DESALEGN AGROFORESTRY

BASED MIXED FARM

(HIGHLAND OIL SEEDS FARM,
BEEKEEPING, FATTENING, AND
DAIRY FARM) INDUSTRY

Girmaye Abebe Consultancy

CONTACT ADDRESS
PHONE: 0994614040

AMEDGUYA KEBELE , WOREDA ADMINISTRATION, NORTH

SHOA, ANRS

2023, ADDIS ABABA

 TABLE OF CONTENTS
TABLE OF CONTENTS .................................................................................... 2
LIST OF TABLES AND FIGURES .................................................................. 5
List Of Tables ..................................................................................................................... 5
List Of Figures.................................................................................................... 7
LISTS OF ABBREVIATIONS ........................................................................... 8
CHAPTER ONE ................................................................................................ 10
SUMMARY ....................................................................................................... 10
1. 1 BACKGROUND ....................................................................................... 10
1. 2. MARKET STUDY ................................................................................... 11
1. 2. 1. Local Market Animal Fattening ........................................................................... 11
1. 2. 2. Market of Dairy Farm........................................................................................... 13
1. 2. 3. Market Study of Honey ........................................................................................ 14
1. 2. 4 . Market Study of Highland Oilseeds .................................................................... 15
1. 3. MIXED FARM CAPACITY AND FARM PROGRAM ........................ 16
1. 3. 1. Fattening Farm ..................................................................................................... 16
1. 3. 2. Dairy Farm ........................................................................................................... 16
1. 3. 3. Beekeeping ........................................................................................................... 17
1. 3. 4. Highland Oil Seeds............................................................................................... 17
1. 4. MACHINERY AND EQUIPMENT ........................................................ 17
1. 5. LOCATION, LAND, BUILDING AND CIVIL WORK ........................ 18
1. 6. ORGANIZATIONAL STRUCTURE AND HUMAN RESOURCE ...... 19
1. 7. IMPLEMENTATION .............................................................................. 19
1. 8. FINANCIAL ANALYSES ...................................................................... 19
CHAPTER TWO ............................................................................................... 21
BACKGROUND ............................................................................................... 21
2. 1 INTRODUCTION ..................................................................................... 21
2. 2 OBJECTIVES OF THE STUDY .............................................................. 21
2. 3 METHODOLOGY AND APPROACH.................................................... 22
2. 3. 1 Preliminary Assessment and Study Design ........................................................... 22
2. 3. 2 Market Study ......................................................................................................... 22
2. 3. 3 Technical Study ..................................................................................................... 24
2. 3. 4 Financial Analysis ................................................................................................. 24
3. PRODUCT DESCRIPTION.......................................................................... 26
3. 1. HONEY .................................................................................................... 26
3. 2. OIL SEEDS FARM .................................................................................. 27
3. 2. 1. Flax ....................................................................................................................... 27
3. 2. 2 . False Flax ............................................................................................................ 28

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 3. 2. 3. Importance of Pollination and Agroforestry Trees For Yield of Honey and Oil
Seeds................................................................................................................................. 28
3. 3. CATTLE FATTENING AND DAIRY FARM ....................................... 31
CHAPTER FOUR..............................................................................................32
MARKET STUDY ............................................................................................32
4. 1 MARKET STUDY OF FATTENING ...................................................... 32
4. 1. 1 Local Market Of Live Animals And Meat ............................................................ 32
4. 1. 2. Global Market Of Live Animals And Meat ......................................................... 48
4. 1. 3. Present Export Demand for Locally Processed Meat ........................................... 50
4. 2. MARKET STUDY OF ATTENING DAIRY FARM ............................. 52
4. 2. 1. Global Dairy Market Situation ............................................................................. 55
4. 2. 2. Ethiopian Dairy Market Situation ........................................................................ 58
4. 3. Market Study of Honey ............................................................................ 62
4. 3. 1. Present Supply of Honey ...................................................................................... 62
4. 3. 2. Projected Demand Honey..................................................................................... 66
4. 4. Market Study of False Flax ...................................................................... 67
4. 4. 1. Present Supply of False Flax ................................................................................ 67
4. 4. 2. Demand of False Flax........................................................................................... 67
4. 5. Market Study of Flax ................................................................................ 69
4. 5. 1. Present Supply of Flax ......................................................................................... 69
4. 4 TOTAL MARKET SHARE OF THE ENVISAGED PROJECT ............. 70
4. 5 MARKETING MIX ASSESSMENT ....................................................... 71
4. 5. 1 Quality ................................................................................................................... 71
4. 5. 2 Distribution............................................................................................................ 74
4. 5. 3 Pricing ................................................................................................................... 75
4. 5. 4 Promotion .............................................................................................................. 77
4. 5. 5 Development of Marketing Capability .................................................................. 77
CHAPTER FIVE ...............................................................................................79
MIXED FARM CAPACITY, PRODUCT MIX AND FARM PROGRAM ....79
5. 1 MIXED FARM CAPACITY .................................................................... 79
5. 1. 1 Factors Considered in the Selection of Mixed Farm Capacity .............................. 79
5. 1. 2 Selected Capacity .................................................................................................. 79
5. 2 MIXED FARM PROGRAM..................................................................... 80
CHAPTER SIX ..................................................................................................82
MATERIALS AND INPUTS ............................................................................82
6. 1 DESCRIPTION, SPECIFICATION AND REQUIREMENTS................ 82
6. 1. 1 Mixed Farm ........................................................................................................... 83
6. 2 COST OF MATERIAL AND INPUTS .................................................... 87
6. 2. 1 Direct and Auxiliary Raw Materials...................................................................... 87
6. 2. 2 Utilities .................................................................................................................. 88
CHAPTER SEVEN ...........................................................................................90
TECHNOLOGY ................................................................................................90
7. 1 TECHNOLOGY SELECTION of Mixed Farm ....................................... 90

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 7. 1. 1 Animal Fattening Farm ......................................................................................... 90
7. 1. 2 Dairy Farm ............................................................................................................ 90
7. 1. 3. Farming Process ................................................................................................... 91
7. 1. 4. Beekeeping ........................................................................................................... 91
7. 2 PROCESS DESCRIPTION OF MIXED FARM ...................................... 92
7. 2. 1. Process Description of Fattening and Dairy Farm ............................................... 92
7. 3. Process Description of Farming and Beekeeping .................................... 94
7. 2. 1. EIA /ESIA OF The Mixed Farm .......................................................................... 94
7. 3 QUALITY CONTROL ............................................................................. 94
7. 3. 1 Cattle, Sheep And Goats Fattening ....................................................................... 95
CHAPTER EIGHT ............................................................................................ 96
MACHINERY AND EQUIPMENT .................................................................96
8. 1 FARM MACHINERY .............................................................................. 96
8. 1. 1. Source of Technology .......................................................................................... 98
8. 2 OFFICE EQUIPMENTS AND FURNITURE ......................................... 98
CHAPTER NINE .............................................................................................100
LOCATION, BUILDING AND CIVIL WORK .............................................100
9. 1 LOCATION ............................................................................................ 100
9. 1. 1 Access to Market ................................................................................................. 100
9. 1. 2 Utilities ................................................................................................................ 100
9. 1. 3 Transport Infrastructures ..................................................................................... 101
9. 1. 4 Labor (Skilled and Semi-Skilled) ........................................................................ 101
9. 1. 5 Other Infrastructures ........................................................................................... 101
9. 2 LAND ...................................................................................................... 101
9. 3 COST OF BUILDING AND CIVIL WORKS ....................................... 102
CHAPTER TEN ..............................................................................................105
ORGANIZATIONAL STRUCTURE AND HUMAN RESOURCE .............105
10. 1 ORGANIZATIONAL STRUCTURE ................................................... 105
10. 1. 1 General Manager ............................................................................................... 107
10. 1. 2 Farm and Technical Department ....................................................................... 107
10. 1. 3 Finance and Administration Department .......................................................... 108
10. 1. 4 Commercial Department ................................................................................... 110
10. 1. 5 Quality Control And Assurance Department .................................................... 110
10. 1. 6 Management Information System Services Department ................................... 111
10. 2 HUMAN RESOURCE REQUIREMENT ............................................ 111
CHAPTER ELEVEN.......................................................................................114
IMPLEMENTATION......................................................................................114
11. 1 PROJECT ORGANIZATION AND MANAGEMENT ....................... 114
11. 1. 1 Project Organization .......................................................................................... 114
11. 1. 2 Project Management .......................................................................................... 115
11. 2 IMPLEMENTATION SCHEDULE ..................................................... 116
11. 3 IMPLEMENTATION COST ................................................................ 118
CHAPTER TEWELVE ...................................................................................121

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FINANCIAL ANALYSES ..............................................................................121
12. 1 BASIC ASSUMPTIONS FOR FINANCIAL ANALYSES ................. 121
12. 1. 1 Project Life ........................................................................................................ 121
12. 1. 2. Repair and Maintenance Cost........................................................................... 121
12. 1. 3 Depreciation ...................................................................................................... 121
12. 1. 4 Working Capital ................................................................................................ 122
12. 1. 5. Discounting ...................................................................................................... 122
12. 1. 6. Income Tax ....................................................................................................... 123
12. 1. 7 Source of Finance .............................................................................................. 123
12. 1. 8 Revenue ............................................................................................................. 123
12. 2 RESULT OF FINANCIAL ANALYSIS .............................................. 124
12. 2. 1 Investment Cost ................................................................................................. 124
12. 2. 2 Cost of Mixed Farm .......................................................................................... 125
12. 2. 3 Source of Finance .............................................................................................. 126
12. 2. 4 Bank Loan Repayment Schedule ...................................................................... 126
12. 2. 5 Profitability........................................................................................................ 127
12. 2. 6 Cash Flow .......................................................................................................... 127
12. 2. 7 Discounted Cash Flow....................................................................................... 128
12. 2. 8 Break-Even Analysis ......................................................................................... 128
APPENDIX: FINANCIAL ANALYSIS TABLES BASED ON CMFAR FOR
MIXED FARM ................................................................................................130
REFERENCES ................................................................................................138

LIST OF TABLES AND FIGURES

List Of Tables
TABLE 4. 1 : NUMBERS OF LIVESTOCK IN ETHIOPIA BY REGION ........................... 32
TABLE 4. 2 : LIST OF LOCAL FATTENING FARMS ........................................................ 33
TABLE 4. 3: ANNUAL MEAT PRODUCTION .................................................................... 34
TABLE 4. 4 : TOTAL IMPORT OF MEAT ........................................................................... 35
TABLE 4. 5 : EXPORT OF TOTAL MEAT (GOAT, SHEEP AND CATTLE) BY
ETHIOPIA (TON) .................................................................................................................... 37
TABLE 4. 6 : EXPORT EARN FROM LIVE ANIMALS EXPORT BY ETHIOPIA (000
USD)......................................................................................................................................... 37
TABLE 4. 7: APPARENT CONSUMPTION OF MEAT (TON) ........................................... 39
TABLE 4. 8 : FORECAST HUMAN POPULATION AND MEAT CONSUMPTION PER
YEAR ....................................................................................................................................... 40
TABLE 4. 9 : TREND IN GDP PER CAPITA IN ETHIOPIA ............................................... 42
TABLE 4. 10 : RATE OF URBAN POPULATION GROWTH AND PERCENTAGE
CHANGE ................................................................................................................................. 46
TABLE 4. 11 : RANKING OF TOP COUNTRIES ON KEY CRITERIA ............................. 47
TABLE 4. 12 : TOP 10 COUNTRIES WITH A FAVORABLE MACROECONOMIC
BACKDROP FOR MARKET ATTRACTIVENESS .............................................................. 47

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TABLE 4. 13 : PROJECTED EXPORT FOREIGN CURRENCY REVENUE DEMAND
FROM LIVE ANIMALS (IN USD) ........................................................................................ 51
TABLE 4. 14 : WORLD MILK PRODUCTION TRENDS, TON .......................................... 55
TABLE 4. 15 : TOP EXPORT OF MILK AND MILK PRODUCTS AT GLOBAL LEVEL
AT 2017-21 .............................................................................................................................. 56
TABLE 4. 16 : TOTAL POPULATION PROJECTED BASED ON THE 1994
POPULATION AND HOUSING CENSUS, ETHIOPIA (IN 1000) ....................................... 58
TABLE 4. 17 : MILK DEMAND FORECAST IN THE URBAN AREA OF ETHIOPIA..... 59
TABLE 4. 18 : DEMAND-SUPPLY GAP OF FRESH MILK................................................ 60
TABLE 4. 19 : IMPORT OF MILK PRODUCTS ................................................................... 62
TABLE 4. 20: HONEY PRODUCTION IN ETHIOPIA (TON) ............................................. 63
TABLE 4. 21 : EXPORT OF HONEY FROM ETHIOPIA (TON) ......................................... 64
TABLE 4. 22 : IMPORT OF NATURAL HONEY (TON) ..................................................... 65
TABLE 4. 23: CONSUMPTION OF HONEY ........................................................................ 66
TABLE 4. 24 : PROJECTED DEMAND FOR HONEY (TON) ............................................. 66
TABLE 4. 25 : PROJECTED DEMAND FOR FALSE FLAX (TON) ................................... 68
TABLE 4. 26 : COMPARISON OF ETHIOPIAN AND WORLD HONEY STANDARDS . 73

TABLE 5. 1 : PRODUCT MIX OF MIXED FARM FULL CAPACITY ............................... 80

TABLE 5. 2 : FARM PROGRAM (IN NUMBER) ................................................................. 81

TABLE 6. 1 : SPECIFICATION OF THE REQUIRED MOLASSES.................................... 84

TABLE 6. 2 : RAW MATERIALS AND AUXILIARY MATERIALS REQUIREMENT
FOR FATTENING AND DAIRY FARM ............................................................................... 86
TABLE 6. 3 : COST OF DIRECT AND AUXILIARY RAW MATERIALS AT FULL
CAPACITY .............................................................................................................................. 87
TABLE 6. 4 : ANNUAL COST OF UTILITY AT FULL CAPACITY .................................. 89

TABLE 8. 1 : LIST AND CORRESPONDING COST OF MACHINERY AND

EQUIPMENT ........................................................................................................................... 96
TABLE 8. 2 : LIST AND COST OF OFFICE FURNITURE AND EQUIPMENT ................ 98

TABLE 9. 1 : ESTIMATED COST OF BUILDING AND CIVIL WORKS ........................ 103

TABLE 10. 1 : ESTIMATED HUMAN RESOURCE REQUIREMENT AND COST ........ 112

TABLE 11. 1 : IMPLEMENTATION COST ........................................................................ 119

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TABLE 12. 1 : MINIMUM DAYS OF COVERAGE FOR WORKING CAPITAL
COMPUTATION ................................................................................................................... 122
TABLE 12. 2 : ANNUAL REVENUE (IN 000‟ ETB) .......................................................... 123
TABLE 12. 3 : TOTAL INVESTMENT COSTS (IN 000‟ ETB) ......................................... 125
TABLE 12. 4 : COSTS OF FARM (IN 000‟ ETB) ............................................................... 126
TABLE 12. 5 : BANK LOAN REPAYMENT SCHEDULE (IN 000‟ ETB) ........................ 126

List Of Figures
FIGURE 4. 1 : TREND IN IMPORT OF MEAT (TON) 35
FIGURE 4. 2 : AVERAGE ANNUAL GROWTH RATE OF GDP AND PER CAPITA GDP
FOR ETHIOPIA AND SELECTED COUNTRIES AND INCOME GROUPS (2000-2017) 43
FIGURE 4. 3 : FINAL HOUSEHOLD CONSUMPTION EXPENDITURE FOR ETHIOPIA
AND PEER COUNTRIES IN 2017 (IN MILLION USD) 44

FIGURE 7. 1 : PROCESS FLOW DIAGRAM OF ANIMAL FATTENING AND DAIRY

FARM....................................................................................................................................... 93

FIGURE 10. 1 : ORGANIZATIONAL STRUCTURE OF THE DESALEGN DEFITE

AGROFORESTRY BASED MIXED FARM ........................................................................ 106

FIGURE 11. 1 : PROJECT IMPLEMENTATION SCHEDULE .......................................... 118

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 LISTS OF ABBREVIATIONS
AADPA : Addis Ababa Dairy Producers Association
BC : Before the Birth of Jesus Christ
ADLI : Agricultural Development Led Industrialization
AGOA : African Growth and Opportunity Act
ANRS : Amhara National Regional State
ATMs : Automatic Teller Machine
BMI : Business Monitor International
CAGR : Compound Annual Growth Rate
CMFAR : Computer Module for Financial Analyses and Reporting
COMESA : Common Market for Eastern and Southern Africa
CRGE : Climate Resilient Green Economy
CSA : Central Statistical Authority
DDE : Dairy Development Enterprise
DFQF : Duty Free and Quota Free
DRMAS : Micro-wave Digital Radio Multi Access System
EBA : Everything But Arms
EEU : Ethiopian Electric Utility
EIC : Ethiopian Investment Commission
ERC : Ethiopian Railways Corporation
ERCA : Ethiopian Revenues and Customs Authority
ESC : Ethiopian Sugar Corporation
EU : European Union
FDI : Foreign direct investment
FICC : Fixed Income, Credit Currency
GCI : Global Competitiveness Index
GDP : Gross Domestic Product
GHG : greenhouse gas
GNI : Gross National Income
GOE : Government of Ethiopia
GTP : Growth and Transformation Plan
ha : hectare
IATA : International Aviation Transportation Association
IDS : Industrial Development Strategy
IMF : International Monetary Fund
IRR : Internal rate of return
IVTW Integrated Vertical Flow Treatment Wetland
Kg : Kilogram

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km : Kilo meter
LAR : Live Animal Regulation
LDC : Least Developed Countries
Li : liter
LS : Lump sum
ml : milliliter
m2 : Square meter
M3 : Cubic meter
MoE : Ministry of Education
MoFED : Ministry of Finance and Economic Development
MoI : Ministry of Industry
MoT : Ministry of Trade
NBE : National Bank of Ethiopia
NPV : Net present value
ONRS : Oromia National Regional State
ORDA : Organization for Rehabilitation and Development Of Amhara
PASDEP : Plan for Accelerated and Sustained Development to End Poverty
PCI : per capita income
PPP purchasing power parity
Proc. No. : Proclamation Number
RMB : Rand Merchant Bank
SC : Share Company
SNNPRS : Southern Nations, Nationalities and Peoples Regional State
SSA : Sub-saharan Africa
TLU : tropical livestock units
UN : United Nation
UNIDO : United Nation Industrial Development Organization
UNRRA : United Nations Relief and Rehabilitation Administration
USD : United States Dollar
WB : World Bank
WDI : World Development Indicators
WEF : World Economic Forum
WTC : World Trade Center
WTO : World Trade Organization
WWTP : wastewater treatment plant

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 CHAPTER ONE

SUMMARY
1. 1 BACKGROUND

In considering the potential of Ethiopia for Agroforestry Based Mixed Farm (Highland Oil Seeds
Farm, Beekeeping, Fattening, And Dairy Farm) Industry with huge and progressively growing local
and export market for oil seeds, honey, meat, and milk, the Company strongly wants to participate
in this business.

Consequently, encouraged by the new initiatives for agricultural farms and the favorable business
environment of Ethiopia, Desalegn Defite Agroforestry Based Mixed Farm has decided to
undertake Highland Oil Seeds Farm, Beekeeping, Fattening, And Dairy Farm with the objectives
of becoming one of the leading local producer of high quality highland oil seeds, honey, meat, and
milk for both the local and export market from cattle, sheep and goats. The standards of fattening
and dairy animals are considered and fulfill related to animal feed standard, transport standard and
meat, and milk standard. The standards of the highland oilseeds and honey also full fill all standards
starting from farm to delivery to market based on ISO standards and other food pre- requisites.

To this end Desalegn Defite Agroforestry Based Mixed Farm has consistently studied the
Agroforestry Based Mixed Farm related to highland Oil Seeds Farm, Beekeeping, Fattening, And
Dairy Farm Feasibility Study.

This Final Report on the Agroforestry Based Mixed Farm Feasibility Study is hence, prepared and
submitted by the investor as per the bank and investment standard.

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 1. 2. MARKET STUDY
1. 2. 1. Local Market Animal Fattening

1. 2. 1. 1. Past Supply Trend

Fattening of animals for meat: The local market for meat is supplied through local farm and few
import. Currently there are many fattening local farms and meat products processing.

Ethiopia has the largest livestock population in Africa with 65 million cattle, 40 million sheep, and
50 million goats. The source of meat and export of live animals in Ethiopia are harness from these
huge potential. The production of meat was slightly fluctuating from year to year during the period
2015-2021, although it exhibits a general increasing trend. The import of meat was slightly
fluctuating from year to year during the period 2013-2020, although it exhibits a general decreasing
trend. Most of the imported meat and meat products are from developed nations like UK, EU and
USA foe international communities in Addis Ababa.

Despite having the largest livestock resource base in Africa, Ethiopia‟s meat and live animals
export business is much lower than Somalia‟s or Sudan‟s. Domestic meat and live animal prices
are also higher than those in its neighboring countries, including Kenya, a meat-deficient country.
Export of meat and live animals from Ethiopia were negligible especially compared to its potential
due to illegal export of live animals. The ultimate goal of the fattening activities is to get a quality
meat of ruminant animals. The source of meat for local and international market like export of live
animals in Ethiopia was harnessing from these huge livestock potential.

The import of meat was very small amount and has a general decreasing trend. During the period
2013-2020, the average annual import was 14,368. 98 ton. Export of meat started to increase in the
only few years. A huge increase of export is registered during the recent six years i. e. 2017- 2019
for meat. Data from ERCA reveals that the main destination of meat is UAE and Saudi Arabia. The
significant amount of meat products is also exported to Qatar, Bahrain, Somalia, Vietnam, and
Djibouti.

Export of live animals started to increase in the only few years until 2015. A huge decrease of
export is registered during the recent year‟s i. e. 2016-2021. The export of live animals was
fluctuating. Most of the live animals from Ethiopia were exported to neighboring nations by illegal
market.
Global per capita beef consumption, which has declined since 2007