Srawberry Fruit Processing Industry-2015

FESIBILITY STUDY
ESTABILSHMENT & OPERATION
OF
SAID NURE Agricultural Products Processing Center (APC)
On
STRAWBERRY FRUIT
Location: SNNPRS, GURAGE ZONE, CHEHA WOREDA
Owner: Mr. Said Nure
PREPARED BY: Abrham astatike
Mobile Phone: 0911384833
JUNE, 2023
AVOCADO & STRAWBERRY FRESH FRUIT PROCESSING APC_INDUSTRY PROJECT
TABELS OF CONTENTS
LIST OF FIGURE ..................................................................................................................................................... 4
LIST OF TABLES ..................................................................................................................................................... 4
LIST OF ANNEXURE................................................................................................................................................ 4
ACRONYMS........................................................................................................................................................... 5
1. EXECUTIVE SUMMARY....................................................................................................................................... 6
2. INTRODUCTION ................................................................................................................................................. 9
2.1 RATIONAL BEHIND THE PROJECT ................................................................................................................. 9
2.3 COMPANY / APPLICANT PROFILE............................................................................................................... 10
2.4 PROMOTER’S PROFILE .............................................................................................................................. 10
3. BACKGROUND INFORMATION ......................................................................................................................... 12
3.1 FRUIT MARKETING CONSTRAINTS ............................................................................................................. 12
3.1.2 FRUIT VALUE CHAIN ACTORS FUNCTION AND VALUE ADDITION .............................................................. 12
3.1.3 APC-TECHNOLOGY CONSTRAINTS IMPACT..................................................................................................... 13
4.GENERAL DESCRIPTION 0F THE PROJECT ........................................................................................................... 15
4.1 LOCATION OF PROJECT ............................................................................................................................. 15
4.2 PROJECT LOCATION ADVANTAGE .............................................................................................................. 15
4.3 GENERAL DISCRIPTION OF THE PROJECT ................................................................................................... 15
5. MARKET STUDAY AND APPLICATION ............................................................................................................... 16
5.1 MARKET STUDY ........................................................................................................................................ 16
5.1.1 PAST SUPPLY AND PRESENT DEMAND............................................................................................................ 16
5.1.2 PROJECTED DEMAND ...................................................................................................................................... 16
5.1.3 PRICING AND DISTRIBUTION .......................................................................................................................... 18
5.2 PLANT CAPACITY AND PRODUCTION PROGRAMME ................................................................................... 18
5.2.1 PLANT CAPACITY ............................................................................................................................................. 18
5.2.2 PRODUCTION PROGRAMME........................................................................................................................... 19
5.3 MARKET ANALYSIS.................................................................................................................................... 19
5.3.1 MARKET SEGMENTATION ............................................................................................................................... 19
5.1.2 MARKET TARGET ............................................................................................................................................. 19
5.1.3 PROJECT MARKET CHAIN ............................................................................................................................... 20
6. THE PROJECT ................................................................................................................................................... 21
6.1 PROJECT DESCRIPTION .............................................................................................................................. 21
6.2 PROJECT ACTIVITIES .................................................................................................................................. 21
6.2.1 APC - INDUSTRY ESTABLISHMENT .................................................................................................................. 21
6.2.2 FRESH FRUIT PROCESSING INDUSTRY ESTABLISHMENT ................................................................................. 22
6.3 PURPOSE OF THE PROJECT ........................................................................................................................ 22
6.4 PROJECT OBJECTIVES ................................................................................................................................ 23
6.5 PROJECT STRATEGY................................................................................................................................... 23
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6.6 TECHNOLOGY AND ENGINEERING .................................................................................................................. 23

6.6.1 APC ESTABLISHMENT ...................................................................................................................................... 23
6.2.1.1 PRODUCTS PROCESS FLOW ..................................................................................................................... 24
6.2.1.2 PRE PACKAGING OPERATIONS ................................................................................................................. 25
6.2.1.3 PACKAGING HOUSE CAPACITY AND PRODUCTION PLAN ........................................................................ 26
6.2.1.4 PACKAGING TYPES AND MATERIAL ....................................................................................................... 26
6.2.1.5 QUALITY REQUIREMENTS ........................................................................................................................ 27
6.6.3 SOURCE OF TECHNOLOGY .............................................................................................................................. 27
6.7 PLANT CAPACITY AND PRODUCTION PLAN ................................................................................................ 27
6.8 ENGINEERING ........................................................................................................................................... 27
6.8.1 MACHINERY AND EQUIPMENT FOR APC ........................................................................................................ 27
6.9 LAND, BUILDING AND CIVIL WORKS .................................................................................................................. 28
6.9.1 LAND LEASE COST ........................................................................................................................................... 28
6.9.2 APC- PLAN BUILDING COST ............................................................................................................................. 28
6.10 MAIN RAW MATERIALS ........................................................................................................................... 29
6.12 MAINTENANCE & REPAIRS ...................................................................................................................... 30
6.13 OFFICE FURNITURE & EQUIPMENT .......................................................................................................... 30
6.14 COMPANY VEHICLES ........................................................................................................................................ 30
6.15 OPERATING ACTIVITIES ........................................................................................................................... 30
6.15.1 PRE-OPERATING ACTIVITIES ......................................................................................................................... 30
6.16 PRE- PRODUCTION EXPENSES .................................................................................................................. 31
7. HUMAN RESOURCE AND TRAINING REQUIREMENT .......................................................................................... 32
7.1 HUMAN RESOURCES REQUIREMENTS........................................................................................................ 32
7.2 ORGANIZATIONAL STRUCTURE.................................................................................................................. 32
7.3 MAN POWER REQUIREMENT .................................................................................................................... 32
7.4 TRAINING REQUIREMENT ......................................................................................................................... 33
8. FINANCIAL STUDY OF THE PROJECT .................................................................................................................. 34
8.1 INTRODUCTION ........................................................................................................................................ 34
8.2 OBJECTIVES .............................................................................................................................................. 34
8.3 INVESTMENT COST AND WORKING CAPITAL REQUIREMENTS .................................................................... 34
8.4 OPERATING COST ..................................................................................................................................... 35
8.5 MEANS OF FINANCE .................................................................................................................................. 36
8.6 FINANCIAL ANALYSIS KEY ASSUMPTIONS .................................................................................................. 36
8.6.1 GENERAL ASSUMPTION OF THE PROJECT ..................................................................................................... 36
8.7 REVEENUE PROJECTION ............................................................................................................................ 37
8.10 OTHER ASSUMPTIONS............................................................................................................................. 38
8.11 FINANCIAL VIABILITY............................................................................................................................... 38
8.11.1 INCOME STATEMENT .................................................................................................................................... 38
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8.11.2 CASH FLOW STATEMENT AND BALANCE SHEET ........................................................................................... 38

8.12 FINANCIAL EVALUATION .............................................................................................................................. 39
8.12.1 PROFITABILITY ..................................................................................................................................... 39
8.12.2 INTERNAL RATE OF RETURN ................................................................................................................. 39
8.12.3 PAY BACK PERIOD ......................................................................................................................................... 39
8.12.4 NET PRESENT VALUE (NPV)........................................................................................................................... 39
8.12.5. LOAN REPAYMENT SCHEDULE ..................................................................................................................... 39
8.12.6 SENSITIVITY ANALYSIS................................................................................................................................... 40
8.12.7 RISK AND UNCERTAINTY ................................................................................................................................ 40
9. SOCIO-ECONOMIC IMPACT OF THE PROJECT .................................................................................................... 41
9.1. POSITIVE IMPACT ON SOCIAL & ECONOMY............................................................................................... 41
9.1.1 CREATION OF EMPLOYMENT OPPORTUNITY................................................................................................ 41
9.1.2 LINKAGE EFFECT.............................................................................................................................................. 41
9.1.3 CREATE GOOD HEALTH VALUE ....................................................................................................................... 42
9.1.4 CONCERN TO THE ENVIRONMENT ................................................................................................................. 42
10. CONCLUSIONS AND RECOMMENDATIONS ..................................................................................................... 43
11. ANNEXTURE .................................................................................................................................................. 44
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List of Figure
Figure 1: Simplified Strawberry & Avocado fruit supply chain ......................................................................... 20
Figure 2: Organization Structure of the project ............................................................................................... 32
List Of Tables
Table 1: projected demand for the next ten year (‘’000’’ Mt) ......................................................................... 17
Table 2: Project estimated sales price .............................................................................................................. 18
Table 3: Production Programe of the project ................................................................................................... 19
Table 4: APC Construction, machinery and equipment cost ............................................................................ 27
Table 5: Fresh Fruit Processing Facility and Related Cost................................................................................. 28
Table 6 : Raw and auxiliary materials and related cost .................................................................................... 29
Table 7: Annual utility Requirement and related cost ...................................................................................... 29
Table 8: Company Vehicles cost ....................................................................................................................... 30
Table 8: Company Vehicles cost ....................................................................................................................... 30
Table 9: PRE-OPERATING ACTIVITIES ................................................................................................................ 31
Table 11: Man Power requirements ................................................................................................................. 32
Table 12: Project Investment and Working Capital Cost .................................................................................. 35
Table 13: Projected Production Operation estimated cost (direct and indirect) ............................................. 35
Table 14: Project Investment and Working cost by Source of the Fund .......................................................... 36
Table 15: Revenue Determination (seals in birr) .............................................................................................. 37
Table 16: loan repayment Schedule ................................................................................................................. 39
List of Annexure
Annex 1: PROJECTED DEPRECIATION (000 BIRR) ............................................................................................ 44
Annex 3: LOAN REPAYMENT SCHEDULE (BIRR) ................................................................................... 44
Annex 4: PROJECTED INCOME STATEMENT (000 Birr) .......................................................................... 46
Annex 5: PROJECTED BALNCE SHEET (Birr) ............................................................................................ 47
Annex 6: PROJECTED CASH FLOW STATEMENT (Birr) .......................................................................... 47
Annex 7 INTERNAL RATE OF RETUREN (Birr) ......................................................................................... 48
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Acronyms
APC Agricultural Products Processing Center
ETB Ethiopian Birr
FDRE Federal Democratic Republic of Ethiopia
GDP Gross Domestic Product
GTP Growth and Transformation Plan
ha Hectare
KA(s) Kebele Administration(s)
KM Kilo Meter
m.a.s.l. Meters above sea level
mm Millimeter
MoARD Ministry of Agriculture and Rural Development
MoFED Ministry of Finance and Economic Development,
oC Degree Cellicious
PIF Policy and Investment Framework (of Ethiopian Agricultural Sector)
PLC Private Limited Company (Pvt. Ltd. Co)
Qtl(s) Quintal(s)
USA United States of America
USD United States Dollars
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1. EXECUTIVE SUMMARY
The present feasibility study business plan is established in view of new “Agriculture Products Processing
Center (APC)” for strawberry and avocado fresh fruit processing project at SNNPRS, Gurage Zone, Cheha
Woreda which is anticipated by Mr. Said Nure. The project has holistic approach industry; it can be
processing any kinds of fresh horticultural fruit by exchanging the shape of the sorting, washing and
packing machine part.
APC is a sophisticated facility that handles commercialization functions such as harvesting, collecting,
storing and shipping of fruits, vegetables, and other horticultural products to meet the quality and
specifications required by the market. The product handled in the APC is sold to wholesale markets, to large
distributors, exporters, and food ingredients companies.
APC business is to reduce post-harvest loss and improve quality of life horticultural fruit at rural areas.
Further through it is one of the major horticultural industry of job creation for the local community and by
improving the shelf life of the horticultural crops for exports of agricultural products, it would serve us as a
model of sustainable economic growth in Ethiopia horticultural industries. In addition to this APC in
Ethiopian agriculture will reduce the post-harvest loss and increase value-addition of agricultural products,
which will greatly contribute to fulfillment of government policy.
APC is when functionally, the main raw material source is the company strawberry & avocado produce and
the surround farmer or cooperatives horticultural products through this providing value addition
technology to local communities by linking as out-grower as part of the project components.
Said Nure APC is a private company, by acquiring investment land 2hectares and investing a capital
investment of 50.505 million birr. The objective of this investment proposal study are to be used as a basis
for developing the business idea of envisaged Agricultural Products Processing Center (APC) and to
improve the company strawberry & avocado fruit shelf life and quality to fetch the high value foreign
currency and to seek 2 ha investment land, investment license permit for the duty free permits for
imported items from foreign countries.
This summary highlights the key points of feasibility business plan APC industry establishment for the
production of exportable 433.755 tone fresh avocado and 2,213 tones strawberry fruit for export &
domestic market, the rest by-product will processed for animal feed, soap and cosmetics ingredient supply
for the cosmetics industry. The APC processing capacity 85 tone fresh fruit per day the overall the project
required 20,400 tone fruit product per year.
The allocation of investment cost is mainly on Site and building development accounts 24% and Machinery
and furniture 57% and the working capital is 12% of total investment. The APC built up are of buildings
covers 6,829m2 from the total of requested investment land 20,000M2. The breakdown of total investment
costs are:
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The financial studies show of the project its profit and/ or loss, cash flow statements, was tested carefully.
The financial Internal Rate of Return (FIRR) shows 182 % after tax. The net present value of project capital
investment at 10 % discount rate is Eth, Birr 1,824.218 billion after tax. These results demonstrate that the
project is viable and provides healthy returns to the promoters. The sources of financing include: equity
funds (own funds) of the project proponent 30% (15.151million), Ethiopia bank financing, by means of
Ethiopia contractor financing 70%(35.353 million).
Some of social economic benefits
 The project will employ 35 workers in permanent employment bases for more than 95 casual laborers
every year.
The envisage project will contribute to the national economy by,
 increasing the foreign exchange income of the country by directly or indirectly contributing to
the horticulture industry of the county
 Benefit from the tax of the APC operations.
 Benefiting all the actors’ in the chain of APC industry from the rural community at project site to
provide technology for horticulture crop producers, cooperatives, private horticulture company,
agency owners, and others who participate in the chain will benefit from this project.
 The horticulture producer farmers motivated to produce horticultural crops and create market
barging power to sell their products.
 APC is an advantage for the horticulture farmers and cooperative by preserving and improve shelf life
of their product and fetching a better price.
 APC is an advantage to crate market sustainability for Gurage Zone, Cheha Woreda, SNNPRS fruit and
vegetable traders to minimize the post-harvest loss.
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Government Strategic Significance of the Project

 Agriculture Products Processing Center (APC) industry plays important role in economic
development of the country by creating revenue tax from occupancy and other activities in
the APC rent service chain.
 The Agriculture Products Processing Center (APC) industry is new and important in the country to
reduce the horticultural crop loss.
Some of opportunities and government strategies considered by the owner when planning to invest of
Agriculture Products Processing Center (APC) industry are,
 Strong effort is underway to improve Ethiopia’s image for the world horticultural production system,
 The government commitment to use this APC industry for the fight against poverty,
[
To full fill his desire after looking the gaps and opportunities the company share holders have
Proposed new investment on Agriculture Products Processing Center (APC) Plant establishment over
20,000 square meter area and investment of Et. Birr 50.505 million birr for the envisaged project.
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2. Introduction
In Ethiopia, recently modern improved avocado and strawberry grows emerge Amhara, Gamibela, SNNPR,
Sidama, Oromia and others regions. The volcano environment of this part of the country, especially in the
Rift Valley, found best nutritional required avocado and strawberry fruit from the avocado growers. The
production involvement includes introduction of improved commercial cultivars that have been tested and
promoted by the national research center at Melkassa and Upper Awash Agro Industry. The introduced
avocado varieties include “Ettinger”, “Fuerte”, “pinkarton”, “Hass” “Naba “and “Bacon” which are known
for bearing uniform and good quality fruits (Ketema et al., 2010).
However, the absence of modern technology APC (Agricultural Products Processing Center), the
horticultural crops post-harvest loss is very high. Due to this reason the horticultural crop producers
exposed to short life spin of their crops which exposed to very low sales price
According to Garedew and Tsegaye (2010) even though avocado, strawberry and other horticultural crops
has economically and socially play a significant role its production is challenged by a number of constraints;
this are degeneration of fruits, disease problem, improper harvesting, maturation and storing, and absence
of good agricultural processing practices.
Through, establishing modern APC industry which motivated expanding fruit & vegetable production and
trading at the export level will improve farmers’ and traders’ income and will result in a more poverty
reduction and create positive trade balance for the country.
Therefore, the owner is planning to invest on Agricultural Products Processing Center (APC) Industry
establishment project. This APC industry is currently one of the most required high value addition
technologies for fruit crops in Ethiopia and the project is in line with government interest and policy which
focuses on special grade value market oriented products. It is also in line with agricultural marketing high
value added technology using for fresh fruit processing and exporting strategy of the Country and Special
Gurage Zone administrative and contributes to the recent undertakings of the area were on horticultural
crops development corridors plan.
2.1 RATIONAL BEHIND THE PROJECT

The some of the rational for establishment of the envisage project with processing and export facility are,
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Policy: Government five years strategic plan, which promotes new investment in agro-industrial sector and
specially encourages commercial horticulture products of fruits which indirectly contributes to import
substitution and exportable ones.
Land: The Company has acquired a 2ha of land for Agricultural Products Processing Center (APC)
establishment area.
Labor: There is plenty of skilled and semi-skilled labor in Ethiopia. The country has a good education system
that churns out a number of graduates in most key professions at all levels.
Availability of raw materials: The improved variety of avocado fruit“Ettinger”, “Fuerte”, “pinkarton”,
“Hass” “Naba “and “Bacon”, which has higher demand at international market raw materials, are available
at various part of the country.
2.3 COMPANY / APPLICANT PROFILE

Name of Owner Mr.Said Nure
2.1.1 Nationality: Ethiopian
2.1.2 Type of business:  Agricultural Products Processing Center (APC) Industry
2.1.3 Full Address : Address Mobile: 09-11-30-06-50
2.1.4 Project Name: Said Nure Agricultural Products Processing Center (APC)
2.1.5 Status of the Project: New
2.1.6 Proposed Site: SNNPRS, Gurage Zone, Cheha Woreda
2.1.7 Specific location: Cheha Woreda
Size of proposed land: 2ha
Total estimated capital: 50.505 Million Birr
Legal Form of organization: Proprietor/private
Registering office: Investment Bureau of Gurage Zone, SNNPRS Region
Taxpayer Identification No. ----------------
Right of Occupancy: Lease agreement
Contract Period: 35 years
Project period 10 years (2024-2034)
2.4 PROMOTER’S PROFILE
Said Nure Agricultural Products Processing Center (APC) business is owned by Mr.Said Nure reputable
Ethiopia business man, is motivated and interested to go into the “Said Nure Agricultural Products
Processing Center (APC) Industry” project to produce high quality fresh Production and marketing. The
government strategies and policy also motivated the prompter besides the high demand supply gap of this
tropical fruits at export market at large and as import substations at domestic markets observed by the
promoter. To fulfill the certification requirements and earn more profits due to modern management
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systems, qualified manger with sufficient work experience and qualification will lead the organization
business
Mr.Said Nure is the general manager of project. In view of his work experiences have a very reputable
experience in the field of Mining investment; he managed other relate business more than 8 years. The
project envisages establishment of a new ‘Said Nure Agricultural Products Processing Center (APC)
Industry” for the processing of Avocadoand strawberry fruit to produce high quality fresh fruit from the
company farm and collection from their out-growers by using modern fruit processing APC technology and
producing high quality products as its immediate objective. Nevertheless, strawberry and avocado fruit for
the future operated more value addition for assembling of sweet sticks, jams, special paste production
could be included based on the results of future studies. The promoter is expected to introduce advanced
technologies in ‘’Agricultural Products Processing Center (APC)” farming system in horticulture industry.
And thus, the project will create better employment opportunities for the local communities and facilitates
a good deal of technological transfer to the country
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3. BACKGROUND INFORMATION
3.1 FRUIT MARKETING CONSTRAINTS
Marketing of agricultural products consists primarily of moving products from production sites to points of
final consumption. In this regard, the market performs exchange functions as well as physical and
facilitating functions.
The exchange function involves buying, selling and pricing. Transportation, product transformation and
storage are physical functions, while financing, risk bearing and marketing information facilitating
marketing (Branson and Norvell, 1983).
Market channel is a business structure of interdependent organizations from the point of product origin to
the consumer with the purpose of moving products to their final consumption destination (Kotler and
Armstong, 2003). The analysis of marketing channels is intended to provide a systematic knowledge of the
flow of goods and services from their origin (producer) to their final destination (consumer). This
knowledge is acquired by studying the participants in the process, i.e. those who perform physical
marketing functions in order to obtain economic benefits (Getachew, 2002).
A marketing chain is used to describe the numerous links that connect all actors and transactions involved
in the movement of agricultural products from the farm to the consumer (Lunndyet al., 2004). It is the path
one good follow from their source of original production to ultimate destination for final use.
Fruits for both fresh and processed have a huge domestic market in Ethiopia which is by far significant than
that of the export volume. The major export markets for fruits for Ethiopia are the surrounding countries
Djibouti, Sudan and Somalia and the main products exported to these countries is non-graded fresh fruits
Whereas, higher valued fresh produce that includes graded and pre-packed are exported to the United
Arab Emirates, United Kingdom and the Netherlands. About 85% of the fruits are exported to Djibouti and
the second export market destination is the Emirates (EHDA, 2011).
In this regarding Mr.Said Nure was planned to inter in this investment to introduce the new APC
technology to solve the country horticultural post-harvest handling problems and to inter the niche market
like Europe, Asia, America and the like with competitive quality and price, in the meantime contribute the
foreign currency generation
3.1.2 FRUIT VALUE CHAIN ACTORS FUNCTION AND VALUE ADDITION

According to Ayelech (2011) market participants along avocado value chain are producer, local collectors,
wholesalers, retailers, processors and final consumers of the product. Producers are the primary or first link
actors who cultivate and supply avocado to the market. Local collectors are farmers or part time traders in
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assembly markets who collect Avocado from farmers in village markets for the purpose of reselling it to
wholesalers, retailers and consumers. They use their financial resources and their local knowledge to bulk
avocado from the surrounding area. Wholesalers are known for purchase of bulky products with better
financial and information capacity. They are major actors in the channel and they purchase avocado either
directly from farmer or local collectors. They procure and consign large amount of Avocado to the regional
market and to terminal markets.
Retailers are the ultimate actors in the market chain that purchase and deliver avocado to consumers.
Processors are those value actors like cafeteria, restaurants and juice houses which change Avocado fruit
into processed goods like juice. Consumers are those households who bought and consume avocado. The
collectors are closely associated with brokers who work at grassroots level as well as with those coming
from bigger marketing centers. In the markets where the producers sell their products, mainly during the
peak supply period, the collectors fix the prices, which is often very low.
According to Nega.et.al (2015) participants along avocado value chain are;-
Producers: They are the first actors in the marketing chain of avocado and all of them are smallholder
farmers who produce the avocado and supply to the next agents.
Local Collectors: - These are important actors in the market chain and they collect avocado, from producers
or farmers and they in turn sell it to retailers and consumers.
Retailers: These are also important actors in the avocado that deliver fruits to consumers. That is, they
purchase fruits either directly from producers or local collectors and deliver to consumers.
Consumers: These are the last actors in the fruit value chain. They are individuals or households who buy
various fruits from fruit producers, local collectors and retailers for their own consumption only. As last
actors in the chain they can buy the fruits from various actors in the marketing chain. That is either directly
from producers or other actors in the channel as local collectors and retailers.
3.1.3 APC-TECHNOLOGY CONSTRAINTS IMPACT

Postharvest losses of fruits and vegetables are estimated 5-20% in developed countries and 20-50 % in
developing countries (Mashav, 2010). In Ethiopia post-harvest losses currently reached 30% to & 70 %(
CSA, 2009). On the other hand, FAO (2011) estimated it 32 percent globally and 37 percent in Africa south
of Sahara where hunger and food insecurity remains highest. The current research shows:
Postharvest handlings losses at producer level: The causes of postharvest loss that brought mechanical
injury at farmer’s storage include damage caused by vertebrate and invertebrate pests (rats, ants, termites
and domestic animals), compaction, overcrowding and roughness of container. According to Bahir Dar
University Research on Postharvest Losses Assessment of Tropical Fruits in the Market Chain of North
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Western Ethiopia reviled percentage of fruit loss at producers’ level estimated between 15% to 30%,
Avocado 28%, Tomato 22%, Mango 21%, Papaya 19%, Banana 18% and Guava 16%, ( Article · January 2017)
Postharvest handlings losses at trader level: Loss of fruits ranged from 5% to 25 % at traders level and
maximum loss occurred during storage followed by transportation and marketing both at wholesaler (local
collector) and retailer (Article · January 2017).
Therefore, this proposed envisaged project aim to reduce and improve the following factors: Low
productivity of vegetables, High Post-harvest Loss, Transport problems, Seasonal price variations, Weak
market linkages & Lack of proper storage facilities and Agricultural Products Processing Center (APC)
Consolidate Center.
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4.GENERAL DESCRIPTION 0F THE PROJECT

4.1 LOCATION OF PROJECT AREA
The project is located at Cheha Woreda, Gurage Zone, SNNPRS, region state. Since the company project
comments such as Strawberry farm, Avocado farm and Holistic Agriculture Product Center or Horticultural
fruit processing center industry were established at Gurage zone, Cheha wored. Therefore, for this
envisaged project no need of more describing about location of the project area physical and social
characteristics, it can be refer in the “strawberry Farm project” project part one.
4.2 PROJECT LOCATION ADVANTAGE

The project area of location advantages are commercial, business, infrastructure advantages being in
Gurage Zone, Cheha Woreda are:
Availability of well-developed social and economic infrastructure facilities such as modern
telecommunication, electric power, higher education and financial institutions, airport and etc.
The presence of abundant, easily trainable and inexpensive labor force in the city and surrounding
urban and rural area;
An ideal for established collection spot area different market of fruit and vegetable products;
The availability of abundance and different variety of the fruit which required APC for value added
processing system (private traders and wholesaler, Producer Company).
There are so money private fruit and vegetable trader & cooperatives that required the APC service
for rental process their products.
It is important for fruit and vegetable producers around Gurage Zone farmers and cooperatives.
4.3 GENERAL DISCRIPTION OF THE PROJECT

Since the company project comments such as Strawberry farm, Avocado farm and Holistic Agriculture
Product Center or Horticultural fruit processing center industry were established at Gurage zone, Cheha
wored. Therefore, for this envisaged project no need of more describing about location of the project area,
Topography of the proposed project area, Climatically condition of the project area, Soil Conditions of the
Project Area, Water Resources, Socio-economic Environment, Infrastructure and services,Health Facilities
and so on. You can refer at strawberry project description part
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5. MARKET STUDAY AND APPLICATION

5.1 MARKET STUDY
5.1.1 PAST SUPPLY AND PRESENT DEMAND
Non edible avocado fresh fruit is used by cosmetics manufacturers and the local cosmetics manufacturing
industry is at an early stage of development. Now a day there is started Ethiopia fruit processing if the form
of fresh is processing and packing for the export market either in the form of edible avocado oil processing
like Abost industry parking, as well as the upper and lower awash merit fruit processing industry.
According to the International Trade Center (ITC, 2006) the market for non-edible avocado oil is expanding.
World trade in the product grew on average by 13% and 8% annually in terms of volume and value
respectively during the period 2000 – 2005.
In 2005, total world imports of avocado oil reached 371 tons valued at USD 59 million, of which China and
India’s exports contributed USD 14 million and USD 9 million, respectively, for quantities exceeding 85 tons
each. The United States, Malaysia and Germany are among the major markets for avocado oil. In 2005, the
United States accounted for 24% of the total value of avocado oil imports, followed by Malaysia 8% and Germany 7%.
To estimate the present global demand for the product the average growth rate registered by world
avocado fruit export during the period 2000 – 2005 in terms of volume i.e. 13% is assumed to continue in
the near future. Accordingly, taking the 2005 level of international trade (371 tones) as a base and applying
13% annual growth rate the current (2021) demand for the product is estimated at 2,622 tones. The
conservative assumption the market share that could be capture by country produced strawberry &
avocado fruit is assumed to be 5.7 % of world demand reach is 1299.50 tons tones per annum in 2034
years.
5.1.2 PROJECTED DEMAND

The global market for avocado fruits expanding the past ten decay. Therefore based on past trend, it can be
assumed that the market grows at an annual growth rate of 23%. Accordingly by taking the estimated
present demand as a base and applying a 23% growth rate, the projected demand for the product and
estimated share of local product is shown in Table 2.
The main forms of world strawberries exported include

 Fresh with 57% of the total exports,
 Frozen with 43% of the total exports
The main exporters of fresh strawberries in 2019 were Spain, Mexico, the US, the Netherlands, Belgium,
and Egypt. The most significant export growth was observed in Mexico which tripled the value of its exports
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in 2019 in comparison to 2015. The value increased from USD 213M to USD 580M and pushed the country
to become the second-largest exporter of fresh strawberries in the world. Spain dominates global
strawberry exports with exports worth USD 667M in 2019. Spain mainly exports to the EU countries, taking
advantage of its geographical proximity to other countries. The shelf life of strawberries is about 2 weeks
from harvest making it a fruit suitable for short-distance travel (https://www.tridge.com/stories/global-
market-update-strawberry).
Main exporters of frozen strawberries are Poland, Egypt, Mexico, Morocco, and Chile with a share of 15.4%,
13.4%, 12.7%, 8.5%, and 7.9% respectively in the value of exports. Egypt’s export value grew by an
impressive 339% from 2015 to 2019 going from USD 44M to USD 152M. Morocco and Chile also had an
increase in exports, by 60% and 115% respectively from 2015 to 2019.
(https://www.tridge.com/stories/global-market-update-strawberry).
Today’s consumers are more knowledgeable and they are in demand of high quality, nutritionally versatile
and safer plant produce. Therefore based on past trend, it can be assumed that the market grows of strawberry
at an annual growth rate is increased by 23% while the growth rate of avocado fresh fruit is 13%. The same
talking of the Ethiopia Avocado export and domestic growth rate is estimated 7%, while the growth rate of
strawberry is estimated 5% for the last seven years. Thus demand estimation of green coffee is exceeding
than the supply.
The interaction of demand supply is summarized in table 1 below through demand– supply gap of avocado
and strawberry fresh fruit demand and supplied are calculated as shown below. Table 1: Demand – supply
gap (in tons), Source: Consultant Analysis Results. The Demand – Supply Analysis shows that there is a
wide range of supply that enables this upcoming project to sale its produce without any problem Therefore,
there is a significance large export demand- supply gap for the product. The present world demand- supply
gap for the proposed product is estimated at 33,062 million tons washed green coffee and the demand-
supply gap to reach at 227,013 million tons avocado & strawberry fresh fruit from the year 2023 to 2034
respectively. Similarly the Ethiopia supply demand is estimated at 656, 000 tons washed green coffee and the
demand- supply gap to reach at 1.299 million tons avocado & strawberry fresh fruit from the year 2023 to
2034 respectively.
Table 1: projected demand for the next ten year (‘’000’’ Mt)
Year Projected Global Demand(‘‘000’’Mt) Ethiopia Market Share
Avocado Fresh Fruit Strawberry Total Avocado Strawberry Total
2023 16,117 16,944 33,062 449.95 206.06 656.00
2024 18,212 20,842 39,054 481.44 216.36 697.80
2025 20,580 25,635 46,215 515.14 227.18 742.32
2026 23,255 31,531 54,787 551.20 238.54 789.74
2027 26,278 38,784 65,062 589.79 250.46 840.25
2028 29,695 47,704 77,398 631.07 262.99 894.06
Page 17 of 51
Year Projected Global Demand(‘‘000’’Mt) Ethiopia Market Share

Avocado Fresh Fruit Strawberry Total Avocado Strawberry Total
2029 33,555 58,676 92,231 675.25 276.14 951.38
2030 37,917 72,171 110,088 722.51 289.94 1012.46
2031 42,846 88,771 131,617 773.09 304.44 1077.53
2032 48,416 109,188 157,604 827.21 319.66 1146.87
2033 54,710 134,301 189,011 885.11 335.65 1220.76
2034 61,823 165,190 227,013 947.07 352.43 1299.50
The conservative assumption the market share that could be capture by country produced strawberry &
avocado fruit is assumed to be 5.7 % reach which is 1299.50 tons per annum by the year 2034.
5.1.3 PRICING AND DISTRIBUTION

Pricing strategy plays an important key in the company revenue and profits. It aims to set an optimal price
for a product or service by taking various internal and external factors into account, such as production and
distribution costs, competitor products prices, target customers and consumers expecting and soon.
On the one hand, sales must be affected adversely by higher prices than the normal standard of the
industry if the segment is the low-end market. On the other hand, the business will not be sustainable if the
prices are too low. Therefore, it is critical to make a good pricing strategy. The product can be sold directly
to the end user industries. For this project will be adopted in making the wholesalers market prices for the
end export price. Therefore for this project purpose of revenue estimation of the project the average price are:
Table 2: Project estimated sales price

No. Description Unit Price in USD Price in ETBIRR
1 Fresh Avocado Fruit per kg Kg 8.10 453.6
2 Fresh Strawberry Fruit per kg kg 5.2 291.2
3 By-product Kg 20
5.2 PLANT CAPACITY AND PRODUCTION PROGRAMME
5.2.1 PLANT CAPACITY

The avocado & strawberry fresh fruit processing operation need a modern holistic processing industry
which is called APC (Agricultural Products Processing Center). This industry required development skill
manpower and time required for market penetration (for export market) the processing plant will be
planned to start operation at 70% of the capacity in the first year, and will grow to 80% , 90% and 100% in
the second, third and fourth years respectively. Considering the company has one year construction period
and fourth years for full capacity attainment. The plant will operate double shift of 8 hours a day and 240
days a year.
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5.2.2 PRODUCTION PROGRAMME

Considering the need for skill development and the time required for market penetration (export market)
the processing plant will be planned to start operation at 60% of the capacity in the first year, and will grow
to 70% 80% and 90% in the second, third and fourth years respectively. The plant will operate at full
capacity operation in the fourth year and then after. It is estimated that the envisaged plant will have
annual production at full capacity of tones 433.76 tone (Avocado Fruit) and 2,213 tones (Strawberry Fruit)
of per annum. For the detailed information is presented below table-3.
Table 3: Production Programe of the project
Year y1 Y2 Y3 Y4-Y10
Capacity utilization (%) 7 80 90 100
Avocado Fresh Fruit(tone) 413.59 419.66 425.74 433.76
Strawberry Fresh Fruit(tone) 652.43 875.90 991.70 2,213.00
By-product 13.62 15.89 18.16 22.70
5.3 MARKET ANALYSIS
5.3.1 MARKET SEGMENTATION
The processed fresh fruit of strawberry & avocado market is very wide goes from to premium and niche
market in the food industry and for the processed cosmetic industry products such as cream, soap and
lotions. Both fruits are highly demand which fetches a higher price in the market especially in the export
market. One of the Ethiopia avocado and strawberry market advantage in world market is the products
reach when the North America season become heavy snows fall period, as time the avocado plant become
decides its leave and unproductive.
5.1.2 MARKET TARGET
According to Ethiopian Fruit and Vegetable Sector Ethiopia is an emerging exporter of avocado & srawberry
products. Exports fresh fruits and vegetables trade in Ethiopia is discussed at two different levels: the
export market, with an average annual growth of 6.4%, and the promising domestic market which currently
absorbs 77% of the national production. While strawberry & avocado export marketing is increasing craze
in Ethiopia. These days the demand of strawberry & avocado is very higher and the production of
strawberry & avocado compared to the demand becoming is very in increasing. In the big picture company
project will target both the domestic as well as the export markets because of the high potential in both
markets for investors.
Decisions on products to be targeted will be informed by careful market feasibility study and gross margin
analysis to ensure Said Nure Strawberry & Avocado fresh fruit processing APC business model is profitable
and sustainable.
Customers and markets will partner with smallholder horticultural farmers from through company to
facilitate production and marketing of high quality products for both the domestic market and the
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international market. The target market is the export market and the domestic market for high quality
products. In the large scale, Mr. Said Nure would invest in product development to produce finished
products for the Export and domestic. Value addition will include processing of avocado & strawberry into
premium washed and packed fresh fruit.
5.1.3 PROJECT MARKET CHAIN

Fruits are grown in different parts of the country and passes through different channels before they reach
end users. The private and state commercial farms supply fresh fruits to distributor wholesalers, Etfruits
and Agro processing industry. Distributor wholesalers, Etfruit and Agro processing industry intern supply to
private seller and retailers like supermarkets, open market, juice and fruit shops etc. Finally, private sellers
and retailers supply the fresh fruit to consumers in Ethiopia.
Based on this scenario the company is planed their own market channel by establishing collection center in
different place of avocado production region. The collection centers of the project are,
 Amhar region of Gojam zone, Oromia region of Jima, SNNPRS region of Butajira, Wester part of
Ethiopia Kefa Zone , Addia Abeba City, Benshagule gomize region Meteke town and Sidama region
at Dale Woreda
The collection centers are operated by the employees and Common Interested Group (CIG) youth and
women who are supported by the project in collaborating local administrative.
On the other hand avocado & strawberry producer farmers supply their products APC collection center, and
then the collection center transport to APC for processing sometimes the cooperatives can be directly supplied
for APC. The following chart shows the project fruit supply chain in the APC.
Figure 1: Project Simplified Strawberry & Avocado fruit supply chain
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6. THE PROJECT
6.1 PROJECT DESCRIPTION

The owner is planned to invest on the Agricultural Products Processing Center (APC) industry which is
located at SNNPRS, Gurage Zone, at Cheha Woreda fruit and vegetable market easily access infrastructure
of raw material supply. The proposed plan include other fruit crops processing for domestic and export
market. The company also acquired 2ha of land with the full capacity production plan of tones 433.76 tone
(Avocado Fruit) and 2,213 tones (Strawberry Fruit) of per annum; the establishment of the envisaged project
is new commercial Agricultural Products Processing Center (APC) industry.
The project is in line with government interest and policy which focuses on Agricultural Products
Processing Center (APC) industry which service provide for the fruit producers, cooperatives, and private
horticulture sector rather than company products. Furthermore the construction of the new Agricultural
Products Processing Center (APC) industry operation also stimulates the economy through the induced
effects of private horticulture sector. In this regard, construction of the proposed Agricultural Products
Processing Center (APC) industry is job opportunities for the local communities and payments for labour
services that ultimately increase household income.
Through, this intended investment in the Agricultural Products Processing Center (APC) industry will be
realized with an initial investment of Birr 50.505 million for the intended project. The project area has
20,000 M2 will be acquired on based on the Cheha woreda lease. The realization of the project will open
up about 35 permanent and 95 temporary employment opportunities during the project operation and
implementation phase, respectively.
The investor has already commenced the design and feasibility business study activities of the project and
expects to conclude sooner. Following the acquisition of land the project phase activities will be
commenced within one year duration. The investor has intended to speed up the project phase activities
with partner collaboration of Ethiopia Ministry of Agriculture by made negotiation and using professional in
project management and qualified contractor for the civil works.
6.2 PROJECT ACTIVITIES

6.2.1 APC - INDUSTRY ESTABLISHMENT
Construction of APC is a sophisticated facility that handles commercialization functions such as harvesting,
collecting, storing and shipping of fruits, vegetables, and other horticultural products to meet the quality
and specifications required by the market. The building of APC is near at Cheha Woreda Company avocado
and strawberry farm area. The products are handled in the APC is sold to the domestic market such as
wholesale markets, to large distributors, and food ingredients companies were as 90% of the APC product is
sold to the export market. The project will construct the APC building facility and established processing
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plant in an area of Cheha industry zone. This Commercial Agricultural Products Processing Center (APC) has
following facility
Division Features
Collection or  Transport the company fruit product from farm to APC
Reception Center  Collect the fruit from out-grower collection center, then transport to APC
 Transporting and harvesting the harvested agricultural products to the APC

Warehousing
 Screening of quantity and quality
 Sorting by quality level according to the demands or sales strategy of the
distributor
Sorting  Quality standard is based on appearance, size, color, sugar content, etc.
 Automatic machine sorting or manual sorting according to the characteristics
of the item
 Preparation such as cleaning, peeling, cutting with respect to convenience
Washing &
 Demand for small groups, group meals, etc.
Convenience
 Need expertise in technology and facilities by strengthening food safety
Process
regulations
 Putting selected agricultural products in packing containers
 Set the packing standard according to the sales person's request or sales
Packing
strategy
 Expansion of small package and eco-friendly packaging design
 To preserve the freshness and quality of agricultural products,
 Contribution to farm household income, profit management, consumer
Storage convenience, and supply / demand stabilization
 The need for specialized technology and facilities, depending on the
characteristics of the items
 Development of lots for each product according to quality standards for sales
Shipment
 Logistics work such as palletizing to reduce transportation costs
6.2.2 FRESH FRUIT PROCESSING INDUSTRY ESTABLISHMENT

Construction of holistic fruit processing center is a sophisticated plant facility that handles
commercialization functions such Plant house, Raw Material Store, Product Store, Sorting table, Loading
Area, office and other facilities Toilet Facility, Guard house, Dry waste and wet waste Disposal thank.
6.3 PURPOSE OF THE PROJECT

The purpose of running APC is to increase the value addition of agricultural products in response to the
demands of the market. Purchasers with a certain level of transaction size prefer products that have quality
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standardization (selection function), freshness maintenance (low-temperature storage function) and ideal
packaging (packaging function) by using facilities, equipment and professional manpower of the APC.
The functions of the APC are necessary for improving the value addition of agricultural products because it
enables improvement of the merchandise by reducing post-harvest loss, production costs, and promoting a
differentiated marketing strategy.
The project’s main objective is to implement an agricultural industrial investment project using new
Agricultural Products Processing Center (APC) and the production high quality fresh strawberry & avocado
fruit export market. It is vital optimal for economic returns as well as socially and environmentally
acceptable processing system that will attain full production level within ten years starting from the 2024
strawberry and avocado production season. Ultimately the project objective role in:
 Reduction in poverty
 Achieve gender equality & empower women
 Promote sustainable economic growth and productive employment
6.4 PROJECT OBJECTIVES

 The project objectives of the envisaged company are profitable production of high quality
strawberry & avocado fresh fruit export market
 As a business firm one of objective of the Company is to earn higher income from the demand
supply gap exists in the sector at large and while for the futures earn higher income at the
international markets.
6.5 PROJECT STRATEGY

Constructing a project APC building as per EUREGAP / ISO 14001
regulations and Agricultural APC building standards
Constructing strawberry & Avocado fresh fruit processing plant facility
Procures machineries and equipments.
Recruit and train workers
Setting up of the production, collection, packaging, and marketing system.
Setting up processing and packaging house
Set up and a qualified and efficient management team recruited
6.6 TECHNOLOGY AND ENGINEERING

6.6.1 APC ESTABLISHMENT
The APC are facilities that carry out commercialization and logistics functions of horticultural, agricultural
products. Commercializing is a function to make harvested products suitable for sale, sorting, grading
according to quality standards, cleaning if necessary, and packaging of farm products in graded quality.
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Since commercialization is an essential factor in improving value addition and increasing profits through
differentiated product strategies in response to changes in market demand and trends, it requires expertise
in facilities and equipment and operating personnel and efficient management capabilities. Fruit APC for
industrial use consists of the following unit operations:
a) Warehousing
b) Floating in the Water
c) Pre-cooling
d) Screening and grading
e) Application of fungicides and waxing
f) Degreasing of fruit shell Storage
6.2.1.1 PRODUCTS PROCESS FLOW

The process flow of avocados post-harvest and packaging house for preparing the product for export
market are shown at process flow diagram shown below. Process includes washing, disinfection, sorting,
waxing and manual or mechanical packing, cooling and storage.
Containers & Packaging Materials • The plastic or wooden containers must be padded to
prevent damaging the skin of fruits as this can result
into infections
• Store the field boxes in the shade in order to minimize
sunburn, loss of moisture and dust accumulation
Value Addition Techniques: Sorting,  Sorting: Remove all the field debris including misshaped,
Cleaning & Grading diseased and bruised fruit
 Cleaning: Use cold, clean water to remove any dirt found
on the fruits
 Pre-cooling: Fruits must be cooled as quickly as possible.
“Avocado & strawberry” must be cooled to 5 oC – 7 oC
within five hours of harvesting
 Grading: Fruits are graded according to size and stage of
ripening.
Avocados packed into a box for the export market
Storage Avocado & Strawberry fruits can be stored at temperatures
Page 24 of 51
of
5 0C – 7 0C and a relative humidity of 85 % –95 % for three
to four weeks
Packaging  Fresh Avocado fruits are packed in cartons made of solid
or corrugated fiberboard
 They should be packed in a single layer
 The boxes must have adequate ventilation, holes, for
effective cooling and air circulation
Transportation  Avocado fruits must be packed firmly in place and
should not roll around or rub against one another in
transport vehicle
 Boxes must not be shaken during loading and offloading
and must be securely stacked in the container,
preferably on pallets, throughout transportation
 Covered vehicles should used: insulated or
refrigerated trucks are recommended
6.2.1.2 PRE PACKAGING OPERATIONS

A. Floating in the Water
On arrival of harvested fruits of strawberry & avocado at the packinghouse,
Fruits are unloaded by hand and submerged in water or allowed to slide out of the container into
the water.
The water in the dump tanks should be chlorinated and replaced frequently to prevent a build-up of
disease organisms.
Fruits with high flesh translucency are called “sinkers” and must be separated at this stage. The
“sinkers” are very fragile and have limited shelf life.
High translucency is also associated with bacterial and yeast fermentation and acetic acid souring
during handling, shipping and marketing
B. Pre-cooling
The purpose of pre-cooling is to remove field heat. If strawberry & avocados are to be exported to, the
destination within 2 – 3 days of harvesting, as with air-shipments, then precooling is advisable. Fruit
transported by sea should preferably be pre-cooled prior to loading into containers. By submerging fruits in
water as described above hydro cooling is being achieved. The fruits are sorted and fungicidal treatment is
given. They are packed in full telescoping perforated CFB cartoons.
C. Grading
Fruits are graded based upon certain characteristics: degree of skin coloration, size (weight), absence of
defects and diseases, and in keeping with other market requirements.
Page 25 of 51
D. Application of fungicides and waxing

Strawberry & Avocado fruits are commercially treated with a fungicide such as Dowicide A (Sodium 2-
phenly phenoloate) at a concentration of 7g per liter of water in either a dip or a spray application to
control postharvest fruit rot. A wax, which may contain polyethylene/paraffin or carnauba/paraffin-based,
could also be applied to the fruit with the fungicide. Waxing could reduce internal browning, a symptom of
chilling injury. Waxing also reduces postharvest water loss and improves fruit appearance.
E. Degreasing of fruit shell
Postharvest use of ethephon could result in uniform skin de greening but this could also lead to a shortened
shelf-life. The need to degreasing is related to the consumer’s perception that a ripe avocado must have a
yellow skin. Ethylene treatment has no significant effect on flesh TSS or acidity.
6.2.1.3 PACKAGING HOUSE CAPACITY AND PRODUCTION PLAN

The packaging plant capacity considerations was determined based on,
o the raw material purchasing plan
o the quality requirement of fresh fruit export market
o the experience of expert market
o Certification requirements
Therefore the export of fresh fruit will start at second year of envisage APC project period or at the second
establishment with capacity and program shown at the plant production progrme.
6.2.1.4 PACKAGING TYPES AND MATERIAL

The Avocado & strawberry fruits are sorted according to weight. The avocado must weigh at least 700
grams, and which must weigh a minimum of 400 grams. While strawberry 250-500gm. The contents of a
carton must be uniform, and may only contain strawberry & avocados of identical origin, variety and/or
trade type, and quality. The visible part of the carton must be representative of the entire contents.
Carton labeling regulations
Each carton must display the following details in unbroken, legible, and permanent Letters visible from the
outside:
a. Identification-Name and address of the exporter and packer
b. Type of product-”strawberry or avocados”, when the contents are not visible ¨Name of the variety
c. Origin of product ¨ Country of origin, and optionally, national, regional or local description
d. Commercial characteristics
 Class
 Size (reference letter or weight class)
 Number of fruits (optional)
 Net weight (optional)
Page 26 of 51
6.2.1.5 QUALITY REQUIREMENTS

As per ‘Codex Alimentations Standard for Avocados’, (Codex Stan 182-1993) the minimum requirements for
trading with fresh Avocados must be as follows:
Fresh and healthy
Clean, practically free of visible foreign substances
Practically free of pests and damage caused by them
Free of fungus
Free of bruising and frost-damage
Free of strange taste of smell
well developed, ripe
6.6.3 SOURCE OF TECHNOLOGY

The machinery and equipment required for processing strawberry & avocado fresh fruit industrial use can be
procured from the following companies:
a) JAWLA Engineering Company

6, MADHU IND. EST., OFF 11B PATEL ROAD
GORE GAONE (E)
Mumbai – 4000063, Maharashtra, India
Phone: 91-22-56902548/56903038
Fax: 91-22-26862622
b) Shanghai Small Enter Prise Trade
Development Service Centre
International Cooperation Division
Shanghai 200032
Fax: (00862) (64220814
6.7 PLANT CAPACITY AND PRODUCTION PLAN

The processing plant capacity considerations for fixing capacity of plant was determined by evaluating
availability of raw materials , marketing assessment results, skill requirements, cold storage requirements,
investment cost capital requirements of the plant, and others. The plant production capacity is described
above marketing section production capacity and programe sub-topics.
6.8 ENGINEERING
6.8.1 MACHINERY AND EQUIPMENT FOR APC
The list of APC plant machinery and equipment required for the production of industrial fresh strawberry &
avocado fruit is shown in Table 4 below. The total cost of machinery and equipment is estimated at Birr
42.8 million, out of which Birr 28.800 million is required in foreign currency.
Table 4: APC Construction, machinery and equipment cost
No. Description Qty. Cost( Birr)
Qt LC FC TC
1 Establishment of APC(set) 1 4,840,000 23,960,000 28,800,000
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- Site Design and

Construction
- Low Temperature
Storage,
- Selection Equipment:
Fruit Selection,
Compressor
- Agro Processing
Equipment
Total cost 4,840,000 23,960,000 28,800,000
6.9 LAND, BUILDING AND CIVIL WORKS
6.9.1 LAND LEASE COST

Accordingly, the total land of the project is 20,000M2 of lease cost, for a period of 70 years with cost of Birr
2birr per m2, is estimated at Birr 1,414,000 of which 10% or Birr 141,400 will be paid in advance. The
remaining Birr 1,272,600 will be paid in equal installments within 28 years i.e. Birr 45,450 annually.
6.9.2 APC- PLAN BUILDING COST

2
The total land required for the Fresh Fruit processing plant is estimated to be 20,000 m , and be purchased
based on the judgment of the entrepreneur. The built-up area will be 6,829 M2. Each required facilities
area and related cost is shown below table5.
Building will have walls made of hollow – block linings and properly cement plastered. The production and
storage hangars will have walls covered by corrugated iron sheets on columns and beams made of metallic
bars. The roofs will be of saw –tooth type with metallic trusses and covered with metal cladding. Other
buildings will be built by hollow-block walls properly finished, but mot cement plastered. Based on the
above building construction, an average unit price is Birr 1,472 per m2. The cost estimated of building
structure cost is 7,685,000 birr. The details breakdown and others details on floor area shown at the
supporting plan and bill of quantities.
Table 5: Fresh Fruit Processing Facility and Related Cost
Description unit Area Unit Price Total Cost
Building Construction works
Main Factory Shade M2 2109 1,500.00 3,163,500.00
Raw Material Storage block M2 1500 1,500.00 2,250,000.00
Finished Material Storage cold house M2 1000 1,500.00 1,500,000.00
Canteen M2 400 1,500.00 600,000.00
Office M2 200 1,500.00 300,000.00
Guard House M2 120 1,500.00 180,000.00
Loading & unloading M2 500 500.00 250,000.00
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Green are, Road M2 1000 500.00 500,000.00

Sub-total M2 6,829 8,743,500.00
VAT 15% Birr 1,311,525.00
For sorting and packing operation area M2 13,171
Grand Total BIRR 10,055,025.00
6.10 MAIN RAW MATERIALS

The main raw material is ripe avocado & Strawberry fruit. The extreme limit of the weight loss termed as “a
loss in mechanical damage and sorting size” is about 30 per cent of the initial weight and weight loss
termed as “a loss in post-harvest” is about 30% of fresh fruit. Then APC plant annual production 85 tone
fresh fruit per day for washing, sorting, drying and packing, at full capacity(4th year).
The plant annual raw material requirement (85+85* 30%) tone per days which is totally is equal to 2,646.76
tons of ripe avocado & strawberry fruit is requiring per year.
Auxiliary materials include corrugated box and pallet. The total annual cost of raw and auxiliary material is
estimated at birr 191,675,720. Annual requirement of raw and auxiliary materials, including costs are
shown below in table 6.
Table 6 : Raw and auxiliary materials and related cost
No. Description unit quantity Unit Price Total Cost(birr)
1 Ripe Avocado & Strawberry fruit tones 2,646.76 72,398 191,620,000
2 corrugated box 700gm/pcs 84 200 16,800
3 pallet 2kg/pcs 3,360 5 10,835
4 spray wax No 139 65 9,000
5 Gumming paper roll 347 55 19,085
Total 191,675,720
6.11 UTILITIES
Utilities required for APC Avocado & strawberry fresh fruit processing plant consists of electricity, water for
fresh use, fuel oil and lubricants, The total annual utilities estimated at birr 271,506. Annual requirement of
each of those inputs at full capacity production is shown in table 7 below.
Table 7: Annual utility Requirement and related cost
No. Description unit quantity Unit Price Total Cost(birr)
1 Electricity Kw 85,000 0.4736 40,256
2 water M3 17,000 3.25 55,250
3 Fuel & lubricants Litters 8000 22 176,000
Total 271,506
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6.12 MAINTENANCE & REPAIRS

Spare parts for machinery and equipment of major farm production lines and auxiliaries systems will be
procured and stored. It is planned to hold a spare part for one production year. A total of price of Birr
249,240 is allocated for the purchase of spare parts. Maintenance costs are estimated at a level to
adequately maintain machinery and equipment in good working order over the project’s life.
6.13 OFFICE FURNITURE & EQUIPMENT

A total of ETBirr 221,000.00 is required for purchase of office furniture and related equipment. The
following table gives an assumed breakup For the derailed information is shown below table 8 :
Table 8: Company Vehicles cost
Office Empts Quantity (No) Unit Price (ETB) Total Price
Computer 1 27000 27,000.00
Printers 1 20000 20,000.00
Fax Machine 1 20000 20,000.00
Sub total 67,000.00
Office Furniture
Tables 10 5000 50,000
Managerial Tabel 2 16000 32,000
Managerial Chair 2 12000 24,000
Swivel Chair 6 6000 36,000
Guest Chairs 12 1000 12,000
Sub total 154,000
Total 221,000.00
6.14 COMPANY VEHICLES

A loading vehicle would be required for providing services for transportation of raw material(s), small
amount of inputs, facilitating farm programmed, transporting locale raw materials from far places other
than, conducting marketing activates, transporting product sales to various market, mobilizing casual
laborers and other works, Insulated Fruit Transport Min Truck for product sales. For this purpose a
transportation vehicle has been proposed which will cost around Eth.Bir 10,000,000 tax free purchase for
local suppliers, the cost breaks down as show at Table 8 below
Table 9: Company Vehicles cost
Types of vehicles Quantity Unit price Total Price(Biir)
Dum Truck 1 3,748,000 3,748,000.00
Delivery Van Truck 1 1,248,000 1,248,000.00
Staff Bus 1 2,000,000 2,000,000.00
Toyota Double- cup 1 3,004,000 3,004,000.00
Total cost 10,000,000
6.15 OPERATING ACTIVITIES
6.15.1 PRE-OPERATING ACTIVITIES
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During the implementation period, the different activities likely to be undertaken have been classified as
follows on the basis of activities category and schedule in twelve months period as shown in the activity
chart shown at table -9 below.
Table 10: PRE-OPERATING ACTIVITIES
YEAR AND MONTHS
ACTIVITIES 1 2 3 4 5 6 7 8 9 10 11 12
Preparing Design and BOQ
Building and Site Work Construction
Purchase Machineries and Equipments
Manpower recruitment (Mangemnt Staffs)
Machinery Installatiosn
Commission of machinery
Manpower recruitment ( Production Staffs)
Training to Technical Staff by Supplier
Preparation to Production
Purchasing and supplying all inputs
Plant machinery testing and trails
6.16 PRE- PRODUCTION EXPENSES

It is estimated that an additional amount of 1,581,328 Birr will be required in cash for pre-
production investment expense before starting production and generate revenue. The table shoe
below describes the assumption and estimated pre-production operational cost estimate of the
envisaged plant.
PRE – OPERATING EXPENSE
TYPE OF EXPENSES ASSUMPTIONS COST
Feasibly Studies and Engineering 50,000
Installation Cost 3% Machinery and Equipment 860,759
Premium Insurance cost 0.50% Fixed Asset 215,190
Safety Wear& Uniforms One year Performa 25,000
Miscellaneous Expenses (1% of bank loan) 1% 430,379
Total in Birr 1,581,328
Page 31 of 51
7. HUMAN RESOURCE AND TRAINING REQUIREMENT
7.1 HUMAN RESOURCES REQUIREMENTS

Technical & production Staffed and managerial staff requirement are given in the finical assumptions sections
below and the labor requirement is based on the 240 days of the year.
7.2 ORGANIZATIONAL STRUCTURE

The owner will follow the performance and guidance, but the business will be managed by an experienced
one functional structures. The organizational structure is depicted in the organization chart, figure 2.
Figure 2: Organization Structure of the project
7.3 MAN POWER REQUIREMENT

APC industry is considered to be a labor intensive industry where most of the functions are preformed
manually. The project will totally employ 130 workers of which 25 skilled workers for technical and
production staff and 10 shield workers for the marketing and administrative staff totally 35 employees in
permanent employment bases and for more than 95 casual laborers in daily base for more than eleven
months for handle the operations of the APC processing and packaging. The business unit will work on one
shift basis. APC Industry staff is sufficient to look after all the processing operations, while one trained staff
will be required for operating machine. Such staff is available in the local market. Total estimated manpower
required for the business operations along with their respective salaries is given in the table 11 below.
Table 11: Man Power requirements
Job Title No. Required Monthly Salary/Person Annual Salary
General Manager 1 50,000 600,000
Secretary 1 5,000 60,000
Admin. & Finance Manager 1 25,000 300,000
Page 32 of 51
Marketing and Commercial Manager 1 25,000 300,000

Personnel officer 1 7,000 84,000
Store keeper 2 4,500 108,000
Driver 3 4,000 144,000
Guard 4 1,500 72,000
Accountant 1 5,000 60,000
Accounts Clerk 1 4,500 54,000
Production manager 1 30,000 360,000
Sales and Business development 2 25,000 600,000
Fruit Machine Operator 4 10,000 480,000
fruit Conveyor Attndant 2 8,000 192,000
Hammer Mill Attendant 2 8,000 192,000
Tanks (Kneader Overflow) 2 9,000 216,000
fruitTank Separator 2 8,000 192,000
Centrifuge 4 5,500 264,000
Sub-total Cost 35 4,278,000
Laborers 95 3,000 3,420,000
Sub-total Cost 130 7,698,000
Boons 15% 641,700
Total Salary Expense 130 8,339,700
7.4 TRAINING REQUIREMENT

The skill of Agronomy and Agro-processing is well developed in the country since there is a plant engaged in
strawberry & avocado processing. However, machinery operators will have to be given training for two
weeks in Ethiopian with cooperation Ethiopia Industry Minister and Ministry of Agriculture and foreign APC
specialist. A total of ETB 2,000, 000 is allotted to train plant operators and technicians.
Page 33 of 51
8. FINANCIAL STUDY OF THE PROJECT
8.1 INTRODUCTION
The demand for strawberry & Avocado fresh fruit increasing rapidly in national markets and a big gap exists
between supply and demand. There is need to take advantage of this situation by encouraging its
production which is a highly viable venture as brought out below for “Said Nure Agricultural Products
Processing Center (APC) Industry” putting hands in commercial processing of agriculture crops in the
country. Fruit movement in to large scale production of fresh fruit would give fast returns to them and will
contribute in the wealth of nation.
 With the imbalance between supply and demand in the national for strawberry & avocado fresh
fruit market coupled with a high level of commercial for processed fruit prices, there is much
interest among private operators to invest in for strawberry & avocado valued addition in Ethiopia.
The APC-plant for fruit processing is a necessary investment to produce a quality of for value added
fresh fruit products, which is sold in the export market at good prices. This chapter will assess the
financial feasibility of investing in strawberry & avocado fruit processing and marketing, using the
“Said Nure Agricultural Products Processing Center (APC) project” establishment as feasibility
studies. Detailed information regarding economics of the project is provided as follows:
8.2 OBJECTIVES
The purpose of this section is to find what should have been the profitability of the project if major
investments and operation costs were paid by them. The results of the analysis may therefore be a useful
guide for project implementation and weather it is feasible or not the analysis will:
i. Estimate the expected after-tax cash flows from the investment over a time frame of ten
years. The time frame of ten years was chosen because it was difficult to predict what the
value added strawberry & avocado fruit market, a thin market, will look like in the long run.
ii. Compute the net present value and the internal rate of return.
iii. Propose a hypothetical value addition APC for strawberry & avocado fruit is sales pricing
related to world price base analysis.
iv. Carry out sensitivity analysis to identify the impact of change of key parameters on
profitability.
8.3 INVESTMENT COST AND WORKING CAPITAL REQUIREMENTS

The total cost of project including working capital is estimated at ET. Birr 50.505 million. The fixed
investment component is estimated at about Birr 43,037,942 the working capital portion is Birr 5,886,398
and Birr 1,581,328 is a pre-production expenditure. The following table briefly summarizes the total
investment cost of the project. Broad break-up of the above cost under various heads is presented, table 12
below.
Page 34 of 51
Table 12: Project Investment and Working Capital Cost

Description ET BIRR
Initial Capital Cost
Land Lease Cost 141,400
Infrastructure & Installation Cost 1,790,517
Building of fresh fruit processing 10,055,025
Machinery & equipment 28,800,000
Furniture and Fixtures 221,000
Motor & vehicles 0
Axially Equipment 2,030,000
Sub-total Fixed Asset 43,037,942
Pre-operating cost 1,581,328
Sub-total Pre-operation Cost 1,581,328
Total Capital Costs 44,619,270
Initial Working Capital
Direct Operation Cos 3,932,741.69
Indirect Operation Cost 1,953,655.86
Total Working Capital 5,886,398
CAPITAL INVESTMENT + WC 50,505,667.94
8.4 OPERATING COST

The total operating cost is estimated at Birr 374,815,714 at full production capacity year fourth. Operating
costs are recorded on a year basis. It is divided into overheads (fixed costs) and variable costs. The fixed cost
component is estimated at about Birr 107,400,515 and Birr 267,415,199 is variable cost at full production
capacity and. Summary of operating costs are presented on the above table 13. .
Table 13: Projected Production Operation estimated cost (direct and indirect)
Project Year
Description Y0 Y1 Y2 Y3 Y4
Production cost
Direct 83,987,495 102,965,131 125,102,113 165,056,169
Indirect 61,186,261 77,911,966 86,854,881 102,359,030
Sub-total 145,173,756 180,877,097 211,956,994 267,415,199
Working Capital
Direct 3Month 39,327,417 52,901,906 68,088,760 82,717,361
Indirect 3Month 19536559 21627272 22745136 24683155
Sub-total 58,863,976 74,529,178 90,833,896 107,400,515
Total 204,037,731 255,406,275 302,790,889 374,815,714
Page 35 of 51
8.5 MEANS OF FINANCE

The promoter of the project has planned to finance the project through a long-term loan from the
Development Bank of Ethiopia; and, partially from own contribution. The owner equity is birr 15,151,700,
the bank loan financing is about birr 35,353,968. The debt equity ratio is assumed to be 70:20 based on the
agreement between the bank and owner. The following table briefly summarizes the project financing by
source of funds. The detailed information is presented blow table 14.
Table 14: Project Investment and Working cost by Source of the Fund
Source of Fund
Description
Equity Contribution Bank Loan Total
INVESTMENT COST 12,911,383 30,126,560 43,037,942
Pre-production Cost 474,398 1,106,930 1,581,328
WORKING COST 1,765,919 4,120,478 5,886,398
Total Cost 15,151,700 35,353,968 50,505,668
% Share 30% 70%
8.6 FINANCIAL ANALYSIS KEY ASSUMPTIONS

The project cost estimates for the proposed avocado processing industry have been formulated on the basis of
discussions with industry stakeholders and experts. The projections cover the cost of infrastructures, building
and civil works construction, machinery and equipment purchase, office furniture and fixtures, pre-operating
expense and working capital for startup of the project. Assumptions regarding machinery have been
provided, however, specific assumptions relating to individual cost components are given as under.
8.6.1 GENERAL ASSUMPTION OF THE PROJECT
Description Basis Basis

Project Life (years) 10
Debt Ratio: Equity Ratio 30%
And or lease financing 70%
Operating Expenses for the project and there basis are taken as follows
CONSTRUCTION AND FINANCE
Construction period 1year
Bank interest 11%
Discounted cash flow 10%
Source of finance 25% equity and 75% loan
ECONOMIC ASSUMPTIONS
Utilities price growth 5%
Material price growth rate 5%
Page 36 of 51
Wage Growth Rate 5%

Tax rate 35%
EXPENSE
Salaries Expenses As per salary estimations
Staff Benefits 10% of Payroll
Insurance 1% of equipment Cost
Administrations expense 5% of Sales
Production 99% of Sales
Selling Expenses 5 % of Sales
Utilities price growth
Water and electric city price growth rate % 5%
Loan period 6 years
CASH FLOW ASSUMPTIONS
Inventory (% of COGS) 8%
Minimum cash balance (% of sales) 2%
Accounts receivable (% of sales) 5%
Accounts payable (% of COGS) 3%
WORKING CAPITAL ESTIMATIONS
Local Raw material 2months
Auxiliary Raw Materials Local 2months
Stock of Finished Goods 28 days
Goods in Process 30 days
Administrative and Marketing Expenses 1 months
PRODUCTION ASSUMPTIONS
Production and Machine Capacity
Machinery Full Capacity 85 tons per day
Project Fresh Fruit Processing Machine Capacity(tone/year) 2,646.76 tons
machine operation hour per day 8 hours
available working day per year 240 days
8.7 REVEENUE PROJECTION

The planned Expected Revenue: Based on export strawberry & avocado market analysis the revenue
earned from fresh strawberry & avocado fruit and it’s by- products quantity. The gross revenue not
dedicated income tax 35%, bank annual payment, deprecation and 10% of community development. The
detailed calculation is below table 15.
Table 15: Revenue Determination (seals in birr)
Sr. Description Project Years
no Unit Y1 Y2 Y3 Y4
Revenue Projection
A Total Avocado Fruit kg 413,586 419,661 425,736 433,755
Page 37 of 51
Export sale Rvnue-1 Birr/year 124,329,576 132,463,594 141,100,190 150,945,794

Domestic sale Revnue-2 Birr/year 9,926,064 10,575,457 11,264,975 12,051,015
B Total Strawberry Fruit kg 652,425 875,902 991,700 2,213,000
Export sales Revenue-3 Birr/year 2,348,730 3,310,910 3,936,057 9,222,567
Domestic sales Revenue-4 Birr/year 19,572,750 27,590,913 32,800,478 76,854,724
Gross sales Income Birr/Year 281,975,099 351,273,190 399,916,928 743,034,780
(R1+R2+R3+R4)
8.10 OTHER ASSUMPTIONS

Other Overhead Costs
Utilities 10,000.0 Birr/Year 833 Birr/Month
Traveling Expense 10% Salary 16,560.0 Birr/Year 1380 Birr/Month
Stationary and printing 8,000.0 Birr/Year 667 Birr/Month
Marketing Expenses 5% Revenue/Annum
Insurance expense 0.05% 0f Investment
Professional fees (legal, audit, etc.) 12,000.0 Birr/Year 1000 Birr/Month
Miscellaneous expense 12,000.0 Birr/Year 1000 Birr/Month
8.11 FINANCIAL VIABILITY

8.11.1 INCOME STATEMENT
It may be seen from the profitability estimates that the unit would earn a net profit after taxation of birr
40.507 million during the first years of operation at 70% of the capacity. The net profit after tax will increase
gradually from to ET. Birr 51.132 million in the second year, birr 52.088 million in the third year birr 209.547
million in the fourth year when the unit expects to achieve 10% utilization of capacity. On the above basis,
there is adequate generation of funds out of the APC industry operation and service the repayment of term
loan and interest liabilities, as also to meet additional requirement of margin money for working capital in
the second and subsequent years. Further, adequate surplus cash is available with the unit for promoter
withdrawal. Annexure-4
8.11.2 CASH FLOW STATEMENT AND BALANCE SHEET

Cash flow on hand at a given period in time (i.e., projection) is critical component of a business initiative.
The cash flow is positive starting Year one. The cash end balance clearly shows that the accumulated or free
cash fund is sufficient to finance the expansion activities, strengthen the avocado fresh fruit production and
invest on the establishment of other services.
Page 38 of 51
8.12 FINANCIAL EVALUATION
8.12.1 PROFITABILITY
According to the projected income statement, the project will start generating profit in the first year of
operation. Important ratios such as profit to total sales, net profit on total investment) show an increasing
trend during the life-time of the project. The income statement and the other indicators of profitability
show that the project is viable.
8.12.2 INTERNAL RATE OF RETURN

Based on the cash flow statement on the Annexure-7, the calculated IRR of the project is before tax 193%
and 182% after tax and the net present value at 10 % discount rate is Birr 2.528 billion and Birr 1.824 billion
before and after tax respectively. The internal rate of return is calculated as the rate of discount which
equates the present worth of the costs and benefits streams.
8.12.3 PAY BACK PERIOD

The computation of the payback period is given at Annexure-7. The payback period would be much less in
case calculated on the basis of profit before tax. Therefore, the investment cost and income statement
projection are used to project the pay-back period works out to 1 year on the basis of profit after tax. The
project’s initial investment will be fully recovered within 1 year.
8.12.4 NET PRESENT VALUE (NPV)

The NPV is calculated by subtracting the present value of all the costs incurred for the project from the
present value of the stream of benefits. As shown below annexure 7, the resulting NPV value is greater
than zero; which implies that the project is acceptable (profitable). This is critical stage for paying out
dividends to shareholders who have invested in the business enterprise. Nevertheless, the payment of
dividend is delayed until the enterprise fully pays out its loan (both interest and principals).
8.12.5. LOAN REPAYMENT SCHEDULE

The loan repayment period is simply defined as the period (i.e. the number of years) required paying the
principal and interest of the original investment cost throughout the project life. The business result
obtained reveals that the investment is financially viable and has a healthy cash flow forecast. The outcome
of the financial analysis reveals that: based on the following repayment schedule the annual payment was
described on the base of bellow the given table 16 bellows throughout the project life.
Table 16: loan repayment Schedule
Year Disbursement Principal Interest Payment Outstanding
Repayment at 11% Balance
1 35,353,967.55 3,535,396.76 3,888,936.43 7,424,333.19
2 31,818,570.80 3,535,396.76 3,500,042.79 7,035,439.54
3 28,283,174.04 3,535,396.76 3,111,149.14 6,646,545.90
Page 39 of 51
4 24,747,777.29 3,535,396.76 2,722,255.50 6,257,652.26

5 21,212,380.53 3,535,396.76 2,333,361.86 5,868,758.61
6 17,676,983.78 3,535,396.76 1,944,468.22 5,479,864.97
7 14,141,587.02 3,535,396.76 1,555,574.57 5,090,971.33
8 10,606,190.27 3,535,396.76 1,166,680.93 4,702,077.68
9 7,070,793.51 3,535,396.76 777,787.29 4,313,184.04
10 3,535,396.76 3,535,396.76 388,893.64 3,924,290.40
-
Total 35,353,968 8,166,767 56,743,118
8.12.6 SENSITIVITY ANALYSIS

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

Case 2: if the annual revenue decrees by 20 %
Case 3: if the production cost increase by 10%
Project Case-1 Case-2 Case-3
NPV ( Birr’000) after tax 1,647.406 2,102.752 1,359.287 1,110.435
IRR (after Tax) 182% 146% 130% 120%
Pay Back Period 1Yer 2Yaers 3Yaers 4Years
These results show the viability of the project, especially if it is well-managed providing quality at affordable
prices and best industrial operation management techniques and to increase production and decrees
operating expense.
8.12.7 RISK AND UNCERTAINTY

The following risks and uncertain incidents that might affect the project could occur during operating
period of the project. If the global economic crisis and inflation is prolonged and intensified, it will affect the
project cost benefits analysis. Besides, it may also affect the production cost and both inland and offshore
markets. Due to the price fluctuation the producer discrete results the supply of raw material of ripen red
cherry avocado purchasing will be problems of efficiency of strawberry & avocado production and low price
in export. Unforeseen natural calamity such as crop failure due to draught or long period of rain will be a
problem of avocado processing.
Page 40 of 51
9. SOCIO-ECONOMIC IMPACT OF THE PROJECT
9.1. POSITIVE IMPACT ON SOCIAL & ECONOMY

The establishment of the APC plant has many socio-economic benefits which include, among others:-
9.1.1 CREATION OF EMPLOYMENT OPPORTUNITY

The project is expected to create new employment for about 35 skilled & 95 semi-skilled in the initial
project year and more of these & large number of man days in the subsequent investment years &
projected operational years .Fresh strawberry & avocado fruit production is one of the labor intensive
horticultural industry activities, it provides employment opportunity for the citizens; especially during
project installing and operation (during the peak operational month) and processing at project site, it
provides employment opportunity for many rural households.
9.1.2 LINKAGE EFFECT

There is a high interdependence of foreword & backward activities of the project. This project has forward
and backward linkage effects, as it has forward linkage with raw material supply and marketing activities &
earnings of foreign currency from the import country, which increases the country’s foreign holding and on
the backward side the production & processing of APC plant rates employment to the poor rural house hold
and semi urban dwellers. The establishment of plant will enable the sector to expand to different works of
operations. APC plant is backward linked with packing material producers as inputs. And also it has a
forward linkage with other sector like utilization of the strawberry & avocado fruit making. This creates
mutual benefits in the sectors.
 Technology and knowhow transfer: The APC plant processing practice can transfer new technology
and know-how, especially in the project area for investment on APC business besides its vital role in
the growing of the economy.
 Generate revenue to the Government: The project when it starts operation & begin production will
generate substantial revenue to the promoter & in turn to the government in the form of taxes.
Page 41 of 51
9.1.3 CREATE GOOD HEALTH VALUE

Amid concern about obesity and other health matters, fresh strawberry & avocado fruit’s devoid of calories
and artificial ingredients attracts conscientious consumers. Those consumers that used to consume sugar
added beverages are shifting to strawberry & avocado juice for this cause
9.1.4 CONCERN TO THE ENVIRONMENT

No production activity is devoid of affecting the environment negatively though the level of impact may
differ from production process to production process. Strawberry & Avocado fruit value addition is not
exception to this although the impact on the environment is not to be overemphasized. The by-product of
the fruit is important to reuse for the animal feed and cosmetic use production. Their accusation to the fresh
fruit processed strawberry & avocado fruit production has come not just from the impact on the
environment of the production process and the packing material corroborate carton and wooden pellet;
rather they do not accept the existence of the avocado fruit itself, which can easily reuse to other products.
They further argue that the increase in the consumption of strawberry & avocado products might reduce
the demand for chemically processed products and ultimately results in the bankruptcy of utility firms and
at the end of the day , they contend, the supply may fall at the hand of few handful firms.
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10. CONCLUSIONS AND RECOMMENDATIONS

Based on the framework set out in this feasibility study the following conclusions were made regarding the
feasibility of proposed value added fresh fruit production processing APC Industry.
• A market opportunity was identified for the domestic sales and export market. The demand and
export trend confirms the products are marketable
• The analysis of technical feasibility of the proposed high quality value added fresh fruit production
business revealed that the machinery, equipment’s, production facilities and services and the human
resource could be integrated for efficient value added fresh fruit production industry.
• The analysis on financial feasibility of the proposed business plan revealed that based on the
assumptions made, the owner is profitable. The industry is projected to have a healthy cash flow and
is viable over long term. The positive financial feasibility is, however, dependent on stable inflation
and macro-economic conditions. The profitability of the business plan can be further by developing
alternative strawberry & avocado production and marketing integration with avocado farmers
reduced row material supply and increased costs.
Based on the framework set out in this business plan study where feasibility is assessed in three core areas,
it can be concluded that the proposed strawberry & avocado fruit processing APC industry establishment
and high quality value added fresh fruit production project is feasible. The results of the business plan
study, however, are heavily dependent upon the assumptions made during the study and other operating
environments (political, environmental and economic conditions) remain relatively stable.
Page 43 of 51
11. ANNEXTURE
1. PROJECT INVESETMENT
Annex 1: PROJECTED DEPRECIATION (000 BIRR)
Description Project Years
Y0 Y1 Y2 Y3 Y4
Land Lease original cost 141,400 141,400 141,400 141,400 141,400
Cost Depreciation Rate 5% 5% 5% 5% 5%
Depreciation amt 7,070 7,070 7,070 7,070 7,070
Acc Dep 7,070 14,140 21,210 28,280 35,350
Book Value 134,330 127,260 120,190 113,120 106,050
Infrastructure original cost 1,790,517 1,790,517 1,790,517 1,790,517 1,790,517
& Installation Depreciation Rate 5% 5% 5% 5% 5%
Cost Depreciation amt 89,526 89,526 89,526 89,526 89,526
Acc Dep 89,526 179,052 268,578 358,103 447,629
Book Value 1,700,992 1,611,466 1,521,940 1,432,414 1,342,888
Building of original cost 10,055,025 10,055,025 10,055,025 10,055,025 10,055,025
Fruit Depreciation Rate 10% 10% 10% 10% 10%
processing Depreciation amt 1,005,503 1,005,503 1,005,503 1,005,503 1,005,503
Acc Dep 1,005,503 2,011,005 3,016,508 4,022,010 5,027,513
Book Value 9,049,523 8,044,020 7,038,518 6,033,015 5,027,513
Machinery & original cost 28,800,000 28,800,000 28,800,000 28,800,000 28,800,000
equipment Depreciation Rate 10% 10% 10% 10% 10%
Depreciation amt 2,880,000 2,880,000 2,880,000 2,880,000 2,880,000
Acc Dep 2,880,000 5,760,000 8,640,000 11,520,000 14,400,000
Book Value 25,920,000 23,040,000 20,160,000 17,280,000 14,400,000
Furniture and original cost 221,000 221,000 221,000 221,000 221,000
Fixtures Depreciation Rate 10% 10% 10% 10% 10%
Depreciation amt 22,100 22,100 22,100 22,100 22,100
Acc Dep 22,100 44,200 66,300 88,400 110,500
Book Value 198,900 176,800 154,700 132,600 110,500
Pre- original cost 2,030,000 2,030,000 2,030,000 2,030,000 2,030,000
production Depreciation Rate 10% 10% 10% 10% 10%
costs Depreciation amt 203,000 203,000 203,000 203,000 203,000
Acc Dep 203,000 406,000 609,000 812,000 1,015,000
Book Value 1,827,000 1,624,000 1,421,000 1,218,000 1,015,000
Annual Deprecate & Amortization 4,207,198.37 4,207,198.37 4,207,198.37 4,207,198.37 4,207,198.37
Annex 2: LOAN REPAYMENT SCHEDULE (BIRR)
Page 44 of 51
Year Disbursement Principal Interest Payment Outstanding

Repayment at 11% Balance
1 35,353,967.55 3,535,396.76 3,888,936.43 7,424,333.19
2 31,818,570.80 3,535,396.76 3,500,042.79 7,035,439.54
3 28,283,174.04 3,535,396.76 3,111,149.14 6,646,545.90
4 24,747,777.29 3,535,396.76 2,722,255.50 6,257,652.26
5 21,212,380.53 3,535,396.76 2,333,361.86 5,868,758.61
6 17,676,983.78 3,535,396.76 1,944,468.22 5,479,864.97
7 14,141,587.02 3,535,396.76 1,555,574.57 5,090,971.33
8 10,606,190.27 3,535,396.76 1,166,680.93 4,702,077.68
9 7,070,793.51 3,535,396.76 777,787.29 4,313,184.04
10 3,535,396.76 3,535,396.76 388,893.64 3,924,290.40
-
Total 35,353,968 8,166,767 56,743,118
Page 45 of 51
Annex 3: PROJECTED INCOME STATEMENT (000 Birr)
Sr. Project Years

Description
No 1 2 3 4 5 6 7 8 9 10
1 Gross Revenue 281,975,099 351,273,190 399,916,928 743,034,780 894,284,285 1,058,801,154 1,111,741,212 1,167,328,273 1,225,694,686 1,286,979,421
Less: Production costs
2 145,173,756 180,877,097 211,956,994 267,415,199 281,286,719 292,226,474 298,921,111 305,950,480 313,331,317 321,081,196
(Dir+Indir)Costs
3 Gross profit 136,801,343 170,396,093 187,959,935 475,619,582 612,997,566 766,574,680 812,820,101 861,377,793 912,363,369 965,898,225
Less administrative Cost(Dir + Indr) 58,863,976 74,529,178 90,833,896 107,400,515 115,616,833 120,360,154 124,741,629 129,342,176 134,172,752 139,244,856
Less: Deprication Expense 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198
4 Operation Profit 73,730,169 91,659,717 92,918,841 364,011,868 493,173,535 642,007,327 683,871,274 727,828,418 773,983,419 822,446,171
5 Profit Before Interest & Tax 73,730,169 91,659,717 92,918,841 364,011,868 493,173,535 642,007,327 683,871,274 727,828,418 773,983,419 822,446,171
Less: Prodn Interest Exp 3,888,936 3,500,043 3,111,149 2,722,256 2,333,362 1,944,468 1,555,575 1,166,681 777,787 388,894
6 Profit before tax (PBT) 69,841,233 88,159,674 89,807,692 361,289,612 490,840,173 640,062,859 682,315,699 726,661,737 773,205,632 822,057,277
Othe Charge(2%) 1,396,824.66 1,763,193.48 1,796,153.83 7,225,792.25 9,816,803.46 12,801,257.18 13,646,313.99 14,533,234.74 15,464,112.64 16,441,145.54
Community Development(5%) 3,492,061.65 4,407,983.69 4,490,384.58 18,064,480.62 24,542,008.64 32,003,142.94 34,115,784.97 36,333,086.86 38,660,281.61 41,102,863.86
7 Less: Profit Tax (35% of PBT) 24,444,431.54 30,855,885.85 31,432,692.03 126,451,364.35 171,794,060.49 224,022,000.60 238,810,494.76 254,331,607.99 270,621,971.24 287,720,047.02
8 Net Profit / Loss 40,507,915 51,132,611 52,088,461 209,547,975 284,687,300 371,236,458 395,743,106 421,463,808 448,459,267 476,793,221
Annex 4: PROJECTED BALNCE SHEET (Birr)

Y-1 Y-2 Y-3 Y-4 Y-5 Y-6 Y-7 Y-8 Y-9 Y-10
Assets
Cyrrent Asset
Cumul Cash balance 5,886,398 29,244,068 55,862,145 79,217,327 239,845,074 467,069,553 771,752,297 1,097,606,905 1,445,659,509 1,816,985,220 2,212,710,313
Inventory - 11,613,900 14,470,168 16,956,559 21,393,216 22,502,938 23,378,118 23,913,689 24,476,038 25,066,505 25,686,496
Accounts receivable - 14,098,755 17,563,659 19,995,846 37,151,739 44,714,214 52,940,058 55,587,061 58,366,414 61,284,734 64,348,971
Total Current Assets 5,886,398 54,956,724 87,895,973 116,169,733 298,390,029 534,286,705 848,070,472 1,177,107,654 1,528,501,961 1,903,336,459 2,302,745,780
Gross property, plant & equipment 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270 44,619,270
Less: Accumulated depreciation expense - -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198 -4,207,198
Net property/equipment 44,619,270 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072 40,412,072
Total assets 50,505,668 95,368,796 128,308,045 156,581,805 338,802,101 574,698,777 888,482,544 1,217,519,726 1,568,914,033 1,943,748,531 2,343,157,852
Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5
Accounts payable - 4,355,213 5,426,313 6,358,710 8,022,456 8,438,602 8,766,794 8,967,633 9,178,514 9,399,940 9,632,436
Notes payable/short-term debt - 0 0 0 0 0 0 0 0 0 0
Total current liabilities - 4,355,213 5,426,313 6,358,710 8,022,456 8,438,602 8,766,794 8,967,633 9,178,514 9,399,940 9,632,436
Long-term debt from 35,353,968 35,353,968 33,239,750 30,892,968 28,288,041 25,396,571 22,187,039 18,624,460 14,669,996 10,280,542 5,408,247
Shareholders equity 15,151,700 55,659,615 106,792,226 158,880,687 368,428,663 653,115,963 1,024,352,421 1,420,095,527 1,841,559,334 2,290,018,601 2,766,811,822
Total long-term debt and shareholders equity 50,505,668 91,013,583 140,031,976 189,773,656 396,716,703 678,512,534 1,046,539,461 1,438,719,986 1,856,229,330 2,300,299,142 2,772,220,069
Total liabilities 50,505,668 95,368,796 145,458,289 196,132,365 404,739,159 686,951,135 1,055,306,255 1,447,687,620 1,865,407,845 2,309,699,082 2,781,852,504
Annex 5: PROJECTED CASH FLOW STATEMENT (Birr)
Description Project Years
1 2 3 4 5 6 7 8 9 10
Cash Inflows
Cash On Hand 0 0 0 0 0 0 0 0 0 0
Revenues 281,975,099 351,273,190 399,916,928 743,034,780 894,284,285 1,058,801,154 1,111,741,212 1,167,328,273 1,225,694,686 1,286,979,421
Total Cash Inflow 281,975,099 351,273,190 399,916,928 743,034,780 894,284,285 1,058,801,154 1,111,741,212 1,167,328,273 1,225,694,686 1,286,979,421
Expenses
Cost of Goods Sold 145,173,756 180,877,097 211,956,994 267,415,199 281,286,719 292,226,474 298,921,111 305,950,480 313,331,317 321,081,196
Operating Expenses 58,863,976 74,529,178 90,833,896 107,400,515 115,616,833 120,360,154 124,741,629 129,342,176 134,172,752 139,244,856
Depreciation 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198 4,207,198
Total Expenses 208,244,930 259,613,473 306,998,088 379,022,912 401,110,751 416,793,827 427,869,938 439,499,855 451,711,267 464,533,250
Total Out Flow 208,244,930 259,613,473 306,998,088 379,022,912 401,110,751 416,793,827 427,869,938 439,499,855 451,711,267 464,533,250
Net cash flow 73,730,169 91,659,717 92,918,841 364,011,868 493,173,535 642,007,327 683,871,274 727,828,418 773,983,419 822,446,171
Cumulate Cash Balance 73,730,169 165,389,886 258,308,727 622,320,595 1,115,494,129 1,757,501,456 2,441,372,730 3,169,201,148 3,943,184,568 4,765,630,739
Page 47 of 51
Annex 6 INTERNAL RATE OF RETUREN (Birr)

Benefits Costs
Initial Income tax Net Benefit Net Benefit
W/Cap Fixed asset Total Replacement Operat/Prodn
Project Years Gross Revenue Recovery Investment Total costs 30% of PBT Before Tax After Tax
recovery Benefits Cost costs
Cost
1 2 3 4=1+2+3 5 6 7 8 = 5+6+7 9 10 = 4-8 11= 4-8-9
0 0 0 0 0 50,505,668 0 0 50,505,668 0 -50,505,668 -50,505,668
1 281,975,099 0 0 281,975,099 0 0 204,037,731 204,037,731 0 77,937,368 77,937,368
2 351,273,190 0 0 351,273,190 0 0 255,406,275 255,406,275 0 95,866,915 95,866,915
3 399,916,928 0 0 399,916,928 0 0 302,790,889 302,790,889 26942307.46 97,126,039 70,183,732
4 743,034,780 0 0 743,034,780 0 0 374,815,714 374,815,714 108386883.7 368,219,066 259,832,183
5 894,284,285 0 0 894,284,285 0 0 396,903,552 396,903,552 147252051.9 497,380,733 350,128,681
6 1,058,801,154 0 0 1,058,801,154 0 0 412,586,629 412,586,629 192018857.7 646,214,525 454,195,668
7 1,111,741,212 0 0 1,111,741,212 0 0 423,662,740 423,662,740 204694709.8 688,078,472 483,383,762
8 1,167,328,273 0 0 1,167,328,273 0 0 435,292,656 435,292,656 217998521.1 732,035,616 514,037,095
9 1,225,694,686 0 0 1,225,694,686 0 0 447,504,068 447,504,068 231961689.6 778,190,618 546,228,928
10 1,286,979,421 139,244,856 4,207,198 1,430,431,474 0 0 460,326,051 460,326,051 246617183.2 970,105,423 723,488,240
Total F.A-Y10 193% 182%

FIRR Before Tax = 193%
FIRR After Tax = 182%
NPV beforeTax (Birr) 2,528,790,064

NPV after Tax (Birr) 1,824,218,316
Page 48 of 51
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Srawberry Fruit Processing Industry-2015

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FESIBILITY STUDY

ESTABILSHMENT & OPERATION

Location: SNNPRS, GURAGE ZONE, CHEHA WOREDA

Owner: Mr. Said Nure

PREPARED BY: Abrham astatike

Mobile Phone: 0911384833

6.6 TECHNOLOGY AND ENGINEERING .................................................................................................................. 23

8.11.2 CASH FLOW STATEMENT AND BALANCE SHEET ........................................................................................... 38

Government Strategic Significance of the Project

2.1 RATIONAL BEHIND THE PROJECT

2.3 COMPANY / APPLICANT PROFILE

2.4 PROMOTER’S PROFILE

3.1.2 FRUIT VALUE CHAIN ACTORS FUNCTION AND VALUE ADDITION

According to Nega.et.al (2015) participants along avocado value chain are;-

3.1.3 APC-TECHNOLOGY CONSTRAINTS IMPACT

4.GENERAL DESCRIPTION 0F THE PROJECT

4.2 PROJECT LOCATION ADVANTAGE

4.3 GENERAL DISCRIPTION OF THE PROJECT

5. MARKET STUDAY AND APPLICATION

5.1.2 PROJECTED DEMAND

The main forms of world strawberries exported include

 Frozen with 43% of the total exports

Year Projected Global Demand(‘‘000’’Mt) Ethiopia Market Share

5.1.3 PRICING AND DISTRIBUTION

Table 2: Project estimated sales price

5.2 PLANT CAPACITY AND PRODUCTION PROGRAMME

5.2.1 PLANT CAPACITY

5.2.2 PRODUCTION PROGRAMME

5.3 MARKET ANALYSIS

5.3.1 MARKET SEGMENTATION

5.1.2 MARKET TARGET

5.1.3 PROJECT MARKET CHAIN

Figure 1: Project Simplified Strawberry & Avocado fruit supply chain

6.1 PROJECT DESCRIPTION

6.2 PROJECT ACTIVITIES

 Transporting and harvesting the harvested agricultural products to the APC

6.2.2 FRESH FRUIT PROCESSING INDUSTRY ESTABLISHMENT

6.3 PURPOSE OF THE PROJECT

6.4 PROJECT OBJECTIVES

6.5 PROJECT STRATEGY

6.6 TECHNOLOGY AND ENGINEERING

6.2.1.1 PRODUCTS PROCESS FLOW

Storage Avocado & Strawberry fruits can be stored at temperatures

6.2.1.2 PRE PACKAGING OPERATIONS

D. Application of fungicides and waxing

6.2.1.3 PACKAGING HOUSE CAPACITY AND PRODUCTION PLAN

6.2.1.4 PACKAGING TYPES AND MATERIAL

6.2.1.5 QUALITY REQUIREMENTS

6.6.3 SOURCE OF TECHNOLOGY

a) JAWLA Engineering Company

6.7 PLANT CAPACITY AND PRODUCTION PLAN

- Site Design and

6.9 LAND, BUILDING AND CIVIL WORKS

6.9.1 LAND LEASE COST

6.9.2 APC- PLAN BUILDING COST

Green are, Road M2 1000 500.00 500,000.00

6.10 MAIN RAW MATERIALS

6.12 MAINTENANCE & REPAIRS

6.13 OFFICE FURNITURE & EQUIPMENT