DEVELOPMENT BANK OF ETHIOPIA

RESEARCH ANDPROJECT DATA MANAGEMENT DIRECTORATE

CORN SOY BEAN PLUS PLUS (CSB++) PRODUCTION

DATA AND INFOMATION

Prepared By:

Moges Tesfa Sr. RPDM Officer

ShibeshiZerihun Sr.Food & Dairy Technologist

SimachewAtinaf Jr. RPDM Officer

Revised By:

Mesfin W/mariam Team Manager

Million Jarso Technical Team Manager

APPROVED BY: RPDM APPROVAL TEAM MEMBERS

December, 2019

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 TABLE OF CONTENTS
List of Figures.............................................................................................................................................iv
List of Tables..............................................................................................................................................iv
1. INTRODUCTION...............................................................................................................................1
1.1. Background..................................................................................................................................1
1.2. Objective of the study..................................................................................................................1
1.3. Methodology................................................................................................................................1
1.4. Scope and limitation....................................................................................................................1
2. COMMODITY DESCRIPTION......................................................................................................2
2.1. Definition of Corn-Soya Blend plus plus (CSB++)..................................................................2
3. MATERIALS AND INPUTS DATA......................................................................................................3
3.1. List of Raw materials........................................................................................................................3
3.2. Description raw materials.................................................................................................................4
3.3. Source of raw materials and inputs...................................................................................................5
3.4. Domestic production (supply) of and demand..................................................................................5
3.4.1. Domestic production maize grain...........................................................................................5
3.4.2. Domestic production soya- bean....................................................................................................6
3.4.3. Domestic production – Sugar.....................................................................................................7
3.5. Demand for major raw materials......................................................................................................7
3.6. Packaging materials..........................................................................................................................9
3.7.1. Labeling.....................................................................................................................................9
3.7.2. Storing.......................................................................................................................................9
3.8. Marketing Arrangement....................................................................................................................9
3.9. Price Trend.......................................................................................................................................9
4. TECHNICAL DATA........................................................................................................................10
5. MARKET DATA AND INFORMATION........................................................................................11
5.1. MARKET SEGMENTATION..................................................................................................11
5.2. Demand-side Data for Ethiopian Market...................................................................................11
5.3. Supply-side Data........................................................................................................................11
5.3.1. Domestic production.........................................................................................................11
5.3.2. Import................................................................................................................................12
5.4. Market Arrangement and Channel.............................................................................................12

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6. Problems and Constraints..................................................................................................................13
6.1. Problems....................................................................................................................................13
7. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS......................................14
7.1. Basic assumption.......................................................................................................................14
7.2. Revenue estimation....................................................................................................................14
7.3. Investment cost..........................................................................................................................15
7.3.1. Machinery and equipment......................................................................................................15
7.3.2. Vehicles.............................................................................................................................15
7.4. Operational Expenses................................................................................................................15
7.5. Uniform &Protective Equipment...............................................................................................16
7.6. Insurance....................................................................................................................................16
7.7. Overhead expense......................................................................................................................17
7.8. Working capital determination...................................................................................................19
REFERENCE............................................................................................................................................20

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List of Figures

No table of figures entries found.

List of Tables

Table 3. 1: Source of materials and inputs...................................................................................................11

Table 3. 2: Maize grain production in Ethiopia...........................................................................................12
Table 3. 3: Import trends of maize grains in Ethiopia.................................................................................12
Table 3. 4: Soya beans production in Ethiopia............................................................................................13
Table 3. 5: Annual Sugar Production...........................................................................................................13
Table 3. 6:Projected Total population size of Ethiopia................................................................................13
Table 3. 7: Percent utilization of maize grains production in Ethiopia........................................................14
Table 3. 8:Product: 120190 Soya beans, whether or not broken (excluding seed for sowing
........14Table 5. 1: Product: 19049000 Cereals (excl. maize [corn]) in grain or flake form or other worked
grains, pre-cooked or otherwise ...............................................................................................................18
Table 7. 1: List and type of required vehicle.................................................................................21
Table 7. 2: Major Raw Material Current Price............................................................................................21
Table 7. 3: Auxiliary Material Current Price...............................................................................................21
Table 7. 4: Packing materials and their current price..................................................................................22
Table 7. 5: Current Market Price of Uniform & Protective Materials.........................................................22
Table 7. 6: Insurance Charges (Rates).........................................................................................................22
Table 7. 7:Fuel consumption........................................................................................................................23
Table 7. 8: Working capital determination..................................................................................................25

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1. INTRODUCTION

1.1. Background
DBE one of governmental financial institution established to provide financial support for viable
projects. In line with the newly vested responsibility by the management, the Directorate avail
raw data and information that facilitate financing of a given project on snacks, flakes, granola
bar, and granola cereal production. Hence, this is raw data and information consolidated to
provide an up-to-date data for appraising of related projects.

1.2. Objective of the study

The general objective of the document is to provide an up to date raw data and information on
CSB++ production and marketing for appraisal of projects related to the sub-sector.

1.3. Methodology

Both Primary and secondary data were collected. Primary data were collected from operational
firms engaged in the same line of business while secondary data were collected from Ministry of
Industry, CSA, ITC and ERCA.

1.4. Scope and limitation

The document covers production and marketing of CSB++ from the blend of corn and soy bean
as a major raw material. Absence of historical price both for raw material and selling price to
trace trend could be mentioned as a limitation of the document.

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 2. COMMODITY DESCRIPTION

2.1. Definition of Corn-Soya Blend plus plus (CSB++)

CSB Plus Plus is a fine flour very palatable to young children and has higher protein and fat and
lower fibre levels than CSB Plus.CSB Plus Plus includes higher and more digestible levels of
essential macronutrients (fats and proteins), a reduction in fibre content and enhanced inclusion
of vitamins and minerals.

CSB is used mostly for emergency relief programs, children below the age of 10 and HIV/AIDS
patients.

The Nutritional value of CSB++ is 420 kcal/100 g dry product, 16% protein, 9%fat and 3% max
crude fibre.

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3. MATERIALS AND INPUTS DATA

CSB plus with Sugar shall be manufactured from fresh maize grain and soy beans of good
quality, free from foreign materials, substances hazardous to health, excessive moisture, insect
damage and fungal contamination and shall comply with all relevant national food laws and
standards.

This section of the document encompasses identification of major raw materials, packaging
materials, source of supply, availability of major raw materials and marketing arrangements of
associated materials and inputs for the production of Corn –Soya Blend Plus Plus (CSB++).

3.1. List of Raw materials

 Major raw materials
 Corn
 De-hulled Soybean for reduction of fiber
 Auxiliary Materials and Inputs

Auxiliary materials and additives are different based on the product type and test and preference
of consumers and other influencing factors; however, the following are commonly applied
additives and inputs used in the production of corn –soya Blend Plus Plus (CSB++):
 Sugar -for palatability and energy
 Dried skim milk powder – to improve Protein quality DSM is not only a source of
animal protein, but specific peptides (proteins components) may have a
positive impact on immune and digestive systems.
 Refined soya bean oil-provides energy density,
 Vitamin/mineral FBF-V-13,
 Dicalcium phosphate anhydrous,and
 Potassium chloride.
 Packaging materials & utilities

 Primary packaging PE60/Met polyester 12

 Carton box outer cover
 1stLaminated
bags, 2nd Polyethylene bags

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  The product is packed in small bags (1.5 – 6 Kg)
 Utilities
 Electricity
 Water

3.2. Description raw materials

Main ingredients CSB plus with Sugar shall be manufactured from fresh maize grain and soy
beans of good quality, free from foreign materials, substances hazardous to health, excessive
moisture, insect damage and fungal contamination and shall comply with all relevant national
food laws and standards. Requirements for the raw materials are should be:

o Maize:

 Conform to Codex STAN 153-1985

 Be tested for aflatoxin (recommended method AACC 45-05 or AOAC 26.049 / 1984)
 Be obtained from non-genetically modified varieties (if required by the contract).
o Soya beans:
- Conform to Codex STAN 171-1989 (Rev.1-1995).
- Be obtained from non-genetically modified varieties (if required by the contract).
- Maize and soya beans must be stored under dry, ventilated and hygienic conditions. Only
safe insecticides (i.e. phosphine) may be used for fumigation control. Where needed,
fumigation must be performed by certified operators.

o Sugar
Refined sugar shall conform to Codex STAN 212-1999. Sugar must be milled to meet particle
specification: 100% through a 1000 microns screen, 95% through a 600 micron screen.

o Vitamins and minerals

Complete premixes must be purchased from a approved supplier and used at the following rate
per metric ton of finished product:

 2 kg of vitamin premix (FBF-V-10),8.0 kg of Mono Calcium Phosphate

and 7.6 kg of KCl (Potassium chloride).

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 o Requirements for KCl and Ca (H2PO4)2. H2O are:

 Must meet at least food chemical codex (FCC).

 Particle size for KCl min 60% < 250 µm (microns).
 Particle size for Ca (H2PO4)2. H2O min 95%

3.3. Source of raw materials and inputs

Table 3. 1: Source of materials and inputs

List materials and inputs Source of materials and inputs

Domestic Import
Corn 

De-hulled Soybean 

Sugar 
Dried skim milk powder 

Refined soyabean oil 

Vitamin/mineral FBF-V-13 

Dicalcium phosphate anhydrous 

Potassium chloride

Packaging materials
Primary packaging PE60/Met polyester 12 (PP Bag) 

Carton box outer cover 

3.4. Domestic production (supply) of and demand

3.4.1. Domestic production maize grain
Total domestic production of maize grains are emanating mainly from two source; peasant farms
and commercial farms. The lion share of domestic production is covered by peasant farms.

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Table 3. 2: Maize grain production in Ethiopia

Maize grain production in tons / year

Production Year
Commercial Peasant Total Production/in ton
2013/14 345,138 6,491,540 6,836,678
2014/15 355,470 7,234,955 7,590,425
2015/16 355,470 7,150,835 7,506,305
2016/17 375,005 7,847,175 8,222,180
2017/18 374,725 8,395,887 8,770,612
Source: Central Statistical Agency Annual Report 2014/15 to 2018/19
Remark:
From the above table 3.2 maize grains total production, 18% Peasant farms & 12%
Commercial farms post-harvest are expected respectively.
According to Central Statistical Agency Annual Survey Report 2013/14 to 2018/19
indicate that, crops utilization percentage of maize grain for non-food purpose, animal
feeds, seed and other purposes.

Table 3. 3: Import trends of maize grains in Ethiopia

Production Year Maize grain import in tons

2012/13 2,783
2013/14 4,194
2014/15 4,022
2015/16 5,197
2016/17 38,127
Average Import Volume (in ton) 10,865
Source: ITC Trade map

3.4.2. Domestic production soya- bean

Total domestic production soybeans are emanating mainly from two source; peasant farms and
commercial farms. The lion share of domestic production is covered by peasant farms.

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 Table 3. 4: Soya beans production in Ethiopia

Soya bean production in Quintal /

Production Year
Commercial Peasant Total Production in tons
2013/14 492,865.38 610,249.16 1,103,114.54
2014/15 465,221.30 721,837.45 1,187,058.75
2015/16 505,135.27 812,418.33 1,317,554.60
2016/17 642,717.34 812,346.59 1,455,063.93
2017/18 632,170.74 864,678.69 1,496,849.43
Source: Central Statistical Agency Annual Report 2014/15 to 2018/19

3.4.3. Domestic production – Sugar

As exhibited on the source of materials and inputs, sugar could be recruited from the domestic
market. There are a number of sugar factories being operational and under implementation stage.
Past five years sugar production data is indicated below.
Table 3. 5: Annual Sugar Production

Description Annual production quantity ( in tons)

2013 2014 2015 2016 2017 2018
Sugar 267,649 (before
232,357 313,536 364,600 305,957 351,504 August)
Source: Updated Alcohol and liquor production data, August 2018

3.5. Demand for major raw materials

Table 3. 6:Projected Total population size of Ethiopia

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Growth rate

95,000,000 97,565,000 100,199,255 102,904,635 105,683,060 108,536,503 2.7%

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Table 3. 7: Percent utilization of maize grains production in Ethiopia

Maize grain utilization percentage

Year
Seed Animal feed Others
2013/14 8.32% 0.96% 2.95%
2014/15 8.56% 1.06% 2.57%
2015/16 8.30% 1.09% 2.36%
2016/17 7.98% 1.77% 2.40%
2017/18 7.66% 1.08% 2.02%
Source: Central Statistical Agency Annual Report 2014/15 to 2018/19
Table 3. 8:Product: 120190 Soya beans, whether or not broken (excluding seed for sowing

2013 2014 2015 2016 2017

Importers Exported Exported Exported Exported Exported
quantity, quantity, Tons quantity, Tons quantity, Tons quantity, Tons
World 9,689 24,381 61,362 49,836
India 2,640 14,124 43,724 21,845
Viet Nam 4,705 2,090 7,172 17,732
China 0 0 190 6,094
Canada 920 550 1,840
United Arab Emirates 238 91 704
South Africa 1,232 2,616 632
Singapore 440
Turkey 220 2,300 2,398 312
United States Minor Outlying
110
Islands
Kenya 333 866 900 90
Korea, Republic of 42 38
United States of America 0 572 0
Zambia 0
Korea, Democratic People's
1,368
Republic of
Sri Lanka 1,232 527
Denmark 0
Indonesia 1,243 1,530
Jordan 46
Kuwait 22
Taipei, Chinese 24
Mozambique 1,012

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Nepal 220
Thailand 264
Yemen 21

3.6. Packaging materials

Preferably in new uniform strong polypropylene bags of a net content of 25 kg, fit for export and
multiple handing. All bags have separate plastic inner lining of 75 microns. Polypropylene bags,
the outer bag must have a heat cut mouth to prevent fibrillation and have sewn single folder
bottom. Bag specification size 50 cm x 75 cm in dimensions, tare about 110g each. Bags made of
woven PP are to be given special food grade “ultraviolet” treatment. Construction of fabric must
be solid to sustain harsh handling. The inner liner should be heat sealed and outer bags double
stitched.

3.7.1. Labeling
The label of the product should contain the following information: Name of the product; List of
ingredients; Quantities of ingredients; Batch number / lot number; Expiry date; Storage
conditions; Directions for use; Manufacturer name and address.

3.7.2. Storing
Super cereal (CSB+) with 10% sugar must be stored under dry (<30°C), ventilated and hygienic
conditions.

3.8. Marketing Arrangement

 Cash basis - for purchase from domestic market
 Letter of credit (LC) - for purchase from international market

3.9. Price Trend

Price trend for raw material is not available; however, the current price is incorporated on the
parameter part of this document.

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4. TECHNICAL DATA

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5. MARKET DATA AND INFORMATION
5.1. MARKET SEGMENTATION
 There is no prior experience in exporting of such products to foreign market;
 Unsatisfied increasing demand satisfied through import;
 Market destination: Domestic one

5.2. Ethiopian Market

5.2.1 Demand Side

5.2.1.1 . Potential End Users

The demand for corn-soy blend (CSB++) food is determined based on end-user method. The
consumers of blended foods are the beneficiaries indentified to be assisted under different
programs. There are three programs designed to provide humanitarian requirement to the
beneficiaries. These are

 Emergency Feeding Program: - In emergency feeding program, corn-soy blend (CSB+

+) and other supplementary foods are provided in a package form to those vulnerable
groups as supplementary food since it has a high nutritional value.

 Targeted Supplementary Feeding Program:- targeted feeding supplementary in

Disaster prevention and preparedness agency (DPPA) program and under Non-
governmental organization program like whose program for children under five and
pregnant and lactating women in schools, and health caste centres for HIV AIDS patient.

 Refugee assistance program:-Organizations like UNHCR and WFP are involved in

supplementary food program for refugees and returnees in different countries for a given
period.

In general organizations like GOE, WFP, Plan International, UNHCR, WHO, etc are direct
possible purchasers and can be categorized as potential demanders/end users for corn-soy
blend (CSB++) products.

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5.2.1.2. Target groups:
According to the data obtained from concerned gov’t and non gov’t organs, the target groups to
be benefiter is those children aged to 6-23 months and recommended for treatment and
prevention service/program.

5.2.1.3. Use and application

→ CSB++ is designed for targeted therapy of children with MAM and for feeding
vulnerable children 6 months to 2 years of age;
→ Moderate acute malnutrition (MAM) is defined as having a weight-for-height z-score
(WHZ) < −2 and≥ −3. Children with MAM are often treated with fortified-blended
flours, most commonly corn-soy blend (CSB)

5.2.1.4 Demand determinant factors

The GOE is reported to the purchaser and supplier of these operations with the necessary pre-
mix of minerals and vitamins for this locally-contracted amount.
The demand for CSB in Ethiopia is skyrocketing due to the emergency food needs resulting from
the country’s drought situation, to address moderate acute malnutrition needs, and satisfy the
demand for CSB as food assistance is expected to remain high.

5.3. Supply-side Data

5.3.1. Domestic production

According to the data obtained from the Central Statistical Agency of Ethiopia reports, the
domestic production of supplementary foods, categorized under product category of ‘Fafa,
Dube, Edget, Meten etc’ has grown from 32,166 tons to 348,620 tons during five years time
period between year 2013and 2017 as exhibited on the beneath table 5.1.

Table 5.1 Domestic Production (in tons) for 2013-2017

Year Domestic Production (in tons)

2013 32,166
2014 21,194
2015 26,371
2016 3,732
2017 348,620
Source: CSA

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 5.3.2. Industry Experience
According to the information obtained from Ministry Of Industry, Food, Beverage And
Pharmaceuticals Industry Dev’t Institute (FBPIDI), Currently there are seven major food
processors in Ethiopia that have been contracted by the government to produce CSB. The
existing Seven Factories have a total of 5,300 quintal/24hours installed production capacities,
with varying processing capacity as indicated on table 5.2.

However, due to the demand derived production based that most of the firms are operating, the
issue of availability of major raw materials throughout the year, computation of the raw material
from soya bean crop exporters, and lack of product diversification for most of the existing firms
are the major reason most of the factories are operating below their designed production
capacities and exposed to long time idle of the factories without production.

Above all, as per the information obtained from the above mentioned institute and field data
collection, currently there is no CSB++ producing firm in Ethiopia yet.

Table 5.2 Ethiopian Famix Producers, Production capacities & Addresses

Production Certification
S.
Name of company Location Type of products capacity (ISO:),
No-
quintal/day quality/HACCP
CSB+(famix), Baby
1 Fafa food share company Addis Ababa 800 22000፡2005
foods & d/t snacks
2 Norish business group Addis Ababa CSB+(famix) 500 22000፡2005
3 Kidan industrial plc Addis Ababa CSB+(famix) 1,000 22000፡2005
4 Abay international plc Addis Ababa CSB+(famix) 1,000 22000፡2005
CSB+(famix),
5 Guts agro industry plc SNNPR, Hawaasa 500 22000፡2005
Odized salt,
Pakana food
6 Oromia, Bishoftu CSB+(famix) 1,000 22000፡2005
Manufacturing PLC
7 East African brand line Oromia, Bishoftu CSB+(famix) 500 22000፡2005
Total Production Capacity/day 5,300
Source: Ministry of Industry, Food, Beverage & Pharmaceuticals Industry Dev’t Institute (FBPIDI),

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 5.3.3. Import
For the period covered from 2013-2017, Ethiopian import of supplementary grain foods (in pre-
cooked form), has grown from 51 tons in 2013 to 1,903 tons in 2017, from different countries as
shown below in the table 5.3.

Table 5. 3: Product: 19049000 Cereals (excl. maize [corn]) in grain or flake form or other
worked grains, pre-cooked or otherwise...
Year Import (in tons)
2013 51
2014 55
2015 47
2016 3,127
2017 1,903
Source: ITC Trade map

The products were largely imported from United Arab Emirates, Italy, Belgium, Egypt, United
Kingdom, and USA. In 2017, Ethiopia has imported 1,139.15 tons, 726.41, and 22.27 tons of the
products from Italy, Belgium, and Egypt respectively, as shown below in the table 5.4:

Table 5. 4: Major Exporter Countries and Export Volume/tons

Ser. Imported quantity Share of
Exporters
No in 2017/tons import
1 Italy 1,139.15 59.92%
2 Belgium 726.41 38.21%
3 Egypt 27.27 1.43%
4 United Kingdom 5.93 0.31%
5 United States of America 1.49 0.08%
6 China 0.95 0.05%
Total Imported Volume/tons 1,901.20 100.00%
Source: ITC Trade map

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 4.1. Market Arrangement and Channel
The marketing arrangement of current domestic market of CSB++ is that the customers invite all
interested and eligible bidders for the supply.

Based on the bid result contractual agreement is made between the buyer and the seller. The
successful bidder for the production and supply of CSB++ will be expected to supply the
required amounts in accordance with stipulated requirements and delivery schedule of the
customer.

Products are expected to be sold directly from the Factory, mostly on advance order by local and
international organizations.

5. Problems and Constraints

5.1. Problems
 Shortage of foreign currency for imported raw materials

 Competition from imported products with higher quality orientation

 Demand driven product rather than a kind of product produced in each day continually.
This means that the product is produced as need arises from MAM (Moderate Acute
Malnutrition) and disaster in the country. As a result, the down time per year is an
enormous one.

 There is an ample idle manufacturing capacity in the industry and expects that there will
be sufficient supplies of corn. However, in order to have enough soy, exports will need to
drop unless and otherwise it disrupts the normal operation. CSB imports are expected to
become increasingly important as local supplies of soybeans run tight. In the meantime,
domestic production of CSB ++ will depend on the availability of the pre-mix of vitamins

15
 and minerals. The addition of the pre-mix is essential for the product to have the desired
nutritional value and impact on target beneficiaries.

 The stringent quality of the end product in line with international standards.

 Unless and other wise there is product diversification, it will be difficult to sustain the
business venture as intended.

6. PARAMETERS, TECHNICAL COEFFICIENTS AND ASSUMPTIONS

This part is devoted on the assessment of the coefficients and parameters, which are to be used
on the determination of costs and revenue and caution has to be there since the parameters and
coefficients are being an indicative ones where the real coefficients rely on.

6.1. Basic assumption

 Working days per annum ………….……………………………….270 days
 Working days per week ………………….…………………………6
 Number of shift in a day ……………………………………………1
 Working hours per shift …………………………………………….8

6.2. Revenue estimation

→ Sales price of CSB+: Birr 1950- Birr 2000/quintal
→ Sales price of CSB++ :$0.93/kg (imported price) as sourced from ITC Trade map
 Conversion factor

16
 15-20% Soya dehulled
9% Sugar
57-62% Corn
3% Refined soya bean oil
8% DSM
Vitamins and minerals

Source: WFP

6.3. Investment cost

6.3.1. Machinery and equipment
List of machinery, auxiliary & laboratory equipment are listed on the technical part of the
document.
6.3.2. Vehicles
Table 7. 1: List and type of required vehicle

Sr. No. Type of vehicle Purpose

1. Truck Raw material & output transportation
2. Service vehicle For transportation of employees
3. Pickup vehicle For administrative works
4. Automobile For the manager

NB: Required number of vehicles is variable according to the size of the factory.

6.4. Operational Expenses

Table 7. 2: Major Raw Material Current Price

Sr. No. Major raw material UoM Price in Birr/ UoM

17
 1. Maize Quintal 900
2. De-hulled soy bean* Quintal 1,275
Source: Field survey
*The price varies following international market dynamics as an exportable cash crop. Hence,
please refer ECX official website for the current price.

Table 7. 3: Auxiliary Material Current Price

Sr. No. Additives UoM Price in Birr/ UoM

1. Sugar Quintal 1,677.27
2. Milk Kg 81.67
3. Refined soya bean seed oil Liter 63
4. Vitamin/mineral FBF-V-13 Kg NA
5. Potassium chloride Kg NA
Source: Field survey

Table 7. 4: Packing materials and their current price

Sr.
No. Packing materials UoM Price in Birr/ UoM
1. Packet of 250 gram Pcs 4.50
2. Carton Box Pcs 11.25
3. Scotch tape Piece 0.50
4. Laminated PP Bag* Piece 8.50
Source: Field survey
*PP Bag is used for CSB++ meant for disasters.

6.5. Uniform &Protective Equipment

Table 7. 5: Current Market Price of Uniform & Protective Materials

Price in Birr
Sr. No. Packing materials UoM / UoM
1. Overall PCS 180
2. Safety Shoes Pairs 950
3. Cape PCS 80
4. Hand glove Pairs 25
Source: Field survey
6.6. Insurance
Table 7. 6: Insurance Charges (Rates)

Sr. No Type of contract Insurance premium rate

1. Marine 0.2954% - 3.5438%
2. Fire 0.2954% - 3.5438%

18
 3. Class one 1.19%-5.95%(per mill)
4. Class two 1.19%-5.95%(per mill)
5. Class three 1.79%-6.12%(per mill)
6. Contractors plant and machinery (CPM) including vehicles 5%-12% (per mill)
 Marine
During transportation either on ocean transport or from port to project location insurance paid.

 Fire
- Based on the building type class one means made of block and standardize which is not
easily exposed to fire
- Class two means less than the class one but easily exposed for fire comparing with class
one
- Class three means building made of wood and other cheap materials which is very easy
for fire

 Life insurance
 Working hrs and work man composition for employee and 24 hrs personal and work
team for managers

6.7. Overhead expense

A. Utilities
 Electricity Cost/KWh: will depend on the specification of the proposed technology
choice.
 Water Tariff Rate
The tariff rate will depends up on the water requirement for the meant project. Hence the
appraiser has to refer Research and Project Data Management Directorate’s Cross Cutting
Project Supporting Data, 2019.
 Fuel cost:
 For Automobile: 13-15 Km per liter
 For Truck:
Table 7. 7:Fuel consumption

Gross Pay Load Distance Fuel Fuel Consumption per AVERAGE

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 Vehicle travelled in one Consumption Km for each ton of
Weight liter per Km load lit/km/ton

7.5 TON 3.124 ton 5.840 km/lit 0.171 lit/km 0.055 lit/km/ton

12 TON 6.311 ton 5.500 km/lit 0.182 lit/km 0.029 lit/km/ton 0.035

18 TON 10.198 ton 4.540 km/lit 0.220 lit/km 0.022 lit/km/ton

 For Service Vehicle : 0.013559 lit/seat/ km

 The cost of oil and grease: 2% of fuel cost
B. Travelling expense: - The cost of travel and per diem is found to be on average 1.27% of
annual salary.
C. Medical expense: 5% of wage and salaries.
D. Telephone, post & internet: on average 0.12% of annual sales.
E. Advertisement expense
Advertisement can be considered as a tool to compete and being stable in the business for a long
period of time. Within the presence of higher competition and new product development, the use
of advertisement became crucial. Advertisement cost can vary depending on the size of factory,
profit or other factors. Hence, for determination of advertisement cost, please refer charges set by
radio and television, in cross cutting study, 2019.
F. Repair and Maintenance Rate
Rate
Building and construction 2%
Machinery and equipment 5%
Furniture and fixture 2%
Vehicles 5%
G. Depreciation Rate

Building and Construction 5% of original cost

Machinery & Equipment 10% of original cost
Furniture and Fixture 10% of original cost
Vehicles 20% of original cost

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 Generator 10% of original cost

6.8. Working capital determination

Table 7. 8: Working capital determination

Description Period (Months) Reason For Period Determination

Major Raw material 4 If it is imported

and Inputs 1 If it is domestically recruited
Packing materials 1
Salary and Wages 1
Fuel and lubricant 1
Stationary and P.T.T 1
Travel and per diem 1
Insurance 12 One year coverage will be purchased at a time
The duration of converting raw material and inputs
Work in progress -
to the final product is so insignificant.

Receivables - No credit sale

Finished goods stock 3-5 days Product can be sold after 3-5 days

*Remark: If the auxiliary materials such as sugar recruited from the domestic market, the
holding period will be one month .On the other hand, if it is imported one, the holding period
will be one month.

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REFERENCE
 CSA, Reports
 FAFA Food Complex
 ITC Trade map
 WFP

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