1.

EXECUTIVE SUMMARY

Project Initiator: Moges Yimer Beyene coffee producer and Exporter. Coffee
plantation development project is initiated by the Moges Yimer Beyene coffee
producer and Exporter.
The purpose of the newly initiated project will require 1000 hectares of land for the
purpose of coffee development just as Moges Yimer Beyene coffee producer and
Exporter coffee project farming.
Project cost: The total estimated cost of the coffee and spices project is 39,838,130.00
birr. 30% of the project cost (11,951,439.00 birr) shall be covered by the owner and
the rest 70% (27,886,691.00) birr shall be secured from bank loan.
Land Requirement: The planned development project requires 1000 hectares of land
for its project. The land shall be used for the development of coffee for the purpose of
export.
Work opportunities: The planned project shall provide work opportunities for 51
permanent and for 400 temporary workers – a total of 451 employees.

1
 2. INTRODUCTION

Ethiopia is the third largest country in Africa with a total area of about 113 million
hectares and with a total population of about 100 million, of the total land mass, about
85% of the population lives in rural areas while the remaining 15% dwell in urban
centers. The labor force, between 15-65 years of age, represents about 50% of the
total population. About 50% of the land area is regarded to be potentially suitable for
agricultural production. However, only less than 15% this potential area has been
cultivated. Of the cultivated area, more than 95% is under smallholder farming and
the rest is under commercial farms. Thus, there is a reason to believe that Ethiopia is
endowed with vast and potential of agricultural development.
Agriculture dominates the Ethiopian economy accounting for about 50% of GDP,
85% of the employment and about 90% of the export reaming. Of the agricultural
GDP crop production accounts for about 60% and livestock accounts for about 30%.
The most common crops produced in Ethiopia are Wheat, Barley, Maize, Teff,
Sorghum, Pulses, Oil crops, Fruits, vegetables and coffee. As to crop production,
despite its contribution and the countries natural endowment productivity of the sector
is by far below potential. This is because lack of the employment modern agricultural
implements, in addition to this, importance of private sector that can recognize a
coordinated roll of all factors of production (labor, capital, entrepreneur ability etc)
was not given a room to take part in the development process during the past regimes.
To overcome the problem related to produce good quality coffee bean and sesame
grain that satisfy the customer’s interest, efforts should be made towards developing
the agricultural sector. This needs a shift from traditional and backward method of
production to a new and scientific method of production system that requires a
coordinated roll of all factors of production. In this process, it is the private sectors
should be pushed and encouraged by the government through adopting a favorable
economic policy that allows the sector to play active role in the development process
without capital ceiling. In recognition of the important of the agricultural sector and

2
understanding the major reasons behind the low state of the development of the
country, the Ethiopian government has emerged with free market economic strategy
and the adoption of an economic policy, which acknowledges the role, and importance
of the private sectors investment. This economic policy is promulgated with various
initiatives for those who want to invest their resources and knowledge in any
profitable sector. Initiated by this favorable conditions, the promoter of this project
Moges Yimer Beyene coffee producer and Exportercoffee plantation and production
in Bench Sheko Zone ,Guraferda Woreda,Alenga Kebele. This business plan tries to
explain the necessary information like description of the area, project technical
consideration, total investment capital, source of fund and other basic economic
points relevant to the project. Detail information on each point is given in the
subsequent pages.

3
 3. OBJECTIVES

3.1 GENERAL OBJECTIVE

To established and produce quality Arabica coffee for export market
3.2 SPECIFIC OBJECTIVES OF THE PROJECT
The Moges Yimer Beyene coffee producer and Exporter coffee plantation project has
identified several objectives for the business:

Become a leading supplier of Arabica coffee for the world market.

Reach the point of sustainable profitability.

To create employment opportunity for the people of project area,

To introduce and promote modern farming system in the area,

4
 4. VISION, MISSION OF THE PROJECT

4.1 Vision
The Project’s vision is ‘to be the quality coffee producer farm preference in Ethiopia.

4.2 Mission

It is the Moges Yimer Beyene coffee producer and Exporter coffee plantation
development mission to become the leading provider of Arabica coffee to the world
market. This will be accomplished by providing quality product at fair prices while
exceeding customer's expectations.

4.3 PROMOTER BACKGROUND

Moges Yimer Beyene coffee grower production & exporter one of those coffee and
spice producer. The owner of the farm/ AtoMogesYimer / is resident of Addis Ababa
Region an Ethiopian. Although the promoter has good experience in agriculture, He
has a good deal of experience in project management. Moges’s coffee&spice grower,
producer & exporter was established 2001.Founder Company MogesYimer is 74
years old & has more than 40 years of coffee production &business experience.
The project is located in south west Ethiopia peoples regional state; Bench-sheko
Zone. It is found at a distance of about 606 KM from Addis Ababa and 46 km from
Bench-sheko Zone capital Mizan Aman Town. The total land to be developed by the
developer is623 ha. The land is provided by the government for a lease period of 45
years. The road from Addis Ababa to Mizan Aman (about 560km) is asphalt. The
project is located about 46 km from Mizan Aman. The road condition is asphalt up to
the woreda capital.
The project area is found at an average altitude of 1,200 meters above sea level and
over 95% of the land shows about 3-5% slope gradient indicating a well-drained
forest nature soil.
The climatic conditions in the project area exhibit the type of moist Kolla Agro-

5
ecological zone. Like most of the areas in South-west Ethiopia the area covers by
forest.It has a longer rainy season/1750-2000ml/ as compared to those in other area of
the country.
The company does have own coffee estate. His company has total 1004 ha of coffee
land in south west Ethiopia peoples regional state, Bench sheko zone,Gurafarda
district Wojemita&Fajeka rural village in Ethiopia. It has registered & licensed by
Ethiopian government as coffee grower & exporter. It produces Arabica coffee under
shade. The coffee grown in his farm washed Bebeka & sun dried Jimma. Our farm in
Wojemita, 1004 ha of land found in altitude 1100-1300 M.asl and produce organic
&Utzcertified coffee. The company farm in Fajeka 55 ha of land found in altitude
1100-1350 M asl& produce conventional sundried coffee. The company own 1 pulper
1 huller machineries’ &4 coffee product ware houses.
Organic certified coffee ,Organic & Utz certified coffee, Conventional coffees with
traceability ,
Total production 500 tons ,Total area of cultivation 1059 ha ,
Annual certified organic coffee production from Wojemita farm 455 tons of which
273 tons washed &182 tons sundried natural ,Annual conventional coffee production
from Fajeka farm 45 tons sundried natural coffee. African fine coffee
association/AFCA/,BCSOKO-Guarantee/GMBH/ Utz certified
4.4 THE PROJECT AREA
The 1000 hectare of land planned for the expansion project will be secured from in
South west Regional State in Bench Sheko Zone, Guraferda Woreda, Alenga kebele.
As the vast area of land site is considered neither as a forest area nor as farmers farm
land theowner expects will the zonal trade and industry department hand him the
requested 1000 hectares from this reserved area.

4.5 .FEASIBILITY STUDY

The ensure the project makes profit and grow sustainably to benefit all stakeholders,
before deciding to engage in the investment, Moges Yimer Beyene coffee producer
and Exporter coffee project farming. undertakes feasibility study of the planned

6
project such as availability of man power, availability of land including expansion
sites, accesses to road, electricity, telephone, and so on.

4.6 AVAILABILITY OF LAND

It is expected that Moges Yimer Beyene coffee producer and Exporter coffee project
farming site so far considered neither as a forest area nor as farmers farm land. The
altitude of this particular project shall range between 1150 – 1200 meters above sea
level, the temperature of the project area to fall between 18 oc to 28oc and the rainfall
to be adequate for coffee plantation, the project area to have fertile, friable, loamy soil
with more than 1.5m depth, The topsoil to be predominantly dark brownish in color
with a slightly sour ph.

4.7 AVAILABILITY OF MAN POWER

The farm requires both direct and indirect man power. The direct manpower, in
addition to the direct farm labor, requires head, farm management process, farm
supervisors, and other agricultural professional as well as experienced farm clerks. As
Bench Sheko is one of the few zones in the region that is known to have cheap labor,
the farm will utilize existing manpower in the zone. The presence of MizanTepi
University will provides the project owner to recruit skilled labor and professional
required to run the project.

5. MARKET OPPORTUNITIES & SUPPLY AND DEMAND

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

7
years 2000/01 to 2011/12 it increased to 7.875 million tons.

Table1. World Coffee Production and Consumption

Quantity (000 tons)
Demand/
Years Production Consumption The Gap
2000/01 6,780 6,718 62
2001/02 6,449 6,796 -347
2002/03 7,327 6,917 410
2003/04 6,251 7,087 -836
2004/05 6,927 7,348 -421
2005/06 6,657 7,479 -822
2006/07 7,709 7,873 -164
2007/08 7,126 8,123 -997
2008/09 7,645 8,284 -639
2009/10 7,271 8,101 -830
2010/11 8,063 8,163 -100
2011/12 7,875 8,086 -211
Average 7,173 7,581 -408
Source: International Trade centre,
www.tradeforum.org&www.interacen.org/eshop/welcome, Last Updated on: The
ITC’s Magazine and Publications & Products. Geneva, Switzerland
5.1 Consumption
About one quarter of world production is consumed in producing countries and the
vast majority of export goes to developed countries. Producing countries such as
Latin America coffee producing countries consume about 72%, Asia and Pacific 18%
and Africa consumes about 10% of the total consumption of coffee by producing
countries. In Ethiopia, half of the coffee is consumed by Ethiopians and the country
leads the continent in domestic consumption. Out of the importing countries
consumption, 24% are consumed by the USA, 46% by Western Europe, 8% by

8
Eastern Europe and Asia accounts about 14%. Although the top five consumers are
the USA, Brazil, Germany, Japan and France whiles the Nordic countries have the
world’s highest coffee consumption per capita.
5.2 Demand and Supply Gap
As coffee is an internationally traded commodity, the analysis of key marketing
variables would not be meaningful unless the global situation is considered. For this
reason, the three most important marketing variables – supply, demand, and prices for
coffee will be analyzed in line with their corresponding situation at global market.
Current experience by importing countries is such that their annual import is the
summation of coffee supplied by different producing countries in the world. There is
no single supplier of coffee committed to supply for a given importing country. In
similar manner, there is no single importer which exclusively import from a specified
supplier. For this reason, it would be difficult to actually determine the demand for a
specific importing country from a given supplying country. However, it is possible to
show the general demand trend of Ethiopian coffee by focusing on the world situation
– world aggregate.
Aggregate world demand is the summation of - coffee consumption by producing
countries & by importing countries in the world. As it is shown in the table above,
there is a huge gap b/n world demand and world supply for coffee. Except in the years
2000 & 2003, the negative sign indicated in the other 8 years would show the demand
deficit in those respective years. This would imply that the increase in annual
production is driven by annual increase in effective demand by importing countries.
Considering the demand for Ethiopian Coffee, the increase in demand by those 8
major buyers of Ethiopian coffee, which totally absorb about 52% of Ethiopian
coffee, has been increasing by a higher rate than the increase in production by the
former. While annual production growth, on average, in Ethiopia is 5.16%, the
demand for Ethiopian major buyers has increased up to 20%, in the past 10 years.
According to the data provided by ICO (International Coffee Organization), annual
import for USA has increased by 20%, German by 15%, France, Italy, and Japan by

9
6%, and Canada by 3%. Considering trade statistics of the past five years, one can see
that more than 41% of the world export goes only to three importing countries in the
world: USA 20%, German 14.5%, and Japan 6.5%. Moreover, recent studies in the
area reveal that Ethiopian coffee has never suffered from lack of buyer in the world
market. What is supplied to the world market is fully absorbed by importing countries
provided there is no quality problem. Thus, provided the right quality offered and
prices are attractive, there are plenty of opportunities for getting more demand in the
world market (in both established and new markets).
The emergence of new coffee consumers is another factor affecting the world demand
for coffee. Recent information from ICO report depicts that China has decided to
significantly shift from tea consumption towards coffee. There are also other Asian
countries following the same trend. This is the resultant effect of aggressive
promotion made by ICO since few years in the past.
The increase in coffee consumption by producing countries is another factor affecting
demand for coffee, for aggregate demand is compared against aggregate supply by
world producers. India (the second largest in population in the world) has declared to
double coffee consumption in the coming 5-10 years, ICO report June, 2010.
Ethiopia, through its consumption about 44% of the total annual production, is
categorized among the largest coffee drinking countries in the world – 3rd in Africa
and 15th in the world as far as coffee producing countries are concerned. This could
be regarded as an opportunity with regard to absorbing such a significant proportion
of its production; serves as a shock absorber particularly in case world demand for
coffee fails because of unknown reasons.
5.3 Target Market Identified for this Project
Currently, there are more than 50 importers of Ethiopian coffee in the world. Out of
the these importing countries, only 8 are known to be major buyers, namely; U.S.A.,
Italy, France, Belgium, Germany, Saudi Arabia, Japan, and Sudan. On average, these
countries import about 52% of total Ethiopian coffee exports. As it is the case
elsewhere, the major importers of Ethiopian coffee has increased their annual import

10
from 1% up to 20% over those years ranging from 2002-2009.
Since 2005 coffee prices have been increasing and reached the highest in a decade. As
consumers in India and China develop a taste for the drink and the demand in East
Europe, Russia and Brazil increased, prices are likely to keep rising. Moreover,
something new is happening in developed markets. Europeans, Americans and
Japanese are switching to higher-quality coffee. Discerning consumers now demand
authenticity: they want stories about where their coffee beans come from. Therefore,
the best coffees will increasingly be differentiated, like fine wines and spirits, and sold
at previously unthinkable prices. Currently, the world is moving from instant-coffee
powder to luxury beans. Gourmets and specialist roasters have pushed up
expectations. Governments, activists and “ethical” coffee suppliers have worked to
get higher prices. All this is good news for coffee farmers in Ethiopia. Altitude,
climate, soil and genetic diversity give the country an inherent advantage in quality as
compared to lower-grade Latin American coffee. About 90 percent of Ethiopian coffee
production is premium or organic coffee. An agreement signed last year between
Starbucks, the world's biggest coffee chain, and the Ethiopian government has been
touted as a big step forward. As a result, commercial coffee farms would gain a lot
from these opportunities. Sales of organic, fair trade, rain forest alliance, forest, and
other brand sales of natural and washed of Ethiopia is increasing.
The fact that a Specialty Coffee Association of America (SCAA); signing an
agreement with the Ethiopia Commodity Exchange (ECX), in June 2010 is an added
opportunity for specialty coffee producers in Ethiopia.
In addition to the major importers of Ethiopian coffee, through its other marketing
company in Australia (BEK Coffee International), the owner has established a new
market segment in Australia and South East Asia market with emphasis on Bench
Sheko Coffee.

11
 6. PROCESS OF COFFEE PRODUCTION

6.1 Land Development

The activities of land development include bush clearing; tree felling, chopping and
uprooting of stems roots. Trash removals, leveling, heaping and ridge constriction are
also parts of this activity.

6.2 Seedling Preparation

The nursery site of the farm is to be located at the centers of the planting fields; on a
flat areas and gentle slope not greater than 5%. It is planned to be in proximity where
permanent sources of water for irrigation is available. The project intends to purchase
CBD resistant, viable and healthy seeds from State Coffee Farms and Coffee Research
centers of EARI; and will establish nurseries with the best growing conditions to
produce vigorous and healthy seedlings. Seedlings will be raised in poly tube
methods.
Varietal Selection is the basic point to be considered before Seedling preparation. The
success of any modern coffee plantation highly depends on the kind of the variety.
Variety selection is just like working a good foundation for high story buildings.
Having recognized the importance of variety selection, the promoter has already
established a good relationship with – Bebeka Coffee Plantation, Office of
Agriculture, and Jimma National Coffee Research Center.
The varieties selected for this project will be based on the recommendations of the
above institutions, and considering the ecological suitability of the area, CBD-
resistant and high quality coffee lines.
6.3 Coffee Planting
The coffee planting operation will spread over two months i.e. June and July.

12
6.4 Young Coffee Maintenance
The operations involved in the maintenance of young coffee up to 4 years after
planting are capping and pruning for multiple stem formation, infilling of dead trees,
slashing, weeding and mulching. In addition paths & tracks will have to be
maintained and trees guarded from destruction by wild animals certain amount of per
tree of compost, DAP and UREA are applied for fertilizing the young trees.
6.5 Mature coffee maintenance
The mature coffee trees i.e. 4 years old or more will need all the cultural practices of
young coffee except capping but more pruning. The additional coffee practice is
picking. Some activities like composting and weeding and mulching will require more
manpower than the young coffee trees.

6.6 Harvesting and Processing

The harvesting and processing operation comes first in the 4th year of operation, which
is expected, from September to December every year. The production from the project
is expected to be 100% sundried.

6.7 Thin piece picked

The entire crop is harvested at one time. This can either be done by machine or by
hand. In either case, all of the cherries are stripped off of the branch at one time.
6.8 Selectively preferred
Merely the ripe cherries are harvested and they are picked individual by hand. Pickers
rotate among the trees every 8-10 days, choosing only the cherries which are at the
peak of ripeness. Because this kind of harvest is labor intensive, and thus more costly,
it is used primarily to harvest the finer Arabica beans.
In Most coffee-growing countries, there is one major harvest a year; though in

13
countries like Colombia, where there are two flowerings a year, there is main and
secondary crop. A good picker averages approximately 100 to 200 pounds of coffee
cherry a day, which will produce 20 to 40 pounds of coffee beans. At the end of a day
of picking, each worker’s harvest is carefully weighed and each picker is paid on the
merit of his or her work. The day’s harvest is then combined and transported to the
dispensation stand.
6.9 IMMODERATION THE CHERRIES
Even as there are several coffee species, most coffee is made from the seed or bean of
either Coffee Arabica (Arabica coffee) or Coffee canephora (Robusta coffee). Arabica
trees normally produce berries 8-15 mm in diameter, and Robusta produce berries
approximately 10 mm in diameter. Commercially, Robusta is regarded as having
inferior quality to Arabica coffee and is used mainly as filler in instant coffee blends.
Coffee berries are picked when they ripen to bright deep red color, though there are a
few cultivars that ripen to a deep yellow color. The coffee or green bean lies within
the fruit, and is surrounded by the parchment membrane, pulp or mucilage and outer
skin. Coffee processing in the home is very time consuming. Small-scale processing
equipment is now available in Australia. Equipment is also available from the United
Kingdom at considerable expense. Processing involves six main steps outlined below.
6.10 The dry system
The age-old technique of dispensation coffee and is still used in many countries where
water resources are limited. The freshly picked cherries are simply spread out on huge
surface to dry in the sun. In order to prevent the cherries from spoiling, they are raked
and turned throughout the day, then covered at night, or if it rains, to prevent them
from getting wet. Depending on the weather, this process might continue for several
weeks for each batch of coffee. When the moisture content of the cherries drops to 11
percent, the dried cherries are moved to warehouses.

6.11 In Wet Procedure

In wet procedure dispensation, the Hull is detached from the coffee cherry after

14
harvesting and the bean is dried with only the parchment skin left on. There are
several actual steps involved. Firs the freshly harvested cherries are passed through a
pulping machine where the skin and pulp is separated from the bean. The pulp is
washed away with water. Usually to be dried and used as mulch. The beans are
separated by weight as they are conveyed through water channels, the lighter beans
floating to the top, while the heavier, ripe beans sink to the bottom. Next they are
passed through a series of rotating drums which separate them by size. After
separation, the beans are transported to large, water-filled fermentation tanks,
depending on a combination of factors such as the condition of the beans. The climate
and the altitude they will remain in these tanks for anywhere from 12 to 48 hours. The
purpose of this process is to remove the slick layer of mucilage (called the
parenchyma) that is still attached to the parchment; while resting in the tanks,
naturally occurring enzymes will cause this layer to dissolve. When fermentation is
complete the beans will feel rough, rather than slick, to the touch. At that precise
moment, the beans are rinsed by being sent through additional water channels. They
are then ready for drying.
6.12 Drying the beans
If the beans have been processed by the wet method, the pulped and fermented beans
must now be dried to approximately 11 percent moisture to properly prepare them for
storage. These beans, still encased inside the parchment envelope (the endocarp), can
be sun dried by spreading them on drying tables or floors, where they are turned
regularly. Or they can be machine dried in large tumblers, once dried these beans,
referred to as parchment coffee, and are warehoused in sisal or jute bags until they are
readied for sell abroad.

6.12.1 Milling the beans

Previous to it is exported parchment coffee is processed in the following manner;
Machines are used to remove the parchment layer from wet processed coffee.
6.12.2 Hulling

15
Equipments are used to remove the parchment layer (endocarp) from wet processed
coffee. Hulling dry processed coffee refers to removing the entire dried husk the
exocarp, Mesocarp & endocarp of the dried cherries.
6.12.3 Polishing
An optional process in which any silver that remains on the beans after hulling is
removed in a polishing machine.
While polished beans are considered superior to unpolished one, in reality there is
little difference between the two.
6.12.4 GRADING & SORTING
Previous to being exported, the coffee beans will be even more precisely sorted by
size and weight. They will also be closely evaluated for color flaws or other
imperfections.
Typically, the bean size is represented on a scale of 10 to 20. The number represents
the size of round holes diameter in terms of 1/64’s 0f an inch. A number 10 bean
would be the approximate size of a hole in a diameter of 10/64 of an inch and a
number 15 bean, 15/64 of an inch. Beans are sized by being passed throng passed
through a series of different size a series of different sized screens. They are also
sorted pneumatically by using an air jet to separate heavy from light beans. Next
defective beans are removed. Though this process can be accomplished by
sophisticated machines, in many countries, it is done by hand while the beans move
along an electronic conveyor belt. Beans of unsatisfactory size, color, or that are
otherwise unacceptable, are detached.
This strength includes over-fermented beans, those with insect damage or that are
unshelled. In many countries, this process is done both by machine and hand, insuring
that only the finest quality coffee beans are exported.
6.12.5 Tasting the coffee
By each stage of its production, coffee is repeatedly tested for quality and taste. This
process is referred to as cupping and usually takes place in a room specifically
designed to facilitate the process. First, the taster usually called the cupper carefully
evaluates the beans for their overall visual quality. The beans are then roasted in a

16
small laboratory roaster, immediately ground and infused in boiling water, the
temperature of which is carefully controlled. The cupper “noses” the brew to
experience its aroma an integral step in the evaluation of the coffee’s quality, After
letting the coffee rest for several minutes, the cupper “breaks the crust” by pushing
aside the grounds at the top of the cup. Again the coffee is nosed before the tasting
begins. To taste the coffee, the cupper “slurps” a spoonful with a quick inhalation. The
objective is to spray the coffee evenly over the cupper’s taste buds, and then “weigh”
it before spitting it out. Samples from a variety of batches and different beans are
tasted daily. Coffee is not only analyzed this way for their inherent characteristics and
flaws, but also for the purpose of blending different beans or determining the proper
roast. An expert cupper can taste hundreds of samples of coffee a day and still taste
the subtle differences connecting them.
6.13 EXPORTING THE BEANS
Milled beans, currently referred to as green coffee, are ready to be loaded onto
shipped for transport to the importing country. Green coffee is shipped in either jute or
sisal bags which are loaded into shipping containers, or it is bulk shipped inside
plastic-lined containers. About seven million tons of green coffee is produced world
each year.
6.14 Transporting processed clean coffee
At the initial stages the project will use rented vehicles to transport coffee from the
farm area to the local sites as well as processing plants. Transport to port is considered
to be through hiring external transport facilities.

17
 7. Land Use Plan and production capacity
The project under reference has a total area of 1000 ha for coffee plantation. Full
plantation of 1000 ha with coffee seedling.

Table1: Land use plan of the project

Developed /ha/ Year Total
1 2 3 4
1 Coffee 333 ha 555 ha 703 ha 1000 ha 1000 ha
Total 333 ha 555 ha 703 ha 1000 ha ha

7.1 Production capacity

As shown on table:1 above it is expected that Moges Yimer Beyene coffee producer
and Exporter coffee project farming is going to undertake is coffee and spices farming
for the purpose of supplying the product to foreign markets. The expected annual
yield to be collected from the farm is shown on table 7 below.
Table2 Annual production capacities for Moges Yimer Beyene coffee producer and
Exporter coffee project farming.
Year Description Land to be Expected Total annual expected
developed /ha/ yield /ha yield(qt)
YEAR 4 Coffee 333 8 2,664
YEAR 5 Coffee 555 8 4,440
YEAR 6 Coffee 703 10 7,030
YEAR 7 Coffee 1000 11 11,000
YEAR 8 Coffee 1000 11 11,000

18
7.2 ANNUAL REVENUES FROM PRODUCT SALES
As shown on Table : 1 above, at full scale development, it is assumed that for Moges
Yimer Beyene coffee producer and Exporter coffee project farming collects 11,000
quintals of coffee per year at full operation.
The expected annual revenue from the sales of coffee is shown on table 3 below.
Table: 3 Annual production capacity for DMD Import and Export coffee project
farming
Year Crop harvested Total annual Price/qt Revenue from sales
(qt) expected yield
YEAR 4 Coffee 2,664 17,500 46,620,000.00

YEAR 5 Coffee 4,440 17,500 77,700,000.00

YEAR 6 Coffee 7,030 17,500 123,025,000.00

YEAR 7 Coffee 11,000 17,500 192,500,000.00

YEAR 8 Coffee 11,000 17,500 192,500,000.00

19
7.3 Calendar for the main activities of the project
The main activities to be accomplished and the tentative schedules for implementing
the activities is shown below
Table: 4. Time table of the farm
Time table for implementing main activities of the
project

Description Starting date Complete date

Preparation and submission of Feb,2022 March,2022
business plan
Acquiring land Jan,2023 Feb ,2023
Development of infrastructure March ,2023 April ,2023
Land clearing, lowing, cultivation, and April , 2023 May,2023
harvesting
Production and sales May ,2027 -

20
 7.4 SITUATIONAL & SWOT ANALYSIS
Table 5: SWOT analysis and strategy development
STRENGTH STRATEGY

Sales & Marketing – Currently holds largest Maintain and grow market share by improving

market share from the export items marketing and promotions both within and out of

the country.

Location- suitable agro-ecology for coffee Provide quality products in large amount to attract

production and under construction of asphalt the coffee buyer

road national coffee market centers

Skills – knowledge, skills and experience of Train and develop staff to deliver superior quality

managers in running successful coffee farm of products and services

businesses previously

Financial – owners’ access 30%to financial Fund training, marketing

resources and strong cash flow from operations

WEAKNESS STRATEGY

Location – capped capacity due to limited Investigate the option of negotiating acquisition of

investment land. additional land from adjoining area.

OPPORTUNITY STRATEGY

Economy – Well positioned to take advantage Expand marketing and promotion and maintain

of a strong economy, low interest rates and

21
high disposable income prices at current market levels

Physical Factors- public transport and Increase advertising to attract new clients

infrastructure in the direction of progress

8. ORGANIZATIONS AND MANAGEMENT

The organizational structure of the project will be designed based on how best the
services could reach the services seekers with minimum expenses and high efficiency.
The project is fully owned and managed by General Manager of the project who is a
qualified and well-experienced person to run the business. Besides the project will be
adequately staffed with qualified and experienced personnel who could effectively
execute their duties and responsibilities.
9. FINANCIAL ANALYSIS OF THE PROJECT

9.1 Capital Expenditure

Capital expenditure is equivalent to the total financial requirements of the project. In
other words, they are initial investment outlays required to enter operational stage.
These capital expenditures are constituted of fixed investment costs and initial
working capital.

22
 9.2 Source of capital Expenditures
The above forecasted project capital is planned to be raised from two sources. These
two sources are the promoter's equity contribution and loans from Ethiopia
development Bank. The promoter of the project plans to raise 30% of the total capital
while the remaining 70% assumed to be obtained from the Ethiopia development
Bank. In summary, the promoter's contribution and Ethiopia development Bank will
be; Equity capital 11,951,439.00 birr, Bank loan 27,886,691.00 birr, total
investment capital 39,838,130.00 birr.

9.3 FIXED INVESTMENT

Fixed investment costs are expenditures on the required fixed assets. The major
components of fixed costs are constituted of expenditures on machinery and
equipment. The rest will go to construction of civil works and the acquisition of office
facilities. According to estimates made by this project70.9% fixed cost will be Birr
28,245,234.00

Table 6: Fixed Investment of the Project

No Type of fixed Investment cost Unit Quantity Unit Cost Total Cost

A Machinery and Equipment

1 Tractor Pcs 1 2,500,000 2,500,000
2 Hulling machines Pcs 1 1,000,000 1,000,000
3 pulping machines Pcs 1 1,000,000 1,000,000
4 Chemical Sprayer Pcs 200 1000 200,000
5 Farm Tools Bulk - - 300,000
6 Generator Pcs 1 500,000 500,000
7 Workshop Equipments Set - - 250,000
Sub Total 5,750,000.00

23
B Building and Civil Works
1 Office M2 1000 1500 1,500,000
3
2 Residential houses M 3000 1,806.3 5,418,734
3
3 Launge and M 400 1000 400,000
3
4 Workshop M 400 1000 400,000
2
5 Pack house M 600 1000 600,000
2
6 Shed house for pulping machines M 400 1000 400,000
2
7 Input Store M 400 1000 400,000
2
8 Coffee Store M 1000 1500 1,500,000
2
9 Fermentation tank M 200 2000 400,000
10 Water recirculation system 2,000,000
11 Construction of lagoons No 3 60,000 180,000
3
12 Reserve weir construction M 100 2000 200,000
2
13 Machinery Shed M 200 400 80,000
14 Generator/ Pump House M2 240 1000 240,000
15 Shower and Toilet M2 9 500 4,500
16 Guard House M2 200 500 100,000
17 Access and Farm Road Km 10 200,000 2,000,000
Sub Total 15,823,234.00
C Vehicles
1 Pick-up (D4D) Pcs 2 2,000,000 4,000,000
2 Track Pcs 1 2,200,000 2,200,000
Motor Cycle Pcs 2 150,000 300,000
Sub Total - - - 6,500,000.00
D Office Equipments
Chairs No. 32 500 16,000.00
Tables No. 32 1000 32,000.00
Computer No. 4 10,500 42,000.00
Printer No. 2 10,000 20,000.00
Shelf No. 6 5,000 30,000.00
Safe box No. 8 4000 32,000.00
Sub Total 172,000.00
Total 28,245,234.00

9.4 Working Capital

Working capital is part of annual operating costs and is required to make the project
operational. Except for some operational costs whose yearly expenses were taken as

24
they are, some limited Monthly expenses were taken to forecast the working capital
requirement of the project. Working capital include all project expenses other than
fixed investment. They are expenditures to be spent on annual operating items. As it
will be seen letters in this document, working costs in the year of the project life are
estimated to be 11,592,896.00birr 29.1 % of the total capital. In estimating operating
costs, it has been tried to depend on current market information and on the
experiences of similar projects.
Table 7: Summary of production cost
No Description Value birr
1 Daily Labor 7,560,000.00
2 Coffee Seed 100,000.00
3 Fertilizer DAP 450,000.00
4 Urea 390,000.00
Packing Material 20,000.00
5 Fuel, Oil and Lubricant 450,000.00
6 Salary 1,654,800.00
7 Other operating costs 968,096.00
Total 11,592,896.00

Table 8 : Manpower Requirement of The project

No Description Quantity Monthly Annual Payment
Salary
1 General Manager 1 10,000 120,000
2 Farm Manager 1 7500 90,000
3 Administration Financial Manager 1 7500 90,000
4 Unit Farm Head 4 4500 216,000
5 Accountant 2 4500 108,000
6 Foremen 10 2,500 300,000
7 Secretary 1 2500 30,000
8 Purchaser 1 2500 30,000
9 Cashier 1 2500 30,000
10 Seales person 1 2500 30,000
11 Storekeeper 2 2500 60,000
12 Chief Mechanic 1 3500 42,000
13 Assistant Mechanic 2 2500 60,000
14 Truck Driver 2 2,500 60,000
15 Pick-up Driver 2 2,000 48,000
16 Electrician 2 1800 43,200

25
 17 Tractor Operator 2 2000 48,000
18 Water Pump Operator 2 1400 33,600
19 Assistance Tractor Operator 2 1,500 36,000
20 Guards 10 1000 120,000
21 Office Boy 1 1000 12,000
22 Cleaners 4 1000 48,000
Sub Total 51 1,654,800.00
23 Temporary worker 400×70×270days 70/day 7,560,000.00
Sub Total 400 7,560,000.00
Total 451 9,214,800.00

Table 9: Depreciation Schedule

No Description Original value Rate Depreciation

(Br.) % Per year

1 Machinery and equipments 5,750,000.00 10 575,000.00
2 Construction and Civil works 15,823,234.00 5 791,161.7.00
3 Vehicles 6,500,000 10 650,000.00
4 Office furniture’s 172,000 10 17,200.00
Total 1,242,200.00

26
Table 10: Other operating costs of the project
No Description Annual cost Assumptions used
1 Repair and maintenance
∙ Machinery and farm equipments 115,000 2% of original value
∙ Construction and Civil works 158,232.34 1% of original value
∙ Vehicles 130,000 2% of original value
∙ Office furniture’s 1,720 1% of original value
2 Stationery and office supplies 72,000 Birr6,000 /month
3 Par time and Traveling 99,480 5% of Annual salary
4 Land rent 49,000 1000 ha x 49Br.
5 E-mail, Telephone, Fax and Postage 24,000 2,000 Br./month
6 Audit, license and legal fee 25,000 25,000 Br/ year
7 Miscellaneous expenses 16,000 4000 Br./month
Total cost 690,432.00

Table 11: Summary of Investment cost

No. Description Total Cost (Br.)

1 Machinery and Equipment 5,750,000.00

2 Building and Civil Works 15,823,234.00
3 Vehicles 6,500,000

27
 4 Office Equipments 172,000.00
Total fixed Investment Cost 28,245,234.00
5 Working Capital 11,592,896.00
Total Initial Investment Cost 39,838,130.00

10. . FINANCIAL EVALUATION

The planned investment cost needed to run the project will be secured from equity and
from bank loan. Of the total 39,838,130.00 birr required to run the project, 30% or
11,951,439.00 birr will be contributed by the promoter and the rest 70% or
27,886,691.00birr from bank loan.
11. FINANCIAL AND ECONOMIC ANALYSIS
Table: 12.1 Assumptions used in the financial evaluations of Moges Yimer Beyene
coffee producer and Exportercoffee project farming
Construction period 2 year
Source of finance 30 % equity 70 % loan
Loan duration 5 years
Tax holidays 5 years
Bank interest 9.5%
Depreciation 10% in the initial year with 1% decrease per year
there after
Repair and maintenance 5% of the total farm machinery & equipment and

28
 buildings
Farming materials and Incur 5% additional cost each year
inputs
Labour cost Incur 5% additional cost each year
Utilities Incur 5% additional cost each year
Tax 20% of the gross profit
Work in progress 270 270 days
days
Cash in hand 5 days
Accounts payable 30 days

29
12. LOAN REPAYMENT SCHEDULE
As mentioned above 70% of the investment cost or birr 27,886,691.00birr will be secured from loan granting banks. Depending on t
duration and the rate of interest, the project may consider for securing the loan it requires for its develo
development bank of Ethiopia and the various private banks in the country would be considered as options for securing the loan.
Table:13 Loan repayment schedule
Loan Duration: 5 Years
Number of Payments: 60
Interest Rate: 9.5%
Monthly Payment: 464778.18Birr

Year Beginning Balance Principal payment Interest Payment Total payment

0 27,886,691.00
1 22,309,352.8 5,577,338.2 2,649,235.645 8,226,573.85
2 16,732,014.6 5,577,338.2 2,119,388.516 7,696,726.72
3 11,154,676.4 5,577,338.2 1,589,541.387 7,166,879.59
4 5,577,338.2 5,577,338.2 1,059,694.258 6,637,032.46
5 00 5,577,338.2 529,847.129 6,107,185.33

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

30
 13. PROFITABILITY

Based on the projected income statement, the project will generate profit beginning from first year of operation. Annual government tax will also
grow during the life of the project. The detail analysis is tabulated below

Table 14. Profit or Loss projection

Y-5 Y-6 Y-8
Description Y-0 Y-1 Y-2 Y-3 Y-4 Y-7
Sales Income - - - - 46,620,000.00 77,700,000.00 123,025,000.00 192,500,000.00 192,500,000.00
Expenses - - - - - - - - -
Fixed Cost 28,245,234.00 - - -
Variable Costs 11,592,896.00 - - - 11,592,896.00 11,592,896.00 11,592,896.00 11,592,896.00 11,592,896.00
Depreciation - - - - 1,242,200.00 1,242,200.00 1,242,200.00 1,242,200.00 1,242,200.00
Maintenance - - - - 690,432.00 690,432.00 690,432.00 690,432.00 690,432.00

Bank interest - - - - 2,649,235.645 2,119,388.516 1,589,541.387 1,059,694.258 529,847.129

15,644,916.52 13,525,528.00 13,525,528.00 13,525,528.00

Total Expense 39,838,130.00 16,174,763.65
Gross Profit - - - - 30,445,236.35 62,055,083.48 109,499,472.00 178,974,472.00 178,974,472.00
Tax 20% - - - - 6,089,047.27 12,411,016.696 21899894.4 35,794,894.4 35,794,894.4
Net Profit - - - - 24,356,189.08 49,644,066.784 87,599,577.6 143,179,577.6 143179577.6

Remark: There is No revenue from Year 1 to year 3 (2023-202

31
14.Environmental Impact assessment
14.1 Environmental Dimensions of Coffee production
The way coffee is grown and processed has profound environmental importance both
locally and internationally. This section focuses on four themes intimately related and
which the project will put measures in place: biodiversity and conservation of forest
ecosystems; agro-chemical use; water pollution from coffee processing; and soil
quality. Each of these factories is critical to the environment and the quality of coffee.

14.2 Biodiversity &Conservation of forest ecosystems

Deforestation trends are serious throughout the coffee-producing lands of Africa and
Latin America. Ethiopia is one of the coffee producing countries in the world where
high deforestation rates are encountered. By the late 1980s, for example, only an
estimated one-fourth of the primary moist tropical forest has been cleared for the
purpose of different agricultural activities including coffee and cereals.

Bench Sheko´s forests are critical in protecting the atmospheric dynamics, water
quality, and wildlife species, as well as economically as reservoirs of germplasm
which has multiple applications for food, medicine, and industrial products. To
preserve the Biodiversity & Conservation of forest ecosystems, the project will
employ a method of Traditional shade coffee systems.

Traditional, shade coffee production has been shown to be highly beneficial to

biodiversity conservation in tropical forest ecosystems. In South west Ethiopia,
traditional coffee covers very significant areas with closed canopy, fauna and flora
species unique to the zone.

Traditional coffee is often integral to agro-forestry systems in which tree species are
cultivated together with the coffee and other agricultural commodities. Where
geographic and market conditions are favorable, economic returns can be achieved
through sustained-yield timber production in association with coffee. Agro-forestry

32
systems, including those involving coffee, have potential to enhance the economic and
ecological stability of the area.

By providing an alternative to deforestation, traditional coffee systems constitute an

important check against greenhouse gas emissions that contribute to global warming.

33