Astatke 2

ASTATKE ABEBE
COFFEE SUPPLIER
BUSINESS PLAN
Submitted to:
DASHEN BANK (S.C)
SEPTEMBER,2023
HAWASSA
BUSINESS PLAN FOR COFFEE SUPPLYING COMPANY
Contents
Executive Summary ....................................................................................................................................... ii
1. INTRODUCTION ..................................................................................................................................... 1
1.1. OBJECTIVES ................................................................................................................................... 2
1.2. MISSION ........................................................................................................................................ 3
1.3. KEYS TO SUCCESS .......................................................................................................................... 3
2. COMPANY SUMMARY ........................................................................................................................... 4
3. COMPANY OWNERSHIP ........................................................................................................................ 4
3.1. COMPANY LOCATION AND OWNERS’ FACILITIES.......................................................................... 5
4. PRODUCTS ............................................................................................................................................. 5
5. COMPETITIVE COMARISON................................................................................................................... 6
6. MARKETING STRATEGY AND IMPLEMENTATION.................................................................................. 7
6.1. Marketing plan .............................................................................................................................. 7
6.2. CONSUMPTION TREND ............................................................................................................... 10
6.3. Trade ........................................................................................................................................... 11
6.4. POLICY ......................................................................................................................................... 15
7. GENRAL DESCRIPTION ......................................................................................................................... 17
8. PRODUCTION SCHEDULE .................................................................................................................... 19
9. COFFEE PROCESSING AND PREPARATION .......................................................................................... 20
10. COFFEE TRANSIT AND OPERATION ................................................................................................. 21
11. Human Resource Expenses ............................................................................................................. 23
12. UTILITY EXPENSE ............................................................................................................................. 24
13. LOAN SETTLEMENT PLAN ................................................................................................................ 24
14. FORECASTED FINANCIAL STATEMENT INTEPRETATION ................................................................. 30
14.1. PROFITABILITY ......................................................................................................................... 30
14.2. DEBT PAYING CAPACITY .......................................................................................................... 30
15. RECOMMENDATION ....................................................................................................................... 31
PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

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Executive Summary
ASTATKE ABEBE PV. Ltd coffee supplier project is established with the
objective of coffee supply from the coffee processing sites in Hoku
district, of Sidama regional state. The firm established by Mrs.
ASTATKE ABEBE PV. Ltd, who has good experience on running
private business, the project by introducing modern production
technologies and management will produce and supply of
agricultural product (coffee) for Ethiopian commodity exchange
market and exporting to the world market on an integrated manner.
The project under consideration is profitable from the outset i.e.,

starting from its first year with increasing profitability in
subsequent project periods as well. As per the financial projection
made for the Three project years, the business is expected to
register the lowest profit of ETB 88 million in the first year and a
maximum profit of ETB 90.9 million at 3rd year. The project cash flow
statement indicates that at the end of initial year of operation, the
annual net cumulative cash flow balance would be ETB 165.9
million and it is expected to reach ETB 557.7 million at the 3rd. year.
ASTATKE ABEBE PV.Ltd coffee processing and supplier starts with
commodities needed in local market where there are ever growing
demand for adequate supply of agricultural products and fast
delivery need in the areas of order including the rural and urban
Ethiopian society. The coffee processing and supplying sector now is in
its tip of benefits both to the company and the country as a whole.

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ASTATKE ABEBE PV.Ltd coffee processing and supplying is planning to

supply a total of 765 tons of both washed, specialty and sun-dried
coffee and planning to earn Profit Before tax ETB 135.3 million in
this fiscal year and ETB 148.2 Million at the end of 3rd year. The
business organization will need two kinds of loan that facilitates to easy
supply from region to central market on the vast world market
together with the strengths and opportunities prevailing in the
business organization, the need for coffee working capital and long-
term loan for finishing materials of hotel w i l l h e l p its operation to
be easy and fruit full. Therefore, ASTATKE ABEBE PV.Ltd coffee
processing and Supply demands 80,000,000(one hundred-fitty
million) of working capital loan and 20,000,000(Fifty million) of long-
term loan from our esteem bank (DASHEN BANK S.C) which is one of
the banks that is working with the business organization.

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1. INTRODUCTION
Ethiopia is Africa’s largest coffee producer and the world’s fifth largest
supplier of Arabica coffee. Coffee is Ethiopia’s number one source of
export revenue generating about 30-35 percent of the country’s total
export earnings. All the coffee produced in Ethiopia is of the coffee
arabica variety. In 2023/24 total production is forecasted to be 8.35
million 60 kg bags (501,000 MT). The coffee industry in Ethiopia is the
driving force of the country’s economy, socio-cultural, and spiritual life
of the people. The livelihood of 25 percent of the country’s population
is directly or indirectly dependent on the coffee value chain will remain
so in the years to come. Post Addis estimates Ethiopia’s coffee
production for MY 2022/23 (Oct-Sep) to reach 8.27 million 60 kg bags
(496,200 MT). So, raising the activities of production and processing
and exportable agriculture commodity has a vital role economic
development of the country. From the agricultural products, coffee is
the major important commodity crop that determine the Ethiopian
export and foreign exchange earnings which contribute 52% of the
national foreign exchange earning, 30% government revenue and 25%
of the population livelihood depends on the coffee processing industry.
Ethiopia is the only country where Arabica coffee found as a wild forest
species and primary center/ origin / of this species because of its
diversification and high genetic variability which is found mostly in
western and southern regions.

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Ever though our country is the primary origin of coffee Arabica, the
amount earned by country as foreign exchange from this sector is very
low due to less productivity per hectare and poor quality of the
product. The current Ethiopian economic policy, which precisely
applied by the government that stimulate the role of private sectors
has been advocated rapidly at different level and took necessary
measure to improve the situation of any investment. One of the
significant economic policies which is very attractive for investment i.e.
New proclamation for the promotion and expansion of investment
attracts businessmen and there have been initiated to invest on
various sectors in the country. Coffee is the leading export
commodity of Ethiopian economy, which is natural endowed with good
climate, geographic factor and topography for growth, and
development of tropical crop particularly coffee. The contribution of
coffee to Ethiopian economy is highly significant. About 65% of the
country`s foreign exchange earnings are from coffee 25% of the
population is dependent on it for their livelihood through
production, processing and marketing of coffee. Because of its
superior quality, Ethiopian coffee has enough customers.
As a whole, poor-quality coffee is sometimes undesired in the world

market of today. Only high price is paid for best quality coffee which
determines price structure, the demand and survival of coffee
industries to produce high quality coffee. It is for these reasons, that
the coffee industry remains the most important investment sector in
the country.

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1.1. OBJECTIVES
The objectives of Abraham Hussein coffee supplier
➢ Increase the company`s total coffee supplying share.

➢ Create a better job opportunity for unemployed youth in the
surrounding community.
➢ To create source of income for the owner of the project.
➢ Contribute to the economic growth of the region and the country by

producing export standard quality coffee.

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BUSINESS PLAN FOR COFFEE EXPORT COMPANY
1.2. MISSION
Abraham Hussein coffee supplier`s mission is to provide
enhancement of people`s lives and guarantee our customers:
consistent, high quality organic and traceable Ethiopian coffee
beans supported by efficient, customer focused friendly and
professional services. Our commitment to our customer and our
homeland, Ethiopia, will be reflected through honest and
responsible business.
1.3. KEYS TO SUCCESS

The key to success for Abraham Hussein coffee supplier are:
❖ Establish and maintain good working relationships and loan

agreements with local commercial banks and other financial
institution.
❖ Undertake targeted promotional activities in domestic coffee
market.
❖ Increase our profit margin with potential buyers in the
country.
❖ Supply consistent quality coffee, assess and study customer
tastes to expand market share and work at the level of clients`
interest.

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2. COMPANY SUMMARY
ASTATKE ABEBE PV.Ltd coffee supplier is the family-owned that

buys and source Arabica coffee beans grown in Ethiopia for
exportation to World coffee importers and sells to diverse
international market company operates at both processing and
exporting levels of Ethiopian coffee supply chains.
ASTATKE ABEBE PV.LTD is a growing company in the coffee export
industry, with a focus on providing high-quality coffee products to
customers around the world. The company has positioned itself as a
key player in the Ethiopian coffee market, The company prides itself
on its commitment to sustainability and ethical sourcing practices.
The company works closely with local potential farmers, suppliers,
and whole sellers to ensure fair prices and support for their
communities, while also implementing environmentally friendly
practices throughout the supply chain. With a dedicated team of
experts and a strong network of partners. The Company is poised
for continued growth and success in the global coffee industry. The
company's dedication to quality is evident in its rigorous selection
process for coffee beans.

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The company only sources beans from the finest plantations,

ensuring that each batch meets the highest standards of flavor and
aroma. By maintaining strong relationships with farmers, suppliers
and whole sellers having good foundations the company can closely
monitor the cultivation and harvesting processes, guaranteeing a
consistent and exceptional product. In addition to, its focus on
sustainability and quality, also places a strong emphasis on
customer satisfaction. The company understands the importance of
delivering a memorable coffee experience, and therefore invests in
proper warehousing and packaging facilities. This allows Company
to preserve the freshness and distinct characteristics of each coffee
blend, ensuring that customers receive a superior product every
time.

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COMPANY OWNERSHIP
The promoter, Mr. ASTATKE ABEBE PV.Ltd started coffee business

nearly 11 years ago. As a son of coffee farmer and someone who
grew up working in coffee farm, he didn`t find it difficult to establish
itself in coffee business why he was successful to date from working
as a collector to supplier. He was also engaged in coffee processing
and transporting from Hoku district, in Sidama Regional stater to
central market now a days Ethiopia commodity exchange (ECX).
Mr. ASTATKE ABEBE PV.Ltd has one 2 dry processing stations and
in Chiri and Hoku weredas of Sidama regional state which are
now the assets of the business organization.

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3.1. COMPANY LOCATION AND OWNERS’ FACILITIES

The company`s head office is located in bule hora town, district,
Sidama, Oromia regional state.
The owner of the business organization has wet processing site under
his disposition for washed coffee supply (Dry mills) and will plan to
rent one dry mill located at sidama regional state.
These facilities are currently operating below their maximum

capacity because of insufficient flow of working capital which
illustrate the demand for the proposal of loan in order to furnish it
with new technology and eco-friendly mills.
3. PRODUCTS
ASTATKE ABEBE coffee Supplier deals exclusively in green Arabica

coffee beans, grown throughout coffee growing districts of the
country. Coffee purchasing wing of the business organization buys
fresh finely processed and exportable green washed, unwashed and
specialty coffee cherries directly from potential farmers, suppliers
and whole sellers and packaged in to 60kg and 85kg sacks in
company`s packaging facilities.

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4. COMPETITIVE COMARISON
In order to differentiate our product, coffee, which is a commodity,

from the product offering of competitors, the business organization
has developed coffee quality control guide that strictly followed by
all owners’ facilities (dry mills). Unlike competitors, the business
organization purchase fresh coffee only from small holdersresiding
within 3km radius of the processing sites (wet and dry mills).
Red or dry cherries that arrive to the business organization’s
rental processing facilities are sorted before pulping or hulling, and
unsuitable cherries are removed. The sorted and clear cherries are
pulped within six hours of harvesting.
The business organization ensures consistent supply of high-

quality coffee beans through integrated practical training and
assistance at all levels of operations. It provides to client farmers
practical advices on coffee management and processing. The beans
shipped by ASTATKE ABEBE PV.Ltd coffee Supplier are therefore
exemplary or premium quality and guaranteed fresh. In addition,
we are involved in the certification of client’s good agricultural
practices (GAP).

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All of the small holder’s farms from which the business organization
purchases coffee adhere to environmentally sound farming practical
and avoid the use of pesticides and chemicals in agricultural
production. Among different types of Ethiopian coffee that the business
organization handles, we give more focus to Ethiopia’s specialty
coffee as we have the advantage of established business relation with
many customers in the region and reputation. In addition, many
specialty coffee suppliers are being attracted to its delicate fine flavor
and are willing to pay a premium.

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5. MARKETING STRATEGY AND IMPLEMENTATION
ASTATKE ABEBE coffee Supplier strategy is to increase its volume of

sales in order to fulfill the requests of specialty coffee and conventional
coffee importers and roasters in the world. We intend to first maximize
quantity of coffee sold within existing channels and second, establish
additional accounts through targeted and digital marketing efforts.
5.1. Marketing plan

The MY23/24 (oct-sept) Arabica Coffee forecast shows an increase
in production reaching 8.3 million 60-Killo bags or 501,000 metric
tons due to expectations of better rain fall and less disease pressure
compared to last year. farmers also benefiting from improved
agricultural extension services from the government to support
coffee production and marketing.

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Ethiopia’s coffee Production with respect to area
Table 1: Ethiopia’s Coffee Table 1:

Productivity estimate with Ethiopia’s Coffee
respect to area (MT/ha ). Productivity
estimate with
respect to area
(MT/ha ).
Item 2020/21 2021/22 2022/23 2023/24(For Item
ecast)
Production (000 tons) 478 489 496 501 Production (000

tons)
542 585 590 600 Area (1000 ha)
Area (1000 ha)
Source: official USDA PSD for MY2023/2024 and post estimates for MY
2023/24-2025/26.
Ethiopia’s coffee production in 2023/24 is estimated at 8.27

million60-kg bags. 496,200,60-kg bags more than USDA and post
estimate. This situation is due to favorable weather condition, low
disease and pest infestation, adequate rainfall in coffee growing
areas of the country and better extension services.
All production is rainfed; thus, precipitation is most important

production factor. small land holder farmers produce 95% of
Ethiopia’s coffee in varied environments including forest and, semi
forest, garden and plantation of coffee.

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under governments second growth & transformation Plan (GTPII),

MY19/20 production is predicted to come in at 1.1 million metric tons
coffee productivity is also projected to increase from 0.75 tons/ha in
2014/2015 to 1103 thousand tons by 2019/20.Post believes that the
government planners are not familiar with the real on the ground
situation and given existing tree management practices and lack of
modern inputs, the producers will not be able to make these gains.
Post estimated coffee productivity at this reporting period to be

around 0.82 tons/ha. To achieve the planed target, the major
bottlenecks to increase production and productivity must be
addressed. For example, improved seed, proper tree management, and
price incentives for coffee producers and promotion of irrigation
system in area where irrigation is possible. One of the major challenges
the Ethiopian coffee sector is facing is that many coffee producers,
mostly from the eastern part of the country are tearing out the coffee
bushes and replacing them with khat (Catha edulis) a plant with
stimulant properties. The khat plant can with stand drought, diseases
and pests. It can also be harvested three to four time a year and
provides better revenue for farmers than other cash crops such as
vegetables, oil crops or even coffee.

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Status of GTP II coffee production targets (1000 metric tons)
2015/16 2016/17 2017/18 2018/19 2019/20
GTP II target 504 605 726 871 1,103
Production 391 417 423 438 444
% Achieved 78 69 58 49 40
Source: GTP II plan, official USDA/ post estimates for MY15/16-19/20

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5.2. CONSUMPTION TREND

Coffee consumption in MY 23/24 is forecasted at 3.35 million bags
{approximately 4830 metric tons}. An increase of 100,000, 60 kg bags from MY
21/22 post estimate. Coffee consumption for MY 23/24 is expected to
increase slightly to 3.27 million 60 kg bags {3480 metric tons}. This
trend runs contrary to the government`s attempt to lower
domestic coffee consumption in order to have more beans for export.
This official estimate is slightly above post and USDA estimate. The
main reason for the consumption increase is exportable-grade
coffee entering the informal domestic market to take advantage of
strong local prices and the increase of small roadside coffee stalls in
and around major towns as income generating schemes for young,
unemployed women.
These shops serve coffee in the traditional sit-down fashion and have
become popular among consumers. These informal stalls pay neither
VAT nor exorbitant rental costs, making their cost of serving coffee
relatively lower and more competitive than the regular coffee shops.
Ethiopians drink more coffee than any other African country Close to
half of Ethiopian`s coffee production is consumed locally. Coffee plays
an important role in traditional and cultural gatherings. Ethiopians
drink it during virtually all social occasions such as family gathering,
festivities and times of mourning

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5.3. Trade:
Exports forecast for 2023/24 remain at a record level 4.83 million,
60kg bags (289,800 metric tons). Around 11,000 ,60kg bags more than
2021/22 estimate, keeping Ethiopian`s place among the world`s
coffee leaders. The Ethiopia commodity exchange (ECX) was
established in 2008 to reduce price volatility and incentivize farmers to
plant coffee. However, the lack of traceability at the ECX did not meet
consumer`s demands for traceable, farmer-specific or organic certified
coffee.
To address traceability issues, starting 30 April 2017 suppliers with

valid export license of for marketing year can be sold within three days
of arriving at the processing warehouses in the capital. If the coffee
remains unsold after three days, they will be forced to sell on the
existing ECX platform, but with traceability intact.
The other major change is that farmers may sell beans directly to the
roaster without entering to the Ethiopian coffee exchange platform.
Coffee is the most important foreign currency earner for Ethiopia. In
addition to ensuring the volume and quality of coffee export, exports
must properly manage the contracts.
While most suppliers assist the economy by supplying quality

coffee to the international market, the government is also taking
strict actions against those who fail to comply with their contracts.
In march of 2019 alone 81 coffee suppliers have been banned from

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trading with the Ethiopian commodity exchange {ECX} because they

defaulted on their contracts. The number of coffee suppliers increased
due to the requirement of foreign currency needed for imported goods
to trade and for importing inputs for manufacturing industries. Year
(2022/23). Unfortunately, the price on the international market
indicates Coffee is getting expensive locally but getting cheaper in the
international market. This is forcing suppliers to spend a lot of money
for the procurement of coffee from farmers while getting lower export
value. The Government of Ethiopia (GOE) set a goal of exporting two
billion USD during this market that the expected revenue from coffee
exports may be an unrealistic target for the GOE.
Demand for Ethiopian specialty coffee has increased and continues to

grow. Its higher quality status is achieved by implementing the best
agricultural practices in farming, harvesting, and processing methods,
combined with elevated levels of quality control. In an ideal model, the
extra income generated by specialty coffee is distributed throughout
the supply chain, including the coffee farmers. Importantly, the
increases in income via specialty coffee were achieved without theneed
for more land, or increased inputs, such as artificial fertilizers,
irrigation, herbicides, and pesticides. Most Ethiopian coffee farmers use
organic fertilizer for their coffee.

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The Ethiopia Cup of Excellence program was initially made possible

through a partnership between United States-based ACE and the
Ethiopian Coffee and Tea Authority, with support from the United
States government’s Feed the Future’s Value Chain Activity (FTFVCA).
The last two years, the Ethiopia Cup of Excellence program has
resulted in some of the highest prices ever paid for green coffees at any
global auction while gaining interest from high-end coffee buyers all
over the world. Among the export destinations in the 2021/22
marketing year the lion’s share (20%) went to Germany, which
purchased 57,631 MT of coffee for USD 262,614,628, Saudi Arabia
(13.7%) having purchased 39,757 MT for USD 176,237,893,
Japan
(10%) purchased 29,375 MT for USD 134,715,128, USA purchased
(9.3%) 27,058 MT for USD 183,534,212 and, Belgium (8%) 23,188 MT
for USD 135,629,029. The rest in the top ten includes: South Korea,
UAE, China, Italy, and France. MY 2022/23 coffee exports are estimated
at 4.831 million bags (289,873 MT).

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Coffee Exports by volume and Value for 2020/21 and 2021/2022
2020/21 2021/22
Country Volume Value (USD) % Share Volume Value USD) % Share in

(MT) (1000) in volume (MT) (1000) volume
Germany 53182 186684 20 57631 262614628 20

Saudi Arabia 48532 160183 19 39757 176237893 13.7
Japan 20045 73546 7 29375 134715128 10
USA 29657 102083 10.6 27058 183534212 9.3
Belgium 27018 125241 9.5 23188 135629029 8
South Korea 17739 79059 6.2 18926 110906181 6.5
UAE 1635 49018 0.6 13187 81373120 4.6
China 10221 43914 3.4 12968 79204018 4.5
Italy 8384 34686 3 9172 49132777 3.2
France 8157 30545 3 7315 35134954 3.2
Sudan 9079 20261 3.2 7279 20473333 2.5
Taiwan 3972 23612 1.3 5340 36666585 1.8
Malaysia 2681 7819 1 3169 14065374 1.1
Russia 4352 15303 1.5 2517 10904388 0.9
Israel 1671 5382 0.6 2486 11337884 0.86
Canada 2577 10976 0.9 1672 9091557 0.58
Netherlands 1420 7387 0.5 1650 10743425 0.57
Other 30285 162555 10.5 27184 155112616 9.38
Total 280,607 1138254 100 289873 1516877102 100
Source: Ethiopia revenue custom authority

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Values of coffee exports as a share of total exports (billions USD)
Item 2018/19 2019/20 2020/21 2021/22

Total export value
2.7 2.67 3.41 3.6
Total value of Agricultural
export 2.3 1.94 3.16 3.3
Agricultural exports share out
of the total exports (%) 85 73 93 92
Coffee export 0.789 0.82 1.1 1.52
Source: post calculations based on Ethiopia custom authority data

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Coffee, the backbone of Ethiopian country`s economy, is the most

important export. During the 2017/18 marketing year alone
Ethiopia registered a record almost 917 million U.S. dollars from
coffee export. Recent market tends mean that certification and
traceability have become significant new requirements to increase
marketability and price of Ethiopian coffee. The government has
responded to market demand by creating certifying bodies and new
marketing system.

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5.4. POLICY
The Government of Ethiopia’s coffee policy revolves around its trade and
regulating hard currency earned from exports aiming to maximize foreign
exchange. There are no polices affecting coffee production. However, there are
some regulations that affect the marketing process such as: It is illegal to sell
export quality coffee on the local market even if there is a better local market
price, any coffee related business requires a special license for domestic
wholesaling, coffee exporting, or coffee roasting and coffee exporting business is
strictly reserved for Ethiopians. The GOE had to take measures to stop traders
from selling coffee at a loss to earn foreign currency, distorting the agricultural
market. The Coffee and Tea Authority on 10th of January 2020 in coordination
with the National Bank of Ethiopia, established guidance called the “Export
Coffee Contract Administration”.
This guidance fixed a minimum coffee export price based on the global weighted
average price given to different grades of coffee from various regions. ECX
streamlined the coffee value chain so that coffee farmers with a minimum of two
hetaeras, coffee unions, commercial farmers and coffee processors could export
coffee directly to the international market without using intermediaries.

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Production, supply and demand data statistics:
Coffee, Green 2021/2022 2022/2023 2023/2024

Market Year Begins Oct 2021 Oct 2022 Oct 2023
Ethiopia New Post New post USDA New
USDA USDA Official
Official official post
Area Planted (1000 HA) 550 585 0 535 0 538
Area Harvested (1000 HA) 540 575 0 528 0 528
Bearing Trees (MILLION TREES) 1425 1438 1450 1327 0 1328
Non-Bearing Trees (MILLION 40 40 45 28 0 30
TREES)
Total Tree Population (MILLION 1465 1478 1495 1355 0 1358
TREES)
Beginning Stocks (1000 60 KG 135 135 110 27 0 27
BAGS)
Arabica Production (1000 60 KG 8150 8150 8250 7250 0 7350
BAGS)
Robusta Production (1000 60 KG 0 0 0 0 0 0
BAGS)
Other Production (1000 60 KG 0 0 0 0 0 0
BAGS)
Total Production (1000 60 KG 8150 8150 8250 7250 0 7350
BAGS)
Bean Imports (1000 60 KG 0 0 0 0 0 0
BAGS)
Roast & Ground Imports (1000 0 0 0 0 0 0
60 KG BAGS)
Soluble Imports (1000 60 KG 0 0 0 0 0 0
BAGS)
Total Imports (1000 60 KG 0 0 0 0 0 0
BAGS)
Total Supply (1000 60 KG BAGS) 8285 8285 8360 7277 0 7377
Bean Exports (1000 60 KG 4800 4831 4725 3980 0 4000
BAGS)
Restaging Exp. (1000 60 KG 0 0 0 0 0 0
BAGS)
Soluble Exports (1000 60 KG 0 0 0 0 0 0
BAGS)
Total Exports (1000 60 KG 4800 4831 4725 3980 0 4000
BAGS)
Rst,Ground Dom. Consum (1000 3270 0 3349
60 KG
BAGS) 3375 3364 3500 0 0 0

Soluble Dom. Cons. (1000 60 KG 0 0 0 3270 0 3349
BAGS)

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Domestic Consumption (1000 60 3375 3364 3500 27 0 38

KG BAGS)
Ending Stocks (1000 60 KG 110 90 135 7277 0 7377
BAGS)
Total Distribution (1000 60 KG 8285 8285 8360
BAGS)

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6. GENRAL DESCRIPTION
The project proposal intends to earn the net profit of BIRR

5,234,889 million from the supplying 2,000 quintal of washed, 4500
quintals of unwashed coffee, 8 quintals of specialty coffee and 600
quintals of domestic (reject) sales by mobilizing all the
organization`s work force. The details of the fiscal operational
activities and the expenses associated with as well as all the details
of gross revenue, coffee purchase, operating expenses, statement of
cash flows, balance sheet and profit and loss statement, are stated
as follows.

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wet coffee purchasing cost= birr 50 / kg
Month Purchase kilo Unit cost Total birr

gram
October 156,200 50 7,810,000
November 255,200 50 11,260,000
December 329,700 50 16,485,000
January 258,900 50 12,945,000
Total 1,000,000 48,500,000
Dry Coffee purchasing cost= BIRR 70/ KG
Month Purchase kilo Total birr

gram
February 67,270 70 4,708,900

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specialty coffee purchasing cost = birr 60/ kg
Month Purchase kilo Unit cost Total birr

gram
October 119,424 60 7,165,440
November 314,248 60 18,854,880
December 394,264 60 23,655,840
January 172,064 60 10,323,840
Total 1,000,000 60,000,000

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7. PRODUCTION SCHEDULE
From business organization processed washed coffee taking 20% good

units, 45% for dry coffee, 16% for especially coffee and 3% for by
production from each coffee to be processed per annum. Therefore,
the amount of kilo gram purchased and its yield amount per annum is
summarized below.
Description Years
Unit 1 2 3 4
Red cherry Kilo 1,000,000 1,100,000 1,210,000 1331,000
purchase grams
Yield 0.2 0.2 0.2 0.2
Total output Kilo 200,000 220,000 242,000 266,200
grams
Dry cherry Kilo 1000,000 1,100,000 1,200,000 1,331,000
purchase gram
yield 0.45 0.45 0.45 0.45
Total output Kilo 450,000 495,000 544,500
598,950
gram
Specialty coffee Kilo 1,366,667
purchase grams 1,100,000 1,200,000 1,331,000
Yield 0.16 0.16 0.16 0.16
Total output Kilo 218,667 248,534 272,587 299,845.7
grams 37

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8. COFFEE PROCESSING AND PREPARATION
Loading and unloading the purchasing coffee in our dry mills, buying
the required number of bags, processing the coffee and making it ready
for transportation are some of the activities deemed to be performed in
coffee processing and preparation. Hence to accomplish this, the
required expenses for coffee bags purchase are presented as follows.
The business organization expert to transport a total of 3,333 bags

of washed coffee, 5,294.1 bags of unwashed coffee, 1882.4 bags of
specialty coffee and 1200 bags of reject coffee i.e., 11,951.3 bags in
total. With the assumption that one bags costs 50 birr, taking the
freight fluctuation in to consideration, the total amount for
11,951.3 bags to be purchased is calculated to be 11,951.3 *50 =
ETB 597,565,00

CONSULTING FIRM
33
9. COFFEE TRANSIT AND OPERATION
A company that purchases and prepares coffee to be supplied to

Ethiopian central market Ethiopian commodity Exchange (ECX) is
responsible to cove the transportation charge needed to transport
coffee to respective sites.
The company export to transport a total of 2,000 quintal of washed

coffee 4,500 quintal of unwashed coffee 1600 quintal of especially
coffee and 1,200 quintals of reject coffee i.e., 9,300 quintals in total.
With the assumption that one quintal costs 50 birr, taking the freight
fluctuation in to consideration the total amount for 9,300 quintals is
calculated to be 9,300 * 50= birr 465,500.
After the processed coffee is inspected and graded at the quality and
inspection center insured dispatched to central market and delivery
procedures have been handled by our transportation agent final be
sent to coffee central market. thus, to execute these activities
expenses are attached and presented as follows.
➢ City municipality charge: - if birr 6/ bags for city municipality. The

company will supply 3,333 bags of washed and 5,294.1 bags of dry
coffee 1882.4 specialty coffee and 1441.76 bags of reject coffee in
the season. 11,951.3 bags * birr 6 = birr 71,707.8 is needed.
➢ For laborers who unloading and loading during dry and especially
coffee processing time one bags will processed and loaded on truck for
birr 40 hence 7,176.5 bags * birr 40= birr 287,060 is needed.

CONSULTING FIRM
34
For labors who picking up the defected coffee from cleaned birr 60
per bags. Therefore 7,176.5 bags * birr 60 = birr 430,590. But for
laborers who loading and unloading wet coffee processing time
estimated to be birr 465,800 is needed.
➢ ECX handling warehouse and other service charge fee birr 0.48%
per adjusted trade value. Therefore birr 128,707,726*0.48%= birr
617,797.1
➢ Sales commission expense is birr 0.50% per adjusted trade value.
Therefore birr 128,707,726* 0.50% = birr 643,538.6
➢ Ethiopian coffee sport charge is birr 0.03 per kg. hence 930,000kg *
birr 0.03 = birr 27,900
➢ Plastic bags is birr 10 before VAT. The company will need 1000
bags for washed, unwashed and reject coffee. Therefore birr 10 *
2000 bags = birr 20,000

CONSULTING FIRM
35
10. Human Resource Expenses
(SALARY TRAVEL AND PERDIME, FUEL AND TRANSPORT ALLOWANCE)

As there would be no immediate plan to recruit new employee to cater
the chart of organization the existing staff would assume additional
responsibilities in a manner site manager machine operator are stated
as follows. important monthly salary per dime transport allowance oil
and fuel parking maintenance mobile allowance and other
miscellaneous expenses are presented in the table below.
Ser. Title Salary Transport Total

No Allowance
1 General manager 5000 500 5500
2 Site manger 4000 500 4500
3 Quality control 1500 200 1700
4 Machine operator 5000 300 5300
5 Accountant 4000 300 4300
6 Purchaser 5000 200 5200
7 Guard 800 0 800
8 Cleaner 250 0 250
Total 25,550 2000 27,550
Note
• If monthly expense is birr 27,550 than 27,550*12= birr

330,600 is needed per annum.
• The salary is income tax inclusive

CONSULTING FIRM
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11. UTILITY EXPENSE
(TELEPONE INTERNET FAX AND POSTAL SERVICE EXPENSES)

✓ Cell phone /1line / birr 2000 per month = birr 2000
✓ Fax line birr 95 per month = birr 95
Total birr 2095
Total birr 2095 * 12 months = birr 25,140
SOURCE OF FINANCE
Financial sources of the project

Amount in ETB
N0 Financial sources %Age
Birr
1 Promoter (cash on
30% 30,000,000
hand)
2 Bank Loan 70% 70,000,000
Total investment capital 100% 100,000,000
12. LOAN SETTLEMENT PLAN
The business organization plans to settle its loan through the sale
of dry coffee during the year. Therefore, the loan installment
method is as described below. Taking annual loan settlement in to
consideration the interest principal and outstanding balance is
stated as follows.

CONSULTING FIRM
37
Principal Total payment Interest Outstanding
(br.) (br.) (br.) Balance (br.)
100,000,000
- - -
7,068,592.74 14,568,592.74 7,500,000 92,500,000.00
7,598,737.20 14,568,592.74 6,969,855.54 84,901,262.80
8,168,642.49 14,568,592.74 6,399,950.25 76,732,620.31
8,781,290.67 14,568,592.74 5,787,302.07 67,951,329.64
9,439,887.47 14,568,592.74 5,128,705.27 58,511,442.17
10,147,879.03 14,568,592.74 4,420,713.71 48,363,563.14
10,908,969.96 14,568,592.74 3,659,622.78 37,454,593.18
11,727,192.71 14,568,592.74 2,841,400.03 25,727,400.47
12,606,678.41 14,568,592.74 1,961,914.33 13,120,722.06

-
13,552,179.29 14,568,592.74 1,016,413.45

CONSULTING FIRM
38
The business organization plans to settle its loan through income

generating from building during the year. Therefore, the loan
installment method is as described below. Taking annual loan
settlement in to consideration the interest principal and
outstanding balance is stated as follows.
TOTAL ANNUUAL REVENUE
Coffee type Kilo gram Feresulla Unit price Total price

Washed coffee sale 200,000 11,765 5500 64,707,500
Unwashed coffee sales 450,000 26,471 7500 198,532,500
Specialty coffee sales 218,667 12,863 6500 83,607,973
Reject coffee sales 120,000 7059 680 4,800,120
Grand total 351,648,093

CONSULTING FIRM
39
COST GOODS SOLD
NOTE BIRR
Begging inventory 15,288,356.00
Washed coffee purchase 14.1 48,000,000.00
Specialty coffee purchase 14.3 82,000,000.00
Dry coffee purchase 14.2 70,000,000.00
Goods available for sales 200,000,000.00
Ending inventory
215,288,356.00
Labor cost 17 824,600
Machine rental 150,000
Coffee bags 15 &17 525,475
Costs of goods sold
213,788,281.00

CONSULTING FIRM
40
SELLING AND DISTRIBUTION EXPENSES
NOTE BIRR
ECX service charge 17 387,953.00
Transportation expense 16 465,500.00
Coffee sport club 17 27,900.00
Sales commission 17 643,538.60
Municipality charge 17 45,762.00
Miscellaneous expense 12,580.00
Total selling and distribution expense 1,583,233.60
NOTE BIRR
Salary expense 18 330,600
Fuel and lubricants 202,678
Repair and maintenance 204,862
Stamp duty 150,000
Telephone and postal service 19 25,140
Stationery and printing 3,508
License fee 1,265
Accountancy and audit fee 5,000
TOTAL GENERAL AND ADMINISTRATION EXPENSES 923,053

CONSULTING FIRM
41
ASTATKE ABEBE PV.LTD COFFEE EXPORT FORECASTED PROFIT

ANDLOSS STATEMENT
FOR THE YEAR ENDING 2023 - 2025 E.C
Description /year 2023 2024 2025

Revenue 351,648,093 386,812,902.3 425,494,192.5
Cost of goods sold 213,788,281 235167109.1 258683820
Gross profit 137,859,812 151,645,793 166,810,372
Operating expenses
Selling and distribution 1,583,233.60 1,207,356 1,267,724
Expenses
General and administration 923,053 969,206 1,017,666
expenses
Total operating expense 2,506,286.60 2,710,762.96 2,933,378.66
Net income before tax and 135,353,525.4 148,935,030.2 163,876,993.8
interest
Interest expense 7,500,000 14,568,593 15,585,006.19
Net income before tax 135,346,025.4 134,366,437.5 148,291,987.6
Provision for tax 47,373,733.89 52,127,260.58 57,356,947.84
Net income after tax 87,972,291.5 82,239,176.9 90,935,039.8

CONSULTING FIRM
42
ASTATKE ABEBE PV.LTD COFFEE SUPPLIER FORECASTED CASH FLOW

ATATEMENT FOR THE YEAR ENDING 2015-2017 E.C
Description /year 2023 2024 2025

Cash inflow
Bank loan 100,000,000 110,000,000 121,000,000
Coffee sales 351,648,093 386,812,902.3 425,494,192.5
Total cash inflow 451,648,093 496,812,902 546,494,193
Cash outflow
Cost of goods sold 213,788,281 235,167,109.1 258,683,820
Operating cost 2,506,286.60 2,710,762.96 2,933,378.66

Principal repayment 14,568,592.74 14,568,592.74 14,568,592.74
Interest charge 7,500,000 6,969,855.54 6,399,950.25
Provision for tax 47,373,733.89 52,127,260.58 57,356,947.84
Total cash outflow 285,736,894 311,543,581 339,942,689
Net cash flow 165,911,199 185,269,321 206,551,504
Beginning cash 165,911,199 351,180,520 557,732,023
Cumulative cash flow 165,911,199 351,180,520 557,732,023

CONSULTING FIRM
43
13. FORECASTED FINANCIAL STATEMENT
INTEPRETATION
13.1. PROFITABILITY
The business has planned to generate total sales of ETB 351.7million in the
first year and will increase to ETB 425.5 million at the end of third year. In the
due course of operation first it is expected that the total cost of goods sold and
operating cost amounting to ETB 216.3 million is incurred in the first year of
operation and increase to ETB 261.6 million at the end of third year. As a
result, the revenue before tax is expected to be ETB 135.3 million at the first
year and increase to ETB 148.2 million at the end of third year after deduction
of operating expense. After meeting expected profit tax payments, the business
has planned to generate a net profit of ETB 88 million in the first year and
increase to ETB
90.9 million at the end of third year. It shows that the business is envisaged to
be profitable throughout its planned life.
13.2. DEBT PAYING CAPACITY

The project cash flow reveals that the business generates adequate cash flow in
meeting the bank`s commitment in addition to operating and profit tax
The net cumulative cash flow would be around ETB 165.9 million in the first year
and reaches to ETB 557.7 million at the end of projection year. it seems that the
business would be capable of meeting the bank commitment as planned. Keeping
other factors unchanged.

CONSULTING FIRM
44
14. RECOMMENDATION
The projected income statement indicates that the project is profitable

throughout its life. The projected financial performance of the project also
shows excellent financial capacity and positive cash balance. The project
gauged against various parameters was assessed by varying the most
significant parameters and the result shows that the profitability of the project.
Therefore, based on the forecasted overall financial analysis, we can deduce

that the ASTATKE ABEBE PV.Ltd coffee suppler and supplier business that
shall results improvement of the development sector is supported and viable
worthwhile foe implementation.
Therefore, this result will encourage both the promoter and financing
institution. In view of the above positive outcomes, which are shown in detail in
this bankable business plan it is confirmed that the project is financially
feasible and economical sound. Moreover, market analysis undertaken for
coffee supplying business indicates that there would be unsatisfied demand for
supply of the venture`s product. Hence, the market analysis ascertains the
viability and sustainability of the project in the coming year without market
limitation. As far as the market arrangement is concerned it is a common
phenomenon that business organization has sales their products get directly to
suppliers by bid in cash base. ASTATKE ABEBE PV.LTD COFFEE supplier and
supplier will plan to export its products.
The project is socially desirable an economically very useful. This can be justified
from various angles.

CONSULTING FIRM
45
To state some of the benefits of the project
✓ It will create annual revenue of to the government treasury in the form of

tax and GDP contribution.
✓ It contributes to the use of the country`s resource potential for value
creation.
✓ The firm has created job opportunities for 8 individuals and many other
temporary employees will also be involved in direct production process.
Therefore, the establishment of this project has great positive impact for the
national economic growth and development. it could play a significant role in
bringing about speedy socio-economic development and poverty reduction.

CONSULTING FIRM
46

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ASTATKE ABEBE

DASHEN BANK (S.C)

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

The project under consideration is profitable from the outset i.e.,

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

ASTATKE ABEBE PV.Ltd coffee processing and supplying is planning to

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

As a whole, poor-quality coffee is sometimes undesired in the world

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

➢ Increase the company`s total coffee supplying share.

➢ To create source of income for the owner of the project.

➢ Contribute to the economic growth of the region and the country by

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

1.3. KEYS TO SUCCESS

❖ Establish and maintain good working relationships and loan

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

ASTATKE ABEBE PV.Ltd coffee supplier is the family-owned that

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

The company only sources beans from the finest plantations,

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

The promoter, Mr. ASTATKE ABEBE PV.Ltd started coffee business

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

3.1. COMPANY LOCATION AND OWNERS’ FACILITIES

These facilities are currently operating below their maximum

ASTATKE ABEBE coffee Supplier deals exclusively in green Arabica

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

In order to differentiate our product, coffee, which is a commodity,

The business organization ensures consistent supply of high-

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

5. MARKETING STRATEGY AND IMPLEMENTATION

ASTATKE ABEBE coffee Supplier strategy is to increase its volume of

5.1. Marketing plan

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

Ethiopia’s coffee Production with respect to area

Table 1: Ethiopia’s Coffee Table 1:

Production (000 tons) 478 489 496 501 Production (000

Ethiopia’s coffee production in 2023/24 is estimated at 8.27

All production is rainfed; thus, precipitation is most important

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

under governments second growth & transformation Plan (GTPII),

Post estimated coffee productivity at this reporting period to be

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

Status of GTP II coffee production targets (1000 metric tons)

2015/16 2016/17 2017/18 2018/19 2019/20

GTP II target 504 605 726 871 1,103

Production 391 417 423 438 444

Source: GTP II plan, official USDA/ post estimates for MY15/16-19/20

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

5.2. CONSUMPTION TREND

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

To address traceability issues, starting 30 April 2017 suppliers with

While most suppliers assist the economy by supplying quality

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

trading with the Ethiopian commodity exchange {ECX} because they

Demand for Ethiopian specialty coffee has increased and continues to

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

The Ethiopia Cup of Excellence program was initially made possible

PREPAREDBY: NUSORE ECONOMIC DEVELOPMENT, BUSINESS AND INVESTMENT

Coffee Exports by volume and Value for 2020/21 and 2021/2022

Country Volume Value (USD) % Share Volume Value USD) % Share in

Germany 53182 186684 20 57631 262614628 20