Fair Chain Coffee Agro-processing PLC

Business Operation proposal for Harvest 2022

Contents
Executive Summary.....................................................................................................................................1
Fair Chain Coffee Agro-Processing business plan..................................................................................2
1. Introduction.........................................................................................................................................2
1.1. Back ground of the project...........................................................................................................3
1.2. Overall Production Supply...........................................................................................................4
1.3. Coffee Production Systems in Ethiopia.......................................................................................5
1.4. Culture of Coffee Drinking in Ethiopia........................................................................................7
2. Project Area, Goal and Objective.........................................................................................................8
2.1. Overall goal of Fair Chain company.............................................................................................8
Objectives............................................................................................................................................8
2.2. Company location coffee Growing Environment in Ethiopia...........................................................8
2.3. Project area and benefit..................................................................................................................10
2.4. Project justification.........................................................................................................................10
3. Fair chain export marketing strategy...............................................................................................11
3.1. Business Audit..........................................................................................................................11
Strength of Fair Chain Coffee............................................................................................................11
Weakness...........................................................................................................................................12
3.2. Market analysis........................................................................................................................12
Our first destination exporting coffee to the Netherlands..................................................................12
3.4. Market entry strategy.............................................................................................................14
Place..................................................................................................................................................14
Market positioning.............................................................................................................................14
Product..............................................................................................................................................14
Promotion..........................................................................................................................................14
3.5. Company’s key competitive advantages....................................................................................14
3.6. Demand for coffee.....................................................................................................................16
4. Socio economic benefit of the project...............................................................................................18
4.1. Environmental impact and measures by the project...................................................................18
5. Financial feasibility of the project......................................................................................................20

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5.1. The output of the project................................................................................................................20
6. Work sheet........................................................................................................................................32

Executive Summary
As the main roasted coffee exporter in Ethiopia, Fair Chain Agro. Has a proud history of
providing quality roasted coffee processed in the homeland of coffee and has been the second
runner up in export revenue generation capacity from roasted coffee. FairChain’s mission is to
stimulate and support business models that contribute to a TRULY fair distribution of the wealth
across all participants in the value chain. FairChain’s objective is to limit the need for
development aid with sustainable consumption. We collaborate with and contribute to business
models that create positive externalities and are purpose driven to positively impact ecosystems.

We aim to disrupt conventional value chains and transform all businesses into social enterprises.
By promoting inclusive business models that create shared value and pay for the true costs of
doing business today, we believe we can truly shift the balance of value chains.
The company is established with the main goal of producing, processing, roasting and exporting
of organic coffee to the international market and fairly distribute the income gained from the
overall process to the farmers and the host country.
The company currently owns a 246 hectare coffee plantation at Guraferda Woreda and in the
process of acquiring an additional 300 ha coffee farm at Shy Bench woreda in the Bench Sheko
zone of south west region, In addition the company runs two coffee washing stations at Limmu
Kosa Woreda of Jimma zone in Oromia regional and one washing station in Biftu town of
Guraferda woreda of Bench Sheko zone government. We are currently working with more than
10,000 out-growers in limmu and Mizan area which are part of our digital blockchain
technology.
FC invests highly in impact programs that will change coffee producing farmer’s life among
which its pioneer digital block chain technology is one. At FC we have a rich database of our
farmers online that can be accessed with all the information’s about their farm life and coffee.
Apart from those in the previous three years we have been engaged in Ethiopia the company
distributed more than 200,000 improved coffee seedlings to farmers around Limmu, trained more
than 500 farmers or out growers in different areas of coffee production technology.
FairChain exports Organic Limmu washed Q grade roasted coffee to Europe and Bench Natural
coffee from its plantation in Gura Ferda. We are not just exporting roasted coffee we are
exporting the first fair coffee beans roasted here in Ethiopia. Our company strives to transform
the livelihoods of its outgrowing farmers which we are paying a 20% premium on coffee they are
selling to us in the previous four years.
This harvest year we are planning to export 280 tons of Coffee both in Green and roasted by
collecting coffee cherries from the 4 different centres we are running with an outlay budget of
100,000,000 ETB.

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We are not just about the coffee; we believe in transforming the farming community’s life
through impact programs with different stakeholders.

1. Introduction
As the main roasted coffee exporter in Ethiopia, Fair Chain Agro. Has a proud history of
providing quality roasted coffee processed in the homeland of coffee and has been the second
runner up in export revenue generation capacity from roasted coffee. FairChain’s mission is to
stimulate and support business models that contribute to a TRULY fair distribution of the wealth
across all participants in the value chain. FairChain’s objective is to limit the need for
development aid with sustainable consumption. We collaborate with and contribute to business
models that create positive externalities and are purpose driven to positively impact ecosystems.

We aim to disrupt conventional value chains and transform all businesses into social enterprises.
By promoting inclusive business models that create shared value and pay for the true costs of
doing business today, we believe we can truly shift the balance of value chains.
The company is established with the main goal of producing, processing, roasting and exporting
of organic coffee to the international market and fairly distribute the income gained from the
overall process to the farmers and the host country.
The company currently owns a 246 hectare coffee plantation at Guraferda Woreda and in the
process of acquiring an additional 300 ha coffee farm at Shy Bench woreda in the Bench Sheko
zone of south west region, In addition the company runs two coffee washing stations at Limmu
Kosa Woreda of Jimma zone in Oromia regional and one washing station in Biftu town of
Guraferda woreda of Bench Sheko zone government. We are currently working with more than
10,000 out-growers in limmu and Mizan area which are part of our digital blockchain
technology.
FC invests highly in impact programs that will change coffee producing farmer’s life among
which its pioneer digital block chain technology is one. At FC we have a rich database of our
farmers online that can be accessed with all the information’s about their farm life and coffee.
Apart from those in the previous three years we have been engaged in Ethiopia the company
distributed more than 200,000 improved coffee seedlings to farmers around Limmu, trained more
than 500 farmers or out growers in different areas of coffee production technology.
FairChain exports Organic Limmu washed Q grade roasted coffee to Europe and Bench Natural
coffee from its plantation in Gura Ferda. We are not just exporting roasted coffee we are
exporting the first fair coffee beans roasted here in Ethiopia. Our company strives to transform
the livelihoods of its outgrowing farmers which we are paying a 20% premium on coffee they are
selling to us in the previous four years.
We are not just about the coffee; we believe in transforming the farming community’s life
through impact programs with different stakeholders.

3
 1.1. Background of the project
Ethiopia’s economy is based on agriculture, which accounts, in 2020/21, for about 42 percent of
the gross domestic product (GDP), 85 percent of foreign currency earnings, and 85% of
employment. Generally, the overall economic growth of the country has been highly associated
with the performance of the agriculture sector that includes products like coffee, oil seeds,
pulses, leather and leather products, meat and meat products, fruits and vegetables, live animals,
flowers, chat, all which are from this sector.
Coffee is Ethiopia’s main export commodity, contributing to the livelihoods of more than 15
million smallholder farmers and other actors in the coffee sector. Ethiopia’s coffee production
for MY 2022/23 (Oct-Sep) is forecast at 8.25 million 60-kilogram bags (495,000 MT). Exports
are forecasted to reach a record 4.72 million bags (280,560 MT). Exports in MY 2021/22
reached to 4.70 million bags (282,000 MT). Ethiopia’s primary export destinations in 2020/21
were Germany, Saudi Arabia, US, Belgium, and Japan. Local consumption in MY 2021/22 is
estimated to increase to 3.45 million bags (207,000 MT) (USDA, 2022).
The industrial sector, which mainly comprises small and medium enterprise, accounts for about
13 percent of GDP. Similarly, the service sector comprised of social services, trade, hotels and
restaurants, finance, real estate, and transport and communications, etc. accounts for about 46.1
percent of GDP. (Eth.Inve. Guid 2014).
Ethiopia, the birthplace of coffee, is the world’s fifth largest coffee producer & Africa’s top
producer, with estimated 420,000 metric tons during the coffee or marketing season for F/Y
2020/2021. Half of the produced coffee is assumed to be consumed locally and the country with
a per capita consumption of 2.30 kilogram leads the African continent in domestic consumption.
And up to 20 percent of the population, directly or indirectly depends for a living on coffee
production and trading for generation.

Coffees, therefore, the most significant agricultural produce in the Ethiopian economy in which
millions of farmers grow the crop for a living, hundreds of thousands of different level traders
are involved in the collection of the crop from farmers and supply to the export and domestic

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 market, and a sizable amount of foreign exchange accounting up to 35 percent of the total yearly
export income is derived from. Thus, coffee is a very important agricultural commodity with a
significant contribution to the growth and functioning of the economy and the social stability of
the country as the main source of the income to tens of millions of small-scale farmers, workers
and traders.
Ethiopian coffee is known for its unique characteristics, aroma and flavour. This shows that there
is very high coffee production and export potential in Ethiopia, at premium prices. The country
has also become of particular interest to the world for its inherent quality and coffee production
potential due to its indigenous Arabica coffee.

1.2. Overall Production Supply

According to the world coffee organization data, Ethiopia was the largest coffee producer in
Africa and ranks fifth in the world next to Brazil, Vietnam, Colombia and Indonesia. It is
estimated that more than 6600,000 bags of coffee are produced in Ethiopia every year, with an
increasing trend. The coffee Arabica is largely produced in Ethiopia, making it the largest coffee
producer in Africa. However, production supply is seasonal and fluctuates due to the climatic
variations; thus, prices do, as well.

Table- 1. World coffee production

Country Production (in 1000 bags) * Ran

Years k

1011/13 2012/1 1013/1 1014/15 2015/ 2016/17 2017 2018/19 2019/20 2020/21
3 4 16 /18
Brazil 52,87 52,74 1
48,592 55,418 54,689 53,305 1 56,788 0 65,131 48,592 55,418
Vietnam 31,09 33,43 2
26,500 23,402 27,610 27,241 26,500
0 27,819 2 30,283 30,487
Indonesia 12,58 10,85 4
6,889 13,070 12,901 10,946 5 11,541 2 9,618 11,433 6,889
Colombia 14,00 13,82 3
7,653 9,927 12,124 13,333 9 14,634 4 13,866 14,100 7,653
Ethiopia 5,650 6,132 6,242 6,383 6,515 7,143 7,347 7,511 7,343 5,650 5
Honduras 5,882 4,686 4,583 5,268 5,786 7,457 7,560 7,153 5,931 5,882 6
India 5,334 5,403 5,075 5,450 5,830 6,161 5,813 5,325 4,988 5,334 7
Peru 5,373 4,450 4,106 2,883 3,304 4,223 4,279 4,263 3,836 5,373 8
Mexico 4,561 4,327 3,916 3,636 2,772 3,635 4,485 4,351 3,985 4,561 9
Guatemala 3,850 3,763 3,189 3,310 3,410 3,684 3,734 4,007 3,606 3,850 10
Total 151,18 153,91 156,1 163,6  
141,327 150,302 162,320 172,461 165,053 141,327
4 0 26 93

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 Table -2 world coffee export data
Country Exports of all forms of coffee Ran
by all exporting countries In thousand 60kg bags k
Years
1011/1 2012/ 1013/ 1014/1 2015 2016/1 201 2018/1 2019/2 2020/2
3 13 14 5 /16 7 7/18 9 0 1
Brazil 28,54 31,65 37,56 30,9 1
33,806 9 1 37,335 3 34,269 25 35,637 40,698 33,806
Vietnam 22,92 19,71 21,94 25,0 2
17,717 0 8 26,097 4 29,721 92 31,385 27,400 17,717
Indonesi 8,19 9
a 3,920 8,206 9,255 6,175 8,379 6,545 8 4,539 6,334 3,920
Colombi 12,71 12,9 3
a 7,734 7,170 9,670 10,954 6 12,831 85 12,808 13,672 7,734
Ethiopia 3,77 5
2,675 3,203 2,870 3,117 2,985 3,001 3 3,589 3,921 2,675
Hondura 7,34 6
s 3,947 5,508 4,185 4,252 5,030 5,306 1 7,144 6,765 3,947
India 6,54 4
5,414 5,044 5,033 5,131 5,262 6,086 2 5,967 6,028 5,414
Peru 3,94 5
4,697 4,310 3,736 2,720 2,790 3,960 6 4,064 3,772 4,697
Mexico 2,91 8
2,907 3,556 3,132 2,480 2,458 2,233 1 2,888 2,627 2,907
Guatema 3,38 10
la 3,697 3,750 3,575 3,043 2,961 2,991 3 3,327 3,613 3,697
Total 102,18 108,4 108,5 115,54 116,3 121,33 119, 131,69 102,18  
126,598
5 44 67 8 96 4 519 4 5

1.3. Coffee Production Systems in Ethiopia

Ethiopia, like many other African countries, is also endowed with biodiversity, which is
facilitated by variation in altitude and climate in the country. There are about 6500 to 7000
species of flowering plants, conifers and ferns in Ethiopia, out of which 12% are believed to be
endemic (Shibru and Martha, 1998). The country serves as a source of genetic resources of
different species of domesticated cultivable crops around the world like coffee. However,

6
livelihood of more than 85% of the population is engaged in agricultural sectors, which implies
direct dependency on natural resources.

Coffee is a perennial crop, which is grown in many parts of Ethiopia. The total area under coffee
in the country is estimated to be 500,200 hectares from which about 6600,000 bags of coffee is
produced annually. 95% of total coffee production in Ethiopia was under smallholder agriculture.
Moreover, application of production inputs, such as improved seed, irrigation, pesticide and
fertilizer, in coffee production of Ethiopia is very much limited

The largest volume of coffee is grown in the two large regions of Oromia (in the central part of
the country) and the Southern Nations, Nationalities and Peoples Region (SNNPR). Only five
percent of coffee production is grown on modern plantations, which are owned by private
investors. The rest is grown by smallholder farmers, and about half of that production is in
backyards or gardens. In both cases (modern plantations as well as smallholder production),
coffee is generally grown under shade.

There are four types of production systems in Ethiopia: forest coffee, semi- forest coffee,
garden coffee and plantation coffee. 95% of the coffee production from these systems can
be considered as organic, although not yet officially certified.

Forest coffee

This is found in South and South-Western Ethiopia (Bale, West Wolega, Bench- Maji,
Kaffa, Sheka , Metu and Jimma) These are the centers of origin of C. arabica. Forest
coffee is self-sown and grows under the shade of natural forest trees. Forest coffee offers
a wide diversity for selection and breeding so as to have plant stock selected for disease
resistance, high yields and top quality in terms of aroma as well as flavor. Forest coffee
accounts for about 10% of the total coffee production.

Semi-Forest Coffee

This production system is also found in the Southern and South-Western parts of the
Country. Farmers thin and select forest trees to let in adequate sunlight to the coffee trees

7
and still provide adequate shade. Farmers slash the weeds once a year to facilitate
harvesting of the coffee beans. This system accounts for about 35% of the coffee
production.

Garden Coffee

Garden coffee is found in the vicinity of farmers' residences. It is found mainly in the Southern
and Eastern part of the country (Sidamo, Gedeo, South and North Omo. Hararghe, Wolega ,
Jimma and Guji Zones, East and West.) It is planted at low densities ranging from 1000 to 1800
trees per hectare, mostly fertilized with organic material and inter- cropped. It accounts for about
50% of the total production. This production system is on the increase as it is currently being
introduced in Southwest Ethiopia Kaffa, Sheka and Bench Maji
Plantation Coffee
Plantation coffee is grown on plantations owned by private company and on some well managed
smallholder’s coffee farms. In this production system, recommended agronomic practices like
improved seedlings, spacing, proper mulching, manuring, weeding, shade regulation and pruning
are practiced. Only private owned plantations are known to use chemical fertilizers and
herbicides. Plantation coffee accounts for about 5% of the total production.
1.4. Culture of Coffee Drinking in Ethiopia
In Ethiopia, coffee is traditionally prepared and drunk two to three times a day.
Ethiopians have various special cultural ceremonies related to coffee. These cultures
represent a strong heritage for the country's sustainable coffee production, currently
consumed in a variety of ways. Bunakela, which is coffee accompanied with roasted
barley, wheat and chick-peas is still popular in most coffee growing areas of the country.
Long distance travelers or hunters in Gedio and Borena still use it, while in Wollega
bunakela is prepared on special cultural and family occasions. Bunakela is socially highly
valuable and is a respected (holy) food to be served as the first dish to celebrate the birth
of a new child, as well as an expression of success in arranging marriage or fortune
telling events. In most areas, coffee is prepared from roasted and pounded green beans
described as Bunna, Buno, Bun, etc. In Hararghe besides coffee, infusions of roasted and
ground coffee-leaves called Kuti and husks mixed with milk known as Hoja, are drunk
with salt instead of sugar.

In Kaffa ,Jimma and Sheka zones, where coffee was first originated , coffee leaves
collected from wild coffee plants are brewed and spiced with pepper and ginger to

8
prepare Chamo. The drink is a favorite one and used as medicine for sick and weak
people.

2. Project Area, Goal and Objective

2.1. Overall goal of Fair Chain company
Giving due attention to social and economic benefit of the country as a general and community
around the project, it intends to remain sustainably profitable in the sector by producing, value
adding and marketing best quality coffee to the world market.
Objectives
By producing best quality coffee and processing it with modern technology it intends to get
better return from investment while benefiting the community and the country. The specific
objectives are.
 To be sustainable profitable the company Produce and exporting special Q Grade
coffee with trust and honour contractual commitment.
 Exporting roasted coffee beans to Europe by preparing the top-quality standards, of all
Arabica green beans in the market.
 Creating jobs opportunity for youth and women.
2.2. Company location coffee Growing Environment in Ethiopia

The company currently owns a 246-hectare coffee plantation at Guraferda Woreda and
300 ha Shy Bench woreda in the Bench Sheko zone of southwest region. And two
coffee washing stations at Limmu Kosa Woreda of Jimma zone in Oromia regional and
one washing station in Biftu Guraferda woreda of Bench Sheko zone government. We are
currently working with more than 10,000 out growers in limmu and Mizan area which are
part of our digital blockchain technology.

This year the company intends to collect coffee in four locations namely; Suntu Limmu
Kossa (Washing station 1) , Dire Togo Limmu Kossa (Washing station 2), Biftu
Guraferda (Washing Station 3) and Fair Chain Farm at Aroge Birhan Gura Ferda.

The potential of coffee production in our intervention area is very high because of
altitude, ample rainfall, optimum temperature, suitable planting material as well as fertile

9
soil. Furthermore, the country is of value to the world as it is the home or the origin of C.
Arabica with best inherent quality and production potential.

2.3. Project area and benefit

The benefit of this harvest operation project is beyond its owner and it is multidimensional. It is
expected to create 500 job opportunity both permanent and temporary. It can contribute to the
country’s economic development endeavour by generating 2,000,000 USD. The other benefit
especially to the coffee grower farmers are a technology transfer. This project committed to
import state of the art processing machine that helps easy to show the difference and motivate
farmers’ cooperative to do the same to their beneficiary members also intends to train both
employees, farmers and others on best practice worldwide accepted coffee production,
harvesting, processing and drying so that they can improve productivity and income from coffee.
Its most basic level, this means ensuring an orderly business environment, where valued
relationships and the sharing of information reduces supply chain risks, costs, and inefficiencies.
The company business strategy is lead to better business results through better supply chain
relationships, lower risk and lower supply chain costs.
By providing better quality, traceable and certified coffee with improved supply chains from
farm to customer, we will be able to satisfy our buyers with differentiated products and to all
segments that contribute to countries good will in the sector market.
Inclusive business is central to our sustainability work that is, working in a way that creates
shared value for smallholder farmers. We facilitate their involvement in our programs, and in
doing so, create positive impact in the countries where we operate. Our sustainability work is
challenging because of the sheer numbers of farmers, and without an inclusive business strategy
we could not do it.
Consumers around the world and the companies that supply them with products are becoming
more aware about quality of consumable product. This trend represents our biggest opportunity
since we are prepared and committed to produce and market quality coffee.
2.4. Project justification

According to the United States Governments Department of Agriculture forecast Ethiopia’s

coffee production for MY 2022/23 (Oct-Sep) is forecast at 8.25 million 60-kilogram bags
(495,000 MT). Exports are forecasted to reach a record 4.72 million bags (280,560 MT). Exports
in MY 2021/22 reached to 4.70 million bags (282,000 MT). Ethiopia’s primary export
destinations in 2020/21 were Germany, Saudi Arabia, US, Belgium, and Japan. Local

10
consumption in MY 2021/22 is estimated to increase to 3.45 million bags (207,000 MT) (USDA,
2022).
This Harvest operation project by FairChain coffee aims to take a bite out of these huge potential
by exporting 280 tons of coffee to international market.
Coffee originated here in Ethiopia and has long history of export to different country in the
world. However due to backward and traditional production system, poor handling and
processing technology and inefficient domestic market as well as low bargaining power on
international trade, first producers couldn’t earn his sweet, as we proceed along the commodities
value chain what clearly observed was that no actor benefited best finally as country both the
quantity exported and margin from what final consumer paying is significantly low.
As clearly described in the country’s economic policy and strategy as well as the recent growth
and transformation plan agriculture play and will continue playing a key role as a driving force
of the economy. To realize this the government working intensively in the area of research that
generate a technology with better productivity and efficiency, enhance input system to access all
required input both by small holders and commercial farm with required quality, quantity and
right time. The attention given to the finance sector is also the same even though due to their
internal regulation loan to agricultural sector is remaining a bottle neck.
Coffee is an important commodity both domestically and the world as a whole and will remain
important. Considering its contribution in generating hard currency that play key role in the
transformation process and considering the attention given as a result the future of coffee is
promising. And hopefully it will remain the central economic issue of the government and sound
business area of Ethiopia.
So it can be easily concluding that if any one who can at least able to employ better technology
and input in the production, process and advanced processing machine coupling with improving
man power capacity there is vivid opportunity to be attracted. The other interesting issue is that
even though Ethiopia is a birth place of coffee and a significant expansion made since then in
coverage and production still there is huge potential even ideal coffee production area are
waiting for capable investor.
The other attractive environment to invest on coffee is the establishment of effective and
efficient central coffee market in Ethiopia. ECX brought a significant difference in coffee market
of this country which many countries inspired and motivated to adopt the system.
Finally, the new coffee marketing proclamation and commitment of government from issuing
attractive policy, conducing macro and micro environment to agricultural project which is central
to any economic activity more than any other sector attracted the investor and willing to take risk
of agriculture and patient for long-term benefit.

11
 3. Fair chain export marketing strategy

Marketing strategies will enable you to access markets more effectively and efficiently by giving
direction. As the main roasted coffee exporter in Ethiopia, Fair Chain Agro. Has a proud history
of providing quality roasted coffee processed in the homeland of coffee and has been the second
runner up in export revenue generation capacity from roasted coffee. Fair Chain’s mission is to
stimulate and support business models that contribute to a TRULY fair distribution of the wealth
across all participants in the value chain. Fair Chain’s objective is to limit the need for
development aid with sustainable consumption. We collaborate with and contribute to business
models that create positive externalities and are purpose driven to positively impact ecosystems.

We are not just about the coffee; we believe in transforming the farming community’s life
through impact programs with different stakeholders.
3.1. Business Audit
Strength of Fair Chain Coffee
• Established as a joint venture with one of the prominent coffee traders in Europe which
makes its export market a secure business.
• Unique portfolio of qualities
• Motivated 10,000 farmer-members
• 100% Traceability
• Digitalization and Interesting farmer stories
• Quality coffee traditions and block chain technology
• Certification of UTZ and RFA
• Trained cupper
• Direct partners with Moyee NL as buyers
• Long term contract with Moyee NL
Weakness
 Lack of skill manpower in roasting
 Rudimentary laboratory
 Lack of Road infrastructure around wet mill and farm
 Limited internet around farm
Opportunity
• Specialty coffee market
• Big market in roasted
• Increasing interest in natural process
• Deregulation (coffee proclamation)
• Direct trade options
• New regulations in Europe demanding impact related coffee marketing which our
company is implementing for years.
• New markets like the Chinese coffee market

12
Treat
 Lack of security
 Demography of farmers
 Climate change
 Instability of local banks
 COVID-19
3.2. Market analysis

Our first destination exporting coffee to the Netherlands

The Netherlands is a medium-sized coffee market playing an important role in the European
coffee trade. Like coffee cultures in other European countries, the Dutch demand for sustainable
and high-quality coffee has increased over the years. This offers opportunities to exporters of
high-quality green coffees with a unique story. In addition, adopting sustainable production and
trade practices is important to gain access to the Dutch market. Certified products have become
mainstream on the Dutch coffee market.

Only 36% of coffee imports entering the Netherlands is sourced directly from producing
countries. These imports come mainly from the world’s largest coffee producers: Brazil,
Vietnam and Colombia. Sustainability is very important on the Dutch market, making the
Netherlands an important market for certified coffees. At the same time, the demand for high-
quality coffees is increasing. Therefore, higher-quality coffees and sustainable coffees may find
interesting market opportunities in the Netherlands.

3.3. Requirements for coffee to enter the Dutch market

We must follow the European Union legal requirements applicable to coffee. These rules mainly
deal with food safety, where traceability and hygiene are the most important themes. Special
attention should be given to specific sources of contamination, namely: Pesticides an overview of
the maximum residue levels, Mycotoxins/mould, particularly Ochratoxin-A (OTA), Salmonella
(although coffee is considered low-risk.

For qquality requirements fair Chain used the specialty coffee association The Specialty Coffee
Association’s standards for green and roast evaluation.  Grading is usually based on Altitude and
region; Botanical variety; Preparation — wet processed (washed), dry processed (natural), semi-
washed (wet-hulled), pulped natural or honey processed.
 Bean size or screen size, sometimes also bean shape and colour (note: screen size is
important to ensure that coffee batches are uniform in size, which allows for uniform
roasting which improves the quality of the final product);
 Number of defects or imperfections.
 Roast appearance and cup quality in relation to flavour, characteristics and cleanliness;
 Bean density.

Specialty coffee is also graded according to its cupping profile. Fragrance, flavor, aftertaste,
balance, acidity, sweetness, uniformity and cleanliness are important factors in the grading
process. If you sell specialty coffee, it is important for buyers to know the cupping score of your

13
coffee. Although not mandatory, adding this information to the documentation of the coffee you
are exporting might add value. It is very important to be aware of the quality of your coffees,
either through local cupping experts or by becoming a cupping expert yourself.

Labelling requirements
Labels of green coffee exported to the Netherlands should be written in English and Fair Chain
should include the following information to ensure traceability of individual batches:

 Product name
 International coffee organisation (ICO) identification code
 Country of origin
 Grade
 Net weight in kilograms
 For certified coffee: name and code of the inspection body and certification number

. 3.3. Additional sustainability requirements

Corporate responsibility and sustainability are very important in the entire European coffee
sector. In the Netherlands, coffee industry players will have sustainability policies highlighting
their relationship with farmers, transparency in their operations, as well their social and
environmental impact at origin. Fair Chain exporting 100% traceable from 10,000 digitalized
farmers by using block chain technology.

As an exporter, adopting codes of conduct or sustainability policies related to your company’s

environmental and social impact may give you a competitive advantage. In general, our buyers
require you to comply with their code of conduct, and/or fill out supplier questionnaires
regarding your sustainability practices.

Certification standards are part of the sustainability strategy of fair chain coffee, as such, a
standard like Rainforest Alliance and UTZ has our current certification and increasingly
important in the mainstream coffee market

The European market for fair Chain Moyee coffee shows consistent growth demand for traceable
specialty coffee is higher than commercial grade. Moyee our roasted coffee buyer interested
medium roasted coffee of single and double blend of Limu washed and Jimma natural.

3.4. Market entry strategy

Place
Fair chain coffee more focus on European market with special attention to Netherlands, Ireland.
Germany and turkey
Market positioning
Our promising market segment is roaster in Europe. Fair chain use block chain technology to
export 100% traceable, certified UTZ and RFA coffee that enable to manage 10,000 smallholder
farmers.

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 Product
Our buyers appreciated our Single and double roasted specialty coffee of limu washed and
natural Jimma with medium roasted, filtered grinded coffee with air tight packaging. Green
marketing of Bench specialty , washed lime and Jimma natural.
Pricing
Fair Chain coffee use green coffee cost price calculation which is preferred by our buyers in
Europe. We have a transparent digital ways of communicating this costs that will make it easier
to agree on price of our coffee.
Promotion
As a joint venture between one of the finest coffee roasters in Netherlands and business person in
Ethiopia most of our promotion activity is done by the buyers in Europe. We produce everything
according to the standards they laid down and they buy all our coffee and sell it through their
channels.
In addition with the aim of expanding into new markets we are developing our brand and
packaging and introduce by online presence in social media, visiting trade fair, expo and coffee
exhibition.
The Company has differentiated itself through the production of only the highest quality coffees
raised, harvested, prepared and transported by quality standards. And committed to contributing
to the development of the surrounding community and making it a better place in which to live
and work.

3.5. Company’s key competitive advantages

proposed to rely on.

 Production of high-quality standard coffee

 Exporting green, roasted and grind coffee to the world
 End-to-end quality and traceability management
 Social and environmental best practices / know-how
 Establishing modern processing industries with state-of-the-art machine some
attributes.
1. Washing channels designed to enable density separation:  It is important to build long
washing channels to transport the coffee after soaking to the drying beds.  If they are long
enough (they can curve back and forth in a snake-pattern to conserve space), we can use
them to sort the coffee by density before taking it to the drying beds.

15
2. A drying system that is covered (with transparent plastic or other material): The coffee is
completely protected from rain and the sunlight/UV can be filtered and controlled the amount
of solar radiation that the coffee is getting while it is drying.  The ideal would be the
traditional raised beds with screens and create a forced-air heating system that would blow
warm air (perhaps around 30°c) across the coffee, from underneath.  This air can be heated
by gas, or by parchment, or by solar energy.  The basic idea is to control the drying, because
the way the coffee dries has a huge impact on the quality—the acids and sugars in the coffee.

3. Post-fermentation soaking tanks:  These will allow us to soak the coffee in clean water
for 20-24 hours after the fermentation is completed, to help develop the amino acids in the coffee
and prepare the coffee for uniform drying.  This is a technique used widely in Kenya and it is
very effective.

4. Electronic sorting using Backlight:  Some producers are beginning to use backlight and
other types of lighting inside the Electronic Color-sorting machines to add another dimension
to sorting—this can eliminate individual beans that have internal humidity issues, any level
of mold, or various other minor defects. This is something that needs to be installed in your
dry-mill for preparing the coffee for export.

5. Mechanical de-mucilagers:  These are great for conserving water resources, and there are
already many being used in Ethiopia.  When effectively implemented, we can use 30 times
less water for processing than is used in traditional systems, which is in line with our overall
goal of running our operation environmentally safe.  The key is to augment the process by
also using a short fermentation after rinsing and then a post-fermentation soak so that we will
not lose any of the quality advantages associated with traditional fermentation.

6. Water treatment system for the post-fermentation water:  There are systems we can build
that will treat all of the water used during the washing process and remove the solids,
neutralize the acidity, and filter any other by-products.  These systems are not very
complicated but are extremely beneficial for ecological reasons.  The water that comes out at

16
 the end is very clean, even clean enough to drink…..so there is no pollution associated with
wet processing. 

7. Water recycling systems for the washing station:  It is important to have clean water for
several steps in the process (for the washing channels and the soaking tanks) but we can
recapture that water and use it for the de-pulping and the fermentation.

8. A climate controlled storage system for parchment after it is dried:  Ideally The Company
can either build an underground bunker or an above-ground warehouse in a shaded place,
with hermetic storage containers (either GrainPro systems or similar) to keep the humidity
stable while the coffee is resting before export.

Sustainability at Fair Chain means focusing on improving farm productivity and product quality,
leading in turn to lower costs and higher incomes. The company goal is to produce more and
better coffee; provide opportunities for dignified and profitable livelihoods for generations to
come

3.6. Demand for coffee

Global demand for coffee is on the rise: growth is increasing by 1.5 to 2.4% annually and, in
2021, exports exceeded 131,694 thousand bags.
The largest coffee importers are the US, the EU (led by Germany) and Japan. The United States
imported over 22.8 million bags of coffee in the past 12 months, valued at over $4.5 billion.
Consumption in emerging markets (such as China, Eastern Europe and Korea) is increasing.
Of the two main coffee types, Arabica and Robusta, Arabica accounts for over two-thirds of
global demand. Arabica’s natural flavor elements and aromatic properties are generally preferred
by roasters and consumers over Robusta. Specialty coffee is the most rapidly growing market
segment in the industry (growing by 20% in the US alone);
Despite efforts to upgrade into the specialty market channel, and the well-published specialty
success stories (most notably scaled up in Ethiopia, Kenya and increasingly Rwanda), most
coffee in East Africa still qualifies only as ‘fair average quality” (FAQ) or commodity and is
typically bought in mixed lots through central auctions.

17
 Ethiopian coffee export has increased in the last five years (table 3) both in volume and value.
The volume has increased from 133,993 ton in crop year 2008/09 to 3 001 in crop year 2015/16.
The export volume has risen considerably with annual percentage growth rate of 7.9% and the
value has increased from 375.8 million USD to 746.4 million USD in the same period exhibiting
an annual percentage growth rate 13.7%

Table 3. Ethiopia trends in coffee marketing

Fiscal year Volume in mt Volume change Value in million USD

In figure
2007/8 170,741 -5,696 524.3
2008/9 133,997 -36,743 375.9
2009/10 172217 38,219 528.3
2010/11 196136 23,919 841.8
2011/12 169391 -26,744 833.1
2012/13 198,706 29,314 744.9
2013/14 172,200 -26,506
2014/15 187,020 14,800 812
2015/16 179,100 -7920 722
2016/17 180,060 960 897
2017/18 226,380 46,320 917
2018/19 215,340 -11040 764.1
2019/20 235,260 19920 814.24
2020/21 909.4
2021/22 300,000 1004

4. Socio economic benefit of the project

18
The key contribution of this project is its employment generation. It is predicted to create 500 job
opportunity to the local community. This employment has dual effect by reducing pressure on
forest which a common problem of the area.

Company will address also gender issues by applying gender concern and gender mainstreaming
techniques in all internal policies, mission statements, plans and programs, in addition to giving
priority for female to any job opportunity in the company.

The company will ensure competitive marketing environment through the fair trade and service
at cost principles, work avoiding market monopoly and create true market competition.

Company will enhance staff open communication, peer learning, harmonize social network and
create spaces for experience learning; which are important elements of development approaches.

Company services to its neighbour farmer

 Provide fair price for coffee good quality and stabilize market
 Provide on farm training and technical assistance
 Provide market and market related information to out growers at the right time to produce
market oriented coffee
 Protect small holder producer from illegal trader and reduce the superfluous of
middlemen.
 Develop infrastructure / school, healthy centre and dry weather road.

4.1. Environmental impact and measures by the project

The company preliminary assessment result including information from responsible zone
government organization reveals that the project site and its peripheral area endowed with rich
biodiversity and there is wide experience of forest honey production. So this company as a
responsible company and the respect and attention to implementation of both national as well as
regional environmental regulation every activity designed to be environmentally friendly means;

 Unless obliged by some intolerable production related factors the company will never use
artificial fertilizer and related chemicals

19
  Insecticides, pesticides and other chemicals specially spray able one, as they are
dangerous to bee colony the company determined not to use and as alternative option will
apply different cultural practice with integrated pest management with no or minimum
industrial chemical if the problem encountered

The other important resource that need due attention in the area is river water which commonly
associated with washing machine and to some extent farm chemicals. In this respect as
repeatedly explained in the document the project planned to establish environmentally friendly
processing industry that able to not realize harmful west to the river reinforced by established
checking system.

Company focuses on ensuring “Green Economy” development approach and all its business
processes are reconfigured to deliver better returns on natural resources, human and economic
capital investments, while at the same time reducing greenhouse gas emissions, extracting and
using fewer natural resources, creating less waste and reducing social disparities. As part of
ensuring “Green Economy”, the company will work to create green jobs in rural areas, which is
work in agricultural and service activities that contribute substantially to preserving
environmental quality.

Other important thing in this respect to show the commitment of the company to environmentally
sustainability is investing on Recycling system and Recycling engine which require total of
500,000 birr in addition to forest plantation in farmland for dual purpose that is shed for the
coffee planted and environmental protection more over the project gave due emphasis for its
sustainability so any capacity development activity particularly training hold environment
protection as one part of it.

5. Financial feasibility of the project

The objective of financial analysis is to ascertain whether the proposed project will be financially
viable in the sense of being able to meet the burden of servicing debt and whether the proposed
project will satisfy the return expectations of those who provide the capital.

20
Feasibility of a project is determined based on the results of the financial analyses that are
considered as summary of all individual analyses and evaluations conducted above. They serve
as a cutting-edge for decision making. To arrive at appropriate financial analyses results all
project costs (initial investment, annual direct production and annual overhead costs) and all
revenues should be considered together and arithmetically computed according to their nature.

5.1. The output of the project

The main output of this project is red cherry and processed coffee to international market. From
the four centers of coffee collection the company runs it is estimated to collect 280 metric tons of
green coffee that is ready to export with an investment outlay of Birr 100,000,000.This project
works to produce green beans or washed and roasted coffee even though due to thing beyond
the project some time may be obliged to produce other types like sun dried one.

21
Table 4: Estimated coffee production, collection and value from Limmu Kossa woreda and
Mizan area farm.

Locatio Collectio Total Ready to Unit price Total Productio Total price
n n Center cherry in export/roas per Kg for price for n expense for ready to
Kgs t coffee in cherry cherry in Birr export/roast
Kg (Estimated (10%) coffee
) overhead
cost
Bench Aroge 565,000 62,778 30 16,950,00
Sheko berhan 0
Zone Farm out
Gura growers 1,695,000 18,645,000
Ferda Biftu 740,000 82,222 30 22,200,00
Woreda Washing 0
station 2,220,000 24,420,000
Limmu Suntu 400,000 44,450 40 16,000,00
kossa washing 0
woreda station
Jimma (Limmu
zone 1) 1,600,000 17,600,000
Dire Togo 795,000 88,333 45 35,775,00
washing 0
station
(Limmu
2) 3,577,500 39,352,500
2,500,00 277,783 90,925,00
0 0 9,092,500 100,017,500
1,935,920.44
Euro 

Table 5– Project planning 2022/23 coffee harvesting, collection, processing and transportation

Summary of table regarding 100 million loan

1st option Av. Price
No Description of activities Measurement Amount ETB
Unit cost
Red Green ready to total c
1 Limu -Activities   roast/export
Cherries kg

22
 limu -1 natural and washed coffee
1.1 collection ,processing , storage and KG 400,000 44,450 395.95 17,600
transportation

limu -2 natural and washed coffee

1.2 collection ,processing , storage and KG 795,000 88,333 445.5 39,352
transportation
132,78
  sub total   1,195,000   56,952
3
Mizan farm and Outgrowers
2          
activities

Aroga Birhan Farm natural coffee

2.1 kg 565,000 62,778 296.9 18,645
collection centre

Biftu site natural and washed coffee

2.2 kg 740,000 82,222 296.7 24,400
collection & processing

145,00
  sub total   1,305,000   43,045
0

23
Table 6: Loan Amortization Schedule

Payme
Payment Beginning Scheduled Total Ending Cumulative
nt Principal Interest
Date Balance Payment Payment Balance Interest
Num.

1 01/02/2023 $100,000,000.00 $26,103,236.73 $26,103,236.73 $24,353,236.73 $1,750,000.00 $75,646,763.27 $1,750,000.00

2 01/05/2023 $75,646,763.27 $26,103,236.73 $26,103,236.73 $24,779,418.37 $1,323,818.36 $50,867,344.90 $3,073,818.36

3 01/09/2023 $50,867,344.90 $26,103,236.73 $26,103,236.73 $25,213,058.19 $890,178.54 $25,654,286.71 $3,963,996.89

4 01/12/2023 $25,654,286.71 $26,103,236.73 $25,654,286.71 $25,205,336.69 $448,950.02 $0.00 $4,412,946.91

24
Table 7- Revenue
Total Revenue Quantity in kg Price euro/kg Total Price in euro ETB

Income
Roast coffee sales 132,783 9.5 1,261,438.50 65,275,111.62
Green bean export 145,000 8 1,160,000.00 60,025,403.52
sub total 277,783   2,421,438.5 125,300,514.84
Expenditure      
Direct and indirect cost of     1,935,920.44 100,017,500
producing Coffee
Interest Expense 4,412,946.91

Total 104,430,446.91

Net Income Before profit     20,870,067.93

tax

Profit tax (30%)     6,261,020.38

Net Income After Profit tax     14,609,047.55

25
 Table 8: Cash flow statement projection for fiscal year ending September 2023
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Total

Cash on $ $ $ $ $ $ $ $ $ $ $ $
hand 100,000,000. 84,250,000. 58,500,000. 27,750,000. 56,950,000. 50,096,763. 59,376,817. 68,626,817. 46,723,580. 50,973,580. 29,120,343. 38,370,343.
(beginning 00 00 00 00 00 27 27 27 54 54 81 81
of month)
Cash                          
Receipts

Cash sales $ $ $ $ $ $ $ $ $ $ $ $ $
5,000,000.00 5,000,000.0 10,000,000. 30,000,000. 20,000,000. 10,030,054. 10,000,000. 5,000,000.0 5,000,000.0 5,000,000.0 10,000,000. 10,000,000. 125,030,054.
0 00 00 00 00 00 0 0 0 00 00 00
Total Cash $ $ $ $ $ $ $ $ $ $ $ $
Receipts 105,000,000. 5,000,000.0 10,000,000. 30,000,000. 20,000,000. 10,030,054. 10,000,000. 5,000,000.0 5,000,000.0 5,000,000.0 10,000,000. 10,000,000.
00 0 00 00 00 00 00 0 0 0 00 00
Total Cash $ $ $ $ $ $ $ $ $ $ $ $  
Available 105,000,000. 89,250,000. 68,500,000. 57,750,000. 76,950,000. 60,126,817. 69,376,817. 73,626,817. 51,723,580. 55,973,580. 39,120,343. 48,370,343.
00 00 00 00 00 27 27 27 54 54 81 81

Cash Paid                          
Out

Advertisin 10,000.00 $ $ $ $ $ $ $ $ $ $ $ $
g 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 120,000.00
Commissio 2,000.00 $ $ $ $ $ $ $ $ $ $ $ $
ns and fees 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 24,000.00
Contract 400,000 $ $ $ $ $ $ $ $ $ $ $ $
labor 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 400,000.00 4,800,000.00
Employee       $       $       $ $
benefit 50,000.00 50,000.00 50,000.00 150,000.00
programs
Materials 20,000,000 $ $ $ $ $ $ $ $ $ $ $ $
and 30,000,000. 40,000,000. - - - - - - - - - 90,000,000.0
supplies 00 00 0
Coffee
cherries (in
COGS)
Office $ $ $ $ $ $ $ $ $ $ $ $ $
expense 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 18,000.00 216,000.00

26
Pension 30,000 $ $ $ $ $ $ $ $ $ $ $ $
and profit- 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 360,000.00
sharing
plan
Rent or 30,000 $ $ $ $ $ $ $ $ $ $ $ $
lease 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 30,000.00 360,000.00
Taxes and 52,000 $ $ $ $ $ $ $ $ $ $ $ $
licenses 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 52,000.00 624,000.00
Travel 50,000 $ $ $ $ $ $ $ $ $ $ $ $
50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 600,000.00
Wages 158,000 $ $ $ $ $ $ $ $ $ $ $ $
(less emp. 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 158,000.00 1,896,000.00
credits)
Subtotal 20,750,000 $ $ $ $ $ $ $ $ $ $ $ $
30,750,000. 40,750,000. 800,000.00 750,000.00 750,000.00 750,000.00 800,000.00 750,000.00 750,000.00 750,000.00 800,000.00 99,150,000.0
00 00 0

Loan         $     $   $   $ $
principal 26,103,236. 26,103,236. 26,103,236. 26,103,236. 104,412,946.
payment 73 73 73 73 92
Total Cash 20,750,000 $ $ $ $ $ $ $ $ $ $ $
Paid Out 30,750,000. 40,750,000. 800,000.00 26,853,236. 750,000.00 750,000.00 26,903,236. 750,000.00 26,853,236. 750,000.00 26,903,236.
00 00 73 73 73 73
Cash on 84,250,000 $ $ $ $ $ $ $ $ $ $ $  
hand (end 58,500,000. 27,750,000. 56,950,000. 50,096,763. 59,376,817. 68,626,817. 46,723,580. 50,973,580. 29,120,343. 38,370,343. 21,467,107.
of month) 00 00 00 27 27 27 54 54 81 81 08

27
Table 9 – Operational calendars for coffee Cherry Collection
Operational type Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Harvest
preparation (Bed
construction)
Harvest
preparation (Wet
mill maintenance)
Harvesting (Cherry
collection/purchase
)
Processing
Transporting
Marketing and
exporting

28
29