PROJECT PROPOSAL ON MODERN

INGTEGRATED CATTLE FATTING PROJECT

PROJECT LOCATION:- WEST GUJI ZONE BULE

HORATOWN GORO ABAYI KEBELE

PROMOTER :- Badhane Jarsa

SUBMITTED TO:- BULE HORA TOWN ADMINISTRATION

OCTOMBER, 2022

BULE HORA,

ETHIOPIA

I. Executive Summary
The country named Ethiopia is one of the largest in area coverage and population holdings
about 110 million. Ethiopia experienced wide altitudinal variations from 1000 to 3000 meter.
Ethiopia is a country located in East Africa bordered by Kenya in South direction, Somalia by
East Direction, Djibouti in the north east, Eritrea in north and Sudan in west and north

Prepared by Boruf Economy Consultants PVT LTD CO Addis Ababa Page i

direction. There is also wide climatic variations like high rain fall areas in the central, western,
southern and south western pars of the country, though there is only two distinct seasons dry
and rainy seasons which is common to tropical counters of the of the world. To the country,
there are dry or arid areas in the northern eastern and eastern parts of the country. The country
is governed by Federal State System, where as president, prime minister and parliamentary
system is the ruling system

Agriculture is the main stay of Ethiopia economy, contribution 50% share in the gross
domestic product GDP. ABOUT 85% of population is engaged in agriculture about 75% of the
Ethiopia industry is engaged in processing of farm product (Yohanis 1991). From the total area
in the country, 69% is estimated to be suitable for agricultural purposes. Export crops such as
coffee, oilseed and pulses are also mostly rained, but industrial crops such as sugar cane, cotton
and fruit are irrigated. Other important irrigated crops include vegetables and fruit trees in
medium-and large –scale schemes and maize, wheat, vegetables, sweet potato and bananas I
small scale schemes under private and governmental farms. There is a marked value added in
irrigated agriculture. A case study carried out in 2001 estimated that average yields of cereals
under irrigation and rain fed condition conditions are 1.75 and 1.15tonnes per hectare
respectively. Ethiopia has an important opportunity in water led development, but it needs to
address critical challenges in the planning, design, delivery, and maintenance of its irrigation
systems if it is to capture its full potential. River basin master plan studies and related surveys
indicate a maximum irrigation potential of about 5.7 million hectare, but about 3.6 million
hectares commonly quoted.

Ethiopia is one of the east African countries with the diversified climatic conditions, natural
scenery and resource bases. Currently the country has a total population of about 110 million
and nearly 40 million inhabit at oromia regional state. Oromiya is one of the regional states of
Ethiopia with very fertile land, very conductive weather condition both for horticulture
production and animal husbandry. To day the world is becoming one village because of the
advent of the information technology and computer science. In line with this the inhabitable
globalization movement exerting its pressure on all man kids livelihoods. Notwithstanding
these all Ethiopian as a sovereign nation, member of the UN, founder member of the former
OAU and now AU is ancient but least developed country.

|Page
Though the share of service and industry is growing in recent years, the Ethiopian economy
still remains heavily dependent on agriculture, in terms of share of GDP, export revenue and
employment. The agriculture sector, however suffers from frequent drought poor cultivation
and marketing practices. The Ethiopia government has so far taken a number of steps to deal
with these problems in its agriculture and rural development policy under the frame work of
agricultural development led industrialization strategy. The growth and transformation plan of
Ethiopia also underlines the importance of marked led agriculture. As stated in the plan
document, the agricultural strategy places major effort to support the intensification of
marketable farm products both for domestic and export markets by small and large farmers.

Fundamentals of the strategy include the shift to produce high value crops a special focus on
high potential area facilitating the commercialization of agriculture supporting the development
of large scale commercial agriculture where it is feasible GTP 2010. The Establishment of
Ethiopia Commodity Exchange is in line with the above mentioned policies with a view to
transform the age old traditional agricultural marketing in to a modern one. The Ethiopia
commodity exchange authority was also established with the responsibility of ensuring the
establishment of modern commodity exchange system that is fair transparent and efficient to
ascertain the protection of the interests of the different factors to the system and the public at
large. According to FDRE council of ministers has endorsed sesame and white pea beans
transaction regulation no 178/2010 which laid a legal ground for a new domestic trading of the
said commodities on the ECX trading plat form. Hence this commodity profile analysis of
sesame is aimed at revising the profile study conducted in 2007 to take account of recent trends
in to production system, the issues related to the supply, demand and marketing as well as the
changes in the legal frame work.

Ethiopia is known for its livestock resource potential but, the country has not been able to
benefit from the potentialities of its resource in general and from livestock resources in
particular. A total of 486 thousand live animals including livestock, camels, sheep and goats
were exported though formal trade channels to the neighboring and the middle eastern
countries. In the subsistence sector, farmers and pastoralists depend on small ruminants for
much of their livelihood, often to a greater extent than on livestock, because sheep and goats
are generally owned by the poorer sectors of the community. Any intervention that improves
the productivity of sheep and goats is important in creating wealth and improving the standard

|Page
of living of resource poor farmers. The short generation interval of sheep and goats coupled
with high frequency of multiple births allow for rapid increases in animal numbers. This builds
financial capital and allows the sale of surplus animals for cash that can be used for other
agricultural enterprises, school fees, medical bills, etc. sheep and goats are among the major
economically important livestock in Ethiopia. There are about 26.3 million sheep 24 million
goats and 44 million cattle (IBC 2004) in the country playing an important role in the
livelihood of resource poor farmers. They provide their owners with a vast range of products
and services such as meat, milk, skin, hair, horns, bones , manure and urine for cash, security,
gifts, religious, rituals, and medicine etc.

Ethiopia is a developing country with an emerging liberalized market economic system

agriculture is characterized by production of primary food crops mainly for subsistence
purposes and it the mainstay of the economy accounting for about 50% of GDP. 85% of total
exports and 85% of total employment. The industrial sector produces mainly agro processed
goods example textile, garments and leather products contributing to about 12% of GDP and
15% export earnings.

The present economic policy of our country is hugely inviting the private sector to respond to
the government invitation, there by contributing their share to the development process. In line
with this the envisaged project is identified by the owner. The project is identified because of a
highly growing population of the country as a great potential market for modern and quality
affordable live animals.

This project proposal is prepared based on the existing natural, financial and human resources
with reference to its marketing situation and profitability. Therefore, this proposal has
analyzed the socio economic justifications, commercial feasibility and the financial variability

|Page
of modern integrated farm of both crops and livestock’s, which is planned to be established in
oromia region, west Guji zone Goro Abayi Keble on total land of 1.82 hectars with the total
Capital 32,084,740.98 birr 25,667,792.78 (80%) coverd by

bank loan and 6,416,948.20 birr 20% coverd by owner

equity while giving job opportunity 100 permanent and temporary.

Objectives

Objective of the study is to ensure that the proposed farm and livestock project is
environmentally sound and contributes to the socio-economic development of the regiona state
and local communities. The project is promoted by Badhane JarsoCattle Fatting

Expected beneficiaries

Permanent

 National economy through increased of taxation

 Local and regional areas through increased services
 Full time employees taken from the local and regional areas including manager up
administration staff
Temporary

 Farming food of cattle

 Trading companies through the purchase of equipment such as technology material and
equipment form local and outside of Bule Hora Town
Vision

Badhane JarsoCattle Fatting vision is to been a renewed brand name in the heart of West
Guji Zone. Being renowned means providing unparalleled quality, cleanliness, services and
value which satisfies national economy by farm productive and livelihood

Mission statement

|Page
Badhane JarsoCattle Fatting create Besides creating job opportunity right from the time of
operation to given services, the project treats employees’ welfare seriously and provides
training and rewards for those who join the project which encourage long term, satisfying
growth employment. The project believes in suitability of the agriculture development business
and adopts fair trade policy as a key to drive its business forward.

Goal

Badhane JarsoCattle Fatting aims to prove all its services at reasonable price, the price of
service according to ministry of trade and economic development. Besides creating job
opportunity right form licensing to service, employees welfare seriously and provides training
and rewards for those who join the project which encourages long term, satisfying, growth
employment. The planned project premise will be designed aesthetical to create an environment
to encourage customers.

Generally, it’s our strong conviction that this planned project would benefit the owner to the
project and local community in terms of transferring modern technologies and create job
opportunities for skilled and unskilled citizens. It also serves country in generating income to
the government by the form of taxation. Hence, its advantage can be expressed technically,.

|Page
Chapter one

1. Introduction
Ethiopia is known for its livestock resource potential but, has not been able to benefit from the
potentialities of its resources in general and from livestock resources in particular. The
demographic indicator of livestock reveals that the country has considerable amount of
livestock and is the leading in live livestock population in Africa. According to CSA(2008) the
estimated livestock population kept by farmers in rural areas was about 44million cattele,27
million sheep,19 million goats 620,000 camels, 34.5 million chicken, 4.8 million beehives, 6.7
million equine and 40,0000 ton of annually harvestable fish.

The total number of sheep and goat in Ethiopians estimated to be nearly 48million (CSA,2008)
sheep and goats are widely adapted to different climates and are found in all production
systems. They also have lower feed requirements compared to livestock because of their small
body size. This allows easy integration of small ruminants into different farming systems.
Human population growth in Ethiopia is forcing the conversions of many former grazing areas
into croplands needed for increased food production. Raising large ruminants is becoming
increasingly difficult as a result of the ensuing lack of grazing area. land holdings in densely
populated areas are below0.5 ha. In such places, the importance of sheep and goats in fulfilling
the role once played by livestock for meat, milk and manure production is being increasingly
recognized. The increased demand for sheep and goat meat has also increased their importance
in lowland pastoral areas as a source of cash income, food security. Tec. The share of livestock
in GDP is about 18 and to over 30%to agriculture. More over livestock and livestock product
contribute 17-20% of foreing earning.

Similarly, during the same period (2001-2007) a total of 486 thousand live animals including
livestock, camels, sheep and goats were exported through formal trade channels to the
neighboring and the Middle Eastern countries. The annual average exported quality and growth
was respectively 69 thousand animals and 148 percent. Over period of 2003-2007 was a
steady live animal export growth from merely 10 thousands to 233 thousand animals per year

As compared to goat 19% and camels 11%livestock 67% are by far the largest number of live
animals that the country has been exporting mainly as result of inadequate beef fabrication
facilities. An increase in the volume of livestock export greatly impacts on the meat export

Prepared by Boruf Economy Consultants PVT LTD CO Addis Ababa Page 7

market. For instance, converting the number of live livestock 156,295 sheep and goats 44,322
exported in 2007 is estimate at 20,318tons of beef and 443 tons of goat table 1 shows 2007
exports of livestock

Table 1. live animals export trend thousand heads year

Year Qt of exported live animals Growth

2001 4.92 -
2002 32.38 558.4
2003 10.4 67.9
2004 42.02 304.7
2005 103.9 147.6
2006 163.37 57.2
2007 233.3 42.8
Total 486.3 1,042.59
Average 69.47 148.94

Source computed from the data of the Ethiopia customs authority various years

Ethiopia is one of the east Africa countries with the diversified climatic conditions natural
scenery and resource bases. Currently the country has a total population of about 110 million
and 44 million inhabit at oromia regional state. Oromia is one of the regional states of Ethiopia
with a very fertile land, very conducive weather condition both for crop production and animal
husbandry. The government of Ethiopia has developed a suitable investment policy packages
and other sectorial reforms at federal and regional level to attract a huge private investment of
the wellbeing of the nation and is citizens as a whole.

When one starts to invest on a given area it is must to consider the existing conditions of the
country. From this point, this project studied the existing favorable condition as for cooperative
company and to exploit the existing potential of the agriculture sector in country, decided to
invest in the area of livestock fattening and breeding project. The farm and cattle livestock is
planned to produce more quality of crop production and cattle fattening were highly
competitive in domestic and foreign markets with environmentally friendly.

8
The cooperative must have to make internal control mechanisms and work out towards to cost
effective, update schedule, positive to environmental and best technologies in order to maintain
the supper quality of its product both at local and international markets. There should be good
relationship between the society around the project and the project by conducting regular
meeting with local community to develop a strong relationship with them as a mechanism of
conflict resolution. The project should collaborate and support the stakeholder in development
endeavors undertaken around the project site. The livestock fattening project plant will process
and produce good quality affordable life animals and animal product from Ethiopia to other
country.

This Badhane JarsoCattle Fatting planned to generate products which do no have impacts on
the environment. It will contribute to the delivery of Ethiopians sustainable development and
poverty reduction development of the country. For the last few years MoARD and the export
coordinating national committee have been exerting maximum efforts towards increasing both
the volume and value of Ethiopians meat export. However the volume of export has not been
not up to the expected growth level.

This livestock fattening and breeding farm will address the viability of the livestock fattening
and farm development to be established at Bule Hora District. While the investment takes place
on areas with good infrastructure like road, water, electricity and security, they should be
fulfilled tor better expansion and its works. The project is clear in having great contribution of
profitable and has significant socio economic benefits. It is to be noted that the implementation
of this project is mean to introduce livestock farm and a health nutritious food items to meet
local and international demand, quality crop farm provide job opportunity for the society those
who are working around the project to enhance agricultural production through creation of
market facilities to farm and supply livestock farms include rational use of potentially available
resources and plays great contribution for the economic growth of the country including foreing
country.

9
 1.1. The Livestock Status
The total number of sheep and goats in Ethiopia is estimated to be nearly 49 million CSA,2008.
Sheep and goats are widely adapted to different climates and are found in all production
systems. They also have lower feed requirement compared to livestock because of their small
body size. This allows easy integration of small ruminants in to different farming systems.
Human population growth in Ethiopia is forcing the conversion of many former grazing areas
in to cropland needed for increasing food production. Raising large ruminants is becoming
increasing difficult as a result of the ensuing lack of grazing areas. Land holdings in densely
populated areas are below 0.5 ha. In such places, the importance of sheep and goats in fulfilling
the role once played by livestock for meat, milk and manure production is being increasingly
recognized. The increased demand for sheep and goat meat has also increased their importance
in low pastoral areas as a source of cash income, food security, etc. the share of livestock in
GDP is about 18% and to over 30% to agriculture. More over livestock and livestock product
contribute 20% foreign currency.

Ethiopia has large livestock resource, which puts the country fist in Africa and tenth in the
world. Livestock production accounts for about on third of agricultural GDP and 15%of the
total GDP. The livestock resource of the country are estimated to consist of about 28.8 million
livestock, 20.7 million sheep, 147 million goats, 7million equine, 1 million camels and 58
million of poultry. In Ethiopia, livestock population is an important economic component in the
farming system. Income derived from the sector has been small as compared to the livestock
number. The productivity measured in terms of meat, milk, egg, and other product was very
low. The major technical constraints associated with these are nutrition, health and low genetic
quality of most indigenous breeds. Other constrains to development of the livestock sub sector
include lack of infrastructure and services lack of proper livestock meat processing facilities,
and recurrent drought. Livestock trading is almost entirely traditional with minimum
involvement of private investors. High proportion of livestock sheep and goat sold to local
market for so the number of animal leaving the country through illegal trades to neighboring
countries is also high.

10
 1.2. Company Description
A country look into agriculture development in general livestock farm in particular reveal that
activities are found at a very low level and the livestock industry is at a start up life cycle. More
of the existing livestock industries are concentrated around centeral part of the country but here
to start around West Guji zone livestock development and marketing have not been able to
generate positive results to the people engaged in livestock rearing. As a result the country
livestock and crop farm resources are being unwisely used. This project proposal is prepared
based on the existing natural, financial and human resources with reference to its marketing
situation and profitability.

Therefore, this proposal has analyzed the socio economic justifications, commercial feasibility
and the financial variability of modern integrated farm of both crops and livestock’s, which is
planned to be established in oromia region, west Guji zone Goro Abay Keble on total land of
1.82 hectars with the total Capital 32,084,740.98 birr 25,667,792.78 (80%)coverd by bank
loan and 6,416,948.20 birr 20% coverd by owner equity while giving job opportunity 100
permanent and temporary.

The owner of the project has been undertaking different business operation for many years.
While working in their existing business they are doing it in the best way with maximum
potential and profit. They has been working with different citizens of different nations. The
work experience what they have been help them to run this project in a simple way in west Guji
zone Bule Hora Town Goro Abayi Kebele.

This integrated agricultural farm development was chosen to be established in Bule Hora
Town and its surrounding areas by creating a differentiated experience capitalizing on personal
services. The proposed project will have total area 15 ha designed to run a business, which will
in turn plays significant role towards solving shortage crop farm and livestock in country.

When we look at Bule HoraTown administration historical background, the Bule Hora
administration is ranked among that have the fastest growing economy like other Oromia
region. It is one of the most attractive and has fertile ground for future promising growth of
crop farm and livestock. The major plans of the project are to provide high quality class to

11
satisfy the interest of customers and to generate foreign currency. Base on subject matter
specialist has carried out the type and size of the agricultural production, which is already
determined by the site conceptual planning and preliminary analysis.

1.3. Project Rationale

Bule Hora Town was established before 100 years during market study we have tried to
identity the gaps between demand and supply of the related production in the Bule Hora
administration. Even if this Bule Hora Town administration is in its emerging stage of
development these project this is the first in kind in the Bule Hora Town administration are
feasible and would be a model development in promoting and attracting different type of crop
and farm development in order to respond to the create environment green economy the Bule
Hora Town administration is need of major, basic and feasible green Economy projects to be
developed.

The existing promising investment opportunities, the demands of production needs along with
relatively sound investment support made by the government in such kinds of feasible projects,
compelled the project owner to initiate the multipurpose oriented business project to be
established. Despite the promising business opportunities of the Bule HoraTown
administration, on such kinds of modern integrated agricultural development, facilities and
business station in the Bule HoraTown administration to accommodate the existing demand of
these integrated farm in the Bule HoraTown administration and the surrounding areas. The
mismatch between the demand for and supply of such kind of agriculture in easily observed in
the West Guji Zone and around other zone like Bule Hora Town administration.

Therefore, the existing shortage or absence in the supply of these production, along with its
commercial and administrative access, better location and infrastructure access, escalating trend
of green economy and business activities, thus it is with such reason that this project is
identified and proposed and assumed to be more profitable.

In general, the country’s decentralized state based economy; privatized and free market
economy good governance creates a favorable environment for the development of investment
for private and cooperative investors.

12
 1.4. The Significance of the Project

The envisaged project is believed to add to the economic development of the West Guji Zone
and Bule Hora Town administration, district and zone specifically and country at large with
following ways

I. Source Of Revenue
According to federal democratic of Ethiopia’ policy, the government collects different forms of
taxes from different business organizations and individuals. Among the different forms of
taxes, business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, this business will serve as sources of revenue for the Bule Hora
Town administration as well as for the region and nation in similar ways.

II. Employment Opportunity

It’s known that unemployment is the common problems that most of developing countries’ are
facing. So, the current objective of the government is working on tackling the problem of
unemployment and fostering the development process either through creating self-employment
or employment in other organization. Hence, this project will hire 30 in individuals in
permanent employee and more than 70 individual in contract.

III. Sources of social service

In addition to serving as a source of employment and income for the region the project renders
social for different group of people. Hence, it also provide the following services,

A, serve as a source of mental satisfaction for the different exporters

B, since, the center encompasses different recreational areas; it will divert the attention of the
users from different evil deeds.

C, it deemed to minimize the demand for agricultural production and other bundles of
production in the area.

Furthermore, it services as the pilot experience and ground for other investor to enter in to such
kinds of green economy development. It also contributes on the efforts made on as a character
given building for physical development pattern of the Bule Hora Town administration scope.

13
 1.5. Project Location
The project area is found at a distance of 467km from the capital city of Ethiopia Addis the
above identified location of the project is well attracted site area for influencing and satisfying
both the customer and the owner of the project due to its access to service seeking population.
Thus, the owner of the project identified an appropriate area for the intended project. Beside
these, the realization of the project has no negative impact on the lives of its surrounding
population except promoting economic development to combat local poverty. This project is
located in 467km distance from the capital city of Ethiopia to Moyale when reach Bule Hora
Town its bends to east direction from Bule Hora Town

The above identified location of the project is well attractive area for influencing and satisfying
both the customer and the owner of the project due to its access to service seeking population.
Beside these, the realization of the project has no negative impact on the lives of its
surrounding population except promoting economic development to combat locate poverty.

14
 1.6. Physical Feature of the Project Area
1.6.1. Topography Of The Project Area

The geographical information of the project area shows that the location of the site falls within
a flat and suitable topography for proposed project. The project area does not expose for
flooding and others natural disasters. Form practical point of view, the area is very suitable
cattle fatting and undertake the activities mentioned in this document

1.6.2. Agro Ecology

The Argo- ecology of the proposed project area can be characterized by midland type of
climate. The altitude of the area of the Bule HoraTown 1600-1900 sl. The range of altitude,
agro-ecology, temperature and the amount of rainfall distribution registered in and around the
project area is suitable particularly for intended.

1.6.3. Rainfall Pattern

concerning rainfall distribution, the proposes project area is characterized by bi-modal type
which begins usually from February to April continues up to June to September distributed in a
uniform manner, and is suitable for most of agricultural production. The annual rainfall is
mostly measured from 120mm-800mm in most of district area and specifically in the project
local.

1.6.4. Temperature
Temperature is the most important factor as rainfall for all living things. The mean annual
temperature of the district and the project area is ranging between 18 oc-30oc. therefore it is
favorable for this planned project

1.6.5. Altitude
The average altitude of the proposed project district is measured from1600m – 1800m above
sea level. However, the average altitude of the project area is ranging from 1650-1900 above
sea level. Therefore it is the most favorable for the proposed project

15
 2. The Market Study
There are several factors, which affect the demand of standardized integrated agricultural
development Of these sectors, the most important to have influence are population growth and
the level of income. The currently expanding agricultural led industrial expanding is one

In general, one of the fastest growing of Ethiopian economic level the market demand and
supply gap for crop and livestock in Bule HoraTown administration is not clearly understand,
there is wider gap for such demand and supply as many merchants, organizations are flouring
to the Bule HoraTown administration every day, from prior business experiences, the demand
of crop and livestock in Ethiopia is very high and at the same time demand and supply gap is
very wide

2.1. The demand-supply gap

Bule HoraTown administration is a major business center and commercial route that attracts
thousands of business traveler’s merchant. These are also the most important groups of
potential customers that include both the local and foreign merchants and the modern business
community who choose livestock and crop that range from economic to high class standards.
These groups would also choose a healthy and comfortable productions that combines a more
traditional type with that of modern.

The project will solve the serious demand problem in the regional and national. Over the last
decades, there has been a significant growth in the number of local and international traders
across the country. This increase is mainly associated with the stimulation of economic activist
and partly due to an increase in the flow of international and local traders in to the Bule Hora
Town administration.

Since, Bule Hora Town administration is an important commercial center in west Guji Zone, in
addition, there is a significant increase in business activities and hence increasing the number
of traders to the Bule Hora Town administration. Even though there is a lack of quantitative
estimate that depict the actual demand and the annual growth rate crop and livestock facilities
and green commercial facilities are scarce in the Town

So far in the Bule HoraTown administration, there is no development of such kind standard
modern agricultural integrated farm and it is the first of its kind in the Bule HoraTown

16
administration and will promote other investors from different region of Ethiopia and the
surrounding areas. As a result, there is large gap between the developed and that of the supply
for modern integrated farm production, hence this project would not face any problem of
demand scarcity for it business center and it would provide good service to customer and
currency exchange

Table 3. table number of livestock in Town

livestock 2008 2009 2010 2011

cattle 72990 87490 90889 91339
Goat 50000 60080 40025 49039
Sheep 30000 33500 35212 36211
mule 220 241 121
Donkey 840 900 842 873
poultry 4535 5655 33115 30335

Source:- Bule Hora woreda Agriculture and rural development

Table 3:- Types of livestock disease and treatments from 2008-2011

Types of treatment 2008 2009 2010 2011

Trypansomiasis 4954 5418 5841 10733
Internal parasite 9213 9640 9054 12090
External parasite 3808 3768 3068 5500

Source Bule Hora woreda agricultural and ruala office 2012

2.2. Target customer

The target customers of this envisaged project include

1. Foreign merchant
2. National level merchant
3. Exporters and supplier

17
 4. business organization
5. government organization
6. nongovernmental organization
2.3. Marketing Promotion and Strategy
This project is design to proved quality production in all direction and attracts customers in a
considerable and sustainable manner. Due emphasis must be place on improving quality of
production and facilities. The major marketing strategy to promoter the project and gain
considerable market share include

 advertising services and facilities in publicized place

 promote in association to the key location and nearly business
 Working on public relations to reach and influence key personal and organization with a
capacity of making decision.
 Keeping the quality of its production and service facilities and consistently improving
with changing situations.
2.4. Competition
This project is planned to be competent in all directions, both in price and non-price base
competition. In terms of price allocation, it’s planned to allocate reasonable price in all service
in order to attract a number of foreigner merchant and maximize the number of beneficiaries.
Moreover there are different competition that will compete with the project either directly of
indirectly.

The Project Facilities and Service Plan

This integrated agricultural farm project is aimed to provide high standard product for all
beneficiaries equally. It also has been planned to develop foreigners exchange and develop the
infrastructure and facilities what would viable to meet the requirements to an international
standard business center. The owner also has planned to expand the current activities based on
demand of customers and its market value gradually.

Since the project is planned to be engaged in multipurpose service the main sources of its
annual revenue would be from the sale of production

18
 2.5. land use plan
The total land required for the envisage project is estimated to be 1.82 hectare the total area
for the farm site of this proposed site

Table 4 land use plan

Description Unit Area required

land Livestock development Hectars .05

Office and store hectars 0.01

Employees house 0.1

Cattle food production 1.12

total hectares 1.82

2.6. Machinery and Equipment

In this profile, it is assumed that the envisaged integrated agricultural farm will handle the
construction office works by out- sourcing competent construction contractors, as per the
design made by the investigated enterprise, within of Bule Hora Town administration. The total
cost of machinery and equipment are listed cost of production

3. utilities
A number of utilities would be put in place in order to ensure smooth functioning of the project.
The utilities include

 Water supply
 Supplementary electricity supply
 Drainage facility
 Facility of network
 Facility of road

19
Chapter 2
2.1. Organizational Structure
The organizational structure should be in a way that the company able to achieve its objectives
as well as the satisfaction of standard requirement. In addition to this, the structure should fit
the dynamics of all organization ranging from small business to large tenants.

2.2. Organizational Structure

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organization structure, there will be manager with the
responsibility of supervising the overall activity in industry. Depending up on the nature of the
center and the amount of work to be performed, there exist auxiliary units under the general
manager

owner
General manager
HRM
AccoutanT
finance and marketing
Gaurd
techinacial developer
farmacyic proffesional
quality conctrol

Fig: organizational structure

As clearly indicated in the organization structure, the center organization has one genera
manage and two main sections. Under general manager there are the, marketing department and
human resource department. Under human resource department there are four sections and
under marketing department there is one section

20
A, General Manager

He/she will plan, organize, direct and quality control the all over activity of the farm production
and human resource service

B, she/he will devise policies and strategies that will enable the center to be profitable

C, she/he, will incorporate modern technological innovation that will facilitate the service
delivery of the farm land to increases customer’s satisfaction

B, Marketing department

1. Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling
2. Will develop the marketing strategy for future production supply
3. Will develop effective customer handling strategy
4. Execute the promotion methods
C, Human Resource department

Will manage all human resources activity with matching work and allocate at the right place, to
manage account, cashier, guard and waiter.

D The shared service department

The general service of the project encompasses the following activities

 Will manage te human resource services of the project

 The information technology service of the project
 The logistic service of all the project
 The security service and devise strategies of controlling against fraud and
damage

Table 5 cost of human power per year

No Description Number Monthly Annual

21
1 General manager 1 3500 42,000
2 Secretary 2 1500 36,000
3 Finance administration 1 2500 30,000
4 Accountant 2 1700 40,800
5 Operatory 3 6000 108,000
6 Lab 1 3000 36,000
7 Production workers 2 2500 60,000
8 Animal care 5 1000 60,000
9 Store keeper 1 1200 28,800
10 Marketing 1 2500 30,000
11 Driver 5 2000 48000
12 Guard 5 2000 48,000
13 Daily labourer 70 800 48,000
14 Cleaner 3 600 21,600
Total 100 31,400 631,200

Chapter 3

22
 3. Challenges, opportunity and strategy
3.1. Challenges
The livestock and crop production management is mainly base on extensive grazing of
communal grazing lands and arable lands. Animals grazing communal lands are believed to
perform poorly growth rate which is a reflection of nutrition health and breeding related
problems. So having cattle fattening at a given feedlot in intensive way is major advantageous
than the extensive one

Diseases and disease causing agents cause heavy losses through deaths and reduced
productivity. It is known that livestock productivity is highly affected by poor genetic makeup
on most animals in country. Use range land is hampered by seasonal variation of quality and
quantity of forage and water and it can expose the animals for different diseases. Getting credit
from credit associations by farmers in country is a major challenge risks associated with agri
business coupled with tenure system the use of land as collateral. In case of investors some of
the challenges

 Land ownership that is communal is a hindrance to investment

 Low funding levels in the considering the contributing of the sub sector to county
economy
 Unfavorable environment to attract investors being harsh climatic conditions, recurring
droughts, dilapidated roads network and poor infrastructure
 Insecurity airs in from banditry and livestock rustling.
 Inadequate supply of feeds to sustain processing of livestock production

3.2. Opportunity

23
In the dergue regime the investment environment has been radically changed to encourage the
growth and development of the country private sector. According over the past sixteen years a
number of favorable measures has been taken and laid the foundation for conductive
investment. In this regards, realizing the importance of promoting both local and foreign
investment participation for accelerated socio economic development of the country, the
government has issued a number of investment proclamation and regulations. The investment
proclamation and regulations issued include proclamation no 373/2003 and regulation84/2003
to amend proclamation no 280/2002. These investment proclamation provide incentives for the
investment activities and activities restricted to local investor. For the purpose of providing
incentives investment activity has been divided into pioneer and promoted investment
activities, the project under discussion may probably fail under promoted investment activates.
All allowed investment activity are allowed income tax exemption up to three years depending
on their location.

According to the council of ministers regulations join 84/2003 , providing investment

incentives, investment which exports above 50% of their production or supplies at least 75%
product to exporters are allowed and income tax exemption for 3 years they can get VAT
exemption tax rebate on imported inputs.

The proect under study is a cattle fatting project where its products are going to be mainly for
export. Hence the project will be entitled for a tax exemption from import duty, duty drawback
on import of raw materials, exemption of income tax up to 3 years and loss carry for ward up to
2.5 years after the tax exemption period lapse.

Other common opportunities are.

 Availability of recruited livestock

 Existing of livestock market with in the country a abroad
 Ongoing disease and pest control measures and programmers
 There is political good will peace building initiatives, government and community
security apparatus
 Good weather condition for cultivating crop.

3.3. Strategies

24
  Identification of the age and size of livestock for fatting
 Strengthen peace building initiatives, improve security coverage in the area of the
investment site
 Develop country based livestock and crop market data bade and utilized existing
production marketing information
 Developing marketing information

Chapter 4
25
 4. Financial Requirement and Analysis
The financial resource is a prime resource for undertaking any activities. Hence, for
implementing this integrated farm total capital 32,084,740.98 ETB is required. Out of which
6,416,948.20 (20%) will covered by the owner of project while the rest birr 25,667,792.78
(80%) ETB will be covered through loan from bank at the prevailing interest rate. Therefore,
the said amount of finance is needed for undertaking the following

6.1. Fixed Investment

Table 1:- land and building construction

S/N Description of work Total cost in birr

1 Construction of fence 1800m 3m high 8,042,886.32

2 Building of office and store 2,700,000

5 Site development 33,100

Total 10,775,986.32

Machinery and vehicle

26
s/n Type of vehicle Qty Unit price Total price
(br.)
1 Pick up 4WD 1 750,000 750,000
2 FSR 1 1,250,000 1,250,000
3 Mini bus (12-15 seats) 1 500,000 500,000
4 Motor cycle 4 50,000 200,000
Total - - 2,700,000

Table 4 Office equipment

SN Description Measur Quantit Unit cost in birr Total cost in

ement y birr

1 Managerial table unit 1 3500 3500

2 Managerial chair Unit 1 2500 2500

3 Office chair and table Unit 2 1500 1500

4 Secretarial chair with table Unit 1 1500 1500

5 Computer with printer Unit 1 15,000 15,000

6 Shelf Unit 1 2000 2000

7 File folder pack 1 600 600

8 Guest chair Unit 3 1000 3000

10 Fax and telephone machine Unit 1 3500 3500

Total 33100

Table 5 Annual salary expense for permanent employer

No Description Number Monthly Annual

27
1 General manager 1 3500 42,000
2 Secretary 2 1500 36,000
3 Finance administration 1 2500 30,000
4 Accountant 2 1700 40,800
5 Operatory 3 6000 108,000
6 Lab 1 3000 36,000
7 Production workers 2 2500 60,000
8 Animal care 5 1000 60,000
9 Store keeper 1 1200 28,800
10 Marketing 1 2500 30,000
11 Driver 5 2000 48000
12 Guard 5 2000 48,000
13 Daily labourer 70 800 48,000
14 Cleaner 3 600 21,600
Total 100 31,400 631,200

Operation cost plan to

Purchasing of raw material and Cattle

28
Year Unit Price

Capacity Lump sum Total price

Cattle in four quarter 600*20,000 12,000,000

Goat in four quarter 200*3000 600,000

Sheep in four quarter 300*3000 900,000

Molasess and fagulo lumpsum 2,000,000

Total cost of purchasing material 15,500,000

Table 6 Operational cost plan

29
SN List of item Annual cost in Total cost
birr

1 Audit and legal fee 20,000 20,000

Stationary 7000 7000

Promotional cost 8000 8000

Property insurance 80,000 80,000

Sanitation expense 18,000 18,000

Uniform 2000 2000

Water consumption 2000 2000

Electric consumption 97,000 97,000

Fuel consumption 57,000 57,000

Telephone and internet 3,000 3,000

Repair expense 81,000 81,000

Miscellaneous expense 4,000,000 4,000,000

Total 4,375,000 4,375,000

Table 7, pre service cost plan

30
SN Description Cost in birr

1 Project proposal 20,000

Table 8 summary of total initial investment cost

SN Description Amount in birr

1 Land divert and building construction 8,042,886.32

2 Machinery and vehicles 2,700,000

3 Office equipment 33,100

Total fixed investment cost 10,775,986.32

6 Salary expense 631,200

7 Operation expense purchasing of material 15,500,000

and cattle sheep and goat

Common operational csot 4,375,000

8 Pre service expense 20,000

Operational cost 20,526,200

9 Total working capital 31,302,186.32

Contingency 2.5% 782,554.66

Total initial investment capital 32,084,740.98

Grand total 32,084,740.98

The table 10 shows source initial investment capital budget

No source initial investment Equity/loan Total amount

31
 capital budget

1 Owner equity 20% 6,416,948.20

2 Bank loan 80% 25,667,792.78

Total initial capital budget 100 32,084,740.98

Financial analysis

The financial analysis of the integrated agricultural farm development

project is based on the data presented in the previous chapters and the
following assumptions:-

Construction period 1year

Source of finance 20 % equity

Equity 80 % loan

Tax holidays 3 years

Bank interest 10.5%

Discount cash flow 8.5%

Accounts receivable 30 days

Raw material local 30 days

Work in progress 90 days

Finished products 30 days

Cash in hand 5 days

Accounts payable 30 days

TRAINING REQUIREMENT

The quality controller, production supervisor, technician operators should

be given on-the-job training for a duration of two weeks by experts of

32
the supplier of the machinery and equipment. The estimated training
cost is Birr 100,000

33
8, Revenue/Income With In Three Year

**Assume 1st year reaches after 4 years for production**

Description Quantity Unit Price Total price

Cattle in four quarter 600 25,000

15,000,000.00

Goat in four quarter 500 4000

2,000,000.00

Sheep in four quarter 300 5000

1,500,000.00

Total sales 18,500,000

34
 Badhane JarsoProfit and/or loss statement (in ‘000 birr)

Description Project year

Year 1 2 3 4 5 6 7 8 9 10
Gross sales - - 18,240 19,152 20,110 21,115 22,171 23,279 24,443
Less- production 4,552 3,622 3,622 4,469 4,693 4,926 5,173 5,431 5,202 5,988
cost
Gross income -4,552 3,622 3,622 13,772 14,459 15,184 15,942 16,740 17,577 18.455
Lesbank interest - - - 4,032 4,032 4,032 4,032 4,032 - -
Less depreciation 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 12,250 1,250
Profit before tax -5,772 -4,872 -4,872 -4,872 9,177 9,902 9,902 11,458 16,327 17,205
Less profit tax - - - - 3,212 3,466 3,731 4,010 4,010 6,022
35%
Net profit -5,772 -4,872 -4,872 8,490 5,965 6,436 6,929 7,448 10,613 11,183

35
Badhane Jarsoincome statement

Projected cash flow statement (in ‘000 birr)

Description Project
Cash inflow 0 1 2 3 4 5 6 7 8 9 10
Equality 9,600 - - - - - - - - - -
Bank loan 22,600 - - - - - - - - - -11,183
Net profit - -5,772 - -4,872 - -8,465 6,436 6,929 7,929 10,613 1,250
Deprecation - 1,250 5,772 1,250 8,490 1,250 1,250 1,250 1,250 1,250
1,250 1,250
Total inflow 32,000 -4,522 - 3,622 9,740 7,215 7,686 8,179 8,698 11,863 12,433
3,622
Cash out 18,000 - - - - - - - - -
flow
Fixed cost 14,00 - - - - - - - - -
Initial w.c
Loan - - - - 4,480 4,480 4,480 4,480 - -
repayment
Total out 32,00 - - - - 4,480 4,480 4,480 4,480 - -
flow
Net inflow - -4,522 - -3,622 5,260 2,735 3,205 3,699 4,218 11,863 12,433
3,622
Cumulative - -4,522 - 11,766 - -3,771 -565 3,134 7,352 19,251 31,648
balance 8,144 6,506

36
Badhane JarsoProduction Project

Financial IRR computation (in ‘000 birr)

Year 0 1 2 3 4 5 6 7 8 9 10
Gross - - - - 18,240 19,152 20,110 21,115 22,171 23,779 24,443
income
Total costs 32,000 4,522 3,622 3,622 4,468 4,693 4,926 5,173 5,431 5,702 5,988
Gross (32,000) -4,522 - 3,622 13,722 3,212 15,184 15,942 16,740 17,577 18,455
income 3,622
Less; profit (32,000) - - - - 3,247 3,466 3,731 4,010 5,715 6,022
tax benefit
After tax net 4,522 - - 13,722 11,247 11,718 12,731 12,730 11,863 12,433
benefit 3,622 3,622
DF at 10% 1 0.993 0.826 0.751 0.683 0.621 0.564 12,211 0.467 0.424 0.386
rate
Present (32,000) -4,111 - - -9,406 6,984 6,615 0.513 5,9388 5,031 4,794
value 2,993 2.721
Net present +3,208 - - - - - - - - -
value
DF at 15% 1 0.870 0.756 0.658 0.572 0.497 0.432 0.432 0.327 0.284 0.247
rate
Present (32,000) -3,932 - - 7,874 5,592 5,066 5,591 4,161 3,372 3,073
value 2,739 2,382
Net present -7,323 - - - - - - - - - -
value
9, Income or loss
Regarding profit and loss statement, starting from first year of the project
operation, the project is expected to generate a reasonable amount of net
profit for the owner throughout its life period. Profit and loss statement
shows that the project will generate net profit of ETB birr 19,934,301.15
first year and increase to ETB 24,866,048.25 starting from the fourth year
of the project life and hence it is found to be profitable.

10, financial evaluation

1. Profitability

According to the projected income statement, the project will start

generating profit in the second year of operation. Important ratios such as
profit to total sales, net profit to equity (Return on equity) and net profit plus
interest on total investment (return on total investment) show an increasing
trend during the life-time of the project.

The break-even point of the project including cost of finance when it starts to
operate at full capacity (year 3 a half) is estimated by using income
statement projection.

BE = Fixed Cost = 0.787%

Sales – Variable Cost

3. Pay-Back Period

The payback period, also called pay off period is defined as the period
required recovering the original investment outlay through the accumulated
net cash flows earned by the project. Accordingly, based on the projected

39
cash flow it is estimated that the project’s initial investment will be fully
recovered within 3 year and 6 month.s

4. Internal Rate of Return and Net Present Value

The internal rate of return (IRR) is the annualized effective compounded

return rate that can be earned on the invested capital, i.e., the yield on the
investment. Put another way, the internal rate of return for an investment is
the discount rate that makes the net present value of the investment's
income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater
than the rate of return that could be earned by alternate investments or
putting the money in a bank account. Accordingly, the IRR of this project is
computed

Net Present Value

Net present value (NPV) is defined as the total pee 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 principal a project is accepted if the
NPV is non-negative

5, Environmental Impact of the Project

The project activities was determined by identifying the environmental

aspects and then under an environmental risk assessment to determine the
significant environment aspects. The environmental impact assessment has
include all phases of the project namely construction phase and operational
phase

40
 Positive impact

 Generation of employment opportunity

 Source income for the government through business income tax
 Being exemplary for other investors who want to engage in the same
business line
ECONOMIC BENEFITS

The project can create employment for 100 persons. In addition to supply of

the domestic needs, the project will generate Birr 8,543,272.26 per annum in
terms of tax revenue. The establishment of such coffee processing will have
a foreign exchange saving effect to the country by substituting the current
imports.

Project Implication Schedule

The project’s implementation is expected to take 12 months. The major

activities include bank loan processing and coffee preparing, cleaning the
area around the site, procurement of equipment and start rendering service.
The time schedule for operational include the following table

Gantt chart ( from August , 2021-Dec 2022)

Sep Sep Octobe Nov Dec Feb

Activities Aug. . . r . . Jan. . Jul.

Preparatio
n

Operation
time

41
Reference
Belachew, Y. (2010). Green Land Lease Policy of Ethiopia: Case Study on
Addis Ababa and

Lease oromiyaregionlal coffee suppliny National Regional State FIG Congress

2010, Facing the Challenges

Building the Capacity Sydney, Australia, 11-16 April 2010.

CSA, 1995.The 1994. Population of Ethiopia: Results for Amhara

Region, Characteristics, Addis Ababa

CSA 1998. Revised Report on the 1995/6 coffeplantantion Income,

Consumption and

Expenditure Survey: Statistical Bulletin 204, Addis Ababa.

Malpass, Peter and Alan Murie.1990.Policy and Practice. Macmillan Press.

London.Solomon Mulugeta.1985. Meetting the coffee Shortage in: The Case

of

Thesis in Geography, Addis Ababa University,

World Bank. 1993. Enabling Markets to Work. New York.

42
43