Mengistu Wheat Farm Integrated Farm 2

Mengistu Yeshitila Wheat Production Enterprise
MENGISTU YESHITILA WHEAT

PRODUCTION ENTERPRISE
Business plan for agricultural Investment
Submitted to Benishagul Gumuz Regional State Rural Land Administration & Investment Bureau
Project sector Mechanized Farm

Requested land amount 1000 hectare
 Proposed project location; Benishagul Gumuz regional state, Danguri woreda
 Initial capital of the project; 73,159,226 Birr (100%)
 Owner equity of the company 21,954,068 birr (30%)
 Bank loan 51,205,158birr (70%)
General manager of the company Mr. Mengistu Yeshitila
Phone Number
1|P ag e project proposal developed for desert wheat

Table of Contents
CHAPTER ONE ......................................................................................................................................... 7
A. Executive Summary ......................................................................................................................... 7
B. The vision and mission statement of the project....................................................................... 7
C. Background information of the project ....................................................................................... 7
1. Background of the project ............................................................................................................. 8
1.1. Objectives of the project .......................................................................................................... 9
1.2. key to success/ opportunities .................................................................................................. 10
1.3. Present status of the project ................................................................................................. 10
1.4. Strategic opportunities ............................................................................................................ 11
1.5. Business strategies.................................................................................................................... 11
1.6. Expected Benefits ..................................................................................................................... 11
1.7. Main Component of the Project ............................................................................................... 12
Table 1 main component to be implemented during project operation ............................................. 12
1.8. Management and Organizational Set up ................................................................................. 15
1.9. Study of the Project Area ....................................................................................................... 15
Chapter two ............................................................................................................................................ 17
2. Company analysis, legality and physical condition of the farm ............................................... 17
2.1. Legal structure of; - .................................................................................................................. 17
2.2. Business Name and Address: ................................................................................................... 17
2.3. Project site ................................................................................................................................. 17
2.4. Land Ownership (lease, rent, etc) ........................................................................................... 17
2.5. Physical and Natural Condition of the project Site ............................................................. 18
2.5.1. Climate ..................................................................................................................................... 18
2|Page project proposal developed for desert wheat

2.5.2. Rainfall ..................................................................................................................................... 18
2.5.3. Soil ............................................................................................................................................ 18
2.6. Infrastructure condition of the project area ...................................................................... 18
2.6.1. Communication: ....................................................................................................................... 18
2.6.2. Road: - ...................................................................................................................................... 18
2.6.3. Health centre’s; ...................................................................................................................... 18
2.6.4. Financial institution;- ............................................................................................................. 19
Chapter three ........................................................................................................................................ 20
3. Marketing Analysis of the project ............................................................................................. 20
3.1. Demand Analysis......................................................................................................................... 20
3.1.1. Market System Analysis;- .................................................................................................... 20
3.1.2. Market segmentation............................................................................................................. 20
3.1.3. Risk Analysis ........................................................................................................................... 21
3.1.4. Risk management systems..................................................................................................... 21
3.1.5. Distribution channels............................................................................................................. 21
3.2. Pricing techniques ...................................................................................................................... 21
3.3. Promotional and advertising ..................................................................................................... 22
CHAPTER 4 ............................................................................................................................................. 23
4. ORGANIZATIONAL PROFILE (MANAGEMENT TEAM) ....................................................... 23
4.1. Structure of the project which could show level status..................................................... 23
4.2. Skilled and unskilled manpower................................................................................................ 23
Table 2 human resource requirement .................................................................................................... 24
CHAPTER FIVE ...................................................................................................................................... 24
5. Production Process ........................................................................................................................ 24
5.1. Land Clearing; ............................................................................................................................. 25
3|P age project proposal developed for desert wheat

5.2. Grubbing; ..................................................................................................................................... 25
5.3. Leveling; ....................................................................................................................................... 25
5.4. Land Preparation & Sowing ....................................................................................................... 25
5.5. Fertilization ................................................................................................................................ 26
5.6. Weeding ....................................................................................................................................... 26
5.7. Disease & Pest Control .............................................................................................................. 26
5.8. Harvesting and Threshing ........................................................................................................ 26
5.9. Environmental Impact Mitigation ............................................................................................ 27
5.10. Crop Rotation: ......................................................................................................................... 27
5.11. Soil Fertility: .......................................................................................................................... 27
5.12. Soil Sanitation: ....................................................................................................................... 27
5.13. Protection of Water Bodies: ................................................................................................ 28
5.14. Land Management:.................................................................................................................. 28
5.15. Management of Vulnerable Areas: ...................................................................................... 28
CHAPTER SIX........................................................................................................................................ 29
6. Socio-economic Analysis ............................................................................................................... 29
6.1. Social Analysis ............................................................................................................................ 29
6.2. Market Analysis ......................................................................................................................... 29
6.3. Profitability ................................................................................................................................ 30
CHAPTER SEVEN .................................................................................................................................. 32
7. Farming Program, plan, and revenue estimation........................................................................ 32
7.1. Farming Program of the project.............................................................................................. 32
Table 3 Farming program ......................................................................................................................... 32
7.2. Production Plan and estimated yield ....................................................................................... 32
Table 4 production plan and estimation of revenue for each product ............................................. 33

7.3. Summary of revenue .................................................................................................................. 34
Table 5 summery Revenue........................................................................................................................ 34
CHAPETER EIGHT ................................................................................................................................ 35
8. Financial Analysis ........................................................................................................................... 35
8.1. Source of Fund ........................................................................................................................... 35
8.2. Total Investment ....................................................................................................................... 35
Table 6: Total investment cost ............................................................................................................... 35
8.3. Financing structure.................................................................................................................... 36
Table 7 Financing structure .................................................................................................................... 36
8.4. Depreciation & amortization .................................................................................................... 37
Table 8 Depreciation & amortization ..................................................................................................... 37
8.5. Fixed Asset Investment ........................................................................................................... 38
Table 9 Estimated Fixed Investment cost of the Project................................................................. 38
8.6. Loan requirement and repayment schedule ........................................................................... 38
Table 10 Repayment schedule ................................................................................................................. 38
8.7. Project cost estimation............................................................................................................. 39
Table 11 project cost estimation ............................................................................................................ 39
8.8. Project Cash Flow ...................................................................................................................... 42
Table 12 Project Cash Flow ..................................................................................................................... 42
8.9. Project Income Statement....................................................................................................... 42
Table 13 Project Income Statement ..................................................................................................... 42
CHAPTER NINE..................................................................................................................................... 43
9.1. Challenges & Opportunities ...................................................................................................... 43
9.2. Monitoring & Evaluation (M & E) .............................................................................................. 43
9.3. Parameters for M & E ............................................................................................................... 44

9.4. Conclusion .................................................................................................................................... 44
Content of tables
Table 1 main component to be implemented .................................................................................. 12
Table 2 human resource requirement .............................................................................................24
Table 3 Farming program ....................................................................................................................32
Table 4 production plan and estimation of revenue for each product .................................33
Table 5 summery Revenue ..................................................................................................................34
Table 6: Total investment cost .........................................................................................................35
Table 7 Financing structure ...............................................................................................................36
Table 8 Depreciation & amortization ..............................................................................................37
Table 9 Estimated Fixed Investment cost of the Project ......................................................38
Table 10 Repayment schedule............................................................................................................38
Table 11 project cost estimation ......................................................................................................39
Table 12 Project Cash Flow ................................................................................................................42
Table 13 Project Income Statement...............................................................................................42

CHAPTER ONE
A. Executive Summary
Mengistu Yeshitila Wheat Production Enterprise ; formed for lease of 1,000 hectares
of land for its agricultural project. The project mainly focuses on the area of
producing oil crops like: sesame, wheat and cotton. The farm will create job
opportunities for 52 permanent and more than 200 temporary persons. The total
capital requirement for to the farm will be estimated 73,159,226 birr.
B. The vision and mission statement of the project
Vision:- To be the main and competitive seed producer and supplier as well as cash crop
producer and supplier company in the region, there by empowering the local community
with modern farm business, agricultural technologies, to enhance their farm
production. Beyond this the enterprises participate in social infrastructure
development of kebele and woreda levels.
Mission: - Produce and supply high quality cash crops to the local markets and
international markets.
C. Background information of the project
 N a me Mengistu Yeshitila Wheat Production Enterprise
 Project Address
o Region Benishagul Gumuz Regional state
o Zone Metekel zone,
o Woreda Danguri Woreda
o Kebele will be stated in future
 Type of project integrated farm
 Total area 1,000 hr
 Initial capital 43,339,930 Birr
7|Pa ge project proposal developed for desert wheat

 Project manager Mengistu Yeshitila
o Phone number +--------------------
o Address London
1. Background of the project
This is the business plan for activation and operation of legal project of Mengistu
Yeshitila Wheat Production Enterprise. It purposes to function as domestic investor
in our country. This document is prepared by the founder of the enterprise.
The exciting economy strategy and concentration of the governments is to enhance the
food security as well as utilize the resources of the country to improve the living
condition of the citizen, by promoting the investment opportunity to domestic investor
as well as foreign investment by providing different type of incentives promised
overall economic climates.
The founder of the project propose to be beneficiary by current economy police and to
take to project as citizen of the country by rebuilding the country economy and hope
to bring change by utilizing the resource with technology in establishing modern farm.
As modern business, the ultimate purpose is operating this project at the profit.
Management at this project will pursue sound, will define policies and execute as an
effective and efficient marketing plan that will optimize profitability.
The major economic importance, farming is typically undertaken by subsistence
farmers on small plots of land. The generally luck capital, proper tools, good economic
police, integration with finance organization like banks and have little or no access to
outside market and technology. Thus, large scale farming and production are still
conspicuously elusive to our country agro-industry, and the advantages they bring are
8|Page project proposal developed for desert wheat

not being realized. adequate infusions of capital and injections of vitalizing technology,
this industry that represents the heart of our economic structure will continuous at it
slow rate of development. As the life’s blood of socio economic development,
agriculture must be nurtured on a scale not seen before and rewards that follow must
be dispersed to the benefits of the larger rural populations.
Hence, there is an evident needed to promote farm development, improve the condition
of rural poor, and the overall economy of this land. There for, it is necessary to
increase the quantity and quality of food in the country, to create employments, to
generate foreign exchange, and to introduce modernizing technologies. In an effort of
fulfill these needs, Mengistu Yeshitila Wheat Production Enterprise is established
with clear view of its in place in society within which it will operate. It embraces its
moral responsibility to help this fertile land nourish to our people.
Mengistu Yeshitila Wheat Production Enterprise: formed for leasing 1000 hectares of
land for its agricultural project. The company will produce sesame, wheat and cotton and
others in all the request land.
1.1. Objectives of the project
We are by providence placed in a position to provide an oil product specially sesame to
the world market and onion to the local.
In short terms:
safe and clear the designated farm land,
make permanent residence farm house buildings,
acquisitions seeds,
acquire transport and equipment,
target regional markets,
expands distribution networks to neighbouring region

transfer new technology to the local community/ farmers
In long terms:
make the permanent farm residence office building,
purchase additional farm equipment ,
establish infrastructure ,
create crop seed multiplication and plant nursery in the site
expands distribution networks to neighbouring countries
Generate income for the government in the form of taxation
1.2. key to success/ opportunities
The key to success/opportunities in the projects are:
sub_ tropical climate _ it characteristics adequate annual rain fall, temperature
and fertile soils,
providing environments conductive to produce agricultural products
high level of ground water resources deemed suitable for irrigation
flat topography of the land which is suitable for mechanized farming methods
the absence of industrial pollutants existing in the soil ,ground water, and air
around the project site
conducive political stability around the site currently
1.3. Present status of the project
Mengistu Yeshitila Wheat Production Enterprise; starts its operational activities
immediately after the land is given and approved by the regional government and has
the plan to finish 1000 hectares of the land in five production years.
10 | P a g e project proposal developed for desert wheat

1.4. Strategic opportunities
Resource advantages; - the enterprise will own the sufficient hectares of land
which is virgin, very fertile land and able to produce different crops. The lease
of the time is long and the lease cost is also least.
Marketing strategies:- the enterprise has the following market advantages
The ever increase of demand of oil seed crops to domestic and international
market
The enterprise also rent tractors for farmers by buying additional tractors.
1.5. Business strategies
Market lead production; - which is strongly supported by continuous market
research assessment and analysis demand and supply of the market based on
existing market situation. The project produces and supplies the oil seeds and
cash crops by studying the gap of the markets.
Production based on highest per hectares productivity level; - the enterprise
will select the type of crops which have high market demand for production and
ability to produce highest yield per hectare.
Resources Requirements; - the project required non related and related resource
to operate the day to day operation of its farm business. Some of this resources
are;
 Human power both professional and daily labors
 Financial resource
 Raw material such as; improved seeds, fertilizers, sacks, chemicals and etc.
 Machineries and equipments such as tractors, hand tools, vehicles etc.
1.6. Expected Benefits
Some of the direct financial benefit are;- very progressive, potential and
attractive profit to the owner. For financial institutions give interest for their

loan, export earnings for the government and increase domestic market supply,
the firm provides competitive selling prices of the produced crops.
Some of the most vital non financial benefits are;- create on farm and off
job opportunities to the local community, adopting and diffusion of modern
farming technologies and inputs, achieve food self sufficient and so on.
1.7. Main Component of the Project
Table 1 main component to be implemented during project operation
No_ Main component The activities under the component
of the project
1) A. Technology transfer for local societies
 The project will farm by modern technology and mechanized
way and it will promote for societies.

Contribution of
B. Infrastructure development
the Project for
 The projects will old road maintaining and constructing new
societies
road which serve both for the societies and the project.
 supporting health post in material and financially
 supporting primary school both by material and financially
2) Environmental protection plan of the project
 Seedling indigenous plants and distributing for societies
 The project plan produce indigenous and economically important
 Develop Environmental Impact Mitigation on the project

Environmental
 Soil Sanitation
protection plan
 Protect Water Bodies which is in the project
 Land Management; which is not suitable for mechanized farm
 forestation ; covering areas in the project by the forest
 Protecting soil erosion by planting trees

 Using waste material as fertilizer (composting)
3) Out growing plan of the project
 The project plan to develop training center collaborating with
government body like Agricultural and rural development
Out growing plan bureau, specially establishing Farmer Training Center (FTC) in
the kebele where the project will established and train the
local societies the way they increase productivities in small land
(out growing).
4) Capacity and commitment
To operate the project success fully, owner has the following
 Loan from bank ------ 51,205,158 Birr
 Owner equity 21,954,068 Birr
 Total capital 73,159,226 birr
 will purchase farm machinery in the future like;
 4 tractors with full machinery
 1FSR ISUZU
 1Pick up
Capacity and
 1Tracker
commitment
 1 Dozer
 1 combiner
 1 planter
 1 chemical spry machine
 1 transport vehicle
 2 motor cycle
 2 generator

5) The overall production plan of the project
The overall  The project will export 70% of the total production output
production plan /edible oil/ and it distribute 30% for international and local
market respectively.
6) The experience of the investor
The experience  The owner have experience on producing edible oil and also it
of the investor will be managed by experts those graduates in Agronomist and
other related fields.
7) Value adding of plan of the project
 after the project will be operational and transfer to production
the investor plan in two way
 Short run plan; in short run the production product will be
value adding plan used as raw material for the factory planted in Addis
Ababa. And producing standardized edible oil.
 Long run plan; in long run the project will establish Agro
industry and process the product into edible oil which will
be distributed to local and international market.
8) The project plans on working environment
 The project plan to construct shelters for permanent and

Creating
temporary worker
conducive
 The project plan to establish health post, restaurant hall,
working
entrainment area for the employees
environments
 The project plan to pay attractive salary
 Practically advising the worker to deposit the salary they earn

1.8. Management and Organizational Set up
The proposed organizational and managerial set up of the project comprises
management and technical divisions. The project comprises of managerial, production,
financial and administrative divisions. The project manager, Mr. Mengistu Yeshitila
will serve both as a manager and contact person. The duty & responsibility of each
division is highlighted below.
General Manager: The general manager manages the entire business. Moreover, he
deals with strategic planning and decision making matters.
Production division:
 is responsible for crop production, supervision and provision of farm inputs and
outputs,
 conducts regular follow up and evaluation with regard to farm operations,
 supervises the overall operations of the enterprise,
Finance and administration division:
 Works directly under the manager and is responsible to him,
 Consists of different sections that handle a variety of responsibilities,
 Keeps different books of records,
 Prepares periodic financial plans and reports for the manager as well as external
users &manages the logistics and human resource aspects of the project.
1.9. Study of the Project Area
Mengistu Yeshitila Wheat Production Enterprise will be established in Benishangul
Gumuz Regional State, Metekel Zone, Danguri Woreda, and kebele's will be stated in
the future. The project area experiences sub-tropical temperature and lies in low land

agro- climate zone. The area is selected for investment as it satisfies the following
criteria employed by Ethiopian investment authority.
 The area is fully investment site specially for agricultural sector,
 The area is not covered by both forest and animal species of ecological
importance,
 For the sake of conserving, developing and properly utilizing the woreda’s
agriculture, Danguri woreda were suitable for the envisaged purpose in terms of
environment.

Chapter two
2. Company analysis, legality and physical condition of the farm
2.1. Legal structure of; -
Mengistu Yeshitila Wheat Production Enterprise is formed as private limited
company by the Ethiopian citizen. The company will get its legal registration from
B/G/regional state.
2.2. Business Name and Address:
 The Name of the project; Mengistu Yeshitila Wheat Production
Enterprise
 The Owner Address; England London
 Project offices;- proposed to open in either Manbuki town
 Project Address;- Danguri woreda
 phone Number +2519-11-21-80-44
2.3. Project site
The project site is found in B/G/Regional state Assosa Zone, Danguri woreda, the
kebele will be stated in the future. The total area of the project is 1,000 hectares out
of which around 5-7 hectares assumed covered by forest, stone, hill, valley and which
not suitable for crop cultivation.
2.4. Land Ownership (lease, rent, etc)
The land farm obtains from B/G/regional state in either Danguri woreda. The land
lease from regional government for 25 years for lease rent 154.50 birr per hectares
annually. Once the land is leased, demarcated and handed over by the concerned
authority to the project, it will carry out different activity like land development,
construction and building, inter farm development etc.

2.5. Physical and Natural Condition of the project Site
2.5.1. Cl i m a t e
The project areas are categorized sub tropical, hot low land to warm sub humid moist
low land which is kola. The Danguri woreda are district has average minimum
temperature (25, 27 degree celcues).
2.5.2. Rainfall
The average annual rainfall of the study area ranges from 1000mm to1600mm.
2.5.3. Soil
In Danguri district, the soil would be sandy clay to loamy clay. The texture is clay with
strong angular blocky structure. These soils have the potential to produce different oil
seeds, cereals crops and vegetable like onion and other.
2.6. Infrastructure condition of the project area
2.6.1. Communication:
In regard to communication, the project area is not connected with telephone
connections, but we hope that, the government will plan to expand the
telecommunication service to all area in Ethiopia in these five years.
2.6.2. Road: -
Danguri woreda’s were connected roads to region capital city Asossa and Amahar
region.
2.6.3. Health centre’s;
In Danguri woreda, health post and clinics are constructing and the health service
coverage is increasing gradually. In order to protect the well being/safety of the
worker and the society around the project, an owner of the project is willing to open

his own clinic in the farm site or should ready to afford any medicines before from
nearby government clinic.
2.6.4. Financial institution;-
The enterprise can get financial services from commercial bank Danguri or G/Beles
district.

Chapter three
3. Marketing Analysis of the project
3.1. Demand Analysis
Ethiopia demand for grain continued to increase because of the population pressures,
while supply remain short, and largely for increasing the foreign currency especially
from oilseeds and the domestic demand also increase for those crops. Oil seeds are
the second largest foreign currency earning sector of the country next to coffee.
Ethiopia government has also an ambitious plan to boast different factories that
require agricultural product as input. Ethiopia at the moment is also importing huge
quantity of edible which could have been substituted if the local factories were
developed. Export of sesame has grown from year to year. Due to the above point
there exists enough demand for oil seeds and cereals crops both in domestic and
international market.
3.1.1. Market System Analysis;-
Market situation for oilseeds and cash crops
The indicators of oilseeds market are;-
 The market for oilseeds and cash crops are expending in international market
 Ethiopia being expand its export market destinations through time to time
 Local production improves and the supply of the crop increase
3.1.2. Market segmentation
The enterprise has the following market segmentation
 To the government and private organization for industry with Ethiopia commodity
exchange. ( ECX)
 To whole seller for exporter or domestic market

 To regional and individual customers
3.1.3. Risk Analysis
The major anticipated risks of the enterprise will face the following factors
Absence of rain fall and erratic nature
Pest and insect migrations
Crops failure
Wild fire
Infrastructure problems, especially water, electric power, road and financial
institutions
3.1.4. Risk management systems
Doing experiment and research during cultivation periods
The enterprise get insurance for any risks
Clear the surrounding place to prevent wild fire
Digging ground water hole in the project site
Install generator to the project site
Use chemical and pest acid inputs for the farm
3.1.5. Distribution channels
The enterprise use different distribution channels to makes its product available and
accessible to every end user and trader or Ethiopian commodity exchange (ECX) and in
the future plan to export the product for international market.
3.2. Pricing techniques
The enterprise has several competitive cost advantage and topographic benefit for the
production of different crops. Due to this, the enterprises use the following pricing
techniques.

 Market penetration price technique i.e. set competitive lower price to the product
to get larger quantities sales volumes
 Quantity discount pricing techniques;- give discount advantages for large quantity
buyers to achieve advantages.
3.3. Promotional and advertising
The enterprise uses the following promotional techniques to penetrate market and to
achieve its forecasted sales targets;
 Personal selling promotions; use sales force to present the crops to target
customer
 Trade fairs and expansions as means of promotions
 Donations and free technological services to the local community.

CHAPTER 4
4. ORGANIZATIONAL PROFILE (MANAGEMENT TEAM)
4.1. Structure of the project which could show level status
It is structure of the project that shows how day to day operations are organized in
such a way that could enable to run smoothly the project activities effectively and
efficiently.
General Manager
Financial section and admin

manager
Production and technology
section manager
 Accountant  General  Driver

 Cashiers services  Guards Crop protection Technology
 Purchaser officer  Operator and production section
 Office  cooker
secretary
4.2. Skilled and unskilled manpower
The farm required 52 permanent and more than 200 casual labourers on average for
each production season.

Table 2 human resource requirement
No- Description Qt y Monthly Total Total salary
Salary/ salary per per annual
individual month
1. General manager 1 4,000 4,000 48,000
2. Financial section manager 1 3,000 3,000 36,000
3. Technology and production 1 3,000 3,000 36,000
manager
4. Accountant 2 1,500 1,500 18,000
5. Casher 2 1,000 1,000 12,000
6. Office secretary 1 700 700 8,400
7. General service officer 2 1,000 1,000 12,000
8. Driver 4 1,500 3,000 36,000
9. Guard 4 1,000 2,000 24,000
10. Cooker 4 600 1,200 14,400
Total 22 244,800
CHAPTER FIVE
5. Production Process
As far as production pattern is concerned, the 1,000 hectare will be proportionally
allocated for different types of production like sesame, maize, soybean, cotton,
pepper, and others. However, as per the prevailing market demand and the dynamics of
nature, the planned production pattern will be readjusted.

5.1. Land Clearing;
Prior to land levelling, removing heavy vegetation growth is advantageous. Clearing land
encompasses removing of some vegetation types such as trees, bushes, trashes and
boulders from the area to be cultivated. This is done either manually or mechanically.
As far as this project is concerned, land clearing shall be carried out both manually and
mechanically.
5.2. Grubbing;
The process of removing stumps, deep-set stones & old roots as per required. This will
be done by using human labour as well machinery.
5.3. Leveling;
As mentioned earlier, the project area will be virgin and covered with a variety of
vegetation types. In order to bring the area under cultivation, in the long run, land
clearing & grubbing activities will be carried out in an environmentally friendly manner.
5.4. Land Preparation & Sowing
It is advisable that the preparation of crop fields should be carried out several weeks
prior to planting and as such an activity helps the pre-germination of unwanted or
weeds crops. Otherwise, a delay of the last tillage until the germination of those weeds
is desirable. Appropriate planting dates should be chosen so as to avoid risky
environmental conditions such as delay or extension of rainfall. Planting is
recommended after a thorough preparation of field crops which, in turn, ensures the
rapid germination of seeds as well as crop development. Crop fields should be well
ploughed and prepared so as to ensure proper harrowing and fine filth production.
Planting depth should coincide with common practices of the area in which the project
is situated.

5.5. Fertilization
The application of fertilizers is to achieve maximum production while considering
social, economic and environmental factors. Appropriate fertilization depends on soil
types, environmental conditions and the type of the crop to be produced. The
application of fertilizers should be on the basis of expertise knowledge and this avoids
contamination and environmental pollution.
5.6. Weeding
Proper control of weeds, insect pests and diseases is an integral part of crop
production. Proper weed control is instrumental as it largely facilitates aeration,
proper growth of crops, high yield, and avoids undesirable competition for sunlight,
water & minerals. On the other hand, improper weed control results in undesirable
disease and insects which leads to reduced yield and quality.
5.7. Disease & Pest Control
Controlling of both surface and underground insects is important in crop production.
Most underground pests are controlled either by crop treatment or granular
insecticides application. The application of chemicals is essential for controlling
insects which feed particularly the silks, ears and tassels of crops. An integrated pest
management program (IPM), including proper scouting, is recommended. In the same
manner, proper disease control is vital for both quantity and quality crop production. In
addition, proper disease control mechanisms avoid the spread of crop borne pathogens.
Genetic resistance in parental lines is preferable but sometimes outstanding lines are
susceptible to particular pathogens present in production fields. In general, the
project shares the responsibility of abandoning the application of the internationally
abandoned chemicals.
5.8. Harvesting and Threshing

Late harvesting results in dropping of ears, stalk lodging ear rot development, shelling
of ears and other related negative effects. As a result, harvesting should be done
immediately after maturity when crops form brown layer at the point of attachment
with cobs and the content of moisture is reduced to 20-25%. Harvesting is possible
both manually and mechanically. However, in developing countries like Ethiopia, the
former is more suitable as human labour is abundant and cheap.
5.9. Environmental Impact Mitigation
Experiences have shown that large scale mechanized agriculture has caused massive
environmental degradation such as deforestation, soil erosion and the like.
Environmental degradation is largely caused by unwise use of natural resources.
Vegetative wise, at present, the project area is mainly covered by savannah vegetation
type with flat and gentler topography. In order to minimize the adverse environmental
damages and loss of soil fertility in sustainable manner, crop rotation and wind break
mechanisms will be employed.
5.10. Crop Rotation:
As opposed to the monoculture, crop rotation is a mix of cropping on rotational basis
and has the following merits:
5.11. Soil Fertility:
A rotation of different crops ensures soil fertility for a sustained period of time as
compared to a single crop grown on the same plot year after year. Even though man
made fertilizers like crop residue and compost are believed to be applied immediately
after the commencement of the project, chemical fertilizers such as urea and dap will
be employed as per the demand arises, i.e. when the land loses its virginity and fertility
and after the approval of agricultural research.
5.12. Soil Sanitation:

Growing the same crop on the same plot continuously accelerates infestation with
diseases, insects and weeds resulting reduction in production and higher cost of
cultivation. A diligent follow up will be carried out in this respect so as to control the
possible adverse effects.
5.13. Protection of Water Bodies:
The project gives due emphasis to the protection of water bodies such as rivers &
streams. In doing so, the project moves in accordance with the regional land
administration & uses legal frameworks.
5.14. Land Management:
In the project area, land management will be ensured by the application of organic
fertilizers and other improved agricultural practices. In addition, when the need
arises, the application of chemical fertilizers will be in effect. Nursery practices will
also be undertaken side by side.
5.15. Management of Vulnerable Areas:
The project gives due emphasis for the protection & conservation of easily vulnerable
areas such as sloppy, swampy and rugged areas. In doing so, such areas, instead of
being cultivated, shall be left out or else managed and protected through terracing,
plantation and other conservation mechanisms.

CHAPTER SIX
6. Socio-economic Analysis
6.1. Social Analysis
The area in which the project is located is slightly poor in terms of infrastructural
provision as well as supply of daily labourers. However, the project tries to handle such
setbacks in a hand-in-hand manner with the regional as well as federal government
development Endeavour’s. As far as daily labourers are concerned, the project tries to
employ daily workers from the indigenous community and, if not, fetches from nearby
localities of other regions. Moreover, in addition to the various endeavour’s made by
both the regional & federal governments, transportation problems shall be alleviated
by the project. The farming system of indigenous community is by far traditional and
hence the project contributes much to the improvement of such practices.
6.2. Market Analysis
According to Ministry of Finance & Economic Development, MoFED, agriculture is the
most contributors to GDP. For instance, in 2008/09, agriculture accounted for 42.5%
of the GDP per annum and, the contribution of crop production to GDP was 2%.
Grain production is the mainstay of the rural population as well as the economy of the
state. Commercial crops especially sesame is the 2nd largest export earner for the
country and a great deal of smallholders are involved in its production. The project has
planned to produce both commercial and consumable crops as the demand for both is
increasing at domestic & international markets.
Despite the difficulty of quantifying and determining the exact demand-supply gap in
the agricultural sector, due to an increase in population size, consumption pattern,
income, import-export transactions and other factors, one can easily imagine that
there is unmet demand-supply gap in the sector. Consequently, market wise, the

products of the project of the project are demanded both locally as well as
internationally. From the view point of the nation’s import-export trend, in 2007/08,
the total export value of Ethiopia, driven by high international prices of agricultural
products, grew by 23.7%. According to annual report of NBE, 2007/08, the value of
major agricultural products such as coffee, sesame, flowers, pulses, live animals and
chat has shown an increase of 23.65%, 16.9%, 57.7%, 105.5%, 11.12% and 16.5%,
respectively. An increase in the price of commodities in global markets has resulted in
an increase in the value of exported items. In the same period, the share of major
agricultural products, namely, coffee, sesame, pulses, flowers and chat from the total
value of exports was 35.8%, 14.9%, 7.6% and 7.4%, respectively.
In general, the existing market environment is quite favorable for the sale of farm
produce and purchase of inputs. In both cases the project can have access to local and
national market center of the country. Since the project is located in food deficit
area, it has a vital role in stabilizing the price of food crops in the region. Therefore,
the project can sell its produce to market centers of Assosa, Chagni, Bahir Dar, and
Addis Ababa. Moreover, the sale of the produce at nearby markets is profitable even
immediately after harvesting is completed.
6.3. Profitability
According to the projected income statement, the project will start generating profit
in the first year of operation. Important ratios such as the percentage of net profit
to total sales, net profit to equity (return on equity) and net profit plus interest to
total investment (return on total investment) will show an increasing trend throughout
the production life of the project. The income statement and other profitability
indicators show that the project is viable. In line with this, the break-even point of the
project is estimated by using income statement projection as

BE = Fixed Cost = 20 %
Sales – VC
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 5 years. Based
on the cash flow statement, the calculated IRR of the project is 18 % and the net
present value at 5.4%. As far as the liquidity of the project is concerned, the project
is free from any liquidity problem throughout its life. Sensitivity analysis is among the
crucial elements of project evaluation. In line with this, the project under
consideration has been evaluated from three points of view: if price/benefit decreases
by 10%, its IRR will be 10%. Similarly, if investment costs are increased by 10%, its
IRR will be 13%. Consequently, the project is feasible even under conditions
unfavorable to it.

CHAPTER SEVEN
7. Farming Program, plan, and revenue estimation
7.1. Farming Program of the project
The project, with full capacity, commenced production in 2023/24 production season.
In doing so, the project tries to fully develop the estimated 1,000 hectare of land
within 5 years. Land clearing activities will be accomplished accordingly.
Table 3 Farming program
No Type of Unit Yield/ Land development And patricianly production plan
crops ha
2023/24 2024/25 2025/26 2026/27 2027/28
1. Sesame Quintal 6 120 200 300 400 600
2. Soya Quintal 15 80 120 150 150 150
bean
3. Haricot Quintal 15 20 40 50 100 100
bean
4. Sorghum Quintal 30 5 5 10 15 15
5. Maize Quintal 50 5 5 15 15 15
6. Cotton Quintal 10 30 30 75 120 120
Total - - 260 400 600 800 1000
7.2. Production Plan and estimated yield
The enterprise has an estimated area of 1,000 hectare of land and tentatively planned
to produce a mixture of crops such as Sesame, cotton, Maize, haricot bean, Soya bean,
and Sorghum. However, as mentioned above, the planned production pattern will be
readjusted as per the prevailing market demand and the dynamics of nature.

Table 4 production plan and estimation of revenue for each product
Crop Yr1 Yr2 Yr3 Y r4 Yr5
1. Sesame
Area in Ha 120 200 300 400 600
Yield/Ha/Qt 6 6 6 7 7
Total production in 760 1200 1800 2,800 4,200
quintal
Price per quintal 2,800 2,800 2,800 3,000 3,000
Revenue 2,016,000 3,360,000 5,040,000 8,400,000 12,600,000
2. Wheat
Area in Ha 110 170 225 280 280
Yield/Ha/Qt 40 40 45 45 45
Total production in 4,400 6,800 10,125 12,600 12,600
quintal
Revenue 19,800,000 30,600,000 45,562,500 56,700,000 56,700,000
3. Cotton
Area in Ha 30 30 75 120 120
Yield/Ha/Qt 15 15 15 15 15
Total production in 450 450 1,125 1800 1800
quintal
Revenue 675,000 675,000 1,687,500 2,700,000 2,700,000
4. Irrigation of
vegetable /
mango, lemon,
avocado, orange

& others
Area in Ha 45 50 60 70 80
Yield/Ha/Qt 120 120 125 125 130
Total production in
quintal 5,400 6,000 7,500 8,750 10,400
Revenue 5,400,000 6,000,000 7,500,000 8,750,000 10,400,000
Total revenue
production year 10,216,000 13,260,000 18,697,500 25,205,000 31,055,000
Note: Yield per hectare in quintal estimation is made based on conventional production
practices. As a result, it is understood that yield per hectare in quintal can either
increase or decrease depending on the application of modern farming inputs and the
prevailing rainfall pattern
7.3. Summary of revenue
Table 5 summery Revenue
Revenue type Yr1 Yr2 Yr3 Yr4 Yr5
Revenue from sesame 2,016,000 3,360,000 5,040,000 8,400,000 12,600,000
Revenue from wheat 19,800,000 30,600,000 45,562,500 56,700,000 56,700,000
Revenue from cotton 675,000 675,000 1,687,500 2,700,000 2,700,000
Revenue from irrigation 5,400,000 6,000,000 7,500,000 8,750,000 10,400,000
Total revenue 27,891,000 40,635,000 59,790,000 76,550,000 82,400,000
Note: Revenue from each crop is estimated on the basis of current market prices.
Consequently, such prices are subject to market fluctuations such as inflation and
other related factors.

CHAPETER EIGHT
8. Financial Analysis
8.1. Source of Fund
The total investment of the project is estimated to be an Ethiopian Birr 43,339,930
birr. Of which 70% (30,337,951) will be financed by the development Bank of Ethiopia
in long term. The remaining 30% (13,001,979) will be covered by the project owner.
Other major assumptions for financial analysis of the project are summarized
hereunder. For the sake of simplicity and financial analysis purpose, the life time of
the project is assumed to be 5 years. The project bears costs to a number of central
facilities to support the implementation of it. All fixed assets shall be replaced at the
end of the expected economic life based on three respective depreciation rates. A
straight line depreciation method is adopted for cumulative annual depreciation
changes.
8.2. Total Investment
The overall investment required by the project includes fixed asset investment,
production cost, administration cost and working capital, and is estimated to be
43,339,930 Ethiopian birr.
Table 6: Total investment cost
Description measurement Quantity Unit price Total
Land development Hectare 1,000 5,000 5,000,000
Pick up vehicle No. 1 3,500,000 3,500,000
Motorbike No. 2 35,000 70,000
FSR ISUZU No. 1 1,500,000 1,500,000

Generator No. 2 45,000 90,000
Tractor with accessories No. 2 1,400,000 2,800,000
Dozer No. 1 2,000,000 2,000,000
Combiner No. 1 1,750,000 1,750,000
Planter No. 1 1,500,000 1,500,000
Building & construction Lump sum - - 300,000
Office equipment Bulk 200,000
Infrastructure cost Bulk 2,000,000 4,000,000
Working Pre-operating Bulk 20,629,930
expenditure
Total 43,339,930
Note: The cost estimations are made based on current market prices. Therefore, they
are not exhaustive and hence they are subject to change due to inflation and related
factors.
8.3. Financing structure
Table 7 Financing structure
Description Equity Bank loan Total
Amount % Amount %
Land development 1,500,000 30 3,500,000 70 5,000,000
Pick up vehicle 1,050,000 30 2,450,000 70 3,500,000
FSR 21,000 30 49,000 70 70,000
Motorbike 450,000 30 1,050,000 70 1,500,000
Generator 27,000 30 63,000 70 90,000

Tractor with accessories 840,000 30 1,960,000 70 2,800,000
Dozer 600,000 30 1,400,000 70 2,000,000
Combiner 525,000 30 1,225,000 70 1,750,000
Planter 450,000 30 1,050,000 70 1,500,000
Building & construction 90,000 30 210,000 70 300,000
Office equipment 60,000 30 140,000 70 200,000
Infrastructure cost 1,200,000 2,800,000 70 4,000,000
Working Pre-operating 6,188,979 30 14,440,951 70 20,629,930
expenditure
13,001,979 30,337,951 43,339,930
8.4. Depreciation & amortization
Table 8 Depreciation & amortization
Description Cost R ate 1-5 yr
Land development 1,000,000 20% 200,000
Pick up vehicle 500,000 20% 100,000
Tractor with accessories 800,000 10% 80,000
FSR 1,000,000 20% 200,000
Generator 90,000 10% 9,000
Building and constructions 300,000 20% 60,000
Office equipment 200,000 5% 10,000
Working Pre-operating 1,040,000 2% 20,800
expenditure
Total 679,800

8.5. Fixed Asset Investment
The major investment items of the project include: Purchase of tractor with
accessories, 4wd double pickup, FSR and Purchase of office equipment, Construction of
office and residence.
Table 9 Estimated Fixed Investment cost of the Project
Description Quantity Unit price Total
Building & construction Lump sum 300,000 300,000
Tractor with accessories 2 1,400,000 2,800,000
FSR 1 1,500,000 1,500,000
4wd pickup 1 3,500,000 3,500,000
Generator 2 45,000 90,000
Motorbike 2 35,000 70,000
Office equipment & Lump sum 200,000 200,000
furniture
Total fixed asset investment 8,460,000
Note: The cost estimations are made based on current market prices. Therefore, they
are not exhaustive and hence they are subject to change due to inflation and related
factors.
8.6. Loan requirement and repayment schedule
Table 10 Repayment schedule
Loan amount Principal repayment Interest Out ball
30,337,951 30,337,951
30,337,951 3,033,795.1 3,640,554.1 27,304,155.9
27,304,155.9 3,033,795.1 3,276,498.7 24,270,360.8

24,270,360.8 3,033,795.1 2,912,443.3 21,236,565.7
21,236,565.7 3,033,795.1 2,548,387.9 18,202,770.6
18,202,770.6 3,033,795.1 2,184,332.5 15,168,975.5
15,168,975.5 3,033,795.1 1,820,277.1 12,135,180.4
12,135,180.4 3,033,795.1 1,456,221.6 9,101,385.3
9,101,385.3 3,033,795.1 1,092,166.2 6,067,590.2
6,067,590.2 3,033,795.1 728,110.8 3,033,795.1
3,033,795.1 3,033,795.1 364,055.4
Note: A term of four years loan repayment period and a grace period of nine months
are taken in to account. Plus, a 9.5% lending rate is taken in to account.
8.7. Project cost estimation
The cash flow of the project reveals that the project, including its loan, can easily
settle its financial obligation without difficulties. Even if the project shows short of
cash in the first year of operation due to pre-production expenditures, it turns in to
liquidity after the 1st year of operation. Details are shown below.
Table 11 project cost estimation

Cost items Y ea r 1 Y ea r 2 Y ea r 3 Y ea r 4 Y ea r 5
Seed 412,400 514,800 618,000 720, 597 823, 597
Chemicals 42,000 52,500 62,800 73,250 83,500
Spare parts 44,420 110,450 116,725 128,061 139,464
Wage 542,000 562,000 572,000 576,000 585,000
Fuel 112,500 117,500 122,500 222,500 322,500
Land rent 154,500 154,500 154,500 154,500 154,500
Packing materials 115,000 117,000 122,000 125,000 130,000
S a l a ry 114,000 246,000 244,800 244,800 244,800
Repair & maintenance 5,000 14,400 26,970 40,970 50,970
Insurance 20,000 20,000 20,000 20,000 20,000
Office supply 15,000 30,000 30,000 35,000 40,000
Oil & lubricant 140,000 180,000 200,000 212,000 221,000
Travel &per diem 10,000 15,000 20,000 20,000 20,000
Depreciation & amortization 43,313 86,626 129,939 259,878 346,504
Tractor 2,400,000 2,400,000 400,000 400,000 -
4D pick up 2,750,000 - - - -

Motor bike - 35,000 - 35,000 -
Generator 250,000 45,000 - - 45,000
FSR ISUZU 1,500,000 - 1,500,000 - 1,000,000
Dozer - 2,000,000 - - 1,500,000
Total operational cost 8,670,133 6,700,776 4,340,234 4,046,959 6,226,835

8.8. Project Cash Flow
Table 12 Project Cash Flow
Description Yr1 Yr2 Yr3 Yr4 Yr5
Total revenue from
Sales 27,891,000 40,635,000 59,790,000 76,550,000 82,400,000
Total cost
8,670,133 6,700,776 4,340,234 4,046,959 6,226,835
Annual loan payment 3,033,795.1 3,033,795.1 3,033,795.1 3,033,795.1 3,033,795.1
Interest payment 4,004,609.5 4,004,609.5 4,004,609.5 4,004,609.5 4,004,609.5
Revenue before tax 12,182,462 26,895,819 48,411,361 65,464,636 69,134,760
Income tax
4,263,861.8 9,413,536.8 16,943,976.5 22,912,622.7 24,197,166.1
8.9. Project Income Statement
Table 13 Project Income Statement
Description Year 1 Year 2 Year 3 Year 4 Year 5
Total revenue 27,891,000 40,635,000 59,790,000 76,550,000 82,400,000
Operating cost 8,670,133 6,700,776 4,340,234 4,046,959 6,226,835
Annual loan 3,033,795.1 3,033,795.1 3,033,795.1 3,033,795.1 3,033,795.1
payment
Interest 4,004,609.5 4,004,609.5 4,004,609.5 4,004,609.5 4,004,609.5
payment
revenue before 12,182,462 26,895,819 48,411,361 65,464,636 69,134,760
tax
Income tax 4,263,861.8 9,413,536.8 16,943,976.5 22,912,622.7 24,197,166.1
Net profit 7,918,601 17,482,283 31,467,385 42,552,014 44,937,594

CHAPTER NINE
9.1. Challenges & Opportunities
The project is viable to natural catastrophes such as climate changes like delay or
extension of rainfall. In addition, it is subject to market dynamics such as inflation
which, in turn, affects the import-export Endeavour’s of the project. Plus, the rise and
fall of market prices may also affect the project both negatively and positively.
At international level, the demand for agricultural products, both commercial & food
crops, is increasing at an alarming rate. This, in turn, leads investors to be beneficiary
& competent in the area. In other words, investors in question will be encouraged to
produce more in terms of both quantity and quality, and hence benefit from the
international arena.
The Ethiopian government has given due attention to the sector and has developed a
conducive investment policy together with a variety of incentives. In connection to
this, as the country is witnessing a double digit growth, different industries are
expanding which, in turn, creates a back-forth linkage between the sector & industries.
9.2. Monitoring & Evaluation (M & E)
The day-to-day activities of the project will be monitored by the agronomist. The
general manager shall visit the project site when necessary. The physical and financial
plans as well as reports of the project will be prepared and submitted to the general
manager on time. According to the reports submitted, the project will check and verify
through supervision. The financial and physical audits will be undertaken at the end of
each year either by internal or external auditors. In general, both heads of the
management and technical divisions, assisted by other relevant sectors, are the main
responsible bodies for monitoring and evaluation of the project and a variety of

criteria shall be taken in to account. In other words, the monitoring and evaluation
part will be carried out in an integrated manner.
9.3. Parameters for M & E
As per the stages of the project, the parameters to be monitored and evaluated
include project establishment, project implementation & progress, post implementation,
environmental management, data management, camp set up, protection of water
management, land management, application of modern agricultural inputs, and
composition of machinery and so on.
9.4. Conclusion
According to the study made, the aggregate and planned cost required to establish the
project is estimated to be 43,339,930 Ethiopian birr. Out of the total financial
requirement, 30% will be covered by the investor and the remaining 70% will be
covered by loan from banks. In addition, the project is financially, socially, politically
and environmentally viable. In other words, the establishment of the project has
immense importance in this regard.

Mengistu Wheat Farm Integrated Farm 2

Uploaded by

Copyright:

Available Formats

Mengistu Wheat Farm Integrated Farm 2

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Mengistu Wheat Farm Integrated Farm 2

Uploaded by

Copyright:

Available Formats

Mengistu Yeshitila Wheat Production Enterprise

MENGISTU YESHITILA WHEAT

Business plan for agricultural Investment

Project sector Mechanized Farm

1|P ag e project proposal developed for desert wheat

A. Executive Summary ......................................................................................................................... 7

B. The vision and mission statement of the project....................................................................... 7

C. Background information of the project ....................................................................................... 7

1. Background of the project ............................................................................................................. 8

1.1. Objectives of the project .......................................................................................................... 9

1.2. key to success/ opportunities .................................................................................................. 10

1.3. Present status of the project ................................................................................................. 10

1.4. Strategic opportunities ............................................................................................................ 11

1.5. Business strategies.................................................................................................................... 11

1.6. Expected Benefits ..................................................................................................................... 11

1.7. Main Component of the Project ............................................................................................... 12

Table 1 main component to be implemented during project operation ............................................. 12

1.8. Management and Organizational Set up ................................................................................. 15

1.9. Study of the Project Area ....................................................................................................... 15

Chapter two ............................................................................................................................................ 17

2. Company analysis, legality and physical condition of the farm ............................................... 17

2.1. Legal structure of; - .................................................................................................................. 17

2.2. Business Name and Address: ................................................................................................... 17

2.3. Project site ................................................................................................................................. 17

2.4. Land Ownership (lease, rent, etc) ........................................................................................... 17

2.5. Physical and Natural Condition of the project Site ............................................................. 18

2.5.1. Climate ..................................................................................................................................... 18

2|Page project proposal developed for desert wheat

2.5.3. Soil ............................................................................................................................................ 18

2.6. Infrastructure condition of the project area ...................................................................... 18

2.6.1. Communication: ....................................................................................................................... 18

2.6.2. Road: - ...................................................................................................................................... 18

2.6.3. Health centre’s; ...................................................................................................................... 18

2.6.4. Financial institution;- ............................................................................................................. 19

Chapter three ........................................................................................................................................ 20

3. Marketing Analysis of the project ............................................................................................. 20

3.1. Demand Analysis......................................................................................................................... 20

3.1.1. Market System Analysis;- .................................................................................................... 20

3.1.2. Market segmentation............................................................................................................. 20

3.1.3. Risk Analysis ........................................................................................................................... 21

3.1.4. Risk management systems..................................................................................................... 21

3.1.5. Distribution channels............................................................................................................. 21

3.2. Pricing techniques ...................................................................................................................... 21

3.3. Promotional and advertising ..................................................................................................... 22

4. ORGANIZATIONAL PROFILE (MANAGEMENT TEAM) ....................................................... 23

4.1. Structure of the project which could show level status..................................................... 23

4.2. Skilled and unskilled manpower................................................................................................ 23

Table 2 human resource requirement .................................................................................................... 24

CHAPTER FIVE ...................................................................................................................................... 24

5. Production Process ........................................................................................................................ 24

5.1. Land Clearing; ............................................................................................................................. 25

3|P age project proposal developed for desert wheat

5.3. Leveling; ....................................................................................................................................... 25

5.4. Land Preparation & Sowing ....................................................................................................... 25

5.5. Fertilization ................................................................................................................................ 26

5.6. Weeding ....................................................................................................................................... 26

5.7. Disease & Pest Control .............................................................................................................. 26

5.8. Harvesting and Threshing ........................................................................................................ 26

5.9. Environmental Impact Mitigation ............................................................................................ 27