ARBA MINCH UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS
BUSINESS PLAN PROJECT ON FARMERS GROUP
FRUIT-FARM PARTNERSHIP (ARBA MINCH,
ETHIOPIA)
PREPARED By : XXXX

Submitted To: Abel

Submission Date: 19/04/2016

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FARMERS GROUP FRUIT - FARM
PARTNERSHIP (ARBA MINCH,
ETHIOPIA)

ADDRESS ARBA MINCH ETHIOPIA

PHONE NUMBER +125 965553590

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E-MAIL ADDRESS

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TABLE OF CONTENT…………………………….Page
1. Background.......................................................................................1
1.1 Executive Summary………………………………………………….…...1

1.1.2. The Market…………………………………………………………….2

1.2. Financial Considerations…………………………….…………….3
1.3. Cardinal issues…………………………………………………….3
1.3.1. Mission…………………………………………………………..3
1.3.2. Vision……………………………………………………………3
1.4. Business……………………………………………………………3
14.1. Introductions……………………………………………………...3
1.4.2. Business mission…………………………………………………4
1..4.3 key success ………………………………………………………4
1.4..4 Short-term objectives…………………………………………….4
1.5. Long term objective………………………………………………..4
1.6. Key personnel………………………………………………………5
1.7. Management Summary…………………………………………….5
1.7.1. Organizational plan………………………………………………5

2. Market and competition........................................................................6

2.1. Market………………………………………………………………….……….6

2.2. Competitors……………………………………………………………………..6

2.3. Market Segmentation……………………………………………………………7

2.4. Competitive and market Strategies………………………………………………7

2.4.1. Marketing Strategy…………………………………………………………….7

2.4.2. Pricing Strategy………………………………………………………………..8

2.4.3. Sales Strategy………………………………………………………………….8

3. Selling..............................................................................................................8
3.1 Wage…………………………………………………………………………………………………….....9

4. SWOT ANALYSIS…………………………………………………9
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 4.1. Strengths…………………………………………………………..9
4.2. Weaknesses……………………………………………………….9
4.3. Opportunities……………………………………………………..9
4.4. Threats……………………………………………………………9

5. Project detail………………………………………………………10
5.1. Project location and Facilities…………………………………………10

5.2. Project cost………………………………………………………10

5.2.1. Fixed cost……………………………………………………….10

5.2.2. Operational cost………………………………………….10

6. Financial Analysis........................................................................11
6.1. Projected Cash Flow………………………………………………11

6.2. Projected Profit and Loss……………………………..................11

6.3. Projected Balance Sheet………………………………………….13

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 1. Background of Agriculture Fruit Farm

Farmers Group's plans to concentrate on vegetables as its primary

product. This includes growing carrots, potato, tomato, white
onions and red onions. The partner's farm will have a capacity
sufficient to produce in excess of 20,000 quintals of vegetables per
year.
The partner’s plans to utilize traditional and some advanced plant
technologies to produce new cultivars of vegetable and already
mentioned above type of fruit. This strategy will allow Farmers
Group to produce crops during most of the year and will allow
double cultivation of the greenhouses with almost no additional
heating necessary in the winter months.

1.1. Executive Summary

The partnership:- Farmers Group is a Fruit-farm based partnership,
located in SNNR, Arba minch town, shecha kebele whose mission is to
provide high quality, nutritional, and flavorful vegetables for
consumption in both near and remote regions of the Ethiopia.
Additionally, the partners will provide high quality planting materials
for use nationwide. The idea behind the business is to provide healthy
and delicious vegetables and fruit to the public.

The overall objective of the business is to provide high quality and

quantity fruits product to public in order to get the expected profit and to
satisfy the consumer and to achieve and exceed sales forecasts to enable
us to be operating at capacity, we would also have a claim to create job
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opportunity, increase the capacity and using new technology and plans
to expand the business in different area and also to expand the initial
business in size. In the first year the business forecast a profit. The
reason for obtaining such positive gaining or profit can be mainly
attributed to:

The profitability of the farm industrial

The presence of good market price

Absence of strong competitors due to economies of scale

Usage of few permanent workers

1.1.1 NAME AND ADDRESS OF THE BUSINESS

The name of partnership is Farmer group fruit -farm partnership this

name establish based on agreement of farmers and located in Arba
minch, shecha kebele.

This location is a great opportunity to get different kinds of customer

from Arba minch town society, Shecha kebele society and chamo
campus and sikela society .

1.1.2 The market: With government subsidies and intermediaries,

farmers' markets have extended throughout the year and the number of
farmers who sell that product increased. So many local peoples of
Ethiopia are now getting their fresh food directly from the famers who
grew it.

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This makes for an excellent environment for an industry participant such
as Farmers Group that is willing to compete in a niche market and be
first to the market with new products.

1.2. Financial Considerations: The partners seeking birr 510,000 in

both short-term and long-term loans to finance the purchase of Farmers
Group's new farm, upgrade the facilities, and cover start-up expenses
and first year losses. It is estimated that the partners will begin to make a
profit in Year two of operations. The partners do not expect to have any
cash flow problems during the first five years of operations.

1.3. Cardinal issues

1.3.1. Mission: Farmers Group is a Fruit-farm based partnership, whose

mission is to provide high quality, nutritional, and flavorful vegetables
for consumption in both near and remote regions of the Ethiopia.

1.3.2. Vision: The vision of fresh a Fruit-farm is generating sufficient

profit that will make the owner competent at national level with five
years.

1.4 The business

1.4.1 Introductions

Farmers Group Hayilu marimar and wogen are being formed to engage
in fruit-vegetable farms activity.

The partners are a combination of cutting edge, highest quality, and

efficient food technology and production. It is committed to the
improvement of food taste and nutritional quality.

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1.4.2 business mission

Farmers Group is a Fruit-farm partnership, whose mission is to provide

high quality, nutritional, and flavorful vegetables for consumption in
both near and remote regions of the Ethiopia.

1.4.3 KEY SUCCESS

1. It uses various types of promotional (Advertisement)
mechanism to attract other customers.
2. It Provide good quality product at affordable price.
3. Satisfying customer interests by providing quality fruit product.
4. The presence of good market price due to the weakness of competitor
in the area.
1.4.4 short-term objectives
 To be self-employed.
 Presence of job opportunity to local people in order to reduce
unemployment rate.
 Pay tax to government in order to enhance economic growth of the
country.
 To attract customer and achieve for casted sales by advertising and
promotion.
1.5. long term objective
To be able to hire full time members of staff to form reliable and healthy
team working in the fruit farming, allowing the partners to meet on the
day to day problems, to meet customers and suppliers, making great
promotions and supervising the general function of the fruit-farm in
order to form and expand the business further.

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1.6. key personnel
Manager: Bereket Engida BA Degree in Horticulture or plants sciences,
and Practical experience gained from variety of establishments.
Accountant: - Beharu Wendiye
Level qualification in accountant and related filed BA degree he has a
good working experience of local suppliers, professional adviser and
book keeping experience. Then, he candidate of graduate by BA degree
in Accounting at Arba minch University in 2008 year
1.7 Management Summary
1.7.1. Organizational plan

Farmers Group's management team is led by Belete, Business Manager,

who has extensive knowledge or experiences of the industry. The
partnership management philosophy is based on responsibility and
mutual respect. Farmers Group has an environment and structure that
encourages productivity and respect for customers and fellow
employees.

Overall, Farmers Group will have 17 personnel. The partners expect to

employ ten temporary employees during the equipment re-location
phase, four employees on a permanent basis, and three part-time
employees. The Farmers Group team is organized into three groups:

Management; - Management will be responsible for supervising and

participating in the daily operations of the facility. Management consists
of:

 Bereket Business Manager, Full Time

Babiso Management Trainee, Full Time
Beharu Management Trainee, Full Time

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Daily Maintenance; - This group will consist of the rest temporary
employees and part-time employees:

Contract Personnel; - They will be utilized initially for the moving and
setting up of the vegetable farm, greenhouses, and the building of the
fruit composting facility.

2. Market and competition

2.1 Market

With government subsidies and intermediaries, farmers' markets have

extended throughout the year and the number of farmers who sell that
product increased. So many local peoples of Ethiopia are now getting
their fresh food directly from the farmers who grew it. This makes for an
excellent environment for an industry participant such as Farmers Group
that is willing to compete in a niche market and be first to the market
with new products.

Farmers Groups will concentrate on:

 Wholesale live vegetable markets nationwide that sell organic

produce.
 Fresh farmers' markets.
 Fall and winter greens market.

2.2 Competitors

There is fruit-farm that provides similar product/service. Example;- the

MM Fruit- farm, the local agricultural farm, and the Elifory Fruits -
farm. Each of these competitors has produce stands as well as selling to
local farmers' markets. However, with the exception of the local
agricultural farm, none of the others focus on a niche market and depend
heavily on federal subsidies

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2.3 Market Segmentation

The target customers include oriental vegetable markets demanding

organic and semi-organic green vegetables, vegetable processors, and
private individual buyers through direct selling and farmers markets. In
its greens production the partners will target virtually all main food
outlets. The partners may also plan to use the mass media like radio, TV
etc. as one of its marketing channels in the future.

2.4 Competitive and market Strategies

The partners, by acquiring an existing profitable vegetable farm with all

the necessary custom-innovated equipment, will gain a significant
industry advantage. The partner’s goals in the first year are to:

 Prepare the future site.

 Relocate and expand fruit- vegetable system and get it operational.
 Integrate greens culture into the system.
 Have the composting system in full production by early spring of
the second year.

Farmers Group's main competitive advantages are:

 Efficient production utilizing greenhouses.

 Reduced overhead by fully realizing crop output potential and
economies of scale through joint costs.

2.4.1 Marketing Strategy

Farmers Group will initially market and supply its products to target
customers. The partners is further exploring marketing opportunities on
the billboard, newspaper and magazines but gradually in the future, the
partners would like to set up an mass-media and website to market its
products.

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The partners will utilize aggressive advertising strategies to further
market its products. These strategies include the promotion of products
through the sponsoring of spots on cooking shows and exhibitions, and
also engaging prominent chefs to help promote this fledgling industry.

2.4.2 Pricing Strategy

Farmers Group's pricing for vegetables will exceed the average market
price for the following reasons:

 Taste sampling at outlets will be encouraged.

 Unparalleled flavor superiority will addict greens tasters.
 Promotion of pesticide-free, fumigant-free cultural techniques of
soil, environment, ozone, and health-friendly production
techniques.

2.4.3 Sales Strategy

As in the past, live cars will be delivered by contract carriers in special

oxygenated tanks carrying, 100 quintals vegetables or more, and will be
continued as demanded.

The partner's average sales cycle from first contact to closing of the sale
is approximately 3 to 12 days for fruit products. Farmers Group plans to
shorten this cycle.

Furthermore, the partner’s estimates that from first contact to sale

conclusion, the cycle for fresh vegetables will run 3 days or less.
Composted products sale cycle should run from three to 12 days. Direct
sales contacts of vegetable markets by delivery personnel, as well as
cold calling by telephone of potential market outlets, will also be
employed.

3. selling

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 In and out house sales: - different types of fruit such as potato,
tomato, carrot, and white and red onion are all potentially sales and
need to be actively sold.
4.5 Wages
Each employee paid 25 birr per day morning starting from 2:00 am
up to 6:30 am and afternoon starting from 7:30am up to 11:30am at
local time. So the annual cost of labor in terms of monthly and
weekly salary and fringe benefit is estimated to be birr 153000.
5. SWOT ANALYSIS
5.1. Strengths:
 Market conditions are favorable.
 The service style is new to the area.
 Strong focus on quality, health, and competative priced.
5.2. Weaknesses:
 Difficulty to expand The Farmers Group at the present
location.
 Shortage of capital.
 Lack of experience.
5.3. Opportunities:
 Affordable production cost.
 Minimum financial requirement is needed to establish the
business.
 Small numbers of competitors
 The Farmers Group can supply the demand of different
levels of customers.
 It is a good place for students to communicate each other.

5.4. Threats:
 During summer seasons there will not be sales.
 A main competitor has lowered their prices and started a price
war with our Group

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6.Project detail

6.1 Project location and Facilities

The proposed project is located in SNNR region, Arba minch town.

The operation will utilize:

 One small greenhouse, enclosing the vegetable area.

 Horticultural greenhouse.
 Filters, water treatment devices.
 Backwash facilities.
 Outdoor vegetable facilities.
 Business office building.

6.2 Project cost

6.2.1 Fixed cost

A. Land
The required land covering total area of an eight hectors for the
project and its estimated total cost is birr 350, 000.
B. Tankers

Tankers having appropriate standard and quality is capacity of 50000

liters for storing water and with their accessories will be purchased and
installed at estimated cost of birr 155,000.

6.2.2 Operational cost

A. Man power requirement

The proposed project is estimated to create totally 17 employees i.e. four

(4) permanent employment, (ten) 10 temporary employment and three
(3) part-time employment opportunity, ranging from manager,

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accountant and guards. The annual cost of labor in terms of monthly and
weekly salary and fringe benefit is estimated to be birr 153,000.

E. Utilities and other operational cost.

The total cost for utilities (generator power, water pump and telephone
and other operational cost such as facilitates modification, seed, organic
herbicides/pesticides and research and development are estimated to birr
91,000.

6. Financial Analysis
The total investment cost of the project is estimated at birr 850,000 out
of which birr 550000 is capital cost and birr 300,000 is working
capital. Concerning about the source of finance, 510,000 (60%) is
covered by saving and credit association and the remaining cost of the
project birr 340,000 (40%) is financed by the partner. The proposed
project generate revenues will be for Year 1 to Year 5 are birr 40,000,
birr 50,000, birr 65, 000, birr 85,000 and birr 97,000 annually
respectively and commutative net cash inflow of birr during the
projected life of the project. The internal project before tax is 28% and
the net percent value of birr and break-even point of the project point at
5 years.

7.1 Projected Cash Flow

The chart and table below contain the cash flow assumptions and
projections for Farmers Group during the first five years of plan
implementation.

Fruit-vegetable Cash Flow

Year 1 Year 2 Year 3 Year 4 Year 5
Cash
Received
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Cash from
Operations
Cash Sales Birr Birr Birr Birr Birr
143,75 175,00 212,50 222,27 231,83
0 0 0 5 3
Cash from Birr Birr Birr Birr Birr
Receivables 431,25 525,00 637,50 666,82 695,49
0 0 0 5 8
Subtotal Cash Birr Birr Birr Birr Birr
from 575,00 700,00 850,00 889,10 927,33
Operations 0 0 0 0 1
Additional
Cash
Received
Sales Tax, Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
VAT,
Received
Subtotal Cash Birr Birr Birr Birr Birr
Received 575,00 700,00 947,00 889,10 927,33
0 0 0 0 1
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures
from
Operations
Cash Birr Birr Birr Birr Birr
Spending 117,50 111,00 111,00 111,00 111,00
0 0 0 0 0
Subtotal Spent Birr Birr Birr Birr Birr
on Operations 117,50 111,00 111,00 111,00 111,00
0 0 0 0 0
Additional
Cash Spent
Sales Tax, Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
VAT, Paid
Out
Subtotal Cash Birr Birr Birr Birr Birr
Spent 117,50 111,00 111,00 111,00 111,00
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 0 0 0 0 0
Net Cash (birr (birr Birr (birr1 (birr
Flow 5,420) 59,803) 22,073 1,040) 19,104)
Cash Balance Birr Birr Birr Birr Birr
239,98 180,17 202,25 201,21 182,10
0 7 0 0 6

7.2 Projected Profit and Loss

As the profit and loss table shows, Farmers Group expects a steady
growth in profitability over the next few years.

Fruit-vegetable Profit and Loss

Year 1 Year 2 Year 3 Year 4 Year 5
Sales Birr Birr Birr Birr Birr
575,000 700,00 850,00 889,10 927,331
0 0 0
Direct Cost Birr Birr Birr Birr Birr
of Sales 391,000 478,10 578,85 601,03 627,803
0 0 2
Other Birr 10,000 Birr Birr Birr Birr
10,000 10,000 10,000 10,000
Total Cost of Birr Birr Birr Birr Birr
Sales 401,000 488,10 588,85 611,03 637,803
0 0 2
Gross Margin Birr Birr Birr Birr Birr
174,000 211,90 261,15 278,06 289,528
0 0 8
Gross Margin 30.26% 30.27% 30.72% 31.28% 31.22%
%
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Expenses
Payroll Birr Birr Birr Birr Birr
117,500 111,00 111,00 111,00 111,000
0 0 0
Sales and Birr 11,400 Birr Birr Birr Birr
Marketing 11,100 16,550 15,300 17,550
and Other
Expenses
Depreciation Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Payroll Taxes Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Other Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
Total Birr Birr Birr Birr Birr
Operating 141,980 136,60 142,05 140,80 143,050
Expenses 0 0 0
Profit Before Birr 32,020 Birr Birr Birr Birr
Interest and 75,300 119,10 137,26 146,478
Taxes 0 8
Interest Birr 54,664 Birr Birr Birr Birr
Expense 47,845 39,095 32,095 26,495
Taxes Birr 0 Birr Birr Birr Birr
Incurred 5,491 16,668 21,035 24,996
Net Profit (birr22,644 Birr Birr Birr B
) 21,964 63,337 84,139 irr94,98
7

7.3 Projected Balance Sheet

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We project solid cash balance and net worth over the years of the plan.

Fruit-vegetable Balance Sheet

Year Year Year Year Year
1 2 3 4 5
Asset
s
Curre
nt
Asset
s
Cash Birr Birr Birr Birr Birr
239,9 180,1 202,2 201,2 182,1
80 77 50 10 06
Acco birr0 Birr0 birr0 birr0 birr0
unts
Recei
vable
Inven Birr Birr Birr Birr Birr
tory 55,76 24,58 9,767 31,13 32,47
0 6 6 5
Accu Birr 0 Birr 0 Birr 0 Birr 0 Birr 0
mulat
ed
Depre
ciatio
n
Total Birr Birr Birr Birr Birr
Asset 1,045, 954,7 982,0 982,3 984,5
s 740 63 17 46 81
Liabil Year Year Year Year Year
ities 1 2 3 4 5
and
Capit
al
Curre

1.
nt
Liabil
ities
Acco Birr Birr Birr Birr Birr
unts 6,984 44,04 55,96 57,15 59,39
Payab 3 0 0 9
le
Total Birr6, Birr4 birr55 Birr5 Birr5
Liabil 984 4,043 ,960 7,150 9,399
ities
Paid- Birr5 Birr5 Birr6 Birr6 Birr6
in 00,00 00,00 07,00 07,00 07,00
Capit 0 0 0 0 0
al
Retai (birr6 (birr7 (birr7 (birr6 (birr6
ned 84,60 32,24 30,28 76,94 02,80
Earni 0) 4) 0) 3) 4)
ngs
Total Birr Birr Birr Birr Birr
Capit 292,7 289,7 430,0 504,1 589,1
al 56 20 57 96 82
Total Birr8 birr95 birr98 birr98 birr98
Liabil 45,74 4,763 2,017 2,346 4,581
ities 0
and
Capit
al
Net Birr Birr Birr Birr Birr
Wort 292,7 289,7 430,0 504,1 589,1
h 56 20 57 96 82

Appendix
Name ..................Beharu Wendiye
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Sex ....................... male
Nationality .......... Ethiopia
Date of birth ........ 1996
contact address 0985877282
Education information
University degree and major
Freshman under gratuated
name and place of university
Arba Minch university
Languages
Amharic, English and Gamogna

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