Contents

Executive Summary.....................................................................................................................................3
Introduction.................................................................................................................................................4
Beneficiaries (Target Group)........................................................................................................................5
Project Justification.............................................................................................................................5
Objective of the Project...............................................................................................................................6
The Economic Significance of the Project....................................................................................................6
Supply of Quality.....................................................................................................................................6
Source of revenue...................................................................................................................................6
Employment Opportunity........................................................................................................................6
Save and Generate the Country Exchange...............................................................................................7
Benefit for the Local Community.............................................................................................................7
Stimulate for Local Economy...................................................................................................................7
Location and Premises Required.............................................................................................................7
Market Study of Plant and Shopping...........................................................................................................8
Market Study...........................................................................................................................................8
Demand Factors for Processed Dry Coffee Items................................................................................8
Market Potential and Demand Gap for dry coffee processing.............................................................9
Market Completion............................................................................................................................12
Target Customers..............................................................................................................................12
Market Prospects...............................................................................................................................13
Marketing Strategy and Promotion...................................................................................................13
Plant and Cafeteria Capacity and production program..........................................................................14
Plant and Cafeteria Capacity..............................................................................................................14
Production program Plant and Shopping Service..............................................................................14
Pricing....................................................................................................................................................14
Product Nature, Production Process and Technology...............................................................................15
Product Nature, Service and Characteristics.........................................................................................15
Raw Materials, Tools and Input.............................................................................................................15
Production Process, Design and Technology.........................................................................................15

1
 Dryting of Coffee..............................................................................................................................15
Sun Dryting or Natural Dryting..........................................................................................................17
Mechanical Driers..............................................................................................................................18
Quality Control......................................................................................................................................19
Machinery and Equipment’s..................................................................................................................20
Source of Technology............................................................................................................................20
Project Design and Engineering.............................................................................................................20
Plant Lay Out and Construction Works..................................................................................................20
Manpower and Organizational Management............................................................................................21
Man Power............................................................................................................................................21
Organizational Structure and Management..........................................................................................21
Financial Requirement and Analysis..........................................................................................................23
Total Initial Investment Cost..................................................................................................................23
Fixed Investment...............................................................................................................................23
Expenses................................................................................................................................................25
Financial Analysis and Statements.........................................................................................................26
Underlying Assumption.....................................................................................................................26
Sources of Fund.................................................................................................................................27
Loan Repayment Schedule................................................................................................................27
Depreciation Schedule.......................................................................................................................27
Revenue Projection...........................................................................................................................28
Balance Sheet (Beginning).................................................................................................................28
Income Loss Statement.....................................................................................................................29
Cash Flow Statement.........................................................................................................................29
Financial Evaluation...................................................................................................................................30
Economic Benefits.....................................................................................................................................30
Environmental Impact of the Project.........................................................................................................31
...............................................................................................................................................................31
Future Development and Exit Strategies...................................................................................................33

2
 Executive Summary
1. Project Type
2. Project Owner
3. Land Ownership
4. Nationality
5. Project Location
6. Projection Composition
7. Premises Required
8. Total Initial Investment Cost
9. Employment Opportunity
10. Benefits of the Factory for Supply Producers of Quality Dry Processed coffee
Region/Country
Modern Dry Coffee processing Plant/Hulling Machine
Ato Kelifa Suleman Kenbu (Yayo Woreda)
Government
Ethiopian
Oromia Regional State, Illuababor, Yayo Woreda,Wabo
Kebele
Dry coffee processing Certified and Specialty coffee and
unwashed for international , Domestic and Domestic
Market
10,000m2
3,251,902.50 of which 30% equivalent to finance by the
owners’ equity and rest %70 Br 7,587,777.20
equivalent financed Br 10,839,675.00 through Bank
Loan
60 Individuals (30 Permanent and 30 temporarily) Will
be hired.
Products, Source of Revenue, Employment Opportunity,
Stimulate the Local community, Stimulate the local
Economy and technology transfer, by producing
Certified and Specialty Coffee source of foreign
currency
3
 Introduction

This Coffee is one of the most popular beverages in the world. Nearly 25 million farmers in 50
countries around the world depend on coffee for a significant part of their livelihoods ( Cague et
al. 2009). The genus coffee belongs to the botanical family of Rubiaceae and comprises more
than 90 different species (Davis, 2001). The characteristic, rich and pleasant aroma and colour of
coffee brews is a result of complex processes leading from green coffee beans to the cup of
coffee. One of the principal postharvest processes is Dryting that gives rise to the formation of
the characteristic colour, flavour and taste of coffee brews. In 2010-11 according to U.S.
Department of Agriculture 12 million tons of green coffee is produced.

According, to the latest growing consumer economies in Africa with a current population of 110
million. The transformation of Ethiopia from an agricultural economy to a fast-upcoming
industrial economy in the sub-Saharan Africa (SSA) is incredible. According to the United
Nations Development Programme’s (UNDP) 2015 Human Development Index, Ethiopia is one
of the top ten countries that have seen the most gains particularly between 2010 and 2015. A
decade ago Ethiopia looked like the country to be invariably famous for its coffee and culture,
but today, the fashion and textile industry clearly identifies the country as the
Based on the new economic policy proclamation of the EFDR government many investors have
initiated to invest their money on various investment opportunities, especially in industry sector.
However, many of the investors prefer to invest in capital and regional city. Zonal towns and
remote woreda are less preferable to investors.
Ato Kelifa Suleman Kenbu is Private Land Ownership and shows Good innovation among the
Established and a Dry Coffee processing will specialize in coffee and other related activities.

It is obvious that the economy of Illubabor zone is mainly based on agriculture among which the
coffee production sectors dominate or take the lion share. Illubabor zone is one of the potential
zone in coffee production in south west oromia. The market oriented economy policy of
activities the same to in Ilubabor zone.
Now days government due attention for quality of coffee production so that, one of the
instrument that used to improve the quality of the coffee production is dry coffee processing

4
machine. Therefore, the promoter of this project who has been living in the project area and
engaged in various business activities now days he wants to invest his capital on aforementioned
project at remote area which has scarcity of machine in Illubabor zone particularly in Yayo
Woreda, site.

Beneficiaries (Target Group)

In consideration of the general improvement that the project intends to generate in the coffee
value chain, the direct beneficiaries that will be the target of the project are:
1) Farmers’ cooperatives, unions and Coffee Roasters’ Association (ECRA).Small-scale
industries, roasting companies, industrial coffee based processors. Concerned public institutions
(Ministries of Industry, Trade, Agriculture etc.) at central and local level.
2) Associations of the coffee sector (exporters, roasters etc.).
Through capacity building and improvements in the coffee value chain, the ultimate beneficiaries
of the project that would benefit from an increase in export revenues, income as well as working
Conditions and remuneration will be:
3) About 4.2 million smallholder farmers and their families.
4) All individuals and families that depend for their livelihood from the processing and trading
of
Coffee.

Project Justification
Although Ethiopia has been passing through dynamic, fast and double digit economic growth in
all sectors of Economy for the last twelve years, Agriculture Sectors has to be viewed in the
context of the low level of Development that Seeks more Investment on it. At The present the
government of Ethiopia Has Implementing the Ten Years growth and Transformational plan III
that aimed to achieve Wider Development Spectrum in all Sectors to the Nation under the
Category of Middle income Earner.

In addition to the above facts, the following Points Further explains the rationale for
Establishment for The Envisioned Factor by The Investor.

 High Population Growth.

 High Coffee Production and Foreign Income.

5
  Favorable and Attractive Investment incentives packages by the government.
 Availability of Skilled Labor Force at Reasonable Price.
 Availability of Raw Materials and Inputs For the production of Processed Food
Complex.

Objective of the Project

To Establish Modern Dry coffee processing machine and overcome an inadequate of coffee
processing industry in order to increase the income of smallholder farmers deriving and
community, create job opportunity, Generate income for woreda, play Vital role in order to
generate foreign currency to country and from sustainable production, processing and marketing
of the Ethiopian coffee on International, Domestic and Local Market.

The Economic Significance of the Project

Ethiopia is where coffee Arabica, the coffee plant, originates. The plant is now grown in various
parts of the world; Ethiopia Itself accounts for around 3% of the global coffee market. Coffee is
important to the economy of Ethiopia; Around 60% of foreign income comes from coffee with
an estimated 15 million of the population relying on some aspect of coffee production for their
live hood.

Supply of Quality
By producing and supply quality and diversified dry coffee products project will satisfy the
consumers. Besides, the project will add to job and income opportunity of the citizens.

Source of revenue
As public Policy of any Nation, The Government Collects forms of taxes Different Business
Income taxes, VAT and payroll Taxes are collected form undertaking Business activities.
Therefore, the Factory will serve as source of Revenue for both the region and Nation in
General.

Employment Opportunity
One of the problems that our country faces high level of unemployment, Therefore, the current
objective of the government is working on tackling the problem of unemployment and fostering
there development process either through self-employment to re-employment in other

6
organization Hence, this factory will hired round 60(30 permanent and 30 temporarily)
employees.

Save and Generate the Country Exchange

The project will help to reduce the nations for Exchange cost to sell this product to other
Neigherhood towns. Besides in the future, when the industry start export to global market the
nation will generate foreign currency from this specific project;

Benefit for the Local Community

As a corporate Responsibility the Industry will engage in Different Development activities on
the Surrounding areas. This will Better worth the Community and Contribute for the
Development of the region.

Stimulate for Local Economy

This Factor has positive eternality in the Woreda as well as Zone that will encourage the
economic movement of local economy. There will be economic relationship and transactions
among different actors.

Location and Premises Required

i. Location
The project is located in Illubabor Zone, Yayo Woreda,Wabo Kebele.
The Main Justification behind the Selection of this location is;

 Availability of Raw Materials for dry coffee processing.

 The new Asphalt Road support to Collect Raw materials and to let the finished products to
market.
 Availability of labor force
 Conducive investment policy and Governance
 Environmentally healthy for the production of processed foods.
ii. Premises Required
The total land holding of the project is 6000m 2, the premises required planned as follows in table
below.
Table Premises Required and Land Use Plan;

SN Description Land `Requirement/M2

1 Built Tap Area 4500
2 Workshops 500
3 Coffee Dryting space 3000
4 Office and Guard House 1000
5 Parking and Green area 1000
Total 10,000

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 Market Study of Plant and Shopping
Market Study
Demand Factors for Processed Dry Coffee Items

Ethiopians are heavy coffee drinkers, ranked as one of the largest coffee consumers in Sub
Saharan Africa and Coffee was backbone For Economic growth. Nearly half of Ethiopia’s coffee
produce have locally consumed. Coffee in Ethiopia has both social and cultural value. It mainly
consumed during social events such as family gatherings, spiritual celebrations, and at times of
mourning. Coffee supplied and traded in the local market usually has a lower quality. The most
Factors are fast economic growth and population (Demography) Factors Such as indicated
below.

Fast Economy Growth

The Ethiopian Economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of Finance
and economic Development, The Forecasted Economic Growth the Economic Growth (GDP at
Constraint Basic Price) For 2012/13 is estimated to be 10%. As per the Estimates, Annual
Growth rate of the major sectors, i.e. Agriculture, and Garment Textile and service were 8.4%,
10.6 and 12.0%, respectively and their shares out of the total GDP Were 42%, 13% and 45%,
Respectively. This Continuous and a two digit high growth would place Ethiopia among the fast
growing countries in Sub-Saharan African Countries.

In 2018/19 Ethiopia Exports Coffee to 53 destination countries throughout the world and the
total Volume and Value of coffee exports 2011/12 was 196,117 ton and 841.65 million
American Dollars. This Volume and Value of Coffee export as compared 2017/18 increased by
13.9 % and 59.3% respectively. More than 120 Ethiopian Coffee exporters participated in
processing and exporting coffee to all destination of the world. Among these export companies
95% are private companies 5% are Coffee growing farmers’ cooperative unions and two of them
are government enterprises In 2019/20 the top five coffee export destinations for the country are
Germany, United stat of America, Saudi Arabia, Belgium and Italy(FDRE MOT,2020).

8
 Trends in performance of the Economy Growth Rates % in G.C
Item 2012/13 2013/14 2014/15 2015/1 2016/17 2017/1 2018/19 2019/20
6 8
GDP1990/00 11.7 12.6 11.5 111.5 11.6 11.6 10.4 10
Agriculture 16.9 13.5 10.9 9.4 7.5 6.4 7.6 8.4
Texile and 11.6 9.4 10.2 10.2 10.4 11.2 11.7 12
Garment
Service 6.3 12.8 13.3 14.3 17
S0urce; FDRE MOT,2020

His Fast Growth of these sectors resulted from different bodies like government, on governments
and private activities in Ethiopia are growing in the fastest rate. Moreover, the current five years
Ethiopian growth and transformational plan will expand the economic growth paramount level
by harnessing the resource and expanding industrialization.

Population and Population Growth (Demography)

The rate of growth of the urban population is increasing from year to year. The latest report of
the unite fund for population agency revealed that Ethiopia’s population has reached 110 million
which puts Ethiopia as the second most populous country in Africa. According to the central
statistics Authority (CSA), Current population growth is estimated to be 28% per annum and the
growth rate is expected to remain above 2% for the next 20 years. Rural population is growing at
about 3.0% while the urban population is growing at about 4.3%. Total population is projected to
reach 140 million by 2030. In Ethiopia, of the total population, about 20.0% is estimated to
reside in urban areas. The trends suggest that the size of urban population is likely to continue to
grow at high speed in the future. The share of urban population will rise from 16.0% in 2005 to
about 25% by 2030 nearly 35 million of the total 145 million will live in cities and towns by
2030. As a result from big population and population growth, Communities are the major
shares, the demand for Modern Dry Coffee particularly Washed Dry and different other items.

Market Potential and Demand Gap for dry coffee processing

Coffee processing , A ready-to-drink item is very popular in developing countries and now it
has created well market potential in our country also and is Becoming popular item. The factors
governing its demand are;

9
 1. Increasing population of the country.
2. Back bone of country economic Growth
3. Rapid industrialization in the country.
4. Increasing in the purchasing capacity of people.
5. Durability of the product
6. Chyayonge in people’s drinking habits as Culture
7. It is ready to drink product.
8. Convenience of preparation

In Ethiopia though there are different coffee processing, they are not producing the certified and
specialty coffee which are very quality.

Supply and demand balance Consumer interest in making ethical purchasing decisions of
coffee has grown in recent years. However, a willingness to buy ethical products may not
translate into actual purchases. For a majority of end-users, price and intrinsic quality are more
important than certified compliance with a code of conduct or standard. Therefore, the potential
size of the market for certified coffees is restricted. At the same time, the supply of such coffees
is not necessarily always demand driven and may result in oversupply.
Therefore, while certification definitely adds to a coffee’s image and may enhance its value,
certification by itself is not a guarantee of premium prices in the longer term. Producers must
also bear in mind that the overall levels of premiums are likely to decrease as availability grows

Therefore, the majority of coffee Products are exported to Neighborhood Zones and
town/woredas to Grinding. Hence, this project deemed to bridge the demand gaps for dry coffee
processing products in our woreda by locally producing as Domestic and international Markets.

Yayo Woreda and Surrounding areas has suitable agro-ecological condition such as altitude,
temperature and humidity where as favorable for coffee production and it also related to high
coffee production area also neighborhoods woredas like Diiduu and Halu and SNNPR Region.
These areas have few coffee milling plants which is far less than the supply of coffee.

In the production year of 2013 Yayo and Hurumu harvest 131,499.5 and 56,175 Quintals
respectively.

10
 Demand Analysis

Compared with Existing Coffee Production there are plenty of Demand for Coffee milling Plant.
Estimated Coffee production of the two woreda, i.e Yayo and Hurumu Both are High productive
in Coffee ranging from 15,700 tons to 33,255 tons and 12,500 to 23,494 tons Respectively. Time
opportunity of market price escalation for Ethiopia coffee international contributes to a great face
to surrounding farmer expending their coffee plantation. Even the escalation of coffee price
expected the farmers to double their farmers to double their farm compared to other farms.

The data from zonal agriculture office that indicate annual expansion of coffee plantation also
strengthens their argument that predicts annual increment of coffee production with constant rate
of %7.88 from year 2013 G.C on.

Supply Analysis

Currently there are six coffee Milling plants in the two neighboring woredas. The capacity they
mill compared with the existing coffee production beyond their capacity. If assume the capacity
of 1 mill or 1994 ton per annum (i.e. 8 hours/days for six months continuously 1994 ton can be
milled. All seven mills can cover only 14,915 tons only below half compared to existing
production that plant even forced to mill more than expected time, even though un able cover.

The gap Analysis between demand and supply

There is an average gap between existing supplies as compared with demand the intended project
which expected to begin operation in the year 2013 also an able to gap. This indicates more than
16,000 ton coffee transported illegally from the area next to household consumption in the
previous year. This figures double in the current year and increase by constant rate with
predicated coffee production. That is why the promoter’s decided to establish a firm using the
opportunity of fund from own contribution alongside initiating private investment participating
in the business to establish the firm to cover the whole demand preparing favorable investment
precondition.

11
 Market Completion

There are different competitors in the market competing with this envisaged project in the
market.

 Those importing majority coffee from abroad neighborhood villages and towns
 Those producing dry coffee in domestic market and international market
 The potential competitors who deemed to engage in similar production line.

Therefore, there are different forms of competition that my face this project. These are price and
no price based competition. Moreover, the different competitors may compete with the project
under discussion his diversified marketing strategies that could enable it cope with the different
competitors in the market. In addition, it will frequently conduct competitors research which
focuses on, the strength and weaknesses the different competitor’s strategies. The techniques’
they use in rendering the service, their customer handling methods and others. Then it will
devise different strategies like.

1. Diversification of product and product line

2. Diversified Promotional Tools
3. Based on ECX and other mandatory government institutions price Tag
increasing production with certified and specialty which will result in the
decrease in their per-unit cost of production and Give Services Up to Villages.
4. Diversified customer centric marketing strategies.

Target Customers

The Target Customers of the envisioned Factory are;

 Ethiopian Commodity Exchange

 Exporter and Importer from International and National Level
 The residents of towns, Cities, Villages in rural areas
 Yayo Coal Factory
 The different Governmental and Non-Governmental institutions
 Government and Industry Workers
 Hotels and Cafeterias

12
  Other retailers and Wholesalers.
 Neighborhood Woredas as well as zones

Market Prospects

From, above market demand and supply analysis for the processed dry coffee (Certified,
Specialty for international and Domestic Market. There is Exists Huge market gap in National
and International as well as in our woreda. Hence, the factory will be pioneer and very
successfully by entering in to this market.

Marketing Strategy and Promotion

The company will follow the following promotional methods;

 Website Development
 Advertising( Media, player and Newspaper)
 Public Relation
 Branding

13
 Plant and Cafeteria Capacity and production program
Plant and Cafeteria Capacity
Based on Plant Capacity (Grinding 50 Quintals /Day averagely throughout the year) and
program this plant assumed to produce Based on Demand Capacity of Area for 10,700 Quintals s
at full capacity utilization (Third year) operating 220 days a year and 10-14 hours (2 shifts) per
day based on season of coffee production.
Production program Plant and Shopping Service
Considering the gradual growth of demand and time required to develop the required skill of rate
of capacity utilization during the first, second and third year of production will be 60, 80 and
100% respectively.
Table production program
I. Production Program

Description Market area Qty in No Year/ ETB Birr

Quintals 1 2 3 -10
Capacity utilization (% 60 80 100
Washed Dry coffee/ Foreign Quintals 1,500 2,000 2,500
Specialty and Local/Domestic Quintals 750 1,000 1,250
Certified
Unwashed Dry Coffee Foreign Quintals 1500 2,000 2,500
Local/Domestic Quintals 750 1,000 1,250
Grinding Dry Coffee of Quintals 1920 2,560 3,200
others/Traders

Pricing
It would be important to examine the possible level of price based on the competitors’ action. In
this consideration, the existing average retail prices of similar imported products were assessed
for the benefit of comparison. Based on the Existing price in the market the firm settled the price
for Domestic and International Market based on ECX Price tag but for local/Woreda Buyers as
follows;

S/ Product Description Kg/price 1kg of the the company for 1kg

N Competitors/ETB /ETB/
1 Washed Dry coffee Upto 10kg 70 65
/Certified and Specialty 11-50 kg 70 63
For local Community >50 kg 70 60
2 Unwashed dry coffee/ For Upto 10kg 60 55
local Community 11-50 kg 60 52
>50 kg 60 50
3 Grinding Dry coffee/for 1 Quintals 650 500
traders

14
 Product Nature, Production Process and Technology
Product Nature, Service and Characteristics.

The Company will produce different kinds of products and Different Rendering based on the
customer preferences.

These Include plant products for International, Domestic and Local Market;

 Washed Specialty and Certified with Different Grades

 Unwashed Dry Coffee with Different Grades

Raw Materials, Tools and Input

The raw material for the envisaged company will be collected from different domestic suppliers
or local Markets Both Dry, and Dry coffee. Besides, all Products use different type of packing
materials.

Production Process, Design and Technology

Dryting of Coffee
Dryting is one of the most important steps in the coffee processing. The use of natural sun
Dryting process of coffee in terraces is still very common among the coffee producers however it
requires high labour; it is a time requiring operation and on dependency on the climatic
conditions. As the coffee production increases the sun Dryting operation in terraces happen to be
problematic in terms of coffee production operation and the mechanical Dryting becomes a need
due to the possibility of advancing the harvesting operation, allowing harvesting better coffee in
terms of quality and quantity and making possible to destine usable areas for other activities.

Dryting is mainly concern for the degradation of the moisture content up to a certain limit 12%
(w.b). Dryting diminishes the respiration rate of the product and increases the storage time with
the minimum possible loss. If the beans are over dried it will be brittle in nature and if moisture
content is more than safe storage moisture then there is a probability of mould growth in the
beans for further processing. Technical data of the post-harvest processing of coffee in both dry
process and dry process.

15
Conventionally there are 2 types of Dryting techniques used in the coffee processing that is sun
Dryting and mechanical Dryting. The initial moisture content of the coffee is about 55-60% and
after Dryting the final moisture content should be around 12% (wb) and the Dryting should be
even and homogenized to obtain the proper colour, size and to get rid of pests for the longer
storage time. Generally coffee beans can be stored almost for 8 months but the pest problem and
increase in moisture content during storage period are the problem.

Dry Processing and Dry Processing Products Arabica Robusta Products

Arabica
Products Arabica Robusta Products Arabica Products Arabica
At each Moistu We Bulk We Bulk At each Moistu We Bulk
stage of re ight/ density ight density stage of re ight/ density/kg/
processi conten kg /kg/m2/ /kg /kg/m2/ processing conten kg m2/
ng t % wb t %wb
Fresh 65 100 616 100 645 Fresh Dry 65 100 616
Dry Cherry
Cherry Pulped Nd 54 846
cherry
Dry 55 45 665
Parchment
Dry 12 37.2 422 42.20 440 Dry 12 23 352
Coffe 0 Parchment
Cherry Coffee

They concluded that moisture content in the coffee berries affects its physical properties causing
significant decrease in the superficial area, volume and diameter during the Dryting process.
Different variety of coffee has different shrinkage behavior. The shrinkage behavior during the
Dryting process was well explained by a polynomial model with a coefficient of determination
greater than 90%.

16
 Sun Dryting or Natural Dryting

Fresh coffee cherry assuming with a 4 to 6 cm layer (25-30kg/m2) in the sun requires energy up-
to the extent of about 17000 kJ/kg according to FAO research. Removal of fruit tissues in the
pulping step of dry-processing reduces this energy requirement by mechanically removing water
and by removing tissues that inhibit water loss. However, the decision as to which processing
system to apply is much more complex than mere consideration of Dryting efficiency. It depends
from place to place. Previously it was considered that sun dried green coffee are the best in
quality but now a days increase in the production and as a seasonal crop it is very difficult to go
for only sun Dryting method. Researches also proved that mechanically dried and the sun dried
coffee both gives to some extent same quality. There are different types of sun Dryting method
(Fig 3.1).
Dryting ground is another mode of natural Dryting. Here the yard is usually made of concrete,
tiles or asphalt with a small slope (0.5-1%) to drain water. Depending on climatic conditions, sun
Dryting of coffee in patios takes from 7 to15 days for parchment and from 12 to 21 days for
cherries. Parchment requires more careful handling than cherry to avoid cracking and physical
damage to the beans. Raking must be gentler. In tropical areas parchment is often covered during
the hottest hours of the day to avoid cracking caused by overheating.

Dryting racks are used which makes the coffee clear and avoid contamination from the ground.
Racks are also more exposed to wind; this helps remove saturated air which helps to shorten the
Dryting time. Plastic sheds are light wooden or metallic structures with a plastic roof and walls.
The flat floor is made of concrete or tiles like a patio.
Transparent or translucid plastic creates a greenhouse effect that may raise the temperature 10-
15°C. Fans may be used to help remove the saturated air. Dryting procedures are similar to those
in a patio except that coffee is permanently sheltered from dew and rain.

17
 Mechanical Driers
In mechanical Dryting the beans are heated by the passage of hot air which also carries the
moisture away. Temperatures must be monitored during natural and artificial Dryting. Coffee
temperature should not exceed 40°C for parchment and 45°C for cherries. It is often thought that
overheating can only occur in mechanical dryers. There are mainly 2 types of dryers, static and
revolving. In revolving dryers, there are tray dryers with stirrer, vertical dryers and rotary dryers,
cascade driers, column driers, and flex driers.

In all the cases woods, coffee husk, other solid fuel, fuel oils, diesel, gases are used as the main
fuel or energy sources. In case of mechanical dryers Dryting time varies from 20-60 hours
according to the type of driers used. Different types of mechanical dryers are representing in Fig
below. It can be concluded that Dryting air temperature of 50°C and 12 h of tempering is the
best dry ration treatment for natural coffee. It results in a final moisture difference of 1.7
percentage points; almost 50% less than the difference obtained with the conventional Dryting
method. Now a day’s solar assisted dryer is also available. The combination of two driers or pre-
treated sundried sample is used for the final Dryting in mechanical dryers. The main
disadvantage of the mechanical dryers are that the not uniform.

18
Fig 1 General scheme of coffee processing and preparation of green
Coffee beans

Fig.3.1 Different Types of sun Dryting methods

Quality Control

Quality assurance and control ensures that the manufactured Dryting coffee is safe,

unadulterated, properly labeled, and meets all Company quality specifications and any

government regulations. The quality control department inspects all raw materials and all

components furnished by suppliers when they arrive at the factory. These items are matched with

plans and specifications. The parts are again checked along every step of manufacture by the

makers, receivers, or persons who add the components along the assembly line. Independent

quality control inspectors examine the product at various stages of assembly and when it is

finished.

19
 Machinery and Equipment’s

The factory will use Machineries for Dry Coffee processing.

Source of Technology

The Company will use world standard production technology mainly from china.

Project Design and Engineering

The proposed project comprises stock of different components to be executed at different phases
of the project life. These activities include design and construction of various buildings,
importing of machineries and vehicle.

Plant Lay Out and Construction Works

As Indicated in part 1 the total land requirement for the project is estimated to be 10,000M 2. The
buildings are planned to accommodate production houses, Coffee Dryting Space, Workshops,
Office and guarding House and other utility requirements as well as office and a show
room/Constructions.

20
 Manpower and Organizational Management
Man Power
At the top of the organization structure, there will be a general manager with the responsibility of
supervising the overall activity of the plant. Depending up on nature of the center or amount of
work to be performs; there will be auxiliary units under the general manager. Employees under
each unit head that is accountable for the general manager.

The company will use efficient trained staffs in the area of marketing to be competitive supplier
of processed food complex to the market. The opportunities of being serviced by well skilled
professional’s well enable the company to evaluate the internal weakness strength of the
company as well as to assess the global opportunity and risks in the world market so that the
company cope up with the dynamics of the market situation. The company will hire 60
employees.

Organizational Structure and Management

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activities of the plant. Employees
under each unit will be supervised by the department head that is accountable to the owner of the
factor as indicated below.

1. Manager
Duties and Responsibilities
 She/he will plan, Organize, Direct and Control the overall activities of the
factory
 She/he wills device policies and strategies that will enable factory to be
profitable.
 She/he will incorporate modern technological innovation that will facilitate the
service delivery of the project center and increase customer satisfaction.
 She/he will plan, organize, direct and control the human and non-human
resources of the plant so as to achieve the short and long run objectives of the
organization.

21
2. Production Manager and Quality Control

Duties and responsibilities

 Design and prepare the Different types of coffee products based on Plant
standard and customer preferences.
 Use modern manufacture, processing technologies that will enhance the
qualities of Dresses.
 Produce quality Different types of Dress products that will enable the factory
competent both in domestic market.
 Control on the quality of raw materials, inputs, quality of product and also
overall production process
 Moreover control over the quality of the final product.
3. Administration and Finance Department
Duties and Responsibilities;
 Will plan, organize direct and control the financial transaction of the plant and
sales using the entire necessary document.
 Will Develop Sound financial Control system by developing modern financial
control systems.
 Will prepare the annual financial statements’ and prepare considered reports
for general manager, owner and other concerned government body.
 They Control Human and Non-Human resources of the plant.
 Manage and Executive the company national procurement procedure.
 Administer and control the company logistic resource.
 Provide and manage General supportive service to the plant and sales
4. Marketing and Sales Department
Duties and Responsibilities;
 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Provide cost estimates for pricing
 Gather Information of new design, profile
 Approval of new product profile and brand plan analyses market research.
 Plan and execute sales.
 Will develop effective customer handling strategies.
 Will develop the marketing strategies for future project centers development.

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 Financial Requirement and Analysis
Total Initial Investment Cost
The total amount of money that is required to establish the envisaged factory is
estimated to be 21,379,350.00

Table the Total Initial Investment Cost

SN Description Cost in ETB Birr

1 Land, Building and Construction 7,720,000
2 Factory Machineries 4,000,000
3 Vehicles 3,000,000
4 Equipment’s and tools 1,800,000
5 Furniture 602,000
Total Fixed Investment Cost 17,122,000

5 Pre service Expense 83,000

6 Initial Working Capital 3,442,000
Total 20,310,382.50
Contingency (5%) 1,068,967.50
Total Initial Investment Cost 21,379,350.00

Fixed Investment
A. Building and Construction

SN Description Land Unit Cost in Total Cost in

Requirement(M2) ETB ETB
1 Construction of 4500 600 2,700,000
Store/Ware House for
inputs & out puts
3 Construction of Coffee 3000 1500 450,000
Dryting Bed/Space
4 Construction of 1000 250 250,000
machine House
5 Construction of Office 500 600 300,000
and Guard House
6 Parking and Green 1000 120,000
area
7 Design and 40,000
Supervision
Total 3,860,000

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 B. Factory Machineries
The Factory will use for Different Machine for Dry coffee processing purpose of.
Hence estimated cost of this machinery will be as follows.

SN Description Unit Qty Total Cost

1 Different Commercial SETS 1SET 2,000,000
Complex with
accessory with
CFT(%5)
Total 2,000,000

C. Vehicles

SN Description Qty Unit Price Total Price Remark

In ETB in ETB
1 Transportation 1 1,000,000 1,000,000
Truck
3 Generator With 1 500,000 500,000
Installation
Total 1,500,0000

D. Equipment and tools

SN Description Unit Qty Total Cost

ETB
1 Wielding Machine 1 300,000
2 Oxyacetylene 1 200,000
3 Air compressor 1 200,0000
4 Mechanical tool Box 1 200,000
Total 900,0000

E. Furniture

SN Description Unit Qty Total Cost

1 Office Furniture full accessories 3 30,000 90,000
2 Resident House Furniture 4 4000 160,000
3 Coffee and Facility Furniture 2 2500 91,000
Total 301,000

E. Initial Working Capital

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The initial Working Capital is estimated to be 1,721,000 ETB

F. Pre-Service Expense

SN Description Cost in ETB

1 Project Proposal 10,000
2 Licensing 1,500
3 Worker Capacity Training 30,000
Total 41,500

Expenses
I. Raw Material and Inputs.
The Factory will purchase the raw Materials from Different parts Ethiopia
Illubabor Zone Yayo Woreda Especially from different Bodies.
Year Total RM Cost/ETB
1 400,565
2 500,565
3-10 667,420

II. Salary Expense

SN Description No Qualification Monthly Annual

Salary ETB Salary ETB
1 General Manger 1 BA/Mgt 4,500 54,000
2 Production manager 1 BSC/Mech. 4,000 48,000
and Quality Control Engineer
3 Machine Operator 4 Diploma Machine 2,000 24,000

4 Electrician 2 Dip Electricity 2,000 24,00

4 Administer and 1 BA/Purchasing 3,000 36,000
Finance Dept
5 Purchase and store 1 Dip/Acct 2,000 24,000
Keeper
7 Marketing and 1 BA/Marketing 3,000 36,000
Sales Dept
8 Accountant 1 Dip/Acct 2,000 24,000
9 Cashier 2 Dip/Acct 2,000 24,000
10 Driver 2 10th Complete 1600 19,200
11 Cleaner 2 Unskilled 800 7,200
12 Public Relation 1 Dip/Mgt 2,000 24,000

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 13 Load unload 30 Basic 800 28,800
Total 328,400

III. Other operating Expenses

SN Description Annual Cost ETB Assumption Used

1 Property And Insurance 86,168 1.5%ofFixed Investment Cost
2 Audit and legal fee 12000 1000 per month
3 Uniform 9570 33*350 birr
4 Telephone, Fax and 12,000 1000per month
Postal
5 Cleaning Goods Supplies 9600 800 per month
6 Repair and Maintenance 86,168 1.5%ofFixedInvestment Cost
7 Stationery and other 12,000 1000 per month
office Supplies
8 Electricity 120,000 10,000 per month
9 Water 6500 1.5*3,000m3
10 Fuel 240,000 6000litr*20/year
12 Oil and Lubricant 24,,000 %10 of fuel Cost
13 Miscellaneous Expense 24,000 2000/Month
Total 605,446

Financial Analysis and Statements

Underlying Assumption
The Financial Analysis of the Envisioned plant is based on the Data provided in the
preceding sections and the Following Assumptions.

A. Construction and Finance

Construction Period 1 years
Source of Finance 30% equity and 70% Loan
Tax Holidays 2 years
Bank Interest Rate 10%
Raw Materials and Operating Cost Increase By 5% after 3 Years
Salary and Wages increase by 2% after 3 Years
Price of Processed food Products Will Increase By 5% after 3 years
B. Depreciation

26
 Building 5%
Office Furniture 10%
Machinery Equipment 10%
Vehicles 20%
C. Working Capital
Accounts Receivable 30 Days
Raw Material Local 30 Days
Work in Progress Daily
Finished Product 5 Days
Accounts Payable 30 Days

Sources of Fund

S Description % Share Amount in ETB

N
1 Owners Share 30 3,251,902.50
2 Bank Loan 70 7,587,772.50
Total 100 10,839,675.00

Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Remaining

Payment in ETB Balance in ETB
0 0 0 0 7,587,772.50
1 7,587,772.50 758,777.25 1,517,554.50 6,828,995.25
2 7,587,772.50 682,899.525 1,441,676.775 6,070,218.00
3 7,587,772.50 607,021.80 1,365,799.05 5,311,440.80
4 7,587,772.50 531,144.08 1,289,921.33 4,552,663.55
5 7,587,772.50 455,266.355 1,214,043.605 3,793,886.30
6 7,587,772.50 379,388.63 1,138,165.88 3,035,109.05
7 7,587,772.50 303,510.905 1,062,288.155 2,276,331.80
8 7,587,772.50 227,633.18 986,410.43 1,517,554.55
9 7,587,772.50 151,755.455 910,532.705 758,777.25
10 7,587,772.50 75,877.725 834,654.975 0.00

Depreciation Schedule
SN Description Original Value Depreciation Depreciation per

27
 In ETB Rate in % Year
1 Construction/Civil Work 3,860,000 5 193,000
2 Machinery& Equipment 2,900,000 10 290,000
3 Vehicles 1,500,000 20 300,000
4 Office Equipment 301,000 10 30,100
Total 5,711,000 813,100

Revenue Projection

Based On the price and the Capacity Program of The factory indicated in previous
Chapter (Chapter 2), the revenue of the Factory projected as indicated in the table below.

SN Description Qty Year 1/birr Year 2/birr Year 3-10/birr

1 Profit from different ETB 3,058,160 5,094,880 5.143,600
types of income in the
Dry coffee processing
plant
Total Revenue Project. Birr 3,058,160 5,094,880 5.143,600

Balance Sheet (Beginning)

Asset
Current Asset Value in ETB
Cash 557675.00
Inventory of Raw Materials and 1,721,000
Inputs
Total Current Asset 2,278,675.00
Fixed Asset
Land, Building and Construction 3,860,000.00
Machineries and Equipment 2,900,000.00
Vehicles 1,500,000
Office Equipment 301,000
Total Fixed Asset 8,561,000.00
Total Asset 10,839,675.00
Liability
Account Payable 7,587,772.50
Owner Equity
Capital 3,251,902.50
Total Liability and Owners Equity 10,839,675.00

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 Income Loss Statement

Revenue Year 1 Year 2 Year 3-10

Sales Revenue 3,058,160 5,094,880 5,143,600
Purchase of Raw Material 400,565 534,086 667,608
Gross Profit 2,657,595 4,560,794 4,875,992
Expenses
Salary Expense 197,040 246,300 328,400
Other Operating Expenses 363,264 454,080 605,440
Deprecation Building 193,000 193,000 193,000
Depreciation Mach and 290,00 290,00 290,00
Equipment
Depreciation Vehicles 300,000 300,000 300,000
Depreciation Of Office 30,100 30,100 30,100
Equipment
Interest Expense 758,777.25 682,899.525 341,449.7675
Land Tax Payment 1,000 1,000 7,000
Total Expense 1,843,181 1,907,380 1,805,390
Profit Before Tax 1,374,856 2,653,414 3,070,602
Tax(%30) 412,456.80 796,024.20 921,180.60
Net Profit 962,399.20 1,857,389.80 2,149,421.40

Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 3,251,902.50
Loan Principal 7,587,777.50
Net Sale 3,058,160 5,094,880 5,143,600
Total Cash In 10,839,675 3,058,160 5,094,880 5,143,600
Flow
Purchase of Raw 0 400,565 534,086 667,608
Materials
Salary Expense 0 197,040 246,300 328,400
Investment 10,839,675 0 0 0
Other Operating 0 363,264 454,080 605,440
cost
Loan Repayment 0 758,777.25 682,899.525 341,449.7675

29
 Land payment 0 1,000 1,000 8,000
Tax Payment 0 412,456.80 796,024.20 921,180.60
Total Payment 10,839,675 2,133,103 2,714,390 2,872,078
Deficit/Cash 0 1,025,057
Surplus 2,380,490 2,271,522
Cumulative Cash 0 1,025,057 3,739,447 6,010,969
Return to Equity 0 1,025,057 2,380,490 2,271,522

Financial Evaluation
1. Profitability

According to the projected income statement, the project will start generating profit in the 3 rd
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.

2. Break-even Analysis

The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 3) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 24 %

3. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 8 years.

4. Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 13% and the net present
value at 8.5% discount rate is Birr 2.29 million.

30
 Economic Benefits
The project can create employment for 55 persons. In addition to supply of the domestic needs,
the project will generate Birr 0.4 million per annum in terms of tax revenue when it starts to
operate at full capacity. Moreover, the Regional Government can collect employment, income
tax and sales tax revenue. The establishment of such factory will have a foreign exchange saving
effect to the country by substituting the current imports.

Environmental Impact of the Project

The biggest risk that could lead stagnation or even the failure of the project stems from the
limited degree of development of raw materials harvesting mechanisms.
The proper harvesting mechanism is the key stone to the success of the project. Without
proper harvesting coffee products the farmers and the company direct access to export
markets would be lost. It is different levels likely occurrence risks are discussed below.

.
1) Risks of the project

I. Adverse Impacts During pre-Constructions phase

No as such adverse. Impacts can be observed during pre-construction phase of the project
Except 10,000m2 of and taken for the project which previously used for tree plantation and
land that is undeveloped Land.

B) Adverse Impacts during Construction phase.

Because the land used for the project small there are no negative impacts on the environment.
However activities like clearing, levelling and transportation of Construction materials have
adverse impacts on the environment. Change of the landscape by damaging the soil quantity
and structure, change of the land of the project site, air Quantity loss and generation of noise
are also the adverse impacts of construction phase.

C) Adverse Impacts during implementation phase

Adverse impacts of this project during implementation phase originate from improper waste
management, Communicable diseases and Sanitation Contracts due to poor techniques of
production.

The organic material produced by complete milling fouls ecosystems by significantly

increasing the amount of particulate matter around the project site.

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 Air pollution

The main solid waste material disposal from the industry is the coffee by products
(pulp). Effluents will have a potential media for bacteria growth that Will be a source
for Various Communicable Diseases to the employees working in the place as well as
local communities surrounding the project area. The project would have some short
term adverse impact on air quality due to dust and smoke release from machineries
involved especially in land levelling process.

 Noise Pollution
While processing of the coffee products takes place, there are unexpected sounds and
noises that might be created from the processing machine.
 Water Pollution
Harmful Wastes Disposed of in its pits or Water ways can leach in to groundwater and
affect water quality for workers and the community. Contamination of Water sources
may not occur immediately, but can increase or accumulate over time, eventually
causing damage to product quality and working health, so insufficient manpower and
skill of actors to enforce relevant and regulation.
 Hygiene and Safety
Improper sanitation and safety application can lead to the contamination of coffee
products and also hinder their production processes opposing its environmental quality
and usefulness for the public use.
2) Proposed Mitigation Measures

Proposed mitigation aims to prevent adverse impact from happening and to keep that
do occur within acceptable level. Opportunities for impact mitigation will occur
through all project cycle. The purpose of mitigation is to identify measures that
safeguard the environment and community affected by the proposal assessment
process. Its seeks to find the best ways and means of avoiding minimizing and
remedying of the project impact. The described impact can be minimized by
undertaking the following mitigation measures.
I. Pre-construction phases mitigation measures
No mitigation measures are recommended, because the land is give to the
proponent investment. The proponent must take care during the following
phases of implementation.
II. Construction phases mitigation measures
 Create awareness on the value of environmental protection among the
workers engaged on the Construction activities.
 Make se selected materials coming from authorized quarry
site .minimizing the movement of vehicles and construction

32
 machineries particular outside the premise of the project site to avoid
further distraction.
 Carefully excavate store and reuse of top soil for economic and
environmental purposes
 Limit clearing and soil disturbance around construction site,
 To avoid consequences of visibility loss and air pollution during
construction the site workers on the procedures of construction and
safety measure.
 Limiting the amount of withdrawal that will not adversely affect the
Ecological Balance and the demand of the local community, such as
developing and conserving own sources.
III. Operational phase impact mitigation measures
 The risk can be mitigated by using and strengthening the existing
control harvesting mechanism.
 The project site must be protected from any unforgiving environmental
situations that put their production processes in hazard and harm their
lives
 There must be furl production of cloth for those employees working in
the project.
 Dried matured coffee cherries purchases must be conducted for the
maximum coffee equally products.
 There should be free environment that ensures the coffee product from
any contaminations.
 It would be constructing proper sewerage system for liquid wastes and
constructing proper sanitary land fill for solid wastes

Future Development and Exit Strategies

Every Business undertaking is it small or large should have future Development plan. It
is plain fact that business activities are undertaken in a dynamic and turbulent
environment. Hence, to overcome or minimize the risks of uncertain future business
should devise effective strategies that enable them to be successful in their operation. The
first strategy is Diversification of its Activities to different other Business Forms. The
Second future Development Plan of the project is expanding its Branches in many parts
of the Region.
The third strategy of the center is making a joint venture with other similar Business.

33
 The Fourth strategy of the center is the use of Coffee Processing Plant/Hulling Waste as,
as animal feed and soil fertilizer for positive impact directly or indirectly to surrounding
Coffee growers as well as for other farmers

The final Strategy of the center is selling to other organization or Individuals local,
Domestic and internationally.

Action plan of Land Use

No Activity

Remark
March
April
May
Sept
Aug

Nov
July

Dec

Feb
Oct

Jun
Jan
1 Site Exploration
2 Site Grubbing Uprooting and * *
clearing
3 Bulk of the project site
Excavation
4 Preparation of the site plan
from the condition of
proposed block type and size
5 Survey and set the blocks * * *
location from the site plan
6 Construction of store house
7 Material Transportation and * * *
production of material civil
construction
8 Construction of machine and
fencing the compound
9 Construction of Dry Space
10 Preparation of green area and * * *
parking
11 Supply of power and other
infrastructure services

34
35