Feasibility study on Avocado Farm and Processing.

Avocado Fruit Production and Avocado Oil Pressing Project proposal

Contents
1. SUMMARY....................................................................................................................................1
2. INTRODUCTION...........................................................................................................................2

3. Background of the project................................................................................................................2

4. PRODUCT DESCRIPTION.........................................................................................................4

5. Avocado oil processing methods and oil characteristics.................................................................7

6. PESTS AND DISEASES OF AVOCADO CROPS AND CONTROLLING MECHANISMS.....9

7. MARKET STUDY, FARM AND PROCESSING PLANT CAPACITY...............................11

8. FARM SIZE, PLANT CAPACITY AND PRODUCTION PROGRAMME.........................15

9. FARM & PLANT MATERIALS, INPUTS AND UTILITIES...............................................15

10. FARM OPERATION AND PROCESSING TECHNOLOGY AND ENGINEERING........16

11. MANPOWER AND TRAINING REQUIREMENT................................................................20

12. ORGANIZATION STRUCTURE OF THE PROJEct...................................................................21

13. WORKING CAPITAL...................................................................................................................21

14. BUSINESS IMPLEMENTATION SCHEDULE......................................................................22

15. FINANCIAL ANALYSIS........................................................................................................24

16. RISK ANALYSIS........................................................................................................................25

17. PROJECT APPRAISAL............................................................................................................26

18. CONTINGENCY PLAN...........................................................................................................29

19. SOCIO ECONOMIC BENEFITS.............................................................................................29

20. CONCLUTIONS AND RECOMMENDATIONS....................................................................30

Conclusion.........................................................................................................................................30

Recommendations..............................................................................................................................31

1.
 2. SUMMARY
The development of agriculture and agro processing industries in Ethiopia has given high
priority. Realizing the opportunity, the proposed plan to establish full-fledged integrated agro
processing industry, in focus to avocado production development and avocado oil
production/processing. The goal of intended project will be to establishment a modern
integrated agricultural development project.

The proposed project establishes in Ethiopia, SNNPRG, in a locality called Gurage Zone
Administration, Buee Town administration, which is more suitable for planned project
productivity.

To this end, the company plan to request 15 ha land of avocado cultivation and processing
in the town of Buee city administration. Selection of the farm site was considering its
suitability to agriculture and the availability of the necessary utilities as well as due to
accessibility to road and other basic infrastructural facilities.

Regarding market access for the product of the company which is avocado fruit and avocado
oil and were analyzed with the prevailing market situation and major players in the market. In
this regard, it has planned to produce quality products with low cost to be able to penetrate
the market and compete equally with competitors. The company will focus on setting up a
whole seller based distribution system.

The total investment cost of proposed project including working capital is estimated at Birr
19.2 million. The project can create 69 job opportunity. The financial result indicates that the
project will generate profit beginning from the first year of operation. The result shows that
the calculated IRR of the project is 31.3 % and NPV discounted at 10% of Birr
114,810,480.79

In addition to this, the proposed project possesses wide range of economic and social benefits
such as increasing the level of investment, tax revenue and employment creation. Hence, the
project is technically feasible, financially and commercially viable as well as socially and
economically acceptable and the project is worth implementing.
 3. Introduction
2.1 Economic back ground and potential of the country in relation to
investment

Ethiopia has achieved remarkable economic growth rate which is over 9% per annum in
recent years. The current economic growth rate is well above of population growth (2.6%).
Interestingly the current economic growth rate is well above the required MDG goal
(recommended MDG economic growth rate is 7% per annum). Although initially led by
agriculture, growth is now more broad-based dominated by services and construction sector
in national GDP. According to Government projections, real GDP growth is projected to
remain above 10% per annum over the inspiration to growth.

4. Background of the project

a. Location

This project will be implemented on certified total land of 15 ha (Buee town administration)
for avocado production and processing (operation area) and 14 ha for avocado production
and 1ha for office and avocado oil processing at Gurage zone, Buee town administration.

The town is located about 103 km along the main road Addis Ababa to Arbamich having 28,
9564,145 of total population. The area has an elevation of a maximum 2,045 m.a.s.l, which is
suitable for cattle, goat and sheep fatting, dairy, vegetables, cereal, and forage production
(Buee town administration land usage and environmental protection office 2020).

b. Infrastructure

The project area is endowed with infrastructure like road, electric power, telephone, and
health center found with in less than a kilometer distance. Fortunately, the project costs less
for infrastructure since there were already constructed and installed in the project area. The
road from main rod to the project area is less the 1.5 kilometer which is made of gravel.

c. Natural Resources
Climate and Topography

The climatic condition of the area based on eco-climatic classification termed as weyna dega.
The area demarcated under such region are characterized by three seasons and locally known
as Bega (October to January), Belg (February to May) and Kermit (June to September). In
general, the climate is favorable for a dairy, beef, vegetable and forage production Buee town
administration land usage and environmental protection office 2021).

The overall topography is plateau associated with less undulation and having Meki River

running throughout the year. The majority of the project area (> 50%) is characterized by a
slope of more than 15%. Almost 1/3 of the study area has < 8% slope. The altitude of the
study area is estimated 2,045 m.a.s.l..

a. Soil

The soils in Sodo Guragie( Buee town) are mostly sandy loam (60%), black (22%) and red
(12%) types. A predominantly sandy loam soil type also means escarpment in the woreda is
vulnerable to soil erosion and land degradation, with corresponding reduced productivity of
the land. Current land degradation is a result of extensive human activities and related
biophysical factors (SWAO, 2021).

b. Water resource
The area is rich with surface and ground water resource that can be used for irrigation and
drinking surrounding the farm. There are rivers that flash flood during rainy seasons. The
project area has access to both ground (almost 4 ground water this indicate ground water is
the major source of water and easy access to store enough) and surface water (2 drainage
Meki and woldiya rivers are crossing the project area).

c. Temperature
0 0
The average annual max and min temperature of the area is range between 14 to 25 c.
Night frost occurs frequently from October to January ((SWAO, 2018).

d. Rainfall

The rainfall pattern in this region has two distinct peaks during a year. Short rain occurs from
February to May and long rain from June to September. The average annual rainfall is
minimum 800 mm and maximum 1200mm, 50% falling in long rain periods (SWAO, 2018).

e. Land use/ land cover

Even though, the area is suitable for integrated farming system of production, inappropriate
land use practice implemented previously leading the resource to degradation and somehow
rehabilitated now a day. The area also has a potential to grow short –cycle crops (teff,
vegetable,) during ‘Belg’ rain, long- cycle of cereal crops (Sorghum, teff, wheatt, Corn and
other leguminous plant ) and fruit of different types, fodder tree and grass with artificial
forest of lowland species (SWAO, 2021).

g. Suitability Assessment

Generally, the Woreda and particularly the Buee town have medium potential in avocado
production compared with the surrounding area. With some management action in the near
future, the area has a potential of integrated production system of agro processing activities.
The area also has good potential for agro-processing, lowland vegetables, and cereal (Wheat,
Maize, Sorghum, Corn etc..), indicating that different institution had interested to invest in
the sectors mostly in Agro-processing, Agro-forestry, which could create symbiotic relation
among land- human-livestock-plant ecosystem(SWAO, 2021)

5. PRODUCT DESCRIPTION

Avocado is a fruit from a tree that has a variable growth and development, reaching a height
of 10 to 12 meters in its natural habitat Avocado trees may grow at different altitudes. Such
habitat is classified as subtropical-tropical. The tree has a ligneous trunk that can reach up to
80 cm to 1 m in diameter in trees that are 25 to 30 years old (raceme), that can be axillaries or
terminal. Avocado trees can be seeded or grafted. The seeded trees produce fruit after
approximately 8 years and grafted trees, being the most common propagation method,
produce fruit after only 2 years. Besides the longer juvenile period the seeded trees also have
a larger risk of losses in yield and quality. The avocado trees could need irrigation during dry
periods but not during rain seasons. Root rot is the most common failure in avocado
production and too much irrigation is one of the causes of this...

According to FAO, (2010) description of some varieties introduced in Ethiopia and presently
available
Hass: high yielding, Resistant to main pests and diseases. Not presenting a marked biennial
fruiting behavior. Fruit size variable; oil % in the fruit: medium, month to ripen: 9, seed size:
small; cold tolerance: medium
  Pinkerton: high yielding; fruit size; medium; oil % in the fruit: high; month to ripen:
6-8; seed size: big; cold tolerance: medium
 Fuerte: a Mexican Guatemalan cross; medium yielding, fruit size , small to medium;
oil % high; month to ripen 5-6;seed size : tolerant to frost. Bacon: high yielding;
medium size fruit; oil % high; tolerant to cold -5oC
 Ettinger: A Mexican Guatemalan cross, resistant to Nabal: Guatemalan type, big size
fruit; suitable for warm climate.

According to General Manager of Hayat Regency Hotel Addis Ababa Heddo Siebs “Our
hotel contacted many farmers and suppliers to get the right quality of avocado. We also
supported two avocado oil manufacturers to install their factories,” says Siebs. “Currently, we
use around 100 liters of avocado oil monthly, all produced locally. For the supply we have
two avocado oil suppliers, but currently we are entering into an agreement with another
producer.” A bottle of 750 ml of local avocado oil is sold for ETB 550, while 350ml can be
bought with ETB 315. This is way expensive in comparison to other edible oil products. Yet,
It is even more expensive in other countries. This is because it takes many avocado fruits to
make a small amount of avocado oil as only the oil part of the fruit is extracted.

Raw avocado is abundantly available in Ethiopia, but avocado oil as a by-product is new to
the country despite its high quality and nutritional value. It can be also used in cosmetics for
skin and hair treatments, besides its aesthetic value in restaurants. As a result, businesses are
investing in the area.

Kaleb Service Farmers House Plc is among the pioneers in producing avocado oil in
Ethiopia. The company partnered with Tradin Organic Agriculture B.V, a Dutch agribusiness
giant, to produce and supply the oil. “Avocado is the illustration of one of the huge potentials
that the country has in agro-industry”, explains Tesfaye Teklehaimanot, founder and manager
of Kaleb. “Its growing acceptance pushed us to join the avocado oil industry.”

Avocado oil has generated growing interest among consumers due to its nutritional and
technological characteristics, which is evidenced by an increase in the number of scientific
articles that have been published. But the demand for the fruit is not only increasing in
Ethiopia, where it is mainly used in the form of juice in cafes and consumed raw in
households, but also at the global level.
Farmers in Butajira in the Southern state, export between 500kg and 1,500kg per season.
Over 150 avocado farmers in Butajira are supported by Greenpath food, which also supplies
avocado to the Hyatt. Established in 2015 by a former staff of the Agricultural
Transformation Agency (ATA), Greenpath is the first certified organic fruit and vegetable
producer and supplier in Ethiopia.

The second exporter is Mashav, a joint project of the Israel Development Agency and the
Ministry of Agriculture, Livestock and Natural Resources. Introducing the Israeli avocado
variety to over 2,000 Ethiopian farmers, Mashav increased its avocado export from two tons
four years ago to 14 tons in 2017/18, according to Wale Getahun, deputy coordinator of the
Mashav program. The Israeli avocado variety, Hass, has currently become the fifth largely
produced avocado variety in Ethiopia, next to Fuerte, Nabal, Ettinger and Pinkerton.

Keeping this in mind, different reports state that Avocado is one of the most promising fruit
crops in Ethiopia with production having quadrupled over the last five years. Avocado
exports also fetches higher compared to the coffee exports. A kilo of coffee fetched USD2.2
in Over 1.9 million farmers are engaged in cultivating avocado on 19,760ha of land, and
produced 847,936 quintals of avocado in 2018/19. The Southern State leads with 554,308
quintals on 12,376ha of land, constituting more than 60Pct of the production at a national
level.

The farmers sell each fruit of avocado for three Birr on the farm. Each avocado tree gives two
to three quintal per season. A farmer with ten avocado trees, for instance, can generate
ETB72,000 per season with three Birr per fruit. The revenue can double, bearing in mind that
a hectare can accommodate up to 400 avocado trees, if the full technology package is
deployed.

The revenue potentially earned from avocado is also better than many crops, including
coffee. The average revenue from avocado per hectare, in fact, is four times higher than the
earning that can be generated from a hectare of coffee, which stood at ETB20,000, on
average.
Nowadays, avocado production is now mainly supported by NGO programs like Mashav,
which has its own pros and cons. Yet, Wegayehu argues that the farming practice
implemented by the international organizations with the aim of supporting farmers, highly
affects the avocado production. “They advise farmers to use four by five meters plot for an
avocado tree, while the right recommendation is seven by seven meters, it then becomes
difficult for the tree to grow since it intermingles.” For Israeli Hass, four by five meters is
recommendable because they deploy various technologies that increase productivity per
smaller area. “However, they are not supplying that technology to the Ethiopian farmers
whom they are supporting.

6. AVOCADO OIL PROCESSING METHODS AND OIL CHARACTERISTICS

Avocado oil is valued as edible oil due to its health-enhancing qualities and is especially used
in the treatment of connective tissue diseases. This oil is of good quality because the
processed fruit from which the oil is obtained is still intrinsically sound and is only termed
second grade because of its appearance (black or brown spots, rough skin, shape and size),
which is not appealing to the consumer (Eyres et al., 2006).
The avocado oil can be extracted in different ways. It is contained in a finely-dispersed
emulsion in the cells of the fruit pulp. Hence, the extraction process requires rupturing not
only the cell walls, but also the structure of the emulsion (Lewis et al., 1978). Traditionally,
this oil used to be obtained by mashing the pulp in water, then heating and skimming off the
supernatant oil. Later, for cost reasons, most producers started to extract oil from dried fruits
by means of solvents (Sadir, 1972; Human, 1987; Martinez Nieto et al., 1988). Two main
methods are in use to extract avocado oil for industrial production. According to the second
method, fruits are dried and pressed at high temperature, subsequently oil is extracted by
means of organic solvents. In the first method, oil is separated from fruits by centrifugal or
pressing forces, then oil cells are submitted to mechanical and enzymatic destruction
(Human, 1987). The first method was developed in order to cut energy costs and minimize
the air pollution caused by organic solvents. Nevertheless, in both cases, the crude avocado
oil still needs to be refined before final consumption and use in the cosmetic industry, where
it is particularly appreciated for its high vitamin E content and emollient properties, although
it is considered marginal as a food product (Eyres et al., 2001). The first attempt to develop a
method to produce cold-pressed oil intended to obtain high-quality edible oil was made back
in the late 1990’s by a New Zealand company in collaboration with Alfa Laval. In the follow
paragraph let compare shortly the main extraction methods: chemical extraction by solvent,
microwave assisted extraction, cold-pressed mechanical method.
a) Chemical extraction by solvents

Organic solvent extraction is the most widespread. Warm air drying of the pulp followed by
hexane solvent extraction yields 95% oil (oil extracted/oil content). The resulting oil is
brownish with a high pigment content and needs to be refined for most applications. Refining
consists of three steps: de acidification to remove free fatty acids which are less than 1% in
good-quality fruits; bleaching to remove chlorophylls and their degradation products,
pheophytins, as well as carotenoids; de-odourization. When oil is sold crude, it is generally
winterized at 5°C and drummed in lacquer-lined drums (Human, 1987; Martinez Nieto et al.,
1988).
Although hexane extraction is a mild, well-known extraction method, large amounts of
solvent is needed which is expensive and environmentally hazardous. Carbon dioxide is a
non-toxic and environmentally compatible fluid for the extraction of edible oils (Garcia et al.,
1996). Carbon dioxide is an inert solvent which is non-reactive and does not form other type
of chemical compounds. When the extraction process completes, the carbon dioxide will be
returned back to gas phase and released to air. Therefore it does not leave any residual in the
oil and pure oil can be obtain. But this new technology is very expensive due to its
sophisticated operation and control. Consequently, it is not yet widely used. Supercritical
carbon dioxide (SC-CO2) extraction has been proven to be a viable alternative for hexane as
avocado oil extracted with these two methods have been shown to have similar fatty acid
profiles (Botha, 2004). The micro-component content and composition as well as oxidative
stability of avocado oil extracted with SC-CO2 have, however, not been determined.
Furthermore, the effects of progressive extraction on the micro-component distribution and
oxidative stability are not known.

b) Cold-pressed extraction

This is an alternative way to extracting oil from plant. This ancient method uses mechanical
pressure to force the oils out from the leaves. In the late 1990’s, a processing company in
New Zealand began production of cold-pressed avocado oil (CPAO) to be sold as culinary oil
for salads and cooking (Eyres et al., 2001). CPAO is not refined and maintains the chemical,
organoleptic and flavor profile of the fruit flesh. In the 2008/2009 season, the New Zealand
processors produced more than 150,000 liters of CPAO with approximately 3% of the
avocado crop grown for oil production. Today CPAO is produced also in Chile, South Africa,
Kenya, Israel, Samoa and other countries.

c) Microwave assisted extraction

More recently has been demonstrated that oil extracted from pressed and microwave-dried
avocado pulp presented the lowest acid and peroxide values and the highest oxidative
stability in contrast with the oil from ethanol extraction. Microwaves have been used in
assisting the extraction of essential components and oil due to their environmentally friendly
and economical traits. In microwave assisted extraction (MAE), rapid generation of heat and
pressure within the biological system forces out compounds from the biological matrix,
producing good quality extracts with better target compound recovery. The efficiency of the
MAE process depends on time, temperature, solid-liquid ratio, type and composition of
solvent used. Combining microwave drying and pressing of avocado pulp seems to be able to
led to a superior quality avocado oil

7. PESTS AND DISEASES OF AVOCADO CROPS AND

CONTROLLING MECHANISMS
Root rot and anthracnose are the 2 main diseases that affect the avocado industry. Fruit
spotting bug is the main pest.
 6.1 Phytophthora root rot

Avocado trees are very susceptible to root rot, which is caused by the soil-borne fungus
Phytophthora cinnamomi. Controlling this disease is the highest priority for avocado growers.
It is ever-present and requires constant attention. Without root rot management the tree will
lack an adequate root system and can’t perform.

Effective root rot control comes from an integrated approach that includes: disease free
nursery trees, using more tolerant rootstocks, good drainage which includes the use of tree
mounds, mulching and good soil health, appropriate soil moisture management, chemical
treatment, good nutritional practices including sufficient calcium, Suitable soil PH.

6.2Chemical root rot treatment

Phosphonate fungicide is the best chemical root rot treatment, both as a regular preventative
treatment and to cure the disease. It is essential that you maintain an annual, or in some cases
biannual, treatment with phosphonate. You can apply the fungicide to the leaves (only if the
trees are healthy) or inject it directly into the tree by trunk injection. If trees are too small to
inject with phosphonate fungicide, you can use foliar sprays or metalaxyl granules on the
ground. Seek specialist advice on the correct use of phosphonate because timing, rates and
method are critical.

6.3 Replanting after root rot

It is difficult to get a replant tree to grow where the original tree has died from root rot. If the
trees either side of the gap won’t effectively colonise the space, follow these steps.

1. Select a planting site at least 2m away from the site of the dead tree and prepare the
site for replanting.
2. Dig it over, check the pH and apply lime or dolomite and organic manure as required.
3. Mulch the site and leave for at least 3-6 months (or more if possible) before planting.
4. Apply metalaxyl granules around the tree at planting and again 8 weeks later.
5. Adjust the irrigation emitter and fertiliser rate for the smaller size of the newly planted
tree.
Phytophthora root rot is the most destructive and important disease of avocado. It can be
extremely serious and will kills most trees in the farm. Nursery plants and young replants are
particularly sensitive to root rot and often die soon after infection.

6.4Anthracnose

Anthracnose is caused by the fungus Colletotrichum gloeosporioides and presents as a fruit

rot that remains latent until the fruit ripens. Fruit infected with anthracnose can rarely be
identified at packing and is usually only discovered at the point of preparation by the
consumer.

Just like other varieties, Hass is vulnerable to anthracnose but difficult to detect until it is cut
because its thick dark skin masks the symptoms.

Management includes regular orchard sprays (every 2-4 weeks depending on weather
conditions) from shortly after fruit set until harvest using a registered protectant fungicide
such as copper oxychloride. Anthracnose is one of the most common and serious diseases in
horticulture. It requires both pre- and post-harvest treatments.

6.5Fruit-spotting bug and banana-spotting bug

Fruit-spotting bug and banana-spotting bug have a similar effect and either one or both
species are found in all avocado growing areas. These are serious pests which sting the fruit
at all stages from fruit set until picking. Symptoms include: fruit shedding (if stung when
small), fruit distortion and dimpling, woody ‘stones’ where stung.

The pests have hundreds of alternate hosts and are very mobile so can quickly re-infest after a
spray. They are also quite secretive and will move out of sight when you approach so are
difficult to spot. A fresh batch will often fly into an orchard on a hot windy day.

8. MARKET STUDY, FARM AND PROCESSING PLANT

CAPACITY
a. MARKET STUDY

We source our fruit from family growers who plant at least 8 trees in a hectare alongside
other crops, including tea or coffee. With each tree bearing around 195 kilos of fruits, the
 avocado has proven to be a source of income for small-scale farmers in the south-western
volcanic belt.

Ethiopia export five different types of avocado, principally hass, the most important fruit
in the southwest. Its season is the Ethiopian rainy season of May to October. It is
characterized by a darkish purple hue and has a sumptuous flavor that belies its smooth
external skin. Fuerte is our export number two. Also available between May and October,
each year, the fruit is a hybrid of two Central American cultivars. The Ethiopia fuerte has
a smooth green skin and nut-like taste

Table1. Avocado export amount

Year Net weight (tons) price

2012 8.575 29107.29
2013 7.859 43807.9
2014 4.04361 30219.66
2015 10.038 373680.6
2016 63.48255 1118145
2017 314.2893 3065999
2018 1207.633 10203264
2019 2997.785 24847605
2020 2984.618 34747585
2021 3366.845 48186321
Total 10,965.16846 122,645,734.5

12000

10000

8000

6000
Net Weight per tonne
4000

2000

0
12 13 14 15 16 17 18 19 20 21 tal
20 20 20 20 20 20 20 20 20 20 To

b. Past Supply and Present Demand

The demand for avocado in the country is mainly met through local production. The
country also exports fresh avocado mainly to Djibouti, Somalia, Soudi Arabia, UAE,
United kingdom, Singapore, Kuwait, Spain, Sweden Belgium etc. Therefore, the annual
average quantity exported to these countries in the past five years tremendously increase
2174 tons.

In order to estimate the supply and demand for avocado, the number of households is
taken from worldo meter 2021. Household Income is taken as a base of government and
daily laborer estimation per months, Consumption and Expenditure Survey conducted
by CSA and published in February 2011 is used as a base. Domestic consumption of
avocado by income group is given in Table 2

Table 2
DOMESTIC CONSUMPTION OF AVOCADO BY INCOME
GROUP (CSA 2007)

ncome Group No. of H.H Annual per Total

in the HH Annual
Group Consumpti Consumpti
on (gm) on (Tonne)
<600 28,595 - -
600-999 - -
171,951
1000-1399 415,628 25 10.39
1400-1999 1,158,068 30 34.74
2000-2599 1,863,865 141 262.80
2600-3399 3,202,743 192 614.93
3400-4199 3,377,517 155 523.52
4200-5399 4,176,526 216 902.13
5400-6599 2,776,640 412 1,143.98
6600-8999 2,789,575 521 1,453.37
9000-12599 1,463,453 758 1,109.30
12600-16199 477,465 831 396.77
162000-19999 186,411 552 102.90
>20000 274,280 429 117.67
22,362,717.00 6,672.49

A glance at Table 3.1 reveals that major consumers of avocado appear to be the high and
middle income households. The data also show that the per capita annual consumption
per household is about 0.28 kg. Hence, taking the current (year 2022) number of
households which is 22,362,717, the present demand is estimated at 6,672.49 tonnes.
Consumption of processed avocado in the country is found to be low. Therefore of the
total present demand 80% the given tonnes is assumed to be in an avocado oil and the
remaining 20 % tonnes in a sold for fresh fruit.

c. Projected Demand

The consumption of avocado is influenced, among other things, by income, urbanization

and consumption habit of the population. As mentioned earlier, major consumers of the
product are the high and middle income group of population. In addition to the domestic
market there is also a potential export market in neighboring countries. Taking the
above factors into account demand is estimated to grow by 7% per annum. The
projected demand is shown Table 3.

Table 3.
PROJECTED DOMESTIC DEMAND FOR AVOCADO
The Project
Demand( tone (7% of
year Projected Demand( tone) the total demand
2022 6,673 ----
2023 7140 -----
2024 7639 -----
2025 8174 464
2026 8746 511
2027 9359 558
2028 10014 614
2029 10715 680
2030 11465 745
2031 12267 820
2032 13126 905
2033 13985 994
2134 14844 1093

Of the total projected demand, the market share of the envisaged project is estimated to
range from 5-7 %. Hence, taking the projected demand a project can produce the shared
amount of the total demand. Then from the recommended amount of the total product
20% of the fruit will be sold in the local market without any value addition while the
remaining 80% of the fruit will be used to produce oil.

d. Pricing and Distribution

The project will supply fresh fruit and processed avocado oil to the market.
Accordingly, the price for fresh at Birr 15 -20/kg while avocado oil is set Birr
220/250ml and Birr 350/500ml respectively winch is far less than the computers price.
The product can get its market outlet through the existing whole sale fruits and
vegetables enterprises as well as department stores, hotels, pharmacies and
supermarkets.

9. FARM SIZE, PLANT CAPACITY AND PRODUCTION

PROGRAMME
a. Farm Size & Plant Capacity

The total area to be cultivated under avocado will be 15 ha. at its full capacity. About a
minimum of 464 tons of fresh fruit and at the maximum of 1093 will be produced from
the farm annually. The processing plant will have a production capacity of 80 % tones
of the total yearly production of processed for avocado oil whereas 20% of the
avocado production will be sold in local market for fresh fruit production.

b. Production Program

The avocado farm reach fruition after one year from plantation. Considering the
problem in skill development and market penetration, the avocado farm is designed to
begin with 80% capacity in the second year production season and will reach full
capacity in the third year. The processing plant starts operation at 85% of the rated
capacity in the second year (on the same year of fruition) and shall progressively grow
to 95% in the third year, 100% in the fourth year and thereafter. The processing plant
will have 300 working days, operating in single shift of 8 hours a day.

10. FARM & PLANT MATERIALS, INPUTS AND

UTILITIES
A. FARM & PLANT MATERIALS AND INPUTS

The main raw materials and inputs required for the avocado farm and processing plant
are fertilizers, chemicals, preservatives, seedlings and packing materials. Most of the
raw materials can be obtained from the local agents. The detailed raw materials
 requirement and cost is shown in Table 4 below. The total annual cost of raw materials
and inputs is estimated at Birr 995,000
Table 4.
RAW MATERIALS AND INPUTS REQUIREMENT AND COST

S/N
Cost (' Birr)
Description Qty.
1 Fertilizer ( tones) 35 175000
2 Seedlings (No) *( Grafted) 4662 336000
3 Chemicals (lit) Lump sum 120,000
4 Preservatives Lump sum 160,000
5 Crates 250 28000
6 Packing material (Cans & ) cartoons Lump sum 176,000
Total 995,000

B. UTILITIES

Electricity, water, fuel and lubricant are the main utilities required for the envisaged
avocado farm. The types of utilities and consumption quantity and corresponding costs
are depicted in Table 5 below. The total cost is estimated at Birr 212,824.

Table 5
UTILITIES REQUIREMENT AND
COST

Sr. Description Qty. Cost Total Cost

No ('Birr) (in Birr)
1 Fuel (lt) 2200 50 110,000
2 Lubricant (lt) kg 300 150 45000
3 Electricity (kWh) 2,608 3 7824
4 Water (m3) 100,000 5 500,000
Grand Total 662,824

11. FARM OPERATION AND PROCESSING TECHNOLOGY

AND ENGINEERING
Agricultural Operation and Avocado Processing
a) Land Development

Land development is the first operation of the Production process in avocado

production. It includes land surveying and design, planting site clearing and cleaning,
levelling and irrigation land, access and farm roads construction.

b) Land Preparation

Land preparation activities like ploughing, disking, and harrowing and basin formation
follow the land development. Ploughing, disking and harrowing would be carried out by
tractor mounted machineries while basin formation by casual labors.

c) Nursery Establishment and Propagation of Seedlings

Nursery establishment is the most important operation and initial stage in avocado
planting material propagation full stop. Appropriate site selection, fencing clearing and
ploughing are among the important activities of nursery establishment. It is followed
by

seed bed Preparation . Raising of seedlings, grafting and handling of seedlings are some
of the routine activities which are expected to be undertaken in the nursery.
d) Pre-Harvest Management

Pre- Harvest management starts with transplanting of sexually or asexually propagated

seedlings of avocado from nursery to the main planting site. Cultivation for weed
control and soil fertility improvement, training and pruning seedlings, irrigation water
application, fertilization and insect pest and disease control are among the major pre -
harvest management in avocado production.
e) Post - Harvest Management

In avocado production, Post-harvest management includes picking, cleaning, grading,

transporting and marketing. Transporting will be handled with trucks equipped with
refrigerator.
f) Avocado Processing

Select ripe avocado and wash them with a brush washing machine. The remaining
impurities are removed by an air injection washing machine. It then passes to the sorting
line where damaged fruit is eliminated. Then scalding and peeling process are
continued. The peeled fruit is stored in hold tank. The fruit is mixed with preservatives
and flavors such as sugar, acid, pectins and vinegar. Filling in cans will continue by
controlling the weight under vacuum so as to remove part of the air in the head space.
Then it is sealed, treated with heat, marked, and packed in cartoon for dispatch.

1. Source Of Technology

The machinery and equipment required by the farm can be obtained from Ries-
engineering and Nazareth Tractor Assembly plant, whereas planting materials like
fertilizers, chemicals & seedlings, etc. could be obtained from a number of
governmental and non-governmental organizations such as horticulture development
required enterprises, Agricultural In put Supply Enterprise, etc. The machinery and
equipment for the processing of avocado will be obtained from the following suppliers.

1) Jwala Engineering Company

6, MADHU INDL. EST., OFF 11B PATEL
ROAD GORE GAONE (E)
Mumbai - 400063, Maharashtrd,
India Phone: 91-22-
56902548/56903038 Fax: 91-22-
26862622

2) BBC Technologies
Ltd 397 Jary Road
Hamiltonne
Phone: 6478236927
Fax: 6478236025
3) Avocado oil extraction machine- Latent cold press technology
Information about the machine
- Machine type:- Commercial expeller
- Capacity – 1-5 tons oil producing capacity per day
- Model- BCW
- Operation type- semi automatic
- Usage /application; Multispeed oil extraction
Contact Address

Zhengzhou Sinoder Indutech Machinery Co., Ltd

Henan Yongle Group Oil Machinery Co.,Ltd
 E-mail: [email protected]
Mobile Phone/Whatsapp/Wechat: 0086-13643859200
Website:www.sinoder.com
https://www.screwoilpress.com; www.oilpressmill.com

B. ENGINEERING

1. Farm & Plant Machinery and Equipment

The machinery and equipment required by the envisaged avocado farm and processing
project are listed in Table 6 below. The total cost of machinery and equipment is estimated at
Birr 4,902,765, out of this Birr 1,820,765.2 will be required in foreign currency.
Table 6
LIST OF FARM & PLANT MACHINERY AND
EQUIPMENT AND COST

Sr. Description Cost per

No. Qty. Unit
1. Tractor 110 Hp -125 HP 1 1,250,000
2 Disk plough 1 25,000
3 Avocado oil extraction machine 1 1,820,765.2
4 Packaging producing machine 1 1,275,000
4 Disk Harrow of set type 1 35,000
5 Trailers 1 250,000
6 Vehicle 1 1,250,000
7 Sprayers 1 45,000
8 Generator 2 500,000
9 Workshop equipment ( set) 1 355,000
10 Tools (set) 1 150,000
11 Hand tools / farm implements 1 50,000
12 Tanks (10,000 liter) 2 350,000
13 Balances 2 35,000
14 Seamier 2 75,000
15 Conveyor 1 750,000
16 Office Furniture and equipment’s set 300,000
17 Dryer 1 150,000
18 Washing machine 1 250,000
Total 8,915,765

2. Land, Building And Civil Works

The land development cost for 15 ha. of irrigable farm and irrigation infrastructure
construction is estimated to be Birr 1,320,000 . The total area required for avocado
processing plant including open area for future expansion and recreation places, stores,
offices canteens, workshop, etc. is estimated to be 1 ha out of this 500m2 will be left for
construction and the total cost of buildings, at the rate of Birr 11200 per meter square, is
expected to be Birr 5.6 million. The total cost of land, land preparation and development,
buildings and civil works, assuming the total land lease cost will be paid in advance, is
estimated at Birr. 6.9 million.
3 Proposed Location

The location of the proposed avocado farm and processing plant will be in Gurage zone
Sodo woreda Buee town, where there is abundant land and water for irrigation.

12. MANPOWER AND TRAINING REQUIREMENT

MANPWER REQUIREMENT
The manpower required for the envisaged project is 19 permanent employees as shown
in Table 6.1. According to Table 7, the total cost for permanent and casual labor will be
Birr 1,003,104.00
Table 7
MANPOWER REQUIREMENT AND ANNUAL LABOUR COST

Monthly Yearly
Sr. Req. Salary Salary
No Description No. (Birr) (Birr)

1 Manager 1 8,500.00 102,000.00

2. Secretary/ Cashier 1 2,500.00 30,000.00
3 Horticulturist 1 7,000.00 84,000.00
4 Irrigation Engineer 1 12,000.00 144,000.00
5 Warehouse Specialist and storekeeper 1 3,500.00 42,000.00
6 Accountant 1 3,700.00 44,400.00
7 Purchaser/Salesperson 1 2,800.00 33,600.00
8 Processing Plant Higher Technician 1 11,000.00 132,000.00
9 Processing plant Ass, Technician 1 8,600.00 103,200.00
10 Tractor Operator 1 5,000.00 60,000.00
12 Mechanic 1 5,000.00 60,000.00
14 Drivers 2 500.00 6,000.00
16 Generator Operator 1 2,300.00 27,600.00
17 Guards 4 4,000.00 48,000.00
18 Daily laborer (6month) 50 1,000.00 12,000.00
Sub - total 69 77,400.00 928,800.00
Employee Benefits (8%) - 74,304.00
Total 69 1,003,104.00
 13. Organization structure of the Project
In the diagram, there is finance and administration manager next to the general manager (the owner)
who is responsible to lead all the financial transaction and human resource of the farm. The promotion
and sales of products will be facilitated by the marketing unit. The production unit leads the regular
operation.
Owners

General Manager

Administrative Marketing Production Technical and

and Finance Department Department Quality
Department 1. Purchasing 1. Feeding Assurance
1. Human 2. Selling 2. Fattening Department
resource 1. Technical
Figure
2. Budget and5: Organizational structure and Functional description of the project
staff
finance

14. Working Capital

The working capital requirement of the project during operation is calculated on the basis
of the minimum days of coverage needed for the different elements of the working capital.
Hence, the minimum days are specified as follows and the detail is attached in the annex
part.

Table 8: Working capital amount

Items Per Years
Raw Material Consumption 995,000
Utilities 662,824
Wage and Salary 1,003,104.00
Repair & Maintenance 267472.95
Training cost 150,000
Total Working Capital 3,078,400.95
 A. TRAINING REQUIREMENT

Training will be given to the processing plant technicians by the supplier of the
processing machine during erection and commissioning period for about two weeks.
The training cost is estimated to be Birr 150,000.

15. Business Implementation Schedule

Generally, it takes about 14 month’s period for obtaining loan, finalizing the suppliers and
construction of various civil structures and installation of plant and machinery. Purchase of vehicles,
utilities and office furniture and equipment’s goes simultaneously while other investment activities
including construction, machinery procurement & installation, etc. are carried out. Educated and
skilled manpower will be recruited before machinery installation and commissioning to provide first
hand training to newly employed workers by the engineers installing the machineries and make trial
production together. Proper planning needs to be done so as to take up various activities without any
break. The activity wise schedule of implementation is to be given in the project.

The project is expected to start commercial production in June 2021 while the remaining months in
2019 and part of the months in 2020 are assumed to be the project's implementation period. Detail
planned schedule of the company is kept in the following here under
23
 16. FINANCIAL ANALYSIS
The financial analysis of Avocado Farm & Agro-processing project is based on the data
presented in the previous chapters and the following assumptions:-
Table 9. Assumptions
Construction period 1 years
Source of finance 70 % equity, 30 % loan
Tax holidays 3 years
Bank interest 12%
Discounted cash flow 10 %
Repair and maintenance 3 % of the total plant and machinery
Accounts receivable 30 days
Raw material, local 30 days
Work in progress 1 day
Finished product( processed) 30 days
Fresh 1day
Cash in hand 5 days
Account payable 30 days

A. TOTAL INITIAL INVESTMENT COST

The total initial investment cost of the project including working capital is estimated at
6.71 million, of which 65.92 per cent will be required in foreign currency. The major
breakdown of the total initial investment cost is shown in Table 10

24
 Table 10
INITIAL INVESTMENT COST

S. N. Cost Items Total ( in Birr)

1 Site preparation, developed and Building and 6,920,000
Civil Work
2 Farm & Plant Machinery and 8,915,765
Equipment
3 Office Furniture and Equipment 300,000
4 Pre-farming Expenditure* 78,600
5 Working Capital 3,078,400.95
Total investment cost 19,292,766

B. OPERATION & PRODUCTION COST

The annual operation & production cost at full operation capacity is estimated at Birr 3.7
million (see Table 11). The r a w material and utility cost accounts f o r 1 3 % a n d 6 %
while repair and maintenance take 4 per cent of the production cost.
Table 11
ANNUAL OPERATION & PRODUCTION COST (BIRR)

Items Cost %
Raw Material and Inputs 498,800 21%
Utilities 212,824 9%
Maintenance and repair 147,083 42%
Wage and Salary 1,003,104 42%
Administration Cost 528,600 22%
Total Operating Costs 2,390,411 64%
Depreciation 267,472.95 7%
Cost of Finance 796428.27 21%
Total Production Cost 3,707,116 100%

17. RISK ANALYSIS

In order to minimize future loses of the business the following various risks associated with the project
are identified as well as mitigation mechanisms clearly suggested. Increase in Operating Cost by 10%
the project NPV will be positive and acceptable with less risk, when Increase in Investment Cost by
10% the project NPV will be negative and high risky business and when Decrease in Price by 10% the
project NPV will be negative and high risky business.

25
 Table 12 Summary table of result for sensitivity analysis

Factor(a) %chang %decr Sensitivity Rank for

e in ease in (c/b) Manageme
factor(b NPV(c nt
) ) attention
If operating cost 10% 0.028 2.8% 3
increases by 10 %
Increase in initial 10% 0.168 16.8% 2
investment
cost by 10%
Decrease in selling 10% 0.17 17% 1
price by 10%

Importance of sensitivity analysis; - the manager has to identify which variable is highly
sensitive if it is changed by increasing or decreasing. Therefore according to the rank increasing
interest rate is highly sensitive for the project so the manager should take care of the variable.

18. PROJECT APPRAISAL

a. Profitability

According to the projected income statement, the project will start generating profit in
the second year of operation. Important ratios such as profit to total sales, net profit to
equity (return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the life-time of the project. The income
statement and the other indicators of profitability show that the project is viable.
b. Break-even Analysis

A break-even analysis is a financial calculation that weighs the costs of a new business, service or
product against the unit sell price to determine the point at which you will break even. In other words,
it reveals the point at which you will have sold enough units to cover all of your costs. Therefore, the
break-even point of the project including cost of finance when it starts to operates at full capacity (
year4) is estimated by using income statement projection.
¿ cos
BE=
Sales – Variable cost

8,915,765
BE= =34 %
26,481,313.35−3,078,4009.95

26
 c. . NPV
NPV= (Investment) + summation of cash flow in year (x)/ (1+r) t NPV at 10% discount rate is Birr
114,810,480.84 which is positive. The NPV of the proposed project is positive which shows
the project is feasible.

Table 13 : Net Present Value (NPV)

Avocado fruit and oil processing enterprises : Net present value

Present value( PV)
Year Net cash flow PV of benefit
factor at 10 %
0 -19292766 1 (19,292,766.00)
1 17,856,930.46 0.9090909 16,233,572.98
2 19,874,542.75 0.826446281 16,425,241.94
3 21,930,008.04 0.751314801 16,476,339.62
4 17,178,135.03 0.683013455 11,732,897.36
5 19,255,954.09 0.620921323 11,956,432.49
6 21,321,994.36 0.56447393 12,035,709.95
7 23,678,498.96 0.513158118 12,150,813.97
8 26,324,310.28 0.46650738 12,280,485.02
9 29,123,362.97 0.424097618 12,351,148.88
10 32,319,599.27 0.385543289 12,460,604.61
NPV=114,810,480.84

Payback Period
The investment cost and income statement projection are used to project the pay-back
period. The project’s initial investment will be fully recovered within 1.3 years.

Table 14: Discounted Payback Period (DPB)

Avocado production processing : Payback period

Year Net cash flow Discounted factor Discounted Cumulative
at 10% cash flow Discounted cash
flow
0 -19292766 1.00 (19,292,766.00) (19,292,766.00)
1 17,856,930.46 0.90909090 16,233,572.98 (3,059,193.02)
2 19,874,542.75 0.826446281 16,425,241.94 13,366,048.92
3 21,930,008.04 0.7513148009 16,476,339.62 29,842,388.54
4 17,178,135.03 0.6830134554 11,732,897.36 41,575,285.90
5 19,255,954.09 0.6209213231 11,956,432.49 53,531,718.39

27
 6 21,321,994.36 0.5644739301 12,035,709.95 65,567,428.34
7 23,678,498.96 0.5131581182 12,150,813.97 77,718,242.31
8 26,324,310.28 0.46650738 12,280,485.02 89,998,727.33
9 29,123,362.97 0.4240976184 12,351,148.88 102,349,876.21
10 32,319,599.27 0.3855432894 12,460,604.61 114,810,480.82
PB=1.year and 3 month

d. Internal Rate of Return

Based on the cash flow statement, the calculated IRR of the project is 31.3% which is
greater than the cost of capital i.e. 10%.
Table 15 : Internal Rate of Return (IRR)

present value present value

Year Net cash Flow present Value present Value
of net cash flows of net cash flows
Factor @12% Factor @13%
0 -19292766 1 1
(19,292,766.00) (19,292,766.00)
1 17,856,930.46 0.892857142 0.884955752 15,802,593.32
15,943,687.90
2 19,874,542.75 0.797193877 0.783146683 15,564,682.23
15,843,863.79
3 21,930,008.04 0.711780247 0.693050162 15,198,595.62
15,609,346.54
4 17,178,135.03 0.635518078 0.613318728 10,535,671.93
10,917,015.36
5 19,255,954.09 0.567426855 0.542759936 10,451,360.41
10,926,345.47
6 21,321,994.36 0.506631121 0.480318527 10,241,348.92
10,802,385.90
7 23,678,498.96 0.452349215 0.425060644 10,064,798.02
10,710,950.42
8 26,324,310.28 0.403883228 0.376159862 9,902,148.92
10,631,947.41
9 29,123,362.97 0.360610025 0.332884833 9,694,725.82
10,502,176.65
10 32,319,599.27 0.321973236 0.294588348 9,520,977.36
10,406,045.96
NPV1 NPV2 97,684,136.55
103,000,999.39
IRR= 31.3%

Based on the cash flow statement, the calculated IRR of the project is 13% and the net
present value at 12 % discount rate is Birr 5,316,863.64 million.

28
 19. CONTINGENCY PLAN
Based on the risk analysis result avocado fruit and oil production business will be risky then
the management attention about price (using occasional and international hotels in Ethiopia ,
supermarkets, holiday and tnear by markets like middle east countries, china through tough
marketing research and investigations), those places and countries driving the demand and
price), investment cost (avoid delay on construction phase) and operating cost (Using cost
efficiency techniques), respectively.

20. SOCIO ECONOMIC BENEFITS

The economic impact of the project can be viewed in a number of ways. It can be viewed
through its specific impact such as employment generation and increasing government
revenue.

The project creates employment opportunities for 69 persons. Moreover, during the life of the
project it will generate Birr 71,845,447.37 in terms of corporate tax and also contributes to
the regional income in the form of payroll tax. Beyond this specific impact, the project could
have such social impacts as it will also create forward linkage with the food industry.
a. Pro-Environment Project

The project will undertake environmental protection and management activities. In doing so,
the proposed production is environmental friendly.

b. Public Health and Nutrition

Delivering quality avocado fresh fruit and organic oil , which improves public health and
nutrition.

c. Modernization of Agriculture

The proposed project compliments to the concerted efforts to modernize and commercialize
Ethiopian agriculture and agro industries.

d. Cross cutting issues analysis

Cross cutting issues are issues which will be implemented in every plan, programs and projects
by all organizations. These issues include COVID 19 and HIV/AIDS and Gender. Recently

29
these issues have got due attention and are a preconditions for project appraisal

f. HIV/AIDS

 The HIV/AIDS/ COVID 19 related pandemic and all socio economic problems that it
poses are more serious in the district and its surrounding areas. To mitigate prevalence
many governmental and nongovernmental organizations devote their time and budget.
This project also has responsible to take part in the same commitment through
allocating funds as per the project’s capacity to finance charities and anti HIV/AIDS
and COVID 19 related clubs. In order to increase workers awareness, the project also
arranges different regular discussion programs among workers.

g. Gender

Gender refers to the different roles that men and women play in a society, and the relative
power they wield. Gender roles vary from one country to another, but almost everywhere,
women face disadvantages relative to men in social, economic and political spheres of life.
Where men are viewed as the principal decision makers, women often hold a subordinate
position in negotiations about limiting family size, contraceptive use, managing family
resources, protecting family health, or seeking jobs. Taking consideration to this, the project
creates employment opportunities to both sexes. The project also will take positive affirmative
action for female participants.

21. CONCLUTIONS AND RECOMMENDATIONS

Conclusion

The proposed feasibility study may form the basis of an important investment decision and in
order to serve this objective, the document covers various aspects of Concept Development,
Start-up, Production, Marketing, Finance and Business Management.

The feasibility study is based on the information obtained from various agricultural sources as
well as discussions with businessmen. For financial model, since the forecast/projections relate
to the future periods, actual results are likely to differ because of the events and circumstances
that don’t occur frequently as expected.

30
Whilst due care and attention has been taken in performing the exercise, no liability can be
inferred for any in-accuracy or omissions reported from the results thereof. It is essential that
our report be read in its entirety with financial model in order to fully comprehend the impact
of key assumptions on the range of values determined.

The project is accessible and has the necessary infrastructure such as road, telephone, water
and electric power. The proposed project clearly identifies all the necessary equipment, inputs,
management of the company and the required man power. The highest authority in the project
will be vested in the hand of the owner. He will control the overall activities of the proposed
project. Demand projection reveals that there is high demand for avocado fruit and avocado
oil in the country. Accordingly, the planned project is set to provide quality products in the
area.

The proposed project possesses wide range of economic and social benefits such as increasing
the level of investment, tax revenue and employment creation for both sexes. It will have also
environmental concerns to protect it through planting avocado trees around it’s the town and
by utilizing environmental friendly raw materials. Generally, the project is technically feasible,
financially and commercially viable as well as socially and economically acceptable. Hence
the project is worth implementing.

Recommendations

Financial sensitivity analysis shows that the project is highly sensitive to decrease in sales
revenue but relatively less sensitive to increase in operational and investment costs. Therefore,
it is recommended that the company should give a great attention for the possible reasons for
sales reduction. In this case, different mechanisms should be selected and implemented to
increase sales. In addition to this, the company should decrease its cost that lowers
profitability. The project must utilize modern promotional styles to capture the planned market
share. To do so, it has to design effective strategy to achieve this plan.

Although, due care and alertness has been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the actual results
may differ substantially from the presented information. In this case, any delaying to

31
implement the project creates some problem on its profitability as there is always change like
change in price of services and goods, cost of raw materials, customers preference and
purchasing power etc.….So, it is recommended that project owner should implement the
project as soon as possible before any change occurred.

32
 Annex 1. Production Plan
Annex 1. Production Plan
Table 1a. Estimated Yearly Production/per ton
Description Yearly Estimated Production Levels( ton)
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Avocado fruit
464.31 511.21 558.11 614.39 680.05 745.71 820.75 905.17 994.28 1092.77
production
number of
335 335 335 335 335 335 335 335 335 335
trees/ ha
productivity per
99 109 119 131 145 159 175 193 212 233
tree(Kg)
Table 1b. Estimated Yearly production per litter
Description Yearly Estimated Production Levels
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
oil production 26,51
in litter 4.29 29,200.00 31,885.71 35,085.71 38,857.14 42,628.57 46,914.29 51,714.29 56,800.00 62,457.14
oil production 26,51
in 500ml 4.29 29,200.00 31,885.71 35,085.71 38,857.14 42,628.57 46,914.29 51,714.29 56,800.00 62,457.14
oil production 53,02
in 250ml 8.57 58,400.00 63,771.43 70,171.43 77,714.29 85,257.14 93,828.57 103,428.57 113,600.00 124,914.29

Productivity increase at minimum by 10 % every Annex 2. loan distribution

Installment Periods (in years )

Item 0 1 2 3 4 5 6 7 8 9 10
Principal 804849.
329814.65 369392.41 413719.5 463365.84 518969.74 581246.11 650995.65 729115.13 816608.94
77
Interest 109752.
694539.6 654961.84 610634.75 560988.41 505384.51 443108.14 373358.61 295239.13 207745.31
(12%) 24
Total 0 1024354.2 1024354. 1024354. 1024354. 1024354.2 1024354. 1024354.2 1024354. 1024354. 91460
5 25 25 25 5 25 6 26 25 2.01

33
 Annex 3 . Forecasted Annual Sales Revenue
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Year
46
product (ton) 4.00 511.00 558.00 614.00 680.00 746.00 821.00 905.00 994.00 1,093.00
20% sold in 9
fruit 2.80 102.20 111.60 122.80 136.00 149.20 164.20 181.00 198.80 218.60
sales of fruit 1,392,00
avocado 0.00 1,533,000.00 1,674,000.00 1,842,000.00 2,040,000.00 2,238,000.00 2,463,000.00 2,715,000.00 2,982,000. 3,279,000
80 % for oil
production 371.2 408.80 446.40 491.20 544.00 596.80 656.80 724.00 795.20 874.40
avocado
production ( in 371,20
Kg) 0.00 408,800.00 446,400.00 491,200.00 544,000.00 596,800.00 656,800.00 724,000.00 795,200.00 874,400.00
oil production in 26,514.
litter 29 29,200.00 31,885.71 35,085.71 38,857.14 42,628.57 46,914.29 51,714.29 56,800.00 62,457.14
oil production in 26,514.
500ml 29 29,200.00 31,885.71 35,085.71 38,857.14 42,628.57 46,914.29 51,714.29 56,800.00 62,457.14

salesof 500 ml of 9,280,000. 10,220,000.0 11,160,000.0 12,280,000.0 13,600,000.0 16,420,000.0 19,880,000.0

avocado oil 00 0 0 0 0 14,920,000.00 0 18,100,000.00 0 21,860,000
oil production in 53,028.
250ml 57 58,400.00 63,771.43 70,171.43 77,714.29 85,257.14 93,828.57 103,428.57 113,600.00 124,914.29

sales of 250ml 11,666,285. 14,029,714.2 15,437,714.2 17,097,142.8 20,642,285.7 24,992,000.0 27,481,142.8

avocado oil 71 12,848,000 9 9 6 18,756,571.43 1 22,754,285.71 0 6

22,338,285. 24,601,000.0 26,863,714.2 29,559,714.2 32,737,142.8 39,525,285.7 47,854,000.0 52,620,142.8

total revenue 71 0 9 9 6 35,914,571.43 1 43,569,285.71 0 6

** a kilo of avocado fruit sales 15 Birr per kg

** a 500 ml of avocado oil sales 350 birr
** a 250ml avocado oil sales Birr 220
** a one liter of avocado oil extracted from 14 kg of avocado fruit

34
 Annex 4 .Operation cost
Description Operating y
1 2 3 4 5 6 7 8 9 10
A. Direct cost
Raw Material
995,000.0 1,094,500.0 1,203,950.0 1,324,345.0 1,456,779.5 1,602,457.4 1,762,703.2 1,938,973.5 2,132,870.8 2,346,157.9
0 0 0 0 0 5 0 1 7 5

Total Direct
cost 995,000.0 1,094,500.0 1,203,950.0 1,324,345.0 1,456,779.5 1,602,457.4 1,762,703.2 1,938,973.5 2,132,870.8 2,346,157.9
0 0 0 0 0 5 0 1 7 5
B. Indirect
cost
Wage and
Salary 1,053,259.2 1,105,922.1 1,161,218.2 1,219,279.1 1,280,243.1 1,344,255.3 1,411,468.0 1,482,041.4 1,556,143.5
1,003,104 0 6 7 8 4 0 6 7 4
Repair and
Maintenance 267,472.9
5 280,846.60 294,888.93 309,633.37 325,115.04 341,370.79 358,439.33 376,361.30 395,179.37 414,938.33
Utility 662,824.0
682,708.72 682,708.72 682,708.72 682,708.72 682,708.72 682,708.72 682,708.72 682,708.72 682,708.72
0
Administrati 528,60
ve cost 0 590788.2 621882.4 621882.4 621882.4 621882.4 621882.4 621882.4 621882.4 621882.4
Subtotal 2,607,602.7 2,705,402.2 2,775,442.7 2,848,985.3 2,926,205.0 3,007,285.7 3,092,420.4 3,181,811.9 3,275,672.9
indirect cost 2,462,001 2 1 6 4 5 5 8 6 9
Total
Operating
cost 3,457,001 3,702,103 3,909,352 4,099,788 4,305,765 4,528,663 4,769,989 5,031,394 5,314,683 5,621,831

35
 Annex 5. Income statement
Operating years of the project
Description 1 2 3 4 5 6 7 8 9 10
Sales Revenue
22,338,28 24,601,000 26,863,714 29,559,714 32,737,142. 35,914,571 39,525,285 43,569,285 47,854,000 52,620,142
5.71 .00 .29 .29 86 .43 .71 .71 .00 .86
Less:
Operating cost 3,457,001 3,702,103 3,909,352 4,099,788 4,305,765 4,528,663 4,769,989 5,031,394 5,314,683 5,621,831
Income 18,881,284 20,898,897 22,954,362 25,459,926 28,431,377. 31,385,908 34,755,296 38,537,891 42,539,317 46,998,311
.71 .00 .29 .29 86 .43 .71 .71 .00 .86
interest + Prin.
1024354.2 1024354.2 1024354.2 1024354.2 1024354.2 1024354.2 1024354.2 1024354.2
5 5 5 5 1024354.25 5 6 6 5 914602.01
Income before
Depreciation 17,856,930 19,874,542 21,930,008 24,435,572 27,407,023. 30,361,554 33,730,942 37,513,537 41,514,962 46,083,709
.46 .75 .04 .04 61 .18 .45 .45 .75 .85
Less:
Depreciation
267,472.95 259,448.76 251,665.30 244,115.34 236,791.88 229,688.12 222,797.48 216,113.56 209,630.15 203,341.24
Profit /Loss
Before Tax 17,589,457 19,615,093 21,678,342 24,191,456 27,170,231. 30,131,866 33,508,144 37,297,423 41,305,332 45,880,368
.51 .99 .74 .70 73 .06 .97 .89 .60 .61
Less: Tax
(30%) 7257437.0 8151069.51 9039559.8 10052443. 11189227. 12391599. 13764110.
0 0 0 1 9 18 49 17 78 58
Net Profit or
Loss After Tax
17,589,457 19,615,093 21,678,342 16,934,019 19,019,162. 21,092,306 23,455,701 26,108,196 28,913,732 32,116,258
.51 .99 .74 .69 21 .24 .48 .72 .82 .03

36
 Annex 6 Undiscounted cash flow
Investme
Operating years
nt Year
0 1 2 3 4 5 6 7 8 9 10
INFLFOWS
Inflow Funds 19,292,76
6
Inflow
Operations
Sales revenue
22,338,28 24,601,00 26,863,714 29,559,714 32,737,142 35,914,571 39,525,285 43,569,2 47,854,000 52,620,142
5.71 0 .29 .29 .86 .43 .71 85.71 .00 .86
TOTAL
INFLOWS 19,292,76
22,338,28 24,601,00 26,863,714 29,559,714 32,737,142 35,914,571 39,525,285 43,569,2 47,854,000 52,620,142
6
5.71 0 .29 .29 .86 .43 .71 85.71 .00 .86
OUTFLOWS

Investment 19,292,76
cost 6
Operating 5,031,39
cost 3,457,001 3,702,103 3,909,352 4,099,788 4,305,765 4,528,663 4,769,989 4 5,314,683 5,621,831
Financing
Cost
· Principal +
interest 1,024,354. 1,024,354 1,024,354. 1,024,354. 1,024,354. 1,024,354. 1,024,354. 1,024,35 1,024,354.
25 .25 25 25 25 25 26 4.26 25 914,602.01
Income Tax 7257437.0 8151069.5 9039559.8 10052443. 1118922 12391599. 13764110.
0 0 0 1 19 18 49 7.17 78 58
TOTAL -
OUTFLOWS 19,292,76 17,244,9
6 4,481,355 4,726,457 4,933,706 12,381,579 13,481,189 14,592,577 15,846,787 75 18,730,637 20,300,544
NET CASH -
FLOW 19,292,76 17,856,930 19,874,54 21,930,008 17,178,135 19,255,954 21,321,994 23,678,498 26,324,3 29,123,362 32,319,599
6 .46 2.75 .04 .03 .09 .36 .96 10.28 .97 .27
Cumulative - -
cash 19,292,76 1,435,835. 18,438,70 40,368,715 57,546,850 76,802,804 98,124,798 121,803,29 148,127, 177,250,97 209,570,57
flow( NPV1) 6 54 7.21 .25 .28 .37 .73 7.69 607.97 0.94 0.21

37
 Annex 7 discounted cash flow at 10%
Investmen
Operating years
t Year
0 1 2 3 4 5 6 7 8 9 10
INFLFOWS
Inflow Funds 19,292,766
Inflow
Operations
Sales revenue
22,338,28 24,601,0 26,863,714 29,559,714 32,737,142 35,914,571 39,525,285 43,569,2 47,854,000 52,620,142
5.71 00 .29 .29 .86 .43 .71 85.71 .00 .86
TOTAL
INFLOWS 19,292,766 22,338,28 24,601,0 26,863,714 29,559,714 32,737,142 35,914,571 39,525,285 43,569,2 47,854,000 52,620,142
5.71 00 .29 .29 .86 .43 .71 85.71 .00 .86
OUTFLOWS
Investment 19,292,766
cost
Operating 3,702,10 5,031,39
cost 3,457,001 3 3,909,352 4,099,788 4,305,765 4,528,663 4,769,989 4 5,314,683 5,621,831
Financing
Cost
· Principal
+interest 1,024,354. 1,024,35 1,024,354. 1,024,354. 1,024,354. 1,024,354. 1,024,354. 1,024,35 1,024,354.
25 4.25 25 25 25 25 26 4.26 25 914,602.01
Income Tax 7257437.0 8151069.5 9039559.8 10052443. 1118922 12391599. 13764110.
0 0 0 1 19 18 49 7.17 78 58
TOTAL 4,726,45 17,244,9
OUTFLOWS 19,292,766 4,481,355 7 4,933,706 12,381,579 13,481,189 14,592,577 15,846,787 75 18,730,637 20,300,544
NET CASH 17,856,93 19,874,5 21,930,008 17,178,135 19,255,954 21,321,994 23,678,498 26,324,3 29,123,362 32,319,599
FLOW 19,292,766 0.46 42.75 .04 .03 .09 .36 .96 10.28 .97 .27
Discounted - 16233572. 1642524 16476339. 11732897. 11956432. 12035709. 12150813. 1228048 12351148. 12460604.
rate at 10% 19,292,766 98 1.94 63 36 49 95 96 5.02 86 6
Discounted
cumulative (19,292,76 (3,059,193 13,366,0 29,842,388 41,575,285 53,531,718 65,567,428 77,718,242 89,998,7 102,349,87 114,810,48
cash flow 6) .02) 48.92 .55 .91 .40 .35 .31 27.33 6.19 0.79

Net present value ( NPV1)= 114,810,480.79

38
 Annex 8 Sensitivity analysis

case one - if initial investment increase by 10%

Investme
Project Life years
Description nt Year
1 2 3 4 5 6 7 8 9 10
INFLOW
Net sales
revenue 22,338,28 24,601,0 26,863,714 29,559,714 32,737, 35,914,571. 39,525,28 43,569,28 47,854,000 52,620,142.8
5.71 00 .29 .29 142.86 43 5.71 5.71 .00 6
TOTAL
INFLOWS 22,338,28 24,601,0 26,863,714 29,559,714 32,737, 35,914,571. 39,525,28 43,569,28 47,854,000 52,620,142.8
5.71 00 .29 .29 142.86 43 5.71 5.71 .00 6
OUTFLOWS
Investment 21,222,0
cost 42
Operating 4,726,45 5,330,1
cost 4,481,355 7 4,933,706 5,124,142 19 5,553,017 5,794,343 6,055,748 6,339,037 6,536,433
Income tax 7257437.0 815106 9039559.81 10052443. 11189227 12391599.
0 0 0 0 1 9.519 8 49 .17 78 13764110.58
TOTAL
OUTFLOWS 21,222,0 4,726,45 13,481, 15,846,78 17,244,97
42.60 4,481,355 7 4,933,706 12,381,579 189 14,592,577 7 5 18,730,637 20,300,544
NET CASH -
in FLOW 21,222,0 17,856,93 19,874,5 21,930,008 17,178,135 19,255, 21,321,994. 23,678,49 26,324,31 29,123,362 32,319,599.2
42.60 0.46 42.75 .04 .03 954.09 36 8.96 0.28 .97 7
Discounted
cash flow at (21,222,0 16,233,57 16,425,2 16,476,339 11,732,897 11,956, 12,035,709. 12,150,81 12,280,48 12,351,148 12,460,604.6
10% 42.60) 2.98 41.94 .62 .36 432.49 96 3.97 5.02 .88 1
Cumulative
discounted
cash flow (21,222,0 (4,988,46 11,436,7 27,913,111 39,646,009 51,602, 63,638,151. 75,788,96 88,069,45 100,420,59 112,881,204.
(NPV) 42.60) 9.62) 72.33 .95 .31 441.81 76 5.73 0.75 9.62 24
NET PRESENT VALUE (NPV) 112,881,204.24

Factor(a) %change in factor(b) %decrease in NPV(c) Sensitivity (c/b)

39
 initial investment increase by 10% 0.1 114810480.28−112881204.24 16.8%%
=0.168
114810480.29

case two If operating cost increases by 10 %

Investment
Project Life years
Description Year
0 1 2 3 4 5 6 7 8 9 10
INFLOW
Net sales
revenue 22,338,285.7 26,863,714.2 32,737,142.8 35,914,571.4 47,854,000.0 52,620,142.8
1 24,601,000 9 29,559,714.29 6 3 39,525,285.71 43,569,285.71 0 6
TOTAL
INFLOWS 19,292,766 22,338,285.7 26,863,714.2 32,737,142.8 35,914,571.4 47,854,000.0 52,620,142.8
1 24,601,000 9 29,559,714.29 6 3 39,525,285.71 43,569,285.71 0 6
OUTFLOWS
Investment
cost 19,292,766
Operating cost
4929490.5 5199102.7 5427076.6 5636556.2 5863130.9 6108318.7 6373777.3 6661322.8 6972940.7 7190076.3
Income tax 8151069.5 9039559.8 10052443.4 11189227.1 12391599. 13764110.
0 0 0 7257437.01 19 18 9 7 78 58
TOTAL
OUTFLOWS 4,929,490.5 5,427,076.6 14,014,200. 15,147,878. 19,364,540. 20,954,186.
0 5,199,102.70 0 12,893,993.21 42 52 16,426,220.79 17,850,549.97 48 88
NET CASH in - 17,408,795 19,401,897. 21,436,637 16,665,721. 18,722,942 20,766,692 23,099,064. 25,718,735. 28,489,459 31,665,955
FLOW 19,292,766 .21 30 .69 08 .44 .91 92 74 .52 .98
Discounted
cash flow at (19,292,76 15,826,177 16,034,625. 16,105,663 11,382,911. 11,625,474 11,722,256 11,853,472. 11,997,980. 12,082,311 12,208,596
10%
6.00) .31 87 .18 74 .19 .76 69 03 .93 .83
Cumulative
discounted
cash flow
(19,292,76
(NPV) 6.00) (3,466,588 12,568,037. 28,673,700 40,056,612. 51,682,086 63,404,343 75,257,815. 87,255,795. 99,338,107 111,546,70
.69) 17 .35 09 .29 .05 73 76 .69 4.52
NPV 111,546,704.52

Factor(a) %change in factor(b) %decrease in NPV(c) Sensitivity (c/b)

40
 operating cost 0.1 114810480.28−111546704.52 2.8%%
increases by 10 %
=0.028
114810480.29

case three if selling price decrease by 10%

Investment
Project Life years
Description Year
0 1 2 3 4 5 6 7 8 9 10
INFLOW
Net sales
revenue 19,292,766 22,140,90 24,177,342. 26,603,742. 29,463,428. 32,323,11 35,572,757. 39,212,357 43,068,600. 47,358,128.
20,104,457.14 0.00 86 86 57 4.29 14 .14 00 57
TOTAL
INFLOWS 19,292,766 22,140,90 24,177,342. 26,603,742. 29,463,428. 32,323,11 35,572,757. 39,212,357 43,068,600. 47,358,128.
20,104,457.14 0.00 86 86 57 4.29 14 .14 00 57
OUTFLOWS
Investment
cost 19,292,766

Operating cost 5,553,01

4,481,355 4,726,457 4,933,706 5,124,142 5,330,119 7 5,794,343 6,055,748 6,339,037 6,536,433
Income tax 7257437.0 8151069.5 9039559 10052443. 11189227. 12391599. 13764110.
0 0 0 1 19 .818 49 17 78 58
TOTAL -19,292,766
OUTFLOWS 12,381,57 13,481,18 14,592,5 17,244,97 20,300,54
4,481,355 4,726,457 4,933,706 9 9 77 15,846,787 5 18,730,637 4
NET CASH Iin -19,292,766 17,414,44 14,222,16 15,982,24 17,730,5 21,967,38 27,057,58
FLOW
15,623,102 3 19,243,637 4 0 37 19,725,970 2 24,337,963 5
Discounted
cash flow at (19,292,7 14,202,819.9 14,392,10 14,458,029 9,713,929. 9,923,713. 10,008,4 10,122,541 10,247,94 10,321,672 10,431,87
10%
66.00) 9 1.65 .20 28 34 26.07 .72 5.89 .15 0.16
Cumulative
discounted
cash flow (19,292,7 (5,089,946.01 9,302,155 23,760,184 33,474,11 43,397,82 53,406,2 63,528,795 73,776,74 84,098,413 94,530,28
(NPV) 66.00) ) .64 .83 4.12 7.46 53.52 .24 1.13 .27 3.43
NET PRESENT VALUE (NPV) 94,530,283.43

Factor(a) %change in factor(b) %decrease in NPV(c) Sensitivity (c/b)

41
operating cost increases by 10 % 0.1 114810480.28−94530280.43 17%%
=0.176
114810480.29

42
 ቀን-------------------------
በጉራጌ ዞን ለቡኢ ከተማ አስተዳዳር ጽ/ቤት

ቡኢ

ጉዳዩ፡ የኢንቨስትመንት መሬት እንዲሰጠኝ ስለመጠየቅ ይመለከታል

ከላይ በርዕሱ ለመጥቀስ እንደሞከርኩት እኔ አቶ ስሜነህ አሳዬ በቡኢ ከተማ በአቮካዶ እርሻ ልማትና
በአቮካዶ ዘይት ማምረት ዘርፍ ለመሳተፍ እና ለአካባቢውም አርሶ አደሮች ሞዴል በመሆን ልምድን
በማካፈል በቡኢ ከተማና በወረዳው ብሎም በወረዳው ዙሪያ የፍራፍሬ እርሻ ላይ አሁን ካለበት ዝቅተኛ
ደረጃ ከፍ ለማድረግ ለእርሻና ለአቮካዶ ዘይት ማምረቻ የሚሆን 15 ሄክታር መሬት በኢንቨስትመንት በሊዝ
አንዲሰጠኝ ስጠይቅ የጠየኩት የመሬት መጠን ለቮካዶ ችግኝ ጣቢያ፣ ለ አቮካዶ እርሻ ልማት፣ ለአቮካዶ
ዘይት መጭመቂያ ወይም ማምረቻ፣ለሰራተኞች ማረፍያ፣የምርት ማከማቻ ክፍል፣ ንበረት ክፍል፣ ቢሮ እና
ሌሎች ተዛማጅ አገልግሎት የሚሰጡ ግንባታዎችን ጭምር ያካተት መሆኑን እገልጻለው፡፡

ከሰላምታ ጋር

ግልባጭ
 ለበኢ ከተማ ማዘጋጃ ጽ/ቤት
ቡኢ

43
 ቀን-------------------------
ለቡኢ ከተማ ማዘጋጃ ጽ/ቤት

ቡኢ

ጉዳዩ፡ የኢንቨስትመንት መሬት እንዲሰጠኝ ስለመጠየቅ ይመለከታል

ከላይ በርዕሱ ለመጥቀስ እንደሞከርኩት እኔ አቶ ስሜነህ አሳዬ በቡኢ ከተማ በአቮካዶ እርሻ ልማትና
በአቮካዶ ዘይት ማምረት ዘርፍ ለመሳተፍ እና ለአካባቢውም አርሶ አደሮች ሞዴል በመሆን ልምድን
በማካፈል በቡኢ ከተማና በወረዳው ብሎም በወረዳው ዙሪያ የፍራፍሬ እርሻ ላይ አሁን ካለበት ዝቅተኛ
ደረጃ ከፍ ለማድረግ ለእርሻና ለአቮካዶ ዘይት ማምረቻ የሚሆን 15 ሄክታር መሬት በኢንቨስትመንት በሊዝ
አንዲሰጠኝ ስጠይቅ የጠየኩት የመሬት መጠን ለቮካዶ ችግኝ ጣቢያ፣ ለ አቮካዶ እርሻ ልማት፣ ለአቮካዶ
ዘይት መጭመቂያ ወይም ማምረቻ፣ለሰራተኞች ማረፍያ፣የምርት ማከማቻ ክፍል፣ ንበረት ክፍል፣ ቢሮ እና
ሌሎች ተዛማጅ አገልግሎት የሚሰጡ ግንባታዎችን ጭምር ያካተት መሆኑን እገልጻለው፡፡

ከሰላምታ ጋር

ግልባጭ
 በጉራጌ ዞን ለበኢ ከተማ አስተዳዳር ጽ/ቤት
ቡኢ

44
45
 Operational plan
2022 2023 2024 2025
Activates
S O N D F M A M J J A S O N D F M A M J J A S O N D F M A M J J A S O N D
J J J
Project
Execution
Loan
   K
processing

Building and
       
construction

Machinery
        
purchasing

Machinery
      
Transportation
Vehicle
    
purchase
Purchase of
    
Utilities

Purchasing of
office furniture     
& equipment’s

Plant
installation &    
Commissioning

Recruitment
     
and training

Cultivation of
                            
avocado plant
Commercial
production &          
marketing

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