PROJECT PROPOSAL ON THE

ESTABLISHMENT
OF COFFEE PLANTATION FARM

Project name: -ABDU SAID COFFEE PLANTATION FARM

Promoter: - ABDU SAID AHIMAD/Model farmer/

Nationality: - Ethiopia

Address: - Zone Jimma Woreda L/Saqa Town Atinago Keble Santo –Specific place -Guutoo

Submitted to:-Jimma Zone & L/Saqa woreda Administration & Land Administration Agency

JUNE/2023
 BRIEF HISTORY OF THE APPLICANT
ABDU SAID COFFEE PLANTATION FARM OPERATED
BY:-
1. Mr. ABDU SAID
Address:-Country - Ethiopia
Region - Oromiya
Zone - Jimma
woreda - L/Saqa
Town- Atinago
Keble- Koma Kube
Mob.No0917552221
Email_____________________
Fax_______________________

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 Table of Contents
Contents page
Executive Summary …………………………………………………………….………….…5

1. General background of the project………………………………………………………..7

1.1.Background………………………………………………………………………………………………………………….7
1.2. Objective of the project…………………………………………………………………..20
1.3. PROJECT RATIONALE………………………………………………………………………………………..………………………21
1 .5.THE SIGNIFICANCE OF THE PROJECT……………………………………………………………………………………..….22

A. Source of Revenue……………………………………………………………………………...22
B. Employment opportunity……………………………………………………………….…..22
C. Sources of social service…………………………………………………………….……….22
1.6. PROJECT LOCATION……………………………………………………………………………………………………………23

1.7. INDICATORS FOR SUCCESS…………………………………………………………………………………………………27

2. Product Description and Application.........................................................................30

3. Market Study, Plant Capacity and Production Program...........................................41

3.1 Market Study...........................................................................................................41

3.1.1 Present Demand and Supply ............................................................................ 41

3.1.2 Projected Demand..............................................................................................41

3.1.3 Pricing and Distribution.......................................................................................42
3.2 Farm Size............................................................................................................. 44
3.3 Production Program ............................................................................................ 44
4. Raw Materials and Utilities .....................................................................................48
4.1 Availability and Source of Raw Materials..............................................................48
4.2 Annual Requirement and Cost of Raw Materials and Utilities............................... 49
5. Technology and Engineering................................................................................... 51

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5.1 Production Process........................................................................................... … 51
5.2 Machinery and Equipment................................................................................ ......54
5.3 Civil Engineering Cost..............................................................................................55
6. Human Resource and Training Requirement ........... ............................................. .56
6.1 Human Resource............................................................................................... …56
6.2 Training Requirement .............................................................................................57
7. Financial Analysis.....................................................................................................58
7.1 Underlying Assumption...................................................................................... …58
7.2 Investment........................................................................................................ …..59
7.3 Production Costs ........................................................................................... .........60
7.4 Financial Evaluation ........................................................................................ .......60
8- Economic and Social Benefit and Justification.................................................... .....61

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 EXECUTIVE SUMMARY
1. Project Owner: Mr. ABDU SAID
2. Project location: South West Oromia region Jimma Zone Limu Saqa
Wereda of Santo Keble
3. Project composition: ABDU SAID COFFEE PLANTATION FARM.
4. Premises Required Area: 61.467 hectares
5. Total capital investment cost;-3,200,000.00
6. Source of finance;- 30% or birr 960,000.00 and 70% or bir . 2,240,000.00
7. Project owner will be asked Jimma Zone administration on his a plot of
land 61.467 hectares to register with Title deed registration and
investment permission letter to start modern COFFEE PLANTATION
FARM soon.
8. The proposed project is for setting up ABDU SAID COFFEE
PLANTATION FARM..
This project profile deals with the establishment of Coffee plantation in
Oromiya Regional State at Jimma Zonne in the District of Limmu Saqa
Specifically in Santo Keble.
The following presents the main findings of the study.
Demand projection divulges that the domestic demand for Coffee is substantial
and is increasing with time. Accordingly, the planned plant is set to produce
16,000 tons annually. The total investment cost of the project including
working capital is estimated at Birr 3.2 million and creates jobs opportunity
for 360 Employee and Birr 1.275 million of income.
Hence, this project will hire 160 individuals permanently and more than 200
individual temporally during plantation and collection of product.
The financial result indicates that the project will generate profit beginning
from the first year of operation. Moreover, the project will break even at 7.1% of
capacity utilization and it wills payback fully the initial investment less working
capital in 1 year and 7 months. The result further shows that the calculated

5
IRR of the project is 67.9% and the NPV discounted at 18% is Birr
112,742,716.34.
In addition to this, the proposed project possesses wide range of economic and
social benefits such as increasing the level of investment, tax revenue and
employment creation.
Generally, the project is technically feasible, financially and commercially
viable as well as socially and economically acceptable. Hence the project is
worth implementing.

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1.GENERAL BACKGROUND OF THE PROJECT
1.1.Background
Coffee is the most popular soft drink in the world. Over 2.25 billion cups are
consumed every day (Ponte 2002). Its popularity and volume of consumption are
growing every year, and coffee shops are the fastest growing part of the restaurant
business. Today, coffee is both a part of our social experiences as well as an accepted
norm for doing business. Many business managers, scientists, politicians, and people
of all walks of life relax having a cup of coffee during breaks in between meetings,
busy research works and routine daily activities. Economically, coffee is the second
most exported commodity after oil, and employs over 100 million people worldwide
(Petit 2007; Pedegrast 2010; Gray et al. 2013). According FAO statistics
(www.faostat3.fao.org), global coffee production area covered around 10,142,285 ha in
2013.
There are over 120 species of coffee (genus Coffea). However, the only two species of
economic importance: Arabica coffee (Coffea arabica) and Robusta coffee (Coffea
canephora). Ethiopia is the center of origin and diversity of Arabica coffee. Arabica
coffee is the most widely consumed, dominating over 70% in volume of production and
over 90% of traded value globally. More than 80 developing countries mainly earn
their foreign currency from coffee. For Ethiopia, coffee is the most important export
commodity, with a share of 20-25% of the total foreign exchange earnings. At least 15
million people also directly or indirectly rely on coffee for their livelihood (Ministry of
Trade 2012, Gray et al. 2013).
As the county of origin for crop, Ethiopia produces premium quality coffee. It is the
leading producer in Africa, and the 5th in the world, following Brazil, Vietnam,
Colombia and Indonesia. If we consider Arabica alone, Ethiopia is the 3rd largest
producer after Brazil and Colombia (ICO 2015). Ethiopia also has the largest highland
area suitable for Arabica production and, hence has the potential to be a leading
producer in both quality and quantity.
Nearly all coffees produced in Ethiopia are shade grown, with 40-60% canopy cover,
except few home garden systems in Eastern Ethiopia. The coffee plants are also mainly
either local varieties/ land races or of wild origin. The chemical inputs for production

7
are very low, and even non-existence in most cases, while processing involves both the
wet and dry methods. The dominant method, however is the dry (natural) method,
with low environmental impact.
Ethiopian coffees are traded as conventional or specialty products. Specialty coffee are
those certified, using the standards of Organic (EU), Rainforest Alliance, Fairtrade or
combinations of these. The Swedish Society for Nature Conservation (SSNC) has
commissioned this study as part of their work with the Global Green Action Week in
collaboration with partner organizations around the globe. The aim is to educate
consumers about coffee origin, production system and its social and environmental
sustainability. The study emphasis on coffee origin, diversity, description of
production systems, different certification standards, environmental and social
benefits of traditional coffee production systems, and certification standards. The
report intend to help coffee consumers and reader to better understand the production
of conventional and certified coffee in Ethiopia, and how the production processes are
planned and organized.
"This report is funded by Sida, the Swedish International Development Cooperation,
through the Swedish Society for Nature Conservation. The Swedish Society for Nature
Conservation does not necessarily share the opinions expressed herein. Responsibility
for the content is exclusively the author's.

A. Origin, history and culture of coffee

1. Legend of coffee discovery
Given coffee’s captivating cultural influence, there are several stories and legends
about its discovery. A very common legend about its discovery is that of Kaldi and his
dancing goats. The story tells that a young Ethiopian goat herder named Kaldi, who
lived around the year AD850 noticed to his amazement, that after chewing the bright
red berries from a certain tree, his goats pranced around in an unusually exuberant
manner. Out of curiosity, he tried a handful of the berries that were growing on the
bushes nearby. Feeling a novel sense of elation, Kaldi realized that there was
something exceptional about this fruit and, filling his pockets, rushed back to his wife
to share his discovery. ‘They are heaven sent!’ she declared, ‘you must take them to
the monastery.’ Kaldi presented the cherries to the chief monk, telling the miraculous
effect they had on him, and his goats. On hearing the story and the cherries’
extraordinary properties, the monk threw them onto the fire denouncing them to be

8
the work of the devil. Within minutes, the monastery began to fill up with the heavenly
smell of roasting beans and the other monks gathered to investigate. Raking the
spitting and popping beans from the ashes, they were placed in a pot and covered with
hot water to preserve their freshness.
That night, the monks sat up drinking the rich and fragrant brew and vowed that they
should drink it daily to help with their nightly prayers. Words of the magical properties
of coffee cherries spread far and wide. The habit of drinking coffee spread all over
Arabia, the Mediterranean, and gradually Europe and the rest of the world.
Although the legend of Kaldi, his goats and the monks says that coffee was discovered
as a stimulant and as a beverage on the same day, it is far more likely that coffee
beans were chewed as a stimulant for centuries before they were made into a
beverage. The Oromos in Ethiopia were consuming coffee centuries before the Kaldi
legend, and have their own legend of its discovery. Once upon a time, Waqa, the
supreme sky God, punished one of his loyal men with death. The next morning, Waqa
visited the burial place, and tears dropped of his eyes. A plant emerged from the soil
watered by Waqa’s tears, and that was coffee. It is believed that all other plants are
watered by rain, but coffee is with tears of God. Coffee is always green. In Oromo
tradition green symbolizes fertility through which a supreme God, Waqa manifests
himself to the people. Hence, coffee has special value in Oromo culture (Gole et al.
2013).
2 .Earlier and traditional modes of coffee consumption in Ethiopia
The earlier use of coffee was as food, rather than as beverage. For instance, there are
evidences which show that Oromos started using coffee as energy food long before its
current popular use a beverage. There are also other traditional beverages consumed
locally, than the popular mode of consumption known worldwide. The traditional foods
from coffee include coffee ball, buna qalaa and qori, while traditional drinks are
quti, hojja and chamo (Gole et al. 2013).
Coffee ball: Ripe coffee berries collected from wild coffee trees were ground with stone
mortars, mixed with butter and formed into small balls the size of a billiard ball.
Coffee ball is rich in caffeine, sugar, fat and protein and one can provide energy for
one person for a day. Warriors, farmers and merchants engaged in hard work or long
journeys used to eat the coffee balls to overcome the problems of hunger and
exhaustion. Some historians believe that Sudanese slaves in route to Arabia picked up

9
this custom of chewing coffee/ coffee balls, and the coffee plant from the Oromo tribe
southwestern of Ethiopia and introduced it to Harar and Yemen. In his book, Travels
to Discover the Source of the Nile, James Bruce has noted that the Oromo warriors’
used coffee during their 16th century expansion.

Buna qalaa and Qori: The common coffee meals that have continued to the present
time are buna qalaa and Qori. Buna qala is prepared from green beans. The green
beans are roasted in a pot on fire, and mixed with butter while still on fire. The
roasted coffee enriched with butter is served as food. Currently, Buna qalaa is served
on special occasions like birth of a child, wedding, thanks giving and other events of
high cultural significance. Qori is prepared from roasted coffee beans and barley,
mixed with spiced butter. Qori is served as snack, especially during coffee ceremony.

Figure 1. Buna qalaa

Traditional beverages: Oromos and many ethnic groups in the areas of coffee origin
prepare different beverages from coffee leaves, like Quti, Hoja and Chamo. Quti is tea
from coffee leaf, without any additives, while Hojja is mixed with milk. Chamo is
prepared from fresh coffee buds/ young leaves. The leaves are boiled with ginger,
cardamom and chili pepper to produce a hot beverage that is consumed in the
mornings in southern Ethiopia. Chamo is believed to prevent malaria. It is highly
possible that these traditional uses of coffee, if modernize, can lead to inventions of
new uses of coffee as diet, energy or health food in the future.
B. Coffee culture in Ethiopia
Today, the culture of drinking brewed coffee is deep-rooted and widespread, known
almost among all ethnic groups in Ethiopia. It is a social drink, and is normally shared
with neighbors. Every time coffee is made, it is freshly roasted. The coffee ceremony

10
involves sorting, washing and roasting the beans, and preparing boiled coffee in a clay
pot known as ‘Jabana’.
It is often served by a younger woman in the household, in a ceremony that takes an
hour or two, and up to three times a day (in the morning, at noon and in the evening).
Coffee ceremony can also be organized at any time of the day if a guest comes, on
mourning, conflict mediation or other social events.
The coffee ceremony is considered to be the most important social occasion in many
villages and it is a sign of respect and friendship to be invited to a coffee ceremony.
Guests at a ceremony may discuss topics such as politics, community and gossip.
There are also blessings for ceremony’s performer and praise for the brews she
produces.
The lengthy Ethiopian coffee ceremony involves processing the raw, unwashed coffee
beans into finished cups of coffee. It begins with the preparation of the room for the
ritual. First, the woman who is performing the ceremony spreads fresh, aromatic
grasses and/or flowers across the floor. She begins burning incense to ward off evil
spirits, and continues to burn incense throughout the ceremony. She fills the Jabana
with water and places it over hot charcoal or fire.
The green coffee beans are carefully cleaned, roasted on a pan using traditional
charcoals or wood fire stove. During the roasting, the roast is kept as even as possible
by stirring the beans constantly or shaking them. The aroma of the roasted coffee is
powerful and is considered to be an important aspect of the ceremony. Hence, the
hostess often goes around letting the guest smell the smoke from the roasted coffee.
The roasted beans are grinded using a small mortar and pestle, into a coarse ground.
Then, the ground coffee is added to hot water in the Jabana set on stove, and then
mixed by shaking. The mixture is boiled and removed from heat. Waiting for few
minutes till the dregs settles down to the bottom of the Jabana, the coffee is served, by
pouring the brew into ceramic or glass cups that are arranged on a coffee table or
Rakabot. The dregs of the coffee remain in the pot. Today, the Ethiopian coffee
ceremony has become one of the tourist attractions and being served in most tourist
destination hotels and restaurants. In some areas, the deep-rooted coffee culture is
manifested even in architecture. Symbolic Jabana is used to decorate squares in city
centers, like in Jimma city of Oromia, or roof tops in Bonga/Kafa and many other
places in the main coffee growing areas of the country.

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C. Domestication and distribution
According to Luxner (2001) the domestication and use of coffee in Ethiopia dates back
some 2000 years ago. Some legends of its early consumptions even date it back,
around 1000 BC (Illy and Illy 2015). During the early period of domestication, coffee
was only used as food by the native Oromo people. Coffees become known to the rest
of the world only during the beginning of the last millennium. It was first brought by
traders to Yemen around year 600 (Illy and Illy 2015). The Arabs developed its present
use as liquor, and the culture of drinking coffee reached Turkey and Syria during the
late 1400s and early 1500s. This habit of drinking coffee gradually spread to the rest
of the world, leading to an increased interest in producing it as a commodity on a large
scale. The Dutch first introduced coffee plantations to Java in 1690 (Figure 4.), and it
gradually spread to other parts of the word, especially Latin America (Haarer 1962;
Ferwerda 1976). Today, Latin American countries are the major producers of Arabica
coffee.

D. Coffee genetic biodiversity

The spread of coffee all over the world was based on seeds from a single tree or a few
trees introduced to Yemen, thus, cultivated coffee varieties have a very narrow genetic
base. The best hope for crop improvement lies in the progenitors or wild relatives of
the cultivated plants that harbor rich genetic resources for tolerance against abiotic
(drought, cold, heat, salt, solar radiation), and biotic (pathogens, parasites,
competitors) stresses (Nevo 1998; Schoen and Brown 1993). In this regard, the
Ethiopian Arabica coffee genepool represents the most important and diversified
genepool of this species. The natural genetic diversity or genepool of economic plants
has three distinct categories, namely: a) the primitive cultivars or landraces of
traditional agriculture, b) the advanced cultivars produced by plant breeders in the
last 100 years, and c) the wild or weedy species related to domesticated cultivars
(Teketay and Tigneh 1994).
Ethiopia is well noted as centre of origin and diversity of many domesticated crops
including Arabica coffee. It possesses all three categories of the genepool for C. arabica
(Tewolde 1990). Sylvian (1958) witnessed the existence of a great variation among the
wild coffee plants in Ethiopia. In efforts to collect and document the use of coffee genes
in breeding programs, researchers have collected a total of around 11,691 Arabica

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coffee germplasm accessions from different coffee growing areas throughout Ethiopia.
The collections are conserved ex situ in field gene banks at Jimma Agricultural
Research Center and its sub-centers (5,960 accessions) and in Choche (5,731
accessions), in Jimma zone of Oromia state, Ethiopia (Gole et al. 2002). The collection
at Choche is mainly for conservation and managed by the Ethiopian Biodiversity
Institute.
1. Diversity in wild coffee
The wild populations of C. arabica in the montane rainforests are the most important
genetic pool of the crop. Tesfaye (2006) reported high genetic variability within and
between different wild populations in Ethiopia. He further noted that wild coffee plants
are genetically distinct and more diverse when compared to the cultivated varieties
grown in Ethiopia and around the world.
The presence of high genetic variation in natural coffee populations in the forest and
semi-forest systems can partly be attributing to the presence of wide ecological
variation, ranging from 1000 m to 1800 m or even up to 2000 m in altitude, with
highly dissected and rolling topography. The average temperature and rainfall also
varies with a similar magnitude.
The availability of high genetic diversity is fundamental for any crop improvement
program for use by the plant breeders. In the absence of genetic diversity, any
improvement endeavor is time consuming, expensive and with little success. Alike
other crop species, the conservation of coffee genetic resources plays significant role as
an economic potential, ecosystem conservation and survival capacity of the species.
Because of this high genetic diversity, coffee breeding programs have been striving to
identify disease tolerance, drought resistance, and low caffeine varieties. Therefore, a
diverse coffee gene pool is of paramount importance for breeding. Particularly, cross
breeding of cultivars and wild genetic material leads to results above average due to
heterosis effects. In this regard, the Ethiopian wild coffee populations provide highly
diverse genetic material for future coffee breeding and selection.
2. Diversity in cultivated coffee
Surveys in main coffee growing regions of the country showed that there is a high
diversity of coffee landraces. In garden coffee systems and other cultivated coffee
production systems, farmers choose the coffee types of their preferences and often mix
more than one landrace. Some farmers plant up to five landraces in their garden. Each

13
has its own advantages. Some are high yielding, some have good aroma and flavor and
some are resistant to diseases. A total of 130 landraces known by local names in
different localities were recorded in the areas covered by the surveys (see Box 1).
Twenty-two were recorded in the Hararghe region in the east (Teketay and Tigneh
1994; Gole et al. 2001), 33 in Borana and Sidama in the southern part, and 75 in
Assosa, Gambella, Illubabor, Jimma and Wollega coffee growing regions in western
and southwestern parts of the country (Admasu et al. 1989). The list is not complete
since many coffee growing areas were not surveyed. For instance, the major coffee
areas such as Kaffa, Maji, Mizan –Aman and Tepi in the southwest, and the minor
coffee areas such as Arsi, Bale, Gojjam, Omo, Shoaand Wollo were not covered.
Box 1. Traditional landraces in different coffee growing regions
Italic

Hararghe Borana and Sidama, Jimma, Illubabor, Wollega, Gambella

and Asossa
Abadiro, Bale Walancho,Kolisho, Mello,Chercherei, Chochie, Mito, Alga,
Tino, Bukuri na Buncha, Orommie, Fesfus, Dalecha, Selalei 1, Selalei 2,
(Enkure), Buna Legumami, Shayta, Setea, Wendie, Gota, Kereso, Adi,
Buna Kurumei, Dega, Dirbu, Gedjo, Oshiro (Oromie), Miro, Guracha A,
Setamo, Tils, Chakayie, Kabiso, Inaria, Buna guracha, Buna Guracha
Gidicho, Dumancho, Guna gura, Buna albu, Kubri, Nole Buna, B,Buna
Jima, Terako, Sewa, Bokoji, Buna Liketi, Buna Babu, Darimu Buna
Kella, Wecincho, Buna, Tikur Buna, Yabeshe Buna, Buna adi,
Cherchero, Gugudamei, Hiromie, Kubri Deme, Buna Bilo, Ale Buna,
Denga, Kudume, Galo, Chora Buna, Buna Goromiti, Araba, Yeleku
Buna, Fendisha, Wolisho, Bedesa, Bisle Buba, Dureni Buna, Kombu,
Gamu, Ittu,
Guto, Meke, Awer, Buna Saki, Yegeba Buna, Cholu Buna Kabnya,
Welencho, Kolinsho, Buna Birbirso, Goma Buna , Bedesa, Chobo Buna,
Muyra, Olaha, Deracicho, Ado, Geleb Buna, Sardo Buna, Urgoftu, Sor
Buna, Shekhussieno, Awicho, Shamilei, Yeboto Buna, Yembo, Darma
Buna, Shenkuyi, Bula Bunchu, Wojo, Geri Buna, Yembo Buna,
Yekurundusie Buna, Shimbure, Danchei, Damu, Haya Buna, Toluma,

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 Buna, Senbo Buna, Torbi, Tujar, Kunkuwranachei, Kubur, Syndi, Harar,
Buna, Bedesa, Yawane, Wogere Amoler, Ganticho Aba Bapasa, Gufaro,
Mito, Keda Buna, Gadafa

Note: The headers in bold are names of the coffee growing regions and the list below
each column are the local names of the traditional landraces, separated from each
other by commas, as recorded in respective regions. Hararghe, Borana and Sidama are
found east of the GRV those in the 3rd column are in the western part.

Farmers identify their traditional coffee landraces by color of leaves, gross morphology
of trees, weight and shape of fruits and beans, presence or absence of aroma during
roasting of beans, etc. They give names to the landraces based on the different
attributes of the landrace (Teketay and Tigneh 1994; Gole et al. 2001).

In Ethiopia, there are different coffee types recognized by their origin and quality, and
used as trade names. These include Bebeka, Harar, Jimma, Kaffa, Lekempti/Wellega,
Limmu, Sidama, Teppi and Yirgacheffe. Under each coffee type, 2-5 different local
types are recognized. Such high level of diversity is partly attributed to the presence of
indigenous traditional production systems of coffee in the country. There are four
major categories of production systems namely: forest, semi-forest, garden and
plantation coffee production systems. The first three are traditional systems by small
scale subsistent farmers, and account for over 95% of the coffee produced in Ethiopia.
The different production systems are discussed in detail in the next section, under
coffee production systems.
Box 2. Main coffee type by quality and place of origin (Boot 2011; Ministry of
Trade 2012)

Coffee Characteristics
Type
Yirgacheffe Internationally known and recognized as Yirgachaffe Brand Name. It is
highland grown coffee and has intense flavor known as flora. Top grade
Yirgacheffe coffees share many characteristics with the best Sidama
coffees. Fruit flavors, a bright acidity, and a silky mouth feel are some of
its hallmarks. It has fine acidity and rich body. Many roasters are
attracted to its fine and fruit flavor and are willing to pay a premium

15
 price for it.
Harar Quality Harrar coffees are notable for a fruity characteristic and a
creamy body. The finest Harrar coffees have a distinct note of blueberry,
though many other fruity and fruit-like aromatic flavors can occur. It
has medium sized beans with greenish-yellow color, medium acidity and
full body, and a distinctive mocha flavor. Internationally known and
recognized as Harar Trade Brand Name and highest premium coffee in
the world.
Sidama Medium-sized bean, greenish-greyish in color. Due to balanced tests and
good flavor called sweet coffee, has fine acidity and good body. High
grade unwashed Sidama coffees are known for their intense fruity
characteristics, while being of somewhat lighter body than unwashed
Harrar coffees, for example. It is always blended for gourmet or specialty
coffee.
Limmu Limu coffee (all washed) generally has a milder acidity than Sidama and
Yirgacheffe; the flavor is generally characterized by a balanced and clean
cup- spicy and winy flavor. Washed Limmu is one of premium coffee,
medium sized bean and greenish bluish in color mostly round in shape.
Jimma Jimma coffee encompasses Ethiopia’s largest basket of unwashed coffees
which included all unwashed coffee produced in the southwestern region
of Ethiopia. The area has a multitude of different indigenous varieties
that can be quite diverse in quality. It is heavy bodied cup with winy
after taste, and can be prepared as washed sun-dried.
Tepi Low acidity but better body than Bebeka, commercially important and
used for special blend.
Bebeka Medium-to-bold bean and known for its fruity taste, has greenish-
brownish in color with good acidity and body. There are many roasters
who put his flavor in their blends, but it can also be sold as an original
gourmet or special origin flavor.
Lekempti Highland grown, known for its large bean size, and the flavor can have a
pronounced perfume-like aftertaste. Nekempti coffee export designations
include: Kelem Wollega, East Wollega and Gimbi coffees are coffee mostly
sun-dried.

16
3. Coffee forests and biodiversity
Arabica coffee naturally grows as an understory shrub in the Afromontane rainforests
of Ethiopia. Parts of Afromontane forest where wild Arabica coffee populations
naturally occur are usually named “Coffee Forests.” From biodiversity point of view,
the Afromontane forests of Ethiopia including coffee forests have already been globally
recognized as hotspot areas for biodiversity conservation, as the Eastern Afromontane
Biodiversity Hotspot (Mittermeier et al. 2005) due to their exceptionally high level of
diversity and regional endemism, and high level of threat. For instance, studies on
some five remnant fragments of coffee forests (e.g. Gole 2003; Schmitt 2006; Senbeta
2006) have recorded over 700 species of plants, which represents about 12% of the
country’s flora. The remnant forests also differ from each other in terms of species
composition, since coffee forest occur over wider geographical regions along
topographic and climatic gradients (Senbeta 2006).
Coffee forests are also rich in diversity of birds, mammals and other groups of
mammals. For instance, Gole et al (2009) reported 200 bird, 50 mammal, and 20
amphibian species in the Yayu Coffee Forest Biosphere Reserve. Engelen (2012)
recorded over 107 bird species from garden coffee, semi-managed coffee, forest coffee
and farmland in Gera area of Jimma. Although complete inventory is lacking some of
the common mammal species in the coffee production systems include Bush Pig,
Giant Forest Hog, Warthog, Colobus Monkey, Olive Baboon, Grey Duiker, lion,
bushbuck and others.
Coffee is the major source of foreign currency for Ethiopia and contributes more than
35% of the total export earnings (FAO/WFP, 2008). Thus, it is a cornerstone in the
export economy of the country and it supports directly or indirectly the livelihood of
some 15 million people (EEA, 2001). Coffee the defining feature of the national culture
and identity, with 44% of the production consumed domestically (Mayne et al., 2002).
In Ethiopia, coffee is produced in four production systems, namely: forest, semi-
forest,garden and plantation coffee in the Western, Southern, and Southwestern parts
of the country (CFC, 2004). Coffee grows under diverse environmental conditions
ranging from 550 m to 2600 m above sea level, with annual rainfall from 1000-2000
mm, temperature(minimum and maximum from 8-15 0C, and 24-310C, respectively),
requires deep, well drained, loamy and slightly acidic soils (Paulos and Tesfaye, 2000).

17
The estimated area of land covered by coffee is about 600,000 hectares, whereas the
estimated annual national production of clean coffee is about 350,000 tons
(Alemayehu et al., 2008).
To this effect, the owner M.r ABDU SAID will be planned to invest on COFFEE
PLANTATION FARMING , he has been living for long time in JIMMA ZONE , Committed
to Developing in Jimma Zone Of Limu Saqa Woreda Specifically Santo keble of Bilacha
village and undertaken this project study to check the market, technical and financial
feasibility of this project.

The promoter is very ambitious and committed to realize the project. Hence, He
expects to get the necessary support from the JIMMA ZONE administration and LIMU
SAQA administration to make the project to be operational.

Besides, the government polices and incentives for the private sector investment are
very promising that motivates the promoter to engaged in developing Coffee Plantation
Farming.

1.2 .OBJECTIVE OF THE PROJECT

The objective of this project was to increase production capacity of Organic limu coffee
by
Developing plantations and processing facilities, in order to increase the income and
standard of living of farmers and agricultural laborers in the Jimma Zone and increase
the foreign currency revenue due to coffee exports.
Specific Objectives
 To undertake trading and other refuted business activities that enable to generate
a reasonable to the invested capital.

 To develop modern business centre that would provide services of international

standard in order to attract foreign visitors and thereby contribute towards the
generation of hard currency for the country.
 To create employment opportunities for the population in the town and surrounded
districts
1.3 .PROJECT RATIONALE

18
Internationally the economic growth this country is experiencing, the good governance
created and even if the District is in its nascent stage of development this project is
the best model in kind in the Limu SekaWoreda.

Therefore, the project is feasible and would be a model development in promoting and
attracting different Agricultural investments and tourists in jimma.

In order to respond to the created environment the JIMMA ZONE is in need of major,
basic and feasible COFFEE FARMING projects to be developed.

The existing promising investment opportunities, the demands of Coffee plantation

process andproduction needs along with relatively sound investment support made by
the government in such kinds of feasible projects, compelled the project promoter to
initiate the multipurpose oriented business project to be established. Despite the
promising business opportunities of the jimma zone, the trend on such kinds of
investment found to minimal. Since there is no such kind of modern coffee farming
facilities and business station in the different town of Jimma Zone to accommodate
the existing demand of Coffee production in the town and the surrounding areas. The
mismatch between the demand for and supply of such kind of production in easily
observed in the town of JIMMA ZONE in order to supply for local and international
market.

Therefore, the existing shortage or absence in the supply of these productions , along
with its commercial and administrative access, better location and infrastructure
access, escalating trend of urbanization and business activities, thus it is with such
reason that this project is identified and proposed and assumed to be more profitable.

In general, the country’s decentralized state based economy, privatized and free
market economy; good governance creates a favorable environment for the
development of investment for private investors.

1.4.THE SIGNIFICANCE OF THE PROJECT

The envisaged project deemed to add to the economic development of the nation in
general and zone and town in specific with following ways:

A. Source of Revenue

19
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, the modern coffee plantation farming will serve as
sources of revenue for the Wereda, the region as well as for the national level.

B. Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self employment or
employment in other organization. Hence, this project will hire 160 individuals
permanently and more than 200 individual temporally during plantation and
collection of product.

C. Sources of social service

In addition to serving as a source of employment and income for the region, the project
renders social services for different group of people. Hence, it is also providing the
following services;

 Serve as a source of mental satisfaction for the different users,

 Since, the production encompasses different processing areas; it will divert the
attention of the users from different evil deeds.
Furthermore, it serves as the pilot experience and ground for other investor to enter in
to such kinds of investment development. It also contributes on the efforts made on as
a character given integrated modern Agro-farming for physical development pattern of
the quality coffee production in the region.

1.5. PROJECT LOCATION

Jimma is one of the 23 zones found in Oromia Regional State with Jimma City as its capital.
Jimma Zone consists of 17 districts with 538 peasant Associations (PAs). Jimma special is
stood as a special zone mainly representing the urban parts of Jimma city and its environs.
There are 31 urban centres (towns with more than 2000 inhabitants) in Jimma Zone which
mainly boost the opportunity for farmers to sell out their agricultural products and also to buy
the necessary agricultural inputs. Out of the aforementioned 17 districts, LIVES targets 3,

20
namely: Kersa, Seka Chekorsa and Dedo. Figure 2 below shows these clustered districts
selected for LIVES intervention in Jimma zone.

In terms of population, Jimma zone has a total human population of 2,607,115 of which 1,295,
764 are female. More than 80% of the population lives in rural parts of the districts as well as
district towns than in Jimma Special Zone, which is better urbanized. The populations for the
three selected districts represent about 20% of the population of the zone. The three districts
(Kersa, Dedo, Seka Chekorsa) has a total human population of about 661, 944 of which
329, 672 are female.

In terms of Agro-ecology, Jimma Zone enjoys seven different types of climate

conditions which include, Moist Dega (21.675 ha), Moist Kolla (73445.047 ha), Moist
Weinadega (125216.83), Wet Dega (233401.823), Wet Kolla (99268.614), Wet
Weinadega (1280822.049) and Wet Wurch (438.173). From here, one can easily
observe that the larger part of the land lies under Wet Dega, Moist Weinadega and Wet
Weinadega.. Whereas Wet Kolla, Moist Kolla, Moist Dega and Wet Wurch in aggregate
cover less than 25% of the total existing hectares of land of Jimma Zone. The total
area of the zone is 1,812,614.217 ha (see annex 1 for rainfall climate correlation).
The climate situation suits for livestock production which include small ruminants,
poultry and beekeeping. Due to the availability of perennial rivers and seasonal
streams, the potential of the zone for irrigated agriculture is dependable. In terms of
altitude, the three selected districts of the zone falls between 888 and 3,046 meters
above sea level. Dedo district holds the highest plateaus with forest patched hills and
ridges which dominate the major parts of the land. Figure 3 shows the biophysical
Characteristics of the three selected districts.

Jimma Zone is one of coffee growing zones in the Oromia Regional State, which has a
total area of 1,093,268 hectares of land (JZARDO, 2008). Currently, the total area of
land covered by coffee in the zone is about 105,140 hectares, which includes small-
scale farmers’ holdings as well as state and private owned plantations. Out of the 40–
55 thousand tons of coffee annually produced in the Zone (JZARDO, 2008), about 28-
35 thousand tons is sent to the central market, while the remaining is locally
consumed (Alemayehu et al., 2008). Now a day, Jimma Zone covers a total of 21% of
the export

21
share of the country and 43% of the export share of the Oromia Region (JZARDO,
2008).
Coffee is the major cash crop of the Zone, which is produced in the eight woredas
namely,Gomma, Manna, Gera, Limmu Kossa, Limmu Seka, Seka Chokorsa, Kersa and
Dedo,which serves as a major means of cash income for the livelihood of coffee
farming families (JZARDO, 2008). According to the report from the same source, 30-45
% of the
people in Jimma Zone are directly or indirectly benefited from the coffee industry.
Jimma Zone has a population of approximately 2.1 Million. The area receives annual
rainfall in the range of 1,200-2,800 mm and in normal years the rainy season extends
from February to November. The area is suitable for growing coffee, cereals, pulses,
root and fruit crops. The highlands and the swampy areas grow maize and barley as a
belg season crops using residual moisture in the depressions. Only 25% of farmers in
the area possess one or more oxen. Despite considerable deforestation in recent years,
27% of the total area of Jimma Zone remains forested (natural, artificial, shrubs and
bushes).
Before DERG ended, during three to four years, woredas were abolished and
disappeared, becoming new awarajas or getting included in new awarajas. At most, a
single new awaraja included two woredas. These awarajas were parts of administrative
regions. Kaffa province split and got distributed into:
- Kaffa administrative region: Magi, Gimira and Kaffa ex-awarajas;
- North Omo administrative region: Kullo Konta ex-awaraja;
- Ilubabor administrative region: Jima and Limu ex-awarajas.
Limu Kosa and Limu Seka woredas became two new awarajas with Genet (or Limu
Genet) and Atnago as respective capitals. Goma and Gera woredas became a single
awaraja with capital Agaro. From four woredas belonging to a single awaraja, they
became three new awarajas. The DERG regime created new administrative units called
kebele suffering comparison with soviets. These kebele, named farmers’ or peasants’
associations in rural areas, divided the new awarajas into many units and still
organize the country as the smallest
administrative units.
After opposition defeated the DERG regime, creating a new government lead by its
Prime Minister Meles Zenawi, the ex-administrative system was replaced by regions,

22
zones and woredas. Awarajas disappeared. Limu Kosa, Limu Seka and Goma/Gera
awarajas returned as the four woredas they were, parts of the new Jima zone, the
latter included in the Oromiya Region.
The last changes occurred three years ago when large woredas split into two woredas.
New formed woredas in Jima zone are:
- Limu Kosa woreda split into Limu Kosa and Cooraa Botor woredas;
- Limu Seka woreda split into Limu Seka and Nono Benja woredas;
- Goma woreda split into Goma and Gumay woredas.
The new seventeen Jima zone’s woredas (maqaa aannoolee)
Cooraa Botor Limmuu Saqqaa Shabee Somboo

Deedoo Maanaa Saaxmma

Geeraa Naanoo Beenjaa Sigmoo

Gommaa Omo Naadda Sokoruu

Gumaay Qaarsaa Xiroo Afaataa

Limmuu Kossaa Saqqaa Coqoorssa

Table 5: The new seventeen Jima zone’s woredas (data: Jima Zone Agriculture and Rural
Development Office, 8th July 2009, prod: Bossolasco, 2009)

The Home Gardens of Ethiopia project chose for its investigations to focus on Limu
Kosa woreda, all kebele including. Indeed this district seems to better correspond to
geographical indication prospects: first because it regroups more coffee infrastructures
and institutions (service cooperatives union head office, state farms, investors’ modern
plantations), higher coffee production levels and shelters protected forests which are
the potential wild coffee environment. Anyway, even I also focused in Limu Kosa, I also
extended my investigations, in a lesser way, to Limu Seka, Chore Botor and Nono
Benjaworedas. These four woredas are parts of the old Limu-Ennarea kingdom
defeated by Amhara
conquerors in the second half of 19th century, then were include in the old Limu
awaraja during the Haile Sélassie regime before forming the two ex-Limu awarajas
during Mengistu regime renamed Limu woredas by the current Prime Minister last
century. Nowadays this Limu region is dominated by the Limu Kosa woreda, not only
concerning coffee production but other infrastructures.

23
Limu Saka woreda is located at 100km from Jimma and 450 from Addis Ababa. It is
bounded by Yaanfa woreda in the west, Limu Genet in the North, Nono Benja woreda
in the South and Choora Botori woreda in theeast.
Agro ecologically, the woreda is characterized by 13% highland and 55% lowland and
32% lowland. The elevation of the woreda ranges from 1400 to 2200 m.a.s.l.
Regarding land use in the woreda, about 10241 ha is forest and bush land while
38,874 ha of land is used for crop production. Moderately dense vegetation coverage
includes forests, bushes, scrublands and grasslands.
The woreda potential for agriculture is estimated to be around 42704 ha of land. From
the cereal crops sorghum cover 21,538 ha and maize cover 12.66 ha of land. Coffee is
the major cash crop produced by the majority of the farmers as main source of income
and covers more than 12,964 ha of land. The woreda has more than 3427 ha of land
under irrigation from which 109 is irrigated by modern motor pump.
There are two distinct seasons: the rainy season starting in late March and ending in
October and the dry season occurring during November to early March. The mean
annual rainfall is 1800 mm. The topography of the woreda is complex and consists of
hills, undulating landscape and plains.
Limu coffee grows in the southwest of Ethiopia between 3,600 and 6,200 feet. Limu
coffee (all washed) generally has a milder acidity than Sidama and Yirgacheffe; the
flavors generally characterized by a balanced and clean cup.

Traditionally, Limu coffees marketed under that name have been processed washed;
the unwashe Limu coffees have normally been offered under the Jimma category.
The project owner due to the above mention fertile ground of the area proposed Limu
Seka woreda of Santo Keble keble to invest coffee production on 150 hectares of land.

1.7. INDICATORS FOR SUCCESS

Project owner will be asked Jimma zone administration and investment office
investment permission letter and title deed registration on 100 hectares plot of land to
start the establishment of coffee production farming soon.

There are numerous indicators for the success and effectiveness of ABDU SAID
COFFEE PRODUCTION FARMING project which include the following:

24
1. The administration of jimma Zone has provided a peaceful and secure environment
for the project.

2. The Central Government Representative and Regional Government Representative

of jimma is behind the facilitation of any recommendation for assistance from the
Government, and Ministry of Urban development and Municipality in particular.

3. The local community in the Wereda and surrounding has provided moral and is
ready to provide the necessary help it can afford. (Community Contribution).

4. The Farming is situated between a Police Post and a Worada court Army
Detachment for the assurance of Security.

5. The project owners are well experience in the business activity and participate on different
Tertiary economic activity play great role in the implementation of a project. Some of the
investment they achieved effectively and efficiently are as the following;-

i. He has high commitment to implement this project since he was ahead accumulating
coffee plant and 100 hectares plot of land in the stock and he has different machines which
are utilized for COFFEE PRODUCTION FARMING project.

ii. He has different experience by visiting business activity in the country at national level .

iii. He was educated Business person those have Business Plan by utilizing a fertile ground
of Rule and Regulation of investment proclamation of the country.

iv. He has deposited 30% of cash birr immediately to starting plantation farming.

v. He is customer of Ethiopian development Bank Jimma branch for long period of time and
he can get loan priority with in short period of time.

vi He is also involving on various tertiary economic activity

v ii. Most Raw materials are locally available and are relatively affordable..
Viii. Expertise’s are available and reliable for such a Job with maximum commitment and
efficiency.
Viiii. Man power is undoubtedly available from the whole Keble and beyond, and the work
can be done at a reasonable speed

1. PRODUCT DESCRIPTION AND APPLICATION

25
The type of coffee planted and production will be cultivated and collected in the project
area respectively is limu coffee( Coffee Arabica) (Botanical Latin) .

Limu coffee names

Table 1: Limu coffee designations according to its process and geographical areas (data:
Home

Area
Name
Unwashed processed Washed
processed
Local area Ye-Limmuu buna Ye-Limmuu
buna
Regional area Ye-Jimmaa buna Ye-Limmuu
buna
National level Ye-Jima Ye-Limu
bunna
International level Jima unwashed coffee Limu washed
coffee
Botanical Latin Coffea
Arabica

As noted Petit (2007), the main Ethiopian coffee sector distinctive features are that
1)Ethiopian coffee is an important source of coffee genetic resources since the country
is the centre of origin and diversification of Arabica coffee (wild coffee still grows in
different areas, and forest and semi-forest coffees constitute an important part for the
country’s production);
2) that domestic consumption represents more than 40 % of coffee production.
There is a long and strong tradition of coffee drinking. In this way, national production
is very difficult to approach and is estimated around 280,000 metric tonnes in which
participate 700,000 households (Save the Children UK, 2003 and Dempsey, 2006)
representing around 15 million people (including daily labourers);
3) that different flavored beans produced in various regions (such as Harar, Limu or
Yirgacheffe) are recognized internationally and marketed in blends or 100% Ethiopian

26
products at high premiums; 4) that smallholders represent 95% of total production in
a low input-output system making Ethiopian coffee production naturally organic.
Thus the importance of coffee in Ethiopian economy explains Why coffee should be
considered as a political crop

1.1) Botanical description

Phylum Spermatophytes
Order Rubiaceae
Genus Arabica Linnaeus (among 60-80 species
Class Dicotyledoneae
Table 2: Botanical description of C.arabica (Bantte, 1995)
Indigenous to Ethiopia, Coffea arabica L. is the oldest species known and the most
traded one: in the beginning of the millennium, 60% of world coffee produced was
C.arabica whereas 40% was C.robusta (a third economic species is C.liberica, which
amounts are relatively insignificant). There is a great variation within C.arabica
species itself, and eighteen improved cultivars/varieties are grown in south western
and western Ethiopia (not
including local ones).
C.arabica tree lives up to fifty years, thirty years productive, and can be twelve meters
tall but is generally cut not to get taller than two to three meters in order to facilitate
cultural
practices and harvest. Its genotype is characterized by 2n=44 chromosomes; it is self-
fertile and contains 0.8-1.7% of caffeine (Banttee, 1995). The Coffee Producing
Development Enterprise (2005) in charge of Ethiopian state farms provided them the
following botanical description in its coffee management manual:
The root system consist of a short stout tap-root, rarely extending beyond 45 cm,
four to eight axial roots originating as laterals from the tap-root and going down
vertically to two to three meters. Many laterals are found on the first foot of the soil
and below them, the first and lower laterals ramify evenly and dive deeply in the soil.
The shoot system has a prominent vertical stem with horizontal primary branches
arising from it in pairs opposite to each other. These latter give rise to secondary
laterals, which in turn produce tertiary and quaternary branches.

27
Leaves are dark green. Each pair of leaves is approximately at right angles to the pair
below. Just above the insertion of each leaf on the vertical stem, a series of four to six
buds may be found which give rise to a new vertical stem (sucker). Above these series,
head of series bud develops into a horizontal branch. The serial buds on these
branches develop into branches, inflorescence or remain undifferentiated.
Illustration 1: Coffee tree with unripe berries in Suntu State Farm, Limu seka woreda,
Bossolasco, 1st Jun 2015)

Flowers are white and generally pentamerous. The flower buds are produced at the
leaf axils of mature green wood. Temperature and drought bring buds into dormancy.
After several weeks of water stress, rain induces flower growth followed by opening
within eight to ten days. Fertilization takes place after pollination where the fusion of
one male nucleus and the polar nuclei forms endosperm. It is this endosperm that
forms the coffee bean.

28
Illustration 2: Coffee flower (Bossolasco, 10th October 2009)
The fruit of the coffee tree is a drupe which normally contains two seeds; these ones
are flat on one side. When a single seed develops, its shape is oval and gets called pea
berry.
Fruit is commonly referred to as cherry when ripe, and as berry when unripe. Five
periods can be distinguished during the growth of the berry: pinhead, rapid fruit
growth, endosperm growth, endosperm hardening, and fruit ripening. The whole takes
seven to eleven months (the most of it eight to ten months). The coffee fruit is oval.
When unripe the color is green, and when ripe the skin is red (yellow for some
varieties). The seed is covered with a thin membrane (silver skin). Above the silver skin
is the parchment. A coating of slimy mucilage covers the parchment. The fleshy outer
covering comprises the pulp and skin.

29
Illustration 3: Coffee red cherries, pulp, and beans covered by their sticky mucilage
(Bossolasco, 1st July 2009)

1.2) Two ways of processing coffee: the dry and wet methods
Illustration 4: Wet and Dry methods (adapted from the International Trade Center,
2002)

DRY PROCESS
WET PROCESS

Cherry reception/sorting (according to

Greens to sun Cherry reception/sorting Rubbish to waste size,density and colour of beans)
drying
Floaters to
Flotation-wet feed
sun drying Rubbish to waste Sun drying and raking
Water to
recycling Pulper machine
Pulp to
composting
Pregrading channel

Fermentation tanks

Water to
waste
Washing Storage

Water to
Grading channel Heavies and lights
recycling separated

Skin drying – remove all Hulleries, Dried husk and

free/excess water Parchment removed

Sun drying Household steps

Sun drying Akhrabies, Investors and Service

cooperatives processing plants

Storage and conditioning

30
The dry method: Coffee bean is drying in the cherry, part of the drying sometimes
taking place before harvesting. Picking and drying are often the only operations
undertaken by the grower, especially for agro-forest coffee. When these have been
carried out, dried beans (janfal) addressed to central market are sent to local
processing plants (hulleries) where the dried pulp and the parchment are removed in
one operation. The coffee is then sent to Addis Abeba, where it will be processed again
in export case. Dry coffee still constitutes the bulk of Ethiopian coffee produced but it
is considered that is impossible to produce a first-class coffee by this method,
although the procedure is far simple (Banttee, 1995).
The wet method: This new procedure has been brought to Ethiopia during the 1970’s
socialist regime and is now preferred to reach quality goals and prices. The sitting of
the pulper is near a river or stream which can provide a good supply of water, and
evacuation channel, at picking time since the whole process is carried out in presence
of clean water. The pulpery or washery should be laid out so that the coffee is moving
through each stage of the process by gravity flow (Bantee, 1995). The main constraint
of this method is the water contamination inherent to rubbish then evacuated in
streams feeding neighboring households. Moreover ripe cherries start to ferment very
soon after it is picked and become brown. So it is important to keep it in the shade
and to process it as soon as possible, on the day it is picked. Generally washeries
process the coffee grown in a 20 km radius because of that. The final product is coffee
with parchment. This latter will be removed in Addis Abeba, once coffee with
parchment has been bought to the Ethiopia Commodity Exchange6, before getting
exported.
1.3) Quality seen by the value chain actors
As distinctiveness factor, the quality parameter plays a major role alongside the
historical depth but often gets wrongly interpreted because of its strong linkages with
origin, environmental, traditional, etc. aspects. The aim of this section is to point out
what is called quality concerning coffee production.
There are many differing views on what constitutes quality but, as told me a breeding
expert of the Jima Research Center, the coffee quality comes from a combination of the
coffee genotype, environment and processing. That means the botanical variety,

31
topographical and weather conditions, and the care taken during growing, harvesting,
storing and transporting.
Botanical variety and topographical conditions are constant and dominate the
inherent character of a coffee whereas weather conditions are variable and cannot be
influenced. Only growing, processing, storage, export preparation and transport can
be influenced involving human beings interventions (ITC, 2002); in this way, Ethiopian
government incites producers to follow normalised practices through a quality system
considering uniformity and origin of these coffees.
It is generally not known whether the distinctive nature of a provenance is due to the
genetic make-up of the coffee trees involved, to environmental factors in the place of
production, or to cultivation practices or processing of the harvest. As far as coffee
growing goes, there does not seem to be much difference indeed from one producing
area to another, nor are practices particularly homogenous within growing regions.
Commercially speaking,the preferred treatment is wet processing (washing), a recently
introduced process that does not stem from local tradition (Verdeaux and Roussel,
2007).
The product’s qualification and the productive rules implementation are concretely an
agreements’ creation between coffee actors upon the product characteristics and the
ways to get it. In this way, as it has been formerly written, regulations tend to a
normalization of agricultural practices, a technologies and skills control and large
scale traceability more than the establishment of exact producer books of
requirements as it could be found in certification frameworks. The latter only concerns
producers who are indeed members of any certification (organic, fair trade) project and
in a lesser way those who are directly in contact with the experts of the local offices of
the Ministry of Agriculture and Rural Development. That means the model farmers7.
So, in Addis Abeba coffee laboratories, coffee shall reach a defined score in a 0 to 100
scale to obtain the required grade. This score is evaluated upon the coffee defect
distribution and odour at raw value then upon the acidity, body, flavour and
cleanness at cupping. And it is directly linked to the coffee process, wet or dry process,
and to the different cultural practices, harvesting and drying methods and care given
to those. This to satisfy international requirement; if it doesn’t, coffee will be sold in
the Ethiopian Commodity Exchange (coffee exchange place, new auction system) as
lower quality coffee, even to the national market as under grade coffee, at lower prices.

32
In this production management approach, quality is intended as a standard set of
characteristics which can be measured, and certified (Rangnekar, 2003).
Normalization for uniformity, alongside traceability, is applied to reach large scale
quality goals in Ethiopia, and are both ensured by the Ethiopian Commodity Exchange
Authority and Ministry of Agriculture and Rural Development. Compared to most
other producing countries that have a grading and classification system by bean size,
Ethiopia follows a system of cup taste profile according to regional flavors (Petit, 2007).
But quality goals are not yet reached and practices generally lead by quantity goals
rather than quality whatever is the value chain actor concerned. Interviews of the
three most Influencing local actors go this way:

Feresulla………………………………….. 17 kg
Fetchassa ……………………………… 0.25 ha

These two units of measure are currently and generally used in the district and the
whole zone, the first one is even the national counting coffee measure up to the
national exchange place (Ethiopia Commodity Exchange in Addis Abeba). And due to
the farmer land size generally inferior to one hectare, the second one is more suitable
and in this way employed.
30% of total production which is paid after trading time according to a grade given
according to the amount:
. Grade A: > 1 000 000 birr earned due to coffee trade: from August
. Grade B: > 500 000 birr earned due to coffee trade: from July
. Grade C: < 500 000 birr earned due to coffee trade: from June
The same system, but with quality instead of quantity criteria, could incite akhrabies
to give more attention to quality.” 3rd July 2009
S.N Cultivar Growth habit Suitable area

1 74-1 Open Medium-high altitude

2 74-4 Open Low-medium-high altitude

3 74-40 Intermediate altitude Low-medium-high

4 74-54 Intermediate altitude Low-medium-high

33
5 74-87 Intermediate Medium-high altitude

6 74-110 Compact Medium-high altitude

7 74-112 Compact Medium-high altitude

8 74-140 Compact Medium-high altitude

9 74-148 Compact Medium-high altitude

10 74-15 Compact Medium-high altitude

11 74-165 Compact Medium-high altitude

12 75-4 Open Medium-high altitude

13 75-227 Open Medium-high altitude

14 F-59 Open Low-medium altitude

Table 3: Limu Seka selected coffee cultivars (CPDE, 2005)

Nowadays, quality locally and nationally appears as a synonym of new selected coffee
varieties in the way that they mean high yielding. This joins the value-chain actors’
perception of quality as the result of good agricultural practices, materialized in high
yields.
Modern coffee plantations as state farms and investors’ ones use high yielding coffee
cultivars as now use to do small scale farmers in the framework of extension
programmes since the 70’s and the socialist government policies. Nowadays, the bulk
of planted coffees (if it is not the whole) are selected varieties. So far there are 14 coffee
selected cultivars released and cultivated in Limu seka woreda (and 18 in whole coffee
areas of south western and western regions of the country):
Therefore, the project owner highly committed to invest on Limu coffee production
since Limu coffee: Washed only, It is renowned for its good cup, sweet, spicy/winey
flavor and balanced body and is therefore sought by many roasters, especially in
Europe and United States. It is one of the premium gourmet coffees worldwide.

34
3. THE MARKET STUDY

3.1 MARKET ANALYSIS

3.1.1 Present Demand and Supply

Coffee market includes many participants as small-scale farmers picking coffee from
their gardens or owned agro-forest trees, small-scale farmers as cooperatives
members, investors valorising forest spaces through modern plantations skills used in
the modern state farms, even PLC producing coffee.
State farms and investors easily export directly through Germany, Japan, United
States or Saudi Arabia, the main buyers. In the contrary if they don’t find any export
market they will sell their production on the Ethiopian Commodity Exchange. This
latter replaced executions in Addis Abeba and Dire Dawa, and is in charge of
classifying coffee at its arrival in the capital (what used to do the Coffee Liquoring Unit
under the Coffee and Tea Authority then the Ministry of Agriculture and Rural
Development). Whereas smallholders, allowed but unable to export, sell their coffee to
collectors such as akhrabies (suppliers), forbidden but still existing sebsabies (ex
primary collectors), service cooperatives or by themselves to local markets. Except the
latter case and the small quantities sold to local consumers (bars or buna bet,
groceries, dwellers), all coffee should arrive to the Ethiopia Commodity Exchange.
Whoever produces coffee, it has to be tested on a sample basis at the woreda MoARD
liquoring unit/quality control65 then checked through the WARDO (Woreda
Agriculture and Rural Development Office) before getting out of woreda’s boundaries.
Once in the Ethiopian Commodity Exchange warehouses located in Saris (South of the
capital), whoever provided it, all coffee beans are tested on their provenance and
quality on a sample basis. Grading standards are set according to the number of
defects and the type of processing. A first test, the arrival test, qualifies coffee
according to its provenance and its quality (number of defects): Sidama A2, B5 or C3
for example, each letter meaning different and defined areas whereas numbers are
quality grades. Then for export coffee, once coffee is bought to the Ethiopian
Commodity Exchange, coffee has to be “normalized” through export standards: the

35
export standards processing plants are located in Addis Abeba; these are private
machines but, commonly, exporters and unions rent it to the Coffee Processing and
Warehouse governmental Enterprise. The latter owns the sophisticated German
Bülher machine upgrading coffee according to export standards. Then a second test
only concerning export coffee is realized to control the number of defects after coffee
got reprocessed by exporters.
At this stage grades are given in an international coffee classification: the Ethiopian
exports grades are grade 2 for washed coffee and grades 4 and 5 for unwashed coffee.
For example, washed coffee supplies are often dominated by Sidamo 2, Yirgacheffe 2
or Limu 2 while the most common unwashed coffees are Jima 5, Sidamo 4 or Harar 5.
These graded coffees belong to the nine Ethiopian cup profiles:
Harar (sun dried) Yirgacheffe (washed) Sidamo (sun
Exported as Harar 4 or 5 Exported as Yirgacheffe 2 dried/washed)
Exported as Sidamo 2

Limu (washed) Jima (sun dried) Ghimbi-Lekempti (sun

Exported as Limu 2 Exported as Jima 4 or 5 dried) Exported Nekemte
4/5

Lekempti-Ghimbi Bebeka (washed) Teppi (washed)

(washed)
Exported as Nekemte 2

Table 10: Ethiopian cup profiles (data: Ethiopian Commodity Exchange Authority and
OCFCU, prod:Bossolasco, 2009)
The new Ethiopian Commodity Exchange standing up on auction ruins, still working
in an auction system, is divided into Saris site and Mexico Square: In Saris, the
Ethiopian Commodity Exchange Authority rents warehouses for arrival and export
coffee, the arrival coffee test CLU laboratory, and the export standards processing
machine to the governmental Coffee Processing and Warehouse Enterprise. Whereas
the auction place, the Ethiopian Commodity Exchange, is found in a modern building
around Mexico Square.

36
After being criticized, Ethiopia emphasizes on keeping consignments from different
regions separated in order to maintain the distinctive flavour of the different regions.
Even if difficulties appeared for the specialty market.

Illustration 30: Ethiopian cup profiles (except Yirgacheffe and Ghimbi,Bossolasco,

3.1.2 Projected Demand

Studies show that the average per hectare yield of Coffee in commercial / Plantations
farming is about 700 -900 kg/ha. As we have seen earlier, the current annual
potential demand for the Coffee in Ethiopia is estimated to be 7,703 ton. Domestic
consumption40% of the total production Value 649.5 Million dollars.
The level of demand will increase in the future as more and more families become
aware of the beverage and health advantage of the grain. Accordingly, if we
conservatively assume that the future demand for the crop increases by 5% per
annum the forecasted demand would be as shown in table 1 below.
Table 1: Forecasted Demand for Coffee (in tone)
Year Projected Demand

2007/08 8,088

2008/09 8,493

2009/10 8,917

37
 2010/11 9,363

2011/12 9,831

2012/13 10,323

2013/14 10,839

2014/15 11,381

2015/16 11,950

2016/17 12,547

According to table1 the demand for the Coffee is estimated to reach 8,917 ton in
2009/10 and increases by 41% to reach 12,547 ton by 2016/17. Measured by any standard
such level of demand and growth is very substantial and at the same time suggests the
relevance of establishing a Coffee plantation. Specialty markets (19% of export markets) tends
to grow at higher rates than commodity markets (> 30% vs less than 2% respectively)

38
3.1.3 Pricing and Distribution
Limmu Specialty Coffees are sold from 5 –9 USD per kg FOB whereas the retail market
price of these coffees are above US 50 per Kg.
Based on the market research result and the capacity of the envisaged plant, the
selling price is set to be birr 1,300 per quintal Janfel and 6000 birr per quintal qishir
at local market .
Based on the market research result and the capacity of the envisaged plant,
Main cash crop for 1.3 million households with family size 5 –7 % Source of livelihoods
for 7 million people along the whole coffee chain. Main export earning source (20% of
the Total foreign exchange earnings).Ethiopia is the only producing country with more
than 6,000 accessions of potential high quality coffee Arabica (still 10% is wild forest
coffee)

 Ethiopian Coffee Quality Control &Marketing Proclamation No602/2008

established trade practices and set constraints to the roles of market actors;
According to 602/2008 Proclamation Plantations and Farmers Unions are
allowed direct shipment by passing over ECX. Coffee trading within ECX is
mandatory (2008)

 World Specialty and differentiated markets grow at more than 20% a year

 Only 81,000 tons (27%) of total production reach Specialty Grade (but not
necessarily prices)

 Around 31% of all EthiopianCoffee Exports (G1-G3) may reach Specialty Grade,
but are sold at $US 2 to 4 less per kg comparedto Kenyan, Colombian or
Guatemalan equivalents grades.

 Only 10 to 20% of the best Ethiopian coffees achieve a modest C+ price (40 to
50 points) Direct Exports.

 Only 8% of total coffee area gets some sort of certified (mainlyorganic and fair
trade)

39
  32% of total exports is washed coffee (this segment is growing at 4% for the last
2 consecutive years.

If the proposed project and licensing initiatives are successfully implemented, the
coffee farmer owner can get USD 8-10 per Kg from their coffees. This can change their
lives. Similarly the present coffee export foreign exchange earning of the country would
increase to USD 3 Billion from the prevailing 841-6 million dollar.

In distributing the product the envisaged plantation shall make use of the available
retail and wholesale network.

3.2 Farm Size

In consideration of the expected demand for Coffee as presented earlier the envisaged
Plantation is set to produce 1100 quintals annually from 150 hectares plot of land.
3.3 Production Program
The program is scheduled based on the consideration that the envisaged plantation
will work 275 days in a year, where the remaining days will be holidays and for
maintenance. During the first year of operation the plantation will operate at 80
percent capacity and then it grows to 90 percent in the 2nd year. The capacity will
grow to 100 percent starting from the 3rd year. This
consideration is developed based on the assumption that ample market already exists
and logistics barriers be eliminated within the first two years of operation.

40
4. Raw Materials and Utilities
4.1 Availability and Source of Raw Materials
Step 1: Collection of different coffee variety seeds, both international and national.
Collection from abroad takes into a consideration the importing of well known Arabica
varieties from coffee producing countries, for different purposes such as crossing with
indigenous varieties. National coffee collection consists of the collection of different
coffee cultivars from various coffee growing areas. This is the exploration of coffee
population at a specific area and a detailed observation on different types of available
coffee to distinguish one type from the other by: growth habit, leaf shape & size &
colour, fruit shape & size & ripe colour & maturity state, beans shape & size,
internode length, leaf retention during heavy cropping, and disease and insect
freeness where there is an infestation of the disease and insect. The collection sheet
comprises collection date and number, altitude, region, district, sub district, specific
location, habitat and farm owner.
Step 2: Evaluation consisting on close investigation on the productivity, quality,
resistance to different diseases and insects pests, and adaptability of the collected
coffee seeds.
Primary selection dealing with the selection of best performing coffees based on the
undertaken
Step 3: investigation. At this step those cultivars which have been introduced from
abroad and adapted to the evaluation site can serve as a comparison.
Step 4: Verification. Different regions have different sets of environmental factors. A
cultivar which will do well at a locality may perform better or worse at the other one.
This step consists on planting and investigating on those desirable characteristics at
various areas of the producing regions to identify where does the cultivar perform the
best.
Step 5: Second selection. This step aims at the selection of a cultivar which has
fulfilled the first selection criteria and that has been proved best of the others in all
required parameters at a particular environment.
Step 6.Seed multiplication and distribution. Selected seeds are multiplied in a large
quantity then distributed to coffee producers through the woreda agriculture and rural
development offices (local ministry branches).
Step 7: Crossing programme. It deals with the development of productive and disease
resistant hybrids through: the crossing of the finally selected varieties (both national
and international selections), the selection of the best performing hybrid at a region,
and the multiplication and distribution of the improved hybrid variety.

41
The main inputs used in producing coffee are seed, fertilizer and water and
polyethylene Packaging bags. While seed, fertilizer and polyethylene bags can be
accessed from domestic Suppliers, the firm shall make use of water pump equipments
to pump water from the nearby river or other source
4.2 Annual Requirement and Cost of Raw Materials and Utilities
The annual raw material and utility requirement and the associated cost for the
envisaged plant is Listed in table 2 here under ,,According to table 2, the annual cost
of material and utility at full capacity of operation is estimated to be Birr 2,584,500.
Material and Input Quantity Total Cost

L.C. F.C.

Sulphur 80 ton 800,000

Lime 200 ton 600,000

Polyethylene Bag (100kg 165,000 pcs 412,50
cap) 0
Total Material Cost 412,500 1,400,000
Utility

Electricity 240,000 kwh 132,00

0
Process Water 160,000 m3 640,000
Total Utility Cost 772,000

42
5 Technologies and Engineering
5.1 Production Process
Coffee growing is considered to be \ecologically sound and healthy, a model for many
shade grown and organic plantations[4]." Because of this, it is necessary to describe
how coffee is produced at Farming. An overview of this information is shown in Figure
1, the System Map used for the Plantation . This information was gathered from
interviews at coffee plantation site. The system has been di-vided into three main
phases: Growing, Processing, and Transportation.
Growing
Coffee trees at Limmu seka are between 30 and 55 years of age.
Fruit is produced once per year with a harvest season starting in January. Limmu
kossa has chosen to not use any pes-ticides of fungicides, which is possible in large
part due to their elevation. Additionally, The proposed farm sets their chemi-cal
fertilizer use by recycling the nutrient rich coffee fruit from the processing phase and
using it as a fertilizer. The proposed project uses about 30% of the typical fertilizer
use.
Additionally, no water is used for irrigation, as all the water comes from rainwater.
The coffee cherries are picked by hand. Annually, ap-proximately 135,000 kg of coffee
cherries are picked from approximately 27,000 trees. After processing, this
corresponds to between 35,000 and 45,000 kg of green coffee exported annually.
Processing
Daily, after being harvested, the coffee cherries are soaked in a prefermentation tank
before being transfered for adepulper. The depulper is a diesel powered device which
has a very long life (the ones used at FVH are on average 25 years old). The depulper
uses about 1 L of diesel per day for 90 days plus a few other liters at other times. The
pulped co_ee, which still has mucilage on it, are put into a fermentation tank before
being washed in a washing canal. Water for the washing canal, which is used for 20
minutes each day, is spring fed and then reused in the
other parts of processing. The pulp and mucilige are used for fertilizer while the waste
water from these processes goes to an evaporation lagoon. Green coffee is then dried in
the sun upon which it is stored in jute bags before being transported.

43
Transportation
At Limu seka processed coffee is loaded on any pickup truck which is headed to town
for any reason. This is to pre-vent any of their trucks from driving without a load at
any time. Once coffee leaves the farm, it is stored in a warehouse in the town of
Atinago and Jimma city, a 1.5 hour drive from the farm, where it is further processed
using a dry mill just before shipment. Any coffee which has not been transported at
the end of the season is taken by semi to Jimma city. From Limmu kossa, after being
dry milled, the coffee is loaded into commercial trailers to aport which is 10 hours
away. The coffee is then loaded onto track and transported to the country of
destination. An overview of the transportation is provided in Figure 2.

44
5.2 Machinery and Equipment
The machineries and equipment required for producing soybean plantation is detailed
in table 3 below
Table 3: Machinery and Equipment

Machinery and Equipment Quantity

Improved coffee sun-drying beds 10

Coffee eco-pulping equipment 4

Organic certification for coffee cooperatives 1

45
Tracker 1

Tractor 1

Trailer 1

Eco-friendly coffee sun-drying beds 5

Modern drip irrigation pumping equipment 5

Irrigation Equipments As
Required

Various Agricultural Hand Tools As

Required

Coffee eco-pulping equipment for Limu Seka 6

Sun-drying coffee beds 5

The total cost of machinery and equipment including freight insurance and bank cost
is estimated to be about Birr 1,500,000.
5.3 Civil Engineering Cost
The total site area for the envisaged plantation is estimated to be 150 hectare.
Moreover, addition 250m2 is required for stores, machinery shades, office and
residence building construction.

6 .Human Resource and Training Requirement

6.1 Human Resource
The required manpower for the envisaged plant is stated in table 4 below.
Table 4: Human Resource Requirement

Position No. Required Monthly Salary Total

Annual Salary

Manager/Agronomist 1 4000 48000

46
Accountant/Casher 1 1200 14400

Sales Clerk 2 600 14400

Store Keeper 2 1200 14400

Operation Supervisor 2 1000 24000

Tractor Operator 1 750 9000

Laborers 143 300 42900

Guards 6 300 21600

Benefit (20%) 45720

Total 160 308,220

The envisaged plant creates 160 job opportunity and about birr 308,220 thousand of
income. The professionals and support staffs for the envisaged plant shall be recruited
from OROMIYA region. In order to avoid large-scale labor redundancies, seasonal
works (harvesting, weeding, etc) shall be done by temporary workers. For this,
additional birr 35,000 shall be allocated every year
6.2 Training Requirement

On job training of key personnel shall be conducted primarily with the aim of the
production Technology and machinery maintenance. For this purpose birr 10,000 will
be allocated as training expense.

7.Financial Analysis

7.1 Underlying Assumption

The financial analysis of COFFEE plantation producing plant is based on the data
provided in the preceding chapters and the following assumptions.
A. Construction and Finance

Mobilization and Preparation period 3 year

Source of finance 30% equity and 70% loan

47
Tax holidays 3years

Bank interest rate 12%

Discount for cash flow 18%

Value of land Based on lease rate of ONRS

Spare Parts, Repair & Maintenance 1% of fixed investment

B. Depreciation

Building 5%

Machinery and equipment 10%

Office furniture 10%

Vehicles 20%

Pre-production (amortization) 20%

C. Working Capital (Minimum Days of Coverage)

Raw Material-Local 30

Cash in Hand 30

Raw Material Foreign 120

Spare Parts in Stock and Maintenance 30

Work in Progress Finished Products 15

Accounts Receivable 30
Accounts Payable 30

Work in Progress 10
Accounts Receivable 30
Finished Products 15

7.2 Investment

48
The total investment cost of the project including working capital is estimated at Birr
16.576
million as shown in table 5 below. The Owner shall contribute 40% of the finance in
the form of equity while the remaining 60% is to be financed by bank loan.
Table 5: Total initial investment

Items L.C F.C Total

Land 480,120 480,120

Building and civil works 10,000,000 10,000,000

Office equipment 250,000 250,000

Vehicles 1,800,000 1,800,000

Total fixed investment cost 16,076693 - 4,076693

Pre production
capital expenditure* 1,751,506 1,751,506

Total initial investment 14281626 000 14,281,626

Working capital at full 1,123,067 672,000 1,795,067

Total 15404693 672,000 3,076693

*Pre-production capital expenditure includes - all expenses for pre-investment studies,

consultancy fee during construction and expenses for company‘s establishment, project
administration expenses, commission expenses, preproduction marketing and interest
expenses during construction .
The foreign component of the project accounts for 40.6% of the total investment cost.
7.3 Production Costs

The total production cost at full capacity operation is estimated at Birr 10.47 million
as detailed in table 6 below.
Table 6: Production Cost

Items Cost

1. Raw materials 1,812,500

49
2. Utilities 772,000

3. Wages and Salaries 1,275,120

4. Spares and Maintenance 350,301

5. Depreciation 3,485,301

6. Financial costs 2,777,522

Total Production Cost 6,262,823

7.4 Financial Evaluation

I. Profitability
According to the projected income statement attached in the annex part (see annex 4)
the project will generate profit beginning from the first year of operation. Ratios such
as the percentage of net profit to total sales, return on equity and return on total
investment are 54%, 90% and 54% respectively in the first year and will further rise in
the subsequent periods. Furthermore, the income statement and other profitability
indicators show that the project is viable.
II. Breakeven Analysis
The breakeven point of the project is estimated by using income statement projection.
Accordingly, the project will break even at 7.2 of capacity utilization.
III. Payback Period
Investment cost and income statement projection are used in estimating the project
payback period. The project will payback fully the initial investment less working
capital in 1 year and 7months.
IV. Simple Rate of Return
For the envisaged plant the simple rate of return equals to 103.1%.
V. Internal Rate of Return and Net Present Value
Based on cash flow statement described in the annex part, the calculated IRR of the
project is 67.9% and the net present value at 18 % discount is Birr 112,742,716.34.
VI. Sensitivity Analysis
The envisaged plant is modestly profitable even with considerable cost increment. That
is the plant maintains to be profitable starting from the first year when 10 % cost
increment takes place in the sector.

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 9. Economic and Social Benefits and Justification
The envisaged project possesses wide range of benefits that promote the socio-
economic goals and objectives stated in the strategic plan of the OROMIYA National
Regional State. It also boosts the inter sectorial linkage between the agricultural and
industrial sector. At the same time, therefore, it helps diversify the economic activity of
the region. The other major benefits are listed as follows:
A. Profit Generation
The project is found to be financially viable and earns on average a profit of Birr 34.7
million per
year and Birr 347.3 million within the project life. Such result induces the project
promoters to reinvest the profit which, therefore, increases the investment magnitude
in the region.
B. Tax Revenue
In the project life under consideration, the region will collect about birr 130.3 million
from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such
result creates additional fund for the regional government that will be used in
expanding social and other basic services in the region.
C. Employment and Income Generation
The proposed project is expected to create employment opportunity for several citizens
of the region. That is, it will provide permanent employment to 160 professionals as
well as supportstaff. Consequently the project creates income of Birr 1.275 million per
year. This would be one of the commendable accomplishments of the project

51