 SPECIAL DRY COFFEE PROCESSING AND MARKETING BUSINESS PLAN LOAN APPLICATION TO

SINKE BANK

Project Location: West Guji Zone, Oromia Region

Abbaya District, H/Bagasa Kebele

Promoted By: Gemachu Germamo

Prepared by: West Guji Zone Agricultural Office

1. Ato Teshome Zewdie (BA)
Phone 0922152421
2. Muluken Lindi (BA)
Phone 0916178775

April . 2025

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 Basic Information

 Name of the Promoter: Ato Gemachu Germamo

Contact Address: 009374614

 Type of the Project: Dry Coffee Processing Industry

 Type of Business: Sole proprietor ship

 Project Location: Abbaya District, H/Bagasa Kebele

 Project capital: The total investment capital of the project is estimated at birr 15,000,000 ETB

 Source of finance: The total investment capital of the project is to be financed from the
promoter’s equity and bank loan.

o  Equity (20%): ETB 3,000,000 (Promoter)

o Loan (80%): ETB 12,000,000 (Requested from Sinke Bank)

Location: Abbaya District (High-quality coffee Production ).

 Man power requirement: 64 permanent and temporary employees will be benefited within this

Project, out of which 14 permanent and 50 casual workers during construction phase and loading
and unloading work.

 has been engaged in agricultural production of Coffee Production 4.5 hectares of plot of land.
He is well known and model farmer who has registered remarkable performance in harvesting
agricultural produces. In bulk quantity

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Contents
I EXECUTIVE SUMMARY..............................................................................................................................4
1 INTRODUCTION........................................................................................................................................5
1.1 General Background..........................................................................................................................5
1.1.1 COFFEE PRODUCTION AND MARKETING VALUE CHAIN IN ETHIOPIA.........................................7
1.1.2 Coffee Collectors.........................................................................................................................7
1.1.3 Traders (Suppliers)......................................................................................................................7
1.1.4 Primary Cooperatives and Unions...............................................................................................7
1.1.5 Exporters....................................................................................................................................8
1.1.6 Importers....................................................................................................................................8
1.1.7 Domestic Wholesalers and Retailers...........................................................................................8
1.1.8 Consumers..................................................................................................................................8
1.2 Objective of the project.....................................................................................................................8
1.2.1 Primary Objectives............................................................................................................9
1.2.2 Secondary Objectives.......................................................................................................9
1.3 MISSION AND VISION Dry Coffee Processing and Marketing......................................................9
1.4 KEYS TO SUCCESS.....................................................................................................................10
1.5 BUSINESS BACKGROUND........................................................................................................10
1.6 BUSINESS OBJECTIVES.............................................................................................................11
1.7 project description....................................................................................................................11
3. MARKET STUDY..................................................................................................................................14
2.1 General Overview...............................................................................................................................14
2.2 Demand...........................................................................................................................................14
2.3 COFFEE MARKET ACTORS................................................................................................................15
2.4 MARKET COMPETITION............................................................................................................15
2.5 PRICING AND SALES ANALYSIS.............................................................................................15
3. OPERATIONAL PLAN........................................................................................................................17
3.1 PEODUCTION APPLICATION...................................................................................................17
3.1.1 LOCATION OF THE PROJECT AREA........................................................................................17
3.2. PRODUCTION.................................................................................................................................18

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4. RAW MATERIAL AND INPUT REQUIREMENT.........................................................................18
4.1 Procurement of Raw Material..........................................................................................................18
4.2 AUXILIRY MATERIALS....................................................................................................................19
4.3 CREDIT AND BORROWING SYSTEM.......................................................................................19
4.4 Fixed Asset Dry coffee processing Project.............................................................................20
5. ORGANIZATIONS AND MANAGEMENT.............................................................................................20
5.1 Organizational Structure.................................................................................................................20
5.2 HUMAN RESOURCE REQUIREMENT..............................................................................................21
6.3 Project Capital.................................................................................................................................22
6.4 Land use plan..................................................................................................................................22
7. Environmental impact assessment.......................................................................................................29
8 Economic Benefit....................................................................................................................................29

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 I EXECUTIVE SUMMARY
Most of the farm products including coffee are raw in nature and need to process before
consumption. This increases the cost of marketing service, which adds value and price on farm
products. Under this main activity the sub tasks performed in processing the coffee are pulping,
washing coffee, drying, sorting, sacking/ packing, loading, and transporting then finally
unloading to the warehouse.

Consumers are the ultimate users of the commodity coffee. In the coffee value chain in
Ethiopia, there are varieties of consumers of coffee. These are domestic consumers and foreign
consumers. The consumers present in domestic country consume directly from small-scale
farmers and coffee collectors retailers throughout the country (MOT, 2012).

West Guji zone is one of zone which supply high volume of coffee for international market.
The promoter of this planed dry coffee process factory In Abbaya there are few dry coffee
factory that give services to their customers and they cannot still satisfy the need and want of
the customers in terms of both quality and quantity based on coffee supply volume of district.
In order to maximize customer satisfaction so that dry coffee process factory decides to open a
factory in Abbaya Town . The Farm is available in H/Bagasa

This project located to southern part of Ethiopia in Oromia regional state Abbaya district
H/Bagasa PA. It far from West Guji zone Capital 17km to east direction.

The total investment capital of the project is estimated at birr 15,000,000 of which birr
12,000,000 is for fixed investment items that covered through bank while the remaining balance
of birr 3,000,000 (20%) will be initial working capital of owner.

The project will seriously involve itself protecting conserving and developing the natural and
flora of the project area in line with the millennium development goal. This project will create
employment for 14 employees by permanent and 50 temporary employed in it.

The project will generate 1,481,660 per annum in term of tax revenue. The establishment of
such hotel will have a foreign exchange saving effect to the country by subtracting the current
import.

And Ato Gemachu Germamo has been engaged in agricultural production of Coffee
Production 4.5 hecktars of plot of land. He is well known and model farmer who has registered
remarkable performance in harvesting agricultural produces. In bulk quantity.

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1 INTRODUCTION
1.1 General Background
Ethiopia is the birthplace of coffee and it discovered earlier. In the tenth century, Ethiopian
nomadic mountain peoples were may have been the first to recognize the coffee it have
stimulating effect, although they ate the red cherries directly and did not drink it as a beverage
initially. Then the mystic Sufi pilgrims of Islam spread coffee throughout the Middle East. From
the Middle East these Ethiopian coffee beans spread to Europe and then throughout their
colonial empire including Indonesia and the Americas. More than 1,000 years ago, coffee was a
goatherd in Ethiopia southwestern highlands plucked a few red berries from some young green
trees growing there in the forest and tasted them to check it haves the flavor and make feel-
good effect to the consumers at that time. In addition, as David Beatty discovers in words and
pictures, the Ethiopian province where they first blossom Kaffa gave its name to coffee. The
story of coffee was beginnings in Ethiopia, and the country is original home of the coffee plant,
coffee Arabica, which still grows wild in the forest of the highlands of Ethiopia. While nobody is
sure, exactly how coffee originally discovered as a beverage plant, it believed that its cultivation
and use began as early as the 9th century in Ethiopia.

Marketing is the process of planning production, pricing, promotion, and distribution of ideas,
goods, and services to create exchanges that satisfy individual and organizational goals (AMA
(1995), cited in Kolter, 2003). The definitions of marketing can be grouped into two major
categories: classical (narrow) definitions and modern (broad) definitions. Classical terms,
marketing is defined as “the performance of business activities that direct the flow of goods
and services from producer to consumer or user or the process in a society by which the
demand structure for economic goods and services is anticipated (enlarged) and satisfied
through the conception, promotion, and physical distribution of such goods and services. These
classical definitions of marketing are oriented toward the physical movement of economic
goods and services.
Coffee cherry collecting and transporting activities in Ethiopia in which except loading and
unloading, mostly performed by women groups of farmers. Most of the farm products
including coffee are raw in nature and need to process before consumption. This increases the
cost of marketing service, which adds value and price on farm products. Under this main
activity the sub tasks performed in processing the coffee are pulping, washing coffee, drying,
sorting, sacking/ packing, loading, and transporting then finally unloading to the warehouse.
The small scale coffee producers are always sell the red cherry coffee on their farm as it is
without harvesting, drying, and hulling to the coffee collectors. However, some small-scale
farmers in country grow, harvest, dry, hull and sell their dry cherry coffee to collectors (legal
and illegal collectors). While, household farmers were mostly sell red cherry coffee. The large
scale-private farmers and state farms harvest coffee chary and use pulping machine (dry or wet

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pulping machines) add more value on the coffee products. The pulped and washed coffee then
exposed to sun rise in appropriate place until the coffee bean become properly dried and those
foreign materials in coffee are sorted so that it will be ready grading and sacking. Therefore,
most agro processing employees are women (USAID, 2010).

1.1.1 COFFEE PRODUCTION AND MARKETING VALUE CHAIN IN ETHIOPIA.

The producers under this stage in the coffee value chain of Ethiopia include small-scale farmers,
private owned farmers and state firms. The major portion inters of volume of products
mobilized, value adding functions, market share and capital owned in coffee value chain of the
country is under the hands of producers especially the large-scale private coffee plantations
and state farms of coffee plantations. After the coffee is grown and matured, the following
value adding activities in the value chain performed by those producers are collecting coffee
chary and transporting to processing areas (USAID, 2010)

1.1.2 Coffee Collectors

The most important participants in coffee value chain and they directly bought the coffee with
its pulp (Jenfel coffee) and/or without pulp and sold it to suppliers or private traders for further
processing activities and preparation for marketing. Coffee collectors (sebsabies‘) play an
essential role of bringing coffee from very remote areas to the market by adding value
augmenting the volume of coffee (USAID.2010).

1.1.3 Traders (Suppliers)

Suppliers in coffee value chain of Ethiopia are those who buy coffee from collectors (both legal
and illegal collectors) and sell it to either to exporters in Addis Ababa auction market or
international importers. Suppliers acquire red coffee cherries from collectors or producers and
process their coffee before bringing it to auction. They have hulling, washing and other
sophisticated machines for processing purposes. There are wet and dry processing types
performed by the processors. In the case of wet processing, after the harvested coffee cherries
immediately pulped, fermented in tanks and then finally washed in clean water to remove the
mucilage. It then dried in the sun on raised tables and sorted at proper moisture content. After
drying to proper moisture content, the outer layer of the cherries removed by hulling and the
green bean obtained is ready for marketing. The value addition in this level is totally related
processing activities.

1.1.4 Primary Cooperatives and Unions

The primary cooperatives in Ethiopia are important participants in the coffee value chain of the
country. They produce and harvest the coffee and some of them even perform some processing
activities like washing pulping, sorting and finally sell it to their respective unions. The unions
process the coffee or further processing. Finally further processed were packed, transported to
their warehouse and make ready for export market. Here the unions have different alternatives

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to sell their products. They can sell directly to the international importer or to the domestic
exporter through ECX. The coffee unions contact to ECX for grading systems and to follow the
rules and regulation of the government of Ethiopia.

1.1.5 Exporters
After the all the coffee production and processing activities are finished, it exported to the
international market by exporters. Exporters found in Addis Ababa central market who received
coffee from private producers, private traders and cooperative unions to sell it to the
international market. These exporters bought the coffee from the central auction market
through ECX. These coffee exporters do not get any coffee from the state producers, because
state farm producers export coffee to foreign market by themselves. They play a significant role
by searching foreign market through the linkage they have with the importers outside the
country. They add a place utility to the commodity coffee. Here, the unions, the private traders
and the state owned producers could also act as exporters of coffee, since they can directly sell
it to the foreign importers (MOT, 2012).

1.1.6 Importers
Imports are those actors outside the country who buy coffee from different exporters in the
country Ethiopia. The Ethiopian coffee importing countries are first German coffee importer,
Japan, the Netherlands, and America. These foreign importers after adding some value to the
coffee they received, they directly sell to wholesalers and then to supermarkets (MOT, 2012).
1.1.7 Domestic Wholesalers and Retailers
The other important actors in coffee value chain in Ethiopia are wholesalers who directly buy
coffee from the household farmer’s or small-scale farmers. The small-scale farmers, who
harvest, dry and hull the coffee and transport to market in Ethiopia. By doing so it the small-
scale farmers play a significant role in adding a value on coffee. Here the function of hulling will
go to retailers in that they add more value on the coffee and finally sell to consumers after
hulling it (MOT, 2012).

1.1.8 Consumers
Consumers are the ultimate users of the commodity coffee. In the coffee value chain in
Ethiopia, there are varieties of consumers of coffee. These are domestic consumers and foreign
consumers. The consumers present in domestic country consume directly from small-scale
farmers and coffee collectors retailers throughout the country (MOT, 2012).
Hence, the promoter of this planed dry coffee process factory In Abbaya there are few dry
coffee factory that give services to their customers and they cannot still satisfy the need and
want of the customers in terms of both quality and quantity based on coffee supply volume of
district. In order to maximize customer satisfaction so this dry coffee process factory decides to
open a factory in H/Bagasa PA.

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 1.2 Objective of the project
This plan offers financial institutions an opportunity to review our vision and strategic focus.
It also provides a step-by-step plan for the business start- up, establishing favorable sales
number, gross margin and profitable. Establishing this Factory has beneficiary in
maximizing the wellbeing of the society from different perspective. Some of them are,

 Increase the income of the owner

 It create employment opportunity

 It satisfy the need of the customer(quality and quantity) within a reasonable

price

 It minimizes cost of production for being nearly to farmers.

 It contributes for the development of the surrounding area.

 Increasing government revenue through taxation (Business profit tax and VAT).

1.2.1 Primary Objectives

1. Establish modern dry coffee processing facility

2. Process 65,550 kg of coffee annually
3. Create 64 direct employment opportunities
4. Generate ETB 17,043,000 annual revenue
1.2.2 Secondary Objectives

1. Improve incomes of local coffee farmers

2. Promote Abbaya's specialty coffee
3. Develop export market linkages
4. Implement sustainable processing methods

1.3 MISSION AND VISION Dry Coffee Processing and Marketing

mission is to offer at national market of the coffee exporters the high quality grade coffee. We
are committed to providing the product value that our customers expect.

Our vision is to become the first 10 top dry coffees supplier in local area, and a respected
company - as measured by our customers, our employees, and the community we live in.

Our values are critical to our success. They are the strong foundation of Dry Coffee Processing
and marketing, define who we are, and set us apart from our competitors.
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They underlie our vision of the future. These values include:
Performance excellence. We act like responsible owners, always seeking to meet or exceed
expectations.
Teamwork . We act as a team, committed to each other, and bound by trust and loyalty dry
coffee supply management,
Integrity. We treat one another, and all our stakeholders with dignity and respect. Honesty ,
ethical behavior, and integrity are fundamental characteristics of our business conduct.

1.4 KEYS TO SUCCESS

Our keys to success are:
 Excellent product that will build and maintain customer loyalty.
 A business location that will assure high company visibility and a high flow of
customers.
 Proven management ability to successfully run a similar business.
 Our commitment to continuous improvement and total quality services

1.5 BUSINESS BACKGROUND

1.5.1 DESCRIPTION OF THE PROJECT

Dry Coffee Processing and marketing is a new coffee supplying started in the West Guji Zone ,
Abbaya district Abbaya Town of Oromia regional, the project is a Ato Gemachu Germamo
Dry Coffee Processing & Marketing business managed by Ato Gemachu Germamo . Ato
Gemachu Germamo , Manager of Dry Coffee Processing and Marketing, He has three years’
experience in the hospitality of coffee industry. He successfully conducted a Dry Coffee supply
business in West Guji Zone , Abbaya Woreda , which they sold for a handsome profit at the
previous years the nation market. Her focus is to meet or exceed the customer expectations for an
exceptional quality Dry coffee that is served to be taken out or delivered quickly, and in a
friendly manner. The company will serve a local area with several coffee growers, and a rapidly
coffee growing inhabitant. The company's location is very favorable, providing high visibility
and a large flow of customers. Dry Coffee Processing Industry's prices will not beat the
competition. We are aware that we cannot compete on price only. That is why we prefer to focus
on assessing customer expectations, and our core competencies, decide which expectations we
can reasonably meet, then make sure to constantly exceed them wholeheartedly. Thus, we will be

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able to maintain and increase the level of customer satisfaction, as a strong foundation for future
growth. The entire Dry coffee process will be conducted through five main coffee exporters
direct market that have excellent references in the national market, and we can choose to be one
of their participating suppliers.
. Summary of Operation Loan Requirement
Name Of The Project Unit Unit Ato Gemachu Germamo Dry
cherry Processing & Marketing
Nature of business Clean Green Coffee Production
Planned
Location Abbaya District H/Bagasa Kebele
Sinke Bank 80% 12,000,000
Promoter 20% 3,000,000
Total 15,000,000

1.6 BUSINESS OBJECTIVES

 The business objectives of the envisaged project is profitable processing of Coffee and
marketing the product for national market via ECX and vertical integration market.
 As a business firm one of objective of the project is to earn reasonable income from the
demand supply gap exists in the sector in the International and National Market.
1.7 project description
This Industry is chosen to be established in Abbaya District Town its surrounding areas by
creating a differentiated experience capitalization on personal business. The proposed project
will be have a total 4.5 hectare owner land in H/Bagasa PA, designed to un a multipurpose
business which will turn play a significant role towards solving shortage of coffee process
industry.
This project located to Eastern part of Ethiopia in Oromia regional state West Guji Zone ,
Abbaya district, H/Bagasa Kebele.

1.7 Project location and justification

This kebele found in Abbaya district which is found in West Guji Zone Oromia Regional states
to the southern part of Ethiopia. It borders in the East with the Gedio Zone districts of Guji Zone,
in the south with Wanago Town and in the West with Gelana and in the North with Southern

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Nations, Nationalities, and Peoples Region. This district has 467 km from Addis Ababa capital
city and the farm of owner H/Bagasa kebele It far from West Guji zone Capital town to the
North 108 km and The capital city of Abbaya District is Guangua .
. It has land area of 94,584 hectares. From this hectares 43,778 hectare of land uses for
cultivation, 2348.53 hectares forest land, 12529 hectares for grazing land, and 36,664 heectares
use for Coffee..
Topography of the area comprises uneven, mountains of highlands and plain .There are three
kinds of climate in Abbaya district namely Dega 37.5 %, Kola 12.5 % and Woyna dega 50%.
The average annual rain fall of the area is 1300-2000ml and has temperature of 15 OC-27OC . This
district has 28 that are different crop producers. The area have fertile land can be used for
different crop production. So the community living in this area engaged on crop like coffee,
cereal crops and livestock production.
The topography of the proposed project area shows flat and hill which suitable for coffee
production and industry plant. The project area doesn’t expose for flooding and other natural
disaster. Form practical point of view, the area is very suitable to build planned project and
activates mentioned in this document.
Ato Gemachu Germamo has been engaged in agricultural production of Coffee Production 4.5
hecktars of plot of land in west Guji Zone Abbaya district in H/Bagasa kebele. He is well
known and model farmer who has registered remarkable performance in harvesting agricultural
produces. In bulk quantity. Right know he has secured her farm land with her initial capital and
running her crop production successfully. He has diversified her activities into to produce and
supply best quality products of sundried coffee to the central markets and to remain competitive
business man ever residing in the locality and there by contributes his share in the development
of coffee markets.. It envisions seeing in to the future," to be the business Leader and a Market-
Driven coffee Industry renowned for excellence, quality, performance and reliability in business
rounds.
Target Customer: Abbaya is experiencing a trend toward the high supply of dry and wet coffee
in west Guji Zone.
One of dry coffee industry target customers are Farmers, out growers, Model farmers, whole
sellers and collectors.

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Its strategy is based upon targeting and serving: The typical H/Bagasa and adjacent PA in
Abbaya district coffee producers and coffee market participants are the main customers of this
industry. This PA farmers and coffee processors go long distance and wait for order to form their
coffee that veer lags the time for sell. Coffee in its nature as time of store increase it loses its
moisture content. For these reason this industry minimizes these rescue scenarios.
Description of Products and Services: The Dry coffee industry will offer high quality
processed dry coffee bean, short time and low cost.
Key Features of the Services: This dry coffee industry will have sufficient coffee store with full
store equipment and standard that needed for store as order of customers.
Future Products and Services: Within the next three to five years we expect to branch out into
other nearest PA.
Comparative Advantages in Production: Gemachu Germamo Dry coffee Industry low
overhead and cheaper pricing will be the key to Mars success.
Key Industry Trends: This industry is booming at the present time, there is a trend toward
small cozy places and away from the large generic chain.

The Coffee business does not show signs of slowing down. Gemachu Germamo Dry Coffee
Idustry customers will be attracted by service in addition to this they may be attracting through
standardize customer approach, building, store, office, security and strategic placement.

The industry and marketing that make up the community of establishments in the area
surrounding.
Strength: Consider quality of coffee bean and service with a reasonable price, and its skilled
manager together with its huge store can attract customers, so it has acceptance (brand name) by
the customer.
Weakness: No variation on speed or service it provides. Most of its activities like the speed on
process are limited.
Opportunity: High potential area for coffee production and enough supply .No barriers to enter
and free market
Threats: Ethnic conflict rises to area may destroy the project International market price
fluctuation

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 3. MARKET STUDY
2.1 General Overview
The coffee marketing in Ethiopia accomplished in the following transaction chain. Primary Level
Coffee Transaction Centers (PLCTC): is a place where coffee farmers and suppliers transact
coffee. They are located near to the coffee farms. Currently there are about 979 primary coffee
marketing centers in the country.

Ethiopian Commodity Exchange (ECX): The secondary level where coffee transact in Ethiopia.
Currently ECX warehouses are located at 8 different parts of the country. The centers are in Dire
Dawa, Hawassa, Dilla, Sodo, Bonga, Djimmah, Bedele, Gimbi and Abbaya. The coffee transact
in Addis Ababa in open outcry or protest.

International coffee market: The third level where Ethiopian coffee transacts takes place. In this
level, the Exporters sell coffee to importers. In Ethiopia, only the citizens export green coffee.
The chain of coffee transaction in Ethiopia seen below (Cited Coffee Opportunities in
Ethiopia2012) According to (Getue, 2011) Coffee improvement opportunities related to market
growth of specialty coffee industry and wide range of market options, diverse coffee consumers
preference, modern marketing system, trade marking and licensing initiative, natural resource
richest Arabica coffee gene pool, diverse agro ecology with unique quality profile, associations
Active role cooperatives coop, Proclamation updates on coffee quality and marketing systems. In
addition good investment policy in the country specialization, Example Jimma University)
Control Institutes coffee research center, Promising capacity-building efforts (graduates studies
on coffee tea and spice Nongovernmental organizations newly emerging development
intervention on coffee by NGOs.

2.2 Demand
With the increased demand for coffee products for domestic consumption as
well as export, the business man realized maintaining of Especial quality
coffee production with proper processing and management. The proportion

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of washed and unwashed coffee products from the owner has been
increasing over the years.
2.3 COFFEE MARKET ACTORS
The Coffee Marketing actors include coffee producers, coffee cooperative association private
traders and enterprises, the producers supply to the primary market one to buy and coffee
supplier deliver coffee to auction and the exporters’ coffee buy from auction and export it.
Policies now allow private traders to compete with coffee direct export and by vertical
integration with exporters.
As a result the number of private actors has dramatically increased. However, at the time of this
business plan writing, domestic traders still sell their coffee at auction, some are directly to
exporters. However, this project is planed their Dry coffee products direct to sell to the national
market though ECX and vertical integration.

2.4 MARKET COMPETITION

There are other coffee producing associations and private investors in the project area and
elsewhere who would like to enter into the wet coffee market business. Some of them are in
geographical conditions that can produce a higher quality coffee than this envisaged project
business.
Coffee producing associations fetch high prices and premiums on wet coffee market and paid
dividend for the producers this is attractive for coffee farmers to supply coffee fruit to coffee
association, but to supply dry green coffee to this project mightn’t be a threat.
However the project is planned to avoid this compotators effect by being able to produce a high
quality coffee taste, this will attract consumers and lead to the long-term customers’ relation
between the project and coffee buyers.
Competitors Overview

Mr. Gemachu Germamo has the following competitive advantages over

competitors:-

 He has large potential working areas and Quality of coffee produces Model
farmers are suppliers of Especial processed quality dry coffee.

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2.5 PRICING AND SALES ANALYSIS
PRICE for input and out put
The prices for input and output are used as of current prices obtained from local and
international market. Price of coffee as is mainly influenced by the export market and domestic
supply of the crops.
Current Buying and selling price of Dry coffee in local markets is Birr 120 /1kg and 12350/17kg
respectively. Currently the project cost assuming processing like facilities deprecation,
transportation, labour, other utility, and administrative expenditure costs, is assumed for the
project.
For the detailed information the first year price is reveled below

No. Buying and Selling Price Unit Year One

Dry coffee cherry buying price ETB/Kg 260
Selling price
Clean /processed coffee yield ETB/17Kg 12350
Sort coffee ETB/17Kg 6320

Source :- ECX price

2.6 . MARKET DISTRBUTION

For this envisaged project the raw material purchased from the project area of local primary
market for processing. The supply of dry cherry coffee availability depend on through coffee
supplied period and the price of dry cherry initially set by the regional Agricultural office and
then go through negotiation with producers. The final product of Dry coffee supplied to the
national coffee market center ECX according to the Ethiopia commodity exchange regulation
and qualifying and verified of the origin of beans for price and buyers and sellers under one roof
negotiated the price and if the price reach an agreement goods are sale brought chaos system,
2.7 MARKETING STRAT
For this envisaged project marketing strategy is adopted a quality based DRY coffee production
is an advantage. The focus is on selling a high quality Dry parchment coffee satisfy for
customers of the buyers and reduce the competition threat with other coffee suppliers. It will also

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capture the higher price of the market will providing, hence increasing of the returns of the
project.
The promoter’s aims to keep first buyers with whom it has established market networks.
Moreover, the project seeks to grow by expanding the sales to other new buyers.
The size of the new buyers provides in increasing its output.
The strategy was essential to overcome this threat by building a high level ofcustomer
satisfaction .
In addition the creation of a strong trust with coffee buyers will enable the project to gain
competitiveness in the market place.
The strategy in spend certain amount of time on promotion activities, pricing the products
correctly and distributing timely to the customers effectively and efficiently enhanced price of
the products.
The following paragraphs set out four action strategies the project could implement:
 Control of purchasing of high quality Dry coffee cherries
 Increase the market share in the coffee market channels
 Develop an internal training system for good processing practice
 Diversify into other coffee products by value adding

3. OPERATIONAL PLAN

3.1 PEODUCTION APPLICATION

3.1.1 LOCATION OF THE PROJECT AREA

The coffee processing project is located in Oromia Regional State,West Guji Zone Zone,
Abbaya woreda, .
location advantage
As West Guji Zone Zone , Abbaya woreda, is very ideal for the development of grown coffee.
The locality receives rainfall for about seven to eight months in a year as well as the micro &
macroclimatic conditions are suitable for coffee plantation. Abbaya woreda,. is known for its
coffee production it can be used to supply the coffee for exporter market with a large quantity of
coffee for export. Hence, there was hot economic activity and trade in the area. The Farm of Mr.
Gemachu Found in H/Bagasa . Coffee has been grown in Abbaya woreda, in H/Bangasa

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Kebele . for many years and the farmers have been harvesting high quality coffee known as
“Spices”, which has been fetching premium price in the world market.

3.2. PRODUCTION
The investor is planning to invest on the production of high quality green coffee. The project is
in line with government interest and policy which focuses on market oriented Dry coffee
production modern processing technology as its immediate objective. The quality of Dry coffee
supply to the ECX and vertical integration market is based on daily, weekly and monthly price
reference..
Dry processing refers to methods where the fruit is either dried directly or is disrupted, but the
seeds not separated from the fruit tissues, then immediately dried.
In dry processing the whole cherry is dried with or without some preceding selection/separation
step.
PRODUCTION PLAN
The annual production programme is formulated on the basis of the market forecast. It is
assumed that the project will start operation at a higher production season to allow time for
market penetration and skill development of workers.
The project volume is shown as below table 3.1 for dry coffee production plan.
Table 3.1 Project Production Plan
Description Unit 2025/2026
A FROM DRY MILL
1 Total Annual Required dry cherry kg 65,550
Purchased Dry Cherry Kg 49,800
Own Farm Kg 15,750
Finished Product
Clean coffee (50%) Kg 32,775
Sorting Coffee (7.5%) Kg 4916.5

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 4. RAW MATERIAL AND INPUT REQUIREMENT

4.1 Procurement of Raw Material

West Guji zone in general and the project area in particular is an ideal geographic area for coffee
bean production. The natural and social factors the project site have demonstrated the technical
feasibility of the project. The quality of coffee in that vicinity falls under Guji Coffee category,
which is highly demanded for its flavor and aroma on international market .However, there is a
potential principal raw material supply for our dry coffee processing. During the dry
coffee processing, the dry coffee fruit conversion rate to clean green bean coffee 50% by
weight.
Taking the above mentioned weight loss into account; the annual requirementfor dry cherry
coffee at 100 per cent capacity utilization rate is estimated and for the detailed information
showed below the table
Table 4.1 : Raw Material Requirement and its Cost
Raw material Description Unit 2025/2026
1 Total Annual Required dry Kg 65,550
cherry
Purchased Dry Cherry Kg 49,800
Own Farm Kg 15,750
Price
2 dry Cherry Coffee birr/kg 260
Total price per year in birr Birr 17,043,000

4.2 AUXILIRY MATERIALS

The major auxiliary materials in the production of Dry green bean coffee comprise packing
materials of 100 kg packing of sisal jute sack. The proposed project at 100% production capacity
package materials cost is planned 117,000 birr annually.

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4.3 CREDIT AND BORROWING SYSTEM
As indicated in the business plan the short-term loan requirement of the project is estimated at
Birr 15,000,000
. The Sinke Bank will provide 80 % of the production finance plan at an annual interest rate of
16.5 % to be repaid on a period of 3 year on the end of the year.
Therefor The total investment capital of the project is estimated at birr 15,000,000 ETB Source
of finance: The total investment capital of the project is to be financed from the promoter’s
equity and bank loan.
 Equity (20%): ETB 3,000,000 (Promoter)
 Loan (80%): ETB 12,000,000 (Requested from Sinke Bank)
4.4 FIXED ASSET (COLLATERAL)
For the purpose of this business plan we are assuming that the fixed asset that is related to
collateral value described below the table as shown.
Table 4.2 Fixed Asset Dry coffee processing Project
No Asset Total Cost
Residential house 4,500,000
Store 6,000,000
Dry Coffee Machine 6,500,000
Total 18,000,000

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5. ORGANIZATIONS AND MANAGEMENT

5.1 Organizational Structure

The organizational structure of the project is designed by including all the necessary personal
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of plant. Depending up on the
nature of the center and the amount of work to be performs under each will be supervised by the
unit head that is accountability for general manager.

Cashier
Accountant Marketting
Guard

machine
General Manager operator

CEO/Ouner

5.2 HUMAN RESOURCE REQUIREMENT

PROJECT MAN POWER AND MANAGEMENT
The project shall have 14 permanent and 50 casual labor employees for dry-coffee production
with different responsibilities. The firm controls and supervises the overall activity of the project
at times while the operation and management of the dry-production will be entrusted to qualified
and well experienced manager. All staff members of the project are accountable to the manager
who is assigned by the project owners to manage the overall activities of the project. A junior
accountant will be responsible to keep all the financial transactions of the project, control cash
and stock movements of the coffee processing and prepare up to-date financial reports. The

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purchaser will handle all the payments and minor purchases of the project. The storekeeper will
be responsible to systematically record and keep the input and outputs of the project. Skilled man
powers and casual laborers shall be recruited from project area.
Table 5.1 annual salary expense

S/N Description No Position Monthly Annual salary

salary
1 General manager 1 BA Business mgt 6000 72,000
2 Service supervisor 1 BA in Marketing 5000 60,000
3 Machine operator 2 Dip in Auto Mechanics 5500 132,000
4 Accountant 1 BA 5600 67,200
5 Security guard 3 Well experienced 2500 90,000
6 Purchaser 6 Level II 4000 288,000
7 Daily Labors 50 140,000
Total 849,200

6. FINANCIAL STUDY AND ANALYSIS

6.1 INTRODUCTION
With the imbalance between supply and demand in the global coffee market coupled with a High
level of commercial coffee prices, there is much interest among private operators to invest in dry
coffee supplying in Ethiopia. The dry processing and supplying are a necessary investment to
produce a fully sun Dry coffee which is sold in the coffee national market though ECX and
vertical integration at better prices. This chapter will assess the financial feasibility of Ato
Gemachu Germamo dry coffee supplier and marketing, using the dry-mill coffee processing
as a business’s feasibility study.
6.2 FINANCIAL KEY ASSUMPTIONS
The project cost estimates for the proposed sun dry green coffee processing and supplying have
been formulated on the basis of discussions with owners. The pgrojections cover the cost of
working capital for follow-up of the project. Assumptions regarding Production/Operating cost
for the existing Gemachu Germamo dry coffee supplier and marketing, however, specific
assumptions relating to individual cost components are given as under.

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6.3 Project Capital
The total investment capital of the project is estimated at birr 15,000,000 of which birr
12,000,000 is for fixed investment items that covered through bank while the remaining balance
of birr 3,000,000 (20%) will be initial working capital of owner.

6.4 Land use plan

The total land required for the envisage project is estimated to be 4000m2 the total area for the
construction of this proposed building will 2400 m2 the remain is 1600 m2 parking, garbage
store and coffee drying bed.

And Ato Gemachu Germamo has been engaged in agricultural production of Coffee
Production 4.5 hecktars of plot of land g. He is well known and model farmer who has
registered remarkable performance in harvesting agricultural produces. In bulk quantity.

Table 6-1 GENERAL ASSUMPTION

Operating Expenses for the project and there basis are taken as follows
Operating Expenses
Description Basis Basis
Bank interest 16.5 %
Discounted cash flow 10%
Source of finance 80%
ECONOMIC ASSUMPTIONS
Material price growth rate 5%
Wage Growth Rate 5%
Tax rate 30%
Expense
Salaries Expenses As per salary estimations
Administrations expense 6%
Sales Production 99%

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6.5 Revenue Projections And Assumptions
General Assumptions-
 Green Bean Coffee 50% from total Dry coffee cherry
 Sorting Coffee 7.5 % from the total cheery
 Cattator coffee 0.5 % from the total cheery
 Floater coffee for sale 65% of the total processed
 Sales Price increase 5% per term(for the next 3 term supplying)
N.B :- Source From the Agricultural zone
Table 6.2 annual salary expense
S/N Description No Position Monthly Annual salary
salary
1 General manager 1 BA Business mgt 6000 72,000
2 Service supervisor 1 BA in Marketing 5000 60,000
3 Machine operator 2 Dip in Auto Mechanics 5500 132,000
4 Accountant 1 BA 5600 67,200
5 Security guard 3 Well experienced 2500 90,000
6 Purchaser 6 Level II 4000 288,000
7 Daily Labors 50 140,000
Total 849,200
Table 6-3: Purchasing Dry Coffee Plan And Its Cost
Raw material Description Unit Dry Coffee Unit Price Total Price
Purchased Dry Cherry Kg 49800 260 12,948,000
Own Farm (Gemachu Germamo Kg 15,750 260 4,095,000
Farm)
Total Annual Required dry Kg 65,550 260 17,043,000
cherry and Price

Remark.= From Gemachu Germamo Farm: 4.5 hectares → 15,750 kg/year

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Table 6.4 Raw material Of Dry Cherry
Description Cost
Unit Quantity Unit Price Total Price
Raw material Of Dry Cherry
Quanta Bag /Sack Nu. 450 260 117,000
Table 6.5 office equipment

S/N Description Measurement Quantity Unit cost Total cost in

birr
1 Managerial table Unit 2 2000 4000
2 Managerial chair Unit 1 1500 1500
5 Shelf Unit 1 2000 2000
6 Gust table Pack 1 600 600
7 Guest chair Unit 3 1000 3000
Meeting table Unit 6 1000 6000
Total 37100
6.5 . FINANCIAL PLAN AND WORKING CAPITAL REQUIREMENTS
Production costs include the costs of direct raw material, Auxiliary material and package
Transport Cost for Raw material& Product in marketing, Salary and wage for Production Staffs
(direct labor), overheads, auxiliary material and package.
This envisaged project is pursuing loans for working capitals in order to raise the Capital
required.
The company’s is also negotiating loan facility with its bank to obtain Dry green bean coffee
production for supplying marketing credit.
For the detailed breakdown information is show below table 6.7
Table 6.7 Estimated Of Total Working Capital
Description Total Cost
A Raw Material Cost
Dry Cherry Coffee Cost 17,043,000
B Over Head Expense
Transport 500,000
Coffee Bags 117,000
Stationary, printing and office 37,100
supplies
Petrol and lubricants 450,000
Loading and Unloading 45,000

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 Salary 849,200
Maintenance and repair for coffee 112,500
processing machine
Commission paid for coffee 150,000
collectors
Miscellaneous Expense 75000
Bank Interest 1,320,000
Total 3,655,800
C. A + B (total 20,698,800

Table 6.8 : Gross Annual Revenue

Finished Product Assumption Selling Price
Unit Processed Unit Price Total Price
Coffee
Clean Green Coffee Birr/17kg 32,775 12350 23,810,073
(High Grade)
Sorting Coffee (Law Grade) birr/17 kg 4916.5 6320 1,827,595
Total 37692 25,637,668

Remark :- Clean Green Coffee 32,775 kg = 1927.94 feresul (1 feresula = 17kg)

Sorting Coffee 4916.5 kg = 289.2 Feresula
Table 6.9 investment capital

S/N Financial source Percentage Amount I ETB

birr
1 Promoter (cash on hand ) 20 3000,000
2 Bank loan 70 12,000,000
Total investment capital 15,000,000

Mr. Gemachu Germamo

Projected Balance Sheet

For the Coming 2025/26

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 Table 6.10 Balance Sheet

Particular Amount
Current Asset
Cash on bank 3,000,000
Cash on hand 150,000
Inventary 1,500,000
Total current asset 4,650,000
Fixed asset
Residential house 4,500,000
Store 6,000,000
Dry Coffee Machine 6,500,000
Total 18,000,000
Total fixed asset 22,650,000
Liability
Bank loan 12,000,000
Total liability 12,000,000
Owner equity 10,650,000
Total capital 10,650,000
Liability and capital 22,650,000

6.6 INCOME STATEMENT

It may be seen from the profitability estimates that the unit would earn a net profit after taxation
of birr 1,481,660 during 2025/26 crop season. On the above basis, there is adequate generation of
funds out of the processing operation to service the repayment of term loan and interest
liabilities, as also to meet additional requirement of margin money for working capital in the
second and subsequent terms.
The detail information is given below table

Mr. Gemachu Germamo

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 Profit and Loss Statement
Project Year for 2025/26
Table 6.11: Project Income statements
Profit and Loss Project year 2025/26
Gross Revenue 25,637,668
Dry Cherry Coffee Cost 17,043,000
Coffee Bag 117,000
Sub-Total 17,160,000
Gross Profit 8,477,668
Overhead expense
Transport 500,000
Stationary, printing and office supplies 37,100
Petrol and lubricants 450,000
Loading and Unloading 45,000
Salary 849,200
Maintenance and repair for coffee processing 112,500
machine
Commission paid for coffee collectors 150,000
Miscellaneous Expense 75000
Less Interest Expense (16.5%) 1,320,000
Total administration and selling Expense 3,538,800
Earning Before interest and Tax 4,938,868
Pre-Tax Income 4,938,868
Tax 1,481,660
Net Income 3,457,207
Gross Profit Margin 33.52 %
Net Profit Margin 13.53%

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6.7 CASH FLOW AND BALANCE SHEET
The cash end balance clearly shows that the accumulated or free cash fund is sufficient to
finance the expansion activities, strengthen the Dry coffee production and invest on the
establishment of other services. Therefore this project is expecting a healthy growth in net worth
and a healthy financial position. We do not project any real trouble meeting our debt obligations,
as l We do not project any real trouble meeting our debt obligations, as long as we achieve
our specific objectives.

6.8 FINANCIAL EVALUATION

6.8.1 . PROFITABILITY
The profit and loss statement of the projection for the life of the project is shown above in
table 6.11
The profit and loss statement shows that in in this project: first term of the project life a profit of
Birr 3,457,207 will be generated.

This continues to grow at an increasing rate and reaches at: three term marketing.
6.8.2 RISKS AND UNCERTAIN
The following risks and uncertain incidents that might affect the project could occur during
operating period of the project. If the global economic crisis and inflation is prolonged and
intensified, it will affect the project cost benefits analysis. Besides, it may also affect the
production cost and both inland and off shore markets. Due to the price fluctuation the producer
discourage results the supply of raw material of dry cherry coffee will be problems of efficiency
of green coffee production. Unforeseen natural calamity such as crop failure due to draught or
long period of rain will be a problem of dry coffee processing.
6.8.3 Loan Repayment
The principal loan shall be repaid every year, starting on, 2027 & ending on,2029, whereby
repayment will be made in 1 annual
installment. The loan repayment period is simply defined as the period (i.e. the number of years)
required paying the principal and interest of the original business costthroughout the one project
life. The business result obtained reveals that the business is financially viable and has a healthy
cash flow forecast. The out come of the financial analysis reveals that: based on the following

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repayment schedule the annual payment was described on the base of bellow the given table 7-5
bellows throughout the one year project period.
Year Amount of Principal Instalment Interest Total Amount
Outstanding Due Payable 16.5
Year 12,000,000 12,000,000 1,980,000 13,980,000

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7. Environmental impact assessment
The project will seriously involve itself protecting conserving and developing the natural and
flora of the project area in line with the millennium development goal. To this to will play a vital
role in participating the varies organization and the community around the project area to from
an environmental commute in charge of all environmental issues to be handled in accordance to
varies environmental and water policies of 97/99. The owner of the project believes to undertake
several environmental issues for the conservation development and creation of sustainable
environmental around the project area.

Negative impact

 Noise and dust emission during construction

 Problem on workers construction
 Swages during operation
 Machine sound may disturb community around project

8 Economic Benefit
This project will create employment for 14 employees by permanent and 50 temporary employed
in it. In addition to supply of domestic needs, the project will generate 849,200 per annum in
term of tax revenue. The establishment of such hotel will have a foreign exchange saving effect
to the country by subtracting the current import.

9. SUMMARY AND CONCLUSIONS

Results of the financial appraisal show that investing in coffee processing and marketing is
profitable. These findings are encouraging and can be used as guide lines for this investors
planning to produce for the high quality coffee markets. The major task will be to get financial
resources to set up the require draw materials to produce it.
The task for these investors will be to find what mechanisms will link them to coffee growers so
that they can deliver coffee harries to the primary market.
Another challenge will be to offer attractive prices to farmers that are competitive compared to
prices offered by other private and coffee growers’ associations, leaving at the same time a
reasonable profit level for their operation. It is, however, questionable how a high quality coffee
will be obtained when the investors cannot monitor the production stage of the coffee cherries
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and where there are no quality standards of raw coffee. However, based on the framework set out
in this business study the following
10. conclusions
were made regarding the feasibility of proposed Dry green coffee production.
A market opportunity was identified for the domestic sales and export market. The demand and
export trend confirms the products are marketable
The analysis on financial feasibility of the proposed business planrevealed that based on the
assumptions made, the owner is profitable. This business plan is to have a healthy cash flow and
is viable over short term. The positive financial feasibility is, however, dependent on stable
inflation and macro-economic conditions. Based on the framework setout in this business plan
where feasibility is assessed in three core areas, it can be concluded that the proposed green
coffee production business plan is feasible. The results of the study, however, are heavily
dependent upon the assumptions made during the planning and other operating environments
(political, environmental and economic conditions) remain relatively stable.

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