ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 1

PROPOSAL

Business Plan Proposal for Mixed Farm Production Farm

 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 2
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Table Of Contents
1. Executive Summary.............................................................................................................................3
2 Introduction..............................................................................................................................................4
1.2. Objective Of The Project...............................................................................................................6
Project Support Duration...........................................................................................................................7
Implementation Strategy............................................................................................................................8
2. Agro Ecological Zone And Investment Policies Of Ethiopia..............................................................8
2.1. The Ethiopia Agro Ecological Zones.............................................................................................8
3. The Market Study And Project Capacity..........................................................................................10
3.1. Overview........................................................................................................................................10
Iii. Constraint............................................................................................................................................11
3.3. Competition...............................................................................................................................12
3.5. Capacity Utilization......................................................................................................................13
3.6. Pricing...........................................................................................................................................13
3.7. Marketing And Marketing Strategy............................................................................................13
4. Technical Study Of The Project.........................................................................................................13
4.1. Product Mix..................................................................................................................................14
4.3. Agricultural Technologies............................................................................................................15
4.4. Intended Irrigated System...........................................................................................................15
4.5. Farming Process...........................................................................................................................16
4.5.1. Land Development.................................................................................................................16
4.5.2. Land Preparation, Sowing And Fertilization......................................................................16
4.5.3. Pre-Harvest Management.....................................................................................................16
4.6. Machineries And Equipment.......................................................................................................17
4.7. Project Design And Engineering.................................................................................................17
4.8. Utilities...........................................................................................................................................17
Civil Engineering Cost..........................................................................................................................17
5. Financial Requirement And Analysis....................................................................................................18
5.1. Fixed Capital..................................................................................................................................18

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 3
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5.2.1. Operating Expense At Full Capacity........................................................................................19
5.2.1 Operating Expense....................................................................................................................19
5.1.1. Pre-Service Expenses...............................................................................................................20
5.2.3. Summary Of Investment Cost......................................................................................................20
5.3. Financial Analysis And Statements................................................................................................20
5.3.2. Sources Of Fund......................................................................................................................20

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ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 4
PROPOSAL

1. Executive Summary
Project Name Mixed Production Farm
Project Owner ABA SALAM HAJI SADIQ
Nationality Ethiopian
Project Location Goma Wereda District, Omo Gobu Kebele, Jimma
Zone, Oromia Regional State
Project Produce Different Crops Mainly Maize, Beans And
Composition Banana, Avocado, Onion, Tomato, Rice and Coffee
Through Surface Irrigation Combination With Underground
Water In Dry Season

Premises Required 10 Hectares

Initial Investment A Total Investment Of The Project Is Estimated To Be Br.

Cost 1,203,547.4
Employment At Full Capacity The Farm Will Hire A Total Of 5 Workers
Opportunity (2 Female And 3 Male)
 1Permanent Workers
 4 Temporary Or Seasonal Workers

Farm Input And Improved Seeds, Fertilizers (Both Urea And Dap), Agro
Raw Material Chemicals (Herbicides (Hc), Pesticides (Pc), Fuel For Tractors,
Irrigation Input And Pp Bags For Packaging.

Market Share Domestic

Benefits Of The Source Of Income, Employment, Production And Supply Of
Project Crops, Value Add In Agricultural Sector.

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 5
PROPOSAL
2 Introduction
Ethiopia’s Economy Is Chiefly Agricultural, With More Than 80% Of The Country’s
Population Employed In This Sector. The Size Of Ethiopia S Livestock Resource Is The Largest
In Africa And The Tenth Largest In The World. While The Contribution Of The Livestock
Industry To The Country's Total Exports Is Currently Low Compared To Its Potential. This
Sector Holds Great Promise As A Source Of Export Diversification For The Future. Other Parts
Of His Sector With Substantial Opportunities For New Investment Include Plantation Crops
(Such As Tea, Coffee And Tobacco): Production And Processing Of Oil Crops And Cotton Fish
Farming: Horticulture And Floriculture (Fruits, Vegetables And Flower And Poultry, And
Forestry And Forest By-Products Although Ethiopia Lies Within The Tropics Temperatures
Range From A Mean Annual High Of 86 Degrees Fahrenheit To Mean Annual Low Of 50
Degrees Fahrenheit. Government Of Ethiopia Has Conducive Investment Policies And
Regulations That Further Attract The Private Sectors Involvement In The Economic
Development Through The Various Investment And Business Endeavors. To This Effect The
Owner Of The Envisioned Project. Has Planned To Invest In Goma Woreda, Jimma Zone,
Oromia Regional State In High Value Crop Production. This Project Study Is
Done To Confirm The Market. Technical And Financial Viability Of This Project The Result Of
The Study 1st Very Sound And Promising For The Owner To Commence The Project In The
Area. In Additional The Soil Study Result Confirmed That The Area Is Very Suitable For Crop
Production
The Promoter Is Very Dedicated To Commence This Project Hence They Expect To Get The
Necessary Support From The Regional And Local Government To Make The Project Functional.

1.1. Project Justification

Ethiopia’s Crop Agriculture Is Complex Involving Substantial Variation in Cops Grown across
the Country in Different Region and Ecologies. Five Major Cereal (Corn, Wheat, Sorghum And
Peanut Are The Common Agriculture And Food Economy Accounting For About Three-
Quarters Of Total Area Cultivated, 29 Percent Of Agricultural Gdp In 20014/15 (14 Percent Of
Total Gdp) And 64 Percent Of Calories Consumed. There Has Been Substantial Growth In
Cereals, In Terms Of Area Cultivated, Yields And Production Since 2000, But Yields Are Low
By International Standards And Overall Production Is Highly Susceptible To Weather Shocks,
Particularly Droughts. Thus, Both Raising Production Levels And Reducing Its Variability. Are
Essential Aspects Or Improving Food Security In Ethiopia, Both To Help Ensure Adequate Food
Availability. As Well As To Increase Household Incomes.

Ethiopia Is The Third Largest Populated Country In Africa With A Total Population Number Of
77.4 Million (2005), Out Of Which 84% Of The Populations Reside In The Rural Area. About
80 Percent Of The Economically Active Population Is Engaged In Agriculture. The Cultivated
Area Covered In 2005/06 Was About 11.3 Million Ha, Of Which 10.5 Million Ha And 0.77
Million Ha Covered With Annual And Permanent Crops Respectively.
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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 6
PROPOSAL
Agriculture In Ethiopia Has A Major Influence On All Development Processes In The Country.
As Some 85% Of The Total Employment And 9o%% Of The Country S Export Are Based On
Agriculture (Environmental Policy. 199/). It Also Contributes About 50% Of The Country S
Gross Domestic Product (Gdp) And Supports Around R0% Of The Raw Material Requirements
Of Agro-Industries. This High Proportion Of The Country's Economic Gains Made From
Agriculture Depends Mainly On The Existing Diversity Of Indigenous Crops/Plants And
Livestock. Crop Production Is Estimated To Contribute On Average About 60%. Livestock 27%
And Forestry And Other Subsectors Around 13% Of The Total Agricultural Value (Ministry Of
Water Resource, 2001).
Only 40 Years Ago, Ethiopia Exported An Average Or Sum, Of 1000 Tons Of Grains And
Legumes To Its East African And Arabian Peninsula Neighbors Annually (Hailu,1991). Cereals
Production Has Remained Flat Since The Early 1970s However. With More Than A Doubling
Of Population Between 1970-30 Available Food Per-Capita Is Declined In Recent Year. The
Country Has Become Increasingly Dependent On Supplies Of The Donated Food In Recent
Year. Yet Become Ethiopia Is Endowed In A Wealth Of Natural Resource Increasingly Systems,
Many With Adequate Rainfall And Soils Fertile Enough To Sustain A Wide Variety Of Crops.
Only 40% Potential Arable Land, And Less Than 5% Of Irrigable Land, Is Currently Being Used
(Faught 1988, Cited In Stroud And Mulugeta 1992) Agricultural Practices And Farming Systems
In Ethiopia Are Based On Diverse Agro-Ecological Conditions That In Turn Require Varying
Approaches In Crops Production. In General Term The Agro-Climatic Zones Of The Country
Can Be Grouped Into Three Types Kolla (Warm Semi-Arid, At 500-1500m Above Sea
Level),Woinadega (Cooll Semi-Arid At 1500-2400m) And Dega (Cool And Humid, Higher
Than 2400m).More Recent Discipline Oriented
Studies Further Distinguish And Define This Agro-Ecological Classification By Linking Related
Biotic Factors Such As Annual Rainfall, Altitude And Temperature (Negash Et Al, 1989).

The Government Of The Country Has Been Excreting Its Maximum Effort To Expand
Investment Opportunities In The Country By Designing Different Policies And Strategies That
Will Facilitate Investment Through Attracting Both Domestic And Foreign Investors. Likewise,
The Oromia Regional State Government Has Been Working Day And Night To Make Poverty
History By Making Its Door Open To Investors Both (Domestic Country And Foreign) To Come
And Invest In The Region. Therefore, It Is This Ample Opportunity That Attracts The New
Investors To Come To Oromia For Investing In Crop Production. Hence, Being One Of The
Crop Producers Has Its Own Contribution To Satisfy The Demand Of The Current Market. He
Crop Production Project Is Planned To Supply Different Crops Types Mainly Sun Flower,
Maize, Niger Seed, Wheat, Peanut Soya Bean And Chickpea.
The Present Economic Policy Of The Country Is Highly Inviting The Private Sectors To Invest
Their Capitals To Agricultural To Sector. As A Result, The Investors Respond To The
Government's Invitation By Contributing Their Share To The Development Process The Project
Is Needed Because Of The Highly Growing Population Of The Country And Its Need Of More
Crops Supply And To Obtain Foreign Currency To The Nation.
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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 7
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1.2. Objective Of The Project

The Main Objective Of The Project Is To Produce High Value Crops Mainly Maize, Wheat,
Bean And Coffee Through Modern Practice And Irrigation System With Ground Water At Goma
District, Omo Gobu Kebele, Jimma Zone, Oromia Regional State.
Present Activities
Currently, The Project Is Embarking On The Introduction Of Farming Of Maize, Wheat, Beans
And Coffee Within The Member Of The Project. However Most Member Groups Have Been
Largely Engaged In Individual Farming Activities And Animal Husbandry.

Planned Activities

Depending On The Availability Of Funds, The Project Intends To Embark On The Cultivation
Of 4 Hectares Of Major Food Crop And The Raising Of Livestock (Piggery And Small
Ruminants).

Project Support Duration

The Project Is Soliciting Assistance For A Period Of One (1) Year. Thereafter It Will Be In
Position To Finance Its Operation From The Revolving Fund That Will Be Established.

1.3. Socio-Economic Benefits Of The Project

The Project Has The Following Benefits,

 It Will Commence The Production Of Organic Crops Though Scientific Methods And
Modern Technology.
 It Will Provide Job Opportunity For 6 People
 Will Serve As The Source Of Government Revenue Through Business Income Tax.
 It Will Introduce Modern Technology That Related To Crop Production By Using
Different New Varieties Crops Of High Yield.
 It Will Serve As A Role Model For Other Investors Who Wants To Invest In Similar
Business Undertakings In Ethiopia In General And Oromia In Particular.
 It Will Contribute Somewhat To The Governments Objectives Of Reducing The Problem
Of, Un-Employment Through Creating Employment Opportunities To Thee Citizens
 It Will Generate Foreign Exchange Earnings For The Country Since The Product Is
Exported To Abroad.
 It Will Provide Selected Seeds For Farmers In The Area
 It Will Contribute Some To The Area Of Self-Food Sufficiency In Crop Production If
Gaps Are Created.

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 8
PROPOSAL
1.4. Project Location Background And Required Land

A. Location
The Area Is Located In Oromia Regional State, Jimma Zone, Gomma District Omo Gobu
Kebele. The Total Land The Farmer Have Is 10 Hactares. Gomma Wereda Extends Between
70 40-80 04 North Latitudes And 360 17’-360 46’ East Longitudes. It Is Bordered With Gumay
District North, Limmu Kossa Distrct In East, Manna District In Southeast, With Seka Chokersa
In South And Gera District In West. It Is Situated In The Central Of The Zone. Because Of
Geographical Location (I.E. Near To The Largest Market Centers Like Jimma And Agaro
Towns) The District Has A Great Advantage For Accessing The Local Products To The Market
And Creates Ideal Condition For Provision Of The Demanded Commodities To The Local
Communities. It Has A Total Surface Area Of 936.58 Km2 993657.72 Hectare That Accounted
4.8 % Of The Total Area Of Jimma Zone. Currently The District Is Divided In To 36 Pa s And
(Three Urban Centers (With Over 14262 Population. The Proposed Project Site Is Located In
Omo Gobu Kebele.

Implementation Strategy

The Under Mentioned Strategies Will Be Carried Out To Achieve The Set Objectives:

- Community Mobilization And Sensitization For The Further Understanding Of The

Project.
- Training Of Labor To Enhance The Capacity Of Implementation, Monitoring And
Management Of Especially Agricultural Project.
- Purchase And Distribution Of Viable Seeds. The Group And The Trained Executive
Members Will Ensure That Certified Seeds Approved By The Seed Board Are Bought.
- Supervision, Monitoring, Reporting And Evaluation Of Project Activities.

Project Sustainability:

It Is Expected That With The Provision Of Funds, The Project Will Be Able To Achieve Its
Objectives. The Maintenance Of The Project Will Enhance By One (1) Type Of Account That Is
Already Established. In Addition To These, The Resurrect Expenditure Would Be Met From The
Revolving Fund, After Termination Of Donor Fund This Will Enhance The Project Continuation
After Donor Funding Is Terminated.

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 9
PROPOSAL
2. Agro Ecological Zone And Investment Policies Of Ethiopia

2.1. The Ethiopia Agro Ecological Zones

Ethiopia Has Five Main Agricultural Production Systems. These Can Be Grouped Into Three
Major Systems (Feyissa, 1999): The Highland Mixed-Farming System Practiced In Areas Of
Higher Elevation, Usually Above 2000m As A Crop-Livestock Complex Involving The
Cultivation Of Diverse Crops. Continuous Cropping Alternates With The Production Of Legume
And Oil Crops As A Means Of Maintaining Soil Fertility. Peanut, Oats And Highland Legume
Crops Dominate.
The Low Plateau And Valley Mixed-Farming System Practiced In The Intermediate Or 1ow
Nigh Lands, Mountain Foothills And Upper Valleys, At Elevations Ranging From 1500 To
2000m.Both Crop And Livestock Productions Are Economically Essential, Crop Production Is
Dominated By Sorghum And Niger Seed Followed By Wheat, Corn And Some Legume And Oil
Crops.
The Pastoral And Agro-Pastoral Farming System Is Practiced In The Arid And Semi- Arid Zones
Mainly At Elevations Below 1600m And With Annual Rainfall Less Than 450mm.
In The Arid Zone, Nomadic And Semi-Nomadic Pastoral Livestock Production Dominates, With
Camels And Goats As Important Components. In The, Semi-Arid Zone, Semi-Nomadic Or
Sedentary Agro Pastoral Production Is Practiced With Sorghum And Niger Seed As Main Crops.
Livestock Production In The Semi-Arid Zone Focuses On Cattle And Sheep. Water And Range
Developments Are Important Elements For Improving Both Crop And Livestock Production
Under This System Major Staple Food In Ethiopia Vary According To Cultural And Agro
Ecological Condition Ethiopian End Uroerologa Durim) And The Wiaju Tetraploid Sesama
Central And South Eastern Parts Of The Country. Other Important Staples Are Peanut In
Highland: Corn (Eragrostis Tef) With Its Wide Adaptation To Various Agro-Ecologies Sorghum,
Niger Seed And Millets In The Lowlands; And Different Root Crops Such As Enset (Enset
Ventricosum) And Yam (Dioscorea Spp). Major Legume Crops Are Horse Bean (Vicia Faba),
Pea (Pisum Sativum). Lentils Lens Culinaries) And Vetch (Lathyrus Satives); These Are All
Essential Dietary Components Along With The Other Staples. Major Oil Crops Are Gomenzer
(Brassica Carinata), Noog Or Niger Seed (Ouizofia Abyssinica), Linseed (Linum Usitatissimun)
And Sun Flower (Sesamum Indicum) Dominant In The Lowlands.

2.2. Agricultural Policy Of Ethiopia

Privatization Programme The Ethiopian Government Launched A Programme For The

Privatisation Of State Owned Enterprises In Early 1995. Accordingly, The Ethiopian
Privatization Agency (Epa) Was Established. To Implement The Privatization Programme In.
The Same Year, He Government Has Laid The Ground To Privatize Most Of The State Owned
Enterprises To The Private Sector. Accordingly, Epa Has Received A Stock Of 113 State Owned

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 10
PROPOSAL
Enterprises From The Government Tor Privatization In The Years Ahead. As Indicated In Epas
Work Schedule, Out Of These Enterprises, A Total Of 43 States Owned Enterprises Are In The
Pipeline For Privatization In The Near Future. Most Of These Enterprises Fall Under
Manufacturing, Construction, Agriculture And Agro-Industry. Hotels, Transport, Trade, And
Mining Sectors. There Is A Strong Commitment From The Government Side To Fully Privatize
State Enterprises In The Coming In Few Years. Detailed Information On The
Process Of Privatization Can Be Obtained From The Ethiopian Privatization Agency.
Agriculture
Agriculture Is The Main Stay Of Ethiopia's Economy Providing Employment To 85 Per Cent Of
The Population. The Sector Contributes About 45 Per Cent Of The Gdp And 62 Per Cent Of
Total Exports With Coffee Alone Accountings Of Total Exports2001/2002. Furthermore,
Agriculture Plays A Crucial Role In Providing Raw Material Inputs For The Local Industry
Endowed With Wide Ranging Agro Ecological Zones And Diversified Resource .Ethiopia
Grows All Type Of Cereals, Fibers, Crops, All Seeds, Coffee, Tea, Flowers, Fruits And
Vegetable. The Potentially Irrigable Land Is Estimated At 10 Million Hectares. Ethiopia Has The
Largest Livestock Population In Africa. Fishery And Forestry Resources Are Also Significant.
Considerable Opportunities Exist For New Private Investment In The Production And Processing
Of The Above Agricultural Crops And Resources. The Following Areas In Particular, Have
Been Identified To Offer Plenty Or Opportunities To Private Investors. Food Crops The Food
Crops Grown Include Corn, Wheat, Niger Seed Beans, Peas, Lentils, Soya Beans, Chickpeas Etc.
In 1992/2000, Ethiopia Produced 11.4 Million Tons Of These 1o00 Crops On About 8.9 Million
Hectares Of Land. This Is Far Short Of The Country S Demand For These Crops. Great
Opportunities, Therefore, Exist For Commercial Production And Processing Of These Food
Crops. Some Pulses Can Also Be Produced Or Processed For The Export Market. Oil Crops
Such As Rapeseed, Linseed, Groundnuts, Sunflower, Ginger Seed And Cottonseed Serve As
Raw Material Inputs Tor The Edible Oil Industry.
Some Oilseeds, Including Sun Flower Are Important Export Crops. Favorable Agro- Climatic
Conditions Also Exist In The South-Western Parts Of The Country For Introducing Coconut For
The Production And Processing Of Palm Oil And Ghee. Besides, Ethiopia Has A Huge Potential
For Producing And Processing Of Niger Seed. It Is Widely Grown In Various Agro-Ecological
Zones. The Total Annual Average Production Is 250 Thousand Metric Tons In An Area Of
About 1.4 Million, Hectares. As Part Of The Government's Initiative To Efficiently Tap The
Available Potential, Detailed Project Profiles Have Already Been Prepared For The Processing
Of Coffee And Corn.

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 11
PROPOSAL
3. The Market Study And Project Capacity

3.1. Overview

Cereals And Pulses Are Important Food And Cash Crops For Farmers And Rural Households In
Ethiopia. Wheat, Sorghum, And Niger Seed Supply Over 50% Of Average Daily Caloric Intake.
Cereal Production. Accounts For Roughly 60% Of Rural Employment And 807% Of Total
Cultivated Land. Households Spend An Average Of 40% Of Their Total Food Budget On
Cereals. Pulses Occupy 13% Of Cropland In Ethiopia And Are The Second Most Important
Element In The National Diet After Cereals. Despite The Economic And Food Security
Importance Of These Crops, Data And Opinion Suggest A Yield Gap: Actual Stallholder Farm
Yields Do Not Achieve Estimated Potential Yields For Wheat, Sorghum, Niger Seed Lentil And
Peas. Furthermore, Cereal Prices In Ethiopia Tall Between Import And Export Parity Prices,
Limiting Their International Trading Prospects. Although There Are Significant Sesame Imports,
These Reflect The Influx Of Food Aid And Not Competitive Trade On The
International Market.

The Purpose Of This Study Is To Help Estimate Yield Gaps In Important Ethiopian Crops In
Order To Identify Potential Areas For Productivity Gains Particularly Pea According To The
World Food Program 46% Of The Ethiopian Population Is Undernourished Underscoring The
Importance Of Increasing Domestic Food Productivity. Fao Details Available For Wheat,
Sorghum, Niger Seed Lentils And Peas, Which Form The Bulk Of This Analysis. Corn Is Not
Reported Separately By The Fao, And Is Instead Likely Reported With Other Minor Cereal
Crops Under The Category Cereals, Not Elsewhere Specified Similarly. Other Pulses Are
Reported Under The Aggregate Categories 'Not Elsewhere Specified.

I. Production
Peas Include Garden Peas And Field Peas Are One Of The Oldest Crops Grown In
Ethiopia .They Are Widely Planted In The Mid-To-High Altitude Areas Of Oromia, Tigray,
Amhara And Snnp Region Small Holder Are The Main Producer And Use No Chemical
Ii. Productivity
The Ethiopian Export Promotion Agency Reports That Research Field Using Improved
Technologies And Inputs Achieved Yield As High As 4000-6000 Kilogram Per Hectares. In
Contrast Pea Yield In Ethiopia Since 2000 Have Fluctuate Between 678 (2001) And 1085 (2008)
Kilogram Per Hectares.
In 2007, Ethiopia Produced 90% Of The Peas Consumed. Ethiopian Yields Ere E Above East
African (120%) And African (130%) Average Yields, But Achieved Oniy B3% Of Average
World Pea Yields. If Ethiopia Were Able To Achieve Average Yields, It Could Produce 123%
Of The Local Supply Quantity. The Ethiopian Export Promotion Agency Highlights Use Of
Improved Seed As Crbcal To Increasing Pea Productivity. National Research Has Led To 13

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 12
PROPOSAL
Improved Varietals Released
Since 1981, Which Yield 2,500 To 4,500 Kilograms Per Hectare Under Good Management
Conditions In Research Fields. On-Farm Yields Average 1,000 To 3.000 Kilograms Per Hectare.

Iii. Constraint

The Members Of The Project Are In Dire Need To Develop Them, But Could Not Afford The
Provision Of Basic Inputs. The Major Problem Faced By The Project And Which It Will Try To
Address Is The Lack Of The Most Appropriate Agriculture Inputs To Restart Normal Production
Activities. These Inputs Include Farm Equipment’s, Seeds, And Planting Materials.
Other Issues:-
- Lack Of The Capacity To Provide Support Service.
- The Neglect Of People With Disabilities In Development Activities.

Iv. Consumption
The Majority Of Peas Produced Are Consumed Domestically And Peas Are An Important Part
Of The Daily Diet For Most Ethiopians
V. Marketing
Similar To Lentils, Peas Are Usually Available At Local Markets From Wholesalers, Retailers.
And Directly From Producers At Weekly Markets In Rural Areas.

Vi. Constraints To Agricultural Productivity In Ethiopia

Key Constraints To Agricultural Productivity In Ethiopia Include Low Availability Of Improved
Or Hybrid Seed. Lack Of Seed Multiplication Capacity For Profitability And Efficiency Of
Fertilizer Use Due To The Lack Of Complimentary Improved Practices And Seed. And Lack Of
Irrigation And Water Constraints In Addition, Lack Of Transport Infrastructure Investments In
Productivity Increases Higher Up The Food Value Chain, Such As Through Marketing And
Transportation Infrastructure, Would Increase Prices Farmers Receive For Output While Also
Putting Downward Pressure On Urban To Prices.

Higher Producer Prices Would Create Incentives For Farmers To Invest In Productivity
Increasing Technologies Since Output Increases Would Offer Substantial Gains. Lack Of
Reliable Data Also Poses A Critical Constraint To Understanding The Potential Tor Productivity
Gains In Ethiopia. As Dercon And Hill (2010) Point Out, Data From The Central Statistical
Authority (Csa) Report A Significant Increase In Area Harvested In The Previous Decade,
However The Source And Quality Of This Land Remains Unclear, As Land Pressure Has Long
Been Noted As A Critical Constraint To Agricultural Production In Ethiopia. Furthermore,
According To Bachewe Et Al. (2008) And Nisrane Et Al. (2009). There Is Evidence That
Farmers Moved Closer To The Production Possibility Frontier During The Period From 1994-

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 13
PROPOSAL
2004, But That These Gains Were Largely Due To Increased Use Of Traditional Inputs Such As
Land, Labor, Oxen And Hoes.
There Is No Evidence Of An Expansion Of The Frontier, Which Would Indicate Technological
Change Or Intensification. As Dercon And Hill (2010) Also Question The Reliability Of The
Csa Yield Data And Point To A Small Household Survey (Minot, 2008) And Satellite Data
Suggesting That Csa Data May Overestimate Yield Gains. Given That There Has Been Little
Expansion In The Use Of Modern Inputs Such As Fertilizer (On A Kilogram Per Hectare Basis)
Improved Seed, And Irrigation, There Are Additional Grounds To Question The Validity Of The
Csa Data. However, An Important Caveat In This Argument Concerns The Quantity Of Land
Under Cultivation. If These Data Are Overestimated In Out Used Hectare Would Increase And
Be More Consistent With Yield Gains Due To Intensification Since
Overall Use Of Inputs Has Increased While Per Hectare Use Has Remained Relatively Constant

3.3. Competition

There Are Different Forms Of Competition That May Face This Project. These Are Price And
Non Price Based Competition. Moreover, There Are Different Competitions That Will Compete
With The Project Under Discussion Either Directly Or Indirectly By Both In The Domestic And
Foreign Market. But The Project Under Discussion Has Diversified Marketing Strategies That
Could Enable It Come Up With The Different Competitors In The Market. Moreover The Project
Will Frequently Conduct Competitors Research Which Focuses On, The Strength And The
Weaknesses, The Different Competitor's Strategies, The Techniques They Use In Rendering The
Service, Their Customer Handling Methods, Their Product Quality And Others.

Table 1: Schedule Of Production Plan

Sn Description Plot In Unit Qty Per Yearly
Hectare Hectares Production
In Two
Season
1 Maize 1 “ 45 45
2 Wheat 1 40 20
3 Bean 1 “ 30 15
4 Avocado 1 5000 5000
5 Banana 1 5000 5000
6 Onion 1 4000 4000
7 Coffee 1 Kg 3000 3000
Total 10 20,050

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 14
PROPOSAL
As Clearly Indicated In The Production Plan Of The Project The Crops Producing Within Three
Months Period, Which Is It Deemed To Be Produced Twice A Year

3.5. Capacity Utilization

Based On The Market Condition Of The Project, The Envisioned Project Is Planned In Three
Phases (1st Year70% 2nd Year 90%And 3rd 100% To Reach Full Capacity.
3.6. Pricing
The Pricing Of The Project At Farm

Table 2: Farm Gate Price

Sn Description Uom Unit Price In

Br.
1 Maize Quintal 700
2 Wheat Quintal 2850
3 Bean Quintal 2000
4 Tomato Quintal 3000

3.7. Marketing And Marketing Strategy

The Market Of The Project Outputs Are Mainly Targeted For Domestic And Export Market. The
Products Will Be Sold At Jimma And Addis Ababa City. Which Is The Nearest Market Center
And In Addis Ababa Depending On The Free Market Price. The Main Project Marketing
Strategy Are Satisfying The Customer Demand And Maintain Long Lasting Market
Relationship.
The Proposed Project Will Supply Of Its Product For Domestic Market.

4. Technical Study Of The Project

4.1. Product Mix

The Envisioned Project Will Produce The Following Pulses/Crops Through Irrigation On Gibe
River With Underground Water.

I. Maize
Maize, Also Known As Corn, Is One Of The' Most Extensively Cultivated Cereal Crops On
Earth. More Is Produced, By Weight, Than Any Other Grain, And Almost Every Country On
Earth Cultivates Maize Commercially For A Variety Of Uses. The Abundant Global Cultivation
Has Led To Concerns About Mono Cropping And Biodiversity, Especially Since Genetic
Evidence Suggests That Maize Is Radically Less Diverse Than It Was Originally. In Addition,

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 15
PROPOSAL
This Cereal Is Heavily Genetically Modified, And The Crop Has Been Used As A Rallying Point
By The Anti-Genetically Modified Organisms (Gmos) Community. World Average Maize Yield
3.2 Ton/Hectare Where As In Developed Countries It Yields 6.2 Tons/Hectare Average But In
Highly Developed Countries It Yields Tu Ms/Hectare. But In Our Country Its Average Yield Is
Only 2 Tons. This Shows That We Kave To Agricultural Technologies And Inputs To Reach At
Least World Average To Apply New In Oromia Regional State Maize Covers 23% Of The Total
Are Acoalerede And 32% Of The Produce From Cereal And Other Annual Crops Cereal Crops

Iii. Wheat
Wheat Is A Key Food Staple That Provides Around 20 Percent Of Protein And Calories
Consumed Worldwide. Demand For Wheat Is Projected To Continue To Grow Over The
Coming Decades, Particularly In The Developing World To Feed An Increasing Population, And
With Wheat Being A Preferred Food, Continuing To Account For A Substantial Share Of
Human Energy Needs In 2050 (Wageningen Fsc, 2016). Based On Recent Trends, An Increasing
Number Of Poor Consumers In Low- And Middle-Income Countries Will Want To Eat Wheat-
Based Food At An Affordable Price As Populations And Economies Grow, Women And Men
Seek Employment In Cities, And Dietary Habits Change. Projections Regarding Wheat Demand
Growth To 2050 Abound And Vary Widely Around An Average Of Approximately +50%,
Relative To 2010. The Bulk Of Increased Consumption Is Expected To Occur In Developing
Countries Where Studies Predict Demand Growth Of 34-60% By 2050 (Valin, 2014). Of
Particular Urgency Is Demand Growth Out To 2030, When World Population Growth Is
Predicted To Peak (E.G. 1.15% P.A. In 2010; Projected To Decline To 0.75% P.A. By 2030 And
0.50% P.A. By 2050). Gdp In Developing Countries Is Projected To Grow At 4.3-5.3% P.A.
(2015-18; Low Income Countries At 6.2-6.6%, World Bank, Global Economic Prospects, 2016)
Across Income Levels, With A Positive Income Elasticity Of Demand For Wheat. China And
India, Which Are Home To Half The World’s Poor (Sumner, 2012), Already Produce And
Consume 30% Of Global Wheat. By 2023, Demand For Wheat Is Expected To Grow By 22% In
India, 20% In Pakistan And 19% In North Africa (Oecd-Fao, 2014). Wheat Agri-Food Systems
Prevail In North Africa And West Asia But Both Have Proven Volatile Areas Where Wheat
Prices And Food Insecurity Over The Last Decade Triggered Civil Unrest And Massive
Migration To Europe. Fueling The Instability Is The Region's Wheat Import Dependency: Wheat
Imports Totaled 41 Million (M) Tons In 2015. In Rapidly Urbanizing Sub-Saharan Africa,
Wheat Consumption Is Expected To Grow 38% By 2023, With Imports At 24 M Tons In 2015
And At A Cost Of $8 Billion. (Source: Usda, Index Mundi, 2016).

Vii. Beans
Soybeans Belong To The Legume Family And Are Native To East Asia. They Have Been An
Important Protein Source In The Orient For Over Five Thousand Years. Soybeans Have Only
Been Introduced To The Western World Since The 20th Century. Soybeans Grow On A Variety
Of Soils And A Wide Range Of Climates, Ranging From Tropical Brazil To The Snowy Island
Hokkaido In The North Of Japan- As Soybeans Mature In The Pod, They Ripen Into Hard, Dry
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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 16
PROPOSAL
Beans. Although Most Soybeans Are Yellow, There Are Also Rare Varieties Which Are Black,
Brown Or Green Colored. A Given Area Of Land Planted With Soybeans Can Produce Much
More Protein Than Land Planted With Other Crops, Or If The Land Were Used To Raise Cattle
4.2. Farm Inputs And Raw Materials
The Major Inputs And Raw Materials Required For This Project Are Improved Seeds Fertilizers
(Both Urea And Dap), Agro-Chemicals Herbicide (Hc) And Pesticides (Pc). Fuel For Tractors.
These Inputs Are Easily Available In The Local Market, Ethiopian Seed Enterprise, Agricultural
Input Supply Corporation Of The Ministry Of Agricultural And Fro Bureau Of The Regional
State. All Necessary Inputs Are Mostly Available In Local Market. The Cost Estimation Of The
Agricultural Inputs Are Indicated On Section 6.1.3 Of This Study.

4.3. Agricultural Technologies

The Project Will Use The Following Modern Agricultural Technologies In Production Of Those
Products (Sun Flower Maize Niger Seed, Peanuts, Sesame, Soya Beans And Chick Peas).
 Improved Inputs(Mainly Seeds And Fertilizer)
 Broad Bed Maker (Bbm)
 Improved Input (Mainly Seeds And Fertilizers)
 Broad Bed Mixer
 Crop Rotation
 Land Use Planning
 A Forestation
 Demonstration Of Different Technologies On Occasional Filed Days

4.4. Intended Irrigated System

With The Changing Climate Delivering Hotter, Drier Summers, Many Farmers Are Seeking
Solutions By Irrigating Crops. Options For Irrigation Depend On A Farm S Size, Crops Grown,
Soil Type., And Budget. The Envisioned Crop Production Farm Will Implement Irrigation
System On Underground Water. It Is By Far The Most Common Form Of Irrigation Throughout
The World And Has Been Practiced In Many Areas Virtually Unchanged For Thousands Of
Years. Surface Irrigation Is Often Referred To As Flood Irrigation Implying That The Water
Distribution Is Uncontrolled And Therefore, Inherently Recent In Reality, Some Of The
Irrigation Practices Grouped Under This Name –Involve A Significant Degree Of Management
(For Example Surge Irrigation). Surface Egtonoges In Three Major Types, Level Basin, Furrow
And Border Strip. The Process Or Surface Irrigation Can Be Described Using Four Phases. As
Water Is Applied To The Top End Of The Field It Will Flow Or Advance Over The Field Length
The Advance Phase Refers To That Length Of Time As Water Is Applied To The Top End Of
The Field And Flows Or Advance Over The Field Length. After The Water Reaches The End Of
The Field It Will Either Run Of Or Start To Pond. Phase As The Inflow Ceases The Water Will

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 17
PROPOSAL
Continue To Runoff And Infiltrate Until The Entire Field Is Drained. The Depletion Phase Is
That Short Period Of Time After Cut-Off When Length Of The Field Is Still Submerged. The
Recession Phase Describes The Time Period Of Water While The Water Front Is Retreating
Towards The Downstream End Of The Field. The Depth Or Water Applied To Any Point In The
Field Is A Function Of The Opportunity Time, The Length Of Time For Which Water Is Present
On The Soil Surface.

4.5. Farming Process

4.5.1. Land Development
Like Other Crops, Land Clearing, Leveling. Irrigation System, And Access And Farm Road
Construction Will Be The Land Development Activities For Crop Production Tractor, Leveling
And Surveying Instruments Are Expected To Be Employed For Land Development Purpose.

4.5.2. Land Preparation, Sowing And Fertilization

Land Development For Crop Production Is Followed By Land Preparation. S Operation
Includes Plugging, Dicing And Harrowing. Sowing Follows Harrowing With Fertilization.
For Land Preparation Tractors With Various Bottoms Like Disc Plough, Disc Harrows. Seed.
Fertilizers And Drillers Will Be Employed In General

4.5.3. Pre-Harvest Management

The Pre-Harvest Management In Crop Production Usually Involves Irrigation Water Application
On Underground Water Weeding And Cultivation Insect Pest And Disease Control, Irrigation
Water Application Using Different Canals Gravity And Weed Control Will Be Performed By
Casual Labor. Moreover, Insect Pest And Disease Control Will Be Performed By Motorized
Sprayer.

4.5.4. Post-Harvest Management

Post-Harvest In Crop Production Farm Comprise Picking. Sorting. Grading. Packing

Transporting. Storing And Marketing General Terms, Picking, Sorting And Grading Are
Expected To Be Carried Out Manually By Casual Labor, While Transporting Or Product Will Be
Done By Tractor Driven Trailers And Trucks, From The Farm And Stores To Markets
Respectively.

4.6. Machineries And Equipment

A. Farm Tool
 Hoes
 Spades

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 18
PROPOSAL
 Axle
 Water Pump
 Others
B. Agricultural Machineries
 Plough
 Seed Bed
 Cultivator
 Disc Hallow
 Manual Spray
4.7. Project Design And Engineering
The Proposed Project Comprises Stock Of Different Components To Be Executed Different
Phases Of The Project Life. These Activities Include: Design And Construction Of Various
Buildings (Store).

4.8. Utilities
The Project Needs To Have The Following Utilities
 Water For Irrigation
 . Fuel
 Supplementary Electricity Supply.
 Drainage Facility

Civil Engineering Cost

The Proposed Project Will Undertake Storage And Irrigation Canal Development. To Undertake
The Construction The Proposed Project Uses Locally Available Raw Materials. The Total Coast
Required For The Construction Is 1,203,547.4 birr.

5. Financial Requirement And Analysis

The Financial Resource Is A Prime Resource For Undertaking Any Activities. Hence For
Implementing The Project Is A Total Of 1,203,547.4 Etb Is Required. From This 25%
300,886.85 Birr Will Be Covered By The Promoter Of The Project While The Rest 75%
902,660.55 Will Be Covered Through Loan From Bank At The Prevailing Interest Rate.
Therefore The Said Amount Of Finance Is Needed For Undertaking The Following.

5.1. Fixed Capital

A. Land Development, Buildings And Construction

The Total Land Area Required For Coffee Plant And Crop Production Is 10 Hector. The Cost Of
Buildings And Construction Is Estimated At 250,000 And Detailed Financial Requirement
Presented In The Following Table.

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PROPOSAL
Table 3 Land Development, Buildings And Construction
Cost Of Building & Construction

No Description Value (Birr)

1 Site Clearing And Land Preparation (4ha) 85,474

5 Store (Ware House In Korkoro Wall) 200,000

Total 285,474

A. Machinery And Equipment

Table 4 Equipment

Equipment Requirement

No. Description Value, Birr

2 Farm Equipment 300,000

Total 300,000

5.2. Working Capital

5.2.1. Operating Expense At Full Capacity

a. Salary Expense
The Project Will Create Job Opportunity For More Than 7 Labor Force. From The Total
Employee 6 Are Permanent And 8 Are Causal Workers That Are Planned To Be Drawn From
Local Community. The Proposed Manpower Requirement And The Estimated Annual Labor
Cost Including Fringe Benefits Is Presented In The Table Below.

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 20
PROPOSAL

Table 5 Man Power Requirement And Salary Expense

Salary Annual
S.N Description No. (Birr)
1 Store Keeper 1 700.00 8,400
2 Laborer 5 500.00 30,000
Total 38,400

5.2.1 Operating Expense

Table 6 Operating Expense

Sn List Of Items List Of Items Annual Cost Assumptions

In Birr Used
4 Fertilizer Dap & Urea 200,000
5 Chemical 75,060.00
8 Transportation Coast 40,000.00
13 Electric Consumption Electric 5,000.00 20000kwh By
Consumption Br.0.4736
14 Fuel Fuel 100,000.00 3000 Lit Per
Year By Br. 21
18 Miscellaneous Costs Miscellaneous 20,000.00 1000 Per Month
Costs
Total Total 450,060.00

5.1.1. Pre-Service Expenses

Table 7 Pre Service Expense

Sn Description Cost In Birr

1 Licensing Fee And Others 20,000
Total 20,000.00

5.2.3. Summary Of Investment Cost

The Total Initial Investment Cost Of The Project Including Working Capital Is Estimated At Birr
1,203,547.4 Birr.

The Major Breakdown Of The Total Initial Investment Cost Is Shown In Table 13.

Table 8 Summary Of Total Initial Investment Cost

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 ABA SALAM HAJI SADIQ O/GOBU MIXED FARM PROJECT 21
PROPOSAL

Sn Description Cost In Birr

1 Land, Building & Construction 285,474
2 Equipments 300,000
Total Fixed Investment Cost 585,474
5 Salary Expense 38,600
6 Operation Expense 450,060
7 Pre Service Expense 20,000.00
Total Working Capital 508,660
Sub Total 1,094,134
Contingency (10%) 109,413.4
Total Initial Investment Capital 1,203,547.4

5.3. Financial Analysis And Statements

5.3.1. Underlying Assumption

5.3.2. Sources Of Fund

The Source Of Fund To Finance The Project Is Planned To Be From Two Sources. These Are
Promoter’s Equity And Bank Loan. The Loan Is Expected To Be Obtained From One Of The
Local Lending Institutions. Since The Project Is Expected To Take Some Times To Repay All Its
Debts, The Bank Loan Is Assumed To Obtain On Long Term Credit Basis. Taking The Financial
Position Of The Promoters Into Account, Equity Contribution And Bank Loan To Finance The
Total Investment Outlays Of The Project Are Assumed To Be 30% And 70% Respectively.
Accordingly, The Total Financial Requirement From The Two Sources Will Be.

Table 9 Source Fund

Owners 300,886.85
25%
Equity
Bank Loan 75% 902,660.55
Total 100% 1,203,547.4

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