Table of Contents

Executive Summary.......................................................................................................................1
1.INTRODUCTION........................................................................................................................2
1.1. Brief of the promoters’ business profile...............................................................................2
1.2. Project Justification................................................................................................................3
Project support duration...................................................................................................................5
1.5. Project Location Background and Required Land......................................................................6
Implementation strategy....................................................................................................................8
2. AGRO ECOLOGICAL ZONE AND INVESTMENT POLICIES OF ETHIOPIA..............................9
2.1. The Ethiopia Agro Ecological Zones........................................................................................9
2.2. Agricultural policy of Ethiopia................................................................................................9
3. THE MARKET STUDY AND PROJECT CAPACITY.................................................................11
3.1. Overview.............................................................................................................................11
3.3. Competition.....................................................................................................................13
3.5. Capacity utilization...............................................................................................................14
3.6. Pricing................................................................................................................................14
3.7. Marketing and Marketing Strategy.........................................................................................14
4. TECHNICAL STUDY OF THE PROJECT..................................................................................15
4.1. Product Mix.........................................................................................................................15
4.2. Farm Inputs and Raw Materials.............................................................................................16
4.3. Agricultural Technologies.....................................................................................................17
4.4. Intended Irrigated System.....................................................................................................17
4.5. Farming Process...................................................................................................................18
4.5.1. Land Development.........................................................................................................18
4.5.2. Land Preparation, Sowing and Fertilization......................................................................18
4.5.3. Pre-harvest Management................................................................................................18
4.5.4. Post-harvest Management...............................................................................................18
4.6. Machineries and Equipment..................................................................................................18
4.7. Project Design and Engineering.............................................................................................19
4.8. Utilities...............................................................................................................................19
4.9. Project implementation Plan..................................................................................................19
5. ORGANIZATION AND MANAGEMENT..................................................................................21
6. FINANCIAL REQUIREMENT AND ANALYSIS........................................................................25
 6.1. Total initial investment cost..................................................................................................25
6.1.1. Fixed Investment...........................................................................................................25
6.1.2. Pre-Operating Expenses..................................................................................................27
6.1.3. Operating costs at full Capacity.......................................................................................27
6.2. Financial Analysis and Statements.........................................................................................29
6.2.1. Underlying Assumption..................................................................................................29
6.2.2. Source of fund...............................................................................................................29
6.2.3. Loan repayment.............................................................................................................30
6.2.4. Depreciation schedule....................................................................................................30
6.2.5. 1st Year Revenue projection...........................................................................................30
Income Loss Analysis.............................................................................................................32
6.2.6. Balance sheet (beginning)...............................................................................................32
6.2.9. Profitability...................................................................................................................32
6.2.10. Pay-Back Period..........................................................................................................32
7. ENVIRONMENTAL IMPACT OF THE PROJECT......................................................................33
8. CONCLUSION.........................................................................................................................35
Appendix......................................................................................................................................36

LIST OF TABLE
Table 1: Peas in Ethiopia............................................................................................................................... 11
Table 2: Schedule of production plan............................................................................................................. 13
Table 3: Farm Gate Price.............................................................................................................................. 14
Table 4: Project-Implementation-Schedule...................................................................................................... 20
Table 5: Position, salary and qualification of permanent staff............................................................................21
Table 6: total initial investment capital........................................................................................................... 25
Table 7: land, building and construction......................................................................................................... 25
Table 8: farm tools and equipment................................................................................................................. 26
Table 10: vehicle.......................................................................................................................................... 26
Table 11: office equipment............................................................................................................................ 26
Table 12: preparing expenses......................................................................................................................... 27
Table 13:source of fund................................................................................................................................ 29
Table 14: Loan repayment............................................................................................................................. 30
Table 15 Depreciation schedule:.................................................................................................................... 30
Table 16: Revenue projection........................................................................................................................ 30
Table 17: Sales forcast.................................................................................................................................. 32
List of Annex
Annex 1 Operating Cost............................................................................................................................... 36
Annex 2 Income Statement........................................................................................................................... 36
Annex 3 discounted cash flow..................................................................................................................... 37
Annex 4 Undiscounted Cash Flow................................................................................................................ 37

Executive Summary
Project name Cereal Crop production
Project owner Mr.Negalem Shukuri Azma (Private Owner)
Nationality Ethiopian
Project location Turi Jeka/Aya Meda/ Kebele, Bure Woreda, Ilubabor
Zone,Oromia regional state
Project Produce different Cereal Crops mainly Wheat, Maize, Niger
composition seed, Sesame and Rice
Premises required 200 hectares
Initial investment A total investment of the project is estimated to be Br.
cost 28,117,757.76 From this 30% (8,435,327.328) will be
covered by the promoter of the project while the rest 70 %
(19,682,430.432) will be covered by financial institutions.
Employment At full capacity the farm will hire a total of 370 workers 50
opportunity permanent Workers
 320 temporary or seasonal Workers
Technology Technology used by the project to be Modern Agricultural
Technologies in the production of those Proposed cereals
Products
Farm input and raw Improved seeds, fertilizers (Both Urea and DAP), Agro
material chemicals (Herbicides (HC), Pesticides (PC), Fuel for
tractors, Irrigation input and PP bags for packaging.
Market share 70% for domestic and 30 % for export
Benefits of the Source of income ,employment, production and supply of
project crops, value add in agricultural sector, foreign currency
earning and transformation of agricultural technology etc

1
1.INTRODUCTION
Ethiopia’s economy is chiefly agricultural, with more than 80% of the country’s Population
employed in this sector. The size of Ethiopia s livestock resource is the largest in Africa and the
tenth largest in the world. While the contribution of the livestock industry to the country's total
exports is currently low compared to its potential. This sector holds great promise as a source of
export diversification for the future. Other Parts of his sector with substantial opportunities for
new investment include plantation crops (Such as tea, coffee and tobacco): production and
processing of oil crops and cotton fish farming: horticulture and floriculture (fruits, vegetables
and flower and poultry, and forestry and forest by-products Although Ethiopia lies within the
tropics temperatures range from a mean annual high of 86 degrees Fahrenheit to mean annual
low of 50 degrees Fahrenheit. Government of Ethiopia has conducive investment policies and
regulations that further attract the private sectors involvement in the economic development
through the various investment and business endeavors. To this effect the owner of the
envisioned project. has planned to invest in Turi Jeka/Aya Meda/, Bure Woreda, Ilubabor Zone,
Oromia Regional state in high value crop production. This project study is done to confirm the
market. Technical and financial viability of this project The result of the study 1s very sound and
promisin9 tor the owner to commence the project in the town. In additional the soil study result
confirmed that the area is very suitable for crop production.
The aim of this project plan is to request project expansion in neighboring to previous land since
they have fully developed the former investment land in a sustainable, economically, socially
and environmentally viable to goal of their plan.
The promoter is very dedicated to commence this project hence they expect to get the necessary
support from the regional and local government to make the project functional.
1.1. Brief of the promoters’ business profile
The promoter of this project has a successful business activity for the last decade. Especially in
agricultural sector they have realized Modern agricultural project using modern tools and other
farm input through irrigation by producing twice a year in Turi Jeka/Aya Meda/, Bure Woreda
on 200 ha land. Currently they have 100 % developed the previous investment land their activity
is very appreciable and a center of experience sharing. The promoter is also active in public
participation on woreda and Kebele level on various development activity in school funding,
access road construction and clean water supply. In addition their project is contributing into

2
local and national GDP by taxation, employment opportunity and national food security. Their
land is fully cultivated and occupied by various economical crop, vegetable and fruit. Having a
detailed knowledge in Agri Business especially by Providing high quality of product like
wheat,rice,bana,pinapple,sugarcane bean to the local market. Being in the agri business, it has
able to create employment access to a minimum of 400 persons which are regularly earning their
income from the business performance. Taking into account his business experience and staff
management experience in the current business the promoter has decided to expand his realm in
agricultural activity and to intensify production capacity in Ilubabor zone of Bure woreda ,Turi
Jeka/Aya Meda/ Kebele , to create employment opportunity, to generate revenue to the public, to
develop an idle land and resources in the project area.
The promoters agricultural background, and the aspiration to intensify his farming and
production the promoter has establish this proposal to guide its vision to involve in further
intensifying the meager resources he owned from the former business. The desire to undertake
Farming investment made the promoter to find suitable land in to establish irrigated modern
agricultural farm business and to supply its product to local to as well as foreign markets. Hence,
this proposal has been prepared to elaborate the nature of the intended business, types of business
to be managed, proposed manpower and investment cost, projected revenue and the like to state
the rationale to implement the project in the stated area.
1.2. Project Justification
Ethiopia’s crop agriculture is complex involving substantial variation in cops grown across the
country in different region and ecologies. Five major cereal (corn, wheat, Niger seeds, sorghum
and peanut are the common agriculture and food economy accounting for about three-quarters of
total area cultivated, 29 percent of agricultural GDP in 2005/06 (14 percent of total GDP) and 64
percent of Calories Consumed. There has been substantial growth in cereals, in terms of area
cultivated, yields and production since 2000, but yields are low by international standards and
Overall production is highly susceptible to weather shocks, particularly droughts.
Thus, both raising production levels and reducing its variability. are essential aspects or
improving food security in Ethiopia, both to help ensure adequate food availability. as well as to
increase household incomes.
Ethiopia is the third largest populated country in Africa with a total population number of 77.4
million (2005), out of which 84% of the populations reside in the rural area.

3
About 80 percent of the economically active population is engaged in agriculture. The Cultivated
area covered in 2005/06 was about 11.3 million ha, of which 10.5 million ha and 0.77 million ha
covered with annual and permanent crops respectively. Agriculture in Ethiopia has a major
influence on all development processes in the country. as some 85% of the total employment and
9o%% of the country s export are based on agriculture (Environmental Policy. 199/). It also
contributes about 50% of the country s gross domestic product (GDP) and supports around r0%
of the raw material requirements of agro-industries. This high proportion of the country's
economic gains made from agriculture depends mainly on the existing diversity of indigenous
crops/plants and livestock. Crop production is estimated to contribute on average about 60%.
Livestock 27% and forestry and other subsectors around 13% of the total agricultural value
(Ministry of Water Resource, 2001).
Only 40 years ago, Ethiopia exported an average or Sum, of 1000 tons of grains and legumes to
its East African and Arabian Peninsula neighbors annually (Hailu,1991). Cereals production has
remained flat since the early 1970s however. With more than a doubling of population between
1970-30 available food per-capita is declined in recent year. The country has become
increasingly dependent on supplies of the donated food in recent year. Yet become Ethiopia is
endowed in a wealth of natural resource increasingly systems, many with adequate rainfall and
soils fertile enough to sustain a Wide variety of crops.
Only 40% Potential arable land, and less than 5% of irrigable land, is currently being used
(Faught 1988, cited in Stroud and Mulugeta 1992). Agricultural practices and farming systems in
Ethiopia are based on diverse agro-ecological conditions that in turn require varying approaches
in crops production. In general term the agro-climatic zones of the country can be grouped into
three types Kolla (warm semi-arid, at 500-1500m above sea level),Woinadega (cool semi-arid at
1500-2400m) and Dega (cool and humid, higher than 2400m).More recent discipline oriented
Studies further distinguish and define this agro-ecological classification by linking related biotic
factors such as annual rainfall, altitude and temperature (Negash et al, 1989).
The government of the country has been excreting its maximum effort to expand investment
opportunities in the country by designing different policies and strategies that will facilitate
investment through attracting both domestic and foreign investors.
Likewise, the Oromia regional state government has been working day and night to make
poverty history by making its door open to investors both (domestic country and foreign) to

4
come and invest in the region. Therefore, it is this ample opportunity that attracts the new
investors to come to Oromia for investing in crop production. Hence, being one of the crop
producers has its own contribution to satisfy the demand of the current market. he crops
production project is planned to Supply different crops types mainly Wheat, Maize, Niger Seed,
Wheat, Peanut Soya Bean and Chickpea. The present economic policy of the country is highly
inviting the private sectors to invest their capitals to agricultural to Sector. As a result, the
investors respond to the government's invitation by contributing their share to the development
process the project is needed because of the highly growing population of the country and its
need of more crops supply and to obtain foreign Currency to the nation.

1.3. Objective of the Project

The main objective of the project is to produce high value crops mainly Niger Seed. Wheat and
Rice, a through modern practice and irrigation system on Gibe river in combination with ground
water at Bure woreda, Ilubabor Zone, Oromia Regional state.
Present activities
Currently, the project is embarking on the introduction of farming of Wheat, Nigger seed and
Rice crop within the member of the project. However, most member groups have been largely
engaged in individual farming activities and animal husbandry.
Planned activities
Depending on the availability of funds, the project intends to embark on the cultivation of 100
hectares of major food crop and the raising of livestock (piggery and small ruminants).

Project support duration

The project is soliciting assistance for a period of One (1) year. Thereafter it will be in position
to finance its operation from the revolving fund that will be established.
1.4. Socio-Economic Benefits of the Project
The project has the following benefits,
 It will commence the production of organic crops though scientific methods and modern
technology.
 It will provide job opportunity for 370 people
 Will serve as the source of government revenue through business income tax.

5
  It will introduce modern technology that related to crop production by using different
new varieties crops of high yield.
 It will serve as a role model for other investors who wants to invest in similar business
undertakings in Ethiopia in general and Oromia in particular.
 It will contribute somewhat to the governments objectives of reducing the problem of,
un-employment through creating employment opportunities to thee citizens
 It will generate foreign exchange earnings for the country since the product is exported to
abroad.
 It will provide selected seeds for farmers in the area
 It will contribute some to the area of self-food sufficiency in crop production if gaps are
created.
1.5. Project Location Background and Required Land
A. Location
The proposed project is found in Turi Jeka/Aya Meda/ Kebele, Bure woreda, Ilubabor Zone,
Oromia Regional State. It is situating in the southern part of Ilubabor Zone. Because of
Geographical Location (i.e. near to the largest market like Gambela Region . the district has a
great advantage for accessing the local products to the market and great ideal location for
provision of the demanded commodities to the local societies. Also the woreda has around 24
rural kebeles and two (2) urban towns.
The project site is sited about 778 km distant from Finfine/Addis Abeba, the capital city, and
178km from the capital Town of the Ilubabor zone.
The proposed project will require 200 ha a total area of land. The proposed land is almost flat
land in which the altitudes varies between 1250 to 2500 a.s.l in which the proposed project will
used for Seasonal Farming and for others purpose
B. Relies, Drainage and Climate.
Relief: The present land configuration of the district is the result of tertiary volcanic (Acidic
volcanic and basaltic flow).The largest part of the district areas belongs the part of South-western
highland and associated with lowland in the south part of the district.

The district has two different altitudes; the vast southern, central and the south western part that
lies with elevation between 1500 and 2000 meter above sea level (63%) are characterized by flat

6
land. The Northern, western and eastern part of the district lies between 2000 and 2500 meter
above sea level (37%) altitude.

The lower elevations of the district are found on the Gibe river valley part of the district
1,250m.a.s. l and its altitude increasing toward the south part of the district. There is no well-
known mount in the district. The highest elevation of the district is 2,500 Meter above sea level .
Climate: -Climatically, Most part of the district to sub-tropical (bada-dere) and coal (bada) agro-
climates. These two climates do respectively constitute 65% and 20% of the district areas. The
western parts do have cool agro-climatic condition with the mean annual temperature ranges
between 170c – 200c which western part of the district downs classified to sub-tropical climate
with mean annual temperature range 200c – 230c. The rainfall of the district is weekly bimodal
with spring a small rainy season during the months of June, July and August. The west area of
the district annual rainfall varies between 1400mm – 1900mm
C. Soils, Vegetation and Wild Life
Soil: -Chromic & pellic Vertisols, Orthic acri sols and Dystric Nitosols are the major soils types
found in the district. The western and northern part of the district covered by Chromic & pellic
Vertisols while the eastern portion of the district covered by Dystric Nit sols. All the soils types
have good agricultural potentialities.
Vegetation covers. Almost the district areas covered by 65%, 25%, 7.3% and 2.70% do consist
of cultivation, forest, grassland and woodland respectively. The natural vegetation is destroyed
by human intervention. And dense forest does ideal for the harvesting of the natural coffee.
Wild Life. The distinguishing feature of the entire of the district is the relative abundance of
bird’s sparsely of mammals, reptiles, and Invertebrates. There is no reserved area for its
conservations.
D. Socio Economic Activity
Agriculture: -Agriculture is the main stay the district of the population and hence it provides
almost the largest shares livelihood of the population. However, it is characterized by lack of
access to modern technology, market, low productivity, dependency on rainfall and lack of
irrigation practice, etc. As a result, the sector is remained subsistence in its nature.
Despite of this fact the district is potential rich particularly for farming practice. The district does
have ideal agro-climatic conditions (dominates by subtropical and cool) that suitable for
production of cereals.

7
Mixed farming is a common practice prevailing in the district. As a result, the livelihood of the
rural people is dependent on both crop farming and livestock rearing.
Population: Bure Woreda has a total population 73,000 during 2013 E.C of population.
The median age of the district population is which indicate that the district population is
extremely young that characterized by high technology to fertility rate and require huge capital
investments to support it. Thus; population variables and economic development in developing
countries has indirect interdependence to each other.

Implementation strategy
The under mentioned strategies will be carried out to achieve the set objectives:
- Community mobilization and sensitization for the further understanding of the project.
- Training of Labour to enhance the capacity of implementation, monitoring and
management of especially agricultural project.
- Purchase and distribution of viable seeds. The group and the trained executive members
will ensure that certified seeds approved by the seed board are bought.
- Supervision, monitoring, reporting and evaluation of project activities.
Project sustainability:
It is expected that with the provision of funds, the project will be able to achieve its objectives.
The maintenance of the project will enhance by one (1) type of account that is already
established. In addition to these, the resurrect expenditure would be met from the revolving fund,
after termination of donor fund this will enhance the project continuation after donor funding is
terminated.

8
2. AGRO ECOLOGICAL ZONE AND INVESTMENT POLICIES OF ETHIOPIA
2.1. The Ethiopia Agro Ecological Zones
Ethiopia has five main agricultural production systems. These can be grouped into three major
systems (Feyissa, 1999): The highland mixed-farming system practiced in areas of higher
elevation, usually above 2000m as a crop-livestock complex involving the cultivation of diverse
crops. Continuous cropping alternates with the production of legume and oil crops as a means of
maintaining soil fertility. Peanut, oats and highland legume crops dominate.
The low plateau and valley mixed-farming system practiced in the intermediate or 1ow nigh
lands, mountain foothills and upper valleys, at elevations ranging from 1500 to 2000m.Both crop
and livestock productions are economically essential, crop production is dominated by sorghum
and Niger Seed followed by wheat, Corn and some legume and oil crops.
The pastoral and agro-pastoral farming system is practiced in the arid and semi- arid zones
mainly at elevations below 1600m and with annual rainfall less than 450mm.
In the arid zone, nomadic and semi-nomadic pastoral livestock production dominates, with
camels and goats as important components. In the, semi-arid Zone, semi-nomadic or sedentary
agro pastoral production is practiced with sorghum and Niger Seed as main crops. Livestock
production in the semi-arid zone focuses on cattle and sheep. Water and range developments are
important elements for improving both crop and livestock production under this system major
staple food in Ethiopia vary according to cultural and agro ecological condition Ethiopian end
uroerologa durim) and the Wiaju tetraploid Sesama Central and south eastern parts of the
country. Other important staples are peanut in highland: corn (Eragrostis tef) with its wide
adaptation to various agro-ecologies sorghum, Niger Seed and millets in the lowlands; and
different root crops such as enset (Enset ventricosum) and yam (Dioscorea spp). Major legume
crops are horse bean (Vicia faba), pea (Pisum sativum). lentils Lens culinaries) and vetch
(Lathyrus satives); these are all essential dietary components along with the other staples. Major
oil crops are gomenzer (Brassica Carinata), noog or niger Seed (ouizofia abyssinica), linseed
(Linum usitatissimun) and Sun flower (Sesamum indicum) dominant in the lowlands.

9
2.2. Agricultural policy of Ethiopia
Privatization Programme the Ethiopian Government launched a programme for the privatisation
of state owned enterprises in early 1995. Accordingly, the Ethiopian Privatization Agency (EPA)
Was established. to implement the privatization programme in. the same year, he Government
has laid the ground to privatize most of the state owned enterprises to the private sector.
Accordingly, EPA has received a stock of 113 state owned enterprises from the government Tor
privatization in the years ahead. As indicated in EPAS Work schedule, out of these enterprises, a
total of 43 states owned enterprises are in the pipeline for privatization in the near future. Most of
these enterprises fall under manufacturing, construction, agriculture and agro-industry. Hotels,
transport, trade, and mining sectors. There is a strong commitment from the Government side to
fully privatize state enterprises in the coming in few years. Detailed information on the
process of privatization can be obtained from the Ethiopian Privatization Agency.
Agriculture
Agriculture is the main stay of Ethiopia's economy providing employment to 85 per cent of the
population. The sector contributes about 45 per cent of the GDP and 62 per cent of total exports
with coffee alone accountings of total exports2001/2002. furthermore, agriculture plays a crucial
role in providing raw material inputs for the local industry endowed with wide ranging agro
ecological zones and diversified resource. Ethiopia grows all type of cereals, fibers, crops, all
seeds, coffee, tea, flowers,fruits,and vegetable.The potentially irrigable land is estimated at 10
million hectares. Ethiopia has the largest livestock population in Africa. Fishery and forestry
Resources are also significant. Considerable opportunities exist for new private investment in the
production and processing of the above agricultural crops and resources. The following areas in
particular, have been identified to offer plenty of opportunities to private investors. Food Crops
The food crops grown include Corn, wheat, Niger seed beans, peas, lentils, soya beans,
chickpeas etc. In 1992/2000, Ethiopia produced 11.4 million tons of these 1O00 crops on about
8.9 million hectares of land. This is far short of the country s demand for these crops. Great
opportunities, therefore, exist for commercial production and processing of these food crops.
Some pulses can also be produced or processed for the export market. Oil crops such as
rapeseed, linseed, groundnuts, sunflower, ginger seed and cottonseed serve as raw material
inputs tor the edible Oil industry.

10
3. THE MARKET STUDY AND PROJECT CAPACITY
3.1. Overview
Cereals and pulses are important food and cash crops for farmers and rural households in
Ethiopia. Wheat, sorghum, and Niger Seed supply over 50% of average daily caloric intake.
Cereal production. Accounts for roughly 60% of rural employment and 807% of total cultivated
land. Households spend an average of 40% of their total food budget on cereals. Pulses occupy
13% of cropland in Ethiopia and are the second most important element in the national diet after
cereals. Despite the economic and food security importance of these crops, data and opinion
suggest a yield gap: actual stallholder farm yields do not achieve estimated potential yields for
wheat, sorghum, Niger Seed lentil and peas. Furthermore, cereal prices in Ethiopia tall between
import and export parity prices, limiting their international trading prospects. Although there are
significant Sesame imports, these reflect the influx of food aid and not competitive trade on the
international market.
The purpose of this study is to help estimate yield gaps in important Ethiopian crops in order to
identify potential areas for productivity gains particularly pea According to the World Food
Programme, 46% of the Ethiopian population is undernourished underscoring the importance of
increasing domestic food productivity. FAO details available for wheat, sorghum, Niger Seed
lentils and peas, which form the bulk of this analysis. Corn is not reported separately by the
FAO, and is instead likely reported with other minor cereal crops under the category cereals, not
elsewhere specified similarly. Other pulses are reported under the aggregate categories 'not
elsewhere specified.
Production, consumption and market for crops in Ethiopia
Table 1: Peas in Ethiopia

2005 2006 2007

Production( tones) 167,02 182,268 210,095
1
Local supply (tones) 205,88 198,331 233,682
6
Percent of local supply from domestic production 96% 92% 90%
Trade surplus /deficit (tones) -8,865 -15,063 -23,587
Average yield (Kg/ha) 779 817 948
East African regional average yield(Kg/ha) 692 702 781
Source: EAOSTAT

11
I. Production
Peas include garden peas and field peas are one of the oldest crops grown in Ethiopia. they are
widely planted in the mid-to-high altitude areas of Oromia, Tigray, Amhara and SNNP region
small holder are the main producer and use no chemical
II. Productivity
The Ethiopian export promotion agency reports that research field using improved technologies
and inputs achieved yield as high as 4000-6000 kilogram per hectares. In contrast pea yield in
Ethiopia since 2000 have fluctuate between 678 (2001) and 1085 (2008) kilogram per hectares.
In 2007, Ethiopia produced 90% of the peas consumed. Ethiopian yields ere e above East
African (120%) and African (130%) average yields, but achieved only by 3% of average world
pea yields. If Ethiopia were able to achieve average yields, it could produce 123% of the local
supply quantity. The Ethiopian Export Promotion Agency highlights use of improved seed as
crucial to increasing pea productivity. National research has led to 13 improved varietals released
since 1981, which yield 2,500 to 4,500 kilograms per hectare under good management conditions
in research fields. On-farm yields average 1,000 to 3.000 Kilograms per hectare.
III Constraint
The members of the project are in dire need to develop them, but could not afford the provision
of basic inputs. The major problem faced by the project and which it will try to address is the
lack of the most appropriate agriculture inputs to restart normal production activities. These
inputs include farm equipment’s, seeds, planting materials, and livestock for restocking of lost
animals. Other issues: -
- Lack of the capacity to provide support service.
- The neglect of people with disabilities in development activities.
IV. Consumption
The majority of peas produced are consumed domestically and peas are an important part of the
daily diet for most Ethiopians
V. Marketing
Similar to lentils, peas are usually available at local markets from wholesalers, retailers and
directly from producers at weekly markets in rural areas.

12
Vi. Constraints to Agricultural Productivity in Ethiopia
Key constraints to agricultural productivity in Ethiopia include low availability of improved or
hybrid seed. Lack of seed multiplication capacity for profitability and efficiency of fertilizer use
due to the lack of complimentary improved practices and seed. and lack of irrigation and water
constraints In addition, lack of transport infrastructure investments in productivity increases
higher up the food value chain, such as through marketing and transportation infrastructure,
would increase prices farmers receive for Output while also putting downward pressure on urban
to prices.
There is no evidence of an expansion of the frontier, which would indicate technological change
or intensification. As Dercon and Hill (2010) also question the reliability of the CSA yield data
and point to a small household survey (Minot, 2008) and satellite data suggesting that CSA data
may Overestimate yield gains. Given that there has been little expansion in the use of modern
inputs such as fertilizer (on a kilogram per hectare basis) improved seed, and irrigation, there are
additional grounds to question the validity of the CSA data. However, an important caveat in this
argument concerns the quantity of land under cultivation
3.3. Competition
There are different forms of competition that may face this project. These are price and non-price
based competition. Moreover, there are different competitions that will compete with the project
under discussion either directly or indirectly by both in the domestic and foreign market. But the
project under discussion has diversified marketing strategies that could enable it come up with
the different competitors in the market. Moreover, the Project will frequently conduct
Competitors research which focuses on, the strength and the weaknesses, the different
competitor's strategies, the techniques they use in rendering the service, their customer handling
methods, their product quality and others.
Table 2: Schedule of production plan
SN Description Plot in hectare Unit Qty/ha
1 Wheat 33 “ 30
2 Niger Seed 33 “ 42
3 Rice 33 “ 40
Total 99
As clearly indicated in the production plan of the project the crops producing within three
months’ period, which is it deemed to be produced twice a year

13
3.5. Capacity utilization
Based on the market condition of the project, the envisioned project is planned in three phases
(1st year70% 2nd year 90%and 3rd 100% to reach full capacity.
3.6. Pricing
The pricing of the project at farm
Table 3: Farm Gate Price

SN Description UOM Unit price in Br.

1 Wheat Quintal 3000
2 Niger Seed Quintal 3000
3 Rice Quintal 3000

3.7. Marketing and Marketing Strategy

The market of the project outputs is mainly targeted for domestic and export market. The
products will be sold at Buno Bedele, Jimma Zone and Addis Ababa city. Which is the nearest
market center and in Addis Ababa depending on the free market price. The main project
marketing strategies are satisfying the customer demand and maintain long lasting market
relationship.
The proposed project will supply 70% of its product for domestic market and 30 % for export

14
4. TECHNICAL STUDY OF THE PROJECT
4.1. Product Mix
The envisioned project will produce the following pulses/crops through Seasonal rain water.
I. Niger Seed
The seed of the African yellow daisy Guizotia abyssinica, Nyjer is known by many names.
Originally called Niger in ference to Nigeria and the plant's origin, the name was trademarked as
Nyjer in 1998 by the Wild Bird Feeding Industry to clarify pronunciation. Many backyard
birders also call the seed thistle, but in fact Nyjer is not related to thistle plants or seeds. It is
believed that calling the seed thistle may have e popular because goldfinches, which adore Nyier
also feed on thistle and use thistle down to construct their nests.
II. Rice
Rice belongs to the family “Gramineae” and the genus “Oryza”. There are about 25 species
of Oryza. Of these only two species are cultivated, namely Oryza sativa Linus and Oryza
glaberrima Stead. The former is originated from North Eastern India to Southern China but
has spread to all parts of the world. The latter is still confined to its original home land, West
Africa. Rice (Oryza sativa Linu) is one of the main staple foods for 70% of the population of
the world. Africa produces an average of 14.6 million tonnes of rough rice in the years 1989-
1996 on 7.3 million ha of land equivalent to 2.6 and 4.6 percent of the world total production
and rice area respectively. Africa also consumes a total of 11.6 million tonnes of milled rice
per year, of which 3.3 million tonnes (33.6%) is imported (FAO, 1996).
Rice is among the important cereal crops grown in different parts of Ethiopia as food crop.
The country has immense potentials for growing the crop. It is reported that the potential rice
production area in Ethiopia is estimated to be about 5.4 million hectares. According to
National Rice research and document strategy (2009), the trend in the number of rice
producing farmers, area allocated and production shows high increase rate especially since
2006. The number of farmers engaged in rice production has increased from about 53
thousand in 2006 to about 260 thousand in 2008. Similarly, the area allocated has increased
from about 18 thousand in 2006 to about 90 thousand ha in 2008 along with production
increase from about 150 thousand tones in 2006 to about 286 thousand tones in 2008.

15
III. Wheat
Wheat is a key food staple that provides around 20 percent of protein and calories consumed
worldwide. Demand for wheat is projected to continue to grow over the coming decades,
particularly in the developing world to feed an increasing population, and with wheat being a
preferred food, continuing to account for a substantial share of human energy needs in 2050
(Wageningen FSC, 2016). Based on recent trends, an increasing number of poor consumers in
low- and middle-income countries will want to eat wheat-based food at an affordable price as
populations and economies grow, women and men seek employment in cities, and dietary habits
change. Projections regarding wheat demand growth to 2050 abound and vary widely around an
average of approximately +50%, relative to 2010. The bulk of increased consumption is expected
to occur in developing countries where studies predict demand growth of 34-60% by 2050
(Valin, 2014). Of particular urgency is demand growth out to 2030, when world population
growth is predicted to peak (e.g. 1.15% p.a. in 2010; projected to decline to 0.75% p.a. by 2030
and 0.50% p.a. by 2050). GDP in developing countries is projected to grow at 4.3-5.3% p.a.
(2015-18; low income countries at 6.2-6.6%, World Bank, Global Economic Prospects, 2016)
across income levels, with a positive income elasticity of demand for wheat. China and India,
which are home to half the world’s poor (Sumner, 2012), already produce and consume 30% of
global wheat. By 2023, demand for wheat is expected to grow by 22% in India, 20% in Pakistan
and 19% in North Africa (OECD-FAO, 2014). Wheat agri-food systems prevail in North Africa
and West Asia but both have proven volatile areas where wheat prices and food insecurity over
the last decade triggered civil unrest and massive migration to Europe. Fueling the instability is
the region's wheat import dependency: wheat imports totaled 41 million (M) tons in 2015. In
rapidly urbanizing sub-Saharan Africa, wheat consumption is expected to grow 38% by 2023,
with imports at 24 M tons in 2015 and at a cost of $8 billion. (Source: USDA, Index Mundi,
2016).
4.2. Farm Inputs and Raw Materials
The major inputs and raw materials required for this project are improved seeds fertilizers (both
Urea and Dap), Agro-chemicals Herbicide (HC) and pesticides (PC). Fuel for tractors. These
inputs are easily available in the local market, Ethiopian Seed Enterprise, Agricultural Input
supply corporation of the Ministry of Agricultural and fro Bureau of the regional State. All

16
necessary Inputs are mostly available in local market. The cost estimation of the agricultural
Inputs are indicated on section 6.1.3 of this study.
4.3. Agricultural Technologies
The project will use the following modern agricultural technologies in production of those
products (Sun flower Maize Niger Seed, Peanuts, sesame, soya beans and chick peas).
 Improved inputs(mainly seeds and fertilizer)
 Broad Bed Maker (BBM)
 improved input (mainly seeds and fertilizers)
 Broad bed mixer
 Crop rotation
 Land use planning
 Afforestation
 Demonstration of different technologies on occasional filed days
4.5. Farming Process
4.5.1. Land Development
Like other crops, Land clearing, leveling. Seasonal Crop farm system, and access and farm road
construction will be the land development activities for crop production tractor, leveling and
surveying instruments are expected to be employed for land development purpose.
4.5.2. Land Preparation, Sowing and Fertilization
Land development for crop production is followed by land preparations operation
includes ploughing. disking and harrowing. Sowing follows harrowing with fertilization.
For land preparation tractors with various bottoms like disc plough, disc harrows. Seed.
Fertilizers and drillers will be employed in general
4.5.3. Pre-harvest Management
The pre-harvest management in Crop production usually involves seasonal rain weeding and
cultivation insect pest and disease control, rain water application using different canals gravity
and weed control will be performed by casual labor. Moreover, Insect pest and disease control
will be performed by motorized sprayer.
4.5.4. Post-harvest Management
Post-harvest in Crop production farm comprise picking. Sorting. Grading. Packing transporting.
Storing and marketing general terms, picking, sorting and grading are expected to be carried out
manually by casual labor, while transporting or product will be done by tractor driven trailers
and trucks, from the farm and stores to markets respectively.

17
4.6. Machineries and Equipment
A. Farm tool
 Hoes
 Spades
 Axle
 Water pump
 Others
B. Agricultural Machineries
 Tractor
 Trailer
 Plough
 Seed bed
 Ridger
 Cultivator
 Disc hallow
 Corn-sheet
 Weeding comb
 manual spray
 bale collector
C. Vehicle
 trucks
 tractor
 pickup
 motor bicycle
 dump truck
 automobile
4.7. Project Design and Engineering
The proposed project comprises stock of different components to be executed different phases of
the project life. These activities include: Design and Construction of various buildings (store),
importing of few machineries and farming.
4.8. Utilities
The project needs to have the following utilities
 Seasonal rain
 . Fuel
 Supplementary Electricity supply.

18
  Telephone line
 Paved Road Transportation and Drainage Facility
4.9. Project implementation Plan
The project's implementation is expected to take 8 months. The major activities include
Bank loan processing. Construction of the building.cleaning the area around the
building. Procurement of equipment’s and starts rendering services. The time schedule for
the above mentioned major activities is presented below.
Table 4: Project-Implementation-Schedule

SN Activities Date
1 Land Approval Dec,2023
2 Bank loan Jan. 2024
processing
3 Building and Feb-Marc 2024
construction work
4 Site Development April ,2024
and land
development
5 Farming system May 2024-Jun 2024
development
6 Purchasing of May-Jun ,2024
Machines and
Equipment
7 Planting of crops May ,2024

19
5. ORGANIZATION AND MANAGEMENT
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
a CEO with the responsibility of supervising the overall activity of the plant. Depending
up on the nature of the center and the amount of work to be performs; there will be
auxiliary units under the general manager. At full capacity the farm will hire a total of 370
workers.
 50 permanent Workers
 320 temporary or seasonal Workers
The list of work-force and corresponding costs both for permanent are shown in the
table below
Table 5: Position, salary and qualification of permanent staff
S Position No Qualification Monthly Annual
N salary in Br salary in
Birr
Farm Head 1 BA in crop production 5000 60,000.00
Purchaser 2 Diploma in purchasing 1500 36,000.00
management
Secretary 2 Diploma in secretariat 1500 36,000.00
Supervisors 2 Diploma in crop 1500 36,000.00
production
Store keeper 2 10 +2 in store 1500 36,000.00

20
 management
2 ProductionWorkers 20 Basic 900 216,000.00
Marketing head 2 BA in marketing 5000 120,000.00
Sales workers 2 10+3 in salesmanship 1500 36,000.00
Guards 2 Basic 700 33,400.00
2 Sanitary 2 unskilled 600 14,400.00
3 Administration and 1 BA in 5000 60,000.00
Finance head Accounting/management
6 General service 2 Diploma in management 1000 24,000.00
4 Accountant 2 BA in Accounting 2500 120,000.00
Mechanics 2 Diploma in Automotives 1750 42,000.00
5 Cashier 2 10+2 in Bookkeeping 1200 28,800.00
Driver 2 10 completed 1050 25,200.00
Sub-total 50 1,044,000.00
Benefits(20) 208,800
Total 2,296,800
Benefit (20%) 459,360
Grand Total 2,756,160

Fig. Management structure of the project

CEO

Legal Advisor General Manager Internal Auditing and

Inspection

Production Marketing General

Department Department Administration

As clearly shown in the organizational structure, the crop production project has CEO three
Departments under the general manager, Advisor and the internal Auditing and Inspection. These
departments are the Production Department, The Marketing Department, and the General Service

21
Department. Under each Department there are different sections which are undertaking different
activities Employees under each unit will be supervised by the unit head that is accountable to
the general manager. Hence the following section deals with the duties and responsibilities of
each division.
1. The General Manager's Duties and Responsibilities
 He will plan, organize. direct and control the overall activities of the production center
 He will devise policies and strategies that will enable the project to be profitable
 He will incorporate modern technological innovation that will facilitate the service
delivery the project increase customer’s satisfaction
 he will plan organize, direct and control the human and non-human resources of
the project as to be achieve the short and long run objectives of the organization.

2. General Administration and Finance Department responsibilities

 TO plan, organize direct and control the financial transaction or the project by using
necessary document.
 to develop sound financial control system by developing modern financial control
systems.
 to prepare the annual financial statements and prepared condensed reports for both the
General Manager and other concerned government body.
 To Control the human and non-human resources of the project, which include: effective
handling of the different inventories of the project, and devise strategies of controlling
against fraud and damage.
 To determine the extent of financial resources needed, and the way these needs are to be
met
 To formulate programs to provide most effective profit volume-cost relationship;
 To analyze financial results of all operations, reporting the tact to the top management
and make recommendations concerning future operations efficiency and profitability of
view of Overall economic viability of the project;
 to carry out special studies with a view to reducing costs and improving
 To examine feasibility studies and detailed project reports mainly from the point

22
  To be the principal coordinating officer for preparing and operating long-term, annual
and capital budgets,
 To lay down suitable purchase procedure to ensure adequate control over all purchases of
raw material and equipment’s etc.
 To advise the chief executive on pricing, policies in the departmental issues including
charging of overheads to jobs
 To act as principal Officer in Charge of accounts, including cost and stores account and
internal audit, to ensure annual account s are prepared in time according to the provision
of company law and to attend to external audit
 To be the custodian of the cash and the principal disbursing officer or the enterprise to be
responsible for attending to all tax matters,
 To ensure that market surveys are carried out by the management, to furnish prospective
costs of products, to enable the management to determine the optimum product max, and
 To prepare various period reports to be submitted to various authorities including
financial institutions government.
3. The Marketing Department
 will handle the overall marketing activities of the organization which include planning.
Organizing. directing, and controlling
 will develop the marketing strategies for future Integrated Agro Processing center's
development Conduct both foreign and domestic market research for expanding the sales
of the company
 Will develop effective customer handling strategies
4. The production Department
It is the core department of the project as it handles and administer over all the production
scheme of the company and it encompasses sections like: cleaning of the production area,
preparation of selected seeds, planting. Harvesting and other post-harvest activities. Thus it
undertakes the following activities:
 producing produces with less prices so as to make the company more competent
 Produce products in different types so have diversified choices.
 Use modern production methods. Selected areas and insecticides that will boost
production and productivities.

23
  Produce quality product that will enable the center to be Competent in the domestic
market.
 Produce products in least cost so that the profitably of the center is guaranteed
 Since producing good quality is based on using good input, the department will use
strategies and polices that will link the selected seeds production centers with the
production center and help if the adoption of new technologies in hybreeding disease
resistive seeds.

6. FINANCIAL REQUIREMENT AND ANALYSIS

6.1. Total initial investment cost
The total amount of money that is required to establish the envisaged crop production project is
estimated to be 39,364,860.864
Table 6: total initial investment capital

SN Description Cost in Birr

1 Land, building & construction 5,295,080.00
2 machines & Equipment’s 7,987,460.00
3 Vehicle 3,900,000.00
4 Office Equipment 360,880.00
Total fixed investment cost 17,165,200.00
6 Salary expense 3,858,624.00
7 Operation Expense 13,386,013.14
8 Pre service Expense 56,000.00
Total Working capital 17,300,637.14
Sub total 35,786,237.14
11 Contingency (10%) 3,578,623.714

Total initial investment capital 39,364,860.864

6.1.1. Fixed Investment

Table 7: land, building and construction

S.N Description of works UOM Unit coast Total Coast

24
 in Birr
1 land preparation & site devt ha 198 5,600.00 1,108,800
2 office and residence m2 250 2,800.00 700,000
3 warehouse m2 200 2,800.00 560,000
4 green area, garage & parking ha 1 14,280.00 14,280.00
5 Farming system & infra-structure devt ha 100 21,000.00 2,100,000
7 Design and supervision 280,000.00
9 1st Year land lease & (10%) down payment 330,600.00
Total 5,295,080.00

Farm Machineries and Equipment

Table 8: farm tools and equipment

SN Description Mea Qty Unit cost in Total cost in Remark

s Birr Birr.
1 Hoes no 80 260 20,800
2 Spades no 60 240 14,400
3 Axles no 30 300 9,000
4 Tractor no 2 2,000,000.00 4,000,000.00 Duty free
5 Trailer no 1 500,000.00 500,000.00 Duty free
6 Plough no 1 300,000.00 300,000.00 Duty free
7 Ridger no 1 360,000.00 360,000.00 Duty free
8 Cultivator no 1 300,000.00 300,000.00 Duty free
9 Disc Hallow no 1 340,000.00 340,000.00 Duty free
10 Corn-Sheller no 1 310,000.00 310,000.00 Duty free
11 Seed drill no 1 360,000.00 360,000.00 Duty free
12 Seed bed no 1 340,000.00 340,000.00 Duty free
13 Weeding comb no 1 320,000.00 320,000.00 Duty free
14 Harvester and Combiner no 1 500,000.00 500,000.00 Duty free
15 Manual spray no 6 5,000 30,000 Duty free
16 Bale collector no 1 360,000 360,000 Duty free
water pump no 1 80,000 80,000 Duty free
Total 7,987,460.00

Vehicle

Table 9: vehicle

S Description UOM Qt Unit Cost in Fr. Total cost in Remark

N y Birr

25
 1 FSR ISUZU 1 1,900,000 1,900,000
2 Tractor 1 2,000,000 2,000,000
Total 3,900,000.00

Office Equipment

Table 10: office equipment

S Description Mesmnt Qty Unit cost in birr Total cost in Birr

N
1 Managerial tables Unit 4 7,200.00 28,800.00
2 Managerial chairs Unit 4 4,000.00 14,000.00
3 Office table with chair Unit 4 6,000.00 24,000.00
4 Secretarial table with chairs Unit 2 5000.00 10,000.00
5 Computer with chairs Unit 3 56,000.00 168,000.00
6 Shelf Unit 2 9,000.00 18,000.00
7 Filing cabinets Unit 1 7,000.00 7,000.00
8 Guest chairs Unit 2 4000 8,000.00
9 Fax & Telephone machine Unit 3 5,026.00 10]8,080.00
10 Carpet and Curtain LS 1 66000 66,000.00
Total 360,880.00
6.1.2. Pre-Operating Expenses
Table 11: preparing expenses

S Description Cost in birr

N
1 Project proposal & EIA 56,000.00
2 Licensing fee and others
Total 56,000.00

6.1.3. Operating costs at full Capacity

1. Direct cost
i. Agricultural machineries and tractor fuel cost
S Type of Area Requirement Unit cost Total Total cost
N crop (Ha) lit/hectares Br/lit requirement in Br.
1 wheat 66 46 25.90 2,125.20 78,630.00
Niger 25.90
2 66 52 2,402.40 89,068.80
Seed
3 rice 66 50 25.90 2,310.00 85,470.00
Total 198 16,122.40 252,991.20

ii. improved seed requirement and cost

Type
S Area Requiremen Unit cost Total Total cost
of
N (Ha) t kg/hectares br/quintal requirement in br.
crop
1 wheat 66 30 5600 9.9 110,880

26
 Niger
3 66 25 2,240 8.25 132,000
Seed
4 rice 66 30 2870 9.9 56,826.00
Total 198 28.05 204,666.00

iii. Fertilizer requirement and cost

Type Are Requirement Requirement unit cost in

S Total cost in br Total
of a qt/hectares qt/hectares br
N DAP+UREA
crop (Ha)
DAP UREA DAP UREA DAP UREA DAP UREA
1 wheat 66 1 1 66 66 2100 1680 69,300 55,440 249,480.00
Niger 249,480.00
3 66 1 1 66 66 2100 1680 69,300 55,440
Seed
4 rice 66 1 1 66 66 2100 1680 69,300 55,440 249,480.00
Total 198 198 198 207,990 207,990 748,440.00

IV. Chemical requirement Herbicide (HC) and Pesticides (PC) and Cost

Requirement Requirement unit cost

S Type Area LI/hectares Total cost in br Total
In Li in br/LI
N of crop (Ha) HC+PC
HC PC HC PC HC PC HC PC
1 wheat 66 1 3 66 99 350 280 11550 1,143,450 2,310,000
Niger 11550
3 66 1 5 66 165 350 280 1,917,300 3,834,600
Seed
4 Rice 66 1 3 66 99 350 280 11550 1,143,450 1,650,000
Total 198 198 363 34,650 4,204,200 2,310,000

V. Labor requirement and cost

Type Unit Total Total

S Area Requirement
of cost requiremen cost in
N (Ha) md /hectares
crop br/md t md br.

1 wheat 66 80 182 3,696.00 960,960

Niger
3 66 40 98 1,968 258,720
Seed
4 rice 66 40 91 1,968 68,640
Total 198 435 7632 1,459,920

2. Indirect cost (other operating Expense)

27
 Annual total cost in
SN List of item Assumption
br
2 Packaging and materials 256,000.00 14,320 qt*br.10
3 Insurance 37,822.00 1 % of thefixed cost
4 Stationary materials 24,000.00 Br.1000 per month
5 Cleaning materials 60,000.00 Br.2500 per month
6 Water 22,000.00 5000 m3
7 Electricity 109,200.00 50,000 Kw
9 Oil and Lubricant 1,655,680.784 10 % fuel cost
10 Telephone 36,000.00 Br .1,500 per year
11 advertising 20,000.00
12 Repair expense with spare parts 759,293.16 2 % of the fixed cost
13 Miscellaneous costs 240,000.00 Br.10,000 per month
Total 2,265,395.944

Overall Operating Expenses (direct+ indirect)

SN List of Items List of Annual cost in Assumptions
Items birr Used
1 direct operating coast 11,120,617.20
2 indirect operating coast 2,265,396.00
Total 13,386,013.20

6.2. Financial Analysis and Statements

6.2.1. Underlying Assumption
The financial analysis of the envisioned farm is based on the data provided in the preceding
sections and the following assumption
A. Construction and Finance
Construction and land development period 5 months
Source of finance 30% equity and 70% loan
Tax holidays 2 years
Bank interest rate 10%
Sales increased by 5% after year 3
Operating expense increase by 2% after year 3
B. depreciation
Building 5%
Agricultural Machineries 10%
Farm Equipment’s 10 %
Office furniture 10%

28
 Vehicles 20%
C. Working Capital
Accounts receivable 30days
Raw materials 90days
Work in progress 5days
Finished products 30days
Cash in hand 5days
Accounts payable 30days

6.2.2. Source of fund

Table 12: source of fund

Owners’ equity 30% 11,809,458.25

Bank loan 70% 27,555,402.60
Total 100% 39,364,860.84
6.2.3. Loan repayment
Table 13: Loan repayment

Total
annual
Principal Payment in
year payment Interest rate (10%) ETB year ending balance
0 27,555,402.60
1 27,555,402.60 2,755,540.26 5,511,080.52 24,799,862.34
2 27,555,402.60 2,479,986.234 5,235,526.494 22,044,322.08
3 27,555,402.60 2,204,432.208 4,959,972.468 19,288,781.82
4 27,555,402.60 1,928,878.182 4,684,418.447 16,533,241.56
5 27,555,402.60 1,653,324.156 4,408,864.416 13,777,701.30
6 27,555,402.60 1,377,770.104 4,133,310.364 11,022,161.04
7 27,555,402.60 1,102,216.104 3,857,756.364 8,266,620.78
8 27,555,402.60 826,662.078 3,582,202.338 5,511,080.52
9 27,555,402.60 551,108.052 3,306,648.312 2,755,540.26
10 275,554.026 0

6.2.4. Depreciation schedule

Table 14 Depreciation schedule:

S Description Original Value in Depreciation Depreciation per year in

N Birr rate in % Birr
1 Construction and 10 529,508.00
Building 5,295,080.00

29
 2 Bldg. machines & 6,144,200.00 10 798,746.00
Equipment
3 Vehicle 3,900,000.00 5 195,000.00
4 Office Equipment 360,880.00 10 36,088.00
Total 15,700,160.00 35 1,559,342.00

6.2.5. 1st Year Revenue projection

Table 15: Revenue projection

Total
Prodcn produc unit
Crop type Area qnt/ha n prce total sell
wheat 66 49 1617 4600 6930000
Niger Seed 66 58.8 1940 4200 8316000
Rice 66 28 924 4200 3960000
19899 261.80 4481 14000 19,206,000

30
 wheat Teff Barley

year Production/ktl unit total price Prod./ unit total sell Prod./ktl unit total
price/ktl ktl price/ktl price/ktl sell
sell for 1
season
1 2310 4200 9702000 2772 4200 11642400 1320 4200 3960000 26888400
2 2310 4200 9702000 2772 4200 11642400 1320 4200 3960000 26888400
3 2310 4200 9,702,000 2772 4270 8454600 1610 4228 4862200 28345520
4 6010 4200 25,242,000 2772 4284 8482320 1610 4256 4894400 43969408
5 6020 4200 25284000 2772 4298 8510040 1620 4284 4957200 44138136
6 6030 4200 25326000 2772 4312 8537760 1630 4312 5020400 44307424
7 6040 4200 25368000 2772 4396 8565480 1640 4280 5084000 44477272
8 6050 4200 25410000 2772 4340 8593200 1650 4368 5148000 44618880
9 6060 4200 25452000 2772 4340 8620092 1660 4396 5212400 44818648
10 6070 4200 25494000 2772 4368 8648640 1670 4424 5277200 44990176

31
Income Loss Analysis
Revenue Year 1 Year 2 Year 3 year 4 and
after
Sell 53,776,800.00 53,776,800.0 56,691,040 87,938,816.00
0
Expenses
Salary Expense 3,58624.00 3,58624.00 3,58624.00 3,58624.00
Operating Expenses 13,386,013.14 13,386,013.1 13,386,013.14 13,386,013.14
4
Deprecation Bld. Machineries ,Equiq & 1,190,252 1,190,252 1,190,252 1,190,252
vehicle
Interest Expense3 2,755,540.2 2,479,986.23 2,204,432.208 1,102,216.104
4
Lease payment4 116,000.00 116,000.00 116,000.00 116,000.00
Total Expense 17,530,875.3
17,806,429.34 7 17,255,321.35 16,153,105.24
Profit before Tax 35,970,370.66 36,245,924.6 39,435,718.65
3 71,785,710.76
Tax (30%) 10,791,111.2 10,873,777.3 11,30,715.595
8 21,535,713.228
Net profit 25,179,259.46 25,372,147.2 27,605,003.05
4 50,249,997.53

6.2.6. Balance sheet (beginning)

Table 16: Sales forecast

Year Year 0 Year 1 Year 2 Year 3 year 4

Equity Capital 11247103.104
Loan principal 27555402.60
Net sale 0 53,776,800.00 53,776,800.00 56,691,040 87,938,816.00
Total Cash in flow 39364860.86 53,776,800.00 53,776,800.00 56,691,040 87,938,816.00
Cash payment
Salary Expense 0 3,58624.00 3,58624.00 3,58624.00 3,58624.00
Investment 17,543,420 0 0 0 0
Pre operating 40,000 0 0 0 0
Expense
Operating Cost 0 13,386,013.14 13,386,013.14 13,386,013.14 13,386,013.14
Loan repayment 0 2,755,540.2 2,479,986.234 2,204,432.208 1,102,216.104
Lease payment 0 116,000.00 116,000.00 116,000.00 116,000.00
Tax payment 0 7,036,564.638 7,086,754.83 7,761,425.03 14,507,566.92
Total payment 17,543,420 23,427,378.20 23,826,494.38 29,470,420.16 23,427,378.20
Cash surplus/ deficit 27555402.60 18,056,747.78 18,173,858.24 19.748,088.7 35,489,087.16
Cumulative cash flow 11247103.104 18,056,747.78 18,173,858.24 19.748,088.7 35,489,087.16
6.2.9. Profitability
According to the projected income statement, the project will start generating profit in the 2nd
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an

32
increasing trend during the lifetime of the project. The income statement and the other indicators
of profitability show that the project is viable.
6.2.10. Pay-Back Period
The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 4 years of operation.

33
7. ENVIRONMENTAL IMPACT OF THE PROJECT
This project has the following impact on the environment on operational phases
1. Impact on Ground Water
Agrochemicals that may leach in from the farm fields are the main pollution sources that can
cause a likely significant impact on the ground water bodies found in the project area. The
company will use and apply pesticides and fertilizers that are registered under the applicable
National and International laws.
2. Impacts on soil
One of the impacts that can be anticipated to arise as a result of the activities of the present
development project is its impact on soil. The crop production will not generate wastes that
would affect the soil in the project area. Therefore, impact prediction and analysis on soil will
focus on the irrigation related activities of the proposed development project.
a) Soil salinity
Soil salinity in any given irrigation scheme can arise from one or combination or the following
causes the first cause that can bring about salinity in irrigated soils is associated with the quality
of the water used for the irrigation itself. Salts carried in the irrigation water are able to build up
in the soil profile, as water is removed by plants and by the atmosphere at a much faster rate than
salts. In this respect, the FAO guidelines for irrigation water quality indicates that waters with
electrical conductivity (ECw) value of less than 0.7 dS/m are considered to be completely safe
and he guideline put no restriction on its use for irrigation purpose Moreover waters which have
an ECw value of 0.7-3.0 dS/m considers it be basically safe with slight to moderate restriction on
its use as it moves toward the upper limit of the range.

The other cause for the emergence of salinity in soils application of artificial fertilizers and
pesticide on the farming fields. Salutes applied to the soil in the form of artificial and natural
fertilizer as well as some pesticide wills not all are used on the crop. Excess nutrient that is not
assimilated by the crops will start to accumulate soil. Salts which occur naturally in soil may
move into solution or may already be in solution in the form of saline groundwater. Where the
groundwater level is both high and Saline, Water will rise by capillary action and then evaporate;
leaving salts on the surface aid e upper layers of the soil. Thus, under such mechanisms, salts
present in soils or Saline ground-waters can also cause soil salinity.

34
The likeliness of the irrigation activities of the present development project to cause soil salinity
in the project area is almost zero. Ground waters in the area are generally low in EC value.
Clearly, when combining these evidences together, it appears that the Contribution of ground
water and the soil itself for salinity build up is quite low. However, Since the ground water table
in some of the command area is shallow and especially so during the rainy season, care will be
taken to appropriately manage the irrigation system to prevent any rise of the ground water
table.In general, the predicted impact of the proposed project on soil salinity will be less
significant. However, necessary precautionary measures and appropriate irrigation management
methods will be put in place as mitigation measures to prevent the impact.
b) Water logging
Water logging is a phenomenon that lowers land productivity through the rise in groundwater
table Close to the soil surface. Due to farm management and appropriate irrigation system, water
logging won’t cause a problem for the envisioned farm.
c) Soil erosion
Soil erosion is another impact that can arise from irrigation development project because
irrigated land is wetter, it is less able to absorb rainfall and runoff will therefore be higher. Since
the project irrigation system is modern and there will be effective water management in place
which will not cause soil erosion.
3. Impacts on terrestrial fauna and flora
a) Impacts on terrestrial flora
Impacts on terrestrial fauna in the project area does not contain forest, there is no forest as habitat
for wild animals.in some parts of the project footprint there are scattered acacia trees. The
irrigation development will not affect areas of wildlife habitats, and not disrupt habitat use
patterns of the wild animals.
b) Impacts on terrestrial flora
The project activities that will affect the vegetation and the terrestrial habitats will include land
clearing and leveling. Building access roads and establishment of site facilities when the project
is implemented there would be a consequent change in the natural Vegetation of the area. The
present bush and grass lands will be changed to fruit farms.

35
4. Impacts on Socio Economic Environment
a) Loss of land under various land use types
If the land is covered by shrub land bushes and scattered acacia trees are used for casual
livestock grazing. However, Livestock grazers have sufficient available land rest of the valley to
allow them to continue their grazing activities. Therefore, changing this area into an intensive
agricultural land does not affect the livestock production in the area.
b) Communicable Diseases prevention and control
Any communicable disease in an individual or in à community results from a dynamic
interactions of the agent, the host and the environment in order to prevent and/or Control the
spread of infectious diseases. The chain can be broken by attacking the agent protecting the host
or changing the environment
3. Environmental heath: safe water supply and sanitation
The basic sanitary facilities in the project areas are almost nonexistence and those available may
not be properly used. The project water sources there is safe water Supply through the project
premises and basic sanitations are in place.
5. Health Care Facilities and Health Programs
Scarcity of resources either in terms of professional human resources and materials for health
services seems to have affected the health delivery system and its development to enable control
of infectious diseases, which may possibly reflect themselves at the regional and national levels.
Standard health care facilities in the project areas are very few and those available are not
equipped and staffed adequately. As a result, they cannot handle cases of different types locally
and the available referral health facilities are constrained only with minor cases.
In General, the project will undertake a separate to identify its impact and suggested
environmental mitigation measure.
CONCLUSION
Consideration of private profitability apart the project is also economically and socially very
profitable with significant contributions to the national, regional and local development efforts.
At country level the project will contribute to export growth which is one of the major objectives
of the Growth and Transformation Plan of the Federal government of Ethiopia. The regional and
local governments will also benefit from taxes and employment creations. The indirect benefits
will contribute to the growth of project area and the surrounding population.
Thus,weighed from every angle the project is justifiably sound

36
Appendix
Annex 1 Operating Cost
Annex 2. operating cost
Description Operating years of the project
1 2 3 4 5 6 7 8 9 10
A. Direct cost
Raw Material Cost 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
Sub-total 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
Total Direct cost 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
B. Indirect cost 3,951,275.16
 Wages and Salary 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160
 Repair and Maintenance 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16
 Property Insurance 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822
 Utility 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000
 Land lease 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000
 Advertising and Promotion 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
 Miscellaneous Expense 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00
Total operating cost 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,57 11,894,57 11,894,574 11,894,574
4 4

Annex 2 Income Statement

Description Operating years of the project
1 2 3 4 5 6 7 8 9 10
A. Direct cost
Raw Material Cost 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
Sub-total 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
Total Direct cost 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298 7,943,298
B. Indirect cost 3,951,275.16
 Wages and Salary 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160 2,756,160
 Repair and Maintenance 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16 759,293.16
 Property Insurance 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822 37,822
 Utility 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000 22,000
 Land lease 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000 116,000
 Advertising and Promotion 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
 Miscellaneous Expense 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00 240,000.00
Total operating cost 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574

37
Annex 3 Discounted cash flow

Operating years of the project

Description 1 2 3 4 5 6 7 8 9 10
Sales Revenue
38,412,000 38,412,000 43,493,600 62,813,440 63,054,480 63,296,320 63,538,640 63,782,400 64,026,640 64,271,680
Less: Operating 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574
cost
Income before 26,517,426 26,517,426 28,598,866 50,918,866 51,159,906 51,401,746 51,644,386 51,887,826 52,132,066 52,377,126
Depreciation
and interest
Less: interest 1,673,006.5 1,505,705.92 1,338,405.26 1,171,104.62 1,003,803.96 836,503.30 669,202.64 501,981.98 334,601.32 167,300.65
8
Income before 24,844,420 25,011,720 27,260,622 49.747,762 50,156,102 50,565,244 50.975,184 53,385,924 51,797,466 52,209,806
Depreciation
Less: 0 0 850,180 24,844,420 25,011,720 27,260,622 49.747,762 50,156,102 50,565,244 50.975,184
Depreciation
Profit /Loss 24,844,420 25,011,720 27,260,622 49.747,762 50,156,102 50,565,244 50.975,184 53,385,924 51,797,466 52,209,806
Before Tax
Less: Tax 7,453,326.0 7503,516.28 16,356,372.96 14,924,328.66 15,046,830.46 15,169,573.06 15,292,555.26 15,415,777.63 15,539,239.66 15,662,941.86
(30%) 8
Net Profit or 17,391,094. 17,508,204.64 19,082,435.10 34,823,433.56 35,109,27.12 35395670.48 35,682,628.94 35,970,147.40 36,258,225.86 36,546,864.32
Loss After Tax 1

Annex 4 Undiscounted Cash Flow

Investment
Year Project Life years
Description 0 1 2 3 4 5 6 7 8 9 10
INFLOW
Net sales 38,412,000 38,412,000
revenue 0 40,493,600 62,813,440 63,054,480 0 0 0 0 0
TOTAL 38,412,000 38,412,000
INFLOWS 0 40,493,600 62,813,440 63,054,480 0 0 0 0 0
OUTFLOWS
Investment
cost
13,204,000 - - - - - - - - - -
Operating 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574 11,894,574
cost 0
Income tax 7,453,326.08 7503,516.28 16,356,372.96 14,924,328.66 15,046,830.46 15,169,573.06 15,292,555.26 15,415,777.63 15,539,239.
0 66 15,662,941.86
TOTAL 13,204,000
OUTFLOWS 19,347,900 19,398,090 20,072,760 26,818,902 26,941,404 27,064,164 27,189,128 27,310,350 27,433,812 27,557,516
NET CASH 13,204,000 27,433,812.
FLOW 19,064,100.76 19,013,910.56 20,420,840.36 35,994,538.18 36,113,075.98 27,064,146.22 27,064,146.22 27,310,350.62 82 27,557,515

38