DAKI Project

DAKI Coffee Wet Coffee Processing and Roasting Firm
Executive Summary
1. GENERAL INFOMATION
 The Promoter of the project (Owner): DAKI Coffee
 Name of the project- WET COFFEE PROCESSING AND ROASTING INDUSTRY
 Address/site/:
 Region – Amhara
 Zone – North Shoa
 Woreda – Angolela-Tera
 Town – Chacha
 Legal form of Business : Partnership
 Sector of the Project : Manufacturing and Export
 Distance from International Asphalt Road- Town : within 2–3 km
 Altitude of the district ranges from 2800 to 2845 m above sea level.
 Topography of the Project : Slightly slope
 Temperature ranges from 10.3oc- 20.1 oc
 Total area required : 0.5 Ha(5000m2)
 Total investment cost: XXXXXXXETB is required, out of which amount XXXXXX ETB
(30%) from owner equity and the rest XXXXXXX ETB (70%) will be from bank loan.
 Employment Opportunity: 63 individuals on permanent and 120 on causal basis from both
qualified and unqualified (skilled and un skilled) people.
 Social and Economic Benefit: Provides better employment opportunities for local community
income generation through taxation for the country for and foreign currency
 Labor safety: The envisaged project is assumed to be undertaken by considering workers
safety. The promoter will provide all the necessary safety materials for the permanent and
temporary employees, based on the nature of the activities.
 Environmental Considerations: the proposed project has its own environmental protection plan
and budget. So all the necessary actions will be undertaken on right timely before affecting the
environment.
GASHA Consultancy PLC.

Mobile 09 63 29 62 33, Email meles@gashaconsulting.com
foshe.21mariam@gmail.com
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2. INTRODUCTION
Agriculture is the main stay of Ethiopian`s economy providing employment opportunities to

85% of the population and back bone of Ethiopian`s economy. Ethiopia has one of the fastest-
growing economies in the world and Africa`s second most populous country. Coffee
production in Ethiopia is a longstanding tradition and is where coffee Arabica, the coffee plant
originates. The plant is now grown in various parts of the world; Ethiopia itself is now the 5 th
largest producer in the world following Brazil, Vietnam, Colombia and Indonesia; and the
leading producer in Africa followed by Uganda. It 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 livelihood.
In 2022, coffee exports brought in $1.4 billion, equivalent to 34% of that year's total exports.
Many other economic activities depend on agriculture, including marketing, processing, and
export of agricultural products. Production is overwhelmingly of a subsistence nature, and a
large part of commodity exports are provided by the small agricultural cash-crop sector.
Principal crops include coffee, pulses (e.g. beans). In general, Exports are almost entirely
agricultural commodities, and coffee is the largest foreign exchange earner.
An approach to bring a viable project in Chacha town is chosen with special emphasis to wet
coffee processing industry (production). As an agricultural industry endeavors the project,
which here after will be promoted by DAKI Coffee. In addition, most importantly it is all
good a motivation: obtaining a socio-economically acceptable and technically sound return
from the invested resources.
Structural challenges:
 Lack of competitiveness
 Productivity ;
 Poor access to market & long and weak supply chain;
 Lack of infrastructure;
 Inadequate access to services, particularly financial services, risk management etc.
 Low value addition; and International Coffee Organization

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 Low value addition; and

 Inadequate technology transfer & research (coffee genome, conservation,
biodiversity etc).
3.5. Support for the project
There are some supportive roles expected from the Regional states, zone and town
administrative organs in ensuring smooth and effective implementation as well as long-run
sustainability of the anticipated project. Particularly important roles for the states are
establishing and adjudicating industrial requirements and right of occupancy as well as
associated contractual processes and regulatory functions with farmers. This includes,
among and subsequent implementation of the project, maintaining a supportive legal
framework, providing relevant technical and organizational supports towards facilitating
effective and smooth implementation of the project.
The overall goal of the project is to contribute towards the economic development of
Ethiopia through using the existing investment opportunities in the Country and taking
advantage of the expressed policy incentives that emphasize on greater agricultural
commercialization and enhancing private sector development.
The project’s contribution to the economy, upon realization of a full production level within
five years; include value addition, creation of jobs and permanent employment opportunities
to the local people as well as bringing considerable annual income in foreign currency and
tax revenues.
3.6. Goal and Objective
3.6.1. Overall goal
The overall goal of the project is to contribute towards the economic development of
Ethiopia through using the existing investment opportunities in the Country and taking
advantage of the expressed policy incentives that emphasize on greater commercialization of
agriculture, value addition and enhancing private sector development.
The project’s contribution to the economy, upon realization of a full production level within
five to seven years: include creation of jobs and permanent employment opportunities to the

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local people as well as brining considerable annual income in hard currency and tax
revenues: part of which will be reinvested in the immediate community infrastructure.
3.6.2. Objectives of the project
The main objective of this project is Purchasing red cherry directly from producers, to
process and supply high quality and quantity coffee raw beans and roasted coffee to global
markets like USA, Japan, Europe etc.... Through this process, this project is aimed to
improve the standard of coffee products.
The specific objectives of the project are:

 Processing service of wet coffee in a socially and environmentally acceptable manner
for exporters:
 To establish coffee roasting, grinding and packing plant for domestic and
international market
 Complement the national development agenda through export of a value-added
product.
 To make coffee traceable through transparent and accountable processing:
 To raise the standard and quality of coffee through collaboration with regional
concerned bodies
 Reduce the environmental impact of our operation by devised methods of Modern
coffee processing machine.
4. STUDY OF THE PROJECT AREA
4.1. Descriptions of the area
Chacha is one of the town`s in North Shoa zone, Angolela-Tera Woreda, adjacent to Debrabirhan,
Amhara Region of Ethiopia. Chacha is located in 109Km from capital City of Ethiopia, Addis
Ababa in South Eastern part of Amhara and 20 Km from zonal capital city of Dabrabirhan in
South western direction and within 2 - 3 km from main road Asphalt to the North West direction.

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The 2007 national census reported a total population for this woreda of 9,204 of whom 4,458 were
men and women 4,746 were women.
 Altitude of the district ranges from 2800 to 2845 m above sea level.
 Topography of the Project : Slightly slope
 Temperature ranges from 10.3oc- 20.1 oc
 Total area required : 0.5 Ha(5000m2)
The proposed project is planned to be established on 0.5 hectares of land. During the
establishment of the project, different construction will be undertaken for the sake of better
functioning and management of the project. The proposed constructions are warehouse, storage,
for products and inputs, two workshops (one for wet coffee processing and roasting) and offices
according to proposed plan. At least 2(two) deep ponds will be prepared for solid and liquid waste
management purpose and recycling system could be used.
This project is planned to create job opportunity for more than 70 skilled and unskilled permanent
and 120 daily labors workers especially for those who are living surrounding and locality of the
project area. The recommended crops products will be supplied to local and central market.
Socio Economic Activities of the Area
About 90% of the population depends on subsistence agriculture and cash crop production. The
majority of the surrounding area people of the projects area are farmers relaying on the coffee and
other agricultural activities
4.2. Reasons for preference of this project
The reasons for selection of the investment include:
 Vicinity to the capital city with good combinations of topography, climate and
environmental characteristics that allow optimal production of these crops:
 The vicinity to the capital city makes easier the availability of raw materials (red
cherry).

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 Minimal requirements for infrastructure development because of the topography and

visible prospects of on-going development initiatives in the area including Health,
Road, Electric power, telecommunication network, and other basic infrastructures:
 No visible adverse effects on the community and settlement patterns in the project
area:
 Accessibility of the area by all-weather roads ease of making choices between
marketing options (e.g. transporting to the major terminal market in Addis Ababa
ECX: and
 Regarding Profitability of the business Land ownership
The project is planned to be established on 0.5 hectare of land, which surrounding

community have no problems to safe drinking water specifically in the project area. The
Government and others concerned bodies has established different safe water generating
schemes such as hand dug well, hand pump, and developing spring water to alleviate the
further problems.
5. SOCIO-ECONOMIC BENEFIT
5.1. Socio-economic benefit for the society
The socio-economic impact of the project is expected to be positive, as the operational area
is industrial area, devoid of major settlements, precluding any potential displacement/
eviction. The positive impacts are more pronounced in view of the development of the area,
bringing large employment opportunities especially to the community surrounding of
industry.
As the project requires labor for undertaking its operational activities, a number of people
will have the opportunity of being employed in the project. In this regard, the project will
create new employment opportunity for about 70 skilled and unskilled individuals on
permanent basis and for up to 120 and above casual laborers at different operation phase
5.2 Poverty Alleviation

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The project will undoubtedly play its role in alleviating the existing poverty level through
the creation of employment opportunity, provision of training on the uses of compost
preparation/ or application, and other social benefits for the unemployed youth, women and
the poor sector of the community around the project area.
5.3 Economic Benefit for the community
The creation of substantial direct and indirect employment opportunities with potential for
out-growers will have impact for increasing incomes and skill of the rural community. It
minimizes the burden of local community carrying coffee products to long distance for
market. There will also be good opportunities for out-growers linkages with the surrounding
farmers and the use of the project’s facilities, knowledge and experience, thereby increasing
the economic activities of the in habitants of the area.
5.4 Economic Benefit for the Country
This investment project will have significant socio-economic benefits, both to the local and
national economy of the country at large, and Region and zone in particular in which the
project is to be established.
The specific direct benefits will include:
 Development of part of the country and exploitation of hitherto unused physical

resources of the particular area through the establishment of modern
industrialization.
 Supply of agricultural commodities to the national and export to global markets,
thereby enlarging the domestic basket of food items and contributing to the foreign
exchange balance of the country, both through generation of foreign exchange
revenue, through direct & indirect taxation.
 Upon realization of its full production stage within first year, the project’s economic
contribution to the country’s economy ‘which provide direct employment
opportunities.
 The project will also generate significant tax revenues.
In view of its anticipated commitment to ascertain high standard and quality of its
productions: the project would likely grasp a share among the high value markets in the
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ECX. This will apparently influence production and quality standards other producers’
relevance: which in turn improves the country’s production quality standards: and therefore,
enhances its share of export market supplies.
6. GENERAL OVERVIEW OF THE PROJECT
The Planned project
This project is planned to benefit the promoter of the project, local communities in and around the
project area, Region and Country at large by processing and supplying improved and high value
exportable Arabica coffee products to central and global markets to meet and satisfy export to
earn foreign currency. So that the investor and the country will be benefited from revenue and
value added tax (VAT) taxes.
The project encompasses three major components:
1. Process and supply clean coffee to central and global markets
2. To export value added roasted quality coffee to the global market
3. Create employment opportunity to local skilled and unskilled people
4. Supporting and solving the prior problems of the local community
7. THE PLANT
7.1 The Commodity
Agriculture is the main sources of food and raw material in Ethiopia. It is the major
employment sector as well as generator of foreign currency. Of the exported commodities,
coffee is on the top followed by gold and oil crops.
Coffee grows in the Western, Southern and Eastern parts of the country. The suitable growing
areas fall between an altitude ranges of 1500-1800 masl. The optimum growth temperature is
in between 20-25.50c. And annual mean rainfall requirement is about 1300-1600mm. Well
drained soil having loamy and clay texture with PH of 5-5.5 is highly suitable. Getting situated
in vicinity area to Addis Ababa places the project in advantageous position.
7.2 Technology

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Pulping of red cherry is expanding in the coffee growing areas of the country as
demand for washed coffee is rising. Procured red cherry will be pre-graded, sorted out
and pulped in order to separate pulp from the coffee. Pulped coffee is washed and
fermented for 36-64 hours. To remove sticking material, fermented coffee will be
repeatedly washed. During this process, broken coffee and floating particles will be
separated using water forces. Coffee passed through fermentation and washing stages
is spread on skin drying meshed bed. At this stage, poor quality coffee is transferred to
drying beds where it is exposed to sunshine for 3 days.
In the last stage of drying, coffee is spread under sunshine covered by polythene sheets
to protect against direct heart etc. After testing for optimum level of moisture content
(10.5% to 11.5%) the coffee will be stored and packed.
Roasted Coffee
Green Coffee is roasted at by action of heat (roasting) to develop characteristic

flavor and aroma and packed and supplied to market.
The wet coffee processing unit of the project gives the processing service to
exporters, for direct export of the promotor’s sake and for exportable roasting
purpose.
Roasted Ground Coffee
The Roasted Ground Coffee product is prepared by grinding and packing

roasted coffee for house hold consumption as well as for commercial centers like
hotels and restaurants.
Liquid Coffee Extract

The Liquid Coffee Concentrate extracted from regular or decaffeinated coffee for
house hold consumption or industrial consumption purpose.
Instant Coffee

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Instant Coffee is produced in two forms (spray dried agglomerated and freeze
dried) based on the type of production processes employed. The instant coffee
product dissolves instantly in hot water during consumption.
7.3 Production Plan

 The wet coffee processing
The wet coffee-treating machine that is available in the market has a capacity of
pulping 3 ton/hour. Because of seasonality in coffee harvest, the coffee pulping period
in a year is relatively short. Taking this into account, annual working period of 90 days
is considered. Thus, the input out plan is given in table 1 here under:
 Coffee Roasting
S. Description Production Year (in tons)
N
1 2 3 4 5 6 7 8 9 10
1 Capacity
Utilization
Rate 25% 35% 45% 55% 65% 75% 85% 95% 100% 100%
Roasted,
2 Ground and
Packed Coffee 72 100.8 129.6 158.4 187.2 216 244.8 273.6 288 288
Total Annual
Income (‘000) 37,080 51,912 66,744 81,576 96,408 111,240 126,072 140,904 148,320 148,320
The Proposed production program the plant is to start production at 80% of the production
program during the first year of production, increase it to 90% during the second year and
finally reach 100% at the third year of operation of the plant. With an assumption that
enough time during the initial stage will be required for market penetration and technical
skill development, the detail is shown in Table
8. ENVIRONMENTAL IMPACT ASSESSMENT
This project is designed to Process and promote the production of high value wet coffee and
roasted by maintaining the existing environmental system. It also intends to protect the
environment from the potential negative impacts. Thus, in order to establish environmental

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friendly processing, the new project site has been thoroughly scrutinized particularly for its
vegetation cover and agro ecology to identify the expected negative impacts of the project.
The major expected threats in red cherry processing and coffee roasting are the noise during
hulling process, gas house release and some of water pollution also may occur, accordingly.
However, the designed project area 3-4 apart from other industries in all direction.
Therefore, the environmental management plan realized and minimized the miss balance
effect on the project area of agro-ecology. The by-product of coffee pulp disposed on coffee
farm for the use of compost by supplying to the individual small holder farmers. Regarding
roasting, electric system would be applied. Furthermore, the project will apply integrated
coffee processing waste management, which is more environmental friendly form of west
control rather than simply disposed to the project surrounding area.
9. MARKET STUDY
9.1. General Review
Coffee products in Ethiopia are suppliers, cooperatives and individual (private sectors) coffee
producers concentrated in the southern and western regions of Kefa, Guji, Sidamo, Ilubabor,
Gamo, Gofa, Welega, and Harerge. The current size of the coffee export market is the country
shares the larger one from others commodities. Production has tripled in the last few years.
There is a study conducted forecasting this sector to grow by three fold. The creation of ECX
(Ethiopian commodity Exchange) and its warehouse facilities plus congregation of buyers and
sellers under one roof has brought conducive environment for the market. Therefore, coffee
market is well organized and it has a good track no need of market study.
9.2. Demand Analysis
According to federal trade minster, 2022 annual report Arabica coffee is the leading export
crop by production, coverage and trade in the world, accounting for about 51%. The area
under production in the world is still on average growth as demand of the crop for coffee
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beverage consumption is increasing. In Ethiopia, the production supply of coffee was reached
4.8% (495,000 tons) in 2022 in volume in the world market and 3% export from world export
share, which ranks 6th and 9th respectively. Therefore, no need of detail demand study.
Land, Buildings and Civil Works
The total area of land required for the envisaged plant is 5,000 m2 out of which 3,500 square
meters is a built-up area.
According to the Federal Legislation on the Lease Holding of Urban Land (Proclamation No
721/2004) in principle, urban land permit by lease is on auction or negotiation basis, however,
the time and condition of applying the proclamation shall be determined by the concerned
regional or city government depending on the level of development.
However, the Federal Legislation on the Lease Holding of Urban Land apart from setting the
maximum has conferred on regional and city governments the power to issue regulations on
the exact terms based on the development level of each region.
In Amhara, the City’s Administration is directly responsible in dealing with matters

concerning land. However, regarding the manufacturing sector, industrial zone preparation is
one of the strategic intervention measures adopted by the City Administration for the
promotion of the sector and all manufacturing projects are assumed to be located in the
developed industrial zones.
The highest rate of the industrial Zone will be applicable in most areas of the city that are
considered to be main industrial areas that entertain high level of business activities.
The price rate ranges from Birr 0.75 cents to Birr 60 per m2. Accordingly, in order to estimate
the land lease cost of the project, it is assumed that all new manufacturing projects will be
located in industrial zones. Therefore, for the project a land lease rate of Birr 60 per m2 which
is the highest price of the industrial zone is adopted.
On the other hand, some of the investment incentives arranged by the Bahirdar City
Administration on lease payment for industrial projects are granting longer grace period and
extending the lease payment period. The criterions are creation of job opportunity, foreign
exchange saving, investment capital and land utilization tendency etc. For the purpose of this

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project, the five years grace period, 40 years payment completion period and 10% down
payment is used. The land lease period for industry is 80 years.
Accordingly, the total land lease cost at a rate of Birr 60 per m 2 is estimated at Birr 300,000 of
which 10% or Birr 30,000 will be paid in advance. The remaining Birr 270,000 will be paid in
equal installments within 40 years i.e. Birr 6,750 annually. The total construction cost is
estimated about birr 10,375,000.
No. Description Quantity Unit Cost Total Cost

1 Roasting Store 500 3,000 1,500,000
2 Raw Material Store 1000 3,000 3,000,000
3 Processing Line 300 3,000 900,000
4 Product Store 200 3,000 600,000
5 Administrative Office 100 3,000 300,000
6 Cafeteria 200 3,000 600,000
7 Reception Area 100 3,000 600,000
8 Guard House 50 2,000 100,000
9 Parking 1,050 1,500 1,575,000
Sub Total 3500 4675000
Loading, Circulation,
10 1,500 800 1,200,000
Green Area, etc.
Total
Land Area 0 0
10. FINANCIAL BUDGET OF THE INVESTEMENT
A. Total Investment cost
The total Investment cost of the proposed agricultural enterprise is estimated at Birr
10,675,000. The fixed investment component is estimated at about Birr 10,375,000 and the
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pre-production expenditure is 300,000. The following table briefly summarizes the total
investment cost of the project.
Table3: Summary of Investment costs Plan (in Birr)
Investment costs Preparation Operation Total

phase phase
Fixed Investment cost 10,375,000 0 10,375,000
Land rent/leased (pre-production) 300,000 0 300,000
Total Investment cost 300000 0 300000
B. Operating cost
Operating costs are recorded on a year basis. It is divided into overheads (fixed costs) and
variable costs. The fixed cost component is estimated at about Birr 7,75,407 and Birr
162,919,279 is variable cost. Summary of operating costs are presented on the following table.
Table 4: Summary of operating costs (in Birr)
Item Operating costs Preparation Operation Phase

phase 1st year
1 Fuel & lubricants 0 29,657
2 Stationary 0 8,500
3 Labor operation 0 188,802
4 Red cherry cost 0 16,224,000
5 Transport 0 91,625
6 Maintenance 0 55,540
Fixed cost 0 147165
8 Salary& wage 0 375,600
9 Contingency (5%) 0 118,800
Sum 0 8,594,924
Total operating cost 0 9,024,670
N.B- The purchasing power of the project/industry is assumed to increase by 5% every year.

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 During hulling process, (Cleaning) 15% of Yield /quintal assumed to be broken or will be
out of actual size.
 Investment costs are estimated with a certain margin of errors. To allow physical and
financial contingencies, a percentage of the initial total cost estimate usually between 5
and 15% generally used. For the current project is estimated by using 5% contingencies.
C. Project Status
The promoter of the project is in the process of securing land on lease basis. The required
amount of loan is expected to be obtained shortly; the implementation of the project would
not take more than a year. The industry will start commercial production as immediately
acquired fully license from concerning body.
D. Source of fund
The promoter of the project has planned to finance the project through a long-term loan from
the Development Bank of Ethiopia: and partially from own contribution. The debt equity ratio
is assumed to be 70/30. The following table briefly summarizes the project financing by
source of funds.
Table 5: project Investment cost plan (in Birr)
Description Source of fund

Equity contribution Bank loan Total
Land rent/ lease (pre-production 30,000 0 30,000
charges)
Building& Construction 3,112,500 7,262,500 10,375,000
Processing Machinery and motors 2,744,100 6,402,900 9,147,000
100kg/h
50kVA Generator 719,400 1,678,600 2,398,000
Roasting Machine 15-20 minutes/batch 2,283,600 5,328,400 7,612,000
Office Furniture and Equipment 26,100 60,900 87,000
Product drying and storing materials 86,100 209,000 287,000
Vehicles (1 Isuzu and two Pickups) 2,700,000 6,300,000 9,000,000
Total fixed Investment cost 2812200 6569900 9374000
% share 30.00% 70,00% 100%
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11. FINANCIAL AND ECONOMIC ANALYSIS,
11.1. Price for input and out put
Description Year 1 Yr-2 Yr-3 Yr-4 Yr-5 Yr-6 Yr-7 Yr-8 Yr-9
Buildings 40,30 40,30 40,30 40,30 40,30 40,30 40,30 40,30 40,30
Coffee processing 25,000 25,000 25,00 25,000 25,000 25,000 25,000 25,000 25,000
machine 0
Generator (20KVA) 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
Dynamo 500 500 500 500 500 500 500 500 500
Motor cycles 2100 2100 2100 2100 2100 2100 2100 2100 2100
Total 75,400 75,400 75,40 75,400 75,400 75,400 75,400 75,400 75,400
0
The prices for input and output are used as of current prices obtained from local and
international market. Price of coffee as is mainly influenced by the export market and
domestic supply of the crop. Current market price of coffee in ECX is Birr 1435-2235/17kg
washed coffee with parchment from the gigging to the last years of the project. Assuming
processing facilities like transportation, labor and other utility price costs, of Birr 1200-
150/17kg washed coffee with parchment is assumed for the project.
11.2. Credit and Borrowing System
The depreciation schedule shows the annual amount of depreciation for all project assets, the
total of which is deducted from the net profit. The straight-line method is employed to
calculate depreciations of the different project assets. Depreciation schedules of the project are
shown in the table below.
Table 6: Depreciation schedule (Birr)

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11.3. Financial and Economic Analysis
Under this section the various Performa financial statements and performance indicators
of the investment project are measured to examine the profitability and soundness of the
envisaged investment. The outcome of the financial analysis includes the following the
following pro forma financial schedules and business results.
i. Cash flow statement

ii. Projected net income statement
iii.Discounted cash flow, NPV& IRR
iv.Break even Analysis
Data concerning all aspects of the project including fixed investment cost. Production, sales
revenue, and financial conditions are provided in the appropriate sections. For the sake of
convenience, these data are organized and annexed as part of the financial analysis section.
11.3.1. The financial condition & assumptions
The financial condition for the project and assumption used in the financial analysis is
described as follows
i. Debt/equity
The proportions of debt and equity are forecasted to be 70/30 respectively for the initial
investment cost.
ii. Loan:
As indicated above the medium-term loan requirement of the project is estimated at Birr
1,154.100. one of the local Banks will proved 70% of the initial investment with annual
interest rate of 10.5% to be repaid on a half yearly basis for a period of 10 years.
iii.Opportunity cost of capital:
The cost of capital is assumed to be 15% for total investment and 20% for equity. The equity
share has a time horizon of 5 years for short NPV calculation.
iv.Corporate Taxes:
Profits are taxed at x a flat rate of 35% of net income.
v. Planning Horizon:

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The planning Horizon comprises one year development and 10 years of operation (production
stage). Actual production is scheduled to begin in September 2015.
vi.Product & Revenue:
The planned production & Expected Revenue: washed coffee processing industry daily
processing capacity of 780,000 kg red cherry for each year which expected to produce
163800 kg for each year of parchment coffee & 7500kg of floater coffee year annually
during the first to10 year respectively. The production expected to increase. The production
expected to increase. The revenue earned out of the sales of clean and floater coffee grows
from 14,157,529,17,092,235 20,026,942 in year 1 to 3 respectively and 21,534,882 Birr for 4
to 10year respectively.
Table 7: Revenue Determination
Description Production year

1st yr 2nd yr 3rd yr 4th -10th years
Red cherry (kg) 624.000 624.000 624.000 624.000
Local primary price/kg 13 16 19 21
Red cherry price (kg) 8,112,000 9,984,000 11,856,000 13,104,000
Parchment coffee (kg) 124,800 124800 124800 124800
ECX price/17kg 1435 1735 2035 2235
Revenue-1 10,534,588 12,736,941 14,938,035 16,407,135
Floater (kg) 6240 6240 6240 6240
ECX price 17kg 750 850 950 1000
Revenue -2 275,294 312,000 348,650 367,000
Total revenue 10,809.88 13,048,941 15,286,685 16,774,135
Conversion = 1.00kg cherry = 20kg clean coffee

2.100kg Red cherry =1kg of floater coffee

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vii. Initial working capital:
The initial working capital, to be financed as part of the fixed capital structure of the project
is estimated based on the initial stock raw material and other input required to start operation
of the coffee processing.
11.3.2. Cash flow statement and net income statement
The net income statement of the project for the entire period of its operation is computed and
annexed. According to the projected net income statement, the industry will generate more
than a net profit of ETB 1.244million during the first year, 1,420 for the second and Birr 1.6
million from third year operation. The net profit of the enterprise is forecasted to Birr 1.744
million-during the final projection year.
11.3.3 Cash-generating capacity
The cash generating capacity of the project for each period is found to be significant, i.e., the
amount of cash generated by the project for each period is computed by adding the
depreciation over the net profit of the business.
11.3.4. Discount cash flow and discount rate
This involves the process of calculating the present value of a future amount, based on time
value of money i,e preference for the present. Accordingly, discounted cost and benefits are
calculated using the relevant opportunity cost of capital 10.5% loan interest rate.
11.3.5. Non-discounted measure of project worth
A. Payback period
The payback period is simply defined as the period (I.e., the number of years) required
recovering the original investment cost. The Business Result obtained reveals that the
investment is financially viable and has a healthy cash flow forecast. The outcome of the
financial analysis reveals that
 The payback period for total investment = 5 years and for Equity = 3 year only.
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B. Breakeven Analysis:
The Breakeven Analysis is shows that first year, the breakeven monthly sale is 315,288 and
for the second year breakeven point is 152.237, and the thrived year breakeven point is
527,389 and for the final year, the monthly breakeven point falls to 144,072.
The breakeven ratio, the ratio of breakeven sales toss planned production for the entire period
is between 0.35 and 0.10 the breakeven ratio of the project is not only low but it also steadily
declines throughout the operation period. This low breakeven ratio means low risk to the
investment: the business has great level of security against unforeseen operational difficulties.
For details see the annexed tables.
11.4. Sensitivity analysis
Risk and Uncertainty
The following risks and uncertain incidents that might affect the project could occur during
operating period of the project.
 If the global economic crisis and inflationist prolonged and intensified, it will
affect the project cost benefits analysis. Besides, it may also affect the production
cost and both inland and offshore markets.
 Unforeseen natural climatic hazards such as crop failure due to draught or long
period of rain will be a problem of wet coffee processing.
12. ORGANIZATION AND MANAGEMENT
The complexity of such a project with environmental challenges is certain to require rational
manpower and resource allocations. The administrative and the technical sections manage
and lead the overall project operations. Furthermore, seasonal workers that account to reach
over xx per day for the 3 months will be employed. With this under consideration, the
following list of permanent staff is designated. The list, however, should be taken as a check
list which may serve as a base line for the years to come in which more work forces will be

Page 20
needed in expanded endeavors in the long run. The manpower and its expenditures are listed
hallow.
Table 8: Salary and wage
Description Qty U /payment T /payment
13. IMPLEMENTATION SCHDULE
It is expected that total time of about 9 months will be taken from the date of approval of the
scheme for complete implementation. Breakup of the activities and relative time for each of
them is shown in the table below. The activities indicated in the table consist of different
tasks to make the project in to operation. This implies that to start operation on time, approval
of the project by Amhara investment board is very crucial.
14. CONCLUSION
As shown and deeply discussed in this document, the project is expected to be financially
profitable and will be conducted in environmental friendly way. In addition to creating both
permanent and temporary employment opportunities for local communities and some others
professionals, it also will generate income for the government in terms of maximizing income
tax in a considerable manner considerably

Page 21
15.ANNEX
Annex 1: Buildings & Constriction
No Description Unit Qty unit cost Total cost

(Birr) (Birr)
1 Office complex m2 32 1,500 48,000
2 warehouse M2 72 1,00 72,000
3 staff Residence M2 50 1,5000 75,000
4 water reservoir tanker M2 30 2500 75,000
5 Cherry hopper & motor M2 25 2500 37,500
house
6 washing channel & M2 20 1500 30,000
fermentation tank
7 Sub Total 337,500
Annex 2 Machinery
No Description Unit Qty Unit Cost Total Cost
1 3-disc Aagaarde Pre-grader

Coffee Processing Machine PCS 1
11,147,000 11,147,000
3 Motor Cycles PCS 1
5 Moisture Tester PCS 1
Total 11,147,000 11,147,000
Annex 3: Office Furniture and Equipment’s

Page 22
No Description Unit Qty unit cost Total cost

1 Table PCS 2 20,000 40,000
2 Chair PCS 14 2500 35000
3 Shelf PCS 11 2,500 27,500
4 Cash Box PCS 11 2500 27500
5 Calculator PCS 13 3,500 45,500
6 Computer with Printer PCS 2 25000 50000
Total 32,000 225,500
Annex: 4 Production Drying, Storing and Transporting Equipment and Materials
No Description Unit Qty Unit Cost Year 1
1 Drying Trays PCS 200 1000 12,000
2 Parchment Drying Bed PCS 30 1900 22,800
3 Complete Drying Bed PCS 150 1900 22,800
4 Bedding Suck Roll 4 12000 144,000
5 Mesh Wire Roll 22 550 6,600

Polyethylene Sheet
6 (40mmm) Roll 7 2400 28,800
7 Bagging Sucker Roll 738 400 4,800
8 Electrical Wire Roll 10 800 9,600
9 Plastic Hose M 50 580 6,960
10 Fire Extinguisher PCS 3 3000 36,000
Sub Total 294,360

Page 23

Page 24
Description year 0 year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10
Investment cost 1,109.880
operating costs 0 9,024,670 11,055.416 13,048,705 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842
Total cost 1,109.880 9,024,670 11,055.416 13,048.705 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842 14,385,842
Sales /Revenue 0 10,809.882 13.048.941 15,286,685 16,774,135 16,774,135 16,774,135 16,774,13 16,774,135 16,774,135 16,774,135
5
net Revenue 1,109.880 1,785,212 1,993,525 2,237,980 2,388.293 2,388.293 2,388.293 2,388.293 2,388.293 2,388.293 2,388.293
discount factor 1 1,105 1,221 1,349 1,491 1,448 1,82 2,012 2,223 2,456 2,714
(10.5%)(1+D)
PVC 1,109.880 8,167.122 9,054, 9,672,872 9,648,452 8,729,273 7,904,309 7,150,021 6,471,364 5,857,428 5,300.6
395 05
PVB 1 97826 10687 11331864 11250258 10178480 9216558 8337045 754520 6829860 618059
99 093 5
PVC=pvc=79,065, PVB=
721
∑ pvb=91,340,172
NPV=pvb-
pvc=12,274,4451
B/C ratio =
PVB/PVC=1,
16

Page 25

Page 26
Annex 5: projected Net Income statement of the project

Working years of the project
Description year 1 year 2 year 3 year 4 year 5 year 6 year 7 year 8 year 9 year 10
sales Revenue
washed coffee with parchment 10,534,588 12,736,941 14,938.035 16,407,135 16,407,135 16,407,135 16,407,135 16,407,135 16,407,135 16,407,135
Washed coffee floater 275294 312000 348650 367000 367000 367000 367000 367000 367000 367000
Total sales 10,809,882 13,048,941 15,286,685 16,774.135 16,774.135 16,774.135 16,774.135 16,774.135 16,774.135 16,774.135
Variables cost
Fuel & lubricants 29,657 31,733 34,588 38.739 38.739 38.739 38.739 38.739 38.739 38.739
stationary 8,500 9,400 9,700 9.90 9.90 9.90 9.90 9.90 9.90 9.90
Labor operation 188,802 244.201 244,201 258,416 258,416 258,416 258,416 258,416 258,416 258,416
Red cherry cost 8,112,000 11,856.000 11,856.000 13,104.000 13,104.000 13,104.000 13,104.000 13,104.000 13,104.000 13,104.000
Transport 91,625 118,509 118.509 125,407 125,407 125,407 125,407 125,407 125,407 125,407
Maintenance 45540 45540 45540 45540 45540 45540 45540 45540 45540 45540
Total variables cost 8,476,124 12,308,538 12,308,538 13,582,002 13,582,002 13,582,002 13,582,002 13,582,002 13,582,002 13,582,002
Gross profit 2,333,758 2,978,147 2,978.147 3,192,133 3,192,133 3,192,133 3,192,133 3,192,133 3,192,133 3,192,133
Operating Expenses
Fixed costs (salary & wage) 118,800 118,800 118.800 118.800 118.800 118.800 118.800 118.800 118.800 118.800
Depreciation 75,400 75,400 75.400 75,400 75,400 75,400 75,400 75,400 75,400 75,400
Total Operating expenses 194,200 194,200 194.200 194,20 194,20 194,20 194,20 194,20 194,20 194,20
Operating Income 2,139,558 2,444.573 2,783.947 2,997,933 2,997,933 2,997,933 2,997,933 2,997,933 2,997,933 2,997,933
Interest on loan 224,653,59 256,680.17 292.314.44 314,78297 314,78297 314,78297 314,78297 314,78297 314,78297 314,78297
Income (Loss) Before Taxes 1,914,904 2,187,893 2,491,633 2,683,150 2,683,150 2,683,150 2,683,150 2,683,150 2,683,150 2,683,150
Income Taxes 670,217 765,762 872,071 939,103 939,103 939,103 939,103 939,103 939,103 939,103
Net Income (Loss) 1,244,688 1,422,130 1,619,561 1,744,048 1,744,048 1,744,048 1,744,048 1,744,048 1,744,048 1,744,048

Page 27
Cumulative Net income (loss) 1,78,809 3,160,939 4,780,501 6,524,548 8,268,596 10.012.643 11.756,691 13,500,738 15,244,786 16,988,833

Page 28
TABLE OF CONTENTS
Title Page
1. Executive summary ………………………………………………………………

2. Introduction ………………………………………………………………………..,
3. Background Information …………………………………………………………
3.1 Coffee in Ethiopian Economy ………………………………………………….
3.2 Current policy for the Development of Coffee Sector ………………………..
3.3 Justification of the Proposed Project ………………………………………….
3.4 The Future Expectation of Ethiopian Coffee ………………………………….
3.5 Support for the Project ………………………………………………………..
3.6 Goal and Objectives …………………………………………………………….
4. Study of the Project Area …………………………………………………………
4.1 Description of the Project Area ………………………………………………..
4.2 Reasons for Preference of this Project ………………………………………
5. Socio- Economic Benefit …………………………………………………………..
5.1 Socio- economic benefit for the society ……………………………………….
5.2 Poverty Alleviation ……………………………………………………………..
5.3 Economic Benefit for the Community ………………………………………….
5.4 Economic Benefit for the Country ………………………………………………
6. General Overview of the Project …………………………………………………….
6.1 The Planed Project ………………………………………………………………
7. The Plant ……………………………………………………………………………..
7.1 The Commodity ………………………………………………………………….
7.2 Wet Coffee Pulping Technology ………………………………………………..
7.3 Production Plan ………………………………………………………………….
8. Environmental Impact Assessment ………………………………………………….
9. Market Study ………………………………………………………………………

Page 29
9.1 General Review ………………………………………………………………….

9.2 Demand Analysis ………………………………………………………………..
10. Financial Budget of the Project ……………………………………………………
11. Financial and Economic Analysis ………………………………………………………..
11.1 Price for Inputs and Outputs ……………………………………………
11.2 Credit and Borrowing System ……………………………………………..
12. The Financial Statement ……………………………………………………………….
12.1 The Financial Statement …………………………………………………………
12.2 Cash flow statement and Income statement …………………………………….
12.3 Cash generating capacity ……………………………………………………….
12.4 Discount cash flow and discount rate ……………………………………………
12.5 Non- discounted measure of project worth ………………………………………
12.6 Sensitivity analysis ……………………………………………………………….
13. Organization and Management ………………………………………………………….
14. Conclusion ………………………………………………………………………………..
15. Annex …………………………………………………………………………………….

Page 30
Project Proposal for
Wet Coffee Processing

Industry
Promoter: DAKI Coffee

Project Location:
 Amhara Region,
 North Shoa Zone,
 Demtu Hambela District,
 Chacha Town
Prepared by: GASHA Consulting PLC for Business & Investment PLC.
Contact: Mobile 09 31 15 22 85/09 63 29 62 33
Email meles@gashaconsulting.com
Foshe.21mariam@gmail.com

Page 31
Oct, 2023
Ethiopia, Addis Ababa

Page 32

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DAKI Coffee Wet Coffee Processing and Roasting Firm

GASHA Consultancy PLC.

Agriculture is the main stay of Ethiopian`s economy providing employment opportunities to

GASHA Consultancy PLC.

 Low value addition; and

3.5. Support for the project

3.6. Goal and Objective

3.6.1. Overall goal

GASHA Consultancy PLC.

3.6.2. Objectives of the project

The specific objectives of the project are:

4. STUDY OF THE PROJECT AREA

4.1. Descriptions of the area

GASHA Consultancy PLC.

Socio Economic Activities of the Area

4.2. Reasons for preference of this project

The reasons for selection of the investment include:

GASHA Consultancy PLC.

 Minimal requirements for infrastructure development because of the topography and

The project is planned to be established on 0.5 hectare of land, which surrounding

5.1. Socio-economic benefit for the society

5.2 Poverty Alleviation

GASHA Consultancy PLC.

5.3 Economic Benefit for the community

5.4 Economic Benefit for the Country

The specific direct benefits will include:

 Development of part of the country and exploitation of hitherto unused physical

6. GENERAL OVERVIEW OF THE PROJECT

The Planned project

GASHA Consultancy PLC.

Green Coffee is roasted at by action of heat (roasting) to develop characteristic

Roasted Ground Coffee

The Roasted Ground Coffee product is prepared by grinding and packing

Liquid Coffee Extract

GASHA Consultancy PLC.

7.3 Production Plan

8. ENVIRONMENTAL IMPACT ASSESSMENT

GASHA Consultancy PLC.

9.1. General Review

9.2. Demand Analysis

Land, Buildings and Civil Works

In Amhara, the City’s Administration is directly responsible in dealing with matters

GASHA Consultancy PLC.

No. Description Quantity Unit Cost Total Cost

10. FINANCIAL BUDGET OF THE INVESTEMENT

A. Total Investment cost

Table3: Summary of Investment costs Plan (in Birr)

Investment costs Preparation Operation Total

Table 4: Summary of operating costs (in Birr)

Item Operating costs Preparation Operation Phase

GASHA Consultancy PLC.

Table 5: project Investment cost plan (in Birr)

Description Source of fund

11. FINANCIAL AND ECONOMIC ANALYSIS,

11.1. Price for input and out put

11.2. Credit and Borrowing System

Table 6: Depreciation schedule (Birr)

GASHA Consultancy PLC.

11.3. Financial and Economic Analysis

i. Cash flow statement

11.3.1. The financial condition & assumptions

GASHA Consultancy PLC.

Table 7: Revenue Determination

Description Production year