I.

EXECUTIVE SUMMARY
Ethiopia is a country endowed with a wealth of productive land and natural resources. According to
the information from Central Statistic Authority, nearly 32 million hectares of arable agricultural
land exists within the country’s landmass of 1.1 million square kilometers. Nevertheless, less than 15
million hectares of arable land (47%) comes under cultivation annually, of which about 96% of the
cultivated land area is under smallholder farming. Agriculture is the basis for economic growth,
generation of employment opportunities and earning of foreign exchange; furthermore agriculture
contributes more than 45% of Ethiopia’s export earnings and provides employment for 83% of the
population. Agriculture thus remains the country’s most important sector of the economy though
characterized by small-scale subsistence production systems.

The current Government of Ethiopia has given at most priority for agriculture considering
agriculture as the foundation for initiating structural transformation of the economy in its Home
Grown Economic Policy. This guiding strategic frameworks focus on the development of large-scale
private commercial farms in addition to increasing productivity on smallholder peasant farms
through cluster farming in its Agricultural sector strategic direction. Ethiopian government,
therefore, approved Ten Years Home Grown Economic Policy that is believed to address the
bottleneck of economic development.

The agricultural sector principally consists of two broad sub-sectors vis-à-vis private agricultural
holding and the commercial farms, contributing 95% and 5% of the annual gross agricultural output,
respectively. This situation reveals that the dominant fragmented private agricultural sub-sector does
not worth much as a source of capital formation. Therefore, the promotion of private commercial
farms that characterized by mechanized, capital intensive and market oriented farming systems has
paramount importance for modernization of agriculture.

I.1. Objective of the Company

The economic activities in which the company planned to engage are:
 Working as import-export commission agent;
 Working as legal agent in foreign countries and Ethiopia;
 Engage in wholesales, retile and service trades;
 Engage in construction sector, manufacturing or importing of construction material, and whole
sales or retile trade of construction machineries;
 Engage in real estate business, and constructing, renting, administrating, purchasing and selling
of shops, Apartments and marketing moles;
 Engage in agricultural development and Industrial production;

1
 Work as customs and shipment agent;
 Engage in hotel and truism sector;
 Acquiring and renting lodges and tour vehicles;
 Importing and marketing of industrial raw material;
 Engage in production of coffee, sesame, cereals and oil crops production and supplying to
domestic and export marketing.

I.2. Objective of the Project

The main objectives of the project are production of quality coffee and banana to export market.
Maximize the customers’ satisfaction through supplying quality product and thereby maximize profit
for the company.

I.3. Success factors of the Project

The major success factors for coffee production and marketing are presented as follows:
 Use of improved crop varieties recommended by research institutions,
 Comprehensive strategy to alleviate the labor shortage problem,
 Using of drip irrigation and agricultural machineries,
 Integrated management practice,
 Decreasing of casual workers impact during critical operations,
 Dramatic increase of productivity,
 Past experience of the promoters,

2
I.4. Risk Factors of the Project
Global Risk: The major risk factor that affects the overall production and marketing of coffee is
price decrease in international coffee market,
National Risk: Drought occurrence periodically and electrical power interruption,
Sectoral Risk: Labor shortage during harvesting and input price increase.

I.5. SWOT Analysis

Opportunities Threats
 Increasing demand for organic products  Fluctuating prices
 Global consumer preference for Ethiopian coffee  Marketing competition
 Availability of finance from local Banks  Shortage of laborers during harvesting
 Erratic weather condition
Strength Weakness
 Experience of shareholders in coffee market,  Shortage of finance,
 Experienced and professional staffs,  High switching cost.
 Using of drip irrigation,
 Using of harvesting machine & modern technology

I.6. Mitigating Strategies

 The promoter using his long year experiences reduce the market threats by supplying directly
to foreign buyers at premium price.
 The company planned to approach local Banks for credit finance.
 Understanding the switching cost of the project, the company organized to do the business
using skilled and experienced professionals.
 Using of modern technology reduces the impact of labor shortage.
 Using of drip irrigation helps to contain the threats come from erratic weather.

3
II. DESCRIPTION OF THE COMMODITY
II.1. Coffee
II.1.1. Definition of Coffee
Coffee is the seed of a cherry from trees have shiny evergreen leaves and grow 30 feet or more. Each
cherry contains two light green oval seeds, which after processing and roasting, become beans
(http://www.hudsonscoffee.com.au/). Coffee is a large genus (containing more than 90 species) of
flowering plants in the family rubiaceae. They are shrubs or small trees, native to subtropical Africa
and southern Asia (en.wikipedia.org/wiki/coffee/plant). Like wine and honey, specialty coffee has a
unique flavor.

Although there are some wild speculations about coffee and its origin a considerable number of
reliable source indicates that the term “coffee” derives from the south western massive highlands of
Ethiopia, ”keffa” region where the plant was first discovered blossoming. This shows Ethiopia
considered as the center of nativity of the economic species of coffee Arabica.

P.G Sylvaine after making a thorough and lengthy research in South Western Ethiopia confirmed that
Ethiopia to be the mother land of wild coffee and the name coffee as a derivative from the Ethiopian
province Keffa. It is from Ethiopia that coffee spread to Arabia, India, Ceylon, Martinique, southern
Brazil, Colombia, etc and then back to African countries such as Kenya and Tanzania.

Despite Coffee is so diverse, most commonly classified based on the types of coffee beans as Coffee
Robusta, Coffee Arabica and Coffee Librica. The vast majority of the world’s coffee is the Arabica
species in which Ethiopia specialized. Coffee Arabica is indigenous to Ethiopia and it is the first
cultivated species of coffee tree. It accounts 75% of the world coffee supply. In general, coffee
Arabica is the most important coffee species, which have good flavor and quality.

The coffee's country of origin is largely important for comparative bean flavor; even within the same
country, the flavor is quite different. Thus, most Arabica varieties are named after the country or
region in which the variety predominantly found. Countries such as Ethiopia have a number of
highly prized varietals, which classified based on bean shape and quality. Based on bean shape and
quality assessment using raw roast and liquor characteristics, Ethiopian coffee can be classified in to
Kefa, Gera, Mizanteferi, Bonga, Jimma & Agaro, Sidamo, Illubabore, wellega and Harar coffee.

Besides the origin, coffee can be classified into forest, semi-forest, garden and plantation coffee
based on production system. The interest of this study, plantation coffee is grown on plantations
owned by the state (currently put up for privatization) and private commercial farms.

4
In this production system, recommended agronomic practices like improved seedlings, spacing,
proper mulching, manuring, weeding, shade regulation and pruning are practiced. In addition to the
above classification based on farming system coffee can be classified into organic coffee and
inorganic coffee.

Organic coffee is grown using methods and materials that have low impact on the environment
rather it replenish and maintain soil fertility, reduce the use of toxic and persistent pesticides and
fertilizers, which leads the coffee have their own natural flavor test and quality. Inorganic coffee is
the method of coffee plantation that involves cutting down of trees, and high inputs of chemical
fertilizers and pesticides.

Environmental problems, such as deforestation, pesticide pollution, habitat destruction, soil and
water degradation, are the effects of most modern coffee farms. Even though, it has a negative
impact in the environment possible to increase the yield of production. With this understanding, the
Company has planted and planned to grow Arabica coffee using drip irrigation system for first time
in Ethiopia.

II.1.2. Status of the Coffee

Coffee is the most popular beverage on earth after water. According to the World Bank, as many as
500 million people are involved directly or indirectly in the global coffee trade. Coffee is the most
actively traded commodity on the planet after petroleum. Therefore, coffee has well developed
market both domestically and globally.

II.1.3. Positioning of Coffee

A. Product
Coffee can be marketed as red cherry, brown cherry, clean green coffee, roasted and instant coffee.
However, globally traded ones are clean green coffee, roasted and instant coffee. Among these
globally traded coffee products, the envisaged project planned to produce clean green coffee since
the rest have strong entry barriers.

There are basically three methods of clean green coffee processing which differ in complexity and
quality of the resultant raw coffee and the liquor - the natural method, the wet method and the dry
method. The natural and wet method gives better quality coffee than the dry method and the farm
will use wet method and natural method in processing of the product at proportion of 45% and 45%
respectively.

5
B. Place
Green Coffee Bean can be supplied to domestic and foreign in Ethiopia case. Currently, Green
coffee bean supplied to domestic market in two ways; the major one directly from the producer to
the consumer and the second ways is after it fails quality test to foreign market. A green coffee bean
that pass export standards will go to auction center at Addis Ababa, Dire Dewa or Jimma auction
center which is conducted by Ethiopian Commodity Exchange Authority. There is also a possibility
to export directly to world market without pass through auction center for Coffee Producers Unions
and Coffee Plantation commercial farms. The envisaged farm, therefore, planned to supply directly
to world market.

C. Price
Coffee prices are set according to the New York "C" Contract market. Mostly, speculators in New
York market trade coffee. The single most influential factor in world coffee prices is the weather in
Brazil. Droughts and frosts portend shortages of coffee and the price increases. Specialty coffee is
often imported at a negotiated price over the C market, which is considered a 'quality premium'.
Most of those premiums never reach the coffee farmer, but rather stay in the hands of the exporter.
This creates a disincentive for farmers to increase their quality, as they do not receive the direct
benefits of increased investment in producing better coffee. This is the main reason, the envisage
farm plans to supply for major importers directly on negotiated price.

D. Promotion
Promotional work is not as such a big concern in coffee production since coffee has matured market
both locally and globally.

II.2. Banana
II.2.1. Definition of Banana
Banana is an edible fruit, botanically a berry, produced by several kinds of large herbaceous
flowering plants in the genus Musa. The fruit is variable in size, color and firmness, but is usually
elongated and curved, with soft flesh rich in starch covered with a rind which may be green, yellow,
red, purple, or brown when ripe. The fruits grow in clusters hanging from the top of the plant.
Almost all modern edible parthenocarp ic (seedless) bananas come from two wild species – Musa
acuminata and Musa balbisiana. Musa species are native to tropical Indomalaya and Australia, and
are likely to have been first domesticated in Papua New Guinea. Banana is grown in 107 countries,
primarily for their fruit, and to a lesser extent to make fiber, banana wine and beer, and as
ornamental plants.

6
II.2.2. Status of the Products
Banana is well known and cultivated agricultural product in Ethiopia. Ethiopia Banana product has
significant market in neighboring country. The company, therefore, does not require market
searching for banana rather it desires to be cost effective by using modern technology.

7
III. MARKET STUDY
III.1. Global Market Overview of Coffee
III.1.1. World Production
Coffee has tremendous importance for the economies of many developing nations. It is the second
most traded commodity after petroleum. The United States Foreign Agriculture Service Office of
Global Market Analysis, reported that global coffee production in 2020/21 end of June was an
estimated 10,548,660 tons, of which 5,990,800 tons (59%) is Arabica coffee while the remaining
4,119,700 tons (41%) is Robusta coffee. The United Nations Food and Agriculture Organization
(FAO) have calculated that over 10.8 million hectares of land around the globe are dedicated to
coffee production in 2021.

Table 4.1: World Coffee Production by Coffee Species for the Last Five Years (Tons)
Project Years Average of
Coffee Species
2016/17 2017/18 2018/19 2019/20 2020/21 Production
Arabica 6,062,200 5,713,400 6,338,600 5,714,200 6,125,600 5,990,800
Robusta 3,596,600 3,875,400 4,258,800 4,444,700 4,423,000 4,119,700
10,597,40
9,658,800 9,588,800 10,158,900 10,548,600 10,110,500
Total 0
Source: United States Foreign Agricultural Service office of Global Analysis, USDA

Roughly, 80% of all Arabica coffee and similar percentage of all Robusta coffee are come from
Latin America, see the following table.

Table 4.2: World Coffee Producing Countries for the last Five Years (Tons)
Producing Nations 2016/17 2017/18 2018/19 2019/20 2020/21
Arabica Production
Brazil 2,736,000 2,370,000 2,982,000 2,520,000 2,982,000
Colombia 876,000 829,500 832,200 846,000 858,000
Ethiopia 416,580 423,300 441,000 448,500 456,000
Honduras 450,600 456,000 450,900 336,000 374,160
Peru 253,500 262,500 263,400 235,500 202,140
Guatemala 204,000 216,000 211,200 210,900 192,000
Mexico 186,000 228,000 186,000 189,000 180,000
Nicaragua 156,000 162,000 174,000 160,500 153,000
China 108,000 115,500 132,000 114,000 108,000
Costa Rica 78,000 91,500 75,000 87,960 88,320
India 94,980 94,980 94,980 87,000 84,000
Indonesia 78,000 60,000 72,000 75,000 78,000
Vietnam 66,000 61,560 63,840 66,000 60,000
Uganda 66,000 72,000 63,000 61,500 55,500
Kenya 51,000 43,200 51,000 45,000 42,000
Other 241,500 227,400 246,120 231,360 212,520
Total 6,062,160 5,713,440 6,338,640 5,714,220 6,125,640
Robusta Production none
Vietnam 1,536,000 1,696,440 1,760,160 1,812,000 1,680,000
8
 Producing Nations 2016/17 2017/18 2018/19 2019/20 2020/21
Brazil 630,000 756,000 1,008,000 1,110,000 1,212,000
Indonesia 558,000 564,000 564,000 567,000 564,000
Uganda 226,500 204,000 216,000 267,000 304,500
India 217,020 220,980 224,520 211,020 225,000
Malaysia 126,000 126,000 126,000 114,000 120,000
Cote d'Ivoire 65,400 75,000 120,000 103,500 63,600
Tanzania 30,000 33,000 36,000 36,000 39,000
Thailand 48,000 42,000 39,000 42,000 36,000
Mexico 12,000 12,000 27,000 33,000 31,800
Other 147,660 145,980 138,120 149,220 147,120
Total 3,596,580 3,875,400 4,258,800 4,444,740 4,423,020
Total Production of Coffee
Brazil 3,366,000 3,126,000 3,990,000 3,630,000 4,194,000
Vietnam 1,602,000 1,758,000 1,824,000 1,878,000 1,740,000
Colombia 876,000 829,500 832,200 846,000 858,000
Indonesia 636,000 624,000 636,000 642,000 642,000
Ethiopia 416,580 423,300 441,000 448,500 456,000
Uganda 292,500 276,000 279,000 328,500 360,000
Honduras 450,600 456,000 450,900 336,000 374,160
India 312,000 315,960 319,500 298,020 309,000
Peru 253,500 262,500 263,400 235,500 202,140
Mexico 198,000 240,000 213,000 222,000 211,800
Guatemala 204,000 216,000 211,200 210,900 192,000
Nicaragua 156,000 162,000 174,000 160,500 153,000
Malaysia 126,000 126,000 126,000 114,000 120,000
China 108,000 115,500 132,000 114,000 108,000
Costa Rica 78,000 91,500 75,000 87,960 88,320
Cote d'Ivoire 65,400 75,000 120,000 103,500 63,600
Kenya 51,000 43,200 51,000 45,000 42,000
Tanzania 30,000 33,000 36,000 36,000 39,000
Thailand 48,000 42,000 39,000 42,000 36,000
Other 389,160 373,380 384,240 380,580 359,640
Total 9,658,740 9,588,840 10,597,440 10,158,960 10,548,660
Source: United States Foreign Agricultural Service office of Global Analysis, USDA

III.1.2. Global Coffee Consumption

The Europe is currently the world's largest market for coffee. Annual consumption of Europe in
2020/21 is 2,426,100 tons, which is by far more than the next consumer United States, that is,
1,548,000 tons. Among the seventy coffee producing countries, Brazil is exceptionally high
consumer country by consuming 1,398,420 tons in year 2020/21. The following table shows annual
coffee consumption by Country.

9
Table 4.3: World coffee Consumption (Tons)
Country 2016/17 2017/18 2018/19 2019/20 2020/21
European Union 2,342,700 2,523,900 2,527,440 2,416,200 2,426,100
United States 1,530,720 1,533,420 1,628,400 1,561,800 1,548,000
Brazil 1,297,500 1,345,200 1,392,000 1,379,640 1,398,420
Japan 492,600 493,860 473,820 456,600 454,320
Philippines 419,700 393,000 367,500 367,200 370,500
Canada 273,000 285,000 293,100 289,800 298,800
Indonesia 192,180 213,600 258,000 294,000 267,000
Russia 284,400 267,900 296,700 277,500 252,000
China 193,080 185,100 198,000 222,000 234,000
United Kingdom 258,000 227,100 239,700 232,200 218,100
Ethiopia 186,000 189,000 191,580 188,400 213,000
Vietnam 166,200 172,800 176,400 186,000 189,000
Korea, South 163,500 158,700 166,200 178,800 183,000
Mexico 123,420 137,700 154,800 153,000 156,600
Algeria 132,300 138,000 140,400 122,400 134,400
Colombia 87,000 99,000 117,000 108,000 120,000
Australia 103,800 114,000 122,400 117,600 120,000
Switzerland 87,000 91,500 87,600 88,200 93,000
Turkey 57,600 51,900 72,300 72,900 79,500
Ukraine 57,600 66,300 68,700 76,200 75,000
India 72,000 72,900 75,000 70,200 70,800
Saudi Arabia 50,400 56,100 58,800 62,400 66,000
Jordan 37,500 46,500 50,100 46,200 52,500
Venezuela 67,980 73,020 72,840 57,360 48,960
Malaysia 40,200 36,000 51,000 38,100 48,000
Other 600,540 662,400 671,520 674,280 671,460
Total 9,316,920 9,633,900 9,951,300 9,736,980 9,788,460
Source: United States Foreign Agricultural Service office of Global Analysis, USDA

III.1.3. Global Coffee Exporter

According to USDA projection, 6.93 million, 0.28 million and 0.97 million tons green beans, roasted
and soluble coffee respectively will be exported to the global market in 2021/22. Moreover, Brazil,
Vietnam, Colombia, Indonesia and Uganda expected to be the largest five exporter countries in
2021/22. Honduras, Ethiopia, Peru, India and Guatemala are also expected to export significant
amount of green beans coffee in this year. All the green coffee exporter countries are also producing
countries.

Table 4.4: World coffee export Countries for the last five Years (tons on June)
Exporting Countries 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22*
Bean Exports
Brazil 1,759,500 1,616,280 2,242,740 2,171,400 2,460,000 1,920,000
Vietnam 1,434,000 1,635,420 1,537,080 1,471,560 1,380,000 1,560,000
Colombia 762,000 702,000 750,000 708,000 750,000 744,000
Indonesia 438,540 416,400 294,420 365,760 387,900 390,000
Uganda 276,000 258,000 267,000 321,000 354,000 348,000

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 Exporting Countries 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22*
Honduras 430,500 433,500 409,380 305,580 336,420 312,000
Ethiopia 231,180 233,580 250,440 248,100 240,000 246,000
Peru 241,500 251,100 257,580 223,200 199,440 231,000
India 256,380 247,620 236,160 203,940 219,600 220,800
Guatemala 199,500 207,600 216,000 192,660 186,000 189,000
Other 732,120 774,540 816,360 787,980 703,320 766,200
Total 6,761,220 6,776,040 7,277,160 6,999,180 7,216,680 6,927,000
Roast and Ground Exports
European Union 109,200 112,500 108,360 136,500 129,900 126,000
Switzerland 69,000 73,500 81,000 93,600 105,000 87,000
Vietnam 33,000 33,000 33,000 33,000 33,000 33,000
Colombia 9,300 10,500 18,900 12,900 18,000 12,000
Mexico 9,300 10,800 13,320 12,360 12,000 12,000
Indonesia 3,900 4,200 2,580 3,360 3,300 3,600
Panama 1,800 1,800 2,400 2,400 1,800 1,800
China 10,800 1,800 1,500 1,500 1,500 1,500
Brazil 1,860 1,200 1,440 1,560 1,560 1,200
Costa Rica 600 300 300 600 600 600
Other 960 600 600 1,140 960 1,200
Total 249,720 250,200 263,400 298,920 307,620 279,900
Soluble Exports
Brazil 223,500 209,760 241,380 242,400 240,000 192,000
Malaysia 176,400 184,500 187,500 180,000 180,000 174,000
Vietnam 120,000 126,000 129,000 135,000 123,000 138,000
India 112,800 121,020 110,280 106,920 118,800 120,000
Indonesia 48,000 60,000 72,000 60,000 69,000 72,000
European Union 45,600 58,200 69,600 72,900 78,000 66,000
Mexico 58,200 60,000 56,580 56,700 54,000 57,000
Colombia 54,000 51,000 54,000 60,000 60,000 54,000
Thailand 51,000 39,000 31,800 31,500 30,000 30,000
Ecuador 29,040 34,320 24,600 22,200 28,500 24,780
Other 57,000 49,500 43,380 38,220 36,360 45,480
Total 975,540 993,300 1,020,120 1,005,840 1,017,660 973,260
Total Exports
Brazil 1,984,860 1,827,240 2,485,560 2,415,360 2,701,560 2,113,200
Vietnam 1,587,000 1,794,420 1,699,080 1,639,560 1,536,000 1,731,000
Colombia 825,300 763,500 822,900 780,900 828,000 810,000
Indonesia 490,440 480,600 369,000 429,120 460,200 465,600
Uganda 276,000 258,000 267,000 321,000 354,000 348,000
India 369,480 368,880 346,680 311,100 338,700 341,100
Honduras 430,500 433,500 409,380 305,580 336,420 312,000
Ethiopia 231,180 233,580 250,440 248,100 240,000 246,000
Peru 241,500 251,100 257,580 223,200 199,440 231,000
European Union 154,800 170,700 177,960 209,400 207,900 192,000
Other 1,395,420 1,438,020 1,475,100 1,420,620 1,339,740 1,390,260
Total 7,986,480 8,019,540 8,560,680 8,303,940 8,541,960 8,180,160
Source: United States Foreign Agricultural Service office of Global Analysis, USDA
* Estimate

11
III.1.4. Coffee Import
Importers purchase green coffee almost exclusively from established exporters and large estate
owners in producing countries; in some cases, mostly in the specialty coffee segment, importers buy
directly from small farmer cooperatives. In the United States, most green coffee is supplied to the
industry by importers, although some medium and large roasters also import a portion of their
supplies directly.

Many importers specialize by geographic region and product quality. Similarly, most roasters are
regionally focused, while others specialize in certain types of coffee (e.g., countries of origin,
flavored coffee, organic, etc.). Importers provide a crucial service to their customers who do not
have the financial resources to source quality green coffee directly from the world. Most roasters are
small and do not have sufficient finance to buy entire container-loads of coffee directly from source.
Importers bring in container loads and hold inventory, selling gradually through numerous small
orders. Since many roasters rely on these services, importers wield a great deal of influence over the
types of green coffee that are sold in the US.

For this reason, roasters often look to the importers as a source of information, advice and
leadership. In general, importers play a dual role by providing green coffee origins that are
specifically requested by roasters, while at the same time actively influencing the source selection
decisions of roasters through marketing and sales efforts. The following table depicts the major
importing countries in the world and the amount imported.

Table 4.5: Top ten coffee Importers for the last Five Years (tons)
Importing Countries 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Green Coffee Bean
United Kingdom 29,400 37,200 42,000 37,200 40,800 39,000
United States 9,600 6,900 22,200 21,600 27,000 33,000
Canada 13,200 17,100 21,000 28,800 28,500 28,500
Ukraine 15,600 16,800 21,600 27,000 27,000 25,500
Russia 19,500 23,400 28,500 25,800 25,200 24,000
Korea, South 13,500 14,700 17,400 19,200 21,000 21,000
China 56,700 23,100 15,000 15,600 16,500 18,000
Saudi Arabia 3,000 4,500 9,000 11,400 12,000 12,600
Vietnam 20,400 24,000 30,000 18,000 12,000 12,000
Norway 7,500 8,400 8,100 7,200 7,800 6,600
Other 44,820 45,300 45,000 49,500 41,820 38,820
Total 233,220 221,400 259,800 261,300 259,620 259,020
Soluble Imports
Philippines 360,000 330,000 330,000 300,000 300,000 291,000
China 108,000 95,100 91,500 108,000 114,000 108,000
Canada 78,000 85,800 84,000 90,900 94,800 96,000
United States 30,000 12,600 30,000 47,400 48,000 54,000

12
 Importing Countries 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Indonesia 23,460 49,680 58,980 45,960 40,500 42,000
United Kingdom 69,600 16,500 7,200 36,600 29,400 30,000
Japan 55,500 68,400 51,600 37,800 28,800 27,000
Russia 102,300 72,900 84,000 60,900 24,000 27,000
Ukraine 26,400 25,500 21,900 24,000 24,000 24,600
South Africa 15,900 18,900 21,600 18,600 23,400 24,000
Other 156,900 197,220 189,120 212,760 217,500 211,140
Total 1,026,060 972,600 969,900 982,920 944,400 934,740
Total Imports
European Union 2,605,500 2,670,600 2,753,400 2,667,600 2,700,000 2,550,000
United States 1,588,200 1,486,500 1,681,200 1,503,000 1,545,000 1,539,000
Japan 481,800 463,200 499,200 437,400 454,500 434,400
Philippines 385,200 366,000 366,000 340,200 345,000 336,000
Canada 273,000 285,000 293,100 289,800 298,800 301,500
Russia 284,400 267,900 296,700 277,500 252,000 249,000
United Kingdom 258,000 227,100 239,700 232,200 218,100 219,000
China 213,120 167,100 157,500 177,600 211,500 201,000
Korea, South 163,500 158,700 166,200 178,800 183,000 183,000
Switzerland 156,000 165,000 168,600 181,800 198,000 180,000
Other 1,336,860 1,532,580 1,627,560 1,532,520 1,575,960 1,522,200
Total 7,745,580 7,789,680 8,249,160 7,818,420 7,981,860 7,715,100
Source: United States Foreign Agricultural Service office of Global Analysis, USDA 9
* Estimate

III.1.5. Global Market Overview of Banana

Banana is ranked in the first position among all fruits produced in the world in general and tropical
fruits in particular. Moreover, the world production of banana has depicted increasing trend because
of increasing consumption globally as shown in the following table.

Table 4.6: World production of Banana (tones)

Area 2015 2016 2017 2018 2019 2020 % Share
World 114,950,266 112,112,614 113,289,235 116,653,973 117,525,115 119,833,677
India 29,221,000 29,135,000 30,477,000 30,808,000 30,460,000 31,504,000 26.3%
Americas 32,750,031 32,127,608 30,106,331 31,646,464 32,225,179 31,499,909 26.3%
China 10,901,066 11,197,559 11,525,817 11,577,938 11,998,329 11,872,600 9.9%
Indonesia 9,496,058 7,007,125 7,162,685 7,264,379 7,280,659 8,182,756 6.8%
Brazil 6,859,227 6,625,211 6,584,967 6,723,590 6,831,874 6,637,308 5.5%
Ecuador 7,194,431 6,529,676 6,282,105 6,505,635 6,583,477 6,023,390 5.0%
Philippines 5,840,124 5,829,142 6,041,369 6,144,374 6,049,601 5,955,311 5.0%
Guatemala 3,796,115 3,775,150 4,082,703 4,207,229 4,343,827 4,476,680 3.7%
Angola 3,595,306 3,718,579 3,915,948 3,954,036 4,036,959 4,115,028 3.4%
Tanzania 3,584,532 3,164,911 2,533,674 3,395,499 3,406,936 3,419,436 2.9%
Costa Rica 2,470,437 2,659,710 2,537,743 2,595,229 2,249,400 2,528,721 2.1%
Mexico 2,262,028 2,384,778 2,229,519 2,354,479 2,399,490 2,464,171 2.1%
Colombia 3,705,343 3,691,163 2,020,915 2,567,169 2,914,419 2,434,900 2.0%
Peru 2,145,361 2,073,995 1,981,047 2,194,858 2,252,172 2,314,514 1.9%
Viet Nam 1,943,337 1,941,935 2,045,352 2,087,275 2,194,247 2,191,379 1.8%
Kenya 1,290,150 1,288,588 1,434,162 1,414,176 1,715,770 1,856,659 1.5%
Source: USDA

13
 The same to production, the leading fruit exported in the world is Banana. The leading position of
Banana in the world export market is caused by its low purchasing price and utilization as basic food
crop in many countries. The leading world exporter is Ecuador and then followed by Philippines and
Guatemala as shown in the following table.

Table 4.7: World export of banana

2016 2017 2018 2019 2020
Exporters Value Value Value Qty Value Value
Qty (Tons) Qty (Tons) Qty (Tons) Qty (Tons)
(000,USD) (000,USD) (000,USD) (Tons) (000,USD) (000,USD)
World 137,264,992 10,745,052 178,313,792 11,557,122 74,394,425 12,659,775 No Qty 14,093,215 27,266,468 14,101,101
Ecuador 6,176,269 2,742,005 6,589,366 3,038,742 6,890,874 3,238,284 6,881,117 3,310,588 7,265,065 3,682,436
Philippines 1,397,451 618,830 1,663,430 687,376 3,388,832 1,504,777 4,351,975 1,930,879 3,725,774 1,608,278
Guatemala 2,418,279 789,908 2,580,267 882,341 2,595,490 901,164 2,698,959 944,511 2,639,806 930,136
Costa Rica 2,370,238 996,815 2,529,679 1,044,313 2,488,769 1,030,914 2,384,821 999,702 2,628,146 1,082,970
Colombia 1,960,565 914,966 2,002,602 918,095 1,854,551 866,179 2,009,965 934,276 2,175,030 990,338
Belgium 1,197,308 983,409 1,302,575 1,050,208 1,180,352 959,540 926,199 880,215 923,586 745,947
Netherlands 466,309 397,553 576,550 483,429 665,163 561,401 814,127 685,262 815,920 743,206
U.S.A. 592,358 431,308 614,286 445,163 602,081 444,470 617,004 450,399 618,474 448,700
Honduras 659,643 259,166 649,111 249,948 634,517 251,095 594,049 237,109 561,167 286,182
Côte d'Ivoire 384,277 140,673 415,143 156,878 404,184 174,397 449,618 168,617 457,379 160,560
Dominican 401,791 246,619 338,467 282,113 342,938 210,017 402,776 251,610 385,799 246,067
Myanmar 109,506 48,052 233,291 69,640 190,549 131,756 410,760 396,519 358,340 367,375
Germany 358,607 335,725 343,427 316,220 247,729 239,488 282,988 242,487 301,866 249,422
Cameroon 295,180 65,433 275,717 62,822 217,177 61,567 300,410 277,932 299,630 279,008
Viet Nam 91,545 44,312 90,820 64,158 128,019 104,332 255,683 175,855 293,067 162,186
Source: ITC
The same to production and export, banana accounts the highest fruit import globally. World import
of banana reached its pick in 2016 and then significantly decreased in 2017. Starting from 2018,
slight increasing has show in quantity as depicted in the following table. The leading world importer
is U.S.A and then followed by China and Russia.

Table 4.8: World import of Banana

2016 2017 2018 2019 2020
Importers Value Value Value Value Value
Qty (Tons) Qty (Tons) Qty (Tons) Qty (Tons) Qty (Tons)
(000,USD) (000,USD) (000,USD) (000,USD) (000,USD)
World 32,401,751 14,717,715 23,551,011 15,816,553 23,739,513 16,237,002 24,118,499 16,089,494 24,530,424 16,395,151
U.S.A. 4,951,573 2,630,513 5,196,146 2,757,560 5,167,748 2,827,322 5,053,869 2,756,348 5,077,041 2,799,876
China 887,192 585,466 1,039,138 579,544 1,544,609 896,812 1,939,973 1,094,356 1,747,398 933,264
Russian 1,355,992 999,194 1,544,059 1,140,356 1,556,679 1,154,742 1,512,447 1,119,904 1,515,717 1,116,769
Germany 1,403,990 1,018,300 1,419,973 1,016,509 1,263,540 950,068 1,342,078 1,006,883 1,355,313 1,046,919
Belgium 1,317,297 1,230,851 1,439,567 1,393,924 1,359,432 1,342,993 1,180,634 1,085,090 1,203,577 1,158,245
Japan 957,057 925,268 986,148 849,307 1,003,370 913,126 1,045,828 959,265 1,068,680 988,411
Netherlands 655,865 428,072 722,858 677,771 870,777 814,713 1,015,891 895,243 1,038,250 923,850
U.K. 1,212,115 831,081 1,230,596 824,563 1,136,884 769,663 1,074,657 745,311 1,035,409 727,750
Italy 730,412 492,344 774,876 524,131 800,763 565,441 757,149 519,995 821,189 541,212
France 572,857 455,988 690,628 545,036 751,564 620,733 698,931 561,065 737,703 622,243
Canada 587,979 409,119 598,147 422,596 598,691 423,674 603,090 427,406 617,034 436,827
Poland 355,813 249,384 466,226 299,642 487,703 322,542 457,622 291,345 560,009 333,305
Argentina 434,699 210,230 489,221 239,925 450,754 218,051 434,698 196,080 470,322 243,359
Source: ITC

14
III.2. Ethiopian Coffee Market Situation
III.2.1. Demand of Green Coffee Bean in Ethiopia
Domestic Demand
Ethiopia is not only the icon of coffee, but it thrives on coffee. Coffee is closely associated with the
Ethiopian culture. Most people in the country start their day by taking a cup or two of coffee in the
morning. Ethiopia is one of the only producing countries with a strong coffee drinking culture. A
large proportion of coffee consumption in Ethiopia occurs on farm, which makes levels of
consumption difficult to assess. According to USDA report on average 44% of national coffee
Production consumed locally.

Table 4.9: Domestic consumption of coffee (tons)

Description 2016/17 2017/18 2018/19 2019/20 2020/21 Average
Production 416,580 423,300 441,000 448,500 456,000 437,076
Growth rate 2% 4% 2% 2% 2.5%
Domestic Consumption 186,000 189,000 191,580 188,400 213,000 193,596
Growth rate 2% 1% -2% 13% 3.3%
Consumption Share 45% 45% 43% 42% 47% 44%
Source: USAD

Domestic Demand Projection

According to the above information, local consumption is growing by 3.3% and this rate is used to
estimate the domestic coffee demand for the coming 5 years as shown in the following table.

Table 4.10: National green Coffee beans Demand Projection

Years Domestic Coffee Demand Projection (tons)
Base Year 213,000
2021/22 220,029
2022/23 227,290
2023/24 234,791
2024/25 242,539
2025/26 250,543

Export Demand
Coffee is major exportable crop in Ethiopia; nearly 48% of foreign currency is earned from coffee
export. According the data obtained from USDA, the Ethiopian export of green bean coffee growing
by 1% per year on average in the last six years, see the following table.

15
Table 4.11: Export Growth of Green Coffee Bean of Ethiopia
Description Quantity (tons) Growth Rate
2016/17 231,180
2017/18 233,580 1%
2018/19 250,440 7%
2019/20 248,100 -1%
2020/21 240,000 -3%
Geometric Mean 1%

This volume shows only the share of Ethiopian coffee in the world market exported but not the
capacity, which can increased more than this per annum because of several reasons of Ethiopian
coffee’s characteristics. The only question frequently asked by the importer is the standard and way
for agricultural practices. However, the future projection is calculated using 1% growth rate.

III.2.2. Supply of Green Coffee Been in Ethiopia

It is difficult accurately to estimate the national production of coffee, because a large proportion of
the harvest gathered from semi-forest and individual farmers' plot that not properly recorded.
However, United States Foreign Agricultural Service office of Global Analysis has estimated an
average annual production growth of 4 percent every year for the last 5 years. This increment
assumed to continue for the future too since Ethiopia established new market partnership with Saudi
Arabia, Japan, Denmark, China, etc. The date obtained from different source about the supply of
green coffee in Ethiopia are showing more or less the same figure, see the following table.

Table 4.12: Projection of the National Green Coffee Bean Production (tons)
Year 2016/17 2017/18 2018/19 2019/20 2020/21 Average
Production 416,580 423,300 441,000 448,500 456,000 437,076
Growth Rate 2% 4% 2% 2% 2.5%

Based on the above growth rate and the existing supply situation, the future supply projection is
calculated.

III.2.3. Demand- Supply Gap Analysis

Green Coffee Demand Supply of Green Demand-Supply
Year
Domestic Demand Export Growth Coffee Bea Gap
2020/2
213,000 246,000 437,076 21,924
1
2021/2
220,029 248,460 448,003 20,486
2
2022/2
227,290 250,945 459,203 19,032
3
2023/2
234,791 253,454 470,683 17,562
4
2024/2
242,539 255,989 482,450 16,078
5
16
 2025/2
250,543 258,549 494,511 14,581
6

As shown in the above table, the demand-supply gap analysis indicates that demand of green coffee
bean exceeds that of supplies. The export demand is promising with the countries those are currently
have strong interest on Ethiopian green coffee bean in the world market like Japan, South Africa,
Saudi Arabia, Scandinavian Countries, Russian Federation, Algeria, Ukraine, Korea, Republic,
Australia Serbia and China. In Addition to this, a right obtained to set standard and certificate by
Ethiopian Commodity Exchange Authority Starting from June 2010 by itself provided good
opportunity for both Ethiopian Exporter and Producer. Before that, this is done by American
institute of Coffee at New York global Market.

III.3. Market Situation of Ethiopian Banana

Ethiopian banana market can be segmented into foreign and domestic market. The domestic market
accounts the lion share of the total market for banana fruits that is about 98%, whereas the export
market share is very insignificant that accounts about 2%.

The major bottlenecks for the poor export performance of Ethiopian growers are high airfreight cost,
poor quality in line with backward production system, lack of modern temporary storage and cold
chain.

III.3.1. Demand for Fresh Banana Fruits

The consumption for banana fruit is primarily derived from table fruit consumers, exports side and
agro processing industries.

a. Export of banana fruit

Ethiopia has exported banana fruits to different countries. From total export of Ethiopia, Djibouti
export takes the major share. Among the fruits exported to Djibouti, Banana is the first export fruit
in volume. In general, export volume of Banana has shown increment by 10% between the years
2016 and 2020.

Table 4.13: Export trend of Ethiopian banana fruits

2016 2017 2018 2019 2020
Importers Qty Value Qty Value Qty Value Qty Value Qty Value
(Tons) (,000USD) (Tons) (,000USD) (Tons) (,000USD) (Tons) (,000USD) (Tons) (,000USD)
World 13764 2846 11485 2367 17320 3485 15201 3129 20386 3944
Somalia 8308 2002 6112 1497 9751 2435 8348 2210 12044 2910
Djibouti 5455 844 5364 822 7549 1038 6852 917 8342 1034
Source: ITC

17
The export demanded of banana is projected by taking in to account the export amount and annual
growth rate. Regarding industrial demand, there is no any industry that uses banana as raw material
so far.

18
b. Domestic Consumption of Banana
The domestic consumption of banana fruit is determined using Apparent Consumption Approach,
which is calculated by subtracting export from the sum of domestic production and import.
However, fresh banana fruits by its perishable nature, the total production is not fully supplied to the
consumers since there is significant lose along the value chain. Post-harvest losses of banana vary
greatly due to production area distance and seasons.

The loss of banana fruit occurs due to biological & environmental causes, and socioeconomic
factors. Biological and environmental causes of deterioration include respiration rate, ethylene
production and action, rates of compositional changes (associated with color, texture, flavor, and
nutritive value), mechanical injuries, water stress, sprouting and rooting, physiological disorders,
and pathological breakdown.

As far as socioeconomic factors is concerned, wholesale markets in most of the developing countries
are in desperate need of improvement in terms of facilities and sanitation. These are overcrowded,
unsanitary, and lack adequate facilities for loading, unloading, ripening, consumer packaging, and
temporary storage. This is true in Ethiopian context as it is observed in many of wholesales fruit
markets like ‘PiassaAtikelteTera’.

In Ethiopia as most of developing countries, roads are not adequate for proper transport of
horticultural crops. Transport vehicles and other modes, especially those suited for fresh horticultural
perishables, are in short supply. The human element involved directly in harvesting, packaging,
transporting, and marketing in our country as most of developing countries have limited or no
appreciation for the need for, or how, to maintain quality.

Considering the above facts, assessment is made in Addis Ababa on wholesaler, retailer markets, and
farms to arrive at the percentage loss of fresh fruit along the value chain. According to this study,
banana fruit post-harvest loss percentage in Ethiopia is 38%.

Per-capita consumption (PCC) for each fresh fruit is determined by equating the population trend of
the country with the consumable domestic production (after deducting of the loss from the
produced), the industrial requirement, amount imported and exported.

PCC = (Consumable domestic production + Import) – (Export + Industrial Consumption)

Number of Population

19
 Table 4.14: Per-capita Consumption analysis for selected crops
Years
Banana Average
2016 2017 2018 2019 2020
95,996,09 98,530,39 101,131,59 103,801,47 106,541,83
Population 101,200,280
9 6 9 3 2
Total Production (Tons) 538,302 493,602 501,529 539,443 898,355 594,246
Less: Post harvest loss (Tons) 204,555 187,569 190,581 204,988 341,375 225,814
Consumable amount (tons) 333,747 306,033 310,948 334,455 556,980 368,433
Add: Import (tons) - - - - - -
Less: Export (tons) 13,764 11,485 17,320 15,201 20,386 15,631
Industrial Demand - - - - - -
Per capita consumption 0.003333 0.002989 0.002903 0.003076 0.005036 0.003467
Change in Per-capita consumption -10% -3% 6% 64% 11%

c. Total Demand Projection

Based on the above analyzed facts and figure, future demand of banana fresh fruits projected as it is
shown in the following table.

Table 4.15: projected demand for selected fresh fruit in Ton

Years
Description
2021 2022 2023 2024 2025 2026 2027
Projected Population 109,354,536 112,241,496 115,204,671 118,246,074 121,367,770 124,571,879 127,860,577
Per capita consumption (tons) 0.003848 0.0042717 0.0047416 0.005263 0.005842 0.006485 0.0071980
Domestic demand (tons) 420,837 479,461 546,252 622,347 709,042 807,815 920,346
Export Demand (tons) 22,425 24,668 27,135 29,849 32,834 36,117 39,729
Total demand (tons) 443,262 504,129 573,387 652,196 741,876 843,932 960,075

III.3.2. Supply of Banana Fruits in Ethiopia

The production of banana increased by 14% for the year 2016 to 2020.

Table 4.16: Total production by fruit type (tones)

Year
Type of Fruit Average
2016 2017 2018 2019 2020
Bananas 538,302 493,602 501,529 539,443 898,355 594,246
Growth rate -8% 2% 8% 67% 14%
Source: FAO Stata

In projection of the supply situation of domestic production, the wastage amount should be deducted
since the demand is determined at the consumers end. The supply projection of banana fresh fruit is
given in the following table by taking in to account the average production as base line.

Table 4.17: Total projected Supply of banana

Description Years 2021 2022 2023 2024 2025 2026 2027
Total domestic production (tons) 677,440 772,282 880,401 1,003,657 1,144,169 1,304,353 1,486,962
Post-harvest loss (tons) 257,427 293,467 334,552 381,390 434,784 495,654 565,046
Total Supply (tons) 420,013 478,815 545,849 622,267 709,385 808,699 921,916

20
III.3.3. Demand and Supply Gap of Banana
In general, the total demand supply gap analysis of selected fresh fruit in Ethiopia shows a positive
result over the projection years.

Table 4.18: Projected Demand-Supply gap

Years
Description
2021 2022 2023 2024 2025 2026 2027
Demand 443,262 504,129 573,387 652,196 741,876 843,932 960,075
Supply 420,013 478,815 545,849 622,267 709,385 808,699 921,916
DD - SS Gap 23,249 25,314 27,538 29,929 32,491 35,233 38,159

III.4. Value Chanel of Coffee

Ethiopian coffee production is dominated by smallholder farmers that having 1 to 2 hectares land
holding. Following this, the market participants in coffee value chain are numerous and it includes
smallholder coffee farmers, commercial farms, local collectors, processors, service cooperatives,
unions, exporters and various government institutions. All the above participants are required to
have specific licenses for their respective functions. Local collectors have to sell for wholesalers and
wholesalers deliver their coffee to the action but are not permitted to export it. Exporter and local
roasters are permitted to buy coffee from the auction market. They are also obliged to send all export
quality coffee to foreign market. However, since 2001, unions and commercial coffee farms have
been allowed to by-pass coffee auctions and sale directly to export market. In Ethiopia major portion
of coffee also consumed and smuggled informally by local collectors as it is depicted by red line.
The local roasters and grinders allowed to supply grinded low grade coffee to local market by
purchasing from ECX market.
Commercial or Peasant Coffee Farmers

Illegal
Local Collectors Smuggling
Collectors

Red Cherry to Dry Cherry to Hulling

Washing Station Machine

Exporters via ECX Local Roasters &

Grinders

Retail Shops
Cooperative
s

Export Market Domestic Consumption

Figure 4.1: Market Channel of Green Coffee Bean of Ethiopia

21
III.5. Market Competitors
Local competitors have no significant impact on export market as the global coffee price is set by
New York market and our local exporters are price takers. However, the major expected from local
competitors is competition for green coffee bean. In this regard, the owner of this project, Trading
PLC is placed at first rank in exporting coffee for the last two years according to the report of
Ministry of Coffee as depicted in the following table trading PLC is also the only one that has coffee
farms among ten top exporters listed in the table below. Moreover, the company is again at first
place in having many washing station and hulling machine in the country.

Table 4.19: Top coffee exporters in Ethiopia

2013 2014
Exporters Name Sum Of Qty Sum Of Value Sum Of Qty Sum Of Value
(Ton) In Mill Usd (Ton) In Mill Usd
i 24,194.97 81.10 23,159.45 101.32
Tracon Trading Private Limited Com 10,859.04 48.09 15,467.10 84.17
Hadeed Trading Private Limited Comp 13,581.60 32.23 19,608.95 75.41
Bnt Industry & Trading P.L.C 3,652.79 20.73 5,728.86 39.12
Daye Bensa Coffee Export Private Li 7,524.96 31.14 6,311.83 35.77
S.A Bagersh Private Limited Company 4,142.40 20.25 6,329.43 34.59
Adulina Coffee Exporter Plc 6,775.20 25.00 6,489.78 33.50
Arfasa General Trading Plc 6,554.74 20.04 7,129.38 29.55
Snap Trading & Industry Private Lim 2,474.74 12.81 5,055.21 28.33
Zelaleme Eshetu G/Amanueil 2,281.80 5.36 6,495.60 25.92
Source: Ministry of Coffee

III.6. Marketing strategy and Price Trend

III.6.1. Market Arrangements and Price of Coffee
In general, the prices of crops vary from region to region and from season-to-season. It is also
dependent on the quality of the products. Prices are lower during harvest season and reach their peak
during the planting season. Prices are also lower at the farm gate and increases with distance
approaching to its highest-level when nearer to consumption centers mainly due to the transportation
and handling costs. Similarly good quality product fetches higher price than the poorer ones.

Market and Marketing arrangement of Green Coffee Bean can be classified into domestic and
foreign. Coffee supplied to foreign market should pass through the standards of ECX and go to
auction center at Addis Ababa, Dire Dawa and Jimma auction center that are conducted by Ethiopian
Commodity Exchange. This authority secured both the producer and buyer based on world coffee
market. The coffee been not fulfilling the export market can be sold to local market with consent of
ECX.

22
In the other way, commercial coffee farms have a right to export directly to foreign market after
passing the ECX quality standards by searching importers according to current Ethiopian coffee
marketing practice. The envisaged project is also planned to follows direct export marketing
strategy.

Coffee prices exhibited high inter year variations from season to season. These variations are a
combined effect of the factors reflecting domestic supply and the periodic trends of the global coffee
demand and supply situations. The variation can be seen between different varieties and grades of
the coffee. Some varieties like the Yergacheffe and Sidama command considerable premium in the
International markets. According to the National Bank of Ethiopia annual report of year 2019/20, the
average price of green coffee bean decreased from USD 3.52 per kg in year 2017/1806 EC to USD
3.16 in year 2019/20 EC because of devaluation.

However, the envisage project is planned to sale the farm product directly to more than 24
different international coffee buyers who are trading coffee across the world and
business partners of the company. Some of international reputed coffees importing
companies working PLC are Starbags, Nestle, Luckin coffee, UCC, Key Coffee, Coastas coffee,
Tchibo, etc. The company current average sales price of natural and washed coffee to
these companies is USD 3.5 and USD 3.8 respectively. This price is also used in this
study in order to project the project revenue.

III.6.2. Market Arrangements of Banana

The marketing arrangement of current domestic fruit market can be seen in two ways. Commercial
private and state farms are selling their products to whole seller whereas peasant farmers are selling
their products to collectors or merchants.

In the first case, fruits are sold at farm get price by bid. Based on the bid result contractual
agreement is made between the buyer and the seller. The contract stipulates about the payment
schedule, unit price and other necessary issues. In the second case, the merchants, associations and
unions/ are purchasing either from farms at farm get price or the farmers transport their products to
the nearby market using their own local transportation means. In this case the price is determined
mostly by merchants as fruits are perishable. The envisage farm always sales for the whole sellers
collectors at Birr 1000 per quintal.

23
IV. THE PROJECT AREA PARTICULARS
IV.1. The Projects Location and Accessibility
IV.2. The Socioeconomic Situation of the Project Area
The main ethnic group around this project areas is the Guji Oromo and their livelihood of the
residence is established on farming and animal husbandry. The farm mainly relies on mechanization
and utilization of modern technology for major operations in order to reduce the impact of daily
laborer shortage in project area.

24
IV.3. Topography, Vegetation and Climate
According to the preliminary assessment, the altitude and slope gradient of the area are suitable for
growing different crops (Coffee, Enset, Maize, Spices, etc). Most of the land is plane with gentle
slope covered with medium forest. Thus, the project planned to clear the forest and to plant coffee
without shed.

The climatic conditions of the project areas exhibit the type of ‘Woinadega’ agro-ecological zone.
Like most of the areas in South Ethiopia, it has a longer rainy season as compared to those in the
north and eastern parts of the country though it is erratic. According to the information obtained
from local farmers, the rainfall in the project area follows unpredictable patterns. The data obtained
from the WorldClim Global Climate Data website also confirms this fact.
‘Meher’ season rain:
 Rain starts in Middle of August and ends in November.
 December to February is dry whereby harvesting and threshing of ‘Meher’ season crops are done.

‘Belg’ season rain:

 Rain starts in March and ends in May. The rain is on and off during the month of June and used for
harvesting and threshing of ‘Belg’ season crops. Mostly July and half of August are dry for land
preparation for 'Meher' cropping.

IV.4. Water Resource and Soil

There is Perennial River called that flow at the boundary of the farmland. The farm also is using
River for irrigation and borehole for potable water and as backup during drought years. The soil
nature is dominantly Walkely and Black soil and reaches with humus similar to most forest soil.
According to Horticoop Ethiopia Soil and Water Analysis Laboratory report, the PH of the soil is
6.00 and organic matter portion is 1.3%. The soil fertility result of the analysis shows that low for
phosphorus, moderate for Nitrogen and Potassium, therefore, the farm planned to use fertilizer
through fertigation system in coffee growing.

IV.5. Agricultural Practice of the Project Area

IV.5.1. Crops Growing in the Project Area
According to the information collected from the farmers and agricultural expertise in both project
areas through interviewing, Coffee, different Spice, Maize and Banana are major crops proved
performing well.

25
IV.5.2. Major Challenges of the Project Area
Wild Animals
Wild animals are not explained as major problems in both project areas. The only wild best of the
area is Monkey and can be controlled easily using cultural means.

Pests
Local farmers describe especially storage pests as the main challenges for annual crops. Maize is
particularly susceptible to pests during both harvesting and storage. To prevent damages from pests
late harvesting or chemical treatments at storage is required. Regarding coffee, no economically
important insect is registered in the area. Regarding disease, there is CBD virus that affect coffee
berry. However, this disease can be controlled by using CBD resistance variety.

Weeds
In general, the area is well known for quick and frequent growing of soft weeds because of wide
rainfall season. Thus, local people to control the impact of weeds on crops use frequent manual
slashing.

IV.5.3. Crop Calendar of the Project Area

According to information obtained from the project area, land clearing for new land starts from
December and continue up to the End of April. Then field preparation follows side by side starting
from December in both farms. Then, planting of coffee begins from August and continue up to
September in traditional practice. However, nursery operation one year head of plantation since
rising of coffee seedling takes solid ten months. Maintenance work of Coffee continues throughout
the year because of perennial nature of coffee plant. The usual harvesting time of red cherry in the
area is between October and December, whereas, natural coffee extends up to end of June.

26
V. TECHNICAL STUDY
V.1. Selection of Crops
Selection of crops for this farm is done based on merit and demerit of the crops with respect to
marketability, return, labor requirement, impact on the forest and venerability to disease and pest.
Table 6.1 shows the merit and the demerit of the crops growing in the area in relation to the above
decisive factors.

Table 6.1: Merits and demerits of crops

Crop Environmental Vulnerability to Labor
Marketability Performance
type Impact different condition requirement
Coffee Reliable market Minimum, since it Capital intensive Highly productive Labor
internationally need shade Agronomically intensive
familiar
Maize Has wide market High, since it Vulnerable to pest at Highly productive and Labor
but inconsistent need deforestation pre & post harvest Agronomically intensive
price Attacked by wildlife familiar
Spice Reliable market Minimum, sine it Sensitive to rain at Very productive labor intensive
globally & locally, need shade harvesting time Locally tested at harvesting
and growing price
Banana Competitive High, since it Venerable to wild Highly productive and Labor
market for Banana need deforestation beasts Agronomically intensive
familiar

Taking into consideration the above factors, the company planned to grow the crop having
established international market and less impact on the environment that is coffee. Moreover, in
areas where not suitable, the farm planned to grow banana for local market.

The major operations required to be implemented for production of green coffee bean and banana
fruit in these farms are:
 Land preparation  Seedling Preparation
 Farm organization and road construction  Plantation
 Construction of farm stead structures  Young plant maintenance
 Installation of Irrigation System  Matured plant maintenance
 Mechanization of farms  Harvesting and Processing
 Selection of variety  Storage and transporting

These activities can be broadly classified in to land development, farm facilities, farm establishment,
matured coffee maintenance, harvesting and processing, and storage and packaging.

V.2. Land Development

27
V.2.1. Coffee Plantation
The major operations under land development for coffee plantation are farm, terrese making road
construction and land preparation for coffee plantation.

A. Land Preparation
Tree felling, de-stoning, uprooting of old coffee, chopping, trash removal, leveling, heaping and
disposal are the major activities which have to be considered during land cleaning so as to make
suitable for operation in the area where covered with forest like the envisaged farms. In this farm,
300 hectare of land has been cleared by machinery so far in order to remove the existing vegetation
totally. During land cleaning:
 All trees will be removed for proper utilization of machineries for harvesting, definite raw
plantation according to the contour and installation of drip irrigation.
 Stumps are dig out by back loaders and disposed with trashes using machinery.
 The land should be leveled roughly for field preparation using machinery.

It is known that shade tree helps to protect the coffee plant from excessive heat and reduces its
exposure to direct sunshine. In addition, shade trees can act as windbreaks and reduce the
aggressiveness of some weeds. However, in this farm growing of coffee without shed tree is
practiced by implementing proper spacing and choosing the right coffee species that tolerate
excessive heat and direct sunshine.

Growing coffee without shed reduces competition of nutrients, water and light with the coffee plants
in addition to providing opportunity to utilize machinery in different operation including harvesting.
In this method, the following additional operations are practiced in order to compensate the
advantages from shed trees.
 Virgin land plowing and disking is done before plantation for proper rooting of the crop.
 Bed preparation and plastic mulching also worked for purpose of moisture retaining, weed and
soil disease controlling.

28
B. Terracing
In sloppy areas, ridges would be constructed along the contour to avoid soil erosion. Terraces can
greatly reduce soil erosion, increase infiltration of rainfall, and make the land more easily managed
during normal agricultural operations.

C. Farm Organization and Road Construction

The farm has constructed 15km gravel road having 7m width from main road to the farm and in farm
roads so far around the coffee plant of 25 ha parceling for smooth machinery movement. All
roadwork had worked using machinery, and cost of road construction and required machineries
presented in assumption part. At completion of the project implementation, the farm will have two
unit farms with size of 300 hectares and that organized by 25 hectare blocking.

V.2.2. Land Development for Banana

A. Land Preparation
The development work for banana is also more or less similar to coffee except bed making and
mulching operation that not worked for banana. Major activities worked under land development are
land clearing, de-stoning and rough leveling. The land development work of the farm planned to be
executed using different machinery.

B. Block Preparation and Farm Road

The banana farm is included under unit farm one as the land size allocated for banana is not
sufficient to establish at unit farm level. The banana field is organized in two blocks having 20
hectare size for proper agricultural management based on the standard of banana production.
Following the blocking of the farm, 7 m wide area is left between each block for farm road and
irrigation line installation, of which 4 m farm road constructed with gravel road.

C. Banana Variety Selection

Different banana clones were adapted in Melkassa research center for test by importing from the
Biodiversity International and Kenya in addition to some locally collected. Of which banana clones,
four dessert (Williams-1, Grande Naine, Robusta, Butuza) and four cooking (Cardaba, Kitawira,
Matoke, Nijiru) varieties were released in 2006 for wider production. Moreover, four banana
varieties, namely Dwarf Cavendish, Giant Cavendish, Poyo and Ducasse Hybrid introduced before
two decades in the country and still widely under production. Among these varieties, the farm has
planned to grow Dwarf Cavendish variety that most adapted in Gamo area.

29
 V.3. Farm Facilities
V.3.1. Building Construction
Office, canteen, garage, laborer shed, staff residence, guesthouse, and product and input storage are
vital for coffee farm. The numbers of facilities built and planned to be built are given in the
following table (Table 6.3). The cost of each building presented in the assumption part.

Table 6.2: Type and size of building and construction

Sr.
Type of Investment Unit 2020/21 2021/22 2022/23 Total Purpose
No.
1 Nursery, net house No. Unit Farm 1 1 2 To raise coffee seedling
2 Main pump station No. Unit Farm 1 1 2 Shed for main pump station
3 River pump station No. Unit Farm 1 1 2 Shed for pump station at river
4 Reservoir No. Unit Farm 1 1 2 To store 4,500,000 liter irrigation water
5 Diversion wear No. Unit Farm 1 1 2
6 Workers residence with canteen Shelter for permanent workers
Block 01 | management staff No. Unit Farm 2 2
Block 02 | supervisors No. Unit Farm 2 2
Block 03 | supervisors No. Unit Farm 2 2
7 Office block 04 No. Unit Farm 2 2 Working place for unit farm management
8 Ground weighing bridge No. 1 1 To control output and input of the farm
9 Fuel station Set 1 1 Fuel supply for machineries & vehicles
10 Garage and workshop | block 05 No. Unit Farm 2 2 Machinery and shuttles maintenance
11 General store | block 06 No. Unit Farm 2 2 Fertilizer, chemical & farm tools storing
12 Guest house | block 07 No. Unit Farm 1 1 Accommodation place for farm gusts
13 Main office | block 08 No. Unit Farm 1 1 Head quarter for farm management
14 Clinic | block 09 No. Unit Farm 1 1 To provide health service for workers
15 Washing Pool No. Unit Farm 2 2 Pulping coffee red cherry
Mucilage pool No. Unit Farm 2 2
Asmara pool No. Unit Farm 2 2
16 Dry mill machine house No. Unit Farm 1 1 Hulling dry coffee cherry
17 Fence work and Entrance M2 78,643 33,704 112,347 To secure the farm
18 Guard house & site electrical LS -

V.3.2. Machineries and Farm Implements

 Tractors and Accessories
Coffee plantation requires tractors type ranges from 95 – 175 HP for different operation. The project
planned to purchase the following machineries and accessories for the following table.
 Four 175 HP tractors will be purchased for deep plowing and sub soiling in order to create appropriate soil
media for root development and breaking of panel formation as the result of intensive machinery
movement.
 Four 150 HP tractors will be purchased to operate bed maker having 80 cm width and roller that shape the
bed at the top with one month time.
 The project will buy three 125 HP tractors for mulching, plowing, disking and drip installation operation.
 The project will buy seven 95 HP compact tractors for transportation of coffee cherry from field to roll up
container box, within raw crop maintenance, cultivation and spraying operation.
 One grader and one roller will be bought for road maintenance throughout the year in all weather condition.

30
 Coffee Harvesting Machine
The project will buy two self propelled red coffee cherry harvesting machines as red cherry
harvesting has to be concluded in short period that not more than two month. These machines will
harvest from the coffee plant height 1.20 to 4.5 m height and width of 2.2 m using shaker system
having 1296 roads with 1000 rotation per minute. The machine have retractable blades collector and
gear chain with splint perforated metal and plastic conveyors system as depicted in the following
figure.

Figure 6.2: Coffee harvesting machine

Moreover, the project planned to purchase PTO driven blowers to push the dry cherries under coffee
trees to the center of the place between plant raw, and harvesting machine that collect the trash from
ground and clean the dry cherry from other garbage. The company will purchase additional machine
that push the trash back to coffee tree in order increase the humus content of the soil. To finalize the
operation within fifteen days in order to leave the field for other operation, the project planned to
purchase two blowers, five coffee harvesting and cleaning machines, and two trash redistributors as
shown in the following picture.

Figure 6.3: Coffee harvesting machine

31
The following table shows the planned machineries for the farm. The price of the machinery
presented in the assumption part.

Table 6.3: Farm machinery requirement

Existing Planed
Type Machinery and Equipment Unit Purpose of the machinery
2020/21 2021/22 2222/23
MF Tractor (175 HP) No. 4 Land preparation
MF Tractor (150 HP) No. 4 Land preparation
MF Tractor (125 HP) No. 3 Farm maintenance work in light soil
MF Tractor (95 HP) No. 6 Product transport and spraying
Special Tractor Trailer No. 8 Input & cherry transport within the farm
Jacot coffee harvester No. 2 Coffee harvesting
Jacto Coffee Harvester Attachment No. 15 Convey harvested coffee to trailer
Grader No. 1 Farm road work and maintenance
Roller No. 1 Farm road work and maintenance
Disc harrow No. 3 Land preparation
Reversible Plow No. 3 Land preparation
Mulching machine No. 2 To cover with plastic mulch
Subsoiler No. 2 Deep plowing & pun breaking
Side & top purring machine No. 4 To shape coffee tree development
Tractor mounted orchard sprayer No. 2 To spray chemicals
Blower ASM-1S No. 2 To push dry coffee from coffee tree
Blower ASM-2S No. 2 To push dry coffee from coffee tree
Harvester Master Café 3E No. 5 To harvest dry coffee from ground
Harvester Master Café 3 No. 2 To harvest dry coffee from ground
Leveler NR-18 No. 7 To shape plantation beds
Dump Cart CTG 4500 No. 6 For coffee product transport
Spare parts LS For harvesting machineries maintenance
Hulling machine set No. 1 Natural coffee processing
Pulpier set No. 2 Washed coffee processing

 Pulping Machine
Pulping machine with five discs and pre-grader having a capacity of 180 qt/hour is used in wet
coffee processing plant. This machine is designed to carry out the duty of the pre-fermentation
grading. Its function is washing and grading of pulped beans. It is chief, economical in water and
labor requirement, and consistent in sorting of coffee grades.

 Waste Circulation System

Wastewater circulation system mainly requires two pumps, the first one to lift the wastewater with
pulp from reservoir to separation structure and the second one back to recirculation water tank.

 Hulling Machine
Hulling machine with a capacity of 16 Qt clean coffees per hour will be installed for dry coffee
processing. This machine is designed to crash and clean brown coffee. The machine producesses
graded and cleaned green coffee for export.

32
V.3.3. Furniture and Fixtures
To facilitate the office work, the project will have tables and chairs, shelves, filing cabinet, desk top
computer, desk calculators, safe box, punchers, staplers, paper trays, as starting and will increase as
will be deemed necessary in the future. The following table shows the planned office furniture and
fixtures required for the farm. Their respective price is presented in assumption part.

Table 6.4: Office furniture and equipments requirement of the farms

Quantity
Type of Office Furniture and Equipment Units
Existing Plan
Managerial Table PCS 2
Manager Chair PCS 2
Secretary Table PCS 2
Secretary Chair PCS 2
Office desk PCS 2
Swivel chair PCS 6
Guest chair PCS 12
Shelves PCS 6
Filling cabinet PCS 6
Coffee table PCS 2
Guest room bed PCS 1
Guest room Maters PCS 1
Guest room Sofa PCS 1
Guest room dying table set PCS 1
Guest room Closet PCS 1
Guest room Chair PCS 4
Guest room table PCS 4
Computer PCS 6
Printer and Copy machine PCS 2
Disk Top calculators PCS 2
Safe Box PCS 2
LED TV PCS 2
Dish with receiver PCS 2
Solar PCS 2
Staplers PCS 10
Punchers PCS 10
Paper trey PCS 10

V.3.4. Transportation Facilities

The company will buy V8 and land cruiser vehicles for frequent field trip to farm with international
buyers, transportation service of farm management respectively, and motorcycles for technical staffs,
field supervisors, and operational experts. Moreover, Iveco tracker with a hook loader 6 4 - gvw41
ton, wheelbase 4500 w/hub with Roll on - roll up container box will be purchased for product
transport from trailer to processing site during harvesting (see figure 6.3).

33
Figure 6.3: Iveco track with container box

The following table shows the vehicle requirements of the projects. Price of each vehicle presented
in the assumption part.

Table 6.5: Vehicle requirement of the projects

Quantity
Vehicle Unit Purpose
Existing Plan
V8 vehicle No. 1 Frequent field trip to farm with international buyers
Land cruiser No. 1 Transport service for management
Ivico truck No. 5 Transport from the farm to processing plants which
are established at some distance from the farm field
using roll up box product t
Roll on and roll up box container No. 15 Product transport from the farm to processing site and
collect coffee harvest from trailers pulled by tractors
Motor cycle No. 13 Transport service for site supervisors and agronomists

V.3.5. Irrigation System

The company already started planting of coffee in the farms using drip irrigation knowing that the
rainfall distribution of the area is not sufficient for the plant and proper fertigation of the plant
maximizes productivity tremendously. The farm mainly depends on River for all crop field
irrigation. However, four boreholes will be dig as backup in case of prolonged drought happing and
potable water need of workers.

Crop Water Requirement Determination

Climate
The climatic data of the project area is obtained using Local Climate Estimator (New-LocClim, FAO
developed software) that interpolating the data from metrology stations within 100 km radios since
there is no metrology station that has no long year’s metrology record. The description of those
meteorology stations considered for estimation are presented here below.

34
Table 6.6: Metrology Stations Considered for Interpolation
Sr. Longitude Altitude Distance Country
Latitude [°] Direction Direction Station Name
No. [°] [m] [km] Name
1 38.3 6.41 1670 5.6 79 E Dila Ethiopia
2 38.25 6.23 1925 18.9 177 S Yirga-Chefe Ethiopia
3 38.41 6.58 1860 26.7 41 NE Wendo-(Aleta) Ethiopia
4 38.51 6.46 2840 29.5 77 E Hagere-Selam Ethiopia
5 38.38 6.75 1835 41.5 20 N Yirgalem Ethiopia
6 37.96 6.65 1200 42.4 311 NW Bilate Ethiopia
7 37.83 6.33 1290 47.1 261 W Mierab-Abaya Ethiopia
8 38.48 6.96 1850 67.3 22 N Colaris Ethiopia
9 37.61 6.25 2580 72.7 257 W Chencha Ethiopia
10 37.71 6.83 2020 76.4 309 NW Sodo Ethiopia
The Project Area: Longitude [°] - 38.25; Latitude [°] –6.4; Altitude [m] - 1280

According to interpolated data, average monthly rainfall of the project varies between 38 in January
and 164.3 mm in April. Similar to most of South part of the country, rainfall has a high magnitude in
April and May. The mean annual temperature of the area is about 24.58 0C, that ranging from a low
of 10.80C in December to 30.80C in March.

Effective Rainfall
Effective rainfall refers to that portion of rainfall that effectively be used by plants. This is to say that
not all rain is available to the crops as some is lost through runoff and deep percolation. The
effective rainfall is calculated by using CROPWAT 8.0 software on the dependable mean annual
rainfall data.

Table 6.7: Effective rainfall (mm)

Month Rain(mm) Effective rain(mm)
January 36.0 33.9
February 49.4 45.5
March 93.6 79.6
April 155.7 116.9
May 164.3 121.1
June 106.3 88.2
July 134.6 105.6
August 124.9 99.9
September 145.0 111.4
October 141.3 109.4
November 61.4 55.4
December 20.9 20.2
Total 1233.4 987.1

Average Temperature Data

The other important climate date in determination of crop water requirement is temperature.
Therefore, maximum and minimum temperature data of the project area is considered in this study.

35
Table 6.8: Monthly temperature at the project area
Minimum temperature Maximum, temperature
Month Mean temperature (0C)
(0C) (0C)
Jan 12 29.5 20.7
Feb 11.8 30.7 21.2
Mar 12.6 30.8 21.7
Apr 13.5 28.6 21.1
May 12.6 27.2 20
Jun 12.3 26.7 19.5
Jul 13.5 25.7 19.7
Aug 12.8 25.7 19.2
Sep 12.6 26.2 19.5
Oct 12.6 26.1 19.3
Nov 11.3 27.2 19.2
Dec 10.8 28.3 19.7
Mean 12.37 27.73 20.07

Other Climate Data

In addition to rainfall and temperature data, relative humidity, wind speed, sunshine hour and daily
radiation data are necessary in determination of crop water requirement. These data are also obtained
in the same way.

Table 6.9: Others climatic data of the project area

Humidity Wind Sunshine Radiation
Month
(hPa) (km/hr) (hr) (MJ/m²/day)
January 13.18 4.28 11.77 25.3
February 13.32 4.43 11.90 26.7
March 14.68 6.19 12.07 28
April 16.26 4.86 12.23 28.1
May 16.57 4.43 12.38 27.5
June 16.16 5.22 12.45 26.9
July 15.65 4.21 12.42 27
August 15.01 4.36 12.30 27.7
September 16.28 3.24 12.13 27.8
October 14.86 3.31 11.97 27
November 14.2 3.35 11.80 25.4
December 11.89 3.56 11.73 24.6
Average 14.4 4.36 11.10 26.8

Reference Evapotranspiration (ETo)

The Reference monthly ETo is calculated using the Penman-Monteith formula, as recommended by
FAO (1998) using the CROPWAT 8 software.

36
Table 6.10: Reference Evapotranspiration calculation
Min Temp Max Temp Humidity Wind Sun Rad ETo
Month
°C °C KPa km/day Hours MJ/m²/day mm/day
January 12 29.5 0.01 103 11.7 25.3 4.52
February 11.8 30.7 0.01 106 11.8 26.7 4.96
March 12.6 30.8 0.01 149 12 28 6.05
April 13.5 28.6 0.02 117 12.1 28.1 5.43
May 12.6 27.2 0.02 106 12.3 27.5 5.01
June 12.3 26.7 0.02 125 12.4 26.9 5.15
July 13.5 25.7 0.02 101 12.3 27 4.75
August 12.8 25.7 0.02 105 12.2 27.7 4.94
September 12.6 26.2 0.02 78 12 27.8 4.53
October 12.6 26.1 0.01 79 11.9 27 4.35
November 11.3 27.2 0.01 80 11.7 25.4 4.07
December 10.8 28.3 0.01 85 11.6 24.6 4.00
Average 12.4 27.7 0.01 103 12 26.8 4.81

The ETo ranges from 4.00mm/day in December to 6.05mm/day in April with an average annual
value of 4.81mm/day. Average monthly reference evapotranspiration exceeds effective rainfall
during all months; hence irrigation is required for all months in year as shown in the following table.

Table 6.11: Evapotranspiration and rainfall

Effective rainfall (ERF) ETo Refference ETo Average (RF-BTo)
Month
Mm mm/day mm/month mm/month
January 33.9 4.52 135.6 -101.7
February 45.5 4.96 148.8 -103.3
March 79.6 6.05 181.5 -101.9
April 116.9 5.43 162.9 -46.0
May 121.1 5.01 150.3 -29.2
June 88.2 5.15 154.5 -66.3
July 105.6 4.75 142.5 -36.9
August 99.9 4.94 148.2 -48.3
September 111.4 4.53 135.9 -24.5
October 109.4 4.35 130.5 -21.1
November 55.4 4.07 122.1 -66.7
December 20.2 4 120.0 -99.8
Total 987.1 4.81 1732.8 -745.7

Crop Water Requirement

The definition of crop water requirement as per FAO is; "The depth of water needed to meet the
water loss through evapotranspiration of a disease-free crop, growing in large fields under non-
restricting soil conditions including soil water and fertility and achieving full production potential
under the given growing environment".

37
Crop Evapotranspiration (ETc), can be determined in a number of ways, among these Crop
coefficient approach is widely used. In the crop coefficient approach the crop evapotranspiration,
ETc, is calculated from a relation:
ETc = Kc*ETo; Where, ETc: crop evapotranspiration (mm/day)
ETo: reference crop evapotranspiration (mm /day)
Kc: crop coefficient, Kc value varies for different crops depending on the development stage of crop.

farm is currently developed coffee and banana plant using drip irrigation and planned to expand
coffee as major crop. After completion of project implementation, the farm cultivable area will
increase to 640 hectare and the percentage land coverage for the selected crops – Coffee and Banana
are assumed to be 94% and 6% respectively. Crop water requirement (m3/day/ha) of the identified
crops summarized as shown below assuming that all fields are to be covered with crop and attained
at high water intake time equally in order to determine the possible highest requirement.

Based on the following water requirement analysis, the irrigation system is designed to meet the crop
water requirement of February at which the crop requirement of coffee attains the highest
(29.5m3/day/ha). Considering 98% field efficiency of the system that uses drip irrigation and plastic
mulching method that reduce evaporation, the field crop water requirement estimated to be
30.1m3/day/ha. The water requirement, therefore, to irrigate 590 hectare of crop is 17,759 m 3/day.
However, practically irrigation pumps cannot work throughout the day continuously. Assuming that
16 hours operational time, the pump house capacity should be 26,638.5 m 3/day to irrigate 590
hectares crop field completely per day. This means that crops field requires a pump having
1,664,910liter/hr discharge capacity excluding head losses for so many factors.

Similarly, the irrigation system is designed to meet the crop water requirement of February at which
the crop requirement of banana attains 39.4m 3/day/ha. Considering 90% field efficiency of the drip
irrigation, the field crop water requirement estimated to be 43.78m 3/day/ha. The water requirement,
therefore, to irrigate 40 hectare of crop is 1,751.2m 3/day. However, practically irrigation pumps
cannot work throughout the day continuously. Assuming that 16 hours operational time, the pump
house capacity should be 2,626.8m3/day to irrigate 40 hectares crop field completely per day. This
means that crops field requires a pump having 164,180liter/hr discharge capacity excluding head
losses for so many factors. Thus, the total water requirement of the farm at pick time becomes
1,729,090 for both coffee and banana.

38
Table 6.12: Coffee crops water requirement
% Area Month
Description
covered Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Reference ETo 135.6 148.8 181.5 162.9 150.3 154.5 142.5 148.2 135.9 130.5 122.1 120.0
Kc of Coffee 100% 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9 0.9
ETo of Coffee (mm/month) 122.04 133.92 163.35 146.61 135.27 139.05 128.25 133.38 122.31 117.45 109.89 108.00
Effective Rainfall (mm/month) 33.90 45.50 79.60 116.90 121.10 88.20 105.60 99.90 111.40 109.40 55.40 20.20
Net Irrigation Requirement (mm/month) 88.14 88.42 83.75 29.71 14.17 50.85 22.65 33.48 10.91 8.05 54.49 87.80
Net Irrigation Requirement (mm/day) 2.94 2.95 2.79 0.99 0.47 1.70 0.76 1.12 0.36 0.27 1.82 2.93
Irrigation Requirement (m3/day/ha) 29.40 29.50 27.90 9.90 4.70 17.00 7.60 11.20 3.60 2.70 18.20 29.30
Irrigation System Efficiency (98%) 30.1 M3/day/ha
For 590 hectare 17,759.0 M3/day
Supply in 16 Hr/day 26,638.5 M3/day = 1,664.91M3/Hr = 1,664,910Lit/Hr

Table 6.13: Banana crops water requirement

% Area Month
Description
covered Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec.
Reference ETo 135.6 148.8 181.5 162.9 150.3 154.5 142.5 148.2 135.9 130.5 122.1 120
Kc of Production Banana 100% 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1
ETo of Banana (mm/month) 149.16 163.68 199.65 179.19 165.33 169.95 156.75 163.02 149.49 143.55 134.31 132.00
Effective Rainfall (mm/month) 33.90 45.50 79.60 116.90 121.10 88.20 105.60 99.90 111.40 109.40 55.40 20.20
Net Irrigation Requirement (mm/month) 115.26 118.18 120.05 62.29 44.23 81.75 51.15 63.12 38.09 34.15 78.91 111.80
Not Irrigation Requirement (mm/day) 3.84 3.94 4.00 2.08 1.47 2.73 1.71 2.10 1.27 1.14 2.63 3.73
Irrigation Requirement (m3/day/ha) 38.40 39.40 40.00 20.80 14.70 27.30 17.10 21.00 12.70 11.40 26.30 37.30

90% Irrigation efficiency 43.78 M3/day/ha

For 40 hectare 1,751.20 M3/day
Supply in 16 Hr 2,626.80 M3/day = 164.18 M3/Hr = 164,180 Lit/Hr

39
Sufficiency of Water Source
According to the above analysis, six pumps having 400,000 lit/hr capacity that deliver from source
to reservoir are more than sufficient to fulfill the irrigation water requirement of the farm (1,829,090
lit/hr). So far, the farm installed three pumps that having a total discharge capacity of 1,000,000 liter
per hour on water source in order to cover water requirement of 300 hectare. To irrigate the
remaining 300 hectare, three pumps having the same capacity planned to be installed next year.

Drip System Design

The drip system design considers a watering pattern of the farm in addition to water requirement of
the crops. Assuming watering of crops every the other day, the drip system is designed to apply the
water requirement of two days within one-day pump house operational time. This means that the
pump house capacity should be 60.2m3/day/ha at least to irrigate ever the other day. The farm
therefore, has installed four pumps having a total capacity of 1,000m 3 discharge to irrigate 300
hectare and planned to install additional 4 pumps having a total discharge capacity of 1000m 3/hr in
the second pump station for remaining lands.

Determining the number of drippers needed to apply 60.2m 3 per day per hectare or 3.76m 3 per hour
to the crop. In this regard, the existing system is designed to provide 5m 3 per hour per hectare
considering some contingency. Deciding on the number of drippers to use is part science, part math,
and partly a judgment. The drip system must wet at least 60% of the plant's root zone. It is, therefore,
necessary to find the proper balance between the formula and the actual site conditions. Formula
to Determine the number of drippers to be used per plant:

Centimeters square plant root zone = Number of drippers

Drippers waited area
Water Reservoirs
Production of such crops requires uninterrupted water supply throughout the year. The Farm,
therefore, constructed one big size reservoir having 45,000 m 3 holding capacity and planned to
construct additional one reservoir having the same size. These reservoirs are adequate to cover more
than two day's irrigation requirement at higher water requirement season.

Figure 6.2: Picture of reservoir

V.4. Farm Establishment

The major operations worked under farm establishment are variety selection, seedlings preparation,
plantation and young plant maintenance. Cost of these all operations contribute for investment
requirement of the project.

40
V.4.1. Farm Establishment for Coffee
A. Varieties of Coffee
It is a long-term crop with a lifespan of more than 25 years, and considerably longer under good
management, thus the choice of variety (cultivar) is very important. There are about 140 local coffee
races known to farmers but not fully explored. Coffee research activities have been carried out in
Jimma Agricultural Research Center (JARC) since the outbreak of coffee berry disease (CBD) in
1971. So far, JARC developed and released 26 CBD resistant and improved coffee varieties (see
table 6.14).

Table 6.14: CBD Resistant Coffee Cultivars Released From JARC

Type of Yield (Qt) per hectare for Shed Growing Seedling Resistance
Spacing
Varieties JRC Farmers Requirement Altitude Per Ha to Disease
741 12.2 6.7 High 1550-2100 3500 High 2.2 X 2.2
744 16.6 8.9 High 1550-2100 4600 High 2.2 X 2.2
7440 16.2 8.9 High 1000-1550 5400 Medium 1.8 X 1.8
7454 18.3 8.9 High 1000-1550 5100 Medium 1.8 X 1.8
7487 23.8 9.1 High 1550-2100 5400 Medium 1.8 X 1.8
74110 19.1 9.1 Low 1550-2100 6600 High 1.5 X 1.5
74112 18.1 9.1 Low 1550-2100 6800 High 1.5 X 1.5
74140 19.7 9.1 Low 1550-2100 6700 High 1.5 X 1.5
74148 18 6.7 Low 1550-2100 6700 High 1.5 X 1.5
74158 19.1 9.1 Low 1550-2100 6200 High 1.5 X 1.5
74165 17.3 8.9 Low 1550-2100 6100 High 1.5 X 1.5
754 14.8 7.8 High 1550-2100 - Medium 2.2 X 2.2
75227 17.9 8.9 High 1550-2100 - High 2.2 X 2.2
Desu 20 10.2 High 1000-1750 N.A N.A N.A
Katimor J-19 16.6 10.2 High 1000-1550 N.A N.A N.A
Katimor J-21 19.4 10.2 High 1000-1550 N.A N.A N.A
Ababuna 23.8 >15 High 1550-1750 N.A N.A N.A
Melkoc H2 24 >15 High 1550-1750 N.A N.A N.A
Mifatu 21.4 14.2 High 1550-1750 N.A N.A N.A
Gawe 26.1 >15 High 1550-1750 N.A N.A N.A
Gesha 23.4 10.2 High 1000-1550 N.A N.A N.A
Merdacherko 15.4 17.1 High 1750-2100 N.A N.A N.A
Bunowashi 23.5 15.6 High 1750-2100 N.A N.A N.A
Yachi 19 15.2 High 1750-2100 N.A N.A N.A
Weshewesh 16.4 16.2 High 1750-2100 N.A N.A N.A
Angofa 20.4 16.2 High 1550-1750 N.A N.A N.A
Source: Jimma Agricultural Research Center, 2008

41
Jimma Agricultural Research Center is nationally responsible for coordinating and dissemination of
improved coffee seed. The center has been engaged for more than forty years in this objective.
According to the information from Research center, a total of 137,890kg of seed disseminated
nationally until now and expected to cover a total of 153,058 hectare of land. The envisaged project
similarly sources improved coffee seed from JARC. Since the demand for improved coffee seed
exceeds the supply from JARC, the project will entitle for purchase in advance. In this regard, the
company selected 74112, 74158, 74148 and 74140 coffee cultivars to grow in both farms since the
selected method of plantation is without shed.

B. Coffee Seedling Preparation/ Nursery Operation

Preparation of seed beds, cleaning and mixing the soil, germination of seed, filling and arranging the
filled bags, planting the germinated seed will be completed over two months (November to
December) whereas care of the seedlings will extend over 6 months (January to June). By that time,
the seedlings will have good root formation and would be about 20 cm high. The farm will use
polythene bag for seedling rising since the advantage of growing seedlings in poly bag at weights
rising without poly bag.

Advantages:
 The root system is not disturbed or exposed during planting to the field.
 Seedling establish quickly without any set-back or planting shock.
 The seedlings can be kept for longer period of time in the planting field in case of adverse
conditions until weather conditions are favorable.
 The spread of soil borne diseases is controlled since fresh potting mixture is prepared.
 The planting operation is easier and quicker.

Disadvantages:
 It is expensive
 Difficult to detect deformed root systems

Each tube will be filled with 1.5 kg mixed soil and contain adequate humus. In this farm, the forest
soil is mixed with red ash and compost at the ratio of 30%, 40% and 30% respectively. The potting
mix is screened through a coarse sieve to remove large objects in order to provide an unrestricted
medium for root development. Animal manure that purchased and transported from Borena are is
used to improve the soil texture. The tubes can be filled quite rapidly using hands.

42
The polythene tube having the following physical features is used in this farm for coffee seedling
nursery.
 Width 14 cm
 Color Black
 Thickness 0.06 mm
 Length 30 cm

Seed Sowing and Subsequent Activities

The Sown seed can take six months to reach transplanting size depending up on the local
temperature. To secure high percentage of germination, the following strategies are used in the farm.
o Sowing of fresh seeds
o Removing parchment to reduces the germination time
o The watering of soil filled poly bag before sowing seeds
o Making a hole at the center of the filled poly bags with a stick and sawing the seeds flat side
facing of the soil at about a centimeter deep.
o Mulching of the bed with suitable fine grass immediately after sowing
o Removing of mulch immediately after 2-3 seedlings per bed start emerging

Shade Construction
To protect the seedlings from direct sunlight, to maintain adequate relative humidity, to regulate
night and day temperature variations, and to protect from heavy rain droplets and hail damage a
proper shade is a prerequisite. The company, therefore, constructed net nursery shed over the beds in
the farms and will construct additional for the remaining plantations.

Common Nursery Diseases and Insects

The most common type of diseases in coffee nursery is Damping-Off (collar rot). Collar rot can be
controlled using chemical or cultural method. However, the farm planned to use cultural method in
order to reduce the environmental impact to the surrounding. The cultural method includes:
 Preparing of raised seed beds with well dried and sieved jungle soil, compost and sand (6:2:1)
 Providing of proper drainage system around the seedbed and avoiding of excessive watering to
the seedbeds.
 Provide uniform filtered overhead shade.

Insects like Grass Hopper, Crickets, and alike commonly attack coffee seedling by eating leaves.
Specially Cricket attack seedling at night and has to be controlled by spraying either metacid 50 EC
1 ml/lit of water.

43
Maintenance of Seedlings
The maintenance of seedling will extended for sex months from January to June or until
transplantation of the seedling to field takes place. Regular maintenance operations include the
following:
 Watering seedling 2 times a week using drip irrigation,
 Pulling out of the weeds growing in the bags and between the bag once in month in order to avoid
competition for nutrient
 Monthly applying of DAP fertilizer after four month of sowing with a rate of 2 gm DAP per pot,
and a total of 8 gm of DAP is applied per pot.
 Fertilizer application carried out to the top layer of the pot with the aid of sharpened stick.
 To promote growth, bayfolan 50 cc will be supplied for 1000 seedlings at a 15 days interval.
 At the stage where two pair of true leaves emerged, the seedlings thin out by leaving the best.
 After 4 months from the date of planting, seedling adaption (hardening) completed through
progressive thinning of the shade starting from 8 weeks of planting date.

Figure 6.4: Seedling in the net shed nursery

C. Coffee Plantation
a. Spacing and Planting Pattern
The spacing of coffee depends mainly on the type of the coffee cultivar, climatic condition, the
shade level, cultural practices adopted, use of mechanization technologies, and disease and insect
situation in the farm area. Close spacing (densely planting) provides optimal use of the natural
resources during the first few years after establishment and an initial yield advantage. However,
thinning is required after a few years to avoid the sharp yield drops due to competition for light,
impracticability of pruning, difficulty in disease and pest control.

44
Coffee can be planted in a single row or hedges, which can be preferred for mechanization and easier
replacing of the stand. The recommended population in this farm is 5500/ha considering the type
cultivars, pruning system and usage of drip irrigation system with firtigation.

Different planting patterns or arrangements can be adopted in coffee planting operations and three
types are commonly practiced, these are Triangular planting, Square planting, rectangular planting.
Rectangular planting is preferred in this project than square planting and triangular planting because
it gives densely planting opportunity and increasing of production. Spacing between rows and
between coffees plants are 2m and 1m respectively in order to get sufficient space for machinery
movement and drip irrigation.

b. Holing (hole preparation)

Young seedlings require loose soil for rapid root development. Thus, holing should be carried out
three months prior from planting using machinery. Planting holes will have 30 cm diameter and 45
cm depth for proper root development. The top 20 cm of soil will be kept separate from the subsoil
in order to use for refilling before plantation.

c. Refilling
Holes are left open for about one month for aeration. Then after the holes should be refilled with the
topsoil preferably mixed with decomposed coffee husk or pulp usually a month before planting.

d. Coffee Planting
Best results obtained from planting out early in the rainy season preferably in July to August and
cool and wet conditions are most suitable for planting. In this farm case, using of drip irrigation
gives advantage of planting out of rain season. The centers of the refilled holes are opened
sufficiently in order to accommodate the root system and the soil in the pot to be well soaked during
planting. Roots examined and if bent occurs, it will be cut above the bend. At planting time of
seedling, the poly bags are removed carefully.

The ball will be placed in a hole in such a way that the upper surface of the soil in the pot is at
ground level. However, deeper planting of 10 cm from the ground level practiced in order to secure
good establishment and subsequent growth. The soil around the seedling in the hole firmly packed
by hand and foot so that no air pockets are left.

45
D. Young Coffee Plant Maintenance
a. Mulch Maintenance
If there is a damage of plastic mulches during planting, maintenance work will be continued
immediately. Mulch around the planted seedling is very useful, because it protects the soil from
sunshine and suppresses the growth of weeds.

b. Canopy Management
The common systems of canopy management in coffee are pruning. Pruning refers to training and
invigorating of the productive part and removal of the unproductive and mal-growth one. Coffee
pruning covers the following operations:
 Capping of young seedlings during the first year helps the crop to establishment properly,
 Cutting up of primary branches below 60 cm of the stem, removal of excessive secondary
growth and removal of upright growth,
 Sucker selection and conversion before production cycle.

c. Fertilizer Application
Phosphorus: though the need of the coffee tree for phosphate is relatively low, its significance in
the young stages of plant growth is high. The small quantity of phosphate has an influence on the
process of fruit formation. Phosphorous-deficient young trees suffer noticeably from impeded root
and wood formation. An adequate supply of phosphorus for young coffee is necessary for:
 Root growth
 Sufficient wood growth
 Early maturity of berries
Application (time &method): phosphorus applied once a year using fertigation system.

d. Pest Control
Disease Control
Tracheomycosis: It occurs in coffee bushes of any age. Wilt and die back are a common symptoms.
Dark necrosis of the vascular tissue is usually occurs near the collar base of the stem at soil level.
Either blue black, brownish, pink streaks or discoloration is seen on the wood under bark when the
bark peeled with a knife.

Cultural control measures: digging out the infected coffee bush with as much of the root system as
possible and burn them. Minimizing any kind of wounding to the coffee stands and sterilizing of
implements (such as pruning scissors & machetes) is important to minimize the dissemination of the
disease.

46
Insect Control
The common insect economically important at young coffee stage is Coffee Thirps. It damages
undersides and the upper sides of leaves and green shoots. They suck the sap from young shoots,
leaves, and even young fruits causing them to dry out. A very heavy infestation causes death of
leaves and total leaf-fall. Cultural Control Measures is mulching, it reduces number of Thrips.

Weed Controlling
The plastic mulch covered the bed is expected to control the weeds along the plant. Moreover, the
weeds between rows will be slashed using machinery. However, slashing usually wounds the coffee
tree and predispose in to a fungal disease caused by Gibberella xylarioides, which eventually kill the
coffee tree. Nevertheless, slashing and digging with the proper timing could be vitally useful with
integrated weed management.

V.4.2. Banana Farm Establishment

A. Planting of Banana
Banana fruit does not want nursery operation since their seedlings collected from mother plant
sucker. The sucker of banana planted in the hole prepared before 1 month. Planting of banana is
carried out in the envisage farm by raw since raw planting convenient for cultural practices such as
cultivation, pruning, training, fertilization, irrigation, chemical application, harvesting and
transporting produce.

B. Young Banana Maintenance

The main activities has to be executed in maintenance of young fruit trees are pruning and training,
pest controlling and cultivation, fertilizer application, and watering.

Pruning is the removal of all dead plant parts, typically shoots, dying or damaged and injured
broken twigs and branches, diseased and insect infested plant parts. It is an effective way to limit the
spread of decay, disease and insects to other portions of the plant or to neighboring plants and to
improve health, and to control growth. In this farm, unwanted suckers are de-suckered and unwanted
leaves are pruned every month especially at dry season.

Replacement of Dead Seedlings: when replacing of dead seedlings, the new seedlings are not
planted in the same hole to prevent the death of new seedling for the same case. Therefore, the new
planting holes should be prepared at one side of the old hole. The expected replacement of banana
plant in this farm is 10% and replacement can be done at any time since the farm has irrigation
system.

47
Pest Control and Cultivation: banana plant is susceptible to different pests (insects, diseases and
weeds) at young stage. Successful control of these pests requires careful monitoring of your plants
and an integrated pest management practices and chemical application.
 Insects - banana weevil can attack banana plant at young stage, but it easily controlled through
planting resistance variety.
 Diseases - there are so many diseases that affect young banana plant mainly caused by bacteria, fungi,
viruses or nematodes. However, only Bacterial wilt is registered in the project area. Bacterial wilt is
controlled using cultural practices, such us removing and burring of affected seedling, disinfecting of
farm tools with fire and controlling the movement of animals.
 Weeds - weeds and grasses can kill young trees through competition for water and nutrients,
and diseases dissemination. Weed can be controlled mechanically, culturally and chemically.
However, the envisage farm use cultural method to control the weeds infestation.

Fertilizers application: banana young plant normally does not require application of any artificial
fertilizer. The fertilizer requirement of young banana plant fulfilled through applying manure (green
or animal) or compost.

Water Requirements: water requirements depend on climate, crop, and the amount of available
soil moisture. Water use changes during the growing season and is difficult to predict. Since the
project area is dry most of the year, irrigation is applied at least once a week for young banana.

V.5. Matured Crop Maintenance

V.5.1. Matured Coffee Maintenance
A. Pest Control
 Diseases - Coffee Berry Disease (CBD): is the most serious disease affecting flowers, green
and ripe berries. It is also a serious pest of Arabica and Robusta coffee. The only means this
project employee to control this disease is selecting resistant varieties. In this regard both farms
are planting CBD resistant variety.

 Insect Control - Coffee Leaf Miner is the major insect causing significant damage on matured
coffee. This insect causes damage both at larvae and adult stage. The young larvae pierce the
young shoots and the flower bund, causing them to abort. More mature larvae and adults pierce
cause one or both of the ovaries of the fruit to abort. The growth problems caused by the damage
to the buds and young shoots provoke a characteristic proliferation of branches, which also
adversely affects productivity. If the attack is serious, using of insecticide can be the possible
options. Recommended insecticides included:
 Fenitrothion (50% ml) 1 lit/hectare

48
  Fenthion (50% ml) 2.25 lit/hectare
 Parathion (40% ml) 1120 ml/hectare

 Weed Controlling - The common weeds in matured coffee are broadleaved weeds since the
closing of matured coffee canopy hampers the growth of perennial grasses. Slashing is the
practice will be used in this project using machinery with serious caution not to worn the coffee
steams and exposes for different coffee disease. The farm avoids chemical options in order to
enjoy the premium price from coffee sales.

B. Rejuvenation or Cycle Conversion

When coffee trees get old or their productivity level decline, therefore, coffee trees usually
rejuvenated (rehabilitated) through pruning. The age of exhaustion varies with the growing area
altitude. In lower altitude where growth is faster, the tree gets exhaustion earlier after four or five
consecutive crops. However, the proposed area categorized in middle altitudes, the rejuvenation
period can extend to 13 years.

Stumping refers to cutting of the coffee stem with a saw at 30 cm above the ground level. The
cutting is orientated to N-S always to 450 angle to avoid rainwater collecting and cause stump rotting.
After stumping, many suckers will grow. The required number, usually 2 to 4 equally spaced suckers
are selected and maintained. Stumped coffee will be out of production for 2 years. Following
rejuvenation many suckers are grown on the main stem. However, the number should be limited
through sucker selection, which should be initiated early as possible and continued on a regular
basis. Except for the selected suckers all others should be discontinued by pruning.

C. Fertilization and Manuring

The farm applies fertilizer, based on soil and leaf analysis, once a year and six months prior to the
main flowering season. The farm applies fertilizer using fertigation system.

Table 6.15: Fertilizers Rate for Mature Coffee

Nutrient Kg/ha/year Fertilizer rate kg/ha/year
Coffee yield
UREA DAP TSP KCL NPK
qt./ha N P K
46-0-0 18-46-0 0-46-0 0-0-60 20-10-10
4 84 36 60 170 78 78 100 420
6 112 48 80 225 104 104 134 560
8 140 60 100 280 130 130 167 700
10 168 72 120 336 157 157 840 840
12 196 84 140 390 183 183 234 980
14 224 96 160 450 209 209 267 1120
15 252 108 180 505 235 235 300 1260
18 290 120 200 560 261 261 334 1400
Source: Tepi coffee plantation norm

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V.5.2. Matured Banana Maintenance
The major activities expected to be done for matured banana plant are pest control and cultivation,
fertilizer application, and watering. Even though these activities are worked for young banana plant,
continuous in matured plant maintenance with slight change in frequency of operation or application.

i. Pest control and Cultivation

Banana plant is not susceptible for pests since its canopy controls the infestation of weeds and this
again reduces the impact of insects and occurrence of disease. The only activity carried out at this
stage is clearing of ruminants of fruited plants.

ii. Fertilizer Application

The project does not apply any fertilizer for matured banana plant so far since the soil fertility is
sufficient for the plant.

iii. Watering of Matured Fruit Tree

Well-developed plant root extract it’s water need from depth, closed canopy development keeps the
soil moisture, slow growth habits, and nutrient requirements reduces the irrigational water
requirement of banana plant at maturity. Therefore, the farm supplies irrigation water once in three-
week interval.

V.6. Harvesting and Processing

V.6.1. Coffee Harvesting and Processing
The company planned to harvest both red and brown coffee using Brazil made coffee harvester in
order to reduce harvest loss and overcome labor shortage during harvesting. There are basically three
methods of coffee processing which differ in complexity and quality. These are the natural process,
the wet method and the dry method. In this project all methods of coffee processing are used
alternatively.

A. Natural Method of Coffee Processing

In this method, red cheery coffee is harvested (picked) by machinery from coffee tree. Coffee berries
for natural should be mature and fully ripe. Thus, the harvested cherry should be sorted prior to
going to natural process. Sorting removes the immature and infected berries as well as other foreign
matter. The sorted cherry will be dried using natural sunlight on raised mash wire bed gradually
using labor. This process will take long time than wet method until the coffee dry through natural
process. However, during this process the coffee beans observe some important enzymes from pulps
and give best flavor for coffee beans.

50
In the course of drying, coffee should not be exposed to wet conditions to avoid molding and rotting,
which adversely affects coffee quality. Coffee should not be allowed to exposed to temperatures
above 380c for the sake of retaining good quality attributes. At night, coffee should be heaped to
retain heat and minimize moisture absorption. In adverse weather conditions, coffee should be
covered with a suitable waterproof material. Then it passes through coffee huller that established in
both farms to get clean coffee beans. The coffee prepared using this processes will have premium
price in export market.

B. Wet Method of Coffee Processing

Coffee berries for wet processing should be mature and fully ripe. Thus, the harvested cherry should
be sorted prior to pulping. Sorting removes the immature, infected and dry berries as well as other
foreign matter. The sorted cherry can be processed by the alternative dry method. Ripe berries are
succulent and possess adequate mucilage, which is necessary in pulping, and have sufficient natural
pecteolytic enzymes that degrade mucilage during fermentation. Berries in mixed stages of maturity
and ripeness would cause fermentation problem and mechanical damage at pulping.

Pulping is the mechanical removal of the red outer skin form the cherry to have parchment coffee.
Pulping is dependent on lubrication form the mucilage layer between the pulp and the parchment.
Pulping is done via a steam of water, which carries the cherry to the pulper.

The water facilitates the squeezing and separation of the products and by-products. The disc pulper
usually does commercial coffee pulping. Berries pressed between the two surfaces to effect pulping.
One disc pulper can pulp about 1000 kg of cherry per hour.

Freshly pulped parchment is graded on the basis of weight and size by an oscillating sieve and water
at constant flow in an Aagard pre-grader. Pre-grading sorts out un-pulped berries and skins and
directs them to a re-passer pulper. It also separates parchment in to three categories of quality:
parchment 1, parchment 2, and lights.

As parchment 1 is conveyed to fermentation tanks, the other two classes are further processed
separately by a re-passer with due care. Grading regulated by velocity of the water flow and the
grading sieve in the water. Then fermentation process continues.

The purpose of fermentation is to degrade or breakdown the thick mucilage layer (which covers the
pulped parchment) into simple non-sticky substances which can easily be washed off with water.
Removal of mucilage is very important because it is sticky, inhibits drying, attracts dust, makes
handling difficult and a good media for spoilage micro-organisms.

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Fermentation process is complete when the parchment feels gritty and no longer sticky when rubbed
between the hands. Fermentation can be accelerated through water recirculation, dry fermentation or
intermediate washing.
 Water Recirculation: This concentrates enzymes and sugar, and raises the initial temperature of
parchment.
 Dry Fermentation: freshly pulped coffee drained and left in the fermentation tank overnight
without water. This reduces formation of acid form sugars and maintains pH to remain at high
level for rapid fermentation.
 Intermediate Washing: is a gentle stirring of parchment in water after every night of fermentation
in the fermentation tank and water is drained off after every washing to remove the degrade
mucilage and acids which can otherwise affect the color of the parchment.
 Commercial Pectic Enzymes: Synthetic enzymes for coffee processing are available and they
speed up the fermentation activity. They should be used only when there is a problem of weather
and natural fermentation become difficult or when there is serious shortage of fermentation space.

Even though, there are different speeding-up ways of fermentation, this project planned to use water
circulation for additional advantage of environmental protection. After fermentation and soaking,
parchment coffee is finally washed with clean water to remove any adhering dirt or remains of mucilage or
sugars. The final washing requires:
 Clean water without oils, dirt, chemicals, smells or tastes;
 Hygienic workers who are healthy and free of perfumes or cigarettes odor;
 A clean and well painted washing channel, and washing tools which are clean and unlikely to
cause mechanical damage on parchment should be used for final washing.

Freshly pulped, fermented and washed parchment coffee has a moisture content of about 55% and
this has to be reduced by drying to 10.5% MC, which is the safe level for hulling, storage and
roasting. Parchment normally dried in the sun although mechanical drying can be safely applied at
certain stages of drying.

The dried coffee should not be stored in an environment where it can pick up or lose moisture. In
high relative humidity and warm atmospheres, coffee beans will absorb moisture and mould growth
can occur. Beans may be bleached out in color and lose some desirable flavor properties. Storage of
coffee as parchment results in mulch less deterioration than when stored as clean coffee.

52
The parchment husk and silver skin coating are barriers to ambient influence that may damage the
seed. Parchment coffee should be delivered for milling immediately the processing season over
otherwise it will develop woody flavor. The dried parchment coffee packed in a bag of 60 kg and
arranged 50 cm from the wall of the store on a platform of 15 cm high from the floor of the store.

C. The Dry Method of Coffee Processing

It is impractical to consider all coffee products are exportable grade for various reasons. Therefore,
in this project 10% of the production assumed to be low-grade coffee. The cherry picked at moisture
content of 55 % to 12% and floaters from wet process will be dried on concrete floor.

Dry coffee cherry can be stored longer in relatively similar conditions than parchment without
deteriorating in quality. The dry cherry should be hulled to remove the beans. The coffee prepared
with this process can be considered as low grade and sold to local market.

V.6.2. Harvesting of Banana

Banana fruits reach to provide its first production tenth month after plantation, then, throughout the
year there is production but more during July-November. Harvesting of banana is done by labor in
the envisage farm.

V.7. Production Pattern and Optimal Production

The project has developed 130 hectare of Coffee and 40 hectare of Banana so far from the total 640
hectare allocated for planting, of which 10 hectare are planted under shed and irrigated with furrow
irrigation for as control field. The remaining 470 hectare planned to be planted in the coming fiscal
year with coffee. In general, the total land holding properly allocated for farm road, farm buildings,
natural runoff and growing crops. The following table shows the land use pattern of the project.

Table 6.16: Land use pattern

Sr. Project Year
Description Unit Total
No. 2020/21 2021/22 2022/23 2023/24
1 Natural waterways & Forest (10%) Hectare 37 37
2 Camping - 2 ha and reservoir Hectare 6 6 12
3 Access Road - Around 25 ha Block Hectare 1 10 11
4 Coffee under shed & furrow irrigation Hectare 10 10
5 New coffee plantation Hectare 20 100 470
6 Young Coffee plant Hectare 20 100 470
7 Matured Coffee plant Hectare - 20 120 590 590
8 Banana Plantation Hectare 40
9 Young banana plant Hectare 40
10 Matured Banana Hectare 40 40 40
Total 37 187 700 700 700

53
The data of the Central Statistics Agency for commercial farm have not been used for estimating
production in this project study, since CSA production data organized based on existing agricultural
practice of the country that using rainfall and maximum plantation of 3000 plant per hectare of
Coffee, and furrow irrigation method and 1100 plant per hectare of Banana plant. However,
productivity of other country like Brazil that used for production estimate as this countries applied
drip irrigation in coffee plantation and plantation of 5500 coffee plant and 2200 banana plant per
hectare. The coffee planted in 2019/20 has indicated the same productivity level in Debeka farm by
using the same method. In this method, coffee plantation is expected for production in second
plantation year.

Figure 6.5: Plant stand and performance in second project year

Based on the above experience of the farm and other countries, the productivity of the farm is given
in the following table.

Table 6.17: Productivity of the coffee

Sr. Process Productivity by Crop Age (Qt/ha)
Crop
No. Share 2 3 4 5 & Above
1 Clean Coffee 40 50 60 60
aWashed Coffee 45% 18 23 27 27
bNatural dry coffee 45% 18 23 27 27
cLow grad Coffee 10% 4 5 6 6
2 Banana 100% 400 450 500 500

Based on the above productivity, the annual total production is calculated in the following table.

Table 6.18: Estimation of total production of the Project (Qt/year)

Project Year
Description 2024/2
2020/21 2021/22 2022/23 2023/24 2025/26 2026/27 & Above
5
A. Coffee Production
Area in ha - First Plantation 30 30 30 30 30 30
- Second Plantation 100 100 100 100 100
Yield per ha (Qt) - First Plantation 40 50 60 60 60 60
- Third Plantation 40 50 60 60 60
Total Production 1,200 5,500 6,800 7,800 7,800 7,800
Washed Coffee 540 2,475 3,060 3,510 3,510 3,510
Natural dry coffee 540 2,475 3,060 3,510 3,510 3,510
Low grad Coffee 120 550 680 780 780 780
B. Banana Production
Banana Plantation (ha) 40 40 40 40 40
Yield per ha (Qt) 400 450 500 500 500

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 Total Production - 16,000 18,000 20,000 20,000 20,000
V.8. Utilities
The project will secured its water source from River and uses water filtration system that installed
with irrigation system for potable water. Regarding communication, the area is under coverage of
mobile telephone network, so that the farm also benefits from this net work.

Regarding electric supply, Ethiopian power supply confirmed to supply sufficient electric power
using two transformers for irrigation system at water source and pump house for each unit farm,
additional one transformer at head quarter for office, residential and coffee processing requirement.
Based on the above requirements, the project will have five transformers at completion of the
project. In case of power drop, the project planned to purchase five standby generators proportional
to transformers. The power requirement of the project is presented in the following table.

Table 6.19: Power requirements of the farm

Transformers No. of Transformer Power Requirement
Transformer one at water source 2 4*55kw Total load = 220kw
Transformer two at pump house 2 4*75kw
1*30kw
1*25kw
Total load = 355kw
Transformer three at head quarter 1 1*45kw
1*15kw
1*32.3kw
1*14.658kw
1*9.098kw
1*10.416kw
1*3.859kw
1*6.051kw
1*78.359
Total load = 200kw

55
 V.9. Project implementation schedule for remaining operation
Sr. 2022/23 2023/24
Operation description
No. July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. April May June July Aug. Sept. Oc. Nov. Dec.
1 Land clearing
2 Irrigation System installation
3 Building and Constructions
4 Agricultural machinery purchase
5 Vehicle purchasing
6 Nursery operation
7 Land preparation
8 Coffee plantation
9 Coffee plant maintenance
10 Coffee processing setup
11 Coffee harvesting and processing
12 Coffee marketing

56
 VI. ORGANIZATIONAL SETUP AND MANAGEMENT
VI.1. Organization Structure
VI.2. Organizational Chart
The organization structure farm only; it is also serving for so many sister company and business
units. Therefore, any expense related to the management members and head office employees
working under these supporting units is considered as expense based on the size of operation.

Figure 6.1: Organizational Trading PLC

SHAREHOLDERS GENERAL
MEETING

MANAGING DIRECTOR
(CEO)

EXTERNAL AUDIT
(ICO)
SOUTH REGIONAL OFFICE

LEGAL ADVISOR PROJECT COORDINATION

PLANNING OFFICE

HR OFFICE FINANCE OFFICE MARKETING CORPORATE

DEPARTMENT AGRICULTURAL
OFFICE

COMMON FINANCE & ACCOUNTS LOCAL SALES &

SERVICE SECTION SECTION AGRICULTURE DISTRIBUTION SECTION
ARM

ADMINISTRATION FINANCE & ACCOUNTS

SECTION OF OTHERS PURCHASING SECTION
SECTION
BUSINESS UNIT DEBEKA
IMPORT & EXPORT SECTION FARM

MARKET RESEARCH &

DEVELOPMENT

by itself is running different businesses, namely, import-export trading, industrial, hotel and
agricultural businesses. Based on this understanding, the cost of head office is distributed to each
strategic business unit. Therefore, 30% of any expense of management members and workers is
considered as the expense of the farms.

Figure 6.2: Organizational Chart of Corporate Agricultural Office

57
 CORPORATE
AGRICULTURAL OFFICE

FARM

DEBEKA FARM
GENERAL STORE &
PRODUCT QUALITY

HR & ACCOUNTS TECHNICAL & PRODUCTION UNIT MECHANIZATION

UNITS IRRIGATION UNIT UNIT

ACCOUNTS IRRIGATION

PERSONNEL MAINTENANCE &

WORKSHOP

VI.3. Management and Manpower

VI.3.1. Management Members of
Trading PLC has well organized organizational structure and highly qualified and experienced and
qualified personnel filled all posts. Table 9.1 below shows the name, position, and experience of the
management staff at the apex level of.

Table 7.1: Name, Position, and Qualification of PLC Top Management Staff

VI.3.2. Management Members of Farms

These farm manager is directly accountable to the corporate office. The farms are structured to have
manager who are responsible to plan, organize, coordinate and supervise the overall activities of the
farms.

Farm

VI.4. Availability of Manpower

The farm has not faced any problem in employing of professionals so far. However, there is a
serious problem and competition for daily laborers in the project area at critical operation time
because of the society in the project area engaged in the same crop farming.

58
VII. ENVIRONMENTAL AND SOCIOECONOMIC CONSIDERATION
VII.1. Environmental Considerations
In recent times, the issue of environment is given a greater emphasis by all stakeholders. In
particular, consumers are demanding commodities that are produced with minimum environmental
polluting impact. The following sections discuss some of the operations in modern coffee farms that
would have negative impact on the environment.

A. Soil Erosion due to Land Clearing and Development

When site clearing is carried out, removal of the protective vegetation cover and disturbance to soil
surface will inevitably bring about soil erosion. The reduction of tree cover, natural predators, and
organic materials leads to higher rates of nutrient-leaching and higher erosion.

B. Chemicals and Fertilizer Use

Contamination of ground and tables (aquifers) water because of chemical and fertilizer usage leads
to damage on soil microorganisms, overgrowth of algae in river and result with depletion of oxygen
in the water, creates air pollution and develops pesticide-resistant weeds and insects.

C. Coffee Processing Waste

Major source of river pollution is from the discharges of coffee processing plants. The process of
separating the coffee bean from the coffee cherries produces “enormous volumes of waste material
in the form of pulp, residual water and parchment. The ecological impact of these discharges of
organic pollutants from processors into rivers results with oxygen in taking from aquatic plant and
wildlife.

Currently, there are schemes which developed and gained much acceptance in relation to minimizing
the negative impact of the coffee plantation on environment. The envisaged farm, therefore, planned
to use the following mitigating method to minimize the environmental impact.
 Conserving of trees through growing coffee tree and enable soil microorganisms to improve the
soil structure and fertility,
 Using of fertigation: Drip irrigation system does not release more water unlike furrow irrigation
and leaching of fertilizer to ground water is very remote.
 Optimum usage and timely application of chemicals and fertilizers: Successive and untimely
application of fertilizer and chemicals cannot only result in higher operating cost but also pollutes
the surface water. Manuring/ fertilizing based on the coffee requirements and use of pesticides,
herbicides and the like on time will minimize environmental pollution.
 The farm always gives priority to biological and manual controlling method of pests.

59
 Coffee husk from pulping should also be dumped in big mason, especially constructed for this
purpose and used back as organic fertilizer.
 The farm will install liquid waste treatment system in pulping station and recycle the water in
washing process. The recycling of water not only minimizes the pollution of environment but also
facilitate fermentation process.

VII.2. Socio-Economic Impact Assessment of the Farm

 Creates Employment Opportunity
Coffee production is one of labor-intensive agricultural production activity, therefore, the farm
provides employment opportunity for 61 permanent worker and very large casual workers.
Especially, during wet processing time it provides employment opportunity for many rural
households.
 Foreign Exchange Contribution
The farm will contributes more in generating Foreign Exchange Currency to the nation since
coffee is the major agricultural export crop providing currently 35% of Ethiopian foreign
exchange earnings.
 GDP Contribution
Ethiopia’s economy performance is largely determined by what happens in the agricultural
sectors. Since agriculture employs more than 85% of population and accounts for nearly half of
GDP, coffee production contributes to the highest GDP of the country. In this regard, the
envisage farm also brings additional production to agricultural sector.
 The farm generates revenue for the government in the form of tax.
 The company working with so many coffee grower farmers by disseminating coffee seedling and
providing technical training in addition to working as reliable market for their coffee produce.

60
VIII. FINANCIAL STUDY
VIII.1. Investment Requirement
The financial requirement of coffee farm establishment includes all funds injected up to all coffee
plant provides production. The investment cost of the farms with project estimated to be Birr
2,236,200,617 of which the company invested Birr 237,201,152 and Birr 229,945,406 in 2019/20
and 2020/21 respectively from own source. The remaining Birr 1,561,493,203 expected in the coming
years in order to finalize the project implementation. The major investment items of the farm are
land development, machinery, equipment, vehicles, coffee development, building construction,
working capital and pre-operation expenses as shown in the following table. The lion share of the
total investment outlay is for fixed asset that accounts Birr 2,013,534,903 whereas the remaining
Birr 32,575,686 and Birr 190,090,028 allocated for working capital and pre-operating cost mainly
pre-production interest.

Table 9.1: Financial requirement of the project

Existing Plan
Description Total
2020/21 2021/22 2022/23
Land Development 29,673,776 124,971,273 34,326,116 188,971,165
Building & Construction 98,734,766 21,481,506 311,227,429 431,443,701
Machinery and Equipments - - 874,744,244 874,744,244
Auxiliary machineries - - 44,124,271 44,124,271
Furniture and Fixture - - 1,976,683 1,976,683
Vehicles - - 67,562,800 67,562,800
Irrigation system 91,442,260 - 116,825,638 208,267,898
Coffee Development 17,176,239 68,561,880 110,706,022 196,444,141
Total Investment Cost 237,027,041 215,014,659 1,561,493,203 2,013,534,903
Working Capital - 14,556,336 18,019,350 32,575,686
Pre-operating cost 174,111 374,411 189,541,506 190,090,028
Total 237,201,152 229,945,406 1,769,054,059 2,236,200,617

VIII.2. Sources of Finance

The company so far invested Birr 528,016,057 from own source and planned to invest Birr
189,541,506 in the coming Ethiopian fiscal year. In addition to own investment, the company
planned to mobilize Birr 1,579,512,553 from the Bank in 2022/23. At the end of project
implementation, the debut equity ratio becomes 71% (Birr 1,579,512,553) to 29% (Birr
656,688,064). The promoter contribution fulfilled through existing investment and future
preproduction interest payment (See table 9.2).

61
VIII.3. Revenue Estimation
The project revenue comes from sales of green coffee bean and banana fruit. However, the lion share
(98%) expected from coffee sales and the remaining 2% comes from banana sales. The product from
wet process and natural process will be sold directly to importers by the company itself and coffee
from dry process through ECX market.

The current direct export price of wet and natural processed green coffee bean are Birr 45,968 and
Birr 40,144 per quintal respectively whereas dry processed green coffee bean is Birr 16,016 per
quintal in ECX market, see table 9.3.

VIII.4. Marketing and Operational Cost Estimation

Similar to revenue contribution, coffee plantation is accountable for 81% of aggregate cost and the
remaining 19% goes to banana plant regarding direct cost. The marketing cost encompasses
transportation cost to market destination, packaging and container, further processing and selling
cost. The cost of transportation to Djibouti, container and further processing cost are purely the cost
attached with direct export while selling cost attached with ECX market, especially payment for seat.
The packaging materially cost at different amount and domestic transportation cost are applicable for
both export and ECX market as given in assumption part.

From marketing cost, the large share (60%) is hold by local transportation cost of the product while
the remaining 20%, 15%, 3% and 2% are occupied by transportation to Djibouti, sake purchase,
container and loading-unloading cost respectively. The total market cost of the project during the
years under consideration accounts 1% of the revenue. The operational cost consists of direct
production and overhead costs of the farms. From the total operational cost 44% estimated to be
direct cost while 56% overhead cost. Material, labor and machinery cost accounts 42%, 31% and
27% respectively from the total direct cost, see table 9.5.

62
 Table 9.2: Source of Finance
2020/21 2021/22 2022/23 Total
Description
Own Bank Total Own Bank Total Own Bank Total Own Bank Total
Land Development 29,673,776 29,673,776 124,971,273 124,971,273 - 34,326,116 34,326,116 154,645,049 34,326,116 188,971,165
Building and Construction 98,734,766 98,734,766 21,481,506 21,481,506 - 311,227,429 311,227,429 120,216,272 311,227,429 431,443,701
Machine & Equipment - - - - - 874,744,244 874,744,244 - 874,744,244 874,744,244
Auxiliary machineries - - - - - 44,124,271 44,124,271 - 44,124,271 44,124,271
Furniture & Fixture - - - - - 1,976,683 1,976,683 - 1,976,683 1,976,683
Vehicle - - - - - 67,562,800 67,562,800 - 67,562,800 67,562,800
Irrigation system 91,442,260 91,442,260 - - - 116,825,638 116,825,638 91,442,260 116,825,638 208,267,898
Coffee Development 17,176,239 17,176,239 68,561,880 68,561,880 - 110,706,022 110,706,022 85,738,119 110,706,022 196,444,141
Total Investment Cost 237,027,041 - 237,027,041 215,014,659 - 215,014,659 - 1,561,493,203 1,561,493,203 452,041,700 1,561,493,203 2,013,534,903
Working Capital - - 14,556,336 14,556,336 - 18,019,350 18,019,350 14,556,336 18,019,350 32,575,686
Pre-operating cost 174,111 174,111 374,411 374,411 189,541,506 - 189,541,506 190,090,028 - 190,090,028
Total 237,201,152 - 237,201,152 229,945,406 - 229,945,406 189,541,506 1,579,512,553 1,769,054,059 656,688,064 1,579,512,553 2,236,200,617
Percentage Share 100% 0% 100% 100% 0% 100% 11% 89% 100% 29% 71% 100%

63
64
Table 9.3: Revenue Estimation
Existing Planed Project year
Description
2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32

Total Coffee Yield (Qt) - 800 5,000 25,000 30,700 35,400 35,400 35,400 35,400 35,400 35,400 35,400

Washed Coffee - 360 2,250 11,250 13,815 15,930 15,930 15,930 15,930 15,930 15,930 15,930

Natural dry coffee - 360 2,250 11,250 13,815 15,930 15,930 15,930 15,930 15,930 15,930 15,930

Low grade Coffee - 80 500 2,500 3,070 3,540 3,540 3,540 3,540 3,540 3,540 3,540

Sales price wet processed (Birr/Qt) - 45,968 45,968 45,968 45,968 45,968 45,968 45,968 45,968 45,968 45,968 45,968

Sales price Natural processed (Birr/Qt) - 40,144 40,144 40,144 40,144 40,144 40,144 40,144 40,144 40,144 40,144 40,144

Sales price Low grad coffee (Birr/Qt) - 16,016 16,016 16,016 16,016 16,016 16,016 16,016 16,016 16,016 16,016 16,016

Total Sales of Coffee - 32,281,600 201,760,000 1,008,800,000 1,238,806,400 1,428,460,800 1,428,460,800 1,428,460,800 1,428,460,800 1,428,460,800 1,428,460,800 1,428,460,800

Total Banana Yield (Qt) - - 16,000 18,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

Sales Price (Birr/Qt) 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000

Total Sales of Banana 16,000,000 18,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000

Total Revenue - 32,281,600 217,760,000 1,026,800,000 1,258,806,400 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800

65
Table 9.4: Direct Cost Estimation
A. Coffee Plant
Description 2020/2 2021/22 2022/23 2023/24 2024/25 2024/26 2026/27 2027/28 2028/29 2029/30 2030/31 2021/32
1
Labor cost
Hectare - 20 120 590 590 590 590 590 590 590 590 590
Labor cost/ha - 29,958 29,958 29,958 29,958 29,958 29,958 29,958 29,958 29,958 29,958 29,958
Sub Total - 599,160 3,594,960 17,675,220 17,675,220 17,675,220 17,675,220 17,675,220 17,675,220 17,675,220 17,675,220 17,675,220
Material Cost
Hectare - 20 120 590 590 590 590 590 590 590 590 590
Material cost/ha 43,119 43,119 43,119 43,119 43,119 43,119 43,119 43,119 43,119 43,119 43,119
Sub Total - 862,380 5,174,280 25,440,210 25,440,210 25,440,210 25,440,210 25,440,210 25,440,210 25,440,210 25,440,210 25,440,210
Machinery Cost
Hectare - 20 120 590 590 590 590 590 590 590 590 590
Tractor cost/ha - 25,658 25,658 25,658 25,658 25,658 25,658 25,658 25,658 25,658 25,658 25,658
Sub Total - 513,160 3,078,960 15,138,220 15,138,220 15,138,220 15,138,220 15,138,220 15,138,220 15,138,220 15,138,220 15,138,220
Grand Total - 1,974,700 11,848,200 58,253,650 58,253,650 58,253,650 58,253,650 58,253,650 58,253,650 58,253,650 58,253,650 58,253,650
B. Banana Plant
Description 2020/21 2021/22 2022/23 2023/24 2024/25 2024/26 2026/27 2027/28 2028/29 2029/30 2030/31 2021/32
Labor cost
Hectare - 40 40 40 40 40 40 40 40 40 40
Labor cost/ha - 39,548 10,850 10,850 10,850 10,850 10,850 10,850 10,850 10,850 10,850
Sub Total - - 1,581,920 434,000 434,000 434,000 434,000 434,000 434,000 434,000 434,000 434,000
Material Cost
Hectare - - 40 40 40 40 40 40 40 40 40 40
Material cost/ha 27,600 27,600 27,600 27,600 27,600 27,600 27,600 27,600 27,600 27,600
Sub Total - - 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000 1,104,000
Machinery Cost
Hectare - - 40 40 40 40 40 40 40 40 40 40
Tractor cost/ha - - 1,291 1,291 1,291 1,291 1,291 1,291 1,291 1,291 1,291 1,291
Sub Total - - 51,640 51,640 51,640 51,640 51,640 51,640 51,640 51,640 51,640 51,640
Grand Total - - 2,737,560 1,589,640 1,589,640 1,589,640 1,589,640 1,589,640 1,589,640 1,589,640 1,589,640 1,589,640

66
Table 9.5: Cost Estimation
Project Year
Description
2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32
A. Marketing Cost
Local product transportation (Birr/qt) - 112,000 2,940,000 6,020,000 7,098,000 7,756,000 7,756,000 7,756,000 7,756,000 7,756,000 7,756,000 7,756,000
Loading unloading (Birr/qt) - 4,000 105,000 215,000 253,500 277,000 277,000 277,000 277,000 277,000 277,000 277,000
Transportation to Djibouti (Birr/qt) - 64,800 405,000 2,025,000 2,486,700 2,867,400 2,867,400 2,867,400 2,867,400 2,867,400 2,867,400 2,867,400
Container cost (Birr/qt) - 8,942 55,890 279,450 343,165 395,701 395,701 395,701 395,701 395,701 395,701 395,701
Sack (Birr/qt) - 50,160 313,500 1,567,500 1,924,890 2,219,580 2,219,580 2,219,580 2,219,580 2,219,580 2,219,580 2,219,580
Sales in ECX - 560 3,500 17,500 21,490 24,780 24,780 24,780 24,780 24,780 24,780 24,780
Total - 240,462 3,822,890 10,124,450 12,127,745 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461
B. Operational Cost
Direct Production Cost
Labor Cost - 599,160 5,176,880 18,109,220 18,109,220 18,109,220 18,109,220 18,109,220 18,109,220 18,109,220 18,109,220 18,109,220
Machinery Cost - 513,160 4,182,960 16,242,220 16,242,220 16,242,220 16,242,220 16,242,220 16,242,220 16,242,220 16,242,220 16,242,220
Input Cost - 862,380 5,225,920 25,491,850 25,491,850 25,491,850 25,491,850 25,491,850 25,491,850 25,491,850 25,491,850 25,491,850
Sub Total - 1,974,700 14,585,760 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290
Indirect Production Cost
Salary - 3,276,102 3,439,907 3,786,502 3,975,827 4,174,618 4,383,349 4,602,516 4,832,642 5,074,274 5,327,988 5,594,387
Repair and maintenance - 4,999,193 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579 6,267,579
Insurance - 1,777,703 3,390,313 16,658,218 16,658,218 16,658,218 16,658,218 16,658,218 16,658,218 16,658,218 16,658,218 16,658,218
Fuel and lubricant - 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200 1,667,200
Land lease payment - 54,034 54,034 54,034 54,034 54,034 54,034 54,034 54,034 54,034 54,034 54,034
Per-diem & travel - 262,088 275,193 302,920 318,066 333,969 350,668 368,201 386,611 405,942 426,239 447,551
PPT expense - 322,816 2,177,600 10,268,000 12,588,064 14,484,608 14,484,608 14,484,608 14,484,608 14,484,608 14,484,608 14,484,608
Uniform - 30,000 51,600 51,600 51,600 51,600 51,600 51,600 51,600 51,600 51,600 51,600
Benefits of employee - 12,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500 21,500
Miscellaneous - 180,000 645,000 645,000 645,000 645,000 645,000 645,000 645,000 645,000 645,000 645,000
Sub Total - 12,581,636 17,989,926 39,722,553 42,247,088 44,358,326 44,583,756 44,820,456 45,068,992 45,329,955 45,603,966 45,891,677
Total - 14,556,336 32,575,686 99,565,843 102,090,378 104,201,616 104,427,046 104,663,746 104,912,282 105,173,245 105,447,256 105,734,967
Working capital requirement - 14,556,336 32,575,686 99,565,843 102,090,378 104,201,616 104,427,046 104,663,746 104,912,282 105,173,245 105,447,256 105,734,967
Incremental Working capital - 14,556,336 18,019,350 66,990,157 2,524,535 2,111,238 225,430 236,700 248,536 260,963 274,011 287,711

67
VIII.5. Financial Estimates
VIII.5.1. Profit/Loss Forecast
Profit/loss statement of the project with shows profit starting from 2023/24 at which the third plantation
commences production. The net earnings of the project have shown continuous increment from
negative Birr 8.13 millions in 2020/21 to Birr 726.77 millions in 2031/32. The project net profit margin
increases also from 40% at the fourth project year to 50% at 2031/32 project year following the
development of the total landholding and attaining maximum productivity, see table 9.6.

VIII.5.2. Projected Cash-flow Statement

The project will have positive cash flow throughout the project years under consideration. The per-
forma cash flow statements depicted that Birr 17.48 million at the end of second project year and
cumulative cash of Birr 3.93 billion at the end of the project year after servicing its debt obligation and
sharing their dividend. The farm starts debt serving and profit sharing in the form of dividend for
shareholders starting from fourth year since then net earnings is insufficient to serve the same in the
second project year, see table 9.7. In other words, the project requires one-year grace period in order to
serve the debt comfortably since the loan is processed.

VIII.5.3. Projected Balance Sheet

Starting from the fourth project year, the farm creates additional values to the owner and becomes
financially strong. The leverage ratio of the project at the end of the third project year is 1.38:1 at the
year production starts and free of liability at the end of sixth project year. In the fourth project year the
gearing ratios of the project will be above acceptable level that is 1.67, see table 9.8.

68
 Table 9.6: Profit or Loss Statement of the Project
Project Year
Description
2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/031 2031/32
Revenue 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/031 2031/032

Less: Marketing cost - 32,281,600 217,760,000 1,026,800,000 1,258,806,400 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800 1,448,460,800

Net Revenue - 240,462 3,822,890 10,124,450 12,127,745 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461 13,540,461

Less: Direct production cost - 32,041,138 213,937,110 1,016,675,550 1,246,678,655 1,434,920,339 1,434,920,339 1,434,920,339 1,434,920,339 1,434,920,339 1,434,920,339 1,434,920,339

Gross Profit - 1,974,700 14,585,760 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290 59,843,290

Less: Indirect cost - 30,066,438 199,351,350 956,832,260 1,186,835,365 1,375,077,049 1,375,077,049 1,375,077,049 1,375,077,049 1,375,077,049 1,375,077,049 1,375,077,049

Operational Profit - 12,581,636 17,989,926 39,722,553 42,247,088 44,358,326 44,583,756 44,820,456 45,068,992 45,329,955 45,603,966 45,891,677

Less Interest - 17,484,802 181,361,424 917,109,707 1,144,588,277 1,330,718,723 1,330,493,293 1,330,256,593 1,330,008,057 1,329,747,094 1,329,473,083 1,329,185,372

Profit Before Tax & Depreciation - - 189,541,506 165,848,818 142,156,130 118,463,442 94,770,753 71,078,065 47,385,377 23,692,688

Less Depreciation - 17,484,802 181,361,424 917,109,707 955,046,771 1,164,869,905 1,188,337,163 1,211,793,151 1,235,237,304 1,258,669,029 1,282,087,706 1,305,492,684

Profit before Tax - 25,619,307 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545

Less Tax (35%) - (8,134,505) (6,028,121) 729,720,162 767,657,226 977,480,360 1,000,947,618 1,024,403,606 1,047,847,759 1,071,279,484 1,094,698,161 1,118,103,139

Net Profit - - - - 268,680,029 342,118,126 350,331,666 358,541,262 366,746,716 374,947,819 383,144,356 391,336,099

Profit Margin - (8,134,505) (6,028,121) 729,720,162 498,977,197 635,362,234 650,615,952 665,862,344 681,101,043 696,331,665 711,553,805 726,767,040

Break Even -25% -3% 71% 40% 44% 45% 46% 47% 48% 49% 50%

69
 Table 9.7: Cash Flow Statement of the Project
Project Year
Description
2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/031 2031/032
Cash Inflows

Owner's Equity 237,201,15 229,945,406 189,541,506 - - - - - - - - -

2
Bank Loan - - 1,579,512,553 - - - - - - - - -

Net Profit - (8,134,505) (6,028,121) 729,720,162 498,977,197 635,362,234 650,615,952 665,862,344 681,101,043 696,331,665 711,553,805 726,767,040

Depreciation - 25,619,307 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545 187,389,545

Salvage Value - - - - - - - - - - - 304,110,174

Total Cash Inflow 237,201,15 247,430,208 1,950,415,483 917,109,707 686,366,742 822,751,779 838,005,497 853,251,889 868,490,588 883,721,210 898,943,350 1,218,266,759
2
Cash Outflows

Investment Cost 237,201,15 215,389,070 1,751,034,709 - - - - - - - - -

2
Incremental Working Capital - 14,556,336 18,019,350 66,990,157 2,524,535 2,111,238 225,430 236,700 248,536 260,963 274,011 287,711

Loan repayment - - - 197,439,069 197,439,069 197,439,069 118,463,442 118,463,442 118,463,442 118,463,442 118,463,442 -

Shareholders Dividend - - - 364,860,081 249,488,599 317,681,117 325,307,976 332,931,172 340,550,522 348,165,833 355,776,903 363,383,520

Total Cash Outflow 237,201,15 229,945,406 1,769,054,059 629,289,307 449,452,203 517,231,424 443,996,848 451,631,314 459,262,500 466,890,238 474,514,356 363,671,231
2
Net Cash Flow - 17,484,802 181,361,424 287,820,400 236,914,539 305,520,355 394,008,649 401,620,575 409,228,088 416,830,972 424,428,994 854,595,528

Cumulative Cash Flow - 17,484,802 198,846,226 486,666,626 723,581,165 1,029,101,52 1,423,110,169 1,824,730,74 2,233,958,832 2,650,789,80 3,075,218,798 3,929,814,326
0 4 4
Note that shareholders dividend is 50% of the profit starting from fourth year

70
 Table 9.8: Projected Balance Sheet of the Project
Year
Description
2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32
Asset
Current Asset
Cash - 17,484,802 198,846,226 486,666,626 723,581,165 1,029,101,520 1,423,110,169 1,824,730,744 2,233,958,832 2,650,789,804 3,075,218,798 3,929,814,326
Working capital - 14,556,336 18,019,350 66,990,157 2,524,535 2,111,238 225,430 236,700 248,536 260,963 274,011 287,711
Total current asset - 32,041,138 216,865,576 553,656,783 726,105,700 1,031,212,758 1,423,335,599 1,824,967,444 2,234,207,368 2,651,050,767 3,075,492,809 3,930,102,037
Fixed Asset
Land Development 28,684,650 148,501,088 176,528,165 170,229,126 163,930,087 157,631,048 151,332,009 145,032,970 138,733,931 132,434,892 126,135,853 119,836,814
Building & Construction 93,798,028 109,268,720 398,923,964 377,351,779 355,779,594 334,207,409 312,635,224 291,063,039 269,490,854 247,918,669 226,346,484 204,774,299
Machinery & equipment - - 765,401,213 656,058,182 546,715,151 437,372,120 328,029,089 218,686,058 109,343,027 - - -
Irrigation system - - 38,608,737 33,093,203 27,577,669 22,062,135 16,546,601 11,031,067 5,515,533 - - -
Fixture &Furniture - - 1,779,015 1,581,347 1,383,679 1,186,011 988,343 790,675 593,007 395,339 197,671 -
Vehicle - - 54,050,240 40,537,680 27,025,120 13,512,560 - - - - - -
Coffee Development 82,298,034 73,153,808 169,152,656 148,325,866 127,499,076 106,672,286 85,845,496 65,018,706 44,191,916 23,365,126 2,538,336 -
Total fixed asset 16,429,446 81,263,582 183,428,554 174,887,504 166,346,454 157,805,404 149,264,354 140,723,304 132,182,254 123,641,204 115,100,154 106,559,104
Pre-operating cost 221,210,158 412,187,198 1,787,872,544 1,602,064,687 1,416,256,830 1,230,448,973 1,044,641,116 872,345,819 700,050,522 527,755,229 470,318,498 431,170,217
Total Asset 156,700 476,259 171,008,762 151,999,759 132,990,756 113,981,753 94,972,750 75,963,747 56,954,744 37,945,741 18,936,738 -
Liability &Capital 221,366,858 444,704,595 2,175,746,882 2,307,721,229 2,275,353,286 2,375,643,484 2,562,949,465 2,773,277,010 2,991,212,634 3,216,751,737 3,564,748,045 4,361,272,254
Liability
Bank Loan
Sub-total - - 1,579,512,553 1,382,073,484 1,184,634,415 987,195,346 789,756,277 592,317,208 394,878,139 197,439,070
Capital - - 1,579,512,553 1,382,073,484 1,184,634,415 987,195,346 789,756,277 592,317,208 394,878,139 197,439,070 - -
Owners equity
Retained Earning 237,201,152 467,146,558 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064 656,688,064
Sub total - (22,441,963) (60,453,735) 268,959,681 434,030,807 731,760,074 1,116,505,124 1,524,271,738 1,939,646,431 2,362,624,603 2,908,059,981 3,704,584,190
Total Liability & capital 221,366,858 444,704,595 596,234,329 925,647,745 1,090,718,871 1,388,448,138 1,773,193,188 2,180,959,802 2,596,334,495 3,019,312,667 3,564,748,045 4,361,272,254

71
VIII.6. Payback period and Break Even Capacity
According to the cash follow statement, the project is expected to recoups its initial investment cost
in 2028/29 Ethiopian fiscal year. This payback period is the feature of all perennial crops commercial
farms. The project will attain its breakeven point if it secures on average 19% of the revenue
throughout the project year.

VIII.6.1. Net Present Value

Net present value (NPV) is defined as the total present (discounted) value of a time series of cash flows.
NPV aggregates cash flows that occur during different periods of time during the life of a project in to a
common measuring unit i.e. present value. It is a standard method for using the time value of money to
appraise long-term projects. NPV is an indicator of how much value an investment or project adds to the
capital invested. In principle, a project is accepted if the NPV is non-negative. Accordingly, the net
present value of the project at 12% discount rate is found to be Birr 2,090,015,047.

VIII.6.2. Internal Rate of Return (IRR)

The Financial Internal Rate of Return (FIRR) before and after tax is 51% and 42% respectively. Both
rates are higher than the cost of capital of 12%. This indicates that the project is financially viable, see
table 10.9.

VIII.6.3. Sensitivity Analysis

A sensitivity analysis is conducted to see how the project reacts to changes of increase in total operational
costs or decrease in selling price of workshop products. In this regard, it is analyzed by assuming if the
total operational costs increased by 10% and selling price decreased by 10%. As a result, the sensitivity
analysis shows in all scenarios above cost of capital and hence the project is expected to contain all
shocks arise from the above assumed happenings. However, it is more sensitive for revenue decrease than
cost overrun, because sensitivity analysis for 10% revenue decrease resulted with 36% FIRR after tax
whereas 39% FIRR for 10% cost overrun see table 10.10 and 10.11. This result remained that project
management to be much sensitive for productivity since revenue directly related with amount produced
and marketability of the same.

72
 9.10. Computing of Financial Internal Rate of Return (FIRR)
Working
Project Fixed Asset Initial Marketing Operating Depreciation Net Benefit Net Benefit
Revenue Capital Total Benefits Income Tax Total Cost
Year Recovery Investment Cost Cost cost Before Tax After Tax
Recovery
2020/21 - - 237,027,041 237,027,041 (237,027,041) (237,027,041)
2021/22 32,281,600 32,281,600 215,014,659 240,462 14,556,336 229,811,457 15,816,883 - (197,529,857) (197,529,857)
217,760,000 217,760,000 1,561,493,203 3,822,890 32,575,686 1,597,891,77 24,037,619 - (1,380,131,779) (1,380,131,779)
2022/23
9
2023/24 1,026,800,000 1,026,800,000 10,124,450 99,565,843 109,690,293 185,807,857 - 917,109,707 917,109,707
2024/25 1,258,806,400 1,258,806,400 12,127,745 102,090,378 114,218,123 185,807,857 268,680,029 1,144,588,277 875,908,248
2025/26 1,448,460,800 1,448,460,800 13,540,461 104,201,616 117,742,077 185,807,857 342,118,126 1,330,718,723 988,600,597
2026/27 1,448,460,800 1,448,460,800 13,540,461 104,427,046 117,967,507 185,807,857 350,331,666 1,330,493,293 980,161,627
2027/28 1,448,460,800 1,448,460,800 13,540,461 104,663,746 118,204,207 185,807,857 358,541,262 1,330,256,593 971,715,331
2028/29 1,448,460,800 1,448,460,800 13,540,461 104,912,282 118,452,743 185,807,857 366,746,716 1,330,008,057 963,261,341
2029/30 1,448,460,800 1,448,460,800 13,540,461 105,173,245 118,713,706 185,807,857 374,947,819 1,329,747,094 954,799,275
2030/31 1,448,460,800 1,448,460,800 13,540,461 105,447,256 118,987,717 185,807,857 383,144,356 1,329,473,083 946,328,727
2031/32 1,448,460,800 105,734,967 304,110,174 1,858,305,941 13,540,461 105,734,967 119,275,428 185,807,857 391,336,099 1,739,030,513 1,347,694,414
FIRR 51% 42%
NPV (10%) Birr 2,314,732,333
9.11. Computation of Sensitivity Analysis When Revenue Decreases by 10% and Cost Remains Constant
Working
Project 10% Reduced Fixed Asset Initial Marketing Operating Depreciation Net Benefit Net Benefit
Capital Total Benefits Income Tax Total Cost
Year Revenue Recovery Investment Cost Cost cost Before Tax After Tax
Recovery
2020/21 237,027,041 237,027,041 (237,027,041) (237,027,041)
2021/22 29,053,440 29,053,440 215,014,659 92,971 14,556,336 229,663,966 15,816,883 (200,610,526) (200,610,526)
2022/23 195,984,000 195,984,000 1,561,493,203 627,149 32,575,686 1,594,696,038 24,037,619 (1,398,712,038) (1,398,712,038)
2023/24 924,120,000 924,120,000 - 2,957,184 99,565,843 102,523,027 185,807,857 821,596,973 821,596,973
2024/25 1,132,925,760 1,132,925,760 3,625,362 102,090,378 105,715,740 185,807,857 294,490,757 1,027,210,020 732,719,263
2025/26 1,303,614,720 1,303,614,720 4,171,567 104,201,616 108,373,183 185,807,857 353,301,788 1,195,241,537 841,939,749
2026/27 1,303,614,720 1,303,614,720 4,171,567 104,427,046 108,598,613 185,807,857 353,222,888 1,195,016,107 841,793,219
2027/28 1,303,614,720 1,303,614,720 4,171,567 104,663,746 108,835,313 185,807,857 353,140,043 1,194,779,407 841,639,364
2028/29 1,303,614,720 1,303,614,720 4,171,567 104,912,282 109,083,849 185,807,857 353,053,055 1,194,530,871 841,477,816
2029/30 1,303,614,720 1,303,614,720 4,171,567 105,173,245 109,344,812 185,807,857 352,961,718 1,194,269,908 841,308,190
2030/31 1,303,614,720 1,303,614,720 4,171,567 105,447,256 109,618,823 185,807,857 352,865,814 1,193,995,897 841,130,083
2031/32 1,303,614,720 105,734,967 304,110,174 1,713,459,861 4,171,567 105,734,967 109,906,534 185,807,857 496,210,915 1,603,553,327 1,107,342,412
FIRR 46% 36%

73
74
9.11. Computation of Sensitivity Analysis When Cost Increased by 10% and Revenue Remains Constant
Working
Project Fixed Asset Initial Marketing Operating Depreciation Net Benefit Net Benefit
Revenue Capital Total Benefits Income Tax Total Cost
Year Recovery Investment Cost Cost cost Before Tax After Tax
Recovery
2019/20 237,027,041 237,027,041 (237,027,041) (237,027,041)
2020/21 29,053,440 29,053,440 215,014,659 240,462 16,011,970231,267,091 15,816,883 - (202,213,651) (202,213,651)
1,601,149,34 (1,405,165,348
2021/22 195,984,000 195,984,000 1,561,493,203 3,822,890 35,833,255 24,037,619 - (1,405,165,348)
8 )
2022/23 924,120,000 924,120,000 10,124,450 109,522,427 119,646,877 185,807,857 - 804,473,123 804,473,123
1,258,806,40
2023/24 1,258,806,400 12,127,745 112,299,416 124,427,161 185,807,857 294,490,757 1,134,379,239 839,888,482
0
1,448,460,80
2023/25 1,448,460,800 13,540,461 114,621,778 128,162,239 185,807,857 397,071,746 1,320,298,561 923,226,815
0
1,448,460,80
2025/26 1,448,460,800 13,540,461 114,869,751 128,410,212 185,807,857 396,984,956 1,320,050,588 923,065,632
0
1,448,460,80
2025/27 1,448,460,800 13,540,461 115,130,121 128,670,582 185,807,857 396,893,826 1,319,790,218 922,896,392
0
1,448,460,80
2025/28 1,448,460,800 13,540,461 115,403,510 128,943,971 185,807,857 396,798,140 1,319,516,829 922,718,689
0
1,448,460,80
2025/29 1,448,460,800 13,540,461 115,690,570 129,231,031 185,807,857 396,697,669 1,319,229,769 922,532,100
0
1,448,460,80
2025/30 1,448,460,800 13,540,461 115,991,982 129,532,443 185,807,857 396,592,175 1,318,928,357 922,336,182
0
1,858,305,94
2025/31 1,448,460,800 105,734,967 304,110,174 13,540,461 116,308,464 129,848,925 185,807,857 396,481,406 1,728,457,016 1,331,975,610
1
FIRR 48% 39%

75
IX. ANNEX I: BASIC ASSUMPTION USED
I. General
1. Land lease years 30
2. Land size secured in hectare 700
3. Lease payment per hectare (Birr) 82.91
4. Total Lease payment for 30 years 1,741,110
5. 10% down payment (Birr) 174,111
6. Lease payment schedule for 54,034 per yearly

II. Land Development Cost

Sr. Machinery Requirement Rent per Hour Total cost
Type of Operation Unit
No. Used (ha) (Birr/hr) (Birr/ha)
1 Land clearing Dozer DH 3.7 4,700 17,390.00
2 Tree falling Loader LH 1 1,200 1,200.00
3 Uprooting Excavator EH 2 1,600 3,200.00
4 Trash removal Dozer DH 2.9 2,950 8,555.00
5 Virgin land plowing Dozer DH 8 4,700 37,600.00
6 Disking Tractor TH 4 468 1,872.00
7 Rough Leveling Tractor TH 1.5 468 702.00
8 Bed Construction and mulching Tractor TH 15 468 7,020.00
Total Machinery Cost 77,539.00

76
 III. Investment
2020/21 2021/22 2022/23 Total
Sr. Unit Unit Unit Unit
Type of Investment Unit Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost
No. Qty Cost Qty Cost Qty Cost Qty Cost
(Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr)
(USD) (USD) (USD) (USD)
1 Land Development
Access road km 5.7 4,933,859 28,122,996 17 4,933,859 83,875,603 5.7 4,933,859 28,122,996 28 - 4,933,859 140,121,595
Land preparation ha 20 77,539 1,550,780 530 77,539 41,095,670 80 77,539 6,203,120 630 - 77,539 48,849,570
Total 29,673,776 124,971,273 34,326,116 - - - 188,971,165
2 Building and Construction
Nursery, net house LS 198,350 10,314,200 10,314,200 98,600 5,127,200 5,127,200 - 296,950 15,441,400 25,755,600
Main pump station No. Unit Farm 1 6,366,218 6,366,218 1 6,366,218 6,366,218 2 - 12,732,436 6,366,218
River pump station No. Unit Farm 1 2,130,548 2,130,548 1 2,130,548 2,130,548 2 - 4,261,096 2,130,548
Reservoir No. Unit Farm 1 90,238,000 90,238,000 1 90,238,000 90,238,000 2 - 90,238,000 90,238,000
Diversion wear No. Unit Farm 1 1,559,144 1,559,144 1 1,559,144 1,559,144
Workers residence & canteen No. Unit Farm
Block 01 | management staff No. Unit Farm 2 9,010,005 18,020,010 2 - 9,010,005 18,020,010
Block 02 | supervisors No. Unit Farm 2 7,738,866 15,477,733 2 - 7,738,866 15,477,733
Block 03 | supervisors No. Unit Farm 2 5,480,585 10,961,170 2 - 5,480,585 10,961,170
Office block 04 No. Unit Farm 2 6,776,969 13,553,939 2 - 6,776,969 13,553,939
Ground weighing bridge No. 1 354,005 354,005 1 354,005 354,005
Fuel station Set 1 340,833 340,833 1 340,833 340,833
Garage and workshop | block 5 No. Unit Farm 2 5,147,215 10,294,430 2 - 5,147,215 10,294,430
General store | block 06 No. Unit Farm 2 6,611,689 13,223,378 2 - 6,611,689 13,223,378
Guest house | block 07 No. Unit Farm 1 10,328,517 10,328,517 1 - 10,328,517 10,328,517
Main office | block 08 No. Unit Farm 1 10,496,992 10,496,992 1 - 10,496,992 10,496,992
Clinic | block 09 No. Unit Farm 1 2,786,539 2,786,539 1 - 2,786,539 2,786,539
Coffee Washing Pool No. Unit Farm 2 4,384,257 8,768,514 2 - 4,384,257 8,768,514
Dry mill machine house No. Unit Farm 1 4,703,761 4,703,761 1 - 4,703,761 4,703,761
Site electrical works LS 28,472,450 - - - 28,472,450
Fence work M2 78,643 142 11,167,306 33,704 142 4,785,968 112,347 142 15,975,276
Main entrance, guard house &
LS 13,311,963 - - - 13,311,963
site electrical works
VAT 39,926,117 - - - 39,926,117
Total 98,734,766 21,481,506 311,227,429 343,045,137
3 Vehicle
V8 Vehicle No. - 1 110,000 5,720,000 5,720,000 1 110,000 5,720,000 5,720,000
Land cruiser No. - 1 8,392,000 8,392,000 1 - 8,392,000 8,392,000
Ivioc Truck No. - 5 155,000 8,060,000 40,300,000 5 155,000 8,060,000 40,300,000
Roll on roll up, container box No. 15 14,000 728,000 10,920,000 15 14,000 728,000 10,920,000
Motor cycle No. - - 13 3,300 171,600 2,230,800 13 3,300 171,600 2,230,800
Total - - 67,562,800 67,562,800
4 Machinery and Equipment
MF Tractor (175HP) No. - 4 150,000 7,800,000 31,200,000 4 150,000 7,800,000 31,200,000
MF Tractor (150 HP) No. 4 135,000 7,020,000 28,080,000 4 135,000 7,020,000 28,080,000
MF Tractor (125HP) No. 3 100,000 5,200,000 15,600,000 3 100,000 5,200,000 15,600,000
MF Tractor (95HP) No. 6 110,000 5,720,000 34,320,000 6 110,000 5,720,000 34,320,000
Special Tractor Trailer No. 8 37,400 1,944,800 15,558,400 8 37,400 1,944,800 15,558,400
Jacot coffee harvester No. 2 490,000 25,480,000 50,960,000 2 490,000 25,480,000 50,960,000
Jacto Coffee Harvester
No. 15 495,000 25,740,000 386,100,000 15 495,000 25,740,000 386,100,000
Attachment
Grader and roller No. 2 385,000 20,020,000 40,040,000 2 385,000 20,020,000 40,040,000
Disc harrow No. 3 13,695 712,140 2,136,420 3 13,695 712,140 2,136,420
Reversible Plow No. 3 17,730 921,960 2,765,880 3 17,730 921,960 2,765,880

77
 2020/21 2021/22 2022/23 Total
Sr. Unit Unit Unit Unit
Type of Investment Unit Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost
No. Qty Cost Qty Cost Qty Cost Qty Cost
(Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr)
(USD) (USD) (USD) (USD)
Mulching machine No. 2 35,000 1,820,000 3,640,000 2 35,000 1,820,000 3,640,000
Subs oiler No. 2 39,500 2,054,000 4,108,000 2 39,500 2,054,000 4,108,000
Side & top purring machine No. 4 19,000 988,000 3,952,000 4 19,000 988,000 3,952,000
Tractor mounted orchard
No. 2 16,000 832,000 1,664,000 2 16,000 832,000 1,664,000
sprayer
Blower ASM-1S No. 2 7,800 405,600 811,200 2 7,800 405,600 811,200
Blower ASM-2S No. 2 12,400 644,800 1,289,600 2 12,400 644,800 1,289,600
Harvester Master Café 3E No. 5 39,000 2,028,000 10,140,000 5 39,000 2,028,000 10,140,000
Harvester Master Café 3 No. 2 51,000 2,652,000 5,304,000 2 51,000 2,652,000 5,304,000
Leveler NR-18 No. 7 6,600 343,200 2,402,400 7 6,600 343,200 2,402,400
Dump Cart CTG 4500 No. 6 16,000 832,000 4,992,000 6 16,000 832,000 4,992,000
Spare parts LS 572,916 29,791,632 29,791,632 - 572,916 29,791,632 29,791,632
Hulling machine set No. 1 800,786 41,640,872 41,640,872 1 800,786 41,640,872 41,640,872
Pulpier set No. 2 866,520 45,059,040 90,118,080 2 866,520 45,059,040 90,118,080
Demerge, Transport and
LS 2 68,129,760 2 - - 68,129,760
Insurance (8%)
Total 874,744,244 874,744,244
5 Auxiliary Units
Power installation of 630 KVA LS 2 2,517,947 5,035,894 2 - 2,517,947 5,035,894
Power installation of 315 KVA LS 2 1,227,854 2,455,708 2 - 1,227,854 2,455,708
Power installation of 100 KVA LS 2 871,440 1,742,880 2 - 871,440 1,742,880
630KVA compact transformer No. 2 8,106,516 16,213,032 2 - 8,106,516 16,213,032
315KVA compact transformer No. 2 700,000 1,400,000 2 - 700,000 1,400,000
100KVA compact transformer No. 1 1,200,000 1,200,000 1 - 1,200,000 1,200,000
High pressure compressor for
No. 1 21,000 21,000 1 - 21,000 21,000
car wash
Battery charger No. 1 23,000 23,000 1 - 23,000 23,000
Floor Jacky No. 1 21,000 21,000 1 - 21,000 21,000
Grinding machine No. 1 8,700 8,700 1 - 8,700 8,700
Drilling machine No. 1 8,600 8,600 1 - 8,600 8,600
Welding machine No. 1 27,000 27,000 1 - 27,000 27,000
Oil pump No. 1 8,500 8,500 1 - 8,500 8,500
Mechanic tools No. 1 4,700 4,700 1 - 4,700 4,700
High pressure compressor for
No. 1 30,000 1,560,000 1,560,000 1 30,000 1,560,000 1,560,000
tyre fill
Fuel station machines No. 1 1,000,000 1,000,000 1 - 1,000,000 1,000,000
Weighing bridge No. 1 24,855 1,292,460 1,292,460 1 24,855 1,292,460 1,292,460
400 KVA Generator - UK No. 2 55,000 2,860,000 5,720,000 2 55,000 2,860,000 5,720,000
250 KVA Generator - UK No. 2 35,000 1,820,000 3,640,000 2 35,000 1,820,000 3,640,000
200 KVA Generator - UK No. 1 30,000 1,560,000 1,560,000 1 30,000 1,560,000 1,560,000
Demerge, Transport and
LS 1,181,797 - - - 1,181,797
Insurance (8%)
Total - - 44,124,271 44,124,271
6 Irrigation system
Pvc main lines LS 259,240 13,480,480 13,480,480 398,809 20,738,068 20,738,068 - 658,049 34,218,548 34,218,548
Pvc sub main lines LS 50,251 2,613,052 2,613,052 113,816 5,918,432 5,918,432 - 164,067 8,531,484 8,531,484
Pvc main lines parts LS 117,409 6,105,268 6,105,268 - 117,409 6,105,268 6,105,268
Pvc sub main lines parts LS 15,750 819,000 819,000 - 15,750 819,000 819,000
Borehole - submersible pump No. - 4 2,602,180 10,408,720 4 - 2,602,180 10,408,720
Pump inlet manifold LS 19,050 990,600 990,600 - - - - 19,050 990,600 990,600
Main pump station LS 31,275 1,626,300 1,626,300 79,914 4,155,528 4,155,528 - 111,189 5,781,828 5,781,828
78
 2020/21 2021/22 2022/23 Total
Sr. Unit Unit Unit Unit
Type of Investment Unit Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost
No. Qty Cost Qty Cost Qty Cost Qty Cost
(Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr)
(USD) (USD) (USD) (USD)
Main pump station parts 46,353 2,410,356 2,410,356 - 46,353 2,410,356 2,410,356
Galv. Parts LS 2,159 112,268 112,268 4,215 219,180 219,180 - 6,374 331,448 331,448
Drainage LS 1,610 83,720 83,720 5,591 290,732 290,732 - 7,201 374,452 374,452
Manifold LS 24,643 1,281,436 1,281,436 51,207 2,662,764 2,662,764 - 75,850 3,944,200 3,944,200
Manifold parts LS 35,835 1,863,420 1,863,420 - 35,835 1,863,420 1,863,420
Fertigaion system LS 35,704 1,856,608 1,856,608 29,354 1,526,408 1,526,408 - 65,058 3,383,016 3,383,016
Fertigaion tank LS 3,460 179,920 179,920 - 3,460 179,920 179,920
Hydrant LS 39,286 2,042,872 2,042,872 - 39,286 2,042,872 2,042,872
Electrical control board LS 119,330 6,205,160 6,205,160 - 119,330 6,205,160 6,205,160
Control system LS 79,001 4,108,052 4,108,052 - 79,001 4,108,052 4,108,052
Misc LS 100,221 5,211,492 5,211,492 - - - - 100,221 5,211,492 5,211,492
Pump station from source/river LS 32,953 1,713,556 1,713,556 - 32,953 1,713,556 1,713,556
Pump station from reservoir LS 47,960 2,493,920 2,493,920 61,009 3,172,468 3,172,468 - 108,969 5,666,388 5,666,388
PVC pump station from
LS 32,953 1,713,556 1,713,556 - 32,953 1,713,556 1,713,556
reservoir
Drip network for coffee LS 354,824 18,450,848 18,450,848 405,242 21,072,584 21,072,584 - 760,066 39,523,432 39,523,432
Drip network for banana LS 84,500 4,394,000 4,394,000 - - - 84,500 4,394,000 4,394,000
Filter system. LS 85,964 4,470,128 4,470,128 90,020 4,681,040 4,681,040 - 175,984 9,151,168 9,151,168
Pvc from river to reservoir LS 170,807 8,881,964 8,881,964 - - - - 170,807 8,881,964 8,881,964
Valve figure - 2 Valve LS 86,841 4,515,732 4,515,732 107,098 5,569,096 5,569,096 - 193,939 10,084,828 10,084,828
Valve figure - 1 Valve LS 86,842 4,515,784 4,515,784 10,120 526,240 526,240 - 96,962 5,042,024 5,042,024
Pressure gauge LS 2,094 108,888 108,888 - 2,094 108,888 108,888
A.V. on 355 MM line LS 5,656 294,112 294,112 - 5,656 294,112 294,112
Pumps LS 219,892 11,434,384 11,434,384 - - - - 219,892 11,434,384 11,434,384
Clean water system LS 42,856 2,228,512 2,228,512 - - - - 42,856 2,228,512 2,228,512
Sprayer fill line LS 8,866 461,032 461,032 - - - - 8,866 461,032 461,032
Open field system LS 3,856 200,512 200,512 - 3,856 200,512 200,512
Sprinklers system PVC & P.E. LS 2,142 111,384 111,384 - 2,142 111,384 111,384
Valve figures for nursery X2 -
LS 2,255 117,260 117,260 - 2,255 117,260 117,260
Sprinklers
Nursery infield sprinklers LS 11,807 613,964 613,964 - 11,807 613,964 613,964
Service line - sprinklers LS 1,975 102,700 102,700 - 1,975 102,700 102,700
Fogger & Drip LS 3,496 181,792 181,792 - 3,496 181,792 181,792
Main head LS 23,689 1,231,828 1,231,828 - 23,689 1,231,828 1,231,828
Control system LS 7,029 365,508 365,508 - 7,029 365,508 365,508
Installation supervision in
LS 45,000 2,340,000 2,340,000 - - - - 45,000 2,340,000 2,340,000
USD
Demerge, transport and
LS 5,395,270 - - - 5,395,270
insurance (8%)
Total 91,442,260 - 116,825,638 158,593,598
7 Furniture and Fixture
Managerial Table PCS - 2 35,361 70,722 2 - 35,361 70,722
Manager Chair PCS - 2 38,217 76,434 2 - 38,217 76,434
Secretary Table PCS - 2 39,957 79,914 2 - 39,957 79,914
Secretary Chair PCS - 2 22,609 45,218 2 - 22,609 45,218
Office desk PCS - 2 19,087 38,174 2 - 19,087 38,174
Swivel chair PCS - 6 10,870 65,220 6 - 10,870 65,220
Guest chair PCS - 12 10,000 120,000 12 - 10,000 120,000
Shelves PCS - 6 3,435 20,610 6 - 3,435 20,610
Filling cabinet PCS - 6 13,870 83,220 6 - 13,870 83,220

79
 2020/21 2021/22 2022/23 Total
Sr. Unit Unit Unit Unit
Type of Investment Unit Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost Unit Cost Total Cost
No. Qty Cost Qty Cost Qty Cost Qty Cost
(Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr) (Birr)
(USD) (USD) (USD) (USD)
Coffee table PCS - 2 4,783 9,566 2 - 4,783 9,566
Guest room bed PCS - 1 23,000 23,000 1 - 23,000 23,000
Guest room Maters PCS - 1 13,100 13,100 1 - 13,100 13,100
Guest room Sofa PCS - 1 39,500 39,500 1 - 39,500 39,500
Guest room dying table set PCS - 1 34,950 34,950 1 - 34,950 34,950
Guest room Closet PCS - 1 37,739 37,739 1 - 37,739 37,739
Guest room Chair PCS - 4 10,000 40,000 4 - 10,000 40,000
Guest room table PCS - 4 19,516 78,064 4 - 19,516 78,064
Computer PCS - 6 23,797 142,782 6 - 23,797 142,782
Printer and Copy machine PCS - 2 190,000 380,000 2 - 190,000 380,000
Disk Top calculators PCS - 2 10,500 21,000 2 - 10,500 21,000
Safe Box PCS - 2 98,000 196,000 2 - 98,000 196,000
LED TV PCS - 2 129,785 259,570 2 - 129,785 259,570
Dish with receiver PCS - 2 7,800 15,600 2 - 7,800 15,600
Solar PCS - 2 27,500 55,000 2 - 27,500 55,000
Staplers PCS - 10 1,500 15,000 10 - 1,500 15,000
Punchers PCS 10 950 9,500 10 950 9,500
Paper trey PCS - 10 680 6,800 10 - 680 6,800
Total - - 1,976,683 1,976,683
8 Farm Establishment
Coffee Nursery ha 20 98,434 1,968,680 100 98,434 9,843,400 470 98,434 11,812,080 590 - 98,434 23,624,160
Coffee Plantation ha 20 103,827 2,076,540 100 103,827 10,382,700 470 103,827 12,459,240 590 - 103,827 24,918,480
Mulch plastic LS 31,275 1,626,300 572,300 29,759,600 572,300 29,759,600 - 572,300 - 61,145,500
Young coffee Maintenance ha 20 78,279 1,565,580 100 78,279 7,827,900 470 78,279 9,393,480 590 - 78,279 18,786,960
Banana Plantation ha - - - 40 109,650 4,386,000 40 - 109,650 4,386,000
Young Banana Maintenance ha - - - 40 159,057 6,362,280 40 - 159,057 6,362,280
Overhead Costs
Repair and Maintenance LS 4,999,193 47,281,622 - - - 52,280,815
Salary LS 3,276,102 - - - - 3,276,102
Insurance LS 1,005,145 - - - - 1,005,145
Fuel and lubricant LS - - - - - -
Land lease payment LS 174,111 - - - - 174,111
Per-diem & travel LS 262,088 - - - - 262,088
Uniform LS 30,000 - - - - 30,000
Benefits of employee LS 12,500 - - - - 12,500
Miscellaneous LS 180,000 - - - - 180,000
S. Total 17,176,239 68,561,880 110,706,022 196,444,141
9 Pre-operation Cost
Feasibility study LS 154,000 - - - - - 154,000
Soil sample test LS 1,300 - - - 1,300
Civil Construction Planning LS 45,000 - - - 45,000
Land lease payment 174,111 174,111 - - - 348,222
Pre-operation interest LS - - 189,541,506 - - - 189,541,506
S. Total 174,111 374,411 189,541,506 190,090,028
Total 237,201,152 215,389,070 876,290,465 1,190,807,823

80
 III. Indirect Cost Breakdown
1. Repair and Maintenance
Sr. 2020/21 2021/22 2022/23
Fixed Assets
No. Original Value Cost Original Value Cost Original Value Cost
1 Farm Road (1%) 28,122,996 281,230 111,998,599 1,119,986 140,121,595 1,401,216
2 Building and Construction (2%) 98,734,766 1,974,695 120,216,272 2,404,325 431,443,701 8,628,874
3 Machine & Equipment (3%) - - - - 874,744,244 26,242,327
4 Auxiliary Equipments (3%) - - - - 44,124,271 1,323,728
5 Furniture & Fixture (3%) - - - - 1,976,683 59,300
6 Irrigation system (3%) 91,442,260 2,743,268 91,442,260 2,743,268 208,267,898 6,248,037
7 Vehicle (5%) - - - - 67,562,800 3,378,140
Total 4,999,193 6,267,579 47,281,622

2. Depreciation and Amortization

Sr. 2020/21 2021/22 2022/23
Fixed Assets
No. Original Value Cost Original Value Cost Original Value Cost
1 Land development (Over Lease Year) 29,673,776 989,126 154,645,049 5,154,835 188,971,165 6,299,039
2 Building and Construction (5%) 98,734,766 4,936,738 120,216,272 6,010,814 431,443,701 21,572,185
3 Machinery and Equipment (12.5%) - - - - 874,744,244 109,343,031
4 Auxiliary machineries (12.5%) - - - - 44,124,271 5,515,534
5 Furniture and Fixture (10%) - - - - 1,976,683 197,668
6 Vehicle (20%) - - - - 67,562,800 13,512,560
7 Irrigation system (10%) 91,442,260 9,144,226 91,442,260 9,144,226 208,267,898 20,826,790
8 Coffee Development Cost (23 year) 17,176,239 746,793 85,738,119 3,727,744 196,444,141 8,541,050
9 Pre-operating cost (10%) 174,111 17,411 548,522 54,852 190,090,028 19,009,003
Total 15,816,883 24,037,619 185,807,857

3.

Note: Agronomy advisor payment considered for five month only for that requires him critically

4. Insurance: 0.75% of all fixed investment

5. Fuel and Lubricant of Vehicle
Consum Unit 2021/22 2022/23
Sr. Covering
Type of Vehicle Utilities Unit ption/ Price No. Annual No.
No. (Distance/Time) Annual cost
Unit (Birr) Vehicle cost Vehicle
1 V8 Vehicle Fuel Km 30000 0.17 36 - - 1 183,600
Oil Km 30000 0.0016 270 - - 1 12,960
Wash Months 12 1 160 - - 1 1,920
2 Field Vehicle Fuel Km 30000 0.10 36 - - 1 108,000
Oil Km 30000 0.0016 270 - - 1 12,960
Wash Months 12 1 160 - - 1 1,920
3 Iveco Track Fuel Km 30000 0.17 36 - - 5 918,000
Oil Km 30000 0.0032 200 - - 5 96,000
Wash Months 12 1 400 - - 5 24,000
4 Motor cycle Fuel Km 10000 0.06 36 - - 13 280,800
Oil Km 10000 0.0005 200 - - 13 13,000
Wash Month 18 1 60 - - 13 14,040
Total - 1,667,200
6. Fuel consumption will increase by 5% every year
7. Per-diem and Travel 8% of the salary
8. Total salary will increase every year by 5%
9. Yearly uniform and protective wears per permanent worker: Birr 1200/head
10. Stationery, postage and Telephone - 1% of revenue
11. Benefits per permanent employee (Birr 500/head/month)
13. Miscellaneous expense for Month: Birr 15,000

81
IV. Marketing cost (Birr)
Sr. Wet Natural
Description Dry Processed
No. Processed Processed
A. Coffee
1 Local product transportation (Birr/qt) 140.00 140.00 140.00
2 Loading unloading (Birr/qt) 6.00 6.00 5.00
3 Transportation to Djibouti (Birr/qt) 90.00 90.00 -
4 Container Cost (Birr/qt) 12.42 12.42 -
5 Sack (Birr/qt) 114.00 114.00 20.00
6 Marketing activities on sales (100 Qt) 700.00 700.00 700.00
B. Banana
1 Local product transportation (Birr/qt) 140.00
2 Loading unloading (Birr/qt) 6.00

V. Direct Production Assumption

1. Tractor hour cost determination
Total cost per hour
Sr. No. Description Unit Rate Unit price (Birr)
(Birr)
1 Fuel Consumption Lt/hr 9 33 297
2 Grease Consumption Kg/hr 0.04 270 10.8
3 Oil consumption Lt/hr 0.4 400 160
Total Cost 467.8
2. Labor cost with accommodation Birr 150

VI. Revenue Assumption

Sr. Process Productivity by Crop Age (Qt/ha) Selling Price
Crop
No. Share 2 3 4 5 USD/Qt Birr/Qt
1 Clean Coffee 40 50 60 60
aWashed Coffee 45% 18 23 27 27 884.00 45,968
bNatural dry coffee 45% 18 23 27 27 772.00 40,144
cLow grade Coffee 10% 4 5 6 6 16,016
2 Banana 100% 400 450 500 500 1,000

Exchange rate (Birr/USD) 52.00

ANNEX II. LOAN REPAYMENT SCHEDULE

Year Begging Balance Principal payment Interest Payment Ending Balance
31-06-2023 1,482,881,207 - 177,945,745 1,482,881,207
31-06-2024 1,482,881,207 185,360,151 177,945,745 1,297,521,056
31-06-2025 1,297,521,056 185,360,151 155,702,527 1,112,160,905
31-06-2026 1,112,160,905 185,360,151 133,459,309 926,800,754
31-06-2027 926,800,754 185,360,151 111,216,090 741,440,603
31-06-2028 741,440,603 185,360,151 88,972,872 556,080,452
31-06-2029 556,080,452 185,360,151 66,729,654 370,720,301
31-06-2030 370,720,301 185,360,151 44,486,436 185,360,150
31-06-2031 185,360,150 185,360,150 22,243,218 -

ANNEX III: OPERATIONAL NORMS USED IN THIS STUDY

A. Coffee operational rate
1. Nursery Cost

82
 Sr. Wage
Description Freq. MD/units Total Cost
No. Rate
Labor cost
1 Surveying seedlings site 1 60 150 9,000.00
2 Seed bed preparation 1 50 150 7,500.00
3 Peg preparation 1 10 150 1,500.00
4 Lining and pegging 1 10 150 1,500.00
5 Parcel and leveling 1 1 150 150.00
6 Soil heaping and mixing composite materials 1 540 150 81,000.00
7 Cutting polythen bags 1 24 150 3,600.00
8 Filling polythen bags 1 1500 150 225,000.00
9 Arranging polythen bags 1 10 150 1,500.00
10 Sorting seeds 1 6 150 900.00
11 Pre-sowing watering 1 2 150 300.00
12 Sowing 1 6 150 900.00
13 Mulch material preparation 1 100 150 15,000.00
14 Mulching 1 50 150 7,500.00
15 Shed materials collecting & construction 1 660 150 99,000.00
16 Watering and Cleaning 60 14 150 126,000.00
17 Weeding 25 4 150 15,000.00
18 Fertilizing 2 8 150 2,400.00
19 Hoeing 8 4 150 4,800.00
20 Spraying chemicals 3 40 150 18,000.00
21 Thinning shade 3 2 150 900.00
22 Removal of mulch 1 4 150 600.00
23 Shade removal 1 6 150 900.00
24 Seedling Sorting 2 3 150 900.00
25 Seedling Counting 2 22 150 6,600.00
Total Man Days Requirement 630,450.00
Material Cost
Sr. Rate per Unit
Type of Farm Tools Unit Total cost
No. hectare Price
1 Blade Pieces 0.1 165 16.50
2 Bow Saw Blade “ 3 278 834.00
3 Zapa “ 12 570 6,840.00
4 Bow Saw “ 3 3000 9,000.00
5 Hose Roll 3 9700 29,100.00
6 Watering cane Pair 15 277 4,155.00
7 Rake Pieces 2 900 1,800.00
8 Wheel barrow “ 4 5800 23,200.00
9 Hammer (small) “ 1 970 970.00
10 Hammer (big) “ 1 3300 3,300.00
11 Poly bags Kg 3000 168.44 505,320.00
12 Nail Pack 8 1270 10,160.00
13 Flate file Pieces 8 1970 15,760.00
Total Requirement 610,455.50
Fertilizer and seed
Sr. Application Unit
Description Freq. Total Cost
No. (Qt per ha) Price
1 Coffee Seed 1 2.4 12,000 28,800.00
2 UREA 2 1.2 4,800 11,520.00
3 Red ash 1 5934.6 515 3,056,319.00

83
4 Manure 1 5934.6 667 3,958,378.20
Total Requirement 7,055,017.20

84
Machinery
Nurser Unit
Description Rate Total Cost
y Price
1 Trans inputs & farm tools Th 4 467.8 1,871.20
2 Labor transport Th 4 467.8 1,871.20
Total 3,742.40
Grand Total 8,299,665.10
No of seedling raised per hectare 600,000.00
85% succession rate 510,000.00
Unit price of seedling 16.27
No of seedling required with loss per hectare 6,050.00
Nursery cost per hectare of plantation 98,433.50
2. Plating
Sr.
Description Md/Ha Wage Rate Total
No.
1 Surveying 5 150 750.00
2 Peg preparation 20 150 3,000.00
3 Transporting pegs 6 150 900.00
4 Lining & pegging 10 150 1,500.00
5 Holing 200 150 30,000.00
6 Re-filling Holes 60 150 9,000.00
7 Loading & Unloading Seedlings 14 150 2,100.00
8 Pre-plating weeding - Manual 32 150 4,800.00
9 Ridging 15 150 2,250.00
10 Planting seedlings 64 150 9,600.00
Total 63,900.00
Machinery Requirement
Rate
Operation Cost/Hr Total
(TH/Ha)
1 Transporting Pages 3 467.8 1,403.40
2 Transporting Seedling 10 467.8 4,678.00
Total 6,081.40
Farm Tools
1 Machet 3.2 2600 8,320.00
2 Gesso 39.27 650 25,525.50
Total 33,845.50
Grand Total 103,826.90

85
3. Young Coffee Maintenance
Sr.
Description Frq. Md/Ha Wage Rate Total
No.
Labor
1 Manual Weeding 8 10 150 12,000.00
2 Chemical Weeding 3 3 150 1,350.00
3 Hoeing 1 14 150 2,100.00
4 Fertilizing 2 10 150 3,000.00
5 Ridge Maintenance 4 10 150 6,000.00
6 Mulching 1 44 150 6,600.00
7 Handling 2 6 150 1,800.00
8 Thinning 1 5 150 750.00
9 Cover crop planting 1 10 150 1,500.00
10 Cover crop maintenance 4 10 150 6,000.00
11 Irrigation 52 0.36 150 2,808.00
Total 43,908.00
Farm Tools
Price
Description Unit Qty/ha Total
(Birr)
1 Pruning Shear pcs 0.16 590 94.40
2 Machet “ 3.2 2600 8,320.00
3 Sickle “ 0.15 795 119.25
4 Axe “ 2.25 480 1,080.00
5 Shovel “ 10.15 420 4,263.00
6 Flat file “ 0.4 140 56.00
7 Mattock “ 10 150 1,500.00
8 Weeding hoe “ 0.4 300 120.00
9 Metter “ 0.01 1700 17.00
10 Dry Cell “ 1.44 370 532.80
11 Basket “ 8 360 2,880.00
Total 1,207.49 18,982.45
Fertilizer
Description Unit Rate Unit Price Total
1 TSP Qt 1 6,000 6,000.00
2 NPS Qt 1 5,550 5,550.00
3 UREA Qt 0.5 4,870 2,435.00
Total Cost 13,985.00
Machinery
Description Unit Qty/ha Price(Birr) Total
1 Trans inputs & farm tools TH 1 467.8 467.80
2 Labor transport TH 2 467.8 935.60
Total Cost 1,403.40
Grand total 78,278.85

86
4. Mature Coffee Maintenance
1. Labor Requirement
Sr. No. Description Frequency MD/units Wage Rate Total Cost
1 Manual Weeding 6 8 150 7,200.00
2 Chemical Weeding 3 3 150 1,350.00
3 Hoeing 1 14 150 2,100.00
4 Fertilizing 3 14 150 6,300.00
5 Handling 2 10 150 3,000.00
7 Coffee stem regulation 1 6 150 900.00
8 Cover Crop Planting 1 10 150 1,500.00
9 Irrigation 52 0.36 150 2,808.00
10 Lichen removal 1 10 150 1,500.00
Total 26,658.00
2. Harvesting and Processing
1 Pulping & Drying 1 14 150 2,100.00
2 Drying & Hulling 1 4 150 600.00
3 Loading & unloading 1 2 150 300.00
4 Weighting and bagging 1 2 150 300.00
Total 3,300.00
3. Machinery Requirement for Operation
Mature coffee Machinery Unit Price
Sr. No. Description Total Cost
maintenance Requirement (Birr/Unit)
1 Red cherry picking HMH 5 467.8 2,339.00
2 Dry cherry picking TH 10 467.8 4,678.00
3 Cultivation TH 3 467.8 1,403.40
4 Pruning TH 3 467.8 1,403.40
5 Spraying TH 1.5 467.8 701.70
6 Inputs & farm tools transport TH 0.5 467.8 233.90
7 Coffee cherry transport TH 3 467.8 1,403.40
8 Input & produce transport TH 25 467.8 11,695.00
9 Pulping red cherry PH 10 60 600.00
10 Hulling dry cherry HH 20 60 1,200.00
Total 25,657.80
4. Material Requirement
Unit Price
Sr. No. Type of Fertilizer Unit Requirement Total Cost
(Birr/Unit)
1 NPS Qt 1 5550 5,550.00
2 UREA Qt 0.5 4800 2,400.00
S. Total 7,950.00
Type of Farm equipment Unit Requirement Unit Price Total Cost
1 Drying sake Roll 41 250 10,250.00
2 Basket No 16 360 5,760.00
3 Hession Cloth M 34.6 270 9,342.00
4 Linin String Roll 0.04 180 7.20
5 Fiber String Roll 8 480 3,840.00
S. Total 29,199.20
Type of Chemicals Unit Rate Unit Price Total Cost
Herbicides
1 Helosate Lit 3 250.00 750.00
2 Gliphosate Lit 3 800.00 2,400.00
3 Mamba (Systemic) Lit 3 250.00 750.00
Pesticides
1 Karate Lit 1.5 1,380.00 2,070.00
S. Total 5,970.00
Total 43,119.20
Grand Total 104,705.00

87
 B. Banana Plantation
1. Plantation
i. Labor
Sr. No. Type of Operation MD/ha Rate per MD Total cost (Birr/ha)
1 Peg preparation 6 150 900.00
2 Fields layout 3 150 450.00
3 Free plant irrigation 6 150 900.00
4 Distributing and Planting 46 150 6,900.00
5 Ridging (for sloppy land) 10 150 1,500.00
S. Total 10,650.00
ii. Material requirement
Requiremen Total Cost
Sr. No. Type of Material Rate per No.
t (Birr/ha)
1 Seedling 2200 45 99,000.00
S. Total 99,000.00
Total 106,100.00
2. Banana Young Plant Maintenance
a. Labor
Sr. Requirement Wage
Type of Operation Freq. Total Cost
No. (MD/ha) Rate
1 Pruning & Training 2 7 150 2,100.00
2 De-suckering 4 2 150 1,200.00
3 Weeding and Cultivation 6 40 150 36,000.00
4 Spraying Herbicides 2 3 150 900.00
5 Mulching 4 4 150 2,400.00
6 Fertilizer Application 2 8 150 2,400.00
7 Irrigation Application 16 4 150 9,600.00
8 Field round sanitation 3 2 150 900.00
9 Canal Clearing 1 10 150 1,500.00
10 Guarding 365 0.5 150 27,375.00
S. Total 84,375.00
b. Material requirement
Sr. No. Type of Material Requirement Rate per No. Total Cost (Birr/ha)
1 DAP 2 5,550 11,100.00
2 Urea 2 4,800 9,600.00
3 Seedling 1111 45 49,995.00
S. Total 70,695.00
c. Farm Tools
Sr. No. Type of Material Requirement Rate per No. Total Cost (Birr/ha)
1 Matchet 0.865 2,600 2,249.00
2 Hoe 0.059 300 17.70
3 Rake (6 fingers) 0.022 970 21.34
4 Geso 0.184 650 119.60
5 Zapa 0.142 570 80.94
6 Scissor 0.22 130 28.60

88
Sr. No. Type of Material Requirement Rate per No. Total Cost (Birr/ha)
7 Sickle 0.246 795 195.57
8 Spade 0.246 200 49.20
9 Iron file 0.62 1,970 1,221.40
10 Measuring meter 0.002 1,700 3.40
S. Total 3,986.75
Total 159,056.75
3. Matured banana maintenance
a. Machinery Cost
Sr. No. Agricultural Operations Unit Freq. Req. Birr/unit Cost (Birr)
1 Tractor transport TH/ha 1 6 215.18 1,291
S. Total 1,291
b. Labor Cost
Sr. No. Agricultural Operations Unit Freq. Req. Birr/unit Cost (Birr)
1 Field sanitation MD/ha 2 5 150.00 1,500
2 De-suckering MD/ha 4 13 150.00 7,800
3 Pruning and thrush removal MD/ha 2 7 150.00 2,100
4 Watering MD/ha 16 4 150.00 9,600
5 Hand weed MD/ha 3 26 150.00 11,700
6 Crop guarding MD/ha 365 0.01 150.00 548
7 Hand harvesting MD/ha 4 10 150.00 6,000
8 Loading unloading MD/ha 1 2 150.00 300
Total cost / hectare 39,548
c. Input Material cost
Banana
Sr. No. Type of Input Unit
Freq. Req. Birr/unit Cost (Birr)
1 Fertilizer - TSP Qt/ha 1 2 6,000 12,000
URIA Qt/ha 1 2 4,800 9,600
2 Harvesting material No./ha 1 40 100 4,000
3 Farm Tools LS 2,000
Total Cost/ha 27,600
Grand Total Cost 68,439

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