A business plan proposal to establish and operate a flour mill in Arsi zone in Oromia.

Business Plan on Provision to establish and operate a flour mill in Arsi zone

Submitted to Arsi zone

Prepared by; Abdurkerim Hedo

Executive Summary

Waabee consumers cooperative proposes to construct and operate the Waabee Flour Mill
(“WFM”), a regional, state-of-the-art short flow flour mill to be located in either Asella City or
Arsi zone in region of Oromia. Expected output will be 30MT of vitamin fortified flour per day,
expanding to a maximum capacity of 60MT based on projected future increases in planting and
harvesting due to higher flour prices and increased demand generated by the flour mill itself.

The current regional market for flour is largely dominated by imported products and donation.
The recent upsurge in food commodity prices, and the tightening of imported flour from different
country, has created a demand for competitively priced, high-quality domestic flour. As a state-
of-the-art regional commercial mill, WFM will provide locally manufactured, superior quality
and competitively-priced flour that is also vitamin fortified and certified. WFM will contribute
important health benefits to a significant portion of the general population.

So, this business plan is prepared to Waabee consumers cooperative. This business plan for
purchase of construct of waabee flour factory has analyzed the project from location area,
operational area, environmental and profitability aspects. The initial investment of this project
with its will be Birr 3,125,000.00 and a minimum of 10,000m2 land. . The forecasted five-year
financial statements showed that the project is feasible and it will pay related principal and
interest without any financial stress. In addition, net present value and internal rate of return
showed that the project is viable to invest on it.
 1. Background information
Opening a flour mill is known as a hot business project with high returns in recent years, especially in big
wheat producer and countries in problem of food supply. The TOP 10 wheat producers are China, India,
Russia, United States, France, Austrialia, Canada, Pakistan, Ukraine and Germany.
Ethiopia also has a severe shortage of wheat milling capacity, which has created a market for surplus flour from
abroad. Grain storage, marketing, milling, baking and processing infrastructure are all grossly inadequate.
Development of these capacities will strongly encourage local wheat production while reducing Ethiopians
dependency on flour imports and international food assistance. The Ethiopian commercial flour market is dominated
by Asian to the extent that flour is priced and sold in Ethiopian birr. Even so, surplus flour is not available on a
regular basis, and quality is not consistent. Therefore flour milling and grain storage requirements of Ethiopia are
issues of national food security.

Location of the project

This project will be located in Oromia Regional National State Arsi Zone, Asella town. Oromia
Regional National State is one of the nine ethnically based regional states of Ethiopia, covering
286,612 square kilometers. It is bordered by the Somali Region to the east; the Amhara Region,
the Afar Region and the Benishangul-Gumuz Region to the north; South Sudan, Gambela
Region, and Southern Nations, Nationalities, and Peoples' Region to the west; and Kenya to the
south. The 2012 census reported Oromia Region population is 55,000,000; making it the largest
state in population.
Arsi is one of the zones of the Oromia Region National State in Ethiopia. Arsi is bordered on the
south by Bale, on the southwest by the West Arsi Zone, on the northwest by East Shewa, on the
north by the Afar Region and on the east by West Hararghe. The administrative centre of this
zone is in Asella; other towns in this zone include Abomsa, Assasa, Bokoji, Sagure, Kersa,
Dhera, Etaya, Arsi Robe, Huruta etc.

Asella is the capital of Arsi zone located Tiyo woreda of Arsi zone in Oromia Regional National
State in Ethiopia. This town is highly populated and surrounded by productive producer of crops
woredas like hetosa, munessa, digalu tijo and near to bale zone.. The lion share goes to Wheat
and Barley crops.
Arsi is one of the zones of the Oromia Region National State in Ethiopia. Arsi is bordered on the
south by Bale, on the southwest by the West Arsi Zone, on the northwest by East Shewa, on the
north by the Afar Region and on the east by West Hararghe. The administrative centre of this
zone is in Asella; other towns in this zone include Abomsa, Assasa, Bokoji, Sagure, Kersa,
Dhera, Etaya, Arsi Robe, Huruta etc.

Lode Hexosa woreda is located in the Arsi zone in Oromia Regional National State in Ethiopia.
The center of the woreda is Kersa town. This woreda is known by the production of different
crops. The lion share goes to Wheat and Barley crops.