Business Plan on Agricultural Investment

in Benishangul Gumuz Region

Project Name: Nejat Mohammed Agricultural Development

Project Manager: Ms. Nejat Mohammed
Contact Number: +251-0911700827
Project Requested Address: Assosa Zone
Investment Sector: Agricultural Activities
Requested Land Area: 500 ha
Owner Contribution (15%): 500,000 birr
Bank Loan: 2,333,334 birr
Total Investment Capital: 3,333,335 birr
Submitted to: B/G/R/State Bureau of Industry and Investment

October/2023
Assosa, Ethiopia

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 Table of Contents
1. Executive summary ............................................................................................................................... 1

2. Vision..................................................................................................................................................... 2

3. Mission .................................................................................................................................................. 2

4. General objectives ................................................................................................................................ 2

5. Keys to success ...................................................................................................................................... 2

6. Introduction .......................................................................................................................................... 3

6.1. Government policy........................................................................................................................ 3

6.2. Project Identification location and site ......................................................................................... 3

6.3. The profile of the project area ...................................................................................................... 3

6.4. Strategy ......................................................................................................................................... 4

6.5. Infrastructure ................................................................................................................................ 4

6.6. Agro Industries .............................................................................................................................. 5

6.7. Social and Economic Benefit ......................................................................................................... 5

7. Market Study......................................................................................................................................... 5

7.1. Business Environment ................................................................................................................... 5

7.2. Market Demand ............................................................................................................................ 5

7.3. Industry Analysis ........................................................................................................................... 6

8. Description of the Project ..................................................................................................................... 8

8.1. Plan of the project to support the nearby community ................................................................... 8

8.2. Environmental Protection Management and Natural Resource Development Plan...................... 9

8.3. The overall development capacity and preparation of investors ................................................... 9

8.4. Project plan to develop types of crops produced .......................................................................... 9

8.5. Investors Experience in agriculture development ....................................................................... 10

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 8.6. Value add plan of the project ...................................................................................................... 10

8.7. Project employee Health and safety plan .................................................................................... 10

9. Technical Studies................................................................................................................................. 11

9.1. Cropping Pattern ......................................................................................................................... 11

9.2. Farming Program ........................................................................................................................ 11

9.3. Growing Season and Operation Calendar ................................................................................... 12

9.4. Agronomic Practice ..................................................................................................................... 12

9.4.1. Seed bed preparation ......................................................................................................... 12

9.4.2. Cultivation ........................................................................................................................... 12

9.4.3. Crop protection ................................................................................................................... 12

9.4.4. Harvesting ........................................................................................................................... 13

9.5. Crop Yield Assumption ................................................................................................................ 13

9.6. Organization and Management .................................................................................................. 13

10. Investment Cost .............................................................................................................................. 14

Loan Borrowing and Settlement Schedule ............................................................................................. 17

11. Financial Study ................................................................................................................................ 17

11.1. Revenue .................................................................................................................................. 17

11.2. Production and mark up costs ................................................................................................ 18

11.3. Environmental Impact Assessment ......................................................................................... 18

11.4. Basic Assumption used............................................................................................................ 18

11.5. Sales and Profit Summary ....................................................................................................... 19

12. Project Monitoring and Evaluation ................................................................................................. 21

13. Conclusion ....................................................................................................................................... 21

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 1. Executive summary
Nejat Mohammed Agricultural Development business plan is crucial to success for new
established enterprise as sole proprietorship. The promoter of the project was an indigenous
Benishangul ethnic in Benishangul Gumuz Region .Going through the planning process
increases the chances for success and helps avoid costly mistakes. It can be very helpful to have
a plan evacuated by several people to make sure that you have not missed any vital components
or issues. This critical evaluation will also be helpful when presenting the plan to lenders or other
potential funders. Accordingly, this business plan is developed with the intent of ensuring
effective preparation for the implementation and positioning of this programs and allied activities
that best achieve long term and short term goals.

This business plan is developed to describe the business potential of my agricultural farming
dedicated to the production of oil seeds, sorghum, maize, ground nut, soya bean, cotton at a large
amount which can be exported and generate foreign currency to the country. Initially, it tries to
describe the prime cornerstones of the farming enterprises and then it exhaustively examines the
crucial considerations which must be addressed for the success of the enterprise as a whole. It
mainly explores all the key elements for a successful plan such as the fundamental issues such as
the profile of the project area, government policy, strategy, agro-industries, infrastructure, social
and economic benefit, product plans, market description, management team overview, industrial
analysis completed and integrated financial planning and other related issues under them.

The production process comprises field clearing, seed bed preparation, sowing, cultural
practices, crop protection, harvesting, grading, packing and exporting. My aim is to produce
much quantity and high quality of the above products which can benefit us our country.

The project aimed at expanding farming as the government of Ethiopia has put in place a number
of incentives for agricultural investors, which creates an enabling environment for us. With such
promising working environment, we planned to operate a maximum capacity that will entirely
accommodate the demand of my products.

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The total investment cost to realize this project plan is about 3,333,335 birr and this cost will be
covered owner contribution birr 500,000 (15%) birr the project and 2,333,334 (70%) by
Development Bank loan.

2. Vision
I was dedicated to become well recognized and competitive Ethiopian agricultural investor
through committed and professional team with customer delight.
3. Mission
My mission is to continually expand a successful line of products, keep the margins as high as
possible; and increase the amount and quality of agricultural products through constant
production efforts.

4. General objectives
The main objective of the agricultural farming is to produce better quality oil seeds particularly
seed to be used for export purpose that can play a significant role in bringing foreign currency
for our currency, and other crops like sorghum, maize and ground nuts at a large amount.
The specific objectives of this agricultural farming
o To develop a gross area of 500 hectare under rain fade condition for the
production of export crops which can provide more yields from a given unit area.
o To enhance agricultural productivity and use this to get foreign currency.
o To create employment opportunities and to help the regional development.

5. Keys to success
1. Strict financial control
2. The never ending search of the highest productivity
3. Ensuring that all customers’ needs are meeting and they are satisfied with the purchased
products.

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 6. Introduction

6.1. Government policy

Ethiopian government has an encouraging agricultural land police which can attract many
investors. Best opportunities are wide opened for both local and foreign investors to participate
in this investment and paly a great role in the development of the country, and also makes the
investor in this profitable and advantageous investment. I strongly believe that this agricultural
investment policy will benefit the investor, the people in that particular region and the country as
a whole.

6.2. Project Identification location and site

Nejat Mohammed Agricultural Development company need to invest with 500 ha of land to
order the project identification study based on the existing information from different media and
ministry of agriculture, asking previous investors in the region, and field visits as well as in bank
land. This project is prepared based on the information gathered at the level of investigation
carried out for the objectives of project identification. From previous studies, we can observe that
western part of Ethiopia is appropriate for agricultural farming especially oil seed production.
Accordingly to the ministry finance and economic development 2002/2003 publication, 68% of
the countries’ annual production comes from north and western regions. In western part of
Ethiopia, there exist huge uncultivated and fertile lands that can make better regional and
national crop production. Therefore, we need to invest agricultural farming in Benishangul
Gumuz region in Assosa Zone all woreda 500 hectare.

6.3. The profile of the project area

The potential agricultural area that covers 500 hectares is to be found in Benishangul Gumuz
Region in Assosa zone that must be fertile to produce agricultural product. The following table
which is taken from methodological institution best summarizes the hydrological data of the
project area.

Parameter Description
Altitude 1100-1230 meter above sea level

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Soil type clay to loamy clay texture
Climate Average rain fall 1200-1350 mm mainly falling between May
and September, kola.
Temperature o Mean minimum temperature is 26.5°c
o Mean minimum temperature is 36°c
Moisture o five months of rain fall (May- September), plus one
o Rain fall month earlier or later with annual depth of 1200-1350
o Ground water mm rain fall.
o It is possible to trap water of 7 liters per second base
flow at 50 meter depth and 5 meter width.
Wind speed 5 meter/second at 2 meter height
Drought coincidence coefficient of rain fall variability is 18-21% which is consider as
less vulnerability of drought
Frost consistence Less frequent
Relative humidity 30 %-40%
Length of growing period 165-185 days

6.4. Strategy
The advocate of this project assumed different strategies in making the feasibility study and with
Investment decision. The advantages could be examined both at regional and national level. As
the product is planned for export purpose and local market, the strategic advantage of this
agricultural enterprise considers both the regional and international markets. Proximity to
consumers, existence of fertile land at reasonable price, and availability of infrastructure
important for the enterprise are also considered.

6.5. Infrastructure
Despite the existence of uncultivated fertile land at a reasonable price, the availability of
infrastructure in the project area is limited to a highway gravel rode only. But it is understood
that infrastructure like access to clean water, heath centers, electricity, telecommunication, farm
headquarters, and housing utilities are very important for a better outcome. So it would have
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been very encouraging if the concerned governmental bodies would provide the above
mentioned infrastructures.

6.6. Agro Industries

The envisaged agro industrial development is a must in the long term in view of the size,
integration, and economics of the scheme. The envisaged cropping patterns suggest that the
following likely possibilities, i.e., oil mils, cotton, ginning, fiber mill, spices processing, and
packing.

6.7. Social and Economic Benefit

Ethiopia has a large amount of uncultivated fertile lands and a strong working people. So to
develop the country, we need to use this fertile uncultivated land, and expensive labors.
Therefore, we strongly believe that the realization of the project by creating a large employment
opportunities and the nation by providing a large and quality product both for export and local
market.

7. Market Study
7.1. Business Environment
According to the statistical compendium given by central statistical Authority (CSA), the
Benishangul Gumuz, Amhara, Oromiya, and other region contribute almost the entire total oil
seed crop production. Crops are produced and supplied by individuals and commercial farms,
and most of them are individual small holder farmers whose production lies on a single crop. The
oil seeds produced for export markets are less in quantities and qualities. Therefore, this
enterprise will work to produce a high quality and quantity oil seeds that will fill the gaps of the
demand the supply.

7.2. Market Demand

Ethiopia which is the Africa’s biggest coffee producer is also the world’s fourth largest exporter
of sesame seeds but has for decades relied on its premium grade coffee for hard currency
inflows. Oil seeds, pulses and spices, which were insignificant in generating export revenue in
the past few decades were, become the second largest of Ethiopia’s foreign currency earing (the

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first one being coffee) contributing significantly for the achievement of the country’s high
economic growth over the past three successive years.

However, currently coffee’s historical place in the Ethiopian economy is being replaced by oil
seeds, particularly sesame seeds. Accordingly to the information obtained from ministry of
agriculture and rural development, oil seed exports overtook as Ethiopia biggest foreign
exchange earner in the first 11 months of 2008/9. It received 326 million American dollars from
sales of 261,216 tones oil seeds, mainly sesame seeds. The oil seeds and pulses of Ethiopia are
also known for their flavor and nutritional value as they are mostly produced originally.

Commercial farms and small scale farms are involved in the production of oil crops. Harvesting
requires a fairly high demand of labor force, if not harvested with combiners. Although prices
are fluctuating, there is a growth interest by farmers in planting and selling oil crops. Often oil
crops represent the only marketable cash crop. Therefore, market demand will not be a problem
as far as we produce quality oil seeds that can meet the demand of the international buyers.

7.3. Industry Analysis

Ethiopia economy is dominated by agriculture that accounts for about 50% of total gross
domestic product (GDP) and 90% of export and almost 80% of total employment. Of course,
agriculture is supplemented by manufacturing, mining, trade, tourism, construction services that
have a combined share of about 50% of GDP.

Endowed with varied agro ecological zones and diversified natural resource, Ethiopia has been
known as home land and domestication several crop plants. Oil seeds and pulses have been
cultivated and consumed in large quantities in Ethiopia for many years. Although the viability of
oil seed and pulses have never been in surplus in the subsistence farming community, recently it
is observed that the production and supply of them is increased due to the ever rising demand
both in local and international market.

The economic liberation process being undertaken in the country and the strong commitment of
government to create a supportive environment for the development of the private sector have
positively affected export growth of oil seeds and pulses in the few recent periods.

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Ethiopia has an attractive portfolio high value specially oil seed for export market. It is among
the top four producing country for sesame seed, linseed and Niger seed. Oil seeds and pulses are
important agricultural commodities widely grown in Ethiopia. Ethiopia oil seeds and pulses are
known for their flavor and nutritional value as they are mostly produced originally. For instance,
the Ethiopian white sesame seed is used as a reference grading in international markets.
Ethiopia’s major oil seed and pulses export include sesame seeds, nigger seeds, line seeds,
sunflower seeds, groundnut, rapeseeds, castor oil seed, pumpkin seeds, haricot beans, pea beans,
soya beans, chick peas. Oil seed are partly used for domestic oil extraction. Most of the sesame
production is for export to Middle East countries. The byproduct of oil extraction (oil cake) is
sold as animal feed.

Oilseed and pulses export has been a growing industry for the past five years. The most notable
growth has been observed in the Ethiopian market where exports have increased almost by one
hundred fifty percent and the market price has nearly doubled. The number of oilseed and pulses
buyers has increased from a handful well-known companies to hundreds independent entities.
There is a constant struggle with in this market to produce the best sesame seed and pulses as
well as serve one or more niches with in the international market. Ethiopia oil seed and pulses
growers and exporters have made greet efforts to improve agricultural techniques, processing
methods, and distribution in order to better serve this growing market.

Although coffee is the leading item in the export market, other agricultural products mainly oil
seeds and pulses are being emerged and exported at an increasing rate since the past few years,
most surprisingly, Ethiopian ministry of agriculture and rural development revealed that oil seed
and pulse export account the first largest share of export market in Ethiopia and generates 326
million dollars foreign currency, to our country in the first 11 months of 2008/9. From this entire
foreign currency, sesame seed accounts the lion share of export value i.e. 87% of earning.

The domestic market for oil crops is partly developed and backed up by an oil extracting
industries, which additionally used maize and cotton lint as an additional source of oil.
According to a vary recent study carried out by CIDR there are approximately 130 registered oil
extraction companies of which are registered micro- companies. The number of big oil extraction
companies operating in a large scale is not significant.
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The European Union, Asia, the Gulf States and neighboring African countries comprise the
major markets for Ethiopian’s oil seeds and pulses exports, china, India, Indonesia, Saudi Arabia,
Yemen Israel, EU, countries and other Asian and neighboring African countries constitute the
major market for Ethiopian’s oilseeds and pulses exports.

8. Description of the Project

Nejat Mohammed Agricultural Development is as a share company investment, the major
objective of the project is to develop 500 ha of farm land phase starting with in 106 ha within
five years to rack the maximum and produce different crops in order to generate profit.

Nejat Mohammed Agricultural Development project has to been established in 2023 and has
wanted to invest in with a total land holding of 500 ha. The project is a result of year’s hard
working born by the promoters. It is legally incorporated project registered under the
Benishangul Gumuz Regional State Land Administration and Investment Bureau as profit
making business. The project is private limited company. The project is located in Benishangul
Gumuz Regional state and for major investment activities; currently it has acquired 500 hectares
of land to grow sesame, maize, soya bean, cotton, pepper, and sorghum of land for each crop,
respectively. The remaining one hectares of land is used for construction of office, garage,
shelters, and other forestry and others.

8.1. Plan of the project to support the nearby community

A/ Infrastructural plan
The project plan to construct infrastructural development near to the project community
o Support material and construct school for education to initiate young and children.
o Medical support for clinic.
o The project construct road from woreda to kebele and kebele to project site.
o With cooperation of the government build different infrastructure facilities.

B/ Technology transfer
o The project will transfer farming experience to farmers to increase their production and
productivity to eradicate poverty.

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 o Within project area the promoters are select 5to 10 ha of land for research of different
type of crops as teaching learning site for farmers to increase production and productivity.

8.2. Environmental Protection Management and Natural Resource

Development Plan
o By coordinating the surrounding community with the project site and outside damage
area the project planting trees and manage trees
o By coordinating the project surrounding community with the project site and outside
damage area the project planting trees and manage trees
o The project will seedling natural trees and organizing communities planting average 50
trees with in one hectare by damage area in site the project site.
o The cutting trees should be prepared and process to produce composes for substitute
fertilizer and trains the nearby farmers.

8.3. The overall development capacity and preparation of investors

The total investment cost of the project amounts to birr 3,333,335 of which, Birr 370,000 is for
purchase of vehicle, 1,301,100 is for procurement of tractor, trailer and disc plow, birr 984,295 is
for initial working capital and the remaining costs are allocated for office furniture & equipment
and pre-operating expenditures, the proponent proposes to finance this capital requirement from
owners contribution of birr 500,000 and loan from Development Bank finance of birr 2,333,334.
The project can bought 1 (one) tractors after one year if requested 500 ha of land transfer to the
owners by bureau of Land and Cooperative.

8.4. Project plan to develop types of crops produced

o The project produce regional and country production and productivity types of crops and
export oriented market type crops like; oil seed, pulse seed, fiber seed and cotton and from
this product 70% is for export market.
o Based on trade proclamation the project by farmers’ product and sell in the country and
outside export market.
o The project use natural composes fertilizer, use anti-pest and anti-weeding to increase
production and productivity.

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 o The project apply sifting cultivation for, land management for cutting of tree

8.5. Investors Experience in agriculture development

The owner of the project is the following experience and qualification;
o The general manager Ms. Nejat Mohammed was graduated with degree in Plant Science
o The General Manager of the project has more than fifteen year’s experiences with relevant
field of agriculture from expert to leader level. So as to successfully plan, direct,
coordinate and implement the overall activities of the project.

8.6. Value add plan of the project

o Collect farmers’ product that produce with in small area of land as input for factory.
o High profit the project work value add product by establishing factory long plan.
o Middle range plan the project export product like sesame, soya bean etc.
o Harvesting cotton product for cloth factory.

8.7. Project employee Health and safety plan

The project promoters highly demand to get high profit by increasing health and safety of
employee understand the importance of human resources and he plan how to manage stress and
nurture good physical and mental health of Employee Welfare and team spirit.
o The prevention and maintenance of physical, mental and social well-being of worker.
o Prevention among workers of ill-health caused by the working conditions
o Protection of workers in their employment risks resulting factors adverse to health
o Placing and maintenance of worker in an occupational environment adapted to
physical and psychological equipment.
o The project build standard quality residence
o Establish health center for workers in the project as well as for nearby community.
o Digging hole and delivering pure water for worker with adding chlorine
o Motivation and employee benefits
o Training and development of workforce
o Delivering food with its time and quality for worker to get the project excellent profit

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 9. Technical Studies
From past experience, the demand of oil seeds in the international market is continually rising.
Accordingly, we expect the same trend in the future. Therefore, the main aim of this agricultural
enterprise is to produce a high quality and quantity of oil seeds and other crops to be used both in
the local and national customers and also mainly for export purpose.

9.1. Cropping Pattern

The cropping pattern to be used in the first year will be summarized by the following table.
Cropping pattern
Production Plan in Production Season in hectares
No. Crop Types Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
1 Maize 12 24 36 48 60 60 60
2 Sesame 35 70 105 140 175 175 175
3 Soya bean 30 60 90 120 150 150 150
4 Sorghum 12 24 36 48 60 60 60
5 Cotton 7 14 21 28 35 35 35
6 Geren Pepper 10 20 30 40 50 50 50
Total 106 188 282 376 470 470 470

The owner of this agricultural enterprise plan to harvest all the 500 hectares of land effectively
even in the five year through rain fade, and try to expand if possible, and use other techniques in
the Coming years.
9.2. Farming Program
The project investment land start 2024/2025 in the production season, and will fully cultivated
capacity 2028/2029.
Farming Program
Farming program
No Production Season Area coverage/Annual
1 2024/2025 106
2 2025/2026 188
3 2026/2027 282
4 2027/2028 376
5 2028/2029 500

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 9.3. Growing Season and Operation Calendar
By hydrological data of the project area, i.e., the moisture and other factors affecting the
production of the crops, the growing season for most crops of the area is from June to November.

9.4. Agronomic Practice

The agronomic practice of this project area for major crops consists of four major activities.
These are:-
1) seed bed preparation: clearing, plowing, disking and ridging
2) crop cultivation: sowing
3) crop protection activities: Weed, insect, and disease protection
4) Harvesting and collecting

9.4.1. Seed bed preparation

Preparation of the seed bad is one of the most important steps in apiaries restoration. Proper
preparation will reduce weeds, facilitate planting, and provide a suitable bad for seed
germination. The success of a prairie is planting while a poor seed bed will promote failure. In
this process, weeds, previous unwanted crop resides will be removed from the field by using
mechanical means, and then the field will be ready for the next operation, i.e., plowing, disking
as ridging.

9.4.2. Cultivation
Loosening and breaking of the up (tilling) of the soil. Cultivation destroys weeds and promotes
growth by increasing soil aeration and water infiltration. Soil being prepared for the planning of
a crop is cultivated by a harrow or plow. In this phase the land should be completely free from
weed and previous crop resides as the new crop cannot compute with them.

9.4.3. Crop protection

Weed control:-weeding is essential during early development ensure maximum establishment.
Apart from weeding the crop requires little attention.

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 9.4.4. Harvesting
The crop takes about 100 to 180 days to mature. The crop is ready for harvesting when the leaves
begin to drop and lower post on the plant change in color from green to yellow. The None-
shattering types are cut at ground level and are tied in bounders. They are then left in the field for
seven to ten days to ripen the seeds. In the shattering types, the steams are cut and feed in
bundles which are hung over rails for one two weeks to day. Mats are placed below the bundles
to collect loose seeds. Alternatively the bundles are transported to a drying floor so that the seeds
can be easily collected. The dried pods are later beaten with sticks to remove any remaining
seeds. The stems bearing the mature pods should be handled with care during harvesting since
the seeds are readily sheds as soon as the pods become dry. The seeds have to be winnowed to
remove impurities such as broken pods and leaves.

9.5. Crop Yield Assumption

This business plan is prepared based on the maximum production capacity for rain fade and
partial irrigated production. The type, amount and revenue to be collected at each year of
operation are summarized below.

9.6. Organization and Management

The management of this agriculture fame will be led by general manager who can manager both
the administration unit, and the production unit. In different to the manager, other laborer and
semiskilled workers are also employed in different area of agronomic practices. The following
tables outline our personal requirement.

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 Manpower and Requirements
No Position No Monthly Salary Annual Salary
1 General Manager 1 5,000 60,000
2 Secretary 1 2,400 28,800
3 Agronomist 1 4,000 48,000
4 Narural Resource Expert 1 3,700 44,400
5 Tractor Operator 1 3,000 36,000
6 Assistant Tractor Operator 1 2,800 33,600
7 Farm Supervision 1 2,500 30,000
8 Accountant 1 2,750 33,000
9 Store Man 1 2,500 30,000
10 Farm Guards 2 800 19,200
11 Mechanic 1 3,000 36,000
12 Cooker 2 1,000 24,000
Total 14 11,900 423,000

10. Investment Cost

In this feasibility study, investment cost is defined as all cost that would be expected to realize
the project. It could be preproduction expenditure, cost of acquiring fixed tangible assets and
initiate working capital. Investment cost can be classified as

1) pre-production expenditure
2) Fixed investment
3) Working capital
i. Preproduction Expenditure
Pre-production Expenditure: As its name indicate pre-production expenditure include all
expenditure before the project starts to generate its own revenue, and it is the expenditures
during the establishment of the project which include cost of problem identification, getting
license, promotion, land preparation , and transportation cost.

ii. Fixed Investment

Fixed investment includes all expansive in acquiring assets of fixed nature and making ready
those assets for production.

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 iii. Working Capital
Working capital is a financial metric which represents operating liquidity available to a business,
organization, or other entity, including government. Along with fixed assets such as plant and
equipment, working capital is considered a part of operating capital.

Farm Machinery and equipment Estimated Cost

The following table will summarize the estimative cost of different basic form machinery and
equipment
Machineries and Equipment’s
No Item Quantity Unit cost in birr Total cost in birr
1 Tractor 1 706,500 706,500
2 Axe 40 100 4,000
3 Spade 40 100 4,000
4 Wheel barrow 20 500 10,000
5 Crow bar 12kg 2 100 200
6 Hammer 3 100 300
7 Saw 5 130 650
8 Cultivator 30 200 6,000
9 Fork 15 70 1,050
10 Sickle 25 200 5,000
11 Matched 15 200 3,000
12 Seed bed cultivator 1 100,000 100,000
13 Generation 1 100,000 100,000
14 Motorized 1 3,000 3,000
15 Shovel 3 300 900
16 Moldboard plough 1 130,000 130,000
17 Disc harrow 1 150,000 150,000
18 Trailer 1 60,000 60,000
19 Fuel tanker 1 16,500 16,500
Total 1,301,100

Vehicles required with their estimated cost

No Items Unit Unit cost n birr Total cost in birr
1 Pick Up 1 300000 300000
2 Motor cycle 150 cc 1 70,000 70,000
Total 370,000

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 Furniture and Fixture
No Description Qty Unit cost Total cost
1 Double pedestal table 1 2,300 2,300
2 Single pedestal table 2 1400 2,800
3 Pc table 2 1000 2,000
4 Guest table 2 800 1,600
5 Guest chair 6 600 3,600
6 Swivel chair 1 1000 1,000
7 Managerial chair 1 1300 1,300
8 Filling cabinet 1 2,500 2,500
9 Pc with printer 1 10,000 10,000
10 others 14,500
Total 41,600

Pre-Investment Expenditure
No Items Cost in(birr)
1 Legal costs 7,410
2 Building Design & plan approval 7,100
3 Stamp Duty/fees 4,000
4 Business Plan Draft and approval 4,500
5 Others 4,100
Total 27,110
Indirect Cost Estimate
No Description Costs (birr)
1 Oil & lubricant 24,890
2 Salary 423,000
3 Maintenance 12,533
4 Insurance 11,698
5 Stationary 3,100
6 Fuel 8,824
Total 484,045
Direct Cost Estimates;
No Description Costs (birr)
1 Seed 241,250
2 Fertilizer 225,000
3 Chemicals 16,000
4 Sacks 18,000
Total 500,250

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 Summary of investment cost
No Capital item Amount in birr
1 Land Development 246,430
2 Construction 362,800
3 Machinery and Equipment 1,301,100
4 Furniture and Fixture 41,600
5 Vehicles 370,000
6 working Capital 984,295
7 Preproduction Expenditure 27,110
Total 3,333,335

Loan Borrowing and Settlement Schedule

To finance the cash requirement/deficit of the project is expected to apply for and secure a long
term bank loan and should be able to obtain the cash as soon as this production season. So as to
carry out the farming process as planned in this document. The schedule of settlement of the
loan would therefore be as follows.
Bank loan = 2,333,334 birr
Interest rate=10.5%
Payment period =10 (ten) years
Year Principal payment Interest rate Total payment (P+I) out standing Balance
0 …… ……… …….. 2,333,334
1 233,333 245,000.10 478,333.53 2,100,001
2 233,333 220,500.09 453,833.52 1,866,667
3 233,333 196,000.08 429,333.51 1,633,334
4 233,333 171,500.07 404,833.50 1,400,001
5 233,333 147,000.06 380,333.49 1,166,667
6 233,333 122,500.05 355,833.48 933,334
7 233,333 98,000.04 331,333.47 700,000
8 233,333 73,500.03 306,833.46 466,667
9 233,333 49,000.02 282,333.45 233,333
10 233,333 24,500.01 257,833.44 0

11. Financial Study

11.1. Revenue
The source of revenue comes from the agricultural products produced from the farm. The annual
revenue to be collected at one year one will be 6,257,500 birr and reaches birr 31,287,500 birr at
year seven. The project will be started at full capacity.

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 11.2. Production and mark up costs
Production cost, have direct contribution to the production process. Variable costs are costs
which vary directly with the volume of production. But fixed costs are relatively fixed in nature
irrespectively of level of capacity utilization.
In this feasibility study fixed cost account is intended to include two major categories which are
directly related to production, but do not vary irrespective of the capacity utilization. These are
salary of employees which do not vary with level of capacity utilization and depreciation of fixed
capital.

11.3. Environmental Impact Assessment

The project does not have any negative impact on the environment, as it is non-smoking industry
with minimum wastes for spoiling the environment. In general it is friendly the environment.

11.4. Basic Assumption used

The following basic assumption are used in the preparation of this business plan
o The life of the project is assumed to be three years
o All sales and purchase performed in cash
Production Forecast Plan
Product Total product in each project year
No Item
/ha Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
1 Maize 35 420 840 1,260 1,680 2,100 2,100 2,100
2 Sesame 6 210 420 630 840 1,050 1,050 1,050
3 Soya bean 15 450 900 1,350 1,800 2,250 2,250 2,250
4 Sorghum 30 360 720 1,080 1,440 1,800 1,800 1,800
5 Cotton 12 84 168 252 336 420 420 420
6 Geren Pepper 8 80 160 240 320 400 400 400
Total 1,184 2,368 3,552 4,736 5,920 5,920 5,920

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 Forecasting Revenue
Project Year
No Product type Sell forcast
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
1 Maize 3,500 1,470,000 2,940,000 4,410,000 5,880,000 7,350,000 7,350,000 7,350,000
2 Sesame 4,500 945,000 1,890,000 2,835,000 3,780,000 4,725,000 4,725,000 4,725,000
3 Soya bean 2,690 1,210,500 2,421,000 3,631,500 4,842,000 6,052,500 6,052,500 6,052,500
4 Sorghum 3,500 1,260,000 2,520,000 3,780,000 5,040,000 6,300,000 6,300,000 6,300,000
5 Cotton 3,000 252,000 504,000 756,000 1,008,000 1,260,000 1,260,000 1,260,000
6 Pepper 14,000 1,120,000 2,240,000 3,360,000 4,480,000 5,600,000 5,600,000 5,600,000
Total 6,257,500 12,515,000 18,772,500 25,030,000 31,287,500 31,287,500 31,287,500
o 25% net profit is reversed minimum cash balance
o 5% crop failure insurance will be purchased to reduced uncertainty.
o At full capacity the farm expected a capacity of 500 hectare rain fade farming.
o The selling price farm product is determined by the previous year (three) post-
harvest average a market price is used as a basic to determine the selling price.

11.5. Sales and Profit Summary

The following table summarizes the projects sales and profit summary

Project Profit and/or Loss Statement

Project Years
No Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
1 Gross Income 6,257,500 12,515,000 18,772,500 25,030,000 31,287,500 31,287,500 31,287,500
2 Operating expense 984,295 1,033,509 1,085,185 1,139,444 1,196,416 1,256,237 1,319,049
3 Interest expense 245,000 220,500 196,000 171,500 147,000 122,500 98,000.04
4 Depreciation 242,798 254,938 267,685 281,069 295,122 309,879 325,373
5 Profit Before Tax 4,785,407 11,006,053 17,223,630 23,437,987 29,648,961 29,598,884 29,545,078
6 Income tax - - 7,031,396 8,894,688 8,879,665 8,863,524
7 Net income 4,785,407 11,006,053 17,223,630 16,406,591 20,754,273 20,719,219 20,681,555
8 Accomulated net profit 4,785,407 15,791,460 33,015,090 49,421,681 70,175,953 90,895,172 111,576,727
Income tax = (0.3) profit

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 Project Cash Flow
Projected Cash Flow of the Project
Project Years
Description
0 1 2 3 4 5 6 7
A. Cash Inflow
Contribition 1,000,000
Loan 2,333,334
Net Profit 4,785,407 11,006,053 17,223,630 16,406,591 20,754,273 20,719,219 20,681,555
Total Inflows 3,333,335 4,785,407 11,006,053 17,223,630 16,406,591 20,754,273 20,719,219 20,681,555
B. Cash Outflow
Fixed Investmet 2,568,360
Working Capital 1,011,405 1,264,256 1,580,320 1,975,400 2,469,250 3,086,562 3,858,203 4,822,753
Income Tax - 7,031,396 8,894,688 8,879,665 8,863,524 11,079,404
Principal Payment 233,333.43 233,333.43 233,333.43 233,333.43 233,333.43 233,333.43 233,333.43
Total Outflows 3,579,765 233,333.43 233,333.43 7,264,729.45 9,128,021.76 9,112,998.68 9,096,856.94 11,312,737.82
Net Inflow (246,430) 4,552,074 10,772,719 9,958,901 7,278,569 11,641,274 11,622,362 9,368,817
Total NPV 15,053,501.06
IRR 41.75%

Pay -Back Period

The total income statement and investment cost projected are used to project the payback period.
The project initial investment will be fully recovered within 1 year.

PBP= TOTAL INVESTMENT

DEPRESATION+NET PROFIT

PBP= TOTAL INVESTMENT

DEPRESATION+NET PROFIT

0.667120175

PBP=0.66 = approximately within one year

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 12. Project Monitoring and Evaluation
The General Manager of the enterprise will supervise the site every month. The monthly physical
and financial reports prepared by the site manager and submitted the enterprise. According to
reports submitted, the enterprise office will check and verify through the supervision. The day to
day activities of the project will be monitored by the Agronomist the financial and physical
audits will be under taken at the end of each year.

13. Conclusion
Agriculture remains one of mainstays of the economy and the main source of employment and
foreign exchange in Ethiopia, and the government has committed itself to promote and attract
potential investors to participate in agricultural investment with a variety of incentive packages
as well as transparent policies, lows, regulations and procedures.
Ethiopia is of course politically, socially and macro economically stable it has significant market
opportunity, an abundant and trainable labor force, and diversified agro-ecological zones.
Among those regions which are suitable for agricultural investors, Benishangul Gumuz regional
state comes first. Therefore, we are sure that this project will benefit the promoter, the regional
people and the country at large.

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