Business Plan Wet Coffee For Later

Seble Niguse Wet Cofee Processing Indsty

1.GENERAL INFOMATION

The Promoter of the project (Owner): W/ro Seble Niguse Gugussa

Name of the project- WET COFFEE PROCESSING INDUSTRY

Address/site/:

Region- Oromia

Zone – West Guji

District/City- Hamballa Wamana


Kebele – Alaka Korchana PA

Legal form of Business : Private

Sector of the Project : Commercial Services

Distance from International Asphalt Road- Woreda : 27Km to East direction

Distance from Woreda – the Project site : 22Km to East direction

Altitude of the district ranges from 1500m-2000m above sea level.

Topography of the Project : Slightly slope

Temperature ranges from 15

c- 30
o

Total area required : 0.67 Ha(6700m

Total investment cost: 6,000,000ETB is required, out of which amount 1,800,000ETB (30%)from

owner equity and the rest 4,200,000(70%) will be from bank loan.

Employment Opportunity: 35 individuals on permanent and a4 on causal basis from

bothqualified and unqualified (skilled and un skilled) people.

Social and Economic Benefit: Provides better employment opportunities for local

communityincome generation through taxation for the country for and foreign currency


Labor safety: The envisaged project is assumed to be undertaken by considering workerssafety.

The promoter will provide all the necessary safety materials for the permanent andtemporary

employees, based on the nature of the activities.

Environmental Considerations: the proposed project has its own environmental protection

planand budget. So all the necessary actions will be undertaken on right timely before affecting

theenvironment.

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Seble Niguse Wet Cofee Processing Indsty

2.INTRODUCTION

Agriculture is the main stay of Ethiopian`s economy providing employment opportunities to85%

of the population and back bone of Ethiopian`s economy. Ethiopia has one of the fastest-

growing economies in the world and Africa`s second most populous country. Coffee production

in Ethiopia is a longstanding tradition and is where coffee Arabica, the coffee plantm originates.

The plant is now grown in various parts of the world; Ethiopia itself accounts for around 3% of
the global coffee market. Coffee is important to theeconomy of Ethiopia;around 60% of foreign

income comes from coffee, with an estimated 15 million of the population relying on some

aspect of coffee production for their livelihood. In 2006, coffee exports brought in $350 million,

equivalent to 34% of that year's total exports.Many other economic activities depend on

agriculture, including marketing, processing, andexport of agricultural products. Production is

overwhelmingly of a subsistence nature, and alarge part of commodity exports are provided by

the small agricultural cash-crop sector.Principal crops includecoffee, pulses (

e.g.

beans). In general, Exports are almost entirelyagricultural commodities, and coffee is the

largest foreign exchange earner.An approach to bring a viable project in Hamballa Wamana

Woreda is chosen with specialemphasis to wet coffee processing industry (production). As an

agricultural industryendeavors the project, which here after will be promoted by W/ro Seble

Niguse Gugussa WetCoffee Processing Industry. In addition, most importantly it is all good a

motivation: obtaininga socio-economically acceptable and technically sound return from the

invested resources.Therefore, it has become a menu of the rational proposal to forward the

likely options thatensure a quality yield as well as satisfactory equilibrium between the

investments and theexpected benefits, attractive profit for that matter. Thus, the promoter of

this project isenvisaged for operations to undergo reducing of challenges without losing the

availableopportunities in the proposed project area and woreda as well.Furthermore, the

project is planned to undergo different methods that will enable to overcomethe hitherto

existing problems of wet coffee processing system and to transform the processingsystems of
market-oriented nature with step-by- step value addition as well as processingventures.

Generally, it serves country in generating income to the government by the form of taxation.

Hence, its advantage can be concluded as technically, economically and financially practicable

and acceptable.

Seble Niguse Wet Cofee Processing Indsty

3.BACKGROUND AND OBJECTVES

Ethiopian’s economy is based on agricultural sector which employees over 85% of the

population and contributes the highest share to the GDP.

Coffee export generated 41% of foreign exchange earnings and provides income for

approximately 8 million stockholder households. Policy attention to the sector was always

considerable, and its importance has been renewed in the latest poverty Reduction Strategy,

the plan for Accelerated and AbstainedDevelopment to End poverty (PASDEP). PASDEP puts

forward a development strategy basedon accelerated economic growth, part of which is hope

to be achieved via increased privatecommercialization and market integration.On the average,

farmers ranked 84% of their farm production overall, coffee contributed 70%to the total value

of output sold. There is, however, a high inter-household differentiation: the85% highly coffee

small holders generated over 95% of their cash income from coffee sales,while the cotton 15%
earned 63% of their cash income from Daly labor food from preprocessing. Although in

Hambela Wamana Wereda, particulary in Alaka korchana kebelecoffee production immense

agricultural potential exists for the dry coffee processing is leftinactive.

3.1. Coffee in Ethiopia Economy

When we look at Historical background of coffee in Ethiopia economy, After the downfall of

Dergue regime, coffee acreage increased tremendously. For instance, the acreage

increasedthree- fold from 300,000 hectares in 2006 to 704,000 hectares in 2010. Similarly,

coffee production has followed the same trend, 308,568 tons of green coffee in 2006 to

480,621 tonsin 2010 (ICO, 2009). Coffee marketing activities make coffee one of Ethiopia’s

mostimportant sources of farm income and government revenues. Table 1 illustrates the

evolutionof foreign exchange earrings as contributed by coffee and the injection of cash

towards thecountry in the last five years.The Government, with strong support from

development partners, has made different tragicintervention to enhance the delivery of

improved production technologies and supportservices. Over the past several years, the

Ethiopian Government has demonstrated strongcommitment to agriculture and rural

development through allocations of more than 10 per centof the total budget. Despite these

achievements, however, the Government recognizes much

3
Seble Niguse Wet Cofee Processing Indsty

remains to be done in the agriculture sector to realize the vision to become a middle-

incomecountry (defined as GDP/ capita of USD 1,000) by 2020. Table 2: share of coffee export

earrings and their contribution to national incomeYear 200620072008200920101998

to22compression %Coffee coverage (ha)300,000435,000557,000679,000704,00055Production

volume(tones)30856831914535357028300048062156Exports coffee

share(%)130.2168.2184.4191198,2419.24Money injected incountry

(USA)364,565,300525,430,600375,838,600527,662,400734,534,10098.4 Source: ICO coffee

production statics (www.ico.org) 2010.

3.2. Current policy for the development of coffee sector 3.2.1. Increased productivity

This section will describe some actions the Government is trying to implement in order totackle

problems associated with coffee subsector performance. This policy adopted in 2006,has two

main objectives (MoFED, 2006): To achieve this objective, the current policy taken into account

the international coffee price and coffee growers are paid accordingly. The removalof the coffee

export tax will facilitate this. This will enable farmers to be paid high pricesgiving them

incentives to increase production if world prices are not low. In addition, coffeeextension

services will focus on regions suitable for the crop.The number of extension workers is planned

to be increased with an average of threeextension agents for on common centers (peasant

associations). Research results highlightcommune that need more extension services to get the

highest communes and more extensionerosion services to get the highest pay-off. Other
priorities include on-going research on highyield varieties, disease and pests, and mulching of

coffee. MoRD is planning to increase their financial support to research activities of EARO. In

addition, loans will be given to farmers’associations to purchase pruning equipment for the

maintenance of coffee trees.

3.2.2. Improve coffee quality

Seble Niguse Wet Cofee Processing Indsty

The challenge is to put in place an economic environment that will support the production of

ahigh value Coffee. The marketing system is planning to install a differential local price.

soincentives are given to produce high quality coffee. The policy does not, however, mention

thecreation of grades and standards to implement the new price structure. To improve

coffeequality, the following actions are to be conducted:

Implementing free market policy:


The creation of EXC(Ethiopian commodity Exchange):

Provide coffee producers with pulping machines to be used in processing theharvest:

Make available coffee drying trays, materials to repair existing pulping machinesand new

pulping machines to be paid by coffee processers through a credit.Currently, at least 80% of the

Oromia Region population of the country’s export earnings untilthe late 2003s Oromia was a

major player on the world market for dried coffee and other agricultural products, accounting

for as much as much as 60% of the world exports market.

3.3 Justification of the Proposed Project

Before the decision was made, the proponent of this project W/ro Seble has conducted

marketassessment for long time and there were a number of reasons that led her to establish

this wetCoffee Processing industry in this area. Firstly, Ethiopa’s climate is suitable for most

producers of Arabica coffee in the world and has a well established linkage to the major

globalmarkets. The growing trends of the establishment of manufacturing industries in the

countryas a whole and coffee processing factory in particular, and their demand for raw

materialinputs for manufacturing of coffee has made the business very importantly. The

enabling policy environment prevailing in Ethiopia, which is important factor to initiate this

project.Besides the suitable climate of Ethiopia coffee cultivation:This project has a distinct

comparative advantage from the very beginning by adopting amodern processing machine, and
market opportunities to the coffee growers.There is a quality and huge supply market for wet

coffee processing around the proposed project area. The Benefit cost, which is included in the

financial feasibility section of this plan. This has helped the promoter to choose wet coffee

production industry, which have avast market worldwide. The establishment of ECX and its

trade facilitation was also another

Seble Niguse Wet Cofee Processing Indsty

factor we looked at. Different articles on the production of wet coffee were used as areference

while writing this Business plan.

3.4 The Future Expectations of Ethiopian coffeeA.Opportunities

The country has suitable altitude, ample rainfall, optimum temperatures, appropriate planting

materials, low labor costs and fertile soil.


The country can sustainably produce and International Coffee Organization supplyfine specialty

coffee, with potential of producing all coffee types of the various worldcoffee growing origins.

Grounds for optimism, Strong potential to increase supply capacity/yields (transfer

oftechnology)

Promote value addition

Stimulate local consumption: Ethiopia is not only the birthplace, an important producer, and a

leading exporter of Arabica coffee, but also a heavy consumer.

Ethiopians are the highest coffee consumers in Africa International CoffeeOrganization Africa.

Coffee is strongly ingrained in Ethiopian culture (“coffee ceremony”).

B. Challenges

Structural challenges:


Lack of competitiveness

Productivity ;

Poor access to market & long and weak supply chain;

Lack of infrastructure;

Inadequate access to services, particularly financial services, risk management etc.

Low value addition; and International Coffee Organization

Low value addition; and

Inadequate technology transfer & research (coffee genome, conservation, biodiversity etc).

3.5. Support for the project

6
Seble Niguse Wet Cofee Processing Indsty

There are some supportive roles expected from the Regional states, zone and

weredaadministrative organs in ensuring smooth and effective implementation as well as long-

runsustainability of the anticipated project. Particularly important roles for the states

areestablishing and adjudicating industry requirements and right of occupancy as well

asassociated contractual processes and regulatory functions with farmers. This includes,among

and subsequent implementation of the project, maintaining a supportive legalframework,

providing relevant technical and organizational supports towards facilitatingeffective and

smooth implementation of the project.MoFED, 2006: Building on progress: A plan for

Accelerated and Sustained Development toEnd poverty (PASDEP) (2005/062009/10) volume1:

Main Ministry of Finance andEconomic Development (MoFED): September 2006 Addis Ababa.

The overall goal of the project is to contribute towards the economic development of Ethiopia

through using theexisting investment opportunities in the Country and taking advantage of the

expressed policy incentives that emphasize on greater agricultural commercialization and

enhancing private sector development.The project’s contribution to the economy, upon

realization of a full production level withinfive years; include creation of jobs and permanent

employment opportunities to the local people as well as bringing considerable annual income

in foreign currency and tax revenues; part of the letter particularly involves access and use of
data/information and technicaladvice from government institutions and line bureaus /

agencies.

3.6. Goal and Objective 3.6.1. Overall goal

The overall goal of the project is to contribute towards the economic development of Ethiopia

through using the existing investment opportunities in the Country and takingadvantage of the

expressed policy incentives that emphasize on greater commercialization of agriculture and

enhancing private sector development.The project’s contribution to the economy, upon

realization of a full production level withinfive to seven years: include creation of jobs and

permanent employment opportunities to thelocal people as well as brining considerable annual

income in hard currency and taxrevenues: part of which will be reinvested in the immediate

community infrastructure.

Seble Niguse Wet Cofee Processing Indsty

3.6.2. Objectives of the project

The main objective of this project is Purchasing red cherry directly from producers, to process

and supply high quality and quantity coffee products to central and global marketslike USA,
Japan, Europe etc.... Through this process, this project is aimed to improve thestandard of

coffee products. The specific objectives of the project are:

The production of wet coffee in a socially and environmentally acceptable manner:

To make coffee traceable through transparent and accountable processing:

To raise the standard and quality of coffee through collaboration with regionalconcerned

bodies( Oromia’s government )

Reduce the environmental impact of our operation by devised methods of Moderncoffee

processing machine.

STUDY OF THE PROJECT AREA 4.1. Descriptions of the area

Hambela Wamana is one of the woreda`s in West Guji zone, Oromia Region of Ethiopia. The

project is planned to be established in Alaka korchana PA. The administrative center of

HambelaWamana is Dimtu. Hambela Wamana is located in 458Km from capital City of Ethiopia,
AddisAbaba in southern part of oromia and 67 Km from zonal capital city Bule Hora to the

Northdirection. The 2007 national census reported a total population for this woreda of 70,365

of whom35,032 were men and women 35,333 were women; 3,502 or 4.91% of its population

weredwellers. The majority of the inhabitants said they were Protestant with 76.47% of the

populationreporting they observed b/n 5

2'29＂-5

58'24＂northing lattés beliefs, 4.09% practiced EthiopianOrthodox Christianity and 1.72% were

Muslim.The proposed project is planned to be established on o.67hectar of land. During the

establishmentof the project, different construction will be undertaken for the sake of better

functioning andmanagement of the project. The proposed constructions are warehouse,

storage for products andinputs, and offices according to proposed plan. At least 2(two) deep

ponds will be prepared for solid and liquid waste management purpose and recycling system

could be used.

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