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EXECUTIVE SUMMARY
O and FB Construction Machinery Rental Private Limited Company planned to institute and

operate integrated annual crop farming, like (Mung bean, Soya bean, Rice, Sesame and Coffee)

that is planned to reduce and supply the product to foreign and domestic markets. The farm shall

be located in the district of Menet Goldiya Woreda planned to invest for 45 years. The project

shall develop 1500 hectares of land, out of which 400 hectare for Mung Beans, 200 hectare for

Soya bean, 300 hectare for Rice, 200 for Sesame, 300 hectare for Coffee and 10 hectare shall be

used for infrastructure activities.

The current regional market is largely dominated by Sesame and Coffee traders who buy and

supply Sesame markets (ECX). The recent Rise, Mung Beans and Soya bean in food commodity

prices, and the demand for high quality rise has created competitively high price, and demand for

domestic rise. As an up to date O and FB Construction Machinery Rental Private Limited

Company Owners’ will provide nearby produced superior quality and competitively-priced

Sesame, Rice, Mung Beans, Soya Bean and Coffee, to central and foreign markets. The total

estimated investment cost for O and FB Construction Machinery Rental Private Limited

Company Owners’ is 75,000,000,000.00 / Seventy Five million birr/. Regarding the source of

finance 70% or 52,500,000 birr shall be loan from bank and the rest 30% or 22,500,000.00 birr

from the promoters. At full O and FB Construction Machinery Rental Private Limited Company

expected to create 34 permanent and 2010 conditional jobs labors, most of which are to be take on

from secret area.

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2. INTRODUCTION
2.1 PROMOTER’S BACK GROUND
O and FB Construction Machinery Rental Private Limited Company Owners’ M/r Bahru
Mengistu, Son Obed Mengistu and Son Fareas Mengistu, are Ethiopian elders. They are the
founder of O and FB Construction Machinery Rental Private Limited Company Owners There
have established path record of success in various business sectors like Construction and
Machinery Rental fields in Addis Ababa. The Promoters’ now they have allocated more than
73,350,000.00 birr to be used for O and FB Construction Machinery Rental Private Limited
Company Owners’ famous skill in business sector. They recognizes that agriculture is an
attractive sector in the current Ethiopian business climate, and also believes the ever increasing
demand and high prices for different agricultural commodities, makes agriculture a highly
attractive business for the private sector in Ethiopia in the years to come.
Doing business in Ethiopia requires exhaustively knowledge of the local environment and
established working relationships with the Ethiopia communities, mostly in Bench Maji Zone
Menet Goldiya District. Ethiopia is located in the tropical zone because of its wide range of
altitude from below sea level to over 2500m above sea level; it is gifted with a broad diversity of
climates ranging from moist tropics to alpine climates suitable for successful growth of most
types of both temperate and tropical crops. Under the weather motivation of its massive
agricultural potential, Ethiopia’s history, however, is punctuated by food insecurity shortage of
currency and famine due to climatic variability and the poor performance of the agricultural
sector. The five year growth and transformation plan (GTP2) of the government gives credit to
and centre on commercialization as the next step of agricultural development. It envisages
diversification and field of crop and livestock around the project to improve a locative efficiency
and increase of resource use to improve technical efficiency. Along with of the target produce that
have received owing emphasis in promotion of agricultural production, sesame, and soya bean,
are considered as the most important oil crop and exchange of foreign currency that has to be
given attention for its potential as a foreign currency earnings and Mung Beans and Rice is
considered too expected to contribute and ensuring food security in the country and foreign
market. Even though, it is a recent introduction to the country, rice has shown promise as to be
among the major crops that can immensely contribute towards ensuring food security in Ethiopia.

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2.2 ECONOMIC BACKGROUND OF THE COUNTRY

Ethiopia is located in the tropical zone that is one of the fastest growing countries in the world;
Because of its wide range of altitude, it is suitable climate that can be appropriate for doing well
growth of most types of both temperate and tropical crops. Anciently in under the weather
motivation of its massive agricultural potential, Ethiopia’s however, is punctuated by food
uncertainty and famine due to climatic variability and the unfortunate performance of the
agricultural sector, but nobly the past five year growth and transformation plan (GTP1) of the
government gives respect to and focus on commercialization as the next step of agricultural
development changes the old agricultural policy system widely to bring about growth and success
in economic and social structure development. To level these supporting system and strategic
policy again planned five year growth and transformation plan (GTP2) to fulfil the standard range
of the country for its potential as a foreign currency earnings and ensuring food security in the
country. In the middle of the target produce that have received due emphasis in promotion of
agricultural production, Sesame, Soybean is considered as the most important oil crop that has to
be given attention for its potential as a foreign currency earnings, rice is considered as farms
expected to contribute to ensuring food security in the country. The promoter’s planned integrated
farming project is thus initiated with the following objectives:

 Appropriate to the encouraging investment policy that the country is applying many foreign
and local investors are being attractive in the production and processing investments.
 Popular of investors prefer SNNPRS as the region is endowed with fertile arable land, river
and favourable security.
 The SNNP regional government as developed appropriate polices and inviting investors to
involve on agriculture and processing Sectors.

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2.3 STUDY OF THE PROJECT
2.3.1 Over View The Project
Mung Bean, Sesame, Soybean and Rice are one of the largest traded commodities and produced
in many countries. They traded commodities and produced in China, India and USA and Africa
countries, the production of this commodity varies across the regions.
2.4 OBJECTIVES OF THE PROJECT
2.4.1 GENERAL OBJECTS
Objects of the project is formulating based on the general policy objectives goals of the central
and regional governments, to words agricultural development, achieving self-sufficiency of food
and raw materials shortage of domestic industries, reduced currency scarcity and to create
investment opportunities by provisions of O and FB Construction Machinery Rental Private
Limited Company promoters’ Mung Beans, Soybean, Rice and Sesame cultivation and to
encourage local farms in dispersal absent of technologies.
2.4.2 SPECIFIC OBJECTIVES
This project possibility study is scheming to meet the following specific objects
 Creating employment opportunities for 34 skilled, 2010 semi- skilled and daily labours.
 Introduced the modern Coffee and Mung Beans, Soybean, Rice, Sesame quality varieties.
 To change the primitive farming techniques that dependent on rain fall in to modern and
productive system of farming.
 To play significant role in the economic development of the region there by the economic
development of the country as a whole.
 To reduce poverty, raw material and currency scarcity of the country.
2.5 VISION AND MISSION
2.5.1 VISION
Toward the leader marketable licensed quality Coffee and Mung Beans, Soybean, Rice, Sesame
products inland and exporter for foreign countries.
2.5.2 MISSION
 Raise local ability quality; Coffee and Mung Beans, Soybean, Rice, Sesame varieties.
Facilitate and hold the effort of the government to create national level Oil seeds export
item.

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  Construct up international marketable Coffee and Mung Beans, Soybean, Rice, Sesame
varieties.
 Enlarge, distinguish and apply the up-do-date technologies for Coffee and Mung Beans,
Soybean, Rice, Sesame.
 Survive certified by internationally recognized quality Certification Company as producers
of Coffee and Mung Beans, Soybean, Rice, Sesame varieties.

2.5.3 OPPORTUNITIES OF INVESTMENT IN ETHIOPIA

The provider of Ethiopian Coffee and Mung Beans, Soybean, Rice, Sesame to local and
international market faces some basic quality problems. This quality problem makes the Ethiopian
Sesame, Rice and Soybean unable to adequately compete in the international Coffee and Mung
Beans, Soybean, Rice, Sesame market and earn reasonable price.
The major quality problems that have observed on Ethiopia Coffee and Mung Beans, Soybean,
Rice, Sesame include problems related to:
 Processing and warehousing Coffee and Mung Beans, Soybean, Rice, Sesame.
 Inability to take care of the Coffee and Mung Beans, Soybean, Rice, Sesame plantation
properly,
 Inability to control the moisture content of the Coffee and Mung Beans, Soybean, Rice,
Sesame.
Mixing high quality Sesame, Rice and Soybean with low quality Coffee and Mung Beans,
Soybean, Rice, Sesame of one origin with or Sesame, Rice and Soybean with relatively better
quality; this is usually done by Coffee and Mung Beans, Soybean, Rice, Sesame collectors and
entire sellers.

2.5.4 BENEFICIARIES

O and FB Construction Machinery Rental Private Limited Company Private Limited Company
promoters’ viability study has the following benefits;

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 At the head is have a spring board,
 Offer a hand for this investment sector to get incorporate investment idea at selected area.
 To encourage the society from the project as food and utility condition around the project.
 It has intended to create 34 permanent and 2010 temporary jobs up on go on board to full operation.

A variety of the farmers in the district where this project is to be accepted have approach in to
arable land that is proper for, crop produce, but do not have accesses for technologies and inputs
that help them increase their outputs both in quantity and quality by transferring technologies and
inputs perimeters planned project will support local farmers increase their output, and thus change
their incomes and standards of livings.

3. STUDY OF THE PROJECT AREA

3.1 GEOGRAPHIC LOCATION OF THE PROJECT AREA

O and FB Construction Machinery Rental Private Limited Company would be placed on the areas
of Bench Maji Zone Menet Goldiya district. The main sprint of the project would be at Menet
Goldiya Woreda Bench Maji Zone South Nation Nationality and Peoples Regional State
(SNNPRS) at about 1116 km and 814 km far from Hawassa and Addis Ababa respectively.

3.2 BACK GROUND Of THE PROJECT AREA

Bench Maji Zone Menet Goldiya is located in South West of the country with capital town, Mizan
Aman that is 1116 km far from Hawassa and 814 km far from Addis Ababa. Bench Maji Zone has
lies between 5.33-7.21 latitude and 34.88 to 36.14 longitudes with an altitude range to about 2500
meters above sea level. The Zone has 10 woredas and one city administration. According to Zone
Finance Economic Development Department (BoFED) a total population of the Zone have
788,988 with 397,795 meals and 391,193 females Population live in Bench Maji Zone in 2007. A
total area of the Zone has19965.8 sq.km; out of these land 17468 hector farming sector 79248
hector Graze 335030 hector forest 493395 hector others 135000 hector not preferable for diverse
Agro-industrial sectors over the past several years, the total road length of the zone is 534 km out
of this 30 km asphalt, 65 km ongoing to asphalt, 239 km gravel and 1,205 km dry weather road.
The worldwide market prices for farming supplies have almost doubled in certain past years.

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There are many reasons for this increase, including higher demand for Sesame, Rice and Soybean
in some parts of the world, particularly in China, India and USA and Africa countries etc. The
strengthening in world product prices that became so evident in late 2008 and early 2012 may
establish to be a new phase in globe markets. Limited food production can support protect the
country against instability in world markets by providing an option to expensive imports. Grand
prices will provide the incentives that the farming sector wants to increase production, which will
finally help reduce domestic food prices. In the restricted areas of Bench Maji, accessibility of
virgin land, cheap labour, have the potential to lead to increased production of farming out puts
that the country needs as a security for domestic food needs and as a foundation of foreign
currency earnings.

3.3 PHYSICAL AND NATURAL CONDITIONS

3.3.1 TOPOGRAPHY

The major Coffee and Mung Beans, Soybean, Rice, Sesame project is located in Bench Maji Zone
Menet Goldiya Woreda and potential to say the place are not serious sloppy area and some of them
are on almost flat land lying on small elevation Plato areas, which emits sufficient drainage.

3.3.2 CLIMATIC CONDITION OF THE PROJECT AREA

The project area Menet Goldiya District is located at an altitude of ranging 1000 to 1800 meters
top above sea level. The mean annual temperature of Menet Shasha District is 15 to 27 oC in
Bench Majii and the average annual rainfall is about 2500 mm at Menet Goldiya district area.

3.3.3 SOIL

As, Zone Agriculture Department Menet Goldiya Woreda soil is rich in organic matter with high
content of Nitrogen, Phosphorus and Calcium and PH rages from 6 to 7 which conforms the
suitability of the soil for growing of oil seeds, fruits, grains, coffee and others farms.

3.3.4 PEST AND DISEASE PREVALENCE

Universally through the world Disease and Pest are living, but thy prevalent in the project area by
Appling deferent Mechanisms and techniques to prevent the Disease and Pest.

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3.3.5 SOCIAL AND ECONOMIC INFRASTRUCTURE

In Bench Maji Zone Menet Shasha District around the project area; Telecommunication service
Wireless, banks, clinics, Electricity, solar energy and other technologies possible to accessible in
the project area at Menet Goldiya Bachuma.

3.3.6 INSTITUTIONS TO SUPPORT THE PROJECT

O and FB Construction Machinery Rental Private Limited Company use the technical advice and
support of the Ministry of Federal Agriculture, Ministry of Trade and Industry, The Agriculture
Bureau of the SNNPRS, Investment Commission, Investment office, Bench Maji Zone
Agriculture Department, Menet Goldiya woredas Agriculture office and Ethiopian commodity
exchange (ECX) institutions.

4. SOCIO-ECONOMIC STUDY
4.1 ECONOMIC AND SOCIAL BENEFIT AND JUSTIFICATION
In excess of the past several years global market prices for agricultural commodities have nearly
doubled. The investigated project possesses wide range of profit that promotes the socio
economic activities in the strategic plan (GTP2) the South Nation Nationality People Regional
State (SNNPRS). The project benefits to the communities and the country are listed as follows.
4.1.1 TAX REVENUE
In the project area survival under consideration, the region will collect thousands from business
tax payment alone, such consequence create additional found for the regional government that
will be used in expending social and other basic services.

4.1.2 EMPLOYMENT AND INCOME GENERATION

The planned project is likely to create employment opening to several citizens of the Zone. That is
it will be provide permanent employment to 12 and 350 temporary labourers. This would be one
of the creditable actions of the project. Integrated agriculture is the one of the recently developed
concept of farming in rural areas and when dealing with environmental dimensions, conservation
of the environment, use of agro-chemicals, use of fertilizers, disposal of wastes, and irrigation are
the pillars. Agricultural Productions will be effective by the use of agrochemicals in combined
with IPM (integrated pest management, the use of cultural practices).
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The use of agrochemicals will be based on the current rules and regulations of the country where
there are only allowed lists with the recommended rates, and target pests which makes limited
impact on the environment. The target of production in the short run is to develop and acquire
experience to penetrate the international market thus, the Europe regulations on use of plant
protection products, MRL, & MPS black lists will be applied. There will be use of only two basic
fertilizers (DAP & Urea) in the normal production of vegetables to increase productivity.
The use of these fertilizers will be based on the result of soil analysis to know which quantity of
elements is available in adequate quantity. And will be based on the recommendations of
MOARD and some guidelines of vegetable productions beside expertise consultation in the farm.
The possible wastes on the planned farm are Organic wastes plant materials left over and empty
chemical containers. Organic wastes (plant materials and animal wastes) will be subjected for
decay and be used as a compost fertilizer on the farm thus will not have effect on the
environment. Chemical containers – use of chemicals is vital in the normal production of any
crop. So far there is no an official system of collection of empty containers in the country after
use. However as an instruction, rinsing at least three times (the reinstate will be used in the spray
tank again) and parsing (no use of containers) will be used. One of the surrounding concerns
related to commercial farming is the use of water. Even though water is in large quantities
available in Ethiopia with the current trend of growing modern farming it needs to be used wisely
and efficiently. In order to concentrate on efficient use of water the proposed project will use
various methods including, drip irrigation in arrangement of flood irrigation though small-scale
river diversions, construction of small ponds and wells.
5. LIVESTOCK PROFILE OF THE SELECTED FARMS
5.1 SESAME PROFILE

Sesame an ancient oilseed is one of the oldest cultivated plants in the world. This warm-season
annual crop is primarily adapted to areas with long growing seasons and well-drained soils and
has spread from its canter or origin in Iraq to many parts of the world. Historical documentation
suggests that Thomas Jefferson grew sesame seed in test plots more than 200 years ago. He
referred to it as Beni or benne, the name used in Africa. Sesame was introduced to the United
States in the 1930s. The first U.S. commercial production began in the 1950s.

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5.2 SESAME SEEDS

Sesame seeds are small; one thousand weigh about one ounce. The seeds also vary in colour. The
two main colours are white and black. White sesame seed is grown in Mexico, Guatemala and El
Salvador while black sesame comes from China and Thailand. The lighter colour seeds are
considered higher quality. Sesame seed is approximately 50 percent oil and 45 percent meal. It is
unusually high in oil; soybeans are only 20 percent oil. Because protein content and oil content
are inversely proportional, seeds with increased oil content have decreased protein content.
Whether hulled or dehulled, roasted or raw, the seeds are now widely used in baking, candy
making and other food products. The bakery industry prefers de-hulled seeds. The hulls
surrounding the seed are removed in a wet process and the hulls are discarded. The bare seed is
then washed and dried to produce a premium confectionary product. This de-hulled seed makes
up 50 percent of the U.S. market. Tahini, a traditional Mideast sesame paste and the peanut butter
equivalent of sesame, is made from hulled sesame seed. The paste is rich in protein and a very
good energy source. Dip and spread manufacturers use tahini in conjunction with chickpeas to
produce hummus and with egg plant to produce baba ganouj. Halva production is a subset of this
industry. Halva is a popular sweet made by mixing approximately 50 percent tahini with boiled
and whipped sugar and several other ingredients to form a popular Middle Eastern confection.
Additional products sold in U.S. grocery and health food stores with sesame seed as an ingredient
include sesame crackers, whole grain and sesame cereals, sesame chips and sesame seed, candy.

5.3 VARITY SELECTION

Because of the environmental variations, there is great diversity within verities of sesame growth
in Ethiopia preferred areas.
5.4 METHODS PLANTED
Sesame is sowing / planted physically by hand over or automatically by hand-operated seeders,
animals-drown or tractor operated drills. Currently sesame can be seeded with a row crop planter
mounted on tractors and equipped with vegetable.
6. ENVIRONMENTAL IMPACT APPRAISAL AND IMPROVEMENT MEASURES
Integrated agriculture yields is the one of the recently developed concept of farming in rural areas
and when dealing with environmental dimensions, conservation of the environment, use of agro-

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chemicals, use of fertilizers, disposal of wastes, and irrigation are the pillars. Agricultural
Productions will be effective by the use of agrochemicals in combined with integrated pest
management, the use of cultural practices. The use of agrochemicals will be based on the current
rules and regulations of the country where there are only allowed lists with the recommended
rates, and target pests which makes limited impact on the environment. The target of production
in the short run is to develop and acquire experience to penetrate the international market thus, the
Europe regulations on use of plant protection products, MRL, & MPS black lists will be applied.
There will be use of only two basic fertilizers (DAP & Urea) in the normal production of
vegetables to increase productivity. The use of these fertilizers will be based on the result of soil
analysis to know which quantity of elements is available in sufficient quantity. And will be based
on the recommendations of MOARD and some guidelines of vegetable productions beside
expertise consultation in the farm. The possible wastes on the planned farm are Organic wastes
plant materials left over and empty chemical containers. In order to concentrate on efficient use of
water the proposed project will use various methods including, drip irrigation in arrangement of
flood irrigation though small-scale river diversions, construction of small ponds and wells.
7 MARKET STUDY
7.1 Coffee Supply in Ethiopia
Recognizing its crucial importance, the Ethiopia Commodity Exchange has planned to include
coffee as one of the commodities traded on the platform. As an organized and self regulated
market established for all market actors to participate keeping the rule of the game, ECX is
expected to create price transparency, introduce a mechanism of price discovery, assist reduce
transaction costs and risk through the introduction of organized spot and futures trade. In doing so
it is also expected to create market integrity through: introduction of viable products with certified
grade and standards; membership based trading; enforcement of standardized terms and conditions
for enforcement of contracts in accordance with trading rules. However, is it necessary to
introduce coffee in ECX trading system? In other words, are there necessary and sufficient
conditions? These decisions require inputs and approval from the Ethiopian Commodity Exchange
Authority (ECEA). Decision as to whether or not to include a commodity to be traded on the
exchange has to be based on thorough investigation about the adequacy of supply and demand,
quality and standards, the available warehouses visa avis its requirements, and other marketing

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preconditions. ECEA, a young institution, should make base-line analysis of all commodities being
traded and to be traded so as to give sound decisions in every aspect regarding this commodity
when it comes to Ethiopia Commodity Exchange. Thus the intension of this analysis therefore is to
investigate basic fundamental patterns of coffee supply and marketing in Ethiopia. Coffee supply
to the market in a given year may come from: production, stock carried-over, and imports. In
Ethiopia import of raw or processed coffee is prohibited. Therefore marketable and/or consumable
coffee supply in a given year in Ethiopia comes only from production and stock-carried-over.
Ethiopia produces more than 33 thousand tons of coffee every year (2007). About 79 percent of the
supply to the market during a given year comes from production while the rest 21 come from
carried-over stock. Production supply is seasonal and fluctuates due to the climatic variations and
so does with prices. Coffee production is estimated to expand by 3.91 percent annually over the
period 1990-2008, on average. This growth in coffee production supply in the country could
mainly be attributed to improvement in productivity (increase yield per hectare) and partly due to
good distribution and amount of rainfall. The growth is also partly due to increase in the area of
land-covered with coffee that started to give production. The quantity of coffee supplied to the
Coffee Auction Centers at Addis Ababa and Dire Dawa as well as to the entire local and
international market has been growing continuously in past. The coffee supply increases from
155,377 tons in 1998 to 236,712 tons in 2007 with average annual growth rate 6.13 percent. Even
though, there was a decline of about 10.7 percent in supply in 2005/06 in all the other years
(2001/02 to 2006/07) supply has shown an increase of about 1 to 16.8 percent. In the years
considered (during 2001/02 through 2006/07) 54 to 63 percent of coffee inspected originated from
Oromia region while 35.7 to 43.7 percent came from SNNPR. The rest was supplied by Gambella,
which ranged 1.25 percent to 2.4 percent. Currently, there are about 27 coffee supplying zones in
the country, 11 of them are found in Oromia and 14 in SNNPR. The remaining two zones are
found in Gambella. There are four zones each of which originates more than 10 percent of coffee
supply: West Wellega and Jimma from Oromia; and Sidamo and Gedio from SNNP. llubabor,
West Harerghe, Borena, Benchmaji and sheka zones have also remarkably consistent and
considerable amount of supply with increasing trend from year to year. There are also many others
with ample potential. The coffee supplied to the auction centers is mainly two types: wet-processed
coffee and sun-dried coffee. The sun-dried coffee is large in proportion with respect to production

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and supply as Compared to wet-processed coffee. If we see region-wide distribution of origin of
wet-processed coffee, SNNP region takes the highest share about 69 percent (about 48, 531 tones)
in 2006/07. The next highest share goes to Oromia, 29 percent (20,748). Similarly, about 71
percent of the sun-dried coffee in 2006/07 is supplied by Oromia region. The SNNPR region
supply about 28 percent from the total sun- dried coffee in the country. The coffee supplied to the
auction centers from the different part of the country is inspected at the centers to set standards and
grades. The grades and standards are used to categorize the coffee supplied based on its quality by
coffee quality inspection center laboratory. The quality certification is designed to create value
throughout the supply chain, particularly giving sellers a tool to enhance the credibility of their
quality statements, communicate with potential buyers using a common language for quality, and
to better promote and differentiate their offerings. This will help coffee to be traded on the auction
centers. About 55 percent of the sun-dried coffee supply inspected is grade-3. Grade-4 and local
consumption coffee contribute about 21 and 9 percent, respectively. Similarly, around 62 percent
of wet-processed coffee supply is categorized in grade-3 and followed by grade4 and grade2
having percentage share 14 and 12, respectively.
7.1.1 Coffee Supply Problems
The supply of Ethiopian coffee (both wet-processed and sun-dried) to local and international
market faces some basic quality problems. This quality problem makes the Ethiopian coffee unable
to adequately compete in the international coffee market and earn reasonable price.
The major quality problems that have observed on Ethiopia coffee include problems related to:
 Coffee harvesting,
 Processing and warehousing,
 Inability to take care of the coffee plantation properly,
 Inability to control the moisture content of the coffee,
 Mixing high quality coffee with low quality or coffee of one origin with or coffee with
relatively better quality; this is usually done by coffee collectors or assemblers and whole
sellers.

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7.1.2 Coffee Marketing World Trends.
Several evidences show increasing trends in world consumption of coffees. Projections confirm
that consumption of coffee is expected to increase by 0.4 percent annually from 2000 to 2010.
Following this increases in world demand for coffee, volume exported by different countries is
expanding. For instance in 2007, Brazil takes the lion share (rank first) of world exports, which
account for about 30 percent of the total exports, followed by Vietnam, Colombia, Indonesia and
Mexico taking 14.05, 11.7, 5.14, and 3.80 percent of world exports. In 2007, Ethiopia took ninth
place according to this data, which accounted for about 3.34 percent of world total with export of
3100 thousand bags. Estimates for 2008 indicate that Ethiopia has become first in Africa and fifth
in the world next to Brazil, Viet Nam, Colombia, and Indonesia producing 5.68 percent of total
world coffee production.
7.1.3 Domestic Trends.
Being the principal cash crop in Ethiopia, coffee is the oldest and the first of most highly marketed
commodities. Coffee used to be exported from Ethiopia (the oldest exporter of coffee as a
commodity in the world) earlier than 1500 years. However, modern coffee marketing based on
coffee standard classification, grading and licensing was started in 1950s, following the
establishment of the National Coffee Board of Ethiopia (NCBE) in 1957. NCBE were established
to regulate coffee marketing in the country and improve the quality of Ethiopian coffee for export.
The NCBE have centers for coffee inspection, grading and auction in Addis Ababa and Dire Dawa
with its own operational rules, regulations, and modalities, which are operating till now. The
supply chain consists of producers (small holders/ cooperatives/ commercial farms), intermediary
traders (small and large product collectors/ cooperatives), suppliers (those who deliver coffee to
auction centers) and exporters and processors. The coffee assembled by farmers, local private
traders, farmers and cooperatives in different Zones which are located in different Zones is
transported to local processors if it is wet- processed and to the central market in Addis Ababa and
Dire Dawa for further inspection and auction sale. The Coffee Standard and Quality Inspection and
Auction Centers of Ethiopia monitor the production and exportation of all coffee through the
system. The domestic consumption and export trend show declining patterns for domestic
consumption starting 2001while coffee export grew. Coffee price declined until 2004 starting from
the late ninetieth and it has increased since 2005 locally and internationally. When we come to the

14
amount sold for export at the auctions centers from 2002/03 through 2006/07 averaged about 87.32
percent while the rest was delivered to domestic uses. The amount sold for export was increasing
by about 7.55 percent in the five years considered more than the supply to the auction center for
sale. There was a negative growth of sale for export, 2005/06, which was a decline by about 7.21
percent more than the decline in the total volume sold at the centers. The highest growth in this
respect was observed in 2006/07, 14.57 percent. The type of coffee sold at the auction centers for
export (by type of processing method) was both Wet-Processed and Sun-Dried. About 71.5 percent
of coffee sold for export at the auction centers in 2005/06 and 73.8 percent in 2006/07 were sun-
dried while the 28.5 and 26.2 percent in 2005/06 and 2006/07 respectively were wet-processed.
Export price of Ethiopian coffee fluctuates together with international coffee supply and price
patterns and movements. The highest price is paid to wet-processed coffee depending on the
quality or grade and standards. Observation of average prices of wet-processed and sun-dried
coffee per 17 Kg of was about 300.3 Birr in 2004/05, 350.8 in 2005/06 and 397.7 in 2006/07
which increased by about 17 percent from 2004/05 to 2005/06 and by 13.4 percent from 2005/06
to 2006/07. Sun-dried coffee was paid an average price of Birr 241.8 in 2004/05 (19.4 percent
lower than wet-processed), 278 in 2005/06 (20.7 percent lower than wet-processed) and 292.6 in
2006/07 (26.4 percent lower than wet-processed), which was increased by 15 percent from
2004/05 to 2005/06 and 5.3 percent from 2005/06 to 2006/07.
7.1.4 Coffee Marketing Problems
The inspection, grading and auction sale of coffee is located vary from the supply centers at only
two central places. Thus, it has been many times criticized for being highly centralized and located
far apart from the major producing areas, with little improvements from time to time. The central
market is entirely auction based which have several drawbacks. Some of these are warehousing
problems, improper sampling and quality inspection, problems associated with brokers and
suppliers, poor processing, high transportation cost, inadequate coffee market financing and unfair
distribution of marketing margins. Even if there is high demand for Ethiopian coffee in the
international market, most of the suppliers do not want to sell their coffee for export at the auction.
Generally, Ethiopia coffee export is constrained by the following major problems: -
 Unfavorable coffee international price,
 Relatively high transaction cost,
 Lack of adequate local standard processing and handling facilities,
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  Centralized coffee inspection and grading system,
 Lack of export marketing skill,
 Inconsistency in coffee quality and other problems.
These are mainly related with and/or affect and coffee quality, proper spatial, time and quality distribution
due to:
 Handling during harvesting and storing,
 Processing and warehousing,
 Inability to take care of the coffee plantation properly,
 Inability to control the moisture content of the coffee,
 Mixing high quality coffee with low quality, or coffee of one origin with or coffee with
relatively better quality usually; this is usually done by coffee collectors or assemblers and
whole sellers.
All these problems exert a negative influence on quality of coffee and made it not to be
competitive and earn desirable prices in both local and international markets. The main sources of
these problems among others include: Inadequate capacity and awareness of coffee producers and
processors on quality due to lack of technical support for coffee producers and processors; Lack of
sufficient standard coffee processing machine in the major coffee producing areas due to lack of
capacity and awareness, or sometimes improper installation of coffee processing machine, Lack of
proper place for coffee processing, inadequate inspection and supervision of responsible bodies in
the assembling, processing or preparation of coffee during harvesting. This may be due to
negligence or lack of sufficient awareness, Lack of proper regulatory and controlling system on
coffee harvesting, assembling, storing, transporting and processing activities; lack of proper
storage with adequate facilities.
Evidences show that, Ethiopia’s coffee is the least promoted in the world market. There are also
inadequate information centers and information on coffee supply, qualities, prices, roasters, etc.
For more understanding and deeper investigation of the problems and potential solutions, this
analysis has to continue till Wereda levels including the institutions involved in coffee marketing
and inspecting.
7.1.5 Significance of Coffee in the world Economy
Coffee is one of the most important agricultural commodities in the world. It is estimated that over 500
Billion cups are consumed every year. For North Americans only, this is estimated to bee 64 liters per

16
person per annum. After crude oil coffee is the second most important export commodity on which
several national economies depend. Coffee is produced and exported by more than 80 countries in the
world. Coffee is exported in its raw, roasted, or soluble product forms to more than 165 countries
worldwide by more than 121 countries. About 17 of these countries get 25 percent of their foreign
exchange earnings from coffee. More than 50 developing countries, 25 of them in Africa, depend on
coffee as a major source of export earnings. In Burundi for instance, coffee constitutes nearly 79
percent and Uganda 43 percent of the entire export. Coffee production by its nature is more labor-
intensive activity than alternative activities. In the world today about 25 million small producers
cultivate coffee for their livelihoods. Thus it directly or indirectly supports many people in their
livelihoods. According to FAO, for example in Brazil alone, more than 5 million people are employed
in the cultivation and harvesting of over 3 billion coffee plants. The largest coffee-producing region of
the world is Latin America and Caribbean. In 2006 Brazil, for instance, produce almost one-third of all
Worlds' coffee production. In the same year, other countries in Asia such as Vietnam, Indonesia and
India together produce about 23 percent of world's production and Ethiopia produce only 3.5 percent of
World production. African countries also supply significant amounts of coffee to world market. In
2006/07, African countries produced about 12.1 percent of the world total (which is about 14,944 bags)
and exported about 11.82 percent of world total exports (see table below). According to this figures
Africa is the third producer and exporter of coffee next to South America and Asia (see table 7.5 below).
Table1 World Coffee Supply and Distribution for Producing Regions 2006/07

Region Total % Share in Domesti % Share in Total % Share in Rank in

Production, total World c Use, total Exports, total World Volume of
Bags* Production Bags* Production Bags* exports Exports
South America 71733 58.0 18947 26.41 43016 46.34 1
South East Asia 23728 19.2 4637 19.54 20235 21.80 2
Africa 14,944 12.1 2902 19.42 10972 11.82 3
Central America 11267 9.1 1374 12.19 10193 10.98 4
North America 4354 3.5 1510 34.68 3500 3.77 5
South Asia 4700 3.8 1470 31.28 3457 3.72 6
Oceania 1201 1.0 2 0.17 1253 1.35 7
Caribbean 1521 1.2 1349 88.69 136 0.15 8
Middle East 195 0.2 138 70.77 57 0.06 9
World Total 123643 100.0 32329 26.15 92819 100.00
Source: Multi Commodity India Limited (MCX) *Note: one bag is equal to 60 Kg.

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7.1.6 Significance of Coffee in the Ethiopian Economy
As the economy is dependent on agriculture, which accounts for about 45 percent of the GDP, 90
percent of exports and 80 percent of total employment, coffee is one of the most important
commodities to the Ethiopian economy. It has always been the country's most important cash crop and
largest export commodity. Coffee accounts for significant amount of Ethiopian export earnings.
In 1999 for instance, coffee generated about 58 percent of all export earnings of the country though
recently, because of diversification of exports, its share in total earnings is declining which reached
about 35 percent in 2005/06 and 2006/07 (see table 7.6).
Table2 Percentage Contributions of Coffee for the Ethiopian Export Earnings
Commodity 2002/03 2003/04 2004/05 2005/06 2006/07
Coffee 34.22 37.22 39.57 35.42 35.78
Oil seeds 9.55 13.77 14.76 21.13 15.82
Pulses 4.13 3.76 4.18 3.70 5.92
Subtotal 47.90 54.75 58.52 60.25 57.53
Others 52.10 45.25 41.48 39.75 42.47
Grand total 100.00 100.00 100.00 100.00 100.00
Source. National Bank of Ethiopia: Annual Report for 2006/07.
Among the coffee varieties produced in Ethiopia, coffee Arabica, which is indigenous dominates
Ethiopians coffee exports. Evidences indicated that Ethiopia’s annual coffee production has been
increasing in recent years. About 50 percent of this production is exported to other countries (Italy,
United Kingdom, Netherlands, Djibouti, Germany, Japan, Saudi Arabia, France and the United States).
In addition to its generation of foreign exchange and creation of social value, the coffee sector is the
major source of employment in most rural areas, especially for women for a large segment of the
population is engaged in the coffee industry. It is estimated that more than 15 million people are
directly or indirectly engaged in the production, processing and trading of coffee.
7.1.7 Coffee Production Potential of Ethiopia
Studies indicate that thanks to the country’s favorable ecological factors such as suitable altitude,
ample rainfall and optimum temperatures, appropriate planting materials, and fertile soil Ethiopian
coffee is known for its unique characteristics, aroma and flavor. This shows that there is very high
coffee production and export potential in Ethiopia and earn premium prices. The country has also
become of particular interest to the world for its inherent quality and coffee production potential

18
due to its Arabica coffee (as its origin). Coffee grows in Ethiopia in several places at various
altitudes ranging from 550 -2750 meters above sea level. More than any other country, Ethiopia
has a broad genetic diversity among its coffee varieties. It is the center of origin and source of
genetic diversity of the Arabica coffee plant for the world. Nine different bean varieties are
cultivated in the four growing areas of Ethiopia, all with distinctive tastes, sizes, shapes and colors.
It is reported that coffee arabica has been grown in the wild forests of the southwestern massive
highlands of the Kaffa and Buno districts of Ethiopia. Evidences show that the bulk of coffee
Arabica is produced in the Eastern, Southern and Western parts of the country, which have
altitudes ranging from 1300 - 1800 meters above sea level. All the coffee-growing regions have
fertile, favorable, loamy soils. For this reason, aroma and flavor are among the unique
characteristics found in Ethiopian coffee. The variability of coffee Arabica character is very wide
in Ethiopia. This made possible coffee planting materials, which are disease-resistant, high-
yielding and top quality. Many agree that, this is a gift of nature to Ethiopia in particular, and to
the world in general which require special 7 care and proper utilization. Shade, which combines
with these ecological factors, is another factor that plays an important role in coffee production
potential of the country. Another promising potential of Ethiopian coffee is its diversity of variety
and quality. According to Luxner’s report (2001) quoting Ethiopian Tea and Coffee Authority
report, Ethiopia has the most diversified coffee types. The major five of these are the following.
Harar. It is produced in the eastern highlands, at altitudes of 1,510 to 2,120 meters sea level.

Wollega (Nekemt). It is known for its fruity taste has medium-to-bold sized beans, a greenish-
brownish color.

Limu. It is produced at altitude 1,400 to 2,020 meters above sea level. The beans are greenish-
bluish in color and mostly round in shape, and have a medium-sized.

Sidamo. It is produced in southern Ethiopia, at altitudes of between 1,400 and 2,200 meters above
sea level.

Yirgacheffee. It is a highland grown coffee, which is grown at altitudes of between 1,770 and
2,000 meters above sea level

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7.1.8 CLASSIFICATION, GRADING AND LICENSING OF COFFEE IN ETHIOPIA

Ethiopia is the oldest exporter of coffee in the world, earlier than 1500. However, coffee classification,
grading and licensing in Ethiopia was started lately in 1952. Coffee certification began after the
establishment of the National Coffee Board of Ethiopia (NCBE) in 1957, which aimed at regulating
coffee marketing in the country and thereby improve the quality of coffee for exports. The NCBE had
established an organized central coffee market in Addis Ababa and Dire Dawa with its own operational
rules, regulations, and modalities for the members of the supply chain. As it has been discussed in sub-
section 1.3, the quality standards of Ethiopian coffee are classified according to their origin of
production. Among the best-known coffee varieties in Ethiopian Harar, Wellega, Limu, Sidama and
Yirgacheffee take the priority. The first type, Harar is the highest premium coffee in Ethiopia as well as
in the world. Harar coffee has medium size bean, with a greenish-yellowish color with medium level of
acidity and a distinctive mocha flavor. The second well-known variety of Ethiopian coffee is Wollega
(Nekempt), which is produced in western Ethiopia. The beans of Wollega has medium-to-bold bean
with fruity taste. The third type, Limu is known for its spicy and wine flavor, and good acidity. It is
most preferred and popular in Europe and the U.S. Washed Limu is one of Ethiopia‟s premium
coffees. The fourth type of Ethiopian coffee is Sidamo, which has greenish-grayish color and medium-
sized beans. Accprding to the sources, Sidamo accounts for 30 percent of all Ethiopian coffee
production. Washed Sidamo, called sweet coffee is known for its balanced taste and good flavor. It has
fine acidity and good body. It is always blended for gourmet or specialty coffee. The fifth Ethiopian
coffee quality type known with an intense flavor known as flora is Yirgacheffee. It is one of the best
highland-grown coffees. The washed coffee is paid a premium. Yirgacheffee has fine acidity and rich
body. In addition to this classification the National Coffee Board of Ethiopia NCBE has set also grades
and standards to Ethiopian coffee: grade 1-5, low quality standard, c-grade, and circular shape coffee.

7.1.9 Harvest and Processing of Coffee in Ethiopia

In coffee plant, the time of flowering determines the time of the maturing of the coffee fruit. In most
coffee-growing areas of Ethiopia, the flowering period is between December and April and the
harvesting period falls between August and January. That is, seed maturity occurs mostly six to nine
months after the blooming period triggered by rainfall. This naturally ensures continuous production
throughout the year. Coffee harvesting is done mostly by family labor for the size of the average coffee
farm is small (about 0.5ha). Coffee is processed by two widely known methods: dry and wet. In the dry

20
method, coffee is dried more slowly than wet-processed coffee for it is harvested with a variable
moisture content that sometimes requires water to be removed from throughout the whole fruit. Natural
coffee drying takes about three to four weeks in the sun, which may be longer in cloudy or damp
weather. The coffee cherry is allowed to dry to about 11.5 per cent moisture in the whole fruit and then
all the outer layers are removed together by hulling until the commercial bean is obtained and delivered
to the central market. In Ethiopia top-quality coffee is produced by the wet method only from freshly
picked, fully ripe cherries. Harvesting is done carefully, under close supervision of development agents
through which farmers are always advised. After they are carefully picked, the cherries are sorted
before pulping and unsuitable cherries are removed then the final sorted and clean cherries are pulped
the same day they are harvested. The pulped wet parchment coffee goes to the different fermentation
tanks to ferment naturally. The process is carefully supervised to avoid under- or over-fermentation.
Finally, the fermented coffee is washed with clean running water and soaked in clean water to degrade
and remove the remaining mucilage and acids and to improve the color of the beans. Then the wet
parchment coffee is dried in the sun on raised drying tables and sorted at 11.5 percent moisture.
Ethiopia’s wet-processed coffee is well known for its high quality in the world market. The country is
well known for its high-quality wet-processed coffee. But there till is a need to have a well-established
infrastructure that connects coffee farmers, processing-plant owners, governmental organizations and
coffee-purchasing enterprises, leading to effective quality control and efficient marketing. The outcome
of effective quality control helps to achieve the desire standard quality coffee, which finally graded by
certification in the Auction center.
7.1.9.1 Processing the cherries
Processing the cherries the method of removing the skin, pulp and permanent from the outer layers,
Washing coffee are differ in coffee producing world.
7.1.9.2 Cherries sorting
Cherries sorting the method green coffee cherries inevitable end up mixed with the perfectively
ripe cherries and must be separated during coffee processing. Overripe coffee cherries,
undeveloped coffee cherries, leaves and stick float in the water. Ripe coffee beans and green coffee
cherries are dense and thus, sink. Therefore the first step in coffee production consists of
separating the “floaters” from the “sinkers” the coffee floaters are usually directly sent to be dried
and are often passed on for local consumption. The ripe and green cherries go on to be dried using
the natural processing of preparing coffee or be sent to the coffee pulping machines.

21
7.1.9.3 Sun-Dried / Natural Processing
Sun-Dried / Natural Processing it is the process by which dry coffee naturally sundried coffee is
prepared. This is the age-old method of processing coffee and is still used in many countries where
water resources are limited. In Ethiopia, this is usually done using raised drying beds, usually one
meter above the ground. This process can take several days to a few weeks, depending on the
temperature and the intensity of the sun. At night or incase of rain the coffee is covered by plastic.
After this process is taken; sacks of dried Cherries are taken to a hulling station to remove the
entire dried husk the exocarp, monocarp and endocarp of the dried Cherries and obtain green
coffee beans.
7.1.9.3 Washed processing
Washed processing the method of outer skin of the coffee cherry is removed immediately after
harvesting, usually the same day the cherries were picked. Washed coffee tends to have a clarity of
flavor and aroma that is often lacking in natural coffee. This method have cleanest, highest quality
coffee characters. The disadvantage of the washed process is that it requires large quantities of
water and more infrastructures. So it is expensive feasible to do the washed coffee process.
7.1.9.4 Pulping
It is the process involves mechanical removal of the pulp from the coffee cherry to yield for wet
parchment. Before the starting the pulping operation, the pulping machine shall be tested and also
be properly adjusted according to the size of the cherries received.
7.1.9.5 Pre-Grading
IT is the technical operation where wet parchment just after pulping is graded by density with the
help of water and pre-grading machine.
7.1.9.6 Fermentation
The method were properly pre-graded wet parchment coffee mucilage is left to be digested with
the help of bacterial reaction. Here the thick mucilage layer on the parchment shall be broken
down in to simple non- sticky substances which easily washed off during final washing. On the
way to the fermentation tanks, anther density separation can occur. The highest quality coffees are
the densest and should be separated and fermented in different task. The best way of determining
completion of fermentation is by washing a bit of the parchment with clean water and then feeling
the coffee with the hand; gritty feel is an indication of the completion of fermentation,

22
fermentation taken with water or without water. Under wet fermentation is suitable according to
Ethiopian condition fermentation.
7.1.9.7 Intermediate washing
Intermediate washing is used to remove the degraded mucilage and acids which could if not brown
the parchment and lower the fermentation rate.
7.1.9.8 Final Washing and Grading
The last Washing and Grading is an operation where fully fermented parchment coffee is washed
through with clean running water to remove already degraded mucilage and any dirt of the
mucilage. So washing can be done mechanically or manually in concrete channels by pushing the
parchment with wooden paddles against the flow of a stream of water. During the final washing,
parchment is more finely graded than during pre- grading in to heavy, medium, and light density.
7.1.9.9 Parchment coffee soaking
Parchment coffee soaking the finally washed Parchment coffee is immersed completely under
water for about 18 hours in concrete tanks. This is create a chance for those Parchment coffees
which have not yet completed their fermentation, improves, the appearances of the permanent and
the green coffee bean
7.1.9.10 Parchment Coffee Drying
Parchment Coffee Drying is the method Parchment coffee released from the soak tank is
subject to dry required moisture level by using appropriate drying facilities. Parchment
coffee drying is usually done by using natural sun light and artificial dryers
7.1.9.11 Hulling
This method is the means of using Machineries to remove the Parchment layers from wet
processed coffee.
7.1.9.12 Grading and sorting
Grading and sorting is the method before being exported, the coffee beans will be even more
precisely stored by size and weight. Coffee beans are sized by being passed through a series of
different sized screens and air jet to separate light from heavy.

23
7.1.9.13 Green Coffee storage
Green Coffee storage during primary storage, it is recommended that Parchment coffee should not
be kept for more than 6 months as prolonged storage results in aging, by keeping from the other
bad things and refrigeration.
7.1.9.14 Testing the Coffee
Testing the Coffee is the one way Method to identify the quality coffee. At every stage of its
production, coffee is repeatedly tested for quality taste. It must usually take places in the
specifically designed room.

7.2 SOYA BEANS

7.2.1 Product Description And Relevance
Soya Beans one of a constant food of massive nutritional value. It is important global crop,
providing production oil and protein. Soya bean has a number of health related advantages as
well. It is regarded as equal in protein to animal foods. It has been establish to be excellent for
number of different conditions such as high blood pressure, diabetes and related diseases. It is
very useful in improving the menu of malnourished children and revitalizing heart and breast
cancer patient and has no cholesterol.
7.2.2 Production Method Soya Beans
In farming process the first task is ploughing, disking and harrowing. There should be enough
moisture in the soil at the time of sowing. Soya Bean seeds should be properly cleaned and well
dried. The moisture content should not be more than 10%. Soya seeds should store in polythene
bags and stored in the freedom.
7.2.3 Project Demand Of Soya Beans
Study show that the average per hectare yields of soya bean in marketable farming is about 1.5
tons per hectare. As we have seen earlier the current annual potential demand for the bean is
expected to increase by 10% with the year.

7.2.4 Soybeans, Production Quantity Value

The most important oil crop; also widely consumed as a bean and in the form of various derived
products because of its high protein content, e.g. soya milk, meat, etc. Figures relate to the total

24
domestic production whether inside or outside the agricultural sector, i.e. it includes non-
commercial production and production from kitchen gardens. Unless otherwise indicated,
production is reported at the farm level.

Table1 Soybeans, Production Quantity Value

Date Value Date Value Date Value

2013 49.110 1996 4.589 1979 15.000
2012 63.653 1995 3.500 1978 16.000
2011 35.880 1994 4.068 1977 16.000
2010 15.824 1993 3.782 1976 16.000
2009 7.899 1992 21.000 1975 15.000
2008 8.401 1991 20.000 1974 15.000
2007 5.849 1990 21.260 1973 15.000
2006 3.812 1989 24.680 1972 14.000
2005 834 1988 8.060 1971 13.000
2004 457 1987 6.220 1970 13.000
2003 600 1986 3.150 1969 10.000
2002 5.000 1985 4.930 1968 10.000
2001 5.455 1984 210 1967 9.000
2000 4.500 1983 5.500 1966 9.000
(Source: FAO STAT)

7.3 MUNG BEANS

Mung beans – a type of the small, green legume in the same plant family as peas and lentils. As the
source of protein, fibre, antioxidants and phytonutrients. Also in most part of the world they are
less popular than other bean varieties. While Mung beans may be new to most people in the U.S,
they have been a part of traditional Ayurvedic diets in India for thousands of years. Mung Beans
are considered ‘’ one of the most cherished foods “In the ancient Indian practice that’s been
traditional form of medicine since roughly 1,500 B. C.

25
These days, Mung Beans are beginning to pop up in protein powders, canned soups and in
restaurant dishes state-side.
 Mung beans are a high source of nutrients including: Manganese, potassium, magnesium,
folate, copper, zinc and various B vitamins.
 They are also a very filling food, high in protein, resistant starch and dietary fibre.
 You can find Mung beans in dried powder form, as whole uncooked beans, ‘split-peeled’’
form (just like you’d find split green peas), as bean noodles, and also as sprouted seeds.
 Their dried seeds may be eaten raw, cooked, fermented, or milled and ground into flour.
 Because of their high nutrient density mung beans are considered useful in defending against
several chronic, age released disease, including heart disease cancer, diabetes and obesity.

7.3.1 Mung Beans Nutrition Facts

One cup of cooked Mung Beans contains the following nutrient percentages:
 112 calories
 14 grams of protein
 15 grams of fiber
 1 gram of fat
 4 gram of sugar
 321 micrograms of folate (100%)
 97 milligrams of magnesium (36%)
 0.33 milligrams of vitamin b1thiamine (36%)
 0.6 milligrams of manganese (33%)
 7 milligrams of zinc (24%)
 0.8 milligrams of vitamin B5 pantothenic acid (8%)
 0.13 milligrams of vitamin B6 (11%)
 55 milligrams of calcium (5%)

7.2.2 Figure 1 Mung Beans Nutrition

26
7.4 RICE
In Ethiopia, rice is among the target commodities that have received due emphasis in promotion
of agricultural production, and as such it is considered as the “millennium crop” expected to
contribute to ensuring food security in the country. Although rice is introduced to the country
very recently, rice has proven to be a crop that can assure food security in Ethiopia, the second
most populous nation in sub-Sahara Africa (SSA) with about 74 million people in 2007 (MoARD,
2010) Currently, mainly small-scale farmers grow rice in different parts of the country, but it is
also produced by large-scale farms in few places mainly in lowlands of the country. The country's
total milled rice production in 2009 was estimated at 323,916 metric tons. Total current rice
consumption is about 353,998 tons with estimated annual average import of 21,724 tons over the
last ten years. Ethiopia adopted NERICA varieties such as NERICA-1, 2, 3, 4 and Suparica-1
varieties in addition to the local varieties such as X-Jigna and others. Due to the introduction of
upland and irrigated rice varieties in the country, rice farming has increased from by 53,302
farmers in 2006 to over 284,268 in 2009. There have been twelve upland/lowland NERICAs and
Sativa-type, and three irrigated rice varieties released in Ethiopia from 1999 up to 2007 (MoARD,
2010). Different actors are involved in the promotion of rice production and marketing in the
country. This paper presents the stakeholder analysis in rice research and development in the
country with the objective of generating knowledge about the relevant actors to understand their
behaviour, intentions, interrelations, agendas, interests, and the influence or resources they have
brought - or could bring-to the development of the sector. This information can, then, be used to
develop strategies for managing these stakeholders, to facilitate the implementation of rice
development plans, and to understand the policy context and assess the feasibility of future policy
directions. Any stakeholder analysis starts from defining who the stakeholders are. Stakeholders
are all those who need to be considered in achieving project goals and whose participation and
support are crucial to its success. Stakeholder analysis identifies all primary and secondary
stakeholders who have a stake in the issues with which the project or policy is concerned (Golder
and Gawler, 2005). In general, the goal of stakeholder analysis is to develop a strategic view
of the human and institutional landscape, and the relationships between the different stakeholders,
and the issues they care about most.

27
The popularity of stakeholder analysis reflects an increasing recognition of how the characteristics
of stakeholders (individuals, groups and/or organizations) influence decision-making process
(Brugha and Varvasovszky, 2000). Different studies document that stakeholder analysis can help
a project or program to identify:
 The interests of all stakeholders who may affect or be affected by the program/project;
 Potential conflicts or risks that could jeopardize the initiative;
 Opportunities and relationships that can be built-on during implementation;
 Groups that should be encouraged to participate in different stages of the project;
 appropriate strategies and approaches for stakeholder engagement; and
 Ways to reduce negative impacts on vulnerable and disadvantaged groups (Golder and
Gawler, 2005; Brugha and Varvasovszky, 2000, Schmeer, 1999).
In the Ethiopian, Rice crop cultivation is increasing from time to time and different actors from
public and private sectors and donors are showing interest in promoting it. In Ethiopia rice is
considered as a recent crop expected to contribute to ensuring, food security in the country. Even
though, it is a recent introduction to the country, rice has shown promise as to be among the major
crops that can immensely contribute towards ensuring food security in Ethiopia. The country has
vast suitable ecologies for rice production along with the possibility of growing it where other
food crops do not do well Based on GIS techniques and agro-ecological requirements of rice, the
Potential rain-fed rice production area in Ethiopia is estimated to be about thirty one million
hectares. Rice is compatible with various traditional food recipes like bread, soup, “enjera”, and
local beverages (like “areki” and “tela”). The country has also a comparative advantage of
producing rice due to the availability of huge and cheap rural labour as the crop is labour
intensive. The importance of rice as a food security crop, source of income and employment
opportunity due to its relative high productivity as compared to other cereals is recognized by
farmers as well as classified investors who often request for enhanced varieties for diverse by
place conditions.

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7.5 SESAME
7.5.1 PAST SUPPLY AND PRESENT DEMAND OF SESAME YIELD

International demand for sesame continues to increase every year. The worlds traded sesame seed
recently surpassed one million tons per year and was valued at roughly $850 million. In the last
15 years, world trade in sesame has increased by nearly 80 percent. The United States imports
more sesame than it grows. In 2010, the United States imported sesame seed valued at $69.9
million, relatively unchanged from 2009. Nearly 60 percent of the sesame was from India,
followed by Guatemala. The seed is mainly used for baked and other food products, although
non-food cosmetic applications are increasing. The United States did export both sesame seed and
sesame oil in 2010. Sesame seed valued at more than $6.1 million, a 98 percent jump from
2009, was exported, mainly to Japan. The value of exported sesame oil also grew, by 21 percent,
to $2.8 million. Canada was the largest buyer, followed by Netherlands, Turkey and France. Japan
is the world’s largest importer of sesame seed. Sesame oil, particularly from roasted seed, is an
important component of Japanese cooking and traditionally this is the principal use of the seed.
China is the second largest importer of sesame, mostly oil-grade sesame. (The country exports
food-grade sesame.) To ensure a top price for the commodity and enhance the market share
through exports, particularly in Asia, product image (quality perception) is important. Most
importers who supply ingredient distributors and oil processors only want to purchase
scientifically treated, properly cleaned, washed, dried, colour-sorted, size-graded and impurity-
free seeds of given minimum oil content (not less than 40 percent) packed according to
international standards. Usually, only seed meeting these criteria may be exported from a
producing country. Production of sesame seeds in the World is estimated at about 2.25 million
tonnes, of which, 70% is consumed in the producing countries themselves. Annual trading
volumes are estimated at 600,000 mt, valued at US$500 million. India, China, Myanmar in Asia,
Nigeria, and Ethiopia and Tanzania in Africa and Guatemala in Central America are the major
producing and exporting countries with Japan the world's largest importer. Production, imports,
exports and consumption, of sesame is shown by geographic region in table 1 below. In these
groupings, imports rarely match exports, according to FAO statistics; Asia produces 64% of the
world's supply of seed and Africa 31%, the two regions contribute a total of 95.3% of total global
production.
29
 28% of sesame produced in the world enters international trade.

 Africa's exports represent 40% of its production.

 While Asia exports 17% of its production, it imports nearly twice as much as it exports.

 Europe is a major net importer.

Table2 Regional Sesame Production, Trade, and Consumption 2007
Region Area Production Imports Exports Net Imports Consumption
Harvested (000 tons) (000 tons) (000 tons) (Exports) (000 tons)
(000 acres)
Asia 11,182 2,397 749 409 340 2,737
Africa 7,273 1,152 39 463 (424) 728
Europe 1 1 145 23 121 122
North America 0 0 54 3 51 51
Central America 257 63 43 57 (14) 49
South America 377 108 5 90 (85) 23
Oceania 0 0 8 0 8 8
World 19,090 3,726 1,042 1,046 3,736
Source: UN / FAO (Consumption = Production + Net Trade)
Of these fourteen countries who are the major producers in the world, as shown in table 3 below,
six are in Asia, seven in Africa and one in Latin America, these countries together account for
84% of the world sesame production.
TABLE3 MAJOR SESAME PRODUCERS 2007
S. No Country Area Harvested Production Share of total
(000 acres) (000 tones) production
1. India 4,324 739 23.7
2. Myanmar 3,954 661 21.2
3. China 1,534 615 19.7
4. Sudan 3,781 287 9.2
5. Uganda 692 185 5.9
6. Ethiopia 544 181 5.8
7. Nigeria 484 110 3.5
8. Paraguay 148 58 1.9
9. Bangladesh 198 55 1.8
10. Tanzania 284 51 1.6
11. Thailand 162 47 1.5
12. Central African Republic 99 44 1.4
13. Egypt 77 41 1.3
14. Pakistan 210 41 1.3
Total 16491 3115 100
Source: - UN/ FAO

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 FAO statistics reveals that in 2007, 16.49 million acres were cultivated, producing 3.1 million
tons of sesame seed for an average yield of 390 lbs/acre. Generally speaking, there is a high
correlation between yield and the amount of rainfall. Much of the sesame in the world is grown in
semi-arid areas where there is very little irrigation.
7.5.2 THE GLOBAL SESAME DEMAND
While sesame is an export commodity whose price is highly affected by global market demand, it
is very imperative to see the nature and structure of global sesame market. According to the data
obtained from FAO, in 2005, there were 1,042 thousand tons of sesame seed reported as
imported. The major importers were as follows:
TABLE4 MAJOR SESAME IMPORTERS 2005
S.N Country Import (000 tons) Export (000 tons)
1. China 214 57
2. Japan 179 -
3. Turkey 95 -
4. Republic of Korea 58 -
5. United States of America 47 -
6. Saudi Arabia 33 -
7. Germany 28 -
8. Syrian Arab Republic 25 -
9. Mexico 25 -
Source: UN / FAO statistics
China, Japan and Turkey are the major sesame importers in the global market. Many countries
such as China, Japan, Guatemala and Thailand are involved both in import and export of sesame
in a year. Studies reveal that the world sesame trade measured as imports continues to increase.
The most significant country in world sesame trade is China because of its shift from a major
exporter to the major importer as shown in table 5 below.
Table5 China Sesame Trade (in 000 tons of whole sesame)
Year Exports Imports Net imports (Exports)
2000 113 41 (73)
2001 75 43 (32)
2002 108 45 (63)
2003 114 108 (7)
2004 46 153 107
2005 57 214 157
Source: UN / FAO statistics
31
Since the Chinese economy grows, disposable incomes improve and the demand for sesame
increases. This can be seen in imports, which have steadily increased to 9 more than fourfold in
six years (see table 5). Despite the high variability in quantity exported, the increased demand for
sesame of China has caused it to be a net importer to satisfy local command.
7.5.3 ETHIOPIA’S SHARE IN WORLD SESAME PRODUCTION AND MARKET
Ethiopia is the sixth largest producer of sesame in the world and the third in Africa in 2007 (table
3). The total sesame production had shown a 26 % increment during 1997 to 2004. (For the
details see table 3). UN/FAO statistics revealed that there were 111 countries which participated
and competed in world sesame trade during the period 1997-2004. These competing countries
may be categorized in to two. The first category includes those countries which are primary
producers (mostly developing countries) and the other category includes those countries which
import sesame and resale after cleaning/ processing. The countries which re-export sesame are
mostly the developed countries who buy sesame at a low price and resale after adding value
through cleaning and/or processing to improve its quality. These countries include Japan,
England, Netherlands, Germany, Israel, Italy, France, Belgium and South Korea. The total world
export of sesame in the above mentioned years stood at 750.44 thousand tones. The total export
has grown by 25.4% while the foreign currency earning has increased by 45.4% which amount a
total of USD 557.89 million. During this period, the share of Ethiopia was 181 thousand tones
(5.8%). In the world market for sesame, 16 countries have a share of 80-90% of both export
volume and value. These countries are India, Sudan, China, Myanmar, Ethiopia, Mexico,
Netherlands, Venezuela, Guatemala, Japan, Nigeria, Tanzania, Pakistan, Thailand, Burkina Faso,
and England. A study by MoARD (2007) indicated that in the years between 1997 and 2004, the
following countries have shown a radical improvement in export of sesame both in volume and
value:-
 Ethiopia 531.9% in volume and 625.4% in export revenue,

 Burkina Faso 202.4% in volume and 77.5% in export revenue,

 Tailand169.2% in volume and 196.5% in export revenue,

 Tanzania 143.7% in volume and 90.45% in export revenue,

 Sudan102.7% in volume and 39.7% in export revenue,

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 Netherlands78.9% in volume and 46.2% in export revenue,

 Nigeria 56.1% in volume and 47.4 and in export revenue,

 India 32.2% in volume and 39.4% in export revenue.

Ethiopia’s share of 1.5% in export volume and 1.9% in value in 1997 had grown to 8.9% and
8.3% in 2004 respectively. In the stated years, Ethiopia ranks 4th in export quantity and revenue
following Sudan, India and China. According to the data obtained from Ministry of Trade and
Industry (MoTI), the number of exporters has also increased from 81 in 2007 to 94 in 2008.
According to FAO statistics the exports of oilseeds of Ethiopia in general and sesame in particular
is expanding and the country’s total exports are performing better in the growing world market.
Significant public and private investments in infrastructure including warehouses and cleaning
machines, ensures that the entire range of operations from collection, storage, quality up
gradation, packing, transportation and shipping are improving in Ethiopia. All these have resulted
in tremendous increase in export volumes in a very short time span of 5 years, making Ethiopia a
significant participant in the sesame seed trade from Africa. This signifies that maintaining and
improving this steady growth in the export of the product requires expansion of land cover,
improvement in productivity, enhancing product quality, infrastructure development and market
information network to maximize the country’s comparative advantage in the export market of the
product. The other aspect of sesame trade in the global market is the variation in the selling price
across countries.
Source: UN/FAO statistics (1997-2004) as can be seen from figure 4.2, countries such as Japan
and England, bought sesame and resale it at more than 50% higher price than primary producer
countries. In the stated 8 years the average price of a tone of sesame was sold USD 1896.15 in
Japan, 1893.87 USD in England, and USD 1025.5 in the Netherlands, while Ethiopian sesame
was sold at 771.6 USD/tone for the same period. The selling price of sesame for some countries
such as Nigeria and Burkina Faso was by far lower than that of Ethiopia.
7.5.4 SESAME PRODUCTION IN ETHIOPIA
7. 5.4.1 Land Suitability for Sesame Production
Owing to the availability of suitable soils and climate, oilseeds are important agricultural
commodities widely grown in Ethiopia. The major oilseeds are sesame, Noug or Niger,
groundnuts, soy beans (partly used for oil extraction), rapeseed (Gomenzer), linseed, sunflower,
33
cottonseed and others. Ethiopia ranks among the top 6 world producers of sesame. Sesame seeds
are partly used for domestic oil extraction and mostly exported to international markets for human
feeds and oil extraction. Most of the sesame production is used for export to Middle East,
European and Far East countries.
7.5.4.2 Types and Characteristics of Ethiopian sesame seeds
A large number of sesame seed varieties exist in Ethiopia. However, in the international trade,
three varieties are well known as trade names: Humera, Gondar and Wellega. The three main
export varieties have their own characteristics such as color, oil content, and taste. The Humera
variety is appreciated worldwide for its aroma and sweet taste. It has good uniform white seeds,
which are quite large in size. This makes it very suitable for bakery products. The Gondar type is
also suitable for the bakery market. For this market a high level of seed purity is demanded, which
has sometimes proven to be problematic for Ethiopia. The major competitive advantage of the
Wellega type is its high oil content. Type and quality are very important factors in the world
sesame market. According to CSA data, all sesame seed varieties are produced during the main or
meher crop season. Ethiopia is well known for its quality sesame worldwide. As can be seen from
table 4.1 below, out of the total cultivated land area of 8.67million hector of grain production, oil
seeds had a share of only 6.58% in 2003/04. In terms of area coverage, sesame had a share of
16.04 % of oil seeds in 2003/04; however, its share of oilseeds has grown to 26.3% in 2007/8.
The total cultivated 15 land for grain has increased to 10.95 million hector in 2007/08 exhibiting
an increase of 12.6% in five years, while the area under sesame has grown more than double and
reached 185912 hector from 91527 hector for the same stage.
Table6 Estimate of Hectare of cultivated Land (Main /Meher Season)
Type of Crop 2003/04 2004/05 2005/06 2006/07 2007/08
Total Grain 8,669,295 9,811,070 10,170,911 10,592,755 10,954,722
Cereals 6,998,977 7,637,524 8,081,401 8,471,920 8,730,001
Pulses 1,099,535 1,349,116 1,292,170 1,379,046 1,517,662
Oilseeds 570,783 824,430 797,341 741,791 707,059
Neug 281,718 358,828 306,877 274,720 285,236
Linseed 142,899 250,702 215,107 174,108 152,129
Sesame 91,527 136,220 205,153 211,312 185,912
Coffee 232,439 260,201 261,175 295,238 407147
Source: CSA Agricultural sample survey Reports (2003/04-2007/08)

34
Globally, improvement in sesame productivity is low and even declining in some countries.
During the period 2001/02 to 2004/05, some countries have managed to improve their
productivity including, Lebanon (85%), Iran (37%), Turkey (29%), Uganda (23%), Vietnam
(21%), Thailand (12%), Ethiopia (10%) and India (9%). Countries having a productivity of more
than one tone per hectare include Central African Republic, China, Egypt, and Lebanon (MoARD
2006/07). Though the productivity of other crops fluctuates from year to year owing to weather
conditions, for sesame seed, there is a good potential of enhancing production and productivity.
Sesame productivity of Ethiopia has improved in the last two years and is better than the major
producing countries of Africa such as the Sudan, Nigeria, Uganda, and Tanzania. This level can,
however, be improved to more than one tone per ha in light of its land suitability and conducive
climate. According to a study by MoARD, the types of seed variety used by the farmers
(especially in the North Western regions) are local varieties obtained from the Sudan and since
these varieties have been used repeatedly, they are exposed to diseases and as a result, their
productivity is low. Even though expected results were not obtained, ten different varieties of
sesame had been approved by the Ethiopian Agricultural Research Institute and distributed to
sesame farmers. The Plan for Accelerated and Sustained Development to end Poverty (PASDEP)
document, indicates that oilseed production will be doubled during the period 2005 to 2010. The
growth could be achieved through expanding cultivated land and improvement in yields per
hectare. 19 Until now, farmers have practiced a low input, rain fed agriculture without the use of
any fertilizer. The use of improved seeds is also very limited and both sesame production and
harvesting are performed manually. The productivity of sesame varies across regions ranging
from 6.23 in Oromia to 18.17 in Amhara. Its productivity at the national level is 10.05 quintals
per hectare whereas in the preceding two years it was estimated to be 7.26 and 7.07Qts/ha
respectively (table 7). Higher yields for marketable surplus can be achieved with improved farm
practices on smallholder level (better seeds, fertilizers, crop protection and farm management in
general as well as through expansion of cultivated land in the low lands of the country using rain-
fed agriculture.

35
7.5.4.3 PRODUCTION REGIONS OF SESAME
In the North West and South Western lowland areas of the country, sesame is currently cultivated
on fertile lands and there seems to be less need for fertilizers. During the year 2007/08, there were
about 527,819 sesame growers with an average acreage of 0.3 ha are involved in sesame seed
production who produced 18,677.3 tons most of which are small holder farmers. Besides small
holders, there are a limited number of investors or large commercial farmers (having more than
100 ha). The share of the latter is less than 2% (Winands and Biersteker 2007). Due to the low
input levels, sesame production in Ethiopia meets organic standards. This is the case for most
small holders and large commercial farms. The main Ethiopian sesame production regions are
situated in the North West and South West. This fragmented faming system has resulted in many
collectors gathering quantities suitable for trading.
TABLE7 SESAME PRODUCTION BY REGIONS
Region No of Area in ha. Production in qt. % Share of Yield
holders national (Qt./ha)
Tigray 115,570 66,877 527,888 28.3 7.89
Amhara 168,222 49,859 906,173 48.5 18.17
Oromia 169,747 47,711 297,304 15.9 6.23
Benshangul 65,857 20,800 131,429 7.0 6.32
Gumuz
National 1evel 527,819 185,912 1,867,727 100 10.05
Source: CSA Agricultural sample survey Report 2007/08
National figure include other regions data. The major producing areas of sesame in Ethiopia are
Tigray, Amahra, Oromia and Benshangul Gumuz. However, a small amount of sesame is
currently produced in SNNPR. Tigray, Amahra and Oromia have a total share of 92.7% of
2007/08 production. In most of the cases sesame is produced in low land areas of the country
where relatively large tracts of arable land survive.

36
TABLE8 PERCENT OF CROP UTILIZATION FOR THE YEAR 2007/08
Percent utilized for
Type of Crop Household Seed Sale wages Animal Others
consumption In kind Feed
Total Grain 60.12 14.05 21.63 1.31 0.66 2.23
Cereals 64.76 13.79 16.60 1.44 0.80 2.62
Pulses 58.65 15.49 22.82 0.95 0.45 1.63
Oilseeds 31.33 12.34 53.89 1.29 0.16 0.99
Neug 23.91 13.49 59.95 1.54 0.18 0.92
Linseed 47.11 15.39 35.59 0.82 0.26 0.83
Sesame 14.54 10.01 72.74 1.65 0.10 0.96
Root crops 71.42 9.24 16.6 0.33 1.07 1.34
Permanent crops 51.60 1.09 42.91 0.84 0.86 2.71
Source: CSA Agricultural sample survey Report 2007/08
In Kafta Humera woreda alone, there were 358 small, medium and large scale commercial farms
who cultivated 110,000 ha of land in 2006/07. However, the extension service provided to the
small holders of sesame farmers is minimal (MoARD 2006/07). As can be observed from table 7
above, in contrast to cereals and pulses, the largest share of annual production of sesame (72.74%)
is destined for market and only14.5% of produce is utilized for household consumption. Data
obtained from the crop and livestock utilization report of the CSA reveals that the percentage of
sesame sales varies across the producing regions of the country. In 2007/08, it was as high as
79.8% in Tigray and 76.9 and 63.2 percent in Benshangul Gumuz and Amhara regions
respectively while that of Oromia region was nearly equivalent to the national average.
7.5.4.4 MAJOR SESAME SEED PRODUCING ZONES
According to the CSA 2007/08 survey report, the major sesame seed producing areas in the
country are Tigray region, Western and North Western zones, (especially Humera, Tsegede and
Welkaite woredas); Amhara region, North Gondar Awi and west Gojam zones (specifically
Metema, kuara, West Armachiho, Tach Armachiho and Tegede woredas); Oromiya region,
(Western, Eastern and Kelum wollega, Jimma, Illubabor as well as West Hararge zones); and

37
Benshangul Gumuz region (Metekel Assossa, and Kemashi zones). The total estimated yield of
sesame in the major producing zones of the regions is presented in table 13 below.
Table9 Share of total production of major producing regions /zones (2007/08)
Region/Zone Production (in Qt.) % share of national % utilized for sale
Tigray 527888 28.3 79.8
N.West Tigray 94030 5.0 69.5
Western Tigray 425051 22.8 85.9
Amhara 906173 48.5 63.2
N.Gondar 257113 13.8 78.1
Awi 533771 28.6 82.1
W.Gojam 56733 3.0 85.1
Oromia 297304 15.9 72.0
W.Wellega 63857 2.0 81.9
E.Wollega 61452 3.3 80.3
Kelem Wollega 32149 1.7 69.4
Illubabor 52435 2.8 78.5
Jimma 28719 1.5 50.4
W.Harrarge 17751 0.9 43.3
Benshangul Gumuz 131429 7.0 76.9
Metekel 53426 2.9 78.4
Assossa 26309 1.4 68.2
Kemashi 38034 2.0 79.9
Others 4933 0.3
National Total 1867727 100 72.7
Source: CSA Agricultural sample survey Report2007/08
Sesame is produced by smallholder farmers, and commercial farmers.the share of the former is
estimated to be 98% while the later contributes only 2% (Winands and Biersteker 2007). The
CSA estimated that 527,819 holders (farmers) were engaged in sesame farming who cultivated
185,912 hectares in 2007/8 during the main cropping season.
At the national level, the bulk of the harvest (more than 70%), of sesame is exported. The
percentage of output utilized for sale varies across the producing zones. It ranges between 43.3 %
in West Hararge to 85.9 % in Western Tigray.
7.5.4.5 PRODUCT QUALITY OF SESAME SEED
Sesame quality grading was performed by the Ethiopian Quality and Standards Authority until the
recent inclusion of sesame in the Ethiopia Commodity Exchange (ECX) system. Export sesame
seed types have to fulfill the standards set by the authority as well as the minimum agreed
international standards. Ethiopian sesame is mostly identified and graded as Humera, Gondar, and
38
Wellega and to some extent mixed types and its oil content is 43-56%. The minimum
international standard of oil content is 52%, 48%, and 45% for first, second and third grades
respectively. On the other hand, the minimum acceptable moisture content is 6-8% for all grades
(Winands and Biersteker 2007). Before reaching at export processing and storage level, sesame
production in Ethiopia has to pass through a series of long chains as explained in section 5.2.
MoARD (2006/07) disclosed that sesame exporters are facing problems of impurities such as dirt,
branches, stones etc. The percentage of these foreign bodies is estimated to be 7 - 9% where as the
internationally agreed standard is 2% for first grade, 4% for second, and 6% for third grade
sesame. Cleaning this low quality sesame to make it exportable would obviously require high
costs of labor and machinery which in turn reduces competitiveness in the global market. One of
the most challenging tasks in sesame marketing in Ethiopia is therefore, reducing the market
chain of the product. In line with the goals and objectives of the Ethiopia Commodity Exchange
(ECX), relentless efforts have to be made to reduce market chain and discover sesame prices
based on the level of quality. To this end, the role of cooperatives in this sub sector has to be
enhanced with a view to benefit smallholder producers through offering better farm gate prices.

7.5.4.6 SESAME OIL

Commercially, sesame oil comes in two basic types. One type of sesame oil is a pale yellow
liquid and has a pleasant grain-like odor and somewhat nutty taste. This oil is high in
polyunsaturated fats, ranking fourth behind safflower, soybean and corn oil. It is excellent for use
as frying oil, in cosmetics and in food preparations. The other type of oil is amber-colour and
aromatic, made from pressed and toasted sesame seeds. This popular ingredient in ethnic cooking
is not used as cooking oil, however, because the flavour is too intense and it burns quite easily.
Instead, sesame oil is normally added as a flavouring agent in the final stages of cooking. Oil is
extracted from sesame seeds by mechanical pressing. The seed may be cold pressed to give an
aromatic salad oil or hot pressed to give a lower grade product. The oil yield is from 50 percent to
57 percent, depending on growing conditions and seed variety. The outstanding characteristic of
sesame oil is its long shelf life. This quality makes it applicable for use in the manufacture of
margarine in many parts of the world where there is inadequate refrigeration. Sesame oil is also
used in paints, soaps, cosmetics, perfumes, bath oils, insecticides and pharmaceuticals (vehicle for

39
drug delivery). Poppy seed, cotton seed and rape oils are frequently added to sesame oil. Seed oil
is being investigated as a cell-growth regulator that slows down cell growth and replication, partly
through its antioxidant properties. Research shows that the oil can neutralize free oxygen radicals
within the skin and surrounding tissues. Other experiments have demonstrated positive effects for
helping to clear blocked arteries. The oil quickly permeates and penetrates the skin, entering the
blood stream through the capillaries. While in the blood stream, molecules of sesame seed oil
maintain good cholesterol (HDL) and assist the body in removing bad cholesterol (LDL). In
addition, sesame oil contains two important antioxidants believed to promote cell integrity and the
healthy function of body tissues in the presence of oxidizing compounds: sesamolin and sesamol.
These antioxidants maintain fats and increase vitamin E activity dramatically. They are also being
researched as potential industrial antioxidants, as well as nutraceuticals and potential templates
for synthetic pharmaceutical compounds. In Japan, where sesame seed intake is especially high
and a positive sesame product image is well established in the marketplace, sesamin and
sesaminol and some related compounds are the focus of considerable laboratory and clinical
research.

Pharmaceutical and Neutraceutical Applications Sesame seed oil has been used as a healing
oil for thousands of years. It is naturally antibacterial and effective against common skin
pathogens as well as common skin fungi including the athlete's foot fungus. It is naturally
antiviral and is a natural anti-inflammatory agent. Many “natural” cosmetics now include sesame
oil because of its antioxidant properties. It has been used in topical preparations in the traditional
medicines of India, North Africa and East Asia. It was even used in the early North American
colonies. Sesame is an important niche market ingredient.

In massage oil formulations a current pharmaceutical use for sesame oil in the United States is as
a “medical carrier” for injected drug or intravenous drip solutions. It also is used as a carrier or as
part of a carrier formulation by the cosmetics industry. The oil for pharmaceutical use is extracted
from high-quality seed and is more refined than oil intended for human consumption or other
“food-grade” (cosmetic) applications. Ayurvedic medicine has used sesame oil to help treat teen
acne and control eruptions, as well as keep the skin soft and supple and tighten facial skin,
particularly around the nose, and has been used to help heal minor abrasions. In many traditional

40
Mideast societies, it also is used to protect children against common skin pathogens easily
transmitted from animals, for example, ringworm fungus, and is successfully used in the hair of
children to treat lice infestations. In some Asian and Middle Eastern countries, the oil is used to
treat diaper rash by neutralizing the acidity of urine and lessening the chafing of cloth diapers. In
these areas, school-age children have sesame oil swabbed into their noses to protect against air-
borne viruses and bacteria. As nose drops, sniffed back into the sinuses, sesame seed oil has been
used for decades to cure chronic sinusitis.

Sesame Meal and Flour When the seeds from food-grade, high-oil sesame are processed, the
resulting sesame meal contains from 50 percent to 55 percent protein. This meal is often blended
with other flours for baking and other food uses. The sesame meal remaining after the oil is
pressed from less desirable food-grade or non-food-grade seed is an excellent high-protein feed
for poultry and livestock. Sesame meal and flour are emerging markets with significant growth
potential. Both can be added to recipes to give a better nutritional balance to health food products.
The antioxidants naturally found in sesame increase the shelf life of other food products produced
with the flour.

Wildlife Food Increasingly, sesame seed is produced to sell to landowners and government
agencies for wildlife food plots. The seed is used to attract and feed game birds. Farmers plant
sesame on ditch banks and along wooded creeks to sustain quail and pheasants. In South Carolina,
farmers plant sesame for dove hunting.

Production In the United States, sesame seed production has been limited to the Southwest,
primarily due to the lack of mechanically harvestable cultivars suited to other climates. Almost all
commercial production is in Texas and Oklahoma. In 2007, sesame was grown on 29 farms. Of
those farms, 25 were in Texas and the remaining four were in Oklahoma. All together, U.S.
sesame farms produced over 2.9 million pounds of sesame, on about 4,978 acres. (In contrast, less
than 2,500 acres were planted to sesame in 1987) The pounds of sesame have doubled since 2002,
with the addition of only seven farms. Most U.S. sesame is grown on contract.  (2007 Census of
Ag 2009) In 2010, Sesaco had more than 100,000 acres of sesame under contract production with
growers in southwest Kansas, Oklahoma and central Texas. There are a few factors to consider

41
when deciding to grow this crop. One factor is environmental suitability since the sesame plant
grows best in areas where cotton does well. Two other factors important to growers are branching
and "shattering resistance." New varieties of sesame allow the plant to dry standing in the field
like wheat, corn or soybeans. It can be harvested with standard combines, and cleaned and stored
with standard grain-handling equipment. Two final factors that require consideration: the lack of
registered herbicides for chemical weed control and of crop disaster insurance.
Today, the decision to plant sesame is based on the fact that it is a high-value oilseed crop with
extensive local and overseas markets. Usually local production depends on whether the seed can
be routed into local processing, oil or seed distribution networks. The sesame plant is an erect
annual (or occasionally a perennial) that grows to a height of 20 to 60 inches, depending on the
variety and the growing conditions. Some varieties are highly branched, while others are
relatively unbranched. The plant thrives best on well-drained, fertile soils of medium texture and
neutral pH but has little tolerance for salt. The plant has an extensive system of feeder roots,
making it very drought-tolerant. Growing this plant seems to help condition the soil by improving
soil structure. The sesame plant continues to produce leaves, flowers and capsules as long as the
weather permits. At maturity, leaves and stems tend to change from green to yellow to red in
colour. At this point the leaves begin to fall off the plants and the sesame seed pods split,
releasing the seed (hence the phrase, "open sesame"). In commercial varieties, maturity occurs in
90 to 120 frost-free days. According to the Food and Agriculture Organization (FAO), Myanmar
(Burma) was the world's largest producer of sesame in 2009, followed by India and then China
(FAOstats 2009). Not surprisingly, nearly 70 percent of the world production is in Asia. Africa
grows about 25 percent of the world's sesame, with Sudan, Ethiopia and Uganda being key
producers.

Planting several hundred varieties of sesame plants exist. Non-shattering varieties have been
developed to allow mechanical harvesting. In the United States, these varieties are usually
planted, and some are far better than others for certain climatic zones. Some non-shattering
varieties include Baco, Paloma, UCR3, SW-16 and SW-17. In the United States, sesame does
particularly well as a re-plant crop. Sesame should not be planted before the soil reaches a
temperature of about 70°F, roughly one month after the last killing frost. Daytime temperatures of
77°F to 80°F are optimal; below 68°F, growth is reduced, and at 50°F, germination and growth is
42
inhibited.
Sesame can be seeded with a row crop planter equipped with vegetable planter boxes. Populations
of 250,000 to 300,000 plants per acre in 18- to 30-inch rows have produced the highest recorded
yields. This is about 1 pound per acre for 30-inch rows. Depth of planting varies with soil type
and soil moisture from 1 to 2 inches. Uniform depth and seed rate are essential for stand
establishment resulting in maximum yield.

Fertilizer Fertility requirements for sesame are 80 pounds of nitrogen, 20 pounds of phosphorus
and 20 pounds of potassium per Hector. The nitrogen recommendation is for soils with less than 2
percent organic matter. The nitrogen can be reduced to 60 pounds per Hector for soils with 2
percent to 5 percent organic matter and to 40 pounds per Hector if the soil has more than 5
percent organic matter. The phosphorus and potassium recommendations are for soils testing in
the "optimum" range. A soil pH of 5.6 or above is satisfactory.

Moisture Sesame requires a warm, moist, weed-free seedbed. Good drainage is important,
because the plant is extremely susceptible to water logging at any stage of growth. However, the
plant also requires adequate moisture for germination and early growth, and a minimum rainfall
of 20 to 26 inches per season is necessary for reasonable yields. Moisture levels before planting
and flowering have the greatest impact on yield. Light rains during the dry-down period will not
seriously damage seed, but the crop should be regularly inspected for the onset of mold or similar
fungal problems. In the United States, these fungal problems tend to be the same as those for
grain sorghum and usually are treated on an as-needed basis. A fungicidal seed treatment is
especially important for non-shattering varieties, because the planted seeds are slower to emerge
than the shattering varieties. Since the seeds for these varieties spend more time in the soil before
germination, they need more protection from fungal pathogens.

Weeds Sesame plants are poor competitors against weeds. Select fields with low weed densities
and cultivate sesame fields early and as close to the rows as possible. Shallow cultivation is
recommended, because the fine, fibrous sesame roots grow close to the surface and are easily
damaged. Cultivate only as necessary to control weeds.

43
Harvesting Given the potential of fall rains in many regions, it is probably best to plan on timely
harvest of the crop. Sesame harvest is usually begun about 90 to 150 days after planting. To
obtain high-quality seeds, the crop must be harvested before the first killing frost. Sesame seed is
easily threshed. It can be combined using an all-crop reel head or a row crop header, such as a
soybean row header. Screens with 1/8 inch round perforations are appropriate for this seed size.
Since the seed is small, holes in combines or trucks may need to be sealed with duct tape. Sesame
seed is also relatively delicate. Seed damage during harvesting can affect seed viability, and
storage and oil quality. To minimize seed damage and loss, non-shattering types can be combined
at low cylinder speed (450-500 rpm) or about half of that required for cereals. Shattering and non-
shattering types of sesame require different harvesting techniques. Mechanical harvesting is more
successful with varieties that have minimal branching and a height from the soil surface to the
first seed pod of about 12 inches. Late-season rainfall prolongs growth and increases shattering
loss. Wind can also cause shattering at harvest.

Storage Since sesame is a small flat seed, it is difficult to move much air through it in a storage
bin. Therefore, the seeds need to be harvested as dry as possible and stored at 6 percent moisture
or less. If the seed is too moist, it can quickly heat up and become rancid.

Processing After harvesting, the seeds are cleaned and hulled. The seeds pass through an air
separation stage to remove any foreign particles, about 10 percent of this "cleaned natural seed"
moves directly into food use as whole seed to be blended into flour for baked goods. Next, a
combination of water and friction work together as the seeds are passed against the chamber of
the hulling machine to separate the hull from the seeds. This dust-free de-hulled seed makes up 30
percent of domestic production and has 99.97 percent purity for the baked goods market. Once the
seeds have been hulled, they are passed through an electronic colour-sorting machine that rejects
any discoloured seeds to ensure perfectly cooled sesame seeds. The oil is often blended with other
vegetable oils for salads and other food uses. Sesame oil should be kept refrigerated. Sesame
seeds can become rancid if exposed to prolonged heat. If properly stored, the packed seeds have a
2-year shelf life with little reduction in quality.

44
Markets and Economics Sesame yields in test plots average 1,000 to 1,500 pounds per hectare,
though as much as 2,300 pounds per acre have been produced on irrigated fields. Commercial
yields are usually lower. The introduction of the non-shattering characteristic into high-yielding,
shattering varieties carried with it a reduction in yield and/or seed quality. Sesame benefits from
both a high price and a strong domestic market, with organic sesame commanding a significantly
higher price. This high price; roughly double that of sunflowers or soybeans is offset by the
relatively low yields of sesame. For Western producers, production costs are modest, being equal
to or less than soybeans or sorghum. Seed costs are similar to conventional crops. The cost
savings from not using herbicides (none are labelled for sesame) is partially offset by extra tillage
for weed control. Fertilizer costs are primarily for nitrogen, which can be met through organic
sources. Sesaco provides their own varieties (available only to contract producers) and does the
processing and marketing of the seed and oil. Producers potentially can market their sesame
directly to food brokers or processors but may have trouble obtaining high-quality varieties to
plant, since Sesaco is the only group actively developing and distributing seed in the United
States. Independent food brokers may be unwilling to contract for sesame in advance of planting,
and planting sesame without a contract is risky for growers. The only two sesame buyers in the
United States are Sesaco and Arrowhead Mills, Hereford, Texas (organic only). Plant breeders
have demonstrated that the antioxidant content in sesame may be enhanced through traditional
crop-breeding techniques. Sesame breeding programs in the United States, Korea, China,
Thailand and Japan now consider the antioxidant level as a primary selection factor in the
development of future varieties.

Export and Import International demand for sesame continues to increase every year. The
worlds traded sesame seed recently surpassed one million tons per year and was valued at roughly
$850 million. In the last 15 years, world trade in sesame has increased by nearly 80 percent. The
United States imports more sesame than it grows. in 2010, the United States imported sesame
seed valued at $69.9 million, relatively unchanged from 2009. Nearly 60 percent of the sesame
was from India, followed by Guatemala. The seed is mainly used for baked and other food
products, although non-food cosmetic applications are increasing. The United States did export
both sesame seed and sesame oil in 2010. Sesame seed valued at more than $6.1 million, a 98
percent jump from 2009, was exported, mainly to Japan. The value of exported sesame oil also
45
grew, by 21 percent, to $2.8 million. Canada was the largest buyer, followed by Netherlands,
Turkey and France. Japan is the world’s largest importer of sesame seed. Sesame oil, particularly
from roasted seed, is an important component of Japanese cooking and traditionally this is the
principal use of the seed. China is the second largest importer of sesame, mostly oil-grade sesame.
(The country exports food-grade sesame.) To ensure a top price for the commodity and enhance
the market share through exports, particularly in Asia, product image (quality perception) is
important. Most importers who supply ingredient distributors and oil processors only want to
purchase scientifically treated, properly cleaned, washed, dried, colour-sorted, size-graded and
impurity-free seeds of given minimum oil content (not less than 40 percent) packed according to
international standards. Usually, only seed meeting these criteria may be exported from a
producing country.

7.6 WORLD EXPORT SESAME

The value of world sesame seed import more than doubled during the last five years, from 868.8
million USD in 2005 to 1.8 billion USD in 2008. During the same period, the volume of world
import only increased from 1.05 million ton in 2005 to 1.07 million ton in 2009. This shows that
the increase in the value of total world import of sesame seed over the years is mainly the result of
price increase. Average annual price of sesame seed has increased from $893/ton in 2005 to
$1,311/ton in 2009. In 2009, China overtook Japan as the largest importer of sesame seed by
purchasing 311,271 ton worth 387.5 million USD. Japan (128,917 ton worth 181.9 million USD)
and Turkey (91,954 ton worth 128.4 million USD) were the second and third largest import
markets in the world.

46
 7.7 Area, yield and revenue from Farms
Table16 Area, yield and revenue from Coffee

Description Production Years

Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

Farm size/Ha 100 167 234 300 300 300 300 300 300 300

Yield in tones/ Ha - - - 5 6 7 8 9 9 8

Total Production in tones - - - 1500 1800 2100 2400 2700 2700 2400

Price per tones - - - 60000 60000 60000 65000 65000 70000 70000

Total Average Revenue Estimation - - -

90,000,000 108,000,000 126,000,000 156,000,000 175,500,000 189,000,000 168,000,000

47
 7.8 AREA, YIELD AND REVENUE FROM FARMS

Table: 10 Area, yield and revenue from Mung Beans

Year Total Yield/ ha (qt) Total production (qt) Price /qt Revenues from sales
area
1 133 40
5320 3500 18,620,000
2 222 40
8880 3500 31,080,000
3 311 40
12440 3500 43,540,000
4 400 40 16000 3500 56,000,000

Subtotal 400 149,240,000

Table: 11 Area, yield and revenue from Soybeans

Year Total area Yield/ ha (qt) Total production (qt) Price /qt Revenues
from sales
1 67 36
2412 3500 8,442,000
2 111 36
3996 3500 13,986,000
3 156 36
5616 3500 19,656,000
4 200 36 7200 3500 25,200,000
Subtotal 200 67,284,000

48
Table: 12 Area, yield and revenue from Rice

Year Total area Yield/ ha (qt) Total production (qt) Price /qt Revenues
from sales
1 100 56
5600 3400 19,040,000
2 167 56
9352 3400 31,796,800
3 234 56
13104 3400 44,553,600
4 300 56 16800 3400 57,120,000
Subtotal 300 152,510,400

Table: 13 Area, yield and revenue from Sesame

Year Total area Yield/ ha (qt) Total production (qt) Price /qt Revenues
from sales
1 67 12 804 4000 3216000
2 111 12 1332 4000 5328000
3 156 12 1872 4000 7488000
4 200 12 2400 4000 9600000

Sub total 200 25,632,000

49
 TABLE 14 SUMMARIES OF REVENUES OF THE PROJECT
Year Revenues from sales of Total annual
Coffee Mung Beans Soybeans Rise Sesame revenues
2016 -
18,620,000 8,442,000 19,040,000 3,216,000 49,318,000
2017 -
31,080,000 13,986,000 31,796,800 5,328,000 82,190,800
2018 -
43,540,000 19,656,000 44,553,600 7,488,000 115,237,600
2019 90,000,000
56,000,000 25,200,000 57,120,000 9,600,000 237,920,000
2020 108,000,000
56,000,000 25,200,000 57,120,000 9,600,000 255,920,000
2021 126,000,000
56,000,000 25,200,000 57,120,000 9,600,000 273,920,000
2022 156,000,000
56,000,000 25,200,000 57,120,000 9,600,000 303,920,000
2023 175,500,000
56,000,000 25,200,000 57,120,000 9,600,000 323,420,000
2024 189,000,000
56,000,000 25,200,000 57,120,000 9,600,000 336,920,000
2025 168,000,000
56,000,000 25,200,000 57,120,000 9,600,000 315,920,000
Grand Total
1,012,500,000 485,240,000 218,484,000 495,230,400 83,232,000 2,294,686,400

50
 8. Financial Budget of the Investment
The entire investment cost of the project including operational capital is expected at the birr
75,000,000,000.00 / Seventy Five million birr/, out of which Farm Machineries equipments and
office fixtures (capital investment) constitutes provide to the total investment and amounting to
birr 38,250,000.00 while the outstanding goes to land lease, seed cost, land cleaning,
preproduction, and operational capital.
8.1 FIXED ASSET REQUIREMENTS
Fixed (Capital) costs are expenditure on Building and Civil Work; Vehicle and Machinery; and
pre-operation cost. The total fixed costs of the project are outlined. The costs of Machinery,
vehicles, Equipment and buildings the machinery and equipment and building cost are shown
below. This total fixed cost is estimated at 51% the total investment cost/ 38,250,000.00 birr.
TABLE 18 CAPITAL INVESTMENTS (FIXED ASSET REQUIREMENTS)
Fixed Asset description Model/ Quantity Cost Remarks
Type Per unit Total

1. Land development preparation Hectares 1500 3500 5,250,000.00

 Surveying
 Clearing
 Levelling
Sub Total
5,250,000.00

5x20m 4 1,000,000 4,000,000.00

2. Building construction
 Staff residence 6x30m 4 500,000 2,000,000.00
 Workers dormitory 5x20m 2 500,000.00 1,000,000.00
 Office 2 1,000,000.0
 Production store 20x30m 0 2,000,000.00
 Cooking Room 6x12m 4 50,000.00 200,000.00
Sub Total 9,200,000.00

3. Farm Machinery and equipment

Massive F. 4 1,300,000 5,200,000.00
 Tractors 110 HP
 Disc Plough 4 Bottom Nard 4 250,000 1,000,000.00
 Disc harrow 28 disc DLA 4 100,000 400,000.00
 Ditcher Mounted 4 50,000 200,000.00

4 tone 4 40,000 160,000.00

51
 3000 LT. 4 35,000 140.000.00
Elliston 4 50,000 200,000.00
5 row 3 30,000 90,000.00
6 row 3 100,000 300,000.00
3 shank 4 25,000 100,000.00
SR-420 4 25,000 100,000.00
Nullity type 3 100,000 300,000.00
Habana 3 40,000 120,000.00

8,170,000.00
4. Plant and Machinery
 Electric line installation 2 515750 1,031,500.00
 Grain mill 3 50,000 150,000.00
 Weighting scale 10 50,000 500,000.00
Sub Total 1,681,500.00

5. Vehicles
 Heavy duty truck 2
- 2,000,000 4,000,000.00
 Pick up
4WD 1 800,000 800,000.00
 Toyota
4WD 1 800,000 800,000.00
 Isuzu
- 1 1,000,000 1,000,000
Sub Total
6,600,000.00

6. Office furniture
Harm chars 100 500 50,000.00
 Chairs
 Tables1 S. pedestal 5 5,000 25,000.00
 Tables2
D. pedestal 5 7,000 35,000.00
 Computer & Printer
Set 4 30,000 120,000.00
 Shelf
 Safe box Wooden 15 1000 15,000.00
Digital 20 1000 20,000.00

Sub Total
265,000.00
Total 30,325,000.00

52
Operating Cost 7,083,500.00
Grand Total 37,408,500.00

8.1.1 SUMMARY OF FIXED COSTS

Table16 fixed costs summarized
Description Cost required
Building and civil works 9,231,500.00
Machines and equipments 21,935,000.00
Pre operating cost 7,083,500.00
Grand total 38,250,000.00

8.2 VARIABLE COST / OPERATING COSTS

Changeable cost of the farm is estimated Birr 49% = 36,675,000.00 birr. The major components
of the production cost are farm input, running cost and labour and salary cost.
Farm inputs The farm utilizes enhanced seeds a combination of fertilizers, pesticides and
fungicides as inputs. All farm inputs needed for the project could be purchased from local markets
and overseas suppliers. The required farm inputs and associated costs are detailed below:
8.2.1 TOTAL FINANCIAL REQUIREMENT
8.2.1.1 Buildings and Repair
The stores of different sizes will be shall be constructed to house the products of O and FB
Construction Machinery Rental Private Limited Company Private Limited Compony products
which include the Mung Beans, Soybean Sesame, Rice, Offices and dormitories for workers shall
also be constructed with cheap local materials.

53
Table17 Required Inputs and Cost for Mung Beans, Soybean Sesame and Rice Farming
Input Items Amount in qt. / lit or kg/no Unit price Total Cost Birr

Coffee seed 100kg 150.00 15,000.00

Mung Beans seed 80qt 4,000.00 320,000.00

Soya Bean seed 30qt 3,000.00 90,000.00

Rice Seed 240qt 3,000.00 720,000.00

Sesame Seeds 20qt 5.000.00 100,000.00

Fertilizers/Dap 500qt 2000.00 1,000,000.00

Fertilizer/ urea 600qt 1800.00 1,080,000.00

Pesticides 200kg 200.00 40,000.00

Sub Total 3,365,000.00

TABLE18 FUEL AND OIL COSTS

Input Items Required Unit cost/birr/ Total cost

Fuel 60,000 litter 20.00 1,200,000.00

Oils and grease 250,kg 200.00 50,000.00

Sub Total 1,250,000.00

Grand Total 4,615,000.00

54
 9. FINANCIAL AND ECONOMIC ANALYSIS

Table: 19 Assumptions used in the financial evaluations of O and FB Construction Machinery Rental

Private Limited Company

Construction period 2 year

Source of finance 30 % equity 70 % loan

Loan duration 10 years

Tax holidays 6 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

55
9.1 BANK LOAN REPAYMENT SCHEDULE

TABLE 20 BANK LOAN REPAYMENT SCHEDULE

Loan Duration: 10 Years

Number of Payments: 60

Interest Rate: 9.5%

Monthly Payment: Birr 437,500.00

No Payment Total Amount Principle Interest Total

. Year Bank Loan Payment Payable Payment

0 2016 52,500,000
1 2017 47,250,000 5,250,000 4987500 10,237,500
2 2018 42,000,000 5,250,000 4488750 9,738,750
3 2019 36,750,000 5,250,000 3990000 9,240,000
4 2020 31,500,000 5,250,000 3491250 8,741,250
5 2021 26,250,000 5,250,000 2992500 8,242,500
6 2022 21,000,000 5,250,000 2493750 7,743,750
7 2023 15,750,000 5,250,000 1995000 7,245,000
8 2024 10,500,000 5,250,000 1496250 6,746,250
9 2025 5,250,000 5,250,000 997500 6,247,500
10 2026 0 5,250,000 498750 5,748,750

Note: the proceed is assumed to be granted with six months elegance period; hence a
slight variation in the loan schedule is predictable

56
9.2 FINANCIAL BUDGET OF THE INVESTMENT
Based on the expected profits declaration, the project will make profit commencement from first year of operation.
Annual government tax will also grow during the life of the project.
Table 21 Predictable Income Statement for the Next five Years

Description Y-0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10

Sales Income 49,318,000 82,190,800 115,237,600 237,920,000 255,920,000 273,920,000 303,920,000 323,420,000 336,920,000 315,920,000
 
Expenses
-  - - -  -  - 
Fixed Cost
52,500,000. 0.00
Variable Costs
22,500,000. 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00

Depreciation
  5,250,000.00 4,725,000.00 4,200,000.00 3,675,000.00 3,150,000.00 2625000 2100000 1575000 1050000 525000

Maintenance
  2,625,000.00 2,625,000.00 2,625,000.00 2,625,000.00 2,625,000.00 2,625,000.00 2,625,000.00 2625000 2625000 2625000
Total Expense
75,000,000. 30,375,000.00 29,850,000.00 29,325,000.00 28,800,000.00 28,275,000.00 27,750,000.00 27,225,000.00 26,700,000.00 26,175,000.00 25,650,000.00
Gross Profit
  18943000 52340800 85912600 209120000 227645000 246170000 276695000 296720000 310745000 290270000
Tax
  3,788,600.00 10,468,160.00 17,182,520.00 41,824,000.00 45,529,000.00 49,234,000.00 55,339,000.00 59,344,000.00 62,149,000.00 58,054,000.00
Net Profit
  15,154,400 41,872,640 68,730,080 167,296,000 182,116,000 196,936,000 221,356,000 237,376,000 248,596,000 232,216,000

57
 10. PLAN OF OPERATION

Table 22 Plane Operation

Sr. No. Type of operation Jun Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

1 Construction & Building X X X X

2 Land Development

3 Frost cleaning X X

4 Tree collection X X

5 Farm plot setting X X

6 Sob soiling X X X X

37 Field work operation

8 Ploughing X X X

9 Disking first X

10 Disking second X

11 Input transfer X X

12 Riding X X

13 Planting operation X

14 Sowing X X

15 Thinning X X

16 Transplanting X

17 Fertilizer X

18 Pest X X X X X

19 Ditching X X

20 Cultivation X X

21 Insecticide X X X

22 Transporting yield X X

23 Harvesting operation

24 Maize harvesting X X X

25 Maize threshing X X

26 Weighing & storing crops X X X

27 Marketing X X X

58
10.1 SOURCES OF TECHNOLOGY
The machinery and equipment required by the envisaged farm could be supplied by Rise
Engineering, Nazareth Tractor Assembly Plant, and TETRACO. P.L.C. etc... Whereas seeds,
fertilizers and chemicals could be supplied by a number of organizations like Agricultural Input
Supply Enterprise, Ambassel, Dinsho, Wondo, Jimma etc.
11. ORGANIZATIONAL STRUCTURE AND MANAGEMENT
The planned project will have suitable management system through which the project could
operate smoothly. At the top of the ladder there will be a general manager that will control and
supervise the overall activities of the project. The general manager is appointed by owner of the
company, O and FB Construction Machinery Rental Private Limited Company’s. Under the
general manager, there are an operation Manager who will be in charge for the remaining work
force and the even operation of the farm. Depending on the activities to undertake the project
requires both skilled and unskilled labours. Employee salary cost is projected with a 5% annual
increment. The project will employ additional casual workers as required.
11.1 Organizational Structure

Chart 1. Organizational structure of O and FB Construction Machinery Rental Private Limited Company’s

11.2 MAN POWER REQUIREMENT AND ANNUAL SALARY COST

59
Table23 Manpower requirement and Annual cost of O and FB Construction Machinery Rental
Private Limited Company’s
N Experienc Monthly Annual
Position Qualification Quantity
o e Salary Salary(birr)
1 General Manager Bsc in Agronomist Min 2 year 1 8000 96,000.
Operation
2 Bsc in agriculture Min 2 year 2 6000 144,000.
manager
3 Cashier Certificate Min 1 year 2 2000 48,000.
4 Tractor operator 8th grade 2 3000 72,000.
5 Time keeper certificate- Min1 year 2 1500 36,000.
Assistant tractor Certificate
6 4 2000 96,000.
operator
7 Farm Manager Bsc in Agronomist Min 2 year 3 6000 216,000.
Quality
8 Bsc in agriculture Min 2 year 2 5000 120,000.
supervision
9 Adimn & Finance Bsc in
Min 3 year 2 5000 120,000.
Division head Management/

Guard X>4 14 1500 252,000.

Total Salary cost 34 1,200,000
2000/ 2000*40 21,600,000
Casual workers
day * 270 day .
21,600,000
Total labour cost   2000
.
22,800,000
Grand total
.

60
 TABLE: 24 SUMMARIES OF VARIABLE COSTS
Cost description Estimated Cost

Salary 1,200,000.00

Labour 21,600,000

Farm imputes/ seeds, fertilizers, pesticides, fungicides, oils and grease 4,615,000.00

In service Cost 9,335,000.00

Grand total
36,750,000.00

11.3 MANAGEMENT

The Organization team of O and FB Construction Machinery Rental Private Limited Company
will be comprised of a General Manager and sub managers responsible for the (Mugi Beans,
Soybean Sesame and Rice) sectors of the farming operation. 2000 labour forces will be used on
the farming site per day. The labour shall be used to accomplish field works such as site clearing,
harvesting, collecting products and so on. Permanent job requiring areas in the project may
include, store-men, and stock clerks; maintenance staff, truck drivers.

12. PROJECT MONITORING AND EVALUATION

Monitoring and evaluation system is designed to inform Project management wether execution is
going as planned and wether corrective achievement is required to adjust effecting plan.
In addition Monitoring and Evaluation system should make available verification of project of
outcomes and give explanation for project judgment allocations. As a result of suitable recording
of in sequence the organization of the farm can take remedial achievement and increase special
mechanisms without postponement and understand the project purpose.

61
The project will use the following factors for implementations Monitoring and Evaluation:
 Description of the problem for situation before the intervention
 Benchmarks for activities and immediate out puts
 Data collection on inputs, activities and immediate outputs
 Systematic reporting on provision of inputs
 Systematic reporting on provision of outputs
12.1 Elements of Results Monitoring
 Differentiate data to describe the problem or state before the involvement
 Identify for outcomes
 Data gathering on outputs how and whether they contribute toward success of outcomes
 Systematic reporting with more qualitative and quantitative information on the progress to
words outcomes
In attempt of doing all these actions the project may complete midterm and end objective which is
to be evaluated at its midterm and conclusion phase.

62
13. ANNEX
ANNEX1 REQUIRED INPUTS AND COST FOR SEEDS
Input Items Amount in qt. / lit or kg/no Unit price Total Cost Birr

Coffee seed 100kg 150.00 15,000.00

Mung Beans seed 80qt 4,000.00 320,000.00

Soya Bean seed 30qt 3,000.00 90,000.00

Rice Seed 240qt 3,000.00 720,000.00

Sesame Seeds 20qt 5.000.00 100,000.00

Fertilizers/Dap 500qt 2000.00 1,000,000.00

Fertilizer/ urea 600qt 1800.00 1,080,000.00

Pesticides 200kg 200.00 40,000.00

Sub Total 3,365,000.00

63
 ANNEX2 Fuel and oil costs

Input Items Required Unit cost/birr/ Total cost

Fuel 60,000 litter 20.00 1,200,000.00

Oils and grease 250,kg 200.00 50,000.00

Sub Total 1,250,000.00

Grand Total 4,615,000.00

64
 ANNEX3 FIXED ASSET COSTS

Monthly Annual
No Position Qualification Experience Quantity
Salary Salary(birr)
Bsc in
1 General Manager Min 2 year 1 8000 96,000.
Agronomist
Bsc in
2 Operation manager Min 2 year 2 6000 144,000.
agriculture
3 Cashier Certificate Min 1 year 2 2000 48,000.
4 Tractor operator 8th grade 2 3000 72,000.
5 Time keeper certificate- Min1 year 2 1500 36,000.
Assistant tractor Certificate
6 4 2000 96,000.
operator
Bsc in
7 Farm Manager Min 2 year 3 6000 216,000.
Agronomist
Bsc in
8 Quality supervision Min 2 year 2 5000 120,000.
agriculture
9 Adimn & Finance Bsc in
Min 3 year 2 5000 120,000.
Division head Management/

Guard X>4 14 1500 252,000.

Total Salary cost 34 1,200,000
2000*40
Casual workers 2000/day * 270 21,600,000.
day
Total labour cost   2000 21,600,000.
Grand total 22,800,000.

65