DALECHA AGRICULTURE DEVELOPMENT, PLC

OIL SEED CROPS PRODUCTION PROJECT

Submitted
to
Hwassa Administrative
Investment Office

Submitted
by
DALECHA AGRICULTURE DEVELOPMENT PLC

PEOJECT LOCATI: Hwassa Administratve

PREPARED BY: REKIKE DEVELOPMENT CONSULTANCE PLC
CONSULTANT PERSON: Abrham Astatike
Mobile Cell Phone: 0911384833 Hwassa
August 2019
ACRONYMS
ADLI Agricultural Development-Led Industrialisation
EARO Ethiopian Agricultural Research Organization
ECX Ethiopian Commodity Exchange
ETB Ethiopian Birr
FDRE Federal Democratic Republic of Ethiopia
GDP Gross Domestic Product
GTP Growth and Transformation Plan
ha Hectare
KA(s) Kebele Administration(s)
KM Kilo Meter
KOSPPP Kota Oil Seeds and Pulse Production Project
m.a.s.l. Meters above sea level
mm Millimetre
MoARD Ministry of Agriculture and Rural Development
MoFED Ministry of Finance and Economic Development,
oC Degree Cellicious
PIF Policy and Investment Framework (of Ethiopian
Agricultural Sector)
PLC Private Limited Company (Pvt. Ltd. Co)
Qtl(s) Quintal(s)
USA United States of America
USD United States Dollars

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 TABLE OF CONTENTS
ACRONYMS ................................................................................................................. I
TABLE OF CONTENTS ................................................................................................ II
LIST OF TABLES........................................................................................................ 1
LIST OF FIGURES ...................................................................................................... 2
1. EXECUTIVE SUMMARY ......................................................................................... 3
2. INTRODUCTION.................................................................................................... 5
2.1 COMPANY PROFIL1E ................................................................................................................ 5
2.2 THE PROMOTERS ..................................................................................................................... 5
2.3 CAPITAL STRUCTURE OF THE PROJECT PROMOTER ........................................................................ 6
2.4 FEATURES OF THE AGRICULTURE SECTOR ................................................................................... 6
2.5 BENEFICIARIES ....................................................................................................................... 7
2,6 PAST AND PRESENT INTERVENTION ............................................................................................. 8
2.7 JUSTIFICATION OF THE PROJECT: WHY IT IS PROPOSED? ................................................................. 9
2.8 SUPPORT FOR THE PROJECT ...................................................................................................... 9
2.9 GOAL AND OBJECTIVE ............................................................................................................ 10
2.9.1 Overall goal .................................................................................................................... 10
2.9.2 Main and Specific objective ............................................................................................ 10
3. STUDY OF THE PROJECT SITE .......................................................................... 12
3.1. DESCRIPTIONS OF THE AREA ............................................................................................ 12
3.2 REASON FOR SELECTION OF INVESTMENT................................................................................... 12
3.3 LAND OWNERSHIP .......................................................................................................... 13
3.4 PHYSICAL AND NATURAL CONDITION OF PROJECT SITE .......................................................... 13
3.5 PRODUCTION OF EACH COMMODITY PER HA WITH AND
WITHOUT PROJECT ....................................................................................................................... 15
3.6 INFRASTRUCTURES ............................................................................................................ 15
4 SOCIO-ECONOMIC STUDY ................................................................................... 16
4.3 SOCIO-ECONOMIC BENEFIT FOR THE SOCIETY ..................................................................... 16
4.4 POVERTY ALLEVIATION .................................................................................................... 16
4.5 ECONOMIC BENEFIT FOR THE COMMUNITY ......................................................................... 16
4.6 ECONOMIC BENEFIT FOR THE COUNTRY............................................................................. 17
5 DESCRIPTION OF OIL CROPS CULTIVATION ....................................................... 19
5.1 AGRONOMICAL PROFILE .......................................................................................................... 19
6 ENVIRONMENTAL IMPACT ASSESSMENT ........................................................... 24

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7 MARKET STUDAY AND PLANT CAPACITY ........................................................... 25
7.1 OILSEEDS PRODUCTION IN ETHIOPIA .................................................................................. 25
7.2 POST SUPPLY AND PRESENT DEMAND ................................................................................ 26
7.4 PRICING AND DISTRIBUTION..................................................................................................... 28
8. TECHNICAL STUDY OF THE FARM ....................................................................... 29
8.1 LAND PREPARATIONS ............................................................................................................. 29
8.2 PLATING MATERIALS AND SEED RATE ....................................................................................... 29
8.3 FARMING .............................................................................................................................. 29
8.3 COP MAINTENANCE................................................................................................................ 30
8.4.1 Application of Fertilizers ................................................................................................. 30
8.4.2 Weed Control .................................................................................................................. 30
8.4.3 Farm Protection .............................................................................................................. 31
8.4.4 Crop Irrigation ................................................................................................................ 31
8.5 HARVESTING ......................................................................................................................... 31
8.5.1 Harvesting Operation ..................................................................................................... 31
8.6 FARM CAPACITY AND FARMING PROGRAMME ................................................................ 32
8.6.1 Farm Capacity ................................................................................................................ 32
8.6,2 Farming Production Programme ..................................................................................... 32
9. FARM OPERATION TECHNOLOGY AND
ENGINEERING ......................................................................................................... 33
9.1 PRODUCTION MACHINERY AND EQUIPEMENTS .............................................................. 33
9.1.1 Farm Machinery Requirement ........................................................................................ 33
9.1.2 Farm Tools and Equipment ............................................................................................ 33
9.1.3 Irrigation and Farm Structure Structures
Requirements ........................................................................................................................... 34
9.2 MATERIALS AND INPUTS .......................................................................................................... 35
9.2.1 Materials ........................................................................................................................ 35
9.2-2 Utilities ........................................................................................................................... 36
9.3 SESAME HULLING PROCESS ..................................................................................................... 36
9.4 SOURCE OF TECHNOLOGY ....................................................................................................... 37
9.5 LAND, BUILDING AND CIVIL WORKS OF THE PROJECT.................................................................. 37
9.5.1 Company Building and Civil Works ............................................................................... 37
9.6 COMPANY VEHICLES AND MOTORS ........................................................................................... 38
9.7 MAINTENANCE AND REPAIRER ................................................................................................. 39
9.8 OFFICE FURNITURE AND EQUIPMENT ........................................................................................ 39
9.10 PRODUCTS AND REVENUE ..................................................................................................... 39
9.11 Pre-Operating Activities ................................................................................................... 40

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10. PLAN OF OPERATION OF THE PROJECT ............................................................. 40
11. PROJECT ORGANIZATION AND MANPOWER
REQUIREMENT ........................................................................................................ 43
11.1 FORM OF BUSINESS ............................................................................................................. 43
11.2 ORGANIZATION STRUCTURE OF THE PROJECT .......................................................................... 43
11.3 MAN POWER REQUIREMENT .................................................................................................. 43
11.4 TRAINING REQUIREMENT ...................................................................................................... 44
12. FINANCIAL STUDY OF THE INVESTEMENT ......................................................... 45
12.1 PROJECT INVESTMENT COST AND WORKING CAPITAL
REQUIREMENTS ........................................................................................................................... 45
12.2 FINANCIAL BUDGET OF THE INVESTMENT................................................................................. 46
12.2.1 Total Investment Cost ................................................................................................... 46
12.2.2 Operating cost .............................................................................................................. 46
12.3 BUDGET ALLOCATION........................................................................................................... 46
12.4 FINANCIAL VIABILITY ............................................................................................................ 46
12.4.1 Income Statement ......................................................................................................... 46
12.4.2 Cash Flow Statement and Balance Sheet .................................................................... 47
12.4.3 Pay Back Period ........................................................................................................... 47
12.4.4 Internal Rate of Return (IRR) ........................................................................................ 47
12.4.5 Net Present Value (NPV) ............................................................................................... 47
12.4.6 Break even Analysis .................................................................................................... 48
12.5 SENSITIVITY ANALYSIS .......................................................................................................... 48
12.5.1 Risk and Uncertainty ................................................................................................... 48
12.5.2 Sensitive Analysis ........................................................................................................ 48
13. CONCLUSIONS AND RECOMMENDATIONS........................................................... 50
13.1 CONCLUSION ...................................................................................................................... 50
13.2 RECOMMENDATION .............................................................................................................. 50
13.2.1 Proposed Loan amount & Purpose ............................................................................... 50
13.2.2 Terms and conditions ................................................................................................... 51
14. ANNEXTURE ...................................................................................................... 55

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 List of Tables
TABLE 1: CAPITAL STRUCTURE OF DALECHA AGRICULTURE DEVELOPMENT PLC ............................... 6
TABLE 2 : AVERAGE MAXIMUM AND MINIMUM MONTHLY TEMPERATURES (OC) OF THE PROJECTAREA .............. 14
TABLE 3: AVERAGE MONTHLY AND ANNUAL RAINFALLS OF THE PROJECT AREA ............................................. 14
TABLE 4: RESULT SHEET FOR CHEMICAL AND PHYSICAL ANALYSIS SOIL SAMPLES FROM THE PROJECT
AREA ......................................................................................................................................... 14

TABLE 5: ANTICIPATED PRODUCTION PER HA OF EACH PLANNED CROP WITH AND WITHOUT PROJECT ............... 15
TABLE 6: OILSEEDS PRODUCTION IN ETHIOPIA IN (1,000 TONES) ............................................................... 25
TABLE 7: PRODUCTION OF TOTAL OIL SEEDS & SHARE OF SESAME, SOYBEAN & SUNFLOWER AND
EXPORT (TONS)............................................................................................................................ 26
TABLE 8: PROJECTED DEMAND FOR OIL SEEDS PRODUCTION OF SESAME, SOYBEAN & SUNFLOWER
(TONES) ...................................................................................................................................... 27
TABLE 9: SEASONAL DISTRIBUTION CALENDAR OF THE PROJECT ................................................................ 28
TABLE 10: PLANTING MATERIAL RATE .................................................................................................. 29
TABLE 11: LAND PREPARATION AND PLANTING COST (ET. BIRR) ............................................................... 29
TABLE 12: FARM MAINTENANCE COST ESTIMATIONS (ET.BIRR) ................................................................ 30
TABLE 13: FARM YIELD ESTIMATION .................................................................................................... 32
TABLE 14: FARM MACHINERY REQUIREMENT ......................................................................................... 33
TABLE 15: FARM TOOLS AND EQUIPMENT’S ............................................................................................ 33
TABLE 16: IRRIGATION AND FARM STRUCTURES REQUIREMENT AND COST .................................................. 34
TABLE 17: ANNUAL REQUIREMENT FOR SEED AND PACKING MATERIALS (AUXILIARY) .................................. 35
TABLE 18: ANNUAL REQUIREMENT OF UTILITY ....................................................................................... 36
TABLE 19: FARM BUILDING FACILITY COST............................................................................................ 38
TABLE 20: COMPANY VEHICLES AND RELATED COST .............................................................................. 38
TABLE 21: MAINTENANCE AND REPAIRER COST ESTIMATED ..................................................................... 39
TABLE 22: OFFICE FURNITURE AND EQUIPMENT ESTIMATED COST ............................................................ 39
TABLE 23: PROJECTED GROSS REVENUE ........................................................................................... 39
TABLE 24: PRE-OPERATING ACTIVITIES OF PROCESSING .......................................................................... 40
TABLE 25: OPERATION PLAN OF THE PROJECT ....................................................................................... 42

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TABLE 26: MAN POWER REQUIREMENTS ............................................................................................... 44
TABLE 27: PROJECT INVESTMENT AND WORKING CAPITAL COST ............................................................... 45

List of Figures
FIGURE 5: ORGANIZATIONAL STRICTURE................................................................................. 43

List of Annex
ANNEX 2: PROJECT INVESTMENT AND INFRASTRUCTURE AND COSTS RELATED TO INSTALLATIONS55
ANNEX 3: INCOME STATEMENT ASSUMPTION ....................................................................55
ANNEX 4: INTEREST CALCULATION (BIRR) ........................................................................56
ANNEX 5: DEPRECIATION CALCULATION (BIRR) ................................................................56
ANNEX 6: REVENUE PROJECTION AND ASSUMPTIONS .........................................................57
ANNEX 7: PROJECTED INCOME STATEMENT ......................................................................57
ANNEX 8: PROJECTED BALANCE SHEET ..........................................................................58
ANNEX 9: PROJECTED CASH FLOW STATEMENT ................................................................58
ANNEX 10: INTERNAL RATE OF RETUREN ( BIRR) ......................................................59

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 1. EXECUTIVE SUMMARY
1.1. Project Title: Dalecha Oil seed Crops Production Project
1.2 Promoter’s Profile
The anticipated “Dalecha Oil Seed Crops Production Project” is initiated by the
newly established DALECHA AGRICULTURE DEVELOPMENT PLC, which is
owned by Mr.Sentayehu Woldegiorgis, Mr.Selmon Nayu, Mr.Debesa Dika,
Mr.Teshome Debebe and Mr.Mesfin Eyasu. The share of the project capital equally
contribution and an equal ownership property which is held by members of the
company.
The PLC members are Ethiopian-born and currently have an Ethiopia citizenship. In
view of their education and work experiences, they bring a wealth of experience to
the Company. The project members both has had more than 10 years of work
experience in relation to agricultural product and other business sales and vastly
involved in money management and administrations.
1.3 Location of the Project
The area identified for implementing the anticipated project is located in the
Southern Nations, Nationalities, and Peoples' Region (SNNPR) within Hwassa
Administrative. It is located 273 km south of Addis Ababa. The town serves as the
capital of the Southern Nations, Nationalities, and Peoples' Region, and is a special
zone of this region. It lies on the Trans-African Highway 4 Cairo-Cape Town, and
has a latitude and longitude of 7°3′N 38°28′ECoordinates: 7°3′N 38°28′E and an
elevation of 1708 meters above sea level. The specific project site is located at
geographic coordinate of 7°3’22” N and 7°1’03” E being its centre.

1.4. Project Goal and Purpose

The overall goal of the project is to contribute towards the economic development of
Ethiopia through using the existing investment opportunities in the Country and
taking advantage of the expressed policy incentives that emphasize on greater
commercialization of agriculture and enhancing private sector development.
The project’s main objective is to implement an agricultural investment project using
intensive mechanized farming for the production of oil seeds production for the
edible oil processing; which primarily involves sesame, sunflower and soybean
cultivation with high standards and quality of production; while ensuring optimal
economic returns as well as socially and environmentally acceptable production
and manufacturing system that will attain full production level within two years
starting from the 2020 production season.

1.5 Estimated Cost of the Project

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 At the beginning of the production year the project will have the following costs
 Total cost 13,940,088
 Intial Investment 12,320,721
 Intial Operating1,619,367.7
1.6 Project Component: The project has three part one is oil seed
crops production, second animal feed production and cattle fatting.
 Total production area: 403 ha
 For oil seed crops production: 300 ha
 For Animal Feed production: 100 ha
 For cattle Fatting: 3 ha
Types of investment: Buildings for edible oil processing shade, office, stores,
residence, workshop Agricultural machineries & implements Vehicles
 Oil Seed Crops Estimated production (Qt)
Oil Crops ha Year 1 Year 2 Year 3-10

Sesame (50%) 150 2,700 3,150 3,150

Sunflower (25%) 75 14,850 17,325 17,325
Soybean (25%) 75 1,350 1,575 1,575
Total 300 18,900 22,050 22,050

1.7 Expected Beneficiaries:

 Permanent employee: 87
 Temporary employee: 450
1.8 Duration of the project: 25 years
1.9 Risks and uncertainty:
 Price fluctuation due to global inflation
 Crop failure due to unforeseen natural calamity
 Conflict

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2. INTRODUCTION

2.1 Company Profil1e

Name of company: DALECHA AGRICULTURE DEVELOPMENT PLC
Ethiopian (i.e. Registered with the Investment Office of
Nationality:
Hwassa administrative City, SNNPR, Regional State,)
Mr.Sentayehu Woldegiorgis, Mr.Selmon Nayu, Mr.Debesa
Owner(s):
Dika, Mr.Teshome Debebe and Mr.Mesfin Eyasu
Oil seed Crop Production (Sunflower, Sesame and soybean
Type of business:
farming)& edible oil manufacturing
Full Address : Mobile: 09
E-mail: [email protected]
Project Name: Oil Seed Crops Production and Edible Oil Processing Project
Status of the Project: New
Proposed Site: Gurafereda Woreda, Hwassa Administrative City SNNPR,
Regional State
Specific location: Within the urban areas surrounding
Size of proposed land: 403 ha
Total estimated capital: 13.940Million Birr
Legal Form of organization: P.L.C.
Registering office: Hwassa Administrative City and SNNPR, Regional State
Investment Office
Taxpayer Identification No.: ------------------
Right of Occupancy: Lease agreement
Contract Period: 25 years (2012-2037)
Name: Mr.Sentayehu Woldegiorgis,
Contact person & Address:
Mobile: 091327506

2.2 The Promoters

The anticipated “Oil Seed Crops Production” is initiated by the newly established
DALECHA AGRICULTURE DEVELOPMENT PLC, which is owned by Mr.Sentayehu
Woldegiorgis, Mr.Selmon Nayu, Mr.Debesa Dika, Mr.Teshome Debebe and Mr.Mesfin Eyasu.
The share of the project equaly contrbution ane equaly ownership is held by mebers of the
company.

The PLC members are Ethiopian-born and currently have an Ethiopia citizenship. In view of
their education and work experiences, they bring a wealth of experience to the Company.
The project members both has had more than 10 years of work experience in relation to
agricultural product and other trades and vastly involved in money management and
administrations.
The project envisages establishment of a new crop production enterprise with specific focus
on sesame, sunflower and soybean farming as its immediate objective. Nevertheless, other
oil processing and/or enterprises could be included based on results of future studies. The
project is expected to introduce advanced technologies and improved practices in sesame,
sunflower and soybean farming supported by the rich experiences of the promoters gained
in the indvidual knolwed and skill. Thus, the project will create better employment
opportunities for the local communities and facilitates a good deal of technological transfer to
the country.

2.3 Capital structure of the project Promoter

As indicated in the minutes of the shareholders meeting dated on August, 17, 2019 the
capital was started equal share from each 200,000 birr and total capital is 1,000,000 birr.
The detail of the company’s capital structure is presented in the table as follows:-
Table 1: Capital Structure of DALECHA AGRICULTURE DEVELOPMENT PLC
Sr. No. Name of shareholder No. of Shares Value of a single Total paid-up share
share (par value) Capital (Birr)
Cash Kind
1 Mr.Sentayehu Woldegiorgis, 200,000 200,000 200,000 -
2 Mr.Selmon Nayu, 200,000 200,000 200,000 -
3 Mr.Debesa Dika 200,000 200,000 200,000 -
4 Mr.Teshome Debebe 200,000 200,000 200,000
5 Mr.Mesfin Eyasu 200,000 200,000 200,000
Total 1,000,000 1,000,000 1,000,000 -

Capital Adequacy: - The required equity capital contribution to the project is birr
4,952,808.64 (36%) of the total project cost. The company’s registered capital of birr
1,000,000 is less by birr 3,952,808.64& not adequate. Hence, the company’s capital
should be raised to fulfil the requirement.

2.4 Features of the Agriculture Sector

The agricultural sector greatly influences economic performance in Ethiopia. Approximately

95 per cent of agricultural GDP and 85 per cent of employment is contributed by smallholder
households, which are estimated at about 11.7 million. With its total area of about
1.13 million km2 and about 51.3 million hectares of arable land, Ethiopia has tremendous
potential for agricultural development. Yet, only about 11.7 million hectares of land is
currently being cultivated; which accounts just over 20 per cent of the total arable area.
6
Nearly 55 per cent of all smallholder farmers operate on one hectare or less. The agricultural
sector accounts for roughly 43 per cent of GDP, and 90 per cent of exports. Cereals dominate
Ethiopian agriculture, accounting for about 70 per cent of agricultural GDP. Over the past
decade, cereal production has more than doubled to nearly 15 million tones, as a result of
horizontal expansion and increased yields.Error! Bookmark not defined.

Ethiopian agriculture is dominated by subsistence, low input-low output, rainfed farming

system. The use of chemical fertilizer and improved seeds is quite limited despite
Government efforts to encourage the adoption of modern, intensive agricultural practices.
Low agricultural productivity can be attributed to limited access by smallholder farmers to
agricultural inputs, financial services, improved production technologies, irrigation and
agricultural markets; and, more importantly, to poor land management practices that have
led to severe land degradation.

The agricultural sector has performed strongly over most of the last decade, but there is still
substantial potential to improve productivity and production. Since 1996/97 the average
growth rate of the agricultural GDP has been about 10 per cent per annum, and since 2004-
05 the sector has been reported to have expanded at around 13 per cent per annum. On the
other hand, the share of agriculture in GDP declined from 53 per cent to 43 per cent between
1995/96 and 2008/09, reflecting strong growth in other sectors of the economy.

The Government, with strong support from development partners, has made different
strategic interventions to enhance the delivery of improved production technologies and
support services thereto. Over the past several years, the Ethiopian Government has
demonstrated strong commitment to agriculture and rural development through allocations
of more than 10 per cent of the total budget. Despite these achievements, however, the
Government recognizes much remains to be done in the agriculture sector to realize the
vision to become a middle income country (defined as GDP/capita of USD 1,000) by 2020.

2.5 Beneficiaries

Upon full production realization of the project within five years, it will create 44 jobs
permanently & temporarily direct employment opportunities and will bring $50,000 in hard
currency import substitution annually; it will generate 311986.1 thousand dollars in tax
revenues will reinvest about $10,000 dollars in the immediate community infrastructure

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2,6 Past and present intervention

Oil seeds are among the oldest crops produced around the world and are principal sources
of oils and fat. Sesame, soybean, groundnut and Niger are the dominant sources of oil
seeds’ productions. For example, Sesame is grown in many parts of the world on over
20,000 km2 and the largest producers of the crop in 2007
were India, China, Myanmar, Sudan, Ethiopia, Uganda and Nigeria. Seventy percent of the
world's sesame crop is grown in Asia, with Africa growing 26%. 1 With the exception of
sesame seeds’ production in the north western parts of the Country where sesame
production is dominating commercial farms with relatively large aerial coverage and modern
agricultural practices; the majority of oilseeds are cultivated traditionally by smallholders
throughout Ethiopia. Sesame seed is by far the leading crop in Ethiopian oil seeds export

Oilseeds produced in Ethiopia are available at various levels of woredas, regional and
terminal markets from wholesale, and retail shops. Sesame and Niger seeds are largely
directed to exporters and oil producing industries by big wholesalers and suppliers.
Production has tripled in the last few years. The creation of ECX (Ethiopian Commodity
Exchange) and its 14 storage facilities plus congregation of buyers and sellers under one
roof has brought order to the chaos. The current size of the oil seeds export market is second
in the country after oil seed crops. There is a study conducted forecasting this sector to grow
by three fold.

Soybean is also one of the great potential for both oil crop and grain legume that will
contribute for export market in view of the suitable conditions of the crop market available in
the country. In Ethiopia, the production of soybean was reached 5849 tons in 2007 with a
total area of 6352ha.

Since the establishment of ECX the buying process has evolved to standards and quality,
where buyers and sellers have bought a membership seat in the exchange, and guarantee
of payments is enforced by the ECX. The creation of ECX has refined purchase process for
the spot market. The global commodity prices are instantaneous in the exchange floor. For
contract farming the law of the country is permissive to deal directly with buyers.

1Sesame Profile at [http://www.agmrc.org/commodities__products/grains__oilseeds/sesame_profile.cfm] as revised on August 2010; by Ray Hansen,

content specialist, AgMRC, Iowa State University, [email protected]) – accessed on 4th April 2011.

8
As the majority of the oilseed producers are small scale farmers; there are very few sizable
farms that employ their own farm machinery. A notable one, among them, is Trading Select
an organic sesame seed company who own its own farm of 600 hectares and works with
1500 farmers through contract farming arrangement.

2.7 Justification of the project: why it is proposed?

There are a number of reasons that led DALECHA AGRICULTURE DEVELOPMENT PLC to opt for
the specific project: Oil seeds production Project. Firstly, Ethiopia’s climate is suitable for
most crops including oil seeds and cotton. Secondly, the Country is among the major
producers of oil seeds in the world and has a well-established linkage to the major global
markets. The growing trends of the establishment of manufacturing industries in the country
as a whole and oil refining factories in particular, and their demand for raw material inputs
such as raw sesame, sunflower and soybean for manufacturing of various fabrics has made
the business very important. The enabling policy environment prevailing in Ethiopia; which
encourages investors to fully participate by investing in the agriculture sector, is also
another important factor to initiate the project.

Besides the suitable climate of Ethiopia for oilseeds and cotton cultivation; DALECHA
AGRICULTURE DEVELOPMENT PLC has a distinct comparative advantage from the very
beginning by adopting a modern way of mechanized farming, especially in the production of
sesame that will put it in the top1% of producers who employ the same technology.

In addition, extended market research has been carried out from both the higher end
markets as well as lower end markets. There is a huge local market for edible oils. The
Benefit Cost Ratio (BCR), which is included in the financial feasibility section of this plan,
was carried on different primary crops. This helped Getafan Mechanised Farming PLC to
choose oil seeds, which have a vast market worldwide. The establishment of ECX and its
trade facilitation was also another factor we looked at. Different articles on the production of
sesame, Sunflower and soybean were used as a reference while writing this Business Plan.

2.8 Support for the Project

There are some supportive roles expected from the Federal and Regional states in ensuring
smooth and effective implementation as well as long-run sustainability of the anticipated
project. Particularly important roles for the states are establishing and adjudicating land
9
 acquisition requirements and right of occupancy as well as associated contractual processes
and regulatory functions. This includes, among others, monitoring and regulating
externalities and third party effects on land occupancy and subsequent implementation of
the project, maintaining a supportive legal framework, providing relevant technical and
organizational supports towards facilitating effective and smooth implementation of the
project. The latter particularly involves access and use of data/information and technical
advice from government research institutions and line bureaus/agencies.

2.9 Goal and objective

2.9.1 Overall goal

The overall goal of the project is to contribute towards the economic development of Ethiopia
through using the existing investment opportunities in the Country and taking advantage of
the expressed policy incentives that emphasize on greater commercialization of agriculture
and enhancing private sector development.

The project's contributions to the economy, upon realization of a full production level within
two years; include creation of jobs and permanent employment opportunities to the local
people as well as bringing considerable annual income in hard currency and tax revenues;
part of which will be reinvested in the immediate community infrastructure.

2.9.2 Main and Specific objective

 Main objective

The project’s main objective is to implement an agricultural investment project using

intensive mechanized farming for the production of oil seeds; which primarily involves
sesame, sunflower and soybean cultivation with high standards and quality of production;
while ensuring optimal economic returns as well as socially and environmentally acceptable
production system that will attain full production level within two years starting from the
2020 production season.

Through ascertaining high standards and quality of its production; the anticipated project
will strive to claim its share among the high value niche markets in the neighbouring country
by adhering to their standards.

 Specific objective
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 The specific objectives of the project are:

- The production of oil seeds and edible oil in a socially and environmentally acceptable way;

- To make oil seeds traceable through transparent and accountable method;

- Contract farming for high value niche markets in the neighbouring by adhering to their
standards;

- To involve buyers in the process of oil seeds production through provision of inputs;

- To raise the standard and quality of oil seeds through collaboration with the country’s
research and development organizations;

- Reduce the environmental impact of our operation by devising methods such as no till
farming and use of Bio-fuel;

- To allocate 3% of our profit to reinvest in the community; and,

- Create jobs and help locals acquire skill through training.

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 3. STUDY OF THE PROJECT SITE
3.1. Descriptions of the area
The area identified for implementing the anticipated project is located in the western part of
SNNPR, Regional State, within Hwassa Administrative. Location of a project is potential
suitable area selected for the establishment of oil seed crops cultivation farm at Hwassa
Administrative rural area and surrounding area is one of the Administrative city in Southern
Nations, Nationalities, and Peoples' Region of Ethiopia, which is Part of the SNNPR, city
administrative Zone. Hwassa is a city in Ethiopia, on the shores of Lake Awasa in the Great
Rift Valley. It is located 273 km south of Addis Ababa via Bishoftu, 130 km east of Sodo,
and 75 km north of Dilla. The town serves as the capital of the Southern Nations,
Nationalities, and Peoples' Region, and is a special zone of this region. It lies on the Trans-
African Highway 4 Cairo-Cape Town, and has a latitude and longitude of
7°3′N 38°28′ECoordinates: 7°3′N 38°28′E and an elevation of 1708 meters above sea level.
The locality of this project is based on soil, rain fall, temperature and altitude requirement
technically feasible for establishment of oil seed production farm and edible oil refining
industry as it full files for existing local packaging material production land quality
requirements.

3.2 Reason for selection of investment

The reasons for selection of the investment include:

- Availability of suitable land for sesame, sunflower and soybean production with good
combinations of topography, climate and soil characteristics that allow optimal production of
these crops;

- Minimal requirements for infrastructure development because of the topography and

visible prospects of on-going development initiatives in the area including power supply,
telecommunication and other basic infrastructures;

12
 - Accessibility of the area by all-weather roads and ease of making choices between
marketing options (e.g. transporting to the major export markets in Ethiopia and/or the
Sudan;

- Profitability of the business

3.3 Land ownership

The land ownership is acquired through a lease contract from the Hwassa City
Administrative for a period of 25 years.

3.4 Physical and natural condition of project site

3.4.1 Topographic Features
The project site is located within the 17km from Hwassa town capital city of SNNPR. The
topographic features of the proposed project area are characterized by flat to gently sloping
terrain. The average altitude of the project area is range from 1500-1708 m.a.s.l; with
general land gradient of not more than 1.5 %. The project area in the project site is a tropical
savanna climate (Köppen Aw) though it borders on a subtropical highland climate. There are
two seasons: a lengthy though not intense wet season from March to October and a short
dry season from November to February. The topography of the project area generally indicates
availability of favourable opportunity for low cost installation of infrastructures and land preparation
requirements

3.4.2 Climate
The climatic conditions of the project area could be broadly categorized as a tropical
savanna climate (Köppen Aw) though it borders on a subtropical highland climate. There are
two seasons: a lengthy though not intense wet season from March to October and a
short dry season from November to February. The extra cloudiness of the wet season is
sufficient to make it substantially cooler than the dry season despite a higher sun angle;
however, the coolest morning temperatures, often close to freezing, occur during the dry
season.

Temperature

According to the climatic data obtained from the Ethiopian Meteorology Agency; the average
minimum and maximum temperatures of the project area are 13 o C and 33 o C respectively.
The Table and Figure below provide the details of the variations in the average temperature
of the area over the months of the year.
13
 Table 2: Average maximum and Minimum Monthly Temperatures (oC) of the
projectarea
Description Jan Feb Mar Apr may Jun Jul Aug Sep Oct Nov Dec
Av. Max. temperature
32 33 33 33 31 30 28 29 30 31 31 31
(oC)
Av. Min. temperature
11 12 13 14 14 14 14 15 13 12 12 10
(oC)
Source: Source National Meteorology Agency (records)[2010),

 Rainfall Trends
The project area has average annual rainfall of 1091 mm; which is higher than the average
precipitation requirements of most field crops. The monthly rainfall distribution of the project
site shows that the area has a mono-modal rainfall pattern where the wet months are March
– October, during which 88.36% of the annual rainfall occurs. As described in Table 2:
below, the wettest months are January, February, November and December accounting for
11.64% of the annual rainfall; where the highest rainfall amounts occur in April (147 mm).
On the other hand, the driest months are November and December .
Table 3: Average monthly and annual rainfalls of the project area
Months Total
Annual
Description
Jan Feb Mar April May Jun Jul Aug Sep Oct Nov Dec RF
(mm)

Average rainfall mm 29 44 100 147 133 99 128 125 140 92 30 24 1091

(inches)
Average rainy days (≥ 0.1 5 8 16 18 16 19 20 22 14 5 4 8 155
mm)
Source: National Meteorology Agency (records)[2010)
3.4.3 Soil Conditions of the Project Area
Results of soil sample analysis from the project area indicate that the major soil textures are
clay and sandy loam with strong coarse structure. The PH of surface soil ranges from 7.1 -
7.9, which implies moderately alkaline soils. These soils are chemically and physically
suitable for cotton, soybean and sesame cultivation. In addition, the proposed investment
area refers to well drained soils that occur on almost flat to gentle slope. The proportion of
the land is suitable to most of annual crops.

The result sheet for chemical and physical analysis soil samples from the project area are
summarized in the following table.

Table 4: Result Sheet for Chemical and Physical Analysis Soil samples from the project
area
PH EC Sand Silt Clay Soil Na K Ca Mg Sum CEC Bas.Sa T.N O.C C/N Av.P.Ol.
H2O ds/m % % % Type cmol(+)/Kg cmol(+)/ % % % ppm

14
 Kg

7.9 0.308 26 26 48 Clay 0.24 1.41 22.16 9.05 32.85 52.73 62 0.145 0.965 7 7.6
Sandy
7.6 0.028 74 12 14 Loam 0.03 0.50 6.43 2.09 9.05 10.67 85 0.069 0.959 14 1.00

7.1 0.010 24 22 54 Clay 0.09 0.59 14.37 5.56 20.61 28.36 73 0.097 0.938 10 0.52
Source: National Soil Testing Laboratory Center

3.5 Production of each commodity per ha with and without project

The project will mainly produce cotton, sesame and soybean crops; for which improved seed
varieties will be used and optimal application of fertilisers will be made. As a result, there
will be improved productivity of each commodity where the anticipated production per ha of
each crop with and without project are described as below.

Table 5: Anticipated production per ha of each planned crop with and without project
Production per ha (Yield = Qtls/ha)
Crop Without With project Increment
project
Sesame 12 23 92%
Soybean 10 25 150%
Sunflower 22 28 27%

3.6 Infrastructures
Road: Generally, the project area can be accessed by all-weather roads up to its Hwassa
city town. Project site is located at 17 km away from Hwassa town and connected with all-
weather roads.
Electric Power: From the Hwassa town to the project area has access to hydroelectric
power.
Water Resources: Generally, shallow well and boreholes are the main sources of water
supply in the project site. Currently, access to safe drinking water is a significant problem in
the project area. However, the Water Resource Bureau and other stakeholders in
collaboration with the community has established different safe water generating schemes
such as hand dug well, hand pump, developing spring water, deep well and shallow well to
alleviate the problem.
Telecommunication: According to the data collected from the Bureau of Finance and
Economy, the Hawssa town and the surrounding PAs in the project area have access to
different telephone services, such as, wire line, mobile telephone service, and wireless.
15
 Financial Institutions: There is so many bank in Hwassa town. There is a government
bank in the project district Guraferda which is found at a distance of 17 km.
Health Services: The project area can get hospital service from the closest Hwassa located
10 kms from project area.

4 SOCIO-ECONOMIC STUDY
4.3 Socio-economic benefit for the society
The socio-economic impact of the project is expected to be positive, as the operational area is
devoid of major settlements, precluding any potential displacement/ eviction or conflicts. The
positive impacts are more pronounced in view of the development of an abandoned and
uninhabited rural area, bringing large employment opportunities to the surrounding
population.

As the project requires labour for undertaking its operational activities, a number of people
will have the opportunity of being employed in the project. In this regard, the project will
create new employment post for about 45 individuals on permanent basis and for up to 450
casual labourers.

4.4 Poverty Alleviation

The project will undoubtedly play its role in alleviating the existing poverty level through the
creation of employment opportunity, provision of training on the uses of modern farming
system, and other social benefits for the unemployed youth, women and the poor sector of
the community around the project area.

4.5 Economic Benefit for the Community

The creation of substantial direct and indirect employment opportunities with potential for
out-growers will have impact for increasing incomes and skill of the rural community. There
will also be good opportunities for out-growers linkages with the surrounding farmers and
the use of the project’s facilities, knowledge and experience, thereby increasing the economic
activities of the inhabitants of the area.

Promotion and transfer of new agricultural technology that could be adaptable to the
surrounding farming community and improve their skills through training and sharing of the
project experiences will also be another benefit for the community.

16
 The project will also be committed to provide agricultural machinery & implements rental
services and other related technical support like the uses of modern agricultural practices
and inputs, etc.

4.6 Economic Benefit for the Country

This investment project will have significant socio-economic benefits, both to the national
economy of the country at large, and the region in particular in which the project is to be
established. The specific direct benefits will include;

 Development of uninhabited part of the country and exploitation of hitherto abandoned

physical resources of the particular area through the establishment of modern agriculture.
 Supply of agricultural commodities to the national and export markets, thereby enlarging the
domestic basket of food items and contributing to the foreign exchange balance of the
country, both through generation of foreign exchange and import substitution.
 Provision of physical and social infrastructure, thereby creating conducive and suitable
environment for regional development.
 Substantial increase in federal and regional government revenue, through direct & indirect
taxation.

Upon realization of its full production stage within five years, the project's economic
contributions to the country’s economy will primarily create 495 jobs; which provide direct
employment opportunities. Exports of the crops produced by the project will bring about ETB
$215898.46 annually in hard currency. The project will also generate over ETB Million in tax
revenues. The project will also reinvest about 3% of its net profit, which amounts about ETB
1 Million for immediate development of community infrastructure within the locality.

There are also indirect but essential contributions that DALECHA AGRICULTURE
DEVELOPMENT PLC could contribute as a socially responsible company. The Company’s
commitments to the latter, among others, are demonstrated by its steadfastness towards
maintaining higher standards of corporate responsibilities in all its internal operations and
management systems. Likewise, it will work persistently through making sure that all the
Company’s external communications, self-promotion and business dealings are conducted in
a traceable, transparent and accountable manner. This corporate values and principles shall
be demonstrated in implementing the anticipated project, and thus; help realization of
tangible influences on the corporate culture and mode of operations of other companies of
17
relevance. As observed from experiences of other countries, the long term benefits of
internalizing such higher standards of corporate responsibilities among companies within a
given production sector often leads to a more prudent and systematic expansion of a
country’s export market opportunities in relation to specific products. As described below,
DALECHA AGRICULTURE DEVELOPMENT PLC believes to accomplish the latter scenario with
the sesame and soybean crops it intends to produce through the project.

In view of its anticipated commitment to ascertain high standards and quality of its
productions; the project would likely grasp a share among the high value niche markets in
the neighbouring country. This will apparently influence production and quality standards
other producers of relevance; which in turn improves the Country’s production quality
standards; and therefore, enhances its share of export market opportunities.

18
5 DESCRIPTION OF OIL CROPS CULTIVATION

5.1 Agronomical Profile

This investment project is intending to cultivate interchangeably three major oil crops;
Sesame, Sunflower, and Soybean. Sesame will take the lion’s share of production area with
50% coverage, and Sunflower some 25%, whereas soybean will be planted as a rotation
crop in the remaining field, besides its marketable value. The envisaged farm project will
entirely apply a rain fed farming system and supplementary irrigation.

Sesame (Sesamum indicum L.) is one of the oldest cultivated plants in the world. It is an
erect annual (or occasionally a perennial) oil crop that grows to a height of 50 to 150 cm
depending on the variety and the growing conditions. Some varieties are highly branched,
while others are un-branched. The bell-shaped white to pale-rose flowers begin to develop in
the leaf axils 6 to 8 weeks after planting and this continues for several weeks. Multiple
flowering is favored by opposite leaves.

Sesame is normally self-pollinated, although cross pollination by insects is common. The

fruit is a deeply grooved capsule (2.5 to 7.5 cm. in length) that contains 50 to 100 or more
seeds. The seeds mature 4 to 6 weeks after fertilization. The growth of sesame is in
determinant; that is, the plant continues to produce leaves, flowers and capsules as long as
the weather permits. Sesame seeds are small and vary in color. One thousand seeds weigh
about one ounce (28 gm).

Upon ripening, sesame capsules split, releasing the seed. Because of this shattering
characteristic, sesame has been grown primarily on small plots that are harvested by hand.
The discovery of an indehiscent (non-shattering) mutant began the work towards
development of a high yielding, shatter-resistant variety. Although researchers have made
significant progress in sesame breeding, harvest losses due to shattering continue to limit
domestic production.

Sesame is very drought-tolerant, partly due to its extensive root system. However, it requires
adequate moisture for germination and early growth. In the context of Ethiopia, sesame is
grown from 600 m to 1300 m altitudes above sea level with well distributed rainfall. There
is a great variation in the time of sowing in different tropical countries. However, the best
time for sowing sesame is found to be from beginning of June to mid July when cultivated as
19
rain fed crop. Daytime temperatures of 25°C to 27°C are optimal; below 20°C, growth is
reduced, and at 10°C germination and growth is inhibited. Sesame is adaptable to many
soil types, but it thrives best on well-drained, fertile soils of medium texture and neutral pH.

The time taken to maturity depends on the weather condition, which usually varies from 90-
105 days. Therefore, the usual harvesting time will be between mid October and
November. In the three main producing regions of Ethiopia, the productivity of Sesame
under smallholders traditional farming is observed to be between 0.4 - 0.6 tons per hectare.
However, some improved varieties developed by EARO found to yield between 0.9 - 1.5 tons
per hectare under irrigated condition. The average yield of sesame with this project is
estimated to about 8 quintals per hectare.

Attempts have been made in Ethiopia by the agricultural research organization to develop
different types of improved varieties, which are found to give better yields, particularly when
cultivated by irrigation. This varieties include; Abasena, Mehado 80, t - 85, Kelafo 74, ADI,
Arabane, Serkem, Kate, which most of them yield 0.3-1.2 and 0.9-1.5 tons per ha as rain
fed and irrigated crops respectively.

Pawi and Melkaworer research centers are responsible for Sesame improvement programs
in the country. Pawe Agricultural Research Center is an essential opportunity to have easy
access to improved agricultural technologies, such as improved varieties of the selected crop
that are easily adaptable to the agro-ecology of the proposed investment area.

Sesame is mostly grown as a sole crop; by its nature. The crop does not improve the soil
structure by the nature of its root system. Considering this effect the company has intended
to cultivate with a rotation plan using soil improving crop that is soybean.

Sunflower (Helianthus annuus L.) is one of the oldest cultivated plants in the world. It is
an erect annual (or occasionally a perennial) oil crop that grows to a height of 50 to 150 cm
depending on the variety and the growing conditions. The total time required for
development of a sunflower plant and the time between the various stages of development
depends on the genetic background of the plant and the growing environment. The average
development of a large number of plants should be considered when determining the growth
stage of a sunflower field. Later in the season, for stages R-7 through R-9, use healthy,
disease-free heads to determine plant development since some diseases can cause head
discoloration. A number or recently released and grown hybrids contain the stay-green
20
characteristic. If this characteristic is present, yellowing or browning of the bracts may not
be an accurate indicator of plant maturity. Maturity is typically reached within 2200-2300
growing degree days (Celsius) after planting or 120-150 days.

Sunflowers grow best on well drained, high water-holding capacity soils with a nearly
neutral pH (pH 6.5-7.5). The optimum soil classifications for sunflowers are loam, silty loam
and silty clay loam soils. Sunflower production performance on reduced agricultural
capacity soils such as those affected by salinity, drought potential or wetness, is not ideal,
but compares with of other commonly grown commercial crops.

Germinating sunflower seeds are very sensitive to seed-placed fertilizer. Starter applications
should be placed away from the seed. When sunflowers are planted with row, phosphate
and potassium fertilizer should be applied side banded 2" beside and 2" below the seed
during planting. Some or all of the nitrogen can also be side banded. The total amount of
fertilizer material side banded should not exceed 1360kg/ha.

Nitrogen applications can be made pre-plant, at seeding, post-seeding, side-dress or a

combination of these methods. Application should be timed so nitrogen is available for rapid
plant growth and development. Often, it is logistically advantageous to apply nitrogen in the
fall. However, the longer the time period between application and plant use, the greater the
possibility for N loss. Fall application is not recommended in sandy soils since the
opportunity for leaching is much greater. A side-dress application of N when the sunflower
plants are about 12 inches high is often preferable. Phosphate and potash may be fall or
spring applied before a tillage operation. These nutrients are not readily lost from the soil
since they attach to the soil forming only slightly soluble compounds. Phosphorus can be
applied pre-plant-broadcast, or banded at seeding. Band applied applications are most
efficient, especially when only small amounts are applied in fields low in available
phosphorus. Potassium deficiencies normally only occur in sandy soils. Potassium that is
band placed is about twice as efficient as broadcast applications.

Sunflower seeding should usually begin any time after May 1 and ideally be completed by
June 1. Seedlings are relatively frost tolerant up to the four-leaf stage. Choose earlier
maturing hybrids or oil type hybrids if planting is delayed into the first week of June or for
replanting. Oil type hybrids are shorter maturing than confection varieties. Planting date can
also affect susceptibility to pests. Consult the following chapters as to when to plant to avoid
21
damage by the most prevalent pest in your area. Seeding rate for sunflowers depends on
sunflower type. Oil seed varieties are generally planted at higher populations than
confectionary varieties. Oil-type sunflower populations range from 20,000-22,000
plants/acre (0.6plants/ft2). Confection type sunflowers should not exceed 18,000
plants/acre (0.4 plants/ft2) to ensure large seed size. Seeding rates for both oil and
confection-type sunflowers should be adjusted when germination is low. Refer to tables 6
and 7 for information on plant density and row spacing as well as seed size and weight.

No yield differences have been detected between sunflowers seeded in rows versus solid
seeded when adequate weed control exists. Fields with a row spacing less than 20 inches
are considered to be solid seeded. Recommended row spacing for solid seeding is 10 to 12
inches (25.4 to 30.5 centimeters) for both confection and oil-type sunflowers. Plant
populations should remain the same as stated above regardless of row spacing. Equidistant
placement of seeds within the row allows for maximum utilization of resources (e.g. water,
nutrients, sunlight) and often results in consistent head size. Sunflower plants compensate
for differences in plant populations by adjusting head and seed size. As plant populations
increase, head and seed size decrease and vice versa.

Sunflowers need to be placed in moisture but not deeper than three inches (7.6 cm). The
ideal seeding depth is 1 ½ to 2 inches (3.8 to 5 cm) deep. Planting equipment should firm the
soil over the seed row to maintain a moist seed bed and ensure good seed to soil contact.
Sunflowers can be combined when the seed moisture is below 20 percent. Harvesting when
the seed moisture content is greater than 20 percent can result in scuffing during
harvesting and shrinkage during drying. It would be preferable to combine seeds at 10 to 13
percent moisture. Sunflowers can easily shatter if heads are very dry, and therefore
combine speed must be slowed accordingly. Cylinder speeds range from 300-500 (rpm),
with concave settings quite open (one inch in front and ¾ inch in rear) to minimize seed
breakage and dehulling. Using the slowest cylinder speeds with the largest opening will
result in the least seed damage

Sunflower seed is safe to store at a moisture content of 9.5 percent or less. At 10 to 12

percent moisture content, seed can be stored in bins with aeration. Any moisture content
over 12 percent will require drying. Oil-type sunflowers can be dried with temperatures of
71-104°C (160-220°F) but confection types may scorch or wrinkle with these temperatures.

22
Sunflower seed should be cooled before storage, since even sunflowers at 8.5 percent
moisture can spoil if stored when warm. The average yield of soybean is estimated to about
15 to 25 quintals per hectare.

Soybean is an herbaceous annual legume crop used as a human food and animal feed and
in soil improvement. It is a warm season crop and its climate requirements are mostly
favoured by temperature ranges between 190C - 230C at minimum and 300C - 320C at
maximum. The crop is less susceptible to frost and very sensitive to light duration, it is a
short day plant. Soybean, like cotton suffers from excessive cloudy weather. In Ethiopia,
soybean is mostly adopted and successfully cultivated in areas of altitude ranging between
950 m to 1500 m above sea level and well distributed rainfall amount of about 1000 mm -
1350 mm.

Soybean is usually erect, bushy and rather leafy. Cultivars range in height from 45-120 cm,
with growth periods of 75-150 days. Depending on the cultivar, Soybean plants are either
determinate or indeterminate in growth habit; earlier-maturing cultivars are indeterminate
and later-maturing ones are determinate.

Seed rates should be based on the desired plant population per hectare and varies from 50-
75 kg/ha. Under Ethiopian condition, the sowing period is mostly similar to world standards
that vary from end of May to end of June. It is harvested after 90-120 days of
emergence when the plant leaves turns yellow.

Soybean can be grown on a wide range of soil types, but thrive best on clay loam soil and
alluvial soils of good fertility. The strain Rhizobium japonicum, the nitrogen – fixing bacteria
in the root nodules, is specific to soybean plant. Soybean has the ability to utilize fertilizer
residues that are normally not available to other crops. Regardless of their ability to grow on
soils with low fertility, it can remove essential minerals from the soil and these minerals
must be replaced. Soybean fixes atmospheric nitrogen that is why nitrogen fertilizers are
rarely required for the successful production of the crop. Soybean is suitable as green
manure crop, even if harvested for seed; it benefits the subsequent crop in a rotation. The
average yield of soybean is estimated to about 15 to 20 quintals per hectare.

23
6 ENVIRONMENTAL IMPACT ASSESSMENT
This project is designed to cultivate and promote the production of high value oil crops,
sesame and soybean, by maintaining the existing environmental system. It also intends to
protect the environment from the possible risks. Thus, in order to establish environmental
friendly farming, the new project site has been thoroughly scrutinized particularly for its soil
character, vegetation cover and agro ecology to identify the expected negative impacts of the
development.

The major expected threats identified due to the overall development farming activities are
soil depletion and loss of plantation cover in some undulated land form areas. Therefore, the
environmental management plan that will be realized by the company is using soil
improving crops through intercropping and rotation system. In addition buffer plantation and
wind break tree plantation are going to be planted in order to protect from soil erosion and
minimize the misbalance effect of agro ecology.

Sesame, by its nature does not improve the soil structure by the loosing effect of its dense
root system. Considering these effects, the company intends to cultivate a vise verse rotation
plan with soil improving crops like soybean and others. Soybean has the ability to utilize
fertilizer residues that are normally not available to other crops. It also fixes atmospheric
nitrogen that is why nitrogen fertilizers are rarely required for the successful production of
the crop. Soybean is suitable as green manure crop, even if harvested for seed; it benefits
the subsequent crop in a rotation system.

In addition to cropping system and tree plantation programs, soil improving and
conservation practices as well as adopting good farming management activities will be
practiced including planting of cover crops, drainage structure and terrace making.

Furthermore the project will apply integrated pest management which is more
environmentally friendly form of pest control than the traditional pesticides as its goal is to
reduce pesticide use to a minimum by using a variety of less impact means with pesticides
only as a last choice.

24
 7 MARKET STUDAY AND PLANT CAPACITY
7.1 Oilseeds production in Ethiopia
Oil seed producers in Ethiopia are small farmers mostly concentrated in Humera and East
Wolega. The current size of the oil seeds export market is second in the country after coffee.
Production has tripled in the last few years. There is a study conducted forecasting this
sector to grow by three fold. The creation of ECX (Ethiopian Commodity Exchange) and its 14
storage facilities plus congregation of buyers and sellers under one roof has brought
conducive environment for the market. Similarly, cotton products (the lint and seeds) are
highly demanded in textile manufacturing and oil processing industries through both local
as well as export markets.

Table 6: Oilseeds production in Ethiopia in (1,000 tones)

S.No Crops Tpe 2000 2001 2002 2003 2004 2005 2006 2007

1 Castor oilseed 15 15 15 15 15 15 15 15
2 Groundnuts 12 15 13 29 29 34 35 28
3 Linseed 32 64 51 77 152 126 128 67
4 Mustard seed 2 2 2 2 2 2 2 2
5 Oilseeds, Nes 102 119 84 85 119 120 120 120
6 Rapeseed 14 15 17 20 29 24 26 26
Safflower
7 6 5 5 5 7 6 11 7
seed
8 Seed cotton 46 46 60 76 76 86 65 65
9 Sesame seed 16 19 39 61 115 149 160 164
10 Soybeans 25 26 27 4 10 12 6 8
Total 270 326 313 374 554 574 568 502
Source: FAO stat, reviewed, April 2009. Oilseed tones 2000 and 2007
Table 5 above reveals that during the past eighteen years, i.e, from 2000 up to 2007, the
annual average production of all types of oil seed crops in the country was 220,215.44 tons.
Of the total annual production of oil seeds. Although total import and local production of
edible oils fluctuates from year to year, it has generally grown by about 4.12 % in the past
eighteen years.
The production of oil seeds in the past eighteen years has shown a tremendous increase.
The production, which was 270,000 tons in the year 2000 has reached to 502,000 tons in
25
 the year 2007. This means that national production of oil seed crops in the past eighteen
years has almost tenfold.

7.2 Post Supply and Present Demand

Ethiopia has untouched potential for the expansion of oil seed crops production to fulfil the
local demand and part of the world market. There is a high market potential for oil seed
crops production both in the domestic and foreign markets. The geographic location of the
country is located close to the Middle East, as well as north and central Africa, where there
is reliable demand of soybean production. Generally, a positive trend is on the rise not only
on oilseeds; the entire agriculture sector of the country is growing fast. The entire business
is on upswing for the foreseeable future. Ethiopia’s oilseed export has almost double in the
last few years.

Sesame is highly demanded crop in the international market and is consumed by existing
domestic large and small-scale oil mills. The following table shows the country's total
production of oil seeds and sesame as well as the total export of oil seeds.

Table 7:
Production of total Oil Seeds & Share of Sesame, Soybean & sunflower and
Export (tons)
Share of
Total Soybean, % of Export
Soybean, Total Export of
Year Production of Sunflower& from
Sunflower& oil seeds
Oil seed Sesame Production
Sesame (%)
Production
2012/13 637,000 159,250 0.25 280,000 44%
2013/14 645,000 174,150 0.27 300,905 47%
2014/15 760,000 250,800 0.33 286586 38%
2015/16 788,000 184,392 0.234 414,093 53%
2016/17 805,000 281,750 0.35 291,088 36%
2016/18 836,000 451,440 0.54 340,000 41%
Total 4,471,000 1,501,782 1.974 1,912,672 258%
Average 745,167 250,297 33% 318,779 43%

26
Source:- CSA, Statistical Abstracts for Domestic Production National Bank, Annual Reports, for
Export

Table 6 above reveals that during the past six years, i.e, from 2012/13 up to 2017/18, the
annual average production of all types of oil seeds in the country was 745,167 tones. Of the
total annual production of oil seeds, the share of Sesame, Soybean & sunflower is about
34%. Although total production of oil seeds fluctuates from year to year, it has generally
grown by about 5% in the past six years.

The production of Sesame, Soybean & sunflower in the past six years has shown a
tremendous increase. The production, which was 159,250 tones quintals in the year
2012/13 has reached to 281,750 tones and 451,440 tons in the year 2016/17 and
2017/18, respectively. This means that domestic production of Sesame, Soybean &
sunflower in the past six years has almost quadrupled.
On the other hand, export of oil seeds in the past four years, i.e, from 2012/13 to 2017/18
has almost doubled. Export of all oil seeds which was 280,000 tons in 2012/13 has grown
to 414,093 tons in the year 2015/16 the highest one (53%). In general, of the total
production of oil seeds about an average 43% has been exported in the past six years.
To determine the present effective demand for Sesame, Soybean & sunflower, the average
production level of years 2012/13 and 2017/18 which was 366,595 tons has been taken
as a base. Since the major users of Sesame, Soybean & sunflower, i.e., existing oil mills are
working much below their capacity and there are a number of projects under
implementation, the existing production is assumed to cover only 65% of the demand
(domestic and export). Hence, the present demand is estimated at 578,243 quintals and
projected by 35% gape of production.

Table 8: Projected Demand for oil seeds Production of Sesame, Soybean & sunflower (tones)

years Total Projected Existing Local Unsatisfied

Demand Production Capacity Demand
2019 578,243.00 366,595.00 211,648.00
2020 780,628.05 366,595.00 414,033.05
2021 1,053,847.87 366,595.00 687,252.87
2022 1,422,694.62 366,595.00 1,056,099.62
2023 1,920,637.74 366,595.00 1,554,042.74
2024 2,592,860.95 366,595.00 2,226,265.95

27
 years Total Projected Existing Local Unsatisfied
Demand Production Capacity Demand
2025 3,500,362.28 366,595.00 3,133,767.28
2026 4,725,489.08 366,595.00 4,358,894.08
2027 6,379,410.25 366,595.00 6,012,815.25
2028 8,612,203.84 366,595.00 8,245,608.84
2029 11,626,475.19 366,595.00 11,259,880.19

According to Table 7, the unsatisfied demand for raw oil seed will grow from 211,648 tons
by the year 2019 to 11,259,880 tones by the year 2029.

7.4 Pricing and Distribution

The price for one sesame oil seeds is Birr 3748 /Qt, Sunflower seeds Birr 1632/Qt and
Soybean seeds will be birr 2406/Qt, the price growth rate increased by 5%. Assuming oil
seeds sealing for wholesalers and retailers, similar at farm get price is recommended the
envisaged product. The product will supply to the export and local market through the
Ethiopia Commodity Exchange (ECX) market.

The supply of oil seeds depends upon the company farm oil seed crop produces. A sufficient
supply of raw materials oil seed crops will result in large quantity of products availability in
the company farm, the supply also in large quantity. For this envisaged project the seasonal
distribution calendar is as shown below table 9.

Table 9:Seasonal distribution calendar of the project

Products Months
Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec
Sesame seed sowing harvesting
Sunflower seeds sowing harvesting
Soybean sowing harvesting
The Sesame seeds high demand of supply during December to June, to June, Sunflower
December to April and Soybean supply during December to April and the low supply period
during the sowing season May to Jun and the harvesting period October to November and
for all oil seeds growing period of July to September is also low supply period

28
8. TECHNICAL STUDY OF THE FARM

8.1 Land Preparations

The lands should be thoroughly ploughed and pulverized to a good tilt. It should be properly
leveled to avoid water stagnation. Adequate drainage channels should be provided.
Preparation of the soil includes the stages of cleaning, leveling, and preparation of farming
ridge, irrigation system designing drainage systems and laying out pathways. Most of this
activates of land preparations will be done on farm machineries that are include under this
studies. Every fourth year the first formation of the farm will be ploughed back into soil.
Sub-soiling at 50 cm deep is done to improve drainage since good drainage is very important
in vegetable production. The land will be harrowed and ridged. The recommended ridge
height is 10 cm and the space between the centers of the ridges is 112 cm.

8.2 Plating Materials and Seed Rate

The platelet purchased initially from the research institution and improve seeds from seed
Supply Company.
Table 10: Planting Material Rate
Plating MATERIALS
unit Qt
Sesame Seedling Seed/ kg 85kg/ha

Sunflower Seed/ kg 75kg/ha

Soybean Seed/ kg 75kg/ha

8.3 Farming
Seedlings should be farmed at 10 – 15 cm in depth. About 5 tone FYM or cow dung is to be
added to the soil. Farming may be done in single or double row following system. This
ensures total weed control and heavy crop. However, fertilizers may be applied during
sowing and or after sowing, the cost of land preparation cost is estimated at birr 1,200,600
Table 11: Land preparation and Planting Cost (ET. Birr)
LAND unit QT unit Price in Birr
PREPARATION AND
PLANTING COST Total Cost in Birr
Nitrogen Kg/ha 0.6 700 126,000.0
Phosphorus Kg/ha 0.28 900 75,600
Potassium Kg/ha 0.86 500 129,000
Total 330,600
29
LAND unit QT unit Price in Birr
PREPARATION AND
PLANTING COST Total Cost in Birr
Chemicals -
Insecticide Lt/ha 810 200 180,000
Farm MACHINERY AND ASSOCIATED COST
Machinery, Fuel, Birr/year 29,250 20 600,000
Oil and Lubricants Birr/year 15% 90,000
Total MACHINERY COST 690,000
PREPARATION AND PLANTING COST 1200600

8.3 Cop Maintenance

8.4.1 Application of Fertilizers

Sisal plant requires abundant supply of Nitrogen and Potash. Manu ring should be done in 2
- 3 equal doses every year, once at the onset of monsoon (May-June) and again at the end of
the rainy season after the sisal plant is harvested. The fertilizer dose was estimated in this
feasibility by conventional farm fertilizers requirements to be conservative by taking the
highest expenses but would be replaced by equivalent compost and other organic farm
recommendations at the operation time of the farm. The fertilizers doses recommended for
obtaining higher yield are 30kgN, 60kgP2O5 and 30kg K2O per ha per year in addition to
2000 kg FYM. Fertilization is followed by earthling up around the ridge. However, nitrogen
fertilizer must be stopped about two months before flower induction. Estimated cost shown
birr 949,500 below table 12.
Table 12: Farm Maintenance Cost Estimations (ET.Birr)

Farm Maintenance Cost unit QT unit Price in Birr Total Cost in Birr
INPUTS unit Qt
Urea ( N ) Kg/ha 0.5 700 105,000
DAP ( P2O5 ) Kg/ha 0.6 900 162,000
Potassium Kg/ha 0.45 500 67,500
Total Maintance Input Cost 334,500
LABOR
Weeding x 2 times man days /ha
40
&Chemical sprayer 12,000 480,000
Harvesting man days /ha 3,000 45 135,000
Sub total 615,000
Total Farm Cost Birr/year 959298

8.4.2 Weed Control

Black polyethylene approximately 90 cm wide is recommended solutions as mulch in
commercial farming of vegetable farming. As the mulch is rolled out on the farming bed, its
30
 edges are covered with soil. Farming holes are punched through the mulch with a trowel.
When nematicides are injected into the soil, crop mulch makes them more effective by
slowing their dissipation. The polyethylene mulching,
 increases soil temperature in the root zone,
 helps to conserve soil moisture,
 promotes rooting by concentrating moisture in the root zone,
 And controls weeds. Weeding should be done at least 3 to 4 times a year. Manual weeding
is recommend for such organic farming operations

8.4.3 Farm Protection

No serious pest or disease of sisal is p plantrevalent in Ethiopia. They can be controlled by

dipping the basal portion of the farming material from 0.02 to 0.05 % methyl parathion as a
prophylactic measure. Application of carbofuran at15 to 17 kg per ha in affected formation
can effectively control the pest.

8.4.4 Crop Irrigation

Oil seed crops is mostly grown as a rain fed crop, but supplementary irrigation give higher
production. Irrigation in winter keeps the farms healthier. About 8 to 12 light irrigations
during winter and summer months are beneficial. Irrigation is essential after farming or after
maturing if there is deficiency in soil moisture. The envisaged farm irrigation water demand
need will be covered with planed motorized pump and perennial river water source after
construction of the irrigation systems at project implementation time

8.5 Harvesting

8.5.1 Harvesting Operation

Harvesting difficulty is in sesame seeds. Harvesting of Sesame may be carried out either by
machine (combine harvester) or manually. In manual harvesting, the harvesting operation
begins when two third of the plant and seed pods turn yellow and is undertaken by
cutting the stems near ground level. It is then bound and stocked in the field to ripen the
seed.
Harvesting is always done before the pods shatter. The best stage is when the pods are
fully mature with the seeds in the hard-dough stage. The seeds should have a moisture
31
content of less than 15% and should be stored at a moisture content of 10-12% or less. With
the dehiscent type, the heads are also cut and dry in bunches hanging down ward on racks
for 1-2 weeks .The bunches and the dried heads including the stocked is usually shacked
by hand to dislodge the seeds on cemented floor where the seed is collected. Harvesting of
sunflower and soybean may be carried out manually or using machine harve.

8.6 FARM CAPACITY AND FARMING PROGRAMME

8.6.1 Farm Capacity

The capacity of the envisaged farm at its full production capacity is estimated to be 8,186
quotas per annum. The above volume of oil seeds produce is expected to be generated from
300 hectares of net irrigable land.

8.6,2 Farming Production Programme

The farm will start with 90 per cent capacity in the first production season, then will reach
full capacity in the second and third year of operation. The production programme of the
farm is shown in Table13.
Table 13: Farm Yield Estimation
Production Year Y-1 Y-2 Y-3-10
Cultivated land ha 2700 300 300

Sesame (50%) Qt 3,105 3,623 3,804

Sunflower (25%) Qt 1,688 1,969 2,067

Soybean (25%) Qt 1,890 2,205 2,315

Total Qt 6,683 7,796 8,186

32
9. FARM OPERATION TECHNOLOGY AND ENGINEERING

9.1 PRODUCTION MACHINERY AND EQUIPEMENTS

9.1.1 Farm Machinery Requirement

Farm required different farm machinery for the different purpose. Tractor and is accessories
required for the farm farming purpose. Most of the farm machinery were purchase from the Commented [h1]:

foreign countries whilst, some machinery purchase in the local market. The related
estimated cost without tax purchase birr 4,790,148 shown below table 14.
Table 14: Farm Machinery Requirement
Description Qty/No. Coast (Birr)
FC LC TOTAL
Tractor 110 HP-125 HP 1 1,350,000 1,350,000
Disc Plough 5-6 furrow 5 300,000 300,000
Harrows 5 45,000 45,000
Trailer 2 100,000 100,000
Fuel tanker 2 35,000 35,000
Ditcher 1 20,000 20,000
Disc Plough of set type 5 450,000 450,000
Planter 6 rows 5 5 1,000,000 1,000,000
Cultivator 1 25,000 25,000
Sprayers (manual) 50 50,000 50,000
Ringer 5 200,000 200,000
Trailers 4 360,000 360,000
Workshop (set) 1 50,000 50,000
Tools (set) 1 12,500 12,500
Generator 1 155,000 155,000
Sickles 83 2,200 0 2,200

sesame peeling machine sesame seeds hulling machine 25 ton/hr 1 199,980 199,980

Total FOB 1 4,154,700 0 4,354,680

Inland Cost (10% of FOB) 435,468 435,468
Grand Total - 4,154,700 435468 4,790,148

9.1.2 Farm Tools and Equipment

Farm required different farm tools for the different purpose. Different farm tools its
accessories required for the farm farming purpose. Most of the farm tools were purchase
from the local market. The cost with related estimated cost shown below table 15. For this Commented [h2]:

purpose a the farm tools has been proposed which will cost around Et.Birr 128,820 without
tax purchase for local suppliers , the cost breaks down as show at Table 15 below,
Table 15: Farm tools and equipment’s

Description Unit Quantity Unit Cost Year 1

Shovel Pcs 50 120 6,000
Hoe Pcs 50 120 6,000
Rake Pcs 50 100 5,000

33
 Description Unit Quantity Unit Cost Year 1
Axe Pcs 50 160 8,000
Sickle Pcs 50 90 4,500
Weighing scale Pcs 2 8,000 16,000
Electric generator (20 KVA) Pcs 1 40,000 40,000
Welder Pcs 1 5,000 5,000
Driller (portable) Pcs 1 1,500 1,500
Grinder (portable) Pcs 1 1,500 1,500
Hammer (med- & big) Pcs 2 100 200
Anvil (med.) Pcs 1 2,000 2,000
Vice (bench) med. Pcs 1 2,000 2,000
Hacksaw Pcs 2 90 180
File Pcs 4 45 180
Work bench Pcs 1 2,000 2,000
Pincers Pcs 4 90 360
Mechanics tools set (compl.) Box 3 4,000 12,000
Jack screw Pcs 1 1,000 1,000
Cross wrench (tyre) Pcs 4 500 2,000
Air compressor Pcs 1 4,000 4,000
Steel cable M 10 80 800
Plastic hose M 50 10 500
Grease gun Pcs 4 300 1,200
Water can Pcs 10 90 900
Fire extinguisher Pcs 3 2,000 6,000
Sum 128,820

9.1.3 Irrigation and Farm Structure Structures Requirements

A total of local of Birr 1,787,710 with the works described at the table 16 below is
recommend and the cost also estimated as shown at the table below on water for
supplementary irrigation and nursery development works. Small farm structures like
culverts and crossings also included at the cost estimates.
Table 16: Irrigation and farm structures Requirement and Cost
Summary of Irrigation and farm structures Requirement with
Unit
Cost item UNIT QAN. Total Cost
cost
IRRIGATION COST AND FARM WORK
Solar Pump 15 Kw, 300 m3/day,
Set 1 165,000 165000
H=30m
50 M3 Masonry Reservoir Ls 1 230000 230000
10 m3 Collection Chamber No 3 70000 210000
uPVC 120 mm pipe line, riser Ml 859 250 214750
34
 uPVC 120 mm pipe line, distribution M3 1598 200 319600
uPVC 100 mm pipe line , distribution Ml 1063 22`0 233860
uPVC 80 mm pipe line , distributions Ml 1058 250 264500
Sprinkler Gun with motor 3 HP. 30
Set 3 50000 150000
m3/h, 50 m hose
Sub-total 1,787,710
The farm will have ground bar-well to pump 10 m3/se. The planned farm is rain fall patter
and amount matches the plat requirements of farm, due to matching of growing periods
determined at the location which matches crop calendar shown at the table more over the
annual water requirement of oil seed crops, for this purpose additional irrigation equipment
shown below table.

Supplementary irrigation cost

Unit Total cost
Cost item Capacity Unit Qt
cost (Birr)
uPVC pipe with connector 125 mm/ 6 Bar Ml 6000 70 20,000
120 m3 /Hr @ 50
Generator and Pump Mt Set 1 391304 391,304
Balancing Tank M3 No 10 230 11,500
Total 822,804

9.2 Materials and Inputs

9.2.1 Materials
The proposed commercial seeds and sacks are among the most important materials required
for oil seeds farm. The materials and inputs required along with their corresponding costs at
full capacity operation of the farm are described in Table 18. The required seed and packing
materials requirement of the envisaged project is indicated in Table 18. The total annual cost
of seeds and auxiliary materials is estimated to be Birr 766,694.

Table 17: Annual Requirement for seed And Packing Materials (auxiliary)
No Description Qty Cost (‘000 Birr)
Unit of LC FC TC
Measure
1 Oil seeds Qt 240 120,000 120,000
2 sacks pcs 8186 646694 - 646694
Total 766,694 - 766,694

35
9.2-2 Utilities
Electricity and water are utilities of the proposed project. Table 19 which indicates the
annual utility requirement and cost at full capacity. Process water shall be supplied by
submersible pumps installed by the project

Table 18: Annual Requirement of Utility

Utility Unit Qty Unit price ( Birr) Total Cost(birr)
Electricity kWh 670,000 o.474 317580
Water M3 7,200 10 72,000
Total 389,580

9.3 Sesame hulling Process

Sesame seeds are is a substantial export market, with the European Countires, Janpan and
certain Gulf countries being the bulk buyers. Sesame seeds have a thin shell or husk which
needs to be removed and this process is known as dehulling. The weight of hull is about
17% of total weight of sesame seed. The hull contains a great deal of oxalic acid and
indigestive fibre. Oxalic acid can reduce biological utilization ratio of Ca in Food and
influence taste. After dehulling, oxalic acid can reduce from 3% to 0.25% in sesame seeds,
which improve the protein digestibility greatly. So, dehulling of sesame seeds is the
precondition of enlarging application of sesame in food field. Hulled sesame seeds are softer
and tastier than unhulled seeds. Sesame seeds are also an excellent source of unsaturated
fatty acids and phytosterols.
Process Flow of Complete Sesame hulling Plant
Soaking
The purpose of soaking is that make hull of sesame seeds sopped up water to expand for
peeling off from seeds. The project use lye, soaking raw sesame seeds in a certain
temperature, which improve the speed of infiltration ratio of water into hull, shorten the
soaking time greatly to 30-40 minuties from original 7-8 hours. The produce periods is
shortened. At the same time, lye weaken pigments in hull for the whiteness of sesame
seeds.
Dehulling
The project use vertical huller to make sesame seeds in relative movement. By soft friction
between sesame seeds, the hull is removed.
Separating

36
 It is the key process in sesame seeds production, affecting final yield of finished product.
Generally, put the mixture of hulls and seeds into water tank, by different buoyancy of hulls
and seeds, fish out the hulls by hand. But it is not thorough method by buoyancy. So the
project use separation theory by different geometrical sizes of hulls and seeds. Namely, use
best soaking technology to soften hulls, increase crush rate of hulls but do not influence
intact rate of seeds when hulling, then use hulls smaller than seeds, taking away the hulls
with water flow in subsidence-type automatic separator. The seeds are captured. The
separation of hulls and seeds successed. The technology save labor and product yield next
to theoretical value.
Drying
The process use single chamber fluid bed drier. The sesame seeds float in hot air flow and
polish by friction between seeds, which decrease sticky hull rate and improve the
smoothness of finished product. It avoid the diadvangtage of yellew, unpolished, high sticky
hull rate etc. in normal fluid bed drier.

9.4 Source of Technology

The machinery and equipment can be obtained from the following company.
 Jagdish Exports, Gondal Road, Rajkot - 360002 - India
 Tel. : 91 281 2461134 / 2462079 / 2451214
 Fax : 91 281 2461770
 WhatsApp : 91 9824242110
 Viber : 91 9824242110
 Skype : jagdishexports
 Mobile : 91 9824242110
 E-mail : [email protected] OR [email protected]
 Web : www.jagdishexports.com OR www.jagdishindia.com

9.5 Land, Building and Civil Works of the Project

9.5.1 Company Building and Civil Works

The total farm Building are 1684 M2 is used for farm facility, 1684 M2 will be covered by
different types of buildings. Office building will have walls made of hollow – block linings
and properly cement plastered. The production and storage hangars will have walls covered
by corrugated iron sheets on columns and beams made of metallic bars. The roofs will be of

37
saw –tooth type with metallic trusses and covered with metal cladding. Other buildings will
be built by hollow-block walls properly finished, but mot cement plastered. Thus, the total
cost of building will be Birr 1.6 million. The details breakdown and others details on floor
area shown at the supporting plan and bill of quantities.

Table 19: Farm Building Facility Cost

Total Cost
Description Unit Qty Unit Cost (Birr)
(Birr)
Farm buildings
Office Complex m2 200 1,500 300,000.00
Product Store m2 900 1,000 900,000.00
Farm Input Store m2 50 500 25,000.00
Multi-Purpose Store m2 50 500 25,000.00
Workshop m2 100 300 30,000.00
Staff Residence m2 100 1,500 150,000.00
Temporary shade for daily labourers m2 100 500 50,000.00
Canteen & Cafeteria m2 64 1,000 64,000.00
Clinic (first aid) m2 20 1000 20,000.00
Others (guard houses, toilets, etc) m2 100 500 50,000.00
Grand Total 1684 1,614,000.00

9.6 Company Vehicles and Motors

Farm required different vehicles for the different purpose. FSR-Isuzie truck and Services bus
and Double Cap (4WD) required for the farm farming purpose, whiniest, a loading vehicle
would be required for providing services for transportation of raw material(s), small amount
of inputs, facilitating farm programmed, transporting locale raw materials from far places
other than, conducting marketing activates, transporting product sales to various market,
mobilizing casual laborers and other work, Insulated Vegetable Transport FSR- Truck for
product sales and Tractor and Services bus and Double Cap (4WD) For this purpose a
transportation vehicle has been proposed which will cost around Et.Birr 2,550,000 without
tax purchase for local suppliers , the cost breaks down as show at Table 22 below,
Table 20: Company Vehicles and Related Cost
Equipment Capacity Required Cost
Capc Unit Qt LC( Birr)
FSR-Isuzie 50 tons 1 1,600,000 1,600,000
Double Cap (4WD) 5qut 1 950,000 950,000
TOATL VECHEL PURCASE 2,550,000

38
9.7 Maintenance and Repairer
Spare parts for machinery and equipment of major farm production lines and auxiliaries
systems will be procured and stored. It is planned to hold a spare part for one production
year. A total of price of ETB 207,843 is allocated for the purchase of spare parts.
Maintenance costs are estimated at a level to adequately maintain machinery and
equipment in good working order over the project’s life.
Table 21: Maintenance and Repairer Cost estimated
Description Parameter (%) Investment cost Repair and
(Birr) maintenance
(Birr/Year)
Building and civil works 0.50% 4,214,000.00 21,070
Office equipment 1.00% 120,400.00 1,204
Vehicles 2.00% 2,550,000.00 51,000
Farm machinery & equipment 3.00% 4,570,170.00 137,105
Farm tools and Equipment 3.00% 128,820.00 3,865
Total 207,843

9.8 Office Furniture and Equipment

A total of ETB 120,400.00 is required for purchase of office furniture and related equipment.
The following table gives an assumed breakup.
Table 22: Office Furniture and Equipment Estimated Cost
Description of Work Unit Qty Cost ( Et. Birr)
Plant manager office
Executive Table Pcs 1 12000 12,000.00
Swivel Chair Pcs 2 5000 10,000.00
Chair normal Pcs 1 1200 1,200.00
Guest chair Pcs 2 5000 10,000.00
Computer Table Pcs 1 1200 1,200.00
Filing Cabinet Pcs 1 5,000 5,000.00
Shelf with locker Pcs 1 12000 12,000.00
Shelf ( 2 x 2) Pcs 1 4000 4,000.00
Table with sink and Drawer Pcs 1 25000 25,000.00
Computer with printer Set 1 40000 40,000.00
Sub Total 120,400.00

9.10 Products and Revenue

Table 23: Projected Gross Revenue
Production years Y-1 Y-2 Y-3
Finished Product Assumption unit

39
 Crude seed oil tons 797,850 930,825 974,224

Residual cake Qt 764,100 891,450 922,958

Sales Price ( Birr/kg)
Crude seed oil birr 45 47 47
Residual cake birr 7 7.35 7.72
Revenue determination
Crude seed oil 35,903,250 43,981,481 46,032,090
Residual cake 5,348,700 6,552,158 7,122,927
total REVEVENU 41,251,950 43,981,481 46,032,090

9.11 Pre-Operating Activities

During the implementation period, the different activities likely to be undertaken have been
classified as follows on the basis of activities category and schedule in 2 years period as
shown in the activity chart shown at table below.

Table 24: Pre-Operating Activities of Processing

ACTIVITES years
Operation years 1 2
Building and Site Work Construction
Processing Machinery Purchase
Processing auxiliary machinery Purchase
Manpower recruitment
Training to technical staff

10. PLAN OF OPERATION OF THE PROJECT

a) Land Development
The main production process of sesame farm will be started with land development
activities, such as land clearing and surveying (for land parceling and access/ farm road
40
marking). The land development activities are expected to be undertaken by machinery and
equipment such as Bulldozers, and surveying instruments. These machinery and equipment
are expected to be rented from other enterprises.

b) Land Preparation, Sowing and Fertilization

Generally, land development for sesame production is followed by land preparation. It
comprises ploughing and harrowing. Ploughing operation may be omitted after the first year
operation and be replaced by minimum or no tillage practices. Sowing follows harrowing
with fertilizer application. For this purpose, tractors with various bottoms like disc plough,
disc harrows and planters and fertilizer drillers are employed in general.

Land preparation for soybean and sesame is similar to that of simple farming crops like
maize. They can be achieved by one ploughing, disking and harrowing. The sowing time
varies from place to place. The best time for sowing in tropical and subtropical regions is just
after the rains are well started, i.e. from the end of May to early July. The crops should
always be sown in rows.

c) Pre-harvest Management
The pre-harvest management in sesame, sunflower & soybean production usually involves
weeding and cultivation, insect pest and disease control.

d) Harvesting
Harvesting of Sesame may be carried out either by machine (combine harvester) or
manually. In manual harvesting, the harvesting operation begins when two third of the plant
and seed pods turn yellow and is undertaken by cutting the stems near ground level. It is
then bound and stocked in the field to ripen the seed.

Harvesting is always done before the pods shatter. The best stage is when the pods are
fully mature with the seeds in the hard-dough stage. The seeds should have a moisture
content of less than 15% and should be stored at a moisture content of 10-12% or less. With
the dehiscent type, the heads are also cut and dry in bunches hanging down ward on racks
for 1-2 weeks .The bunches and the dried heads including the stocked is usually shacked
by hand to dislodge the seeds on cemented floor where the seed is collected.Harvesting of
sunflower and soybean may be carried out manually or using machine harvester.

d) Post-Harvest Management

41
Post-harvest in sesame as well as soybean include, threshing, packing/bagging, storing and
marketing. Harvesting & threshing are expected to be carried out manually by casual labour
or using combine harvester in mechanization. Transporting will be done by tractor driven
trailers and trucks, from the farm and stores, respectively.

Post-harvest management in cotton production process comprises decking, packing and

transporting of products to stores or/and market. The activities such as picking, grading,
packing and loading/unloosing are carried out by casual labor, manually and transporting
will be handled by tractors from farm to stores and trucks from stores to clients.

Table 25: Operation Plan of the Project

Sr. Year 1 Year 2 Year 3 Year 4-10
No Major Activities (ha) (ha) (ha) (ha)
1 Clearing 270 300 300 300
2 Plowing 270 300 300 300
3 Harrowing 270 300 300 300
4 Fertilizing 270 300 300 300
5 Sowing/planting 270 300 300 300
6 Weeding 270 300 300 300
7 Harvesting 270 300 300 300

42
11. PROJECT ORGANIZATION AND MANPOWER REQUIREMENT

11.1 Form of Business

The business will is categorized Medium Scale Commercial Agro Processing Farm Industry
and is registered under the name “Dalecha Oil Seed Crops Production Project” as a
proprietorship and owned by the “DALECHA AGRICULTURE DEVELOPMENT PLC”.

11.2 Organization Structure of the Project

After a thorough assessment of the organizational structures of the existing similar
commercial tomato and onion with their past performance and the advice given by the
selected expertise, machine supplier, the consultant has proposed the following
organizational structure. Accordingly, the recommended organizational structure to be
created within the envisaged farm and processing plant for the smooth running of the
operations may be divided into the following departments and office such as Farm Manger
Office, Finance and Administration Department and Technical and Production Department.
In this context, the organization bloc diagram is shown in figure5 and the role of each
section is described as follows

Figure 1: Organizational Stricture

11.3 Man Power Requirement

The farm works will demand a total of nine perm ant employs as per the skill, qualifications,
and budget details at the table below

43
 Table 26: Man Power requirements
Monthly Annual
Description
Unit Qty U/payment T/Payment Payment

Farm manager No 1 6000 6000 72000

Production manager No 1 3000 3000 36000
Technical head No 1 3000 3000 36000
Administrator & fin. head No 1 3000 3000 36000
Secretary No 1 1000 1000 12000
Unit farm manager No 2 2000 4000 48000
Field foremen No 2 1000 2000 24000
General mechanic No 2 2500 5000 60000
Ass. Mechanic No 2 1000 2000 24000
Welder No 1 1000 1000 12000
Electrician No 1 1500 1500 18000
Tyre man No 1 900 900 10800
Tractor operators No 13 1000 13000 156000
Combiner operator No 1 1500 1500 18000
Fuel/ grease boy No 1 500 500 6000
Time keeper No 2 500 1000 12000
Personnel No 1 1200 1200 14400
Accountant No 1 1500 1500 18000
Cashier No 1 1000 1000 12000
Store man No 1 1200 1200 14400
Ass. Storeman No 1 800 800 9600
Driver No 1 1200 1200 14400
Guards No 4 400 1600 19200
Janitor No 1 350 350 4200
Grand Total 44 687,000

11.4 Training Requirement

The skill of Agronomy and Agro-processing is well developed in the country since there is a
plant engaged in vegetable production. However, machinery operators will have to be given
training for two weeks in Ethiopian with cooperation Ethiopia agricultural research
Institution. A total of Birr 200,000 is allotted to train plant operators and technicians.

44
12. FINANCIAL STUDY OF THE INVESTEMENT
The financial analysis of the jute bags project is based on the data presented in the previous
chapters and the following assumptions:-
Construction period within 2 year
Source of finance 30 % equity 70 % loan(leased finance)
Tax holidays 3 years
Bank interest 12%
Discount cash flow 10%
Accounts receivable 30 days
Raw material local 3 months
Work in progress 3 days
Finished products 30 days
Cash in hand 5 days
Accounts payable 30 days
Goods in Process 1day
Administrative and Marketing Expenses 3 months
Production Assumption
Sesame 50%
Sunflower 25%
Soybean 25%
Product selling 99%
Community elopement 5%
Other charge 3%

12.1 Project Investment Cost and Working Capital Requirements

The total cost of project including working capital is estimated at ET. Birr 13,940,088.46
broad breaks-up of the above cost under various heads is given below table 29.

Table 27: Project Investment and Working Capital Cost

Total Fund Allocation
Description Loan Equity
Land 92,400.00 - 92,400.00
Installation Cost 822,000.00 - 822,000.00
Building and civil works 1,614,000.00 645,600.00 968,400.00
Office equipment 120,400.00 - 120,400.00
Vehicles 2,550,000.00 2,550,000.00 -
Farm machinery & equipment 4,790,148.00 2,874,088.80 1,916,059.20
Farm tools and Equipment 128,820.00 77,292.00 51,528.00
Irrigation Tools farm structure Equipment 1,787,710.00 1,787,710.00 -
Total fixed investment cost 11,905,478.00 7,934,690.80 3,970,787.20

Pre-production capital expenditure 415,242.74 - 415,242.74

45
 Total Initial Investment 12,320,720.74 7,934,690.80 4,386,029.94
Working capital at starting 1,619,367.72 1,052,589.02 566,778.70
Total 13,940,088.46 8,987,279.82 4,952,808.64
100% 64% 36%

12.2 Financial Budget of the Investment

12.2.1 Total Investment Cost

The total investment cost of the proposed agricultural enterprise is estimated at Birr
13,940,088.46. The fixed investment component is estimated at about Birr 11,905,478.00
and the pre-production expenditure is 415,242.74 birr. Summary of investment costs are
presented on the above table 27.

12.2.2 Operating cost

The total operating cost is estimated at Birr 9,712,485 for ten years project life. Operating
costs are recorded on a year basis. It is divided into overheads (fixed costs) and variable
costs. The fixed cost component is estimated at about Birr 4,205,118 and, Birr 5,507,367 is
variable cost.

12.3 Budget Allocation

The promoter of the project has planned to finance the project through a long-term loan from
the Development Bank of Ethiopia; and, partially from own contribution. The debt equity
ratio is assumed to be 64:36%. The following table briefly summarizes the project financing
by source of funds and summarized above table 27.

12.4 Financial Viability

12.4.1 Income Statement

It may be seen from the profitability estimates that the unit would earn a net profit after
taxation of birr 12.98 million during the first years of operation at 90% of the capacity. The
net profit after tax will increase gradually from to ET. Birr 15.84 million in the second year
when the unit expects to achieve 100% utilization of capacity. On the above basis, there is
adequate generation of funds out of the farm operation to service the repayment of term loan

46
and interest liabilities, as also to meet additional requirement of margin money for working
capital in the second and subsequent years. Further, adequate surplus cash is available
with the unit for promoter withdrawal. Annex 6.

12.4.2 Cash Flow Statement and Balance Sheet

Cash flow on hand at a given period in time (i.e., projection) is critical component of a
business initiative. The cash flow is positive starting Year one. The cash end balance clearly
shows that the accumulated or free cash fund is sufficient to finance the expansion
activities, strengthen the jute production and invest on the establishment of other services.

12.4.3 Pay Back Period

The computation of the payback period is given at Annex - 9. The pay- back period works
out to 2 years on the basis of profit after tax. The pay- back period would be much less in
case calculated on the basis of profit before tax.

12.4.4 Internal Rate of Return (IRR)

Internal rate of return calculations are given at Annex-9, IRR of the project based on 10
years life span, works out to 115%%, and 111%, which is quite reasonable before and after
tax respectively. The net present value of project capital investment at 10 % discount rate is
ET, Birr 92,179,686 and 86,488,431before and after tax respectively.

12.4.5 Net Present Value (NPV)

The NPV is calculated by subtracting the present value of all the costs incurred for the
project from the present value of the stream of benefits.

NPV is given at Annex – 9 the resulting NPV value is greater than zero; which implies that
the project is acceptable (profitable). This is critical stage for paying out dividends to
shareholders who have invested in the business enterprise. Nevertheless, the payment of
dividend is delayed until the enterprise fully pays out its loan (both interest and principals)

47
12.4.6 Break even Analysis
The break-even point of the project is estimated by using income statement at full capacity of
production of the projection.
BEP (%) = Fixed Cost (11,905,478) = 110.1%
Sales – Variable cost (22,820,498- 9,712,485)

The break even ratio, the ratio of breakeven sales to planned production, for the entire
period is between 0.10 and 1.10 The break even ratio of the project is not only low but it
also steadily declines throughout the operation period. This low break even ratio means low
risk to the investment; the business has great level of security against unforeseen
operational difficulties.

12.5 Sensitivity analysis

12.5.1 Risk and Uncertainty

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 offshore markets.

12.5.2 Sensitive Analysis

For the sensitivity analysis three worst cases has been
considered as follows,
Case 1: if the capital cost increases by 20%
Case 2: if the annual revenue decrees by 20 %

Parameter
Project Case-1 Case-2
NPV ( Birr’000) after tax 92,179,686 473,893,111 $207,785,287
IRR (after Tax) 111% 324% 178%
Pay Back Period 2Yers+34m 3Yaers+8m 4Yaers+8m

The project's sensitivity to adverse circumstance is viewed & analyzed from two different
scenarios: by decreasing its sales revenue by 10 % and increasing its operating cost by
10%.
A) Sensitivity test Scenario I: – Increase in operating cost by 10 %

48
When operating cost increases by 10%, the result indicates that FIRR after tax increased
from 111 % to 324 %. It can be concluded that, the project can cover its costs, make profit
for stakeholders & will remain viable even if unforeseen costs would occur that should be
incurred more than estimated.
B) Sensitivity test Scenario II: – Decrease in Revenue by 10 %
When revenue decreases by 10%, the result indicates that FIRR after tax decreases from
111% to 178 %. It can be concluded that, the project will remain viable even if an adverse
marketing problem would occur that forces to reduce the selling price & hence reduce the
revenue. It also shows that the project is more sensitive and affected by decline in sales
revenue when compared with the increase in operating costs and indicates caution to be
taken in selling the products.

49
13. CONCLUSIONS AND RECOMMENDATIONS

13.1 Conclusion

DALECHA AGRICULTURE DEVELOPMENT PLC had applied for a loan of Birr 8,987,280
to finance its new oil seed crop plantation project to be established in SNNP Regional State
western Bench Sheko Zone, Mizan-aman Kifeleketema.
The Promoter’s business objective is to engage in the production of oil seeds local
consumption and for export market. The project operation will start by developing land,
establish oil seed crops plantation, for export. Moreover, oil seed crops produced & shall be
sold at local market for local consumers. In order to establish the project and achieve its
objective; the promoter has approached DBE for partial finance which is in excess of its
equity. A loan of Birr 8,987,280 is proposed to be financed by the Development bank of
Ethiopia(DBE) to be used for partial covering of the fixed asset investment cost & the
working capital requirement after assessing the viability of the project.
The total investment cost is estimated to Birr 13,940,088 out of which Birr 11,905,478 is
on fixed Asset, 1,619,367.7 on working capital, Birr 415,243 is on pre-Production costs
and Birr 610,291on pre-production interest. The project’s success & risk factors are
identified & the risk mitigating factors are proposed. As shown in the fund allocation table,
out of the total financial requirement (investment cost) of Birr 13,940,088 Birr
4,952,808.64 (36%) is the owner’s equity contribution and Birr 8,987,280 (64%) is planned
to be financed by DBE term loan.
The projected financial statements & analysis indicates that the project will run in losses
during the period before oil seed e begins to give production up to the 3rd project years when
successive land development and oil seed crops plantation establishment to be undertaken.

13.2 Recommendation

13.2.1 Proposed Loan amount & Purpose

With the available documents on hand, the due diligence assessment report and based on
the financial analysis conducted, the project is found to be viable. Based on this, the
consultant team has proposed a total loan amount of Birr 13,940,088 to be used for

50
partial cost coverage of the fixed asset investment cost and for working capital as per the
following terms & conditions.

13.2.2 Terms and conditions

13.2.2.1 Terms
Equity Release & Loan disbursement schedule
Table 30: Oilseed plantation & processing project Equity Release Schedule

Amount of
Equity contribution (birr)
Equity, cash
Blocked Equity
Equity Utilization (purpose ) contrib to be Equity release period
On to be released to
On planned Total Equity blocked
Existing (birr)
Investment Contribution
Investment
Land 92,400 - 92,400 - - -
After signing of the loan
Installation Cost 0 822,000 822,000 822,000 agreement, before the 1st the client
loan disbursement
after signing of the loan
Building and civil works 0 968,400 968,400 968,400 agreement, before the 1st the client
loan disbursement
Along with the 1st
Office equipment 0 120,400 120,400 120,400
disbursement
the client

Along with the 2st

Vehicles 0 0 0 0
disbursement
the client

Along with the 2st

Farm machinery & equipment 0 1,916,059 1,916,059 1,916,059
disbursement
the client

Farm tools and Equipement 0 51,528 51,528 51,528

Plant machinery & equipment 0 0 0 0
Irrigation Tools farm structure
0 0 0 0 - -
Equipements
Pre production capital
0 415243 415,243 0
expenditure
For payment of the pre- On the due date of
0 1,664,401 0 0 DBE
production interest (birr) Interest
Total 92,400 5,958,031 4,386,030 3,878,387 - -

51
Table 31: Loan Disbursement Schedule (Plan)
Amount to
Balance in
Sr. be Period of To be Conditions for
Disbursement Plan Purpose commitment
no disbursed disbursement disbirsed to Disbursement
(birr)
(birr)

Total Loan Amount 8,987,280

2019
13,940,088
After signing of the loan
agreement & fully
Farm machinery &
1 First disbursement
2,874,089
Y1 4,952,809 to the promoter utilization of the equity
equipment contribution for building &
construction
Farm tools and Equipement 77,292
Sub- total 2,951,381
-
10,988,708
After verification of the
2 Second disbursement Building and civil works 645,600
Y2
10,343,108
to the supplier utilization of the 1st
disbursement
Working capital at full
capacity 1,052,589
Sub-total 1,698,189
-
9,290,519
After verification on the
3 3rd disbursement Vehicles 2,550,000
y3 6,740,519 to the supplier proper utilization of the 2nd
disbursement
Irrigation Tools
y4 4,952,809
Requirement 1,787,710

Sub-total 4,337,710 4,952,809

52
 13.2.2.2 Principal loan Repayment Schedule
The principal loan shall be repaid every year, starting on, 2022 & ending on, 2026, whereby
repayment will be made in 6 annual instalments. 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 investment cost throughout the project life. The business result
obtained reveals that the investment is financially viable and has a healthy cash
flow forecast. The outcome of the financial analysis reveals that: based on the
following repayment schedule the annual payment was described on the base of
below table throughout the project life
Table 32: Loan Repayment Schedule
Year Amount of Principal Instalment Interest Total
Payable at
Outstanding due 12% Amount

1 8,987,280 1,497,880 1,078,474 2,576,354

2 7,489,400 1,497,880 898,728 2,396,608

3 5,991,520 1,497,880 718,982 2,216,862

4 4,493,640 1,497,880 539,237 2,037,117

5 2,995,760 1,497,880 359,491 1,857,371

6 1,497,880 1,497,880 179,746 1,677,626

Total 8,987,280 3,774,658 12,761,937.3

Interest Payment: 12% p.a. on the outstanding loan balance to be paid every 6 on
July & January in every production year. Pre- production interest shall be paid by
the promoter on the due date.
Commitment Charge Payment: Calculated @ 0.5% per annum on the balance in
commitment

13.2.2.3 Conditions
1) Collateral: First degree mortgage on all fixed assets of the project.
2) Insurance: Purchase of insurance policy for the entire fixed assets of the project with
DBE as a co-beneficiary.
3) Current Account: The promoter should open current account with DBE.
4) Record Keeping: The Company should maintain proper record keeping system.
53
5) L/C Opening: The Company should open letter of credit (L/C) in DBE both for import
and export.
6) Equity Capital: The Company should raise its capital to the required level & deposit
its equity contribution of Birr 5,907,797 in block account for partial cost coverage of
building & construction, and pre-operating interest.
7) Any cost escalation should be covered by the promoter.

54
14. ANNEXTURE

Annex 1: Project Investment and Infrastructure and Costs Related to Installations

Infrastructures and costs related to installations
Rate Cost
Equipment Unit Qt.
Birr Birr
SITE WORKS
Site Clearing and Leveleing M2 800.00 20.00 16,000.00
Fence works Ml 35 600 21,000.00
Main and Pedestsial Gaet Ls 1 5,000 5,000.00
access road(1km) km 1 100,000 100,000.00
water well 600,000.00
742,000.00
UTILITES
Electricity installation (30 KW) Set 1 60,000 60,000
Site Electrification Ls 1 5,000 5,000
Water Supply Lines and Sytwms Ls 1 5,000 5,000
Waste Disposal System Ls 1 10,000 10,000
80,000
Total 822,000

Annex 2: Income Statement Assumption

Operating Expenses for the project and there basis are taken as follows

Description Basis Basis

CONSTRUCTION AND FINANCE

Construction period 1 years 1year

Bank interest 12% 12%

Discounted cash flow 10% 10%

Source of finance 30% equity and 70% loan

ECONOMIC ASSUMPTIONS

Utilities price growth 10%

Material price growth rate 5%

Wage Growth Rate 5%

Tax rate 35%

EXPENSE

Salaries Expenses As per Salary Estimations

Staff Benefits 20% of Payroll

Insurance 1% of Eqp. Cost

Administrations expense 5% of Sales

Selling Expenses 5 % of Sales

55
Farm Working Day 300day/annum

Processing working day 150day/annum

Working hour 8 hour & two shift/day

Farm Production 95% sales

Casual labour payment 30 Birr/day

USD Currency 1USD= 27.27 ET. Birr

Annex 3: Interest Calculation (Birr)

Total Investment 13,940,088

Long Term Interest Rate 12.00%
Percent Financed 64%
Loan Amount 8987279.817
Loan Term 6
1 2 3 4 5 6
Beginning Balance 8,987,280 7,879,816 6,639,456 5,250,253 3,694,346 1,951,730
Interest Rate 12% 12% 12% 12% 12% 12%
Interest 1,078,474 945,578 796,735 630,030 443,322 234,208
Annual Payment 2,185,938 2,185,938 2,185,938 2,185,938 2,185,938 2,185,938
Principal 1,107,464 1,240,360 1,389,203 1,555,907 1,742,616 1,951,730
Ending Balance 7,879,816 6,639,456 5,250,253 3,694,346 1,951,730 0

Annex 4: Depreciation Calculation (Birr)

Rate ( % ) 0 1 2 3 4 5 6 7 8 9 10
1-2 3-10
Land 5% 92,400 92,400 4,620 4,620 4,620 4,620 4,620 4,620 4,620 4,620 4,620 4,620
Installation Cost 5% 822,000 822,000 41,100 41,100 41,100 41,100 41,100 41,100 41,100 41,100 41,100 41,100
Building and civil works 10% 1,614,000 1,614,000 161,400 161,400 161,400 161,400 161,400 161,400 161,400 161,400 161,400 161,400
Office equipment 10% 120,400 120,400 12,040 12,040 12,040 12,040 12,040 12,040 12,040 12,040 12,040 12,040
Vehicles 10% 2,550,000 2,550,000 255,000 255,000 255,000 255,000 255,000 255,000 255,000 255,000 255,000 255,000
Farm machinery & equipment
10% 4,790,148 4,790,148 479,015 479,015 479,015 479,015 479,015 479,015 479,015 479,015 479,015 479,015
Farm tools and Equipement10% 128,820 128,820 12,882 12,882 12,882 12,882 12,882 12,882 12,882 12,882 12,882 12,882
Irrigation Tools Requirement
15% 1,787,710 1,787,710 268,157 268,157 268,157 268,157 268,157 268,157 268,157 268,157 268,157 268,157
Total 11,905,478 11,905,478 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213

56
Annex 5: Revenue Projection and Assumptions

Production years Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9
Finshed Product Assumationunit
sesame seeds Qt 3,105 3,623 3,804 3,994 4,193 4,403 4,623 4,854 5,097
soybean seeds Qt 1,890 2,205 2,315 2,431 2,553 2,680 2,814 2,955 3,103
sunflower seeds Qt 1,688 1,969 2,067 2,171 2,279 2,393 2,513 2,638 2,770
Sales Price ( Birr/kg)
sesame seeds birr/Qt 3748 3935 4132 4339 4556 4784 5023 5274 5538
soybean seeds birr/Qt 1652 1735 1821 1912 2008 2108 2214 2325 2441
sunflower seeds birr/Qt 2406 2407 2409 2410 2412 2413 2415 2416 2418
Revenu determination
sesame seeds birr 11,637,540 14,255,987 15,717,225 17,328,241 19,104,385 21,062,585 23,221,500 25,601,704 28,225,878
soybean seeds birr 3,122,280 3,824,793 4,216,834 4,649,060 5,125,588 5,650,961 6,230,185 6,868,779 7,572,829

Annex 6: Projected Income Statement

INCOME STATEMENTS( Et birr '000)

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Gross revenue 18,819,945 22,820,498 24,913,815 27,209,247 29,726,882 32,488,832 35,519,444 38,845,524 42,496,590 46,505,146
Oil e Seed Oil Produc tion
Less Variabl e Cost/Produc tion 4,956,630 5,507,367 5,507,367 5,507,367 5,507,367 5,507,367 5,507,367 5,507,367 5,507,367 5,507,367
Gross Profit 13,863,315 17,313,131 19,406,448 21,701,880 24,219,515 26,981,465 30,012,077 33,338,157 36,989,223 40,997,779
(In % of Total Inc ome) 74% 76% 78% 80% 81% 83% 84% 86% 87% 88%
Deprec iation expense 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213
Less Fixed Costs/Workig Captal 2,956,817 4,205,118 4,205,118 5,318,238 5,318,238 5,318,238 5,318,238 5,318,238 5,318,238 5,318,238
Total Operating Expenses: 4,191,030 5,439,331 5,439,331 6,552,452 6,552,452 6,552,452 6,552,452 6,552,452 6,552,452 6,552,452
Operating Profit 14,628,915 17,381,167 19,474,484 20,656,796 23,174,430 25,936,380 28,966,992 32,293,073 35,944,139 39,952,694
(In % of Total Inc ome) 78% 76% 78% 76% 78% 80% 82% 83% 85% 86%
Other Inc ome 0 0 0 0 0 0 0 0 0 0
Total Operating Profit 14,628,915 17,381,167 19,474,484 20,656,796 23,174,430 25,936,380 28,966,992 32,293,073 35,944,139 39,952,694
Communitty Charges(3%) 564,598 592,828 622,470 653,593 686,273 720,586 720,586 720,586 720,586 720,586
Less Cost of Financ e 1,078,474 945,578 796,735 630,030 443,322 234,208 0 0 0 0
Total Financ ial & Other Charges 1,643,072 1,538,406 1,419,204 1,283,624 1,129,594 954,794 720,586 720,586 720,586 720,586
GROSS PROFIT 12,985,843 15,842,761 18,055,279 19,373,172 22,044,836 24,981,586 28,246,406 31,572,486 35,223,552 39,232,108
Inc ome (Corporate) Tax 0 0 6,319,348 6,780,610 7,715,693 8,743,555 9,886,242 11,050,370 12,328,243 13,731,238
Profit after Taxation 12,985,843 15,842,761 11,735,932 12,592,562 14,329,143 16,238,031 18,360,164 20,522,116 22,895,309 25,500,870
Ac c umul ated Profits - brought forward 0 12,985,843 28,828,604 40,564,535 53,157,097 67,486,240 83,724,272 102,084,435 122,606,551 145,501,860
Ac c umul ated Profits - c arried to the Bal anc e Sheet 12,985,843 28,828,604 40,564,535 53,157,097 67,486,240 83,724,272 102,084,435 122,606,551 145,501,860 171,002,730

RATIOS (%)
Gross Profit/Sal es 69% 69% 72% 71% 74% 77% 80% 81% 83% 84%
Net Profit After Tax/Sal es 69% 69% 47% 46% 48% 50% 52% 53% 54% 55%

57
 Annex 7: Projected Balance Sheet

Production Years 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Assets
Cash 1,619,368 13,543,131 29,152,181 40,628,457 52,784,554 66,479,412 81,861,829 101,304,676 122,894,701 146,841,670 173,376,326
Inventory - 396,530 440,589 440,589 440,589 440,589 440,589 440,589 440,589 440,589 440,589
Accounts receivable - 940,997 1,141,025 1,245,691 1,360,462 1,486,344 1,624,442 1,775,972 1,942,276 2,124,830 2,325,257
Total current assets 1,619,368 14,880,659 30,733,795 42,314,737 54,585,605 68,406,346 83,926,860 103,521,237 125,277,567 149,407,089 176,142,172
Gross property, plant & equipment 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721 12,320,721
Less: Accumulated depreciation expense - -1,234,213 -2,468,427 -3,702,640 -4,936,853 -6,171,067 -7,405,280 -8,639,493 -9,873,706 -11,107,920 -12,342,133
Net property/equipment 12,320,721 11,086,507 9,852,294 8,618,081 7,383,868 6,149,654 4,915,441 3,681,228 2,447,014 1,212,801 -21,412

Total assets 13,940,088 25,967,167 40,586,090 50,932,818 61,969,473 74,556,000 88,842,301 107,202,465 127,724,581 150,619,890 176,120,760
Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5
Accounts payable - 148,699 165,221 165,221 165,221 165,221 165,221 165,221 165,221 165,221 165,221
Notes payable/short-term debt - 0 0 0 0 0 0 0 0 0 0
Total current liabilities - 148,699 165,221 165,221 165,221 165,221 165,221 165,221 165,221 165,221 165,221
Long-term debt from 8,987,280 7,879,816 6,639,456 5,250,253 3,694,346 1,951,730 0 0 0 0 0
Shareholders equity 4,952,809 17,938,652 33,781,412 45,517,344 58,109,906 72,439,049 88,677,080 107,037,244 127,559,360 150,454,669 175,955,539
Total long-term debt and shareholders equity 13,940,088 25,818,468 40,420,869 50,767,597 61,804,252 74,390,779 88,677,080 107,037,244 127,559,360 150,454,669 175,955,539
Total liabilities 13,940,088 25,967,167 40,586,090 50,932,818 61,969,473 74,556,000 88,842,301 107,202,465 127,724,581 150,619,890 176,120,760

Annex 8: Projected Cash Flow Statement

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10

Net income 12,985,843 15,842,761 11,735,932 12,592,562 14,329,143 16,238,031 18,360,164 20,522,116 22,895,309 25,500,870
Plus depreciation 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213 1,234,213
Less increase in inventory - (396,530) (44,059) - - - - - - - -
Less increase in accounts receivable - (940,997) (200,028) (104,666) (114,772) (125,882) (138,098) (151,531) (166,304) (182,553) (200,428)
Plus increase in accounts payable - 148,699 16,522 - - - - - - - -
Cash flow from operations - 13,031,228 16,849,409 12,865,479 13,712,004 15,437,475 17,334,147 19,442,846 21,590,025 23,946,969 26,534,656
Less investment (12,320,721) - - - - - - - - - -

Cash flow from operations and invests (12,320,721) 13,031,228 16,849,409 12,865,479 13,712,004 15,437,475 17,334,147 19,442,846 21,590,025 23,946,969 26,534,656

Plus net new equity capital raised 4,952,809 - - - - - - - - - -

Less dividends paid - - - - - - - - - - -
Plus net new long-term debt 8,987,280 (1,107,464) (1,240,360) (1,389,203) (1,555,907) (1,742,616) (1,951,730) - - - -
Plus net new bank borrowings - - - - - - - - - - -

Cash flow from ops, invests, and fin 1,619,368 11,923,764 15,609,050 11,476,276 12,156,096 13,694,859 15,382,417 19,442,846 21,590,025 23,946,969 26,534,656
Beginning cash balance - 1,619,368 13,543,131 29,152,181 40,628,457 52,784,554 66,479,412 81,861,829 101,304,676 122,894,701 146,841,670

Ending cash balance 1,619,368 13,543,131 29,152,181 40,628,457 52,784,554 66,479,412 81,861,829 101,304,676 122,894,701 146,841,670 173,376,326

58
Annex 9: INTERNAL RATE OF RETUREN ( Birr)

PROJRCT WORTH MAESURE ( NPV, IRR, PB ) before tax . Birr '000

Year 0 Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Cash flow (12,320,721) 13,031,228 16,849,409 12,865,479 13,712,004 15,437,475 17,334,147 19,442,846 21,590,025 23,946,969 26,534,656
PV factor 100% 90.09% 82.64% 75.13% 68.30% 62.09% 56.45% 51.32% 46.65% 42.41% 38.55%
PV of cash flow (12,320,721) 11,739,833 13,924,352 9,665,834 9,365,298 9,585,128 9,785,126 9,978,069 10,071,747 10,155,910 10,229,110
NPV 92,179,686
IRR ( befor Tax ) 115%
Cash flow (12,320,721) 13,031,228 16,849,409 12,865,479 13,712,004 15,437,475 17,334,147 19,442,846 21,590,025 23,946,969 26,534,656
Cumultaive cash (12,320,721) 710,507 17,559,916 30,425,395 44,137,399 59,574,874 76,909,021 96,351,867 117,941,892 141,888,861 168,423,517
Pay Back Period 2.00 Years 34 Months

PROJ RCT WORTH MAESURE ( NPV, IRR, PB ) AFTER TAX . Birr '000
Year 0 1 2 3 4 5 6 7 8 9 10
Cash flow (12,320,721) 12,985,843 15,842,761 11,735,932 12,592,562 14,329,143 16,238,031 18,360,164 20,522,116 22,895,309 25,500,870
PV factor 100% 90.09% 82.64% 75.13% 68.30% 62.09% 56.45% 51.32% 46.65% 42.41% 38.55%
PV of cash flow (12,320,721) 11,698,946 13,092,457 8,817,205 8,600,720 8,896,965 9,166,369 9,422,436 9,573,567 9,709,901 9,830,585
NPV 86,488,431
IRR ( After Tax ) 111%
Cash flow (12,320,721) 12,985,843 15,842,761 11,735,932 12,592,562 14,329,143 16,238,031 18,360,164 20,522,116 22,895,309 25,500,870
Cumultaive cash (12,320,721) 665,122 16,507,883 28,243,815 40,836,376 55,165,520 71,403,551 89,763,715 110,285,831 133,181,139 158,682,010
Pay Bac k Period 2.00 Years 34 Months

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