Executive Summary

The economy of Ethiopia is based on agriculture, which accounts for 46.3% of

gross domestic product(GDP), 60% of export, and 80% of total employment.

Ethiopian’s agriculture is plagued by periodic drought, soil degradation caused

by overgrazing, deforestation, high population density, high level of taxation
and poor infrastructure (Making it difficult and expensive to get goods to
market).

Due to this production is subsistence in nature, and a large part of commodity

exports are provided by small agricultural cash-crop sectors. Principal crops
include coffee, pulse crop, cereal crops, root crops, oilseed, sugarcane, and
vegetables. In 2000, Ethiopia’s livestock contributed to 19% of total GDP.
(Minstar of Agriculture Report, 2000)

The Liberalization of Agriculture

Since the new Ethiopian Government made agriculture its primary priority in
1991, Ethiopia has developed and implemented its agricultural development
led- industrialization (ADLI) strategy. The key concept underlying ADLI is an
export- led development strategy aimed at promoting economic growth in
Ethiopia while coordinating agricultural and industrial development. Export
growth has benefited from the economic liberalization process underway in
Ethiopia and the government’s strong commitment to creating a supportive
environment for the development of private sectors. Recognizing that large
capital investment is needed to exploit Ethiopia’s resource, various incentives
are being provided to encourage foreign investment (including joint venture
and marketing arrangements). So that the agricultural sector makes a
significant contribution to Ethiopia’s development, the program, which covers
all regions of the Ethiopia, has become an integral part of the country’s
agricultural activities.

Agriculture and Agro-processing

1
Major Ethiopian export product include: Coffee, Livestock products (Skins and
hides, leather, live animals and meat), cereals and pulse crops, Vegetable and
Fruits and oilseed crops, Spices and mineral products. Ethiopia has
tremendous potential for investment for agro-processing. Many of its
agricultural product can be exported without being processed, will other can
be processed before they are brought to domestic and foreign markets. The
government not encourages the export of unprocessed agricultural product, it
has placed a priority on the export of processed products, which involves and
stimulates the growth of the agro-processing sectors. Through the
development of agro-processing, Ethiopia’s agricultural sector can achieve
swift and sustained long-term economic development.

From these and the above reason the owner of the project is very much
interested on investing this kinds of project like agricultural product, and the
project increase the income of the society in the area, and to generate hard
currency for the country in general.

This project also contributes a lot in improving current socio- economic

condition of the society. The project has positive implication to upgrade the
agro- industry.

It is expected that after the completion of this project, the promoter, the
population of the surrounding area, the zonal as well as regional government
will be benefited from this projects in different perspectives.

General Profile of the project

2
 1. The Promoter:Ato Habtamu Wondyifrw

 Nationality :- Ethiopian
 Address:Oromia Region,BorenaZone,AbayaWoreda
Mobile0916189465, Po. Box224

2. The Project
 Location:Oromia Region Borena Zone Abaya Woreda
MechechaKebele.
 Type of the project:Integrated Agricultural Mechanized
Farming
 Legality: Legal form of business
 Status of the project: up grading
 Total investment capital:14,311,264.00 Birr
 Sources of finances:30% of the total investment capital is
from owner equity & the rest 70% is from Bank loan.
 Land required:More than 648 hectares
 Project output: Certified seed
 Employment opportunity created:20-50permanentand
100-150 seasonal employees
 Licensing agency :Ministry of trade

Abstracts

3
The proposed project is aimed providing involved in agricultural crop
production and agricultural mechanization service and related projects for
domestic and export market. The envisaged agricultural crop production and
processing machine is going to be set up in oromia region, Borena Zone,
Abaya District and its specific area is Mechecha kebele.

The total investment capital of the project is estimated to be 14,311,264 birr

of which out of the total investment cost from Bank loan 70%, or ETB
10,017,888.80 and 30% or ETB 4,293,379.20 the promoter (owner equity).

At full capacity operation of the project is expected to generate total annual

sales revenue of 40%-50% and above in each year. The expected employment
opportunities to be created by the project are above 20 permanent and 100-
150 seasonal labors in addition the project will generate income to the
government through taxes.

The project has been found to be sound in terms of its financial viability,
technical feasibility and positive contribution towards the national economy.
Furthermore, because of the existing natural and promoter has a long term
vision to be involved in agricultural crop production and agricultural
mechanization service and related project.

Abaya woreda which is found at the Northern side of Borena zone is located
at 365Km from Addis Ababa on the high way to Moyale. Abaya is surrounded
by Sidama Zone Galana Woredas of Oromia Regional state and Gedeo Zone
Dilla Zuria of SNNRP state which is the border ofour project area. The woreda
has an estimated population of 155,000. Food crops like Maize, and Teff,
Commercial crop like Coffee, fruit and vegetables are commonly grown in the
woreda.

As we understand from our observation due to the cultivation practice of

commercial crops, traditional gold mining activity and Inset transplant too
little attention is given to the permanent food crops production withina local
[Link] addition to thisthe agricultural practice of the people is man and
cattle power created similar to other rural parts of Ethiopia. To fill this gap the
owner of his project is now ready to invest on agricultural farming which is
supported by mode mechanized system while doing this we have some sort of
justification. These are the following socio-economy, geographic and historical

4
issues associated with the woreda and specific project area called integrated
mechanized agricultural farming.

 The project area is known and productivity farming area

 These days the cost of food crops, vegetable and fruit is alarmingly
rising so that we believe as our product will not have a problem of
consumer or customer.
 The project area nearby towns like Dilla, BuleHora quickly urbanized,
densely populated government and private institution like college,
university and banks are on building in the town. Accordingly a
number of man powers have been coming to own work for these
institutes, so that our product will not face any problem.
 More over in addition to suitability of the agricultural policy,
Agricultural extension package service and technical consultancy is
available where every and whenever necessary to and this can also
justify the productivity of our farm.
 To add some the owner has about more than 10 years professional
experiences on farming activity.

The specific project area is called Mechecha; which is found at 10Kms from
the woreda town. In the west has semi-tropical climate condition which is
suitable for cultivation of semi tropical crops. The amount of annual rainfall
ranges from 600-900mm during 8 to 5 months of rainy seasons. As far as the
soils of the project area is consumed, It is such a porous absorptive and rich in
organic matter. Regarding its ecosystem it contains every kind of semi tropical
living things. For example, there are no jungles, rivers which are a home for
different kinds of wild animals in addition to agricultural farming cattle`s are
also reared by local farmers. With respect to the infrastructure there is fall
year serving road that join the project area to the capital of the Woreda called
Guangoa there is also a wireless telephone in the kebele administrative office.
As far as social services are concerned there is mural market drug vender
(clinic), primary school and agricultural extension development office closer to
the project area.

1. Introduction

5
Poverty reduction deals with an idea of reducing poverty at local or
community level that contributes to the national wide development of
communities. To do this, citizens should participate to alleviate poverty at
least to a level where they meet there basic necessity of life despite all the
current technological advances, poverty has remained an extremely serious
problem of the world.

Mechanized agriculture is the process of using agricultural machinery to

mechanize the work of agriculture greatly increasing farm worker
productivity. In modern times powered machinery has replaced many jobs
formerly carried out by men or Oxen, Horses and Mules. Mechanization was
one of the factors responsible for urbanization and industrial economies.
Besides improving production efficiency, mechanization encourages large
scale production and improves the quality of farm produce. On the other
hand, it displaces unskilled farm labor, causes environmental pollution,
deforestation and erosion.

In fact, its level of magnitude varies from place to place. Besides to this
especially in our country Ethiopia in general and Oromia region in particular in
ability to meet the social service of the community, the growing need of or
seek of social services by both of the region growing number of population
and external migrants, lack of commitment in infrastructure development, etc
are some of the indicator of the decisiveness of extending social services
provisioning private organization among these social services.

To be realistic, in this aspect the Oromia administration has been promoting

the principle of good governance at present likewise it is very important to
realized land use administration policy that of favors investors interests and
public needs of the region, in this regard the ongoing infrastructure of clean
water, road access and other social needs of the society showed be treated
fairly to speed up the ongoing local poverty and un employments of the town
and its surrounding.

As a matter of these facts, examining the scarcity of agricultural crop

production, and agricultural mechanization project that fit to the needs of the
growing demand of foods, I am expects a due regard of all levels of concerned
government authorities to consider and examine deeply in to the ongoing
national or federal as well as regional policy of investment of free market

6
economy of the land lease proclamation to facilitate and realization of this
project on Abaya Woreda has grown rapidly in recent years. As a result of
increased trade activities and of being major transit center from Addis Ababa
to Moyale (Kenya Boarder). Agricultural mechanized farming project has
played a great role in facilitating the activities of food security of the country
particularly in market. So that, the promoter has proposed to start this
business.

The owner of the project is very much interested on investing agricultural

product, and agricultural mechanization project to increase the income of the
society in the area, and to generate hard currency for the country in general.

The owners use the site for project. To this effect, after fulfilling all the
necessary formalities the owner will acquire 300Hecktare of land enough to
the project. The successful achievement of this project is believed to add
more attraction and initiation for the development activities of that area
taking place in a various part of the woreda. Abaya woreda is situated in
Oromia regional state. The town is situated at about 365 Km away from Addis
Ababa. Abaya woreda has well establish infrastructure and social service; it
has better telecommunication network service, plenty of portable water, an
international cross country Asphalt with well-planned local road network
24Hrs hydroelectric power. In addition to the main international asphalt road
which will connect the country to the eastern and southern country such as
Kenya, Uganda, and South Africa. The construction of new asphalt road
through the town has now been started, which when finish will accelerate
development of the town and greatly changed its work.

When the number of people living in the town and the surrounding area
increases the needs of increasing income generating institute will also rise
proportionally there for the need to facilitate the supply of such commodities
and service by establishing such type of project, which will provide convenient
and trouble free condition that will enhance trade activity of the town. The
establishment of such types of project also greatly influences the flow of
investor to the woreda by encouraging them to participate in various kinds of
other investment activities which will in turn facilitate the development of the
woreda and regional at large. The inflow of the trades, government and NGO

7
employees from the neighboring districts such as Amaro, Burji, Sidama, and
Gedeo makes Guangua one of potential centers.

Therefore the existing and present situation of the location of the project, the
proximity to business and tourist centers, accessible to infrastructure and
institutional assets, cultural, social, and political area, the high way roads that
transacts the town, potentiality of the area for trade and tourism
development proximity of the area for Hawassa city to capture international
tourists, the availability of potential market for high tourist class at Guangua
will make the project economically and socially feasible and viable business.

1.1. Background of the Project

Our country Ethiopia, despite having enormous natural resources, example
enough water supplies, plenty of productive land and huge amount of man
power had existed in under economic development for long time. Even these
days, where there is an increasing in general national gross production and
when people are looking brightest future for development the country is still
unable to feed its people in the world which prevent getting enough rain on
time, these change will affect the lives of many people. There for in order to
be self-subsistent it is imperative to seek an alternative way of achieving
economic development. In urban areas economic growth could be obtained
by increasing production of manufactured goods and also improving services
and trade.

In addition to other factors, the improvement of infrastructure and social

welfare of a country will result in sustain economic growth of that country.
The proper administration and utilization of human and natural resource is a
vital element in development.

In countries like, ours where there is an ever increase number of population

and availability of natural resource to satisfy the need of people. Achieving
development could be challenging however, the will and determination of the
coupled with the clear direction and support government surely guarantee
the economic development of the nation with these regard it is believed that
the current policy of the government of Ethiopia encouraging and investment
and create conducive atmosphere towards development. Based on such fact
in order to add a little input to the ongoing development. Personally, and to

8
accomplish individual national responsibility one has to seek ways that will
improve the existing economic, social, and living condition of the people.

Ethiopia is country whose total geographical area is estimated to be about a

million square kilometer. Out of this about 70% is cultivable assumed to be
under crop even under such condition, the agricultural sectors play the
decisive role in the overall economy of the country the sources of income and
the livelihood of most of the Ethiopia population still for quite some times
remains to be the bases of development of all other economic sectors. Recent
study shows that 80-85% of the population earns its livelihood directly and
indirectly from agricultural.

The country export is mainly originated from the agricultural sector. It is the
leading export item. It plays significant role in Ethiopia socio-economic
development activities. Agriculture currently dominates Ethiopia`s economy
and employment and agricultural growth plays a key role in economic growth.
The government of Ethiopia is committed to rapid agricultural growth as a
means of accelerating economic transformation and reducing poverty.

Agriculture is the backbone of the Ethiopian economy. Agriculture constitutes

a large share of national output. And the labor force and thus the sector have
been integral to any thinking about development. The sector contributes
about 43% of the GDP and 85% of exports. And the project will have high
contribution to the national economy through direct and indirect employment
generation, capital injection into national income account source of revenue
for government and social responsibility by guaranteeing coffee farmers sell
their product to the company.

Agricultural activity is at subsistence`s level in Ethiopia because of this food

crop production is below the food requirement of population. This is due to
fact that our farmer use the back ward agricultural production systems and
they also doesn`t use sufficient and effective inputs for their crop production
system. The above facts result the cost rising on food crop, Vegetables and
fruits throughout the country as well as this problem have been fasting our
woreda Abaya and the Zone too. To maximize product and productivity of
agriculture investing on mechanized agriculture form is the major
interventions. Becoming aware of this agricultural farming is now decided to
establish integrated mechanized agricultural farm which is supported by

9
modern irrigation technology (Drip) and standardized inputs such as improved
seed, fertilizers environmentally friendly insecticide is should be used,
Pesticides and soon for such activity there is suitable conditions in our
country. First of all, the country’s economic policy is agriculture leading
economic policy, In addition to this, there is excessive land resource, Alternate
water resource, comfortable environmental condition and infrastructures in
our locality.

Based on these suitable conditions the owner of this project is design project
proposal to establish advanced mechanized farm which is going to produce
different type of vegetables, Food crop, fruit oil seed and other cash crops in
Abaya woredaonproposedkebele site on 300 Hectares of land. Finally, in this
operational document all important contents like objectives, Implementation;
monitoring and evaluation of the income statements are deeply stated as
follows.

1.2. Justification of the Project

In Borena zone, Abaya woreda up to now there are no enough modern
mechanized farming project which can render a standard and quality service
for the local residence as well as other investor coming from the surrounding
areas. The agricultural mechanization farming that available currently in the
woreda is not sufficient enough to provide satisfactory service to the demand
of the population. Most of them were not initially built with regards to the
specification required for such purpose. Therefore, there is a need to produce
modern Agriculture mechanization farming which should fulfill the demands
of particular and the nation in general.

Reasonable profit that would increase the investor`s income as well as adds
some input in the national GDP at the level of a country. The presence of such
modern facility will encourage other local and international investor to come
and visit the woreda and see other investment opportunity and get enough
information that could help them to consider the availability of investment
potentials in the region even in the future. On the above justification the
owner of this project will produce modern agricultural products to enhance
the economic activities of the region and the country as well.

10
 2 Objectives of the Project
2.1. General objectives of the project

The general objective of the project is to have modern Agricultural product

and mechanization farming for standard service for local communities and
then enhancing the developments of the society in particular and the country
in general.

2.2. Specific objective of the project

 To produce a better quality agricultural products that meet
international standard
 To participate on food self-sufficiency and national food security
 To introduce integrated farming technologies to the
society(community)
 To create additional employment opportunity to the society
 To help ourselves through investment and also make source of income
for the country
 To generate reasonable profit to the owner
 To add income of government by tax
 To create favorable trade transaction

3. Implementation Methodology

 Conceiving idea to develop the project

 Fund securing to implement the project
 Application of letter and project proposal to concerned body
 Preparing and clearing the site
 Architectural design including land scalping
 Accessing public good electric, water, telephone, and etc
 Bid setting or negotiation to contract the whole civil work
 Negotiation to contract the whole work of the building

3.1. Scopes of the Project

11
This project is going to focuses on assessment of the need for modern
agricultural developing mechanism up to agro industry to satisfy the need its
impact on the economic activity of the country, and convincing concerned
body to adopt the project.

3.2. Location of the Project

Location and conducive site of the project is the pre-condition to provide
standard service and generate profit. The proposed project site has
300Hectare areas and is located in oromia region Borena Zone, Abaya Woreda
at Mechecha PA around 20 km far from Dilla town & 16km far from Wonago
town. The above identified location of the project is well attractive site area
for influencing and satisfying both the customer and the owner of the project
due to its access to service seeking population and thus the promoter of the
project identified as appropriate area for the project. Besides these the
realization of the project has no negative impact on the lives of its
surrounding population except promoting economic development to combat
local poverty.

3.3. Beneficiaries
 Agricultural machine markets construction material presenting
companies
 The owner of the project
 The government as a whole
 The residence in that project area by getting job opportunity
 The local customers
 Employed community member
 The central Government and regional state

3.4. Market Potential

The economy of Ethiopia is based on agriculture which accounts for 46.3% of
gross domestic product (GDP) 60% of export and 80% of total employment. In
Ethiopia agriculture is the country`s `most promising resources. As mentioned
under the previous topics agricultural product is the major foreign exchange
earning item for Ethiopia and its demand depends on the world market
situation.

12
Up to now, in the country there are no sufficient amounts of agricultural
production in the area. Therefore, as the demands are not fully satisfied yet,
the establishment of such kinds of project in Abaya will have very much
opportunity to fulfill the gap of demand and supply, boost the business in
general and also produce a reasonable amount of profit. In other hand these
kind of project is decrease the inflation of the countries.

3.5. Capacity of Machinery

The proposed machine tractor has a capacity of more computerized higher
hoer’s power per season (8months) if the machine works for 8hr/day.

3.6. Management
The key to success all depends up on the type of organization and the
efficiency in controlling and running the proposed project. The project will be
responsible for planning, organizing, directing and controlling the overall
operations, and assisted by permanent and temporary workers who are
experienced with agricultural activities.

3.7. Production Target

This project has a plan of producing 70-80 quintal of each product season with
95%operational efficiency.

3.8. Expected Outcomes of the Project

After implementing of the project the following will consider to be enhanced

 The output of this project will be modern agricultural farming

 The availability of modern agriculture will enhance the economic
activity of the woreda and attracting many investors
 It will create job opportunity for the society in the project area.
 Creating awareness and motivation about modern agricultural
processing system for the society as a whole and for the responsible
bodies in particular.
 Developing mechanism to alleviate poverty in the area.
 Developing adoption mechanism so as installing agro-processing

13
  It provides additional modern agriculture for the residence and the
business people
 It will enhance the overall economy of the nation
4. Operation Program
This Agricultural Farming Mechanization decides to set up its farm in
Mechecha kebele the land licensed from regional state, Abaya woreda
concerned branch with required standards. The land owning requisitions
and processes has already started this 300 hectares land is managed as
follows,

No Major Items Types of crop Hectare Production Remark

-
1 Main food o Maize 120 Ones a year
crops o wheat 100
o Teff 13
2 Cash crops Coffee farming 50 Ones a year
3 Vegetables Vegetable---- 5 Two times a
and fruit Fruit (Mango, year
Bananas,
Avocado, papaya 5 Ones a year
and etc
4 Livestock Fattening 3 Three times
/poverty a year
5 Forestry 4 Ones a year
development

14
 Part Two

Feasibility Analysis

Financial Analysis

1, Project Cost
Table 2, Machinery and Equipment

No Item Unit Quantity Unit Total price Remark

price(birr)
1 Italian model (400- No 1 1,000,000 1000000.00
hp) tractor and fully
instruments
2 Hander model (120- No 1 85000 85000.00
Hp) tractor & fully
instrument
3 Nonmoving hasher 3 78000 234000.00
4 Water pump 3 55000 165000.00
5 Dripper pipe M 30000 30 900000.00
6 Geom. Bren shits M2 1500 1200 1800000.00
7 Generator 2 100000 200000.00
8 Weighing equipment 10 7000 70000.00
9 Yield sacks 2000 15 30000.00
10 Manuel watering jug 100 50 5000.00
11 Beefing station 2 5000 10000.00
12 Fuel tanks 20 3000 60000.00
13 Water taker 4 50000 200000.00
14 Office furniture 5 000 85000.00
15 Service Isuzu car(FSR) 1 1200000 1200000.00
16 Traditional agric- Set 60000.00
tools
17 Manual lifting poorly 10 4000 40000.00
18 Auto mechanical 3set 5000 15000.00
implements
19 Poultry station 2 20000 40000.00
20 Fatting station 1 50000 50000.00
Total 4357659.00

15
Table 3, Building and Construction

No Item Quantity Area Unit cost Total cost

1 Yield store 4 20*25 300,000.00 1,200,000.00
2 Material store 2 8*12 45,000.00 90,000.00
3 Water storage 8 5*10 330,000.00 2,640,000.00
4 Beefing and 1 2*15*2 100,000.00 100,000.00
livestock station
5 Garage 1 5*10 70,000.00 70,000.00
6 Office 4 (4*5)3 120,000.00 48,000.00
7 Guard room 8 3.5*3.5 10,000.00 80,000.00
8 Latrine 1 2*0.5 25,000.00 25,000.00
9 Workers 10 4*5*15 15,000.00 225,000.00
residential rooms
10 Camp settlement 2 3,000.00 60,000.00
11 Poultry station 2 5*8 10,000.00 20,000.00
12 Fatting station 2 10*20 50,000.00 100,000.00
13 Reservoir (water 6 25*25 100,000.00 600,000.00
pond)
Total 1,178,000.00 5,690,000.00

Table 4. Direct labor cost

Item Job titles Quan Salary Salary /year Remark
tity /month
1 Machine 1 3,000.00 12,000.00 4 Month
operator
2 Tractor 2 1,500.00 36,000.00 9 Month
3 Driver 1 12,000.00 9,600.00 8 Month
4 Loading 10 15,000.00 120,000.00 8 Month
unloading
5 Daily labor 350 210,000.00 1,260,000.00 6 Month
Total 1.437,600.00

16
Table 5, Indirect labor cost

N Item Quantit Criteria Monthl Mont Yearly Remar

o y y salary h salary k
1 Manager 1 Degree 3,000.0 12 36,000.00
0
2 Forman 1 License 2,500.0 12 30,000.00
0
3 Store 2 Diploma 1,500.0 12 18,000.00
keeper 0
4 Beefing 3 10 +1 1,000.0 12 12,000.00
station 0
5 Accountan 1 10 +1 1,000.0 12 12,000.00
t 0
6 Cashier 1 Diploma 1,200.0 12 14,400.00
0
7 Secretary 1 Diploma 1,200.0 12 14,400.00
0
8 Guard 6 10 500.00 12 6,000.00
9 Other 150 Grade 8 600.00 6 3,600.00
workers
Total Experienc 146,400.0
e 0

Table 6, Furniture and Equipment

Item Description Unit Quantity Unit price Total

1 Table Pc 1 1,000.00 1,000.00
2 Chairs Pc 3 500.00 1,500.00
3 Shelf Pc 1 1,000.00 1,000.00
4 Computer & Pc 1 27,000.00 27,000.00
printer
Total 30,500.00

17
 2. Project Output
Table 7. Throughout its establishment phases it will have the following
outputs

No Output item Unit quantity Quantity Remark

1 Maize Kg 100000
2 Wheat Kg 90000
3 Teff Kg 60000
4 Oil seeds Kg 15000
5 Dried coffee Feresulla 8000
6 Bulls No 200 3times ayear
7 Machine renting Birr 1000000
service
8 Vegetable product Own 30360 3times a year
9 Fruit product Own 10600

Table 8. Production cost plan direct material cost plan

No Item Unit Quantity Unit Total price Remark

price
1 Maize improved variety Kg 1000 32.00 32,000.00
seeds
2 Wheat improved variety Kg 8000 14.00 112,000.00
seeds
3 Teff improved variety seeds Kg 500 14.00 7,000.00
4 Oil seed improved variety Kg 150 20.00 3,000.00 Spsnmemaug

5 Coffee seeds 600 50.00 30,000.00

6 Gravely seeds 20 8.00 160.00
7 Cordial African seeds 30 10.00 300.00
8 Bulls 100 1,500.00 150,000.00
9 Fertilizer & composting 30000 750.00 225.00

18
10 Pesticides chemical 100 90.00 9,000.00
11 Insecticide chemical 60 60.00 3,600.00
12 Bulls feeding 7000 9.00 63,000.00
13 Improved vegetable seed Kg 60 857.00 51,420.00
14 Improved fruit sideling No 2000 27.00 54,000.00
Total 515,705.00

Indirect cost plan

No Title Amount of cost Remark

1 Direct labor site-clearing 130.00
2 Tillage
Staking
Holing
Refilling 2360.00
Planting
Slashing
Mulching
Composting
3 Communication 2,000.00
Stationary 2,500.00
Promotion 2,000.00
Per time 60.00
Depreciation (8%) 10,000.00
Maintenance and repair 1,000.00
Tax 100.00
Total 952,500.00

Table 9, Service Cost

s/n Description Rate % Total

o
1 Maintenance cost for building & 2% 113,800.00
construction
2 Maintenance cost for machinery and 3% 130,729.77
equipment
3 Telephone, post, and telegram - 12,400.00
4 Insurance - 18,000.00
5 Office supplies - 1,000.00

19
6 Spare parts - 10,000.00
7 Oil and lubricants - 55,000.00
8 Contingency 3% 200,896.00
Total 541,826.00

Table 10, Working Capital

s/n Item Cost Remark

o
1 Labor cost 2,082,000.00 8 Month
2 Service cost 541,826.00 8 Month
3 For seed purchasing 815,705.00 8 Month
Total 3,953,605.00 8 Month

Table 11, Total Investment cost breakdown

1 Fixed cost 5,690,000.00

 Construction cost
2 Machinery and equipment 4,357,659.00
3 Furniture 60,000.00
4 Working capital 3,953,605.00
5 Other cost
 License 250,000.00
 Transport cost
 Profile preparation etc
Total investment cost 14,311,264.00

3. Source of Finance
The intention of this project is to using financial sources of the owner and
some from bank loan. The source of fund is assumed to be 30 %( 4293379.2)
birr from the owner and the remaining 70% (10017884.8) birr from bank loan.

Table 12: Source of Finance

No Description Percentage Amount

20
1 Promoter own capital 30 4,293,379.20
2 Bank loan grant 70 10,017,884.80
Total 100 14,311,264.00

4. Sales plan
Our sales plan will consist of two fundamental sources. The first one issale
from the agricultural products, food crop products, oilseeds production, cash
crop production, beefing and [Link] second one is the rental service of
the main agricultural farming machineries tractor i.e. after we complete our
year to year production activity we need to deliver service of these
mechanisms to surrounding farmers.

Selling Income
Because of seasonal variation of price in the world market it is very difficult to
put fixed amount of annual income. Since the owner of this project has a plan
to produce 85%-95% per season and the average price of each product is
differ. There for considering the above justification annual revenue that would
be estimated to be in each year above 40-55%.

5. Project Organization, Monitoring and Evaluation

In orderto make our farm productive, monitoring and evaluation will be an
integral part of one process of implementation, production activities and
accounts of the farm will have managed in modern financial management
system second to this the farm will make a network with woreda, zone and
other agricultural development bodies to have necessary extension facilities
constancy and other agricultural inputs. In addition to this the farm will report
about the condition of his work in preparation on sewing and harvesting
periods even about his lose and gain to concerned body. Generally, to ensure
the objective, the owner of this project will do personally and in group to play
his role of responsibility based on the countries agricultural policy.

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Establishment Phase
Since the existence of this group is to work by receiving the credit capital the
farm will start in production in phases of adjusted period of times. This is
because to establish improved breeds, controlled grazing, stable supply of
water resource, Control disease and analyzed promote the future profitability
as business organization.

6. Project Sustainability and Risk Assumption

It we willget the assigned capital and positive response we can proudly insure
and can play our important role in the countries agricultural activity to be self-
sufficient in the production of food crop. Accordingly, our project sustainably
functions without any hesitation of ceasing for this here the contribution of
government. Community financial institution and other concerned body are
very crucial. On the other hand, if we will come across controlled natural and
social problems the farm will plan to have insurance cover. Any way our
assumption of unsuitability risks is the following.

 Negative response on desired economical resources

 Social, environmental and political factors
 Global uncertainty

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Part Three
Conclusion and Recommendation

1. Conclusion
As it is briefly discussed above, the owner of this project have carefully
studied every detail of the project and considered the possibility of achieving
the goal using the current permissible conditions, attractive policies and
encouragement from regional and zonal government offices. The promoter
has very much desire to be part of the society who is actively involved to bring
about change and development to the country. With this regard the promoter
has designed a project which will enable him to integrated mechanized
farming which will brings a profit to the promoter, and extra job to above 400
citizens and set new technology to the society.

This project also contributes a lot in improving current socio-economical

condition of the society. The project has positive implication to upgrade the
agro-industry.

It is expected that after the completion of this project, the promoter, the
population of the surrounding area, the zonal, as well as regional government
will be benefited from this project.

2. Recommendation
The presence of such modern facility will encourage other local and
international investor to come and visit and see other investment opportunity

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and get enough information that could help them to consider the availability
of investment potentials in the region even in the future, and it will
strengthen the socio-economic activity of the area.

Therefore all stakeholders and concerned bodies are recommended to

provide every detail support from the regional as well as zonal administrators
personally or governmental level that the project requires in order to see the
final accomplishment of desired project.

Table of Contents
Title Page No

Part I

1. Executive Summary ………………………………………………………………………….1

2. General profile of the project ………………………………………………………….. 3
3. Introduction …………………………………………………………………………………… 4
3.1 Background of a project ……………………………………………………………. 8
3.2 Justification of the Project ……………………………………………………… 10
3.3 Objectives of the project …………………………………………………………. 11
3.4 Implementation Methodology of the project …………………………. 11
3.5 Scope of the Project ………………………………………………………………. 12
3.6 Location of the Project ……………………………………………………………. 12
3.7 Beneficiaries …………………………………………………………………………… 12
3.8 Market potential ……………………………………………………………………… 12
3.9 Production target …………………………………………………………………… 13
3.10 Expected Outcome ……………………………………………………………. 13
4. Operation program ………………………………………………………………………. 14
Part II
5. Feasibility analysis ………………………………………………………………………….. 15
5.1 Financial analysis …………………………………………………………………….. 15
5.1.1 Project cost ………………………………………………………………….. 15
5.1.2 Project output ………………………………………………………………. 18
5.1.3 Source of Finance ………………………………………………………… 20
5.1.4 Sale plan ……………………………………………………………………… 21

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 5.1.5 Project organization, monitoring & evaluation ……………... 21
6. Project sustainability and risk ………………………………………………………. 22
Part III
7. Conclusions and Recommendation
7.1 Conclusions ………………………………………………………………………………. 23
7.2 Recommendation ……………………………………………………………………. 23

Project Proposal for

Integrated Agricultural
Mechanized Farming

Promoter: AtoHabtamuWondyifraw

Project Location: Oromiya Region, Borena, Zone Abaya Woreda

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December, 2007

Abaya, Borena

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