized the importance of variety
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selection, the promoter has already established a good relationship with – Bebeka Coffee
Plantation, Office of Agriculture, and Jimma National Coffee Research Center.
The varieties selected for this project will be based on the recommendations of the above
institutions, and considering the ecological suitability of the area, CBD-resistant and high quality
coffee lines.
7.3 Coffee Planting
The coffee planting operation will spread over two months i.e. June and July.
7.4 Young Coffee Maintenance
The operations involved in the maintenance of young coffee up to 4 years after planting are capping
and pruning for multiple stem formation, infilling of dead trees, slashing, weeding and mulching. In
addition paths & tracks will have to be maintained and trees guarded from destruction by wild
animals certain amount of per tree of compost, DAP and UREA are applied for fertilizing the
young trees.
7.5 Mature coffee maintenance
The mature coffee trees i.e. 4 years old or more will need all the cultural practices of young coffee
except capping but more pruning. The additional coffee practice is picking. Some activities like
composting and weeding and mulching will require more manpower than the young coffee trees.
7.6 Harvesting and Processing
The harvesting and processing operation comes first in the 4 th year of operation, which is expected,
from September to December every year. The production from the project is expected to be 100%
sundried.
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7.7 Transporting processed clean coffee
At the initial stages the project will use rented vehicles to transport coffee from the farm area to the
local sites as well as processing plants. Transport to port is considered to be through hiring external
transport facilities.
8. Organizational structure and management

Shimelis Demisse Coffee & Spice expansion project is a privately owned project that is going to act
as per the articles and amendments appeared on the federal and regional investment proclamations
and directives. As a general manager of the project the person in charge shall have full power to
manage the affairs of the project within the specified business objectives. He will also have the
power to delegate all or part of the authority vested up on him to other management members with
in the project. However, the project shall have the following main divisions.
8.1 The administration and finance department
It is responsible for the general personnel management including, administration of salaries and
wages, staff benefits, control and administration of properties, and other related tasks.
8.2 The farm management department
It will be responsible for the general operation of the farm including environmental protection and
other related tasks. The department comprises of all technical staff, ranging from the level of farm
clerks up to the professional experts specializing in different fields of specialization.
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8.3 Man Power Requirements
The type and number of workers required by the project is shown in the table below
Table2. Type and number of man power required by the project
S.NO Position Educational status Required Employment type
1 Unit Farm Managers BSC in related fields 1 permanent

2 Store keeper 2 permanent
3 Purchaser 12 complete 1 permanent
4 Tractor operator - 1 permanent
5 Guards Grade 4 2 permanent
7 Accountant, Purchaser and sales Diploma 1 permanent
officer
8 Time keepers 12 complete 2 permanent
Sub total 10
9 Temporary workers as required 270/day Temporary
Sub total 308
Grand total 308
9. Financial analysis
9.1. Finance requirements and source of Finance
The estimated cost to run this project is estimated to be 7,290,000 birr (Seven Million Two
Hundred Birr). 30 % of the total cost required to run the project shall be secured from the owner
and the rest 70% from bank loan.
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9.2. Table 3. Project cost allocation - Summary
S. No Description of cost % allocated Total
1 Fixed asset cost 40 2,916,000.00
2 Variable Cost 60 4,374,000.00

Grand Total 100 7,290,000.00
8.2.1 Table 4 estimation of fixed asset costs.
S.No Type Value in Birr

1 Building & Civil Works 1,394,400.00
2 Vehicles & Machinery 1,180,000.00
3 Office Equipment 50,000.00
Sub Total 2,770,200.00
4 Contingency & Pre-operation Cost 10% 291,600.00
Grand Total 2,916,000.00
9.2.1 Table 5 Estimation of Variable asset costs.

1 Coffee and spice Seeds 100,000.00
2 Salary 300,000.00
3 Wedge 500,000.00
4 Fuel and grease 300,000.00
6 Operating cost 2,674,000.00
Total 4,374,000.00
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9.2.2 Production capacity and Schedule
Table: 6 land use plan for Shimelis Demisses coffee and spices expansion project farming
Development type % share from the total Total Land to be allocated /ha/
Coffee 90 145
Spices 8 13
Infrastructure and conservation 2 4
Total 100 162
10.Production capacity
As shown on table::7 above it is expected that Shimelis Demisses´ coffee and spices expansion
project is going to undertake is coffee and spices farming for the purpose of supplying the product
to foreign markets. The expected annual yield to be collected from the expansion farm is shown
on table 7 below.
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Table7 Annual production capacities for Shimelis Demisses´ coffee and spices expansion project.
Year Description Land to be Expected Total annual

developed /ha/ yield /ha expected yield(qt)
- Coffee 145 10 1450
YEAR 4 - Black pepper 13 4 52
- Coffee 145 11 1595
- Coffee 145 11 1595
- Coffee 145 12 1740
- Coffee 145 12 1740
The 4 ha. of land allocated for infrastructure and conservation shall be developed within the initial
years of the project life
10.1Annual revenues from product sales
As shown on Table : 7 above, at full scale development, it is assumed that for Shimelis Demisses´
coffee and spices expansion project collects 1450 quintals of coffee, 52 quintals of spices per year.
The expected annual revenue from the sales of coffee and spices is shown on table 8 below.
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Table: 8 Annual production capacity for for Shimelis Demisses´ coffee and spices expansion project
Year Crop harvested Total annual Price/qt Revenue Total Annual

(qt) expected yield from sales Revenue
Coffee 1450 6,000 8,700,000
YEAR 4 9,740,000
Black pepper 52 20,000 1,040,000
Coffee 1450 6,000 9,570,000

YEAR 5 10,870,000
Black pepper 52 20,000 1,300,000
Coffee 1595 6,000 9,570,000
YEAR 6 10,870,000
Black pepper 65 20,000 1,300,000
Coffee 1740 6,000 10,440,000

YEAR 7 11,740,000
Black pepper 65 20,000 1,300,000
Coffee 1740 6,000 10,440,000

YEAR 8 11,740,000
Black pepper 65 20,000 1,300,000
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11. Socio economic Benefits
Coffee growing and its related activities provide a major source of employment in the Bench Maji
zone and to the Ethiopia in general. The International Coffee Organization (ICO) has estimated that
coffee growing provides direct full-time employment for 25 million people worldwide. Taking into
account related industrial and service activities (processing, marketing, roasting, and transportation)
the figure rises to 100 million people, including families.
The socio economic benefits Shimelis Demisses Coffee & Spice expansion project provides to the
Bench Maji community and to the nation includes:-
 Creation of an employment opportunity to the region - Provides skilled and unskilled

work opportunities to local people;
 Knowledge transfer to other local producers such that their coffee production is
integrated with their export marketing activities and enables local farmers
understand and use new technologies in coffee production;
 Creation of new export market to the region by using the farm as a demonstration
ground for foreign importers and its network of export customers to visit and
commit to a long term import contract to the region’s coffee;
 Foreign currency generation and earnings through export of the company’s coffee.
12. FINANCIAL EVALUATION
The planned investment cost needed to run the project will be secured from equity and from bank
loan. Of the total 7,290,000.00 birr required to run the project, 30% or 2,187,000.00 birr will be
contributed by the promoter and the rest 70% or 5,103,000 birr from bank loan.
KUNDISA FARIK
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12.1 FINANCIAL AND ECONOMIC ANALYSIS
Table: 12.1 Assumptions used in the financial evaluations of Shimeles Demisse Project
Construction period 2 year
Source of finance 30 % equity 70 % loan
Loan duration 5 years
Tax holidays 5 years
Bank interest 9.5%
Depreciation 10% in the initial year with 1% decrease per year there after
Repair and maintenance 5% of the total farm machinery & equipment and buildings
Farming materials and inputs Incur 5% additional cost each year
Labour cost Incur 5% additional cost each year
Utilities Incur 5% additional cost each year
Tax 20% of the gross profit
Work in progress 270 days 270 days
Cash in hand 5 days
Accounts payable 30 days
12.2 Loan repayment schedule
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As mentioned above 70% of the investment cost or birr 5,103,000 birr will be secured from loan
granting banks. Depending on the time duration and the rate of interest, the project may consider
for securing the loan it requires for its development activities. The commercial bank of Ethiopia, the
development bank of Ethiopia and the various private banks in the country would be considered as
options for securing the loan.
Table:9 Loan repayment schedule
Loan Duration: 5 Years
Number of Payments: 60
Interest Rate: 9.5%
Monthly Payment: Birr 85,050.00
Year Beginning Balance Principal Interest Payment Ending Balance
payment
2016 5,103,000
2017 4,082,400 1,020,600 484,785 1,505,385
2018 3,061,800 1,020,600 387,828 1,408,428
2019 2,041,200 1,020,600 290,871 1,311,471
2020 1,020,600 1,020,600 193,914 1,214,514
2021 0.00 1,020,600 96,957 1,117,557
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Table 10. Profit or Loss projection

Description Project Year
2016 201 201 2019 2020 2021 2022 2023
7 8
Revenue - - - 9,740,000 10,870,000 10,870,000 11,740,000 11,740,000
Less: 10% 974,000 1,087,000 1,087,000 1,174,000 1,174,000

Marketing cost
Net Revenue 8,766,000 9,783,000 9,783,000 10,566,000 10,566,000
Less: Operational 510,300 510,300 510,300 510,300 510,300

expense (10%)
Less: Interest 484,785 484,785 484,785 484,785 484,785
payment (9.5%)
Income Before Tax
7,770,915 8,787,915 8,787,915 9,570,915 9,570,915
& Depreciation
Less Depreciation 439,595 439,595 878,791 878,791 878,791
Profit before Tax 7,331,320 8,348,320 7,909,124 8,692,124 8,692,124
Less Tax (20%) 1,581,824. 1,738,424. 1,738,424.

1,466,264 1,669,664 8 8 8
Net Profit 5,865,056 6,678,656 6,327,299 6,953,699 6,953,699
Remark: There is No revenue from Year 1 to year 3 (2016-2018)
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13. Environmental Impact assessment

Environmental Dimensions of Coffee production
The way coffee is grown and processed has profound environmental importance both locally and
internationally. This section focuses on four themes intimately related and which the project will
put measures in place: biodiversity and conservation of forest ecosystems; agro-chemical use; water
pollution from coffee processing; and soil quality. Each of these factories is critical to the
environment and the quality of coffee.
13.1 Biodiversity &Conservation of forest ecosystems
Deforestation trends are serious throughout the coffee-producing lands of Africa and Latin
America. Ethiopia is one of the coffee producing countries in the world where high deforestation
rates are encountered. By the late 1980s, for example, only an estimated one-fourth of the primary
moist tropical forest has been cleared for the purpose of different agricultural activities including
coffee and cereals.
Bench Maji´s forests are critical in protecting the atmospheric dynamics, water quality, and wildlife
species, as well as economically as reservoirs of germplasm which has multiple applications for
food, medicine, and industrial products. To preserve the Biodiversity & Conservation of forest
ecosystems, the project will employ a method of Traditional shade coffee systems.
Traditional, shade coffee production has been shown to be highly beneficial to biodiversity
conservation in tropical forest ecosystems. In South west Ethiopia, traditional coffee covers very
significant areas with closed canopy, fauna and flora species unique to the zone.
Traditional coffee is often integral to agro-forestry systems in which tree species are cultivated
together with the coffee and other agricultural commodities. Where geographic and market
conditions are favorable, economic returns can be achieved through sustained-yield timber
production in association with coffee. Agro-forestry systems, including those involving coffee,
have potential to enhance the economic and ecological stability of the area.
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By providing an alternative to deforestation, traditional coffee systems constitute an important

check against greenhouse gas emissions that contribute to global warming.
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Annex:
Annex 1: fixed asset costs
S. No Type Value in Birr
1 Building & Civil Works 1,394,400.00
2 Vehicles & Machinery 1,180,000.00
Sub Total 2,770,200.00
4 Contingency & Pre-operation Cost 10% 291,600.00
Grand Total 2,916,000.00
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Annex 2: Variable asset costs
1 Coffee and spice Seeds 100,000.00
2 Salary 300,000.00
3 Wedge 500,000.00
4 Fuel and grease 300,000.00
6 Operating cost 2,674,000.00
Total 4,374,000.00
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Annex 3: land use plan
Development type % share from the total Total Land to be allocated /ha/
Coffee 90 145
Spices 8 13
Infrastructure and conservation 2 4
Total 100 162
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Annex 4: Man power requirement
Position Educational status Required Employment type
Unit Farm Managers BSC in related fields 1 permanent

Store keeper Grade 8 2 permanent
Purchaser 12 complete 1 permanent
Tractor operator Grade 8 1 permanent
Guards >Grade 4 2 permanent
Accountant, Purchaser and sales officer Diploma 1 permanent
Time keepers 12 complete 2 permanent

Sub total 10
Temporary workers as required 300/day Temporary
Sub total 308
Grand total 308
KUNDISA FARIK

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1.

1.1 Profile of the promoter:

1.2 Project cost:

1.3 Land Requirement:

1.4 Work opportunities:

3. MAIN OBJECTIVES OF THE PROJECT:

4. THE PROJECT AREA

5.1 Availability of land.

5.2. Availability of Man power

6. MARKET OPPORTUNITIES & SUPPLY AND DEMAND ANALYSIS

Table1. World Coffee Production and Consumption

6.2 Demand and Supply Gap

6.3 Target Market Identified for this Project

7. PROCESS OF COFFEE PRODUCTION

7.1 Land Development

7.2 Seedling Preparation

7.3 Coffee Planting

7.4 Young Coffee Maintenance

7.5 Mature coffee maintenance

7.6 Harvesting and Processing

7.7 Transporting processed clean coffee

8. Organizational structure and management

8.1 The administration and finance department

8.2 The farm management department

8.3 Man Power Requirements

Table2. Type and number of man power required by the project

S.NO Position Educational status Required Employment type

1 Unit Farm Managers BSC in related fields 1 permanent

9.1. Finance requirements and source of Finance

9.2. Table 3. Project cost allocation - Summary

S. No Description of cost % allocated Total

1 Fixed asset cost 40 2,916,000.00

2 Variable Cost 60 4,374,000.00

8.2.1 Table 4 estimation of fixed asset costs.

S.No Type Value in Birr

9.2.1 Table 5 Estimation of Variable asset costs.

S.No Type Value in Birr

9.2.2 Production capacity and Schedule

Year Description Land to be Expected Total annual

10.1Annual revenues from product sales

Year Crop harvested Total annual Price/qt Revenue Total Annual

Coffee 1450 6,000 9,570,000

Coffee 1740 6,000 10,440,000

Coffee 1740 6,000 10,440,000

11. Socio economic Benefits

 Creation of an employment opportunity to the region - Provides skilled and unskilled

12. FINANCIAL EVALUATION

12.1 FINANCIAL AND ECONOMIC ANALYSIS

Construction period 2 year

Source of finance 30 % equity 70 % loan

Loan duration 5 years

Tax holidays 5 years

Bank interest 9.5%

Farming materials and inputs Incur 5% additional cost each year

Labour cost Incur 5% additional cost each year

Utilities Incur 5% additional cost each year

Tax 20% of the gross profit

Work in progress 270 days 270 days

Cash in hand 5 days

Accounts payable 30 days

12.2 Loan repayment schedule

Table:9 Loan repayment schedule

Loan Duration: 5 Years