Oil Seed Ahimed 200 Oil Seed Matu Booraa
Oil Seed Ahimed 200 Oil Seed Matu Booraa
Oil Seed Ahimed 200 Oil Seed Matu Booraa
PROJECT PROPOSAL
FOR
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PROMOTER’S: - AHIMED
SH/HASAN MOHAMMED
OCT, 2021
ADDIS ABABA, ETHIOPIA
Contents
1 Executive Summary...........................................................................................................4
PART ONE................................................................................................................................5
1. INTRODUCTION.............................................................................................................5
1.1 Background......................................................................................................................5
1.2 Promoter’s profile............................................................................................................8
1.3. Objectives of The Project...............................................................................................8
1.4. Basic Features of Project Area.......................................................................................9
1.4.1. Location...................................................................................................................9
1.4.2. Geology.........................................................................................................................10
1.4.3. Relief......................................................................................................................11
1.4.4. Drainage system.....................................................................................................11
1.4.5. Climate...................................................................................................................12
1.4.6. Soils......................................................................................................................12
1.5 Socio Economic Activities Of The Population:.............................................................13
PART TWO.............................................................................................................................14
THE MARKET DEMAND POTENTIAL..............................................................................14
2.1. Market Situation...........................................................................................................14
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2.2. Competition..................................................................................................................16
2.3. The Production of Oil Seed..........................................................................................16
2.3.1 Production Hygiene....................................................................................................17
2.3.2 Agricultural input requirements..................................................................................17
2.2.2.1 Water for primary production..............................................................................18
2.2.2.2 Manure, biosolids and other natural fertilizers....................................................18
2.2.2.3. Soil......................................................................................................................18
2.2.2.4. Bio diversity........................................................................................................19
2.2.2.5. Natural Plant Nutrition.......................................................................................19
2.2.2.6. Natural Pest Management...................................................................................19
2.2.2. 7. Manuring and Composting................................................................................20
2.2.2.8. Biological Pest Control.......................................................................................20
2.2.2.9. Sanitation............................................................................................................21
2.2.2.10. Tillage and Cultivation.....................................................................................22
2.2.2.11. Conservation Tillage and Organic Farming.....................................................22
2.2.2.12. Supplemental Fertilization................................................................................23
2.3. Schedule of production plan.........................................................................................23
2.3. Sales Plan......................................................................................................................23
PART THREE.........................................................................................................................24
ORGANIZATIONAL STRUCTURE.....................................................................................25
PART FOUR...........................................................................................................................26
FINANCIAL REQUIREMENT..............................................................................................27
1.1 Fixed Investment.......................................................................................................27
4.1.1 Building & Construction.........................................................................................27
4.1.2. Farm Tools and Equipments..............................................................................28
4.1.3. Vehicles.............................................................................................................29
4.1.4. Office Equipments.............................................................................................29
4.2 Expenses........................................................................................................................29
4.2.1 Raw Material Purchase...............................................................................................30
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Executive Summary
3.Nationality Ethiopia
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PART ONE
1. INTRODUCTION
1.1 Background
Pulses & Oilseeds Ethiopia currently grows and exports a wide variety of oilseeds and
pulses, including sesame seeds, Niger seeds, linseeds, sunflower seeds, groundnuts,
rapeseeds, castor oil seeds, pumpkin seeds, haricot beans, pea-beans, horse beans, and
chickpea. Of these, chickpea is perhaps the most significant, as Ethiopia is currently the
largest producer in Africa. Chickpea is grown by over one million rural households and
contributes significantly to the country’s agriculture and economyis one of the fastest-
growing economies. It has made a significant progress in industrialization. The Ethiopian
government has embarked on a policy aiming to invite as many overseas investors as
possible to the country. Industrialization will contribute to the economy of Ethiopia through a
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large number of small production units. The industrial sector contributes among others to the
expansion of employment opportunities, output and export and fosters entrepreneurship.
Industry is also one of the pillars through which the socio-economic objectives of balancing
development in rural, semi-urban areas. Ethiopia is Africa’s second most populous country
having wide range of market for industrial productions. Industries are indicators of economic
growth and the key drivers of innovations and development.
Oromia Investment Commission is one of government institution established as per relevant
laws of the national regional state so as to facilitate establishment and expansion of private
investment in 20 zonal and 16 autonomous urban administration of the region.
The commission has given responsibilities and duties to identify and study potential
resources and opportunities available for development and expansion of investment
activities. It has also given responsibilities to provide quality services to investors and
promote the identified potential by using different means so as attract potential investors
capable of investing in the regional state.
Oil Seed production is central to food security, especially as global population is predicted to
surpass the 9 billion mark by 2050. Adverse conditions for crop production resulting from a
changing climate, such as increasing temperatures, frequent droughts, soil salinization,
changing intensities and frequencies of disease and pest incidence and their transboundary
spread, are all factors that further threaten food security. Genetic diversity of crop species
achieved through breeding, and optimal soil and water conditions in the growing
environment through management, constitute the essential requirements for increasing crop
production. Breeding improvements in crops include increasing crop yields, improving
quality, and enhancing resilience to adverse conditions such as diseases, pests, and
environmental stress including drought, heat, salinity etc. Management and agronomic
practices address soil, water and nutrient requirements of the crop to ensure increased and
sustained production. This chapter discusses nuclear, isotopic and related techniques used in
creating new genetic diversity for crop improvement, and in the management of soil, water
and nutrients for crop production.
Our country Ethiopia is one of the East African countries with the diversified climatic
conditions, natural scenery and resource bases. Currently the country has a total population
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of about 100 million of which more than 40 million is found in Oromia regional state.
Oromia is one of the regional states of Ethiopia with very fertile land, very conducive
weather condition both for crop production and animal husbandry. The country’s Gross
Domestic Product or GDP (was 19.39 billion US$ in 2007 with per capita income of 245
US$. In the same year, agriculture accounted for almost 47 percent of GDP and about 85
percent of exports. Ethiopia is the third largest populated country in Africa with a total
population number of 77.4 million (2005), out of which 84% of the populations reside in the
rural area. About 80 percent of the economically active population is engaged in agriculture.
The cultivated area covered in 2005/06 was about 11.3 million ha, of which 10.5 million ha
and 0.77 million ha covered with annual and permanent crops respectively.
Agriculture in Ethiopia has a major influence on all development processes in the country, as
some 85% of the total employment and 90% of the country’s export are based on agriculture
(Environmental Policy, 1997). It also contributes about 50% of the country’s gross domestic
product (GDP) and supports around 70% of the raw material requirements of agro-industries.
This high proportion of the country’s economic gains made from agriculture depends mainly
on the existing diversity of indigenous crops/plants and livestock. Crop production is
estimated to contribute on average about 60%, livestock 27% and forestry and other
subsectors around 13% of the total agricultural value (Ministry of Water Resource, 2001).
As a result of shifts in rain patterns, crop production in the highlands and in most areas of
low elevation can be affected by drought, leading to food shortages. The response is often
food aid supply, which may involve grain distribution, especially of maize and wheat.
As a measure to mitigate the negative impacts of grain aid on the market of prices of local
crops, strategic arrangements have been made between donors and the government, whereby
grain aid supply is based on local sources as much as possible. This strategy has proven
useful in keeping the local grain prices at reasonable levels.
Agricultural practices and farming systems in Ethiopia are based on diverse agro-ecological
conditions that in turn require varying approaches in crop production. In general terms, the
agro-climatic zones of the country can be grouped into three types: Kolla (warm semi-arid, at
500–1500m above sea level), Woinadega (cool semi-arid, at 1500–2400m) and Dega (cool
and humid, higher than 2400m). More recent discipline oriented studies further distinguish
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and define this agro-ecological classification by linking related a-biotic factors such as
annual rainfall, altitude and temperature (Negash et al, 1989).
The following five main agricultural production systems can be distinguished in the country:
• Frequently varying agro-climatic conditions with diverse cultural and farming practices
remain characteristics of agriculture in Ethiopia. These can be grouped into three major
systems (Feyissa, 1999):
The highland mixed-farming system practiced in areas of higher elevation, usually above
2000m as a crop-livestock complex involving the cultivation of diverse crops. Continuous
cropping is exercised through crop rotation, where cereal production alternates with the
production of legume and oil crops as a means of maintaining soil fertility. Barley, oats and
highland legume crops dominate.
The low plateau and valley mixed-farming system practiced in the intermediate or low
highlands, mountain foothills and upper valleys, at elevations ranging from 1500 to 2000m.
Both crop and livestock productions are economically essential; crop production is
dominated by sorghum and maize followed by wheat, teff and some legume and oil crops.
The pastoral and agro-pastoral farming system is practiced in the arid and semi-arid zones
mainly at elevations below 1500m and with annual rainfall less than 450mm.
In the arid zone, nomadic and semi-nomadic pastoral livestock production dominates, with
camels and goats as important components. In the semi-arid zone, semi-nomadic or semi
sedentary agro-pastoral production is practiced with sorghum and maize as main crops.
Livestock production in the semi-arid zone focuses on cattle and sheep. Water and range
evelopments are important elements for improving both crop and livestock production under
this system.
Major staple crops in Ethiopia vary according to the cultural and agroecological conditions.
The indigenous Ethiopian tetraploid wheat (Triticum durum) and the introduced bread wheat
(Triticum aestivum) have a wider coverage in the northern, central and south eastern parts of
the country. Other important staples are barley in the highlands; teff (Eragrostis tef) with its
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wide adaptation to various agro-ecologies; sorghum, maize and millets in the lowlands; and
different root crops such as enset (Enset ventricosum) and yam (Dioscorea spp.). Major
legume crops are horse bean (Vicia faba), pea (Pisum sativum), lentil (Lens culinaris)
and vetch (Lathyrus satives); these are all essential dietary components along with the other
staples. Major oil crops are gomenzer (Brassica Carinata), noog or niger seed (Guizotia
abyssinica), linseed (Linum usitatissimun) and sesame (Sesamum indicum) dominant in the
lowlands.
Coffee is an economically important crop in the east, southwest, and the western parts of the
country. Various types of spices, including Aframomun corarima and Capsicum spp. and
Piper longum are widely distributed in humid areas. Cotton (Gossypium spp.), which has
three wild species in Ethiopia, and kenaf (Hibiscus spp.) are important cash crops particularly
for lowland farmers. There are also many wild plant species which are used as food,
particularly during food shortage in the interval between planting and harvest. Some
domesticated types of these plant species still occur with their wild relatives in some parts of
the country.
The government of the country has been excreting its maximum effort to expand investment
opportunities in the country by designing different policies and strategies that will facilitate
investment through attracting both domestic and foreign investors. Likewise, the Oromia
regional state government has been working day and night to make poverty history by
making its door open to investors both (domestic country and foreign) to come and invest in
the region. Therefore, it is this ample opportunity that attracts the new investors to come to
Oromia for investing in crop production. Hence, being one of the crop producers has its own
contribution to satisfy the demand of the current market. The Oil seed production farms
project is planned to supply: different crops types.
The present economic policy of the country is highly inviting the private sectors to invest
their capitals to. As a result, the investors respond to the government’s invitation, by
contributing their share to the development process. The project is needed because of the
highly growing population of the country and its need of more crops supply.
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To serve as a role model for other investors who wants to invest in similar business
undertakings in Ethiopia in general and Oromia in particular.
To contribute somewhat to the governments objectives of reducing the problem of un-
employment through creating employment opportunities to the citizens.
To generate foreign exchange earning for the country since the product is exported to
abroad.
To provide selected seeds for farmers that are produced through irrigation in the area.
To contribute some to the area of self-food sufficiency in crop production if gaps are
created.
Oil Seed and pulses Cleaning and sorting of agro commodities is in practice since ancient
time. Initially, this process was carrying out at household level is now scaled up to
industrial level looking to production and demand of all these commodities. It is
necessary to clean, grade and sort all raw cereals, pulses, legumes, oil seeds and whole
spices before any type of consumption or use in other products.
Cereals, pulses, legumes, oilseeds and whole spices are needed specific post-harvest
operations, start right from farm after harvesting, and divided into three stages:
1) Farm Level Operations;
2) Primary Processing and
3) Secondary Processing.
The farm level operations include are: threshing, winnowing, drying and storage. The
primary processing of whole agro-commodities include: cleaning, grading, sorting and
packing; whereas, secondary processing includes value addition like grinding (flour or
powder making); blending, flaking, baking, roasting, puffing, etc. It is necessary to use
cleaned and sorted grains, pulses, legumes and whole spices for further value addition.
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Illubabor (Oromo: Illuu Abbaa Booraa) is a zone in Oromia Region of Ethiopia. Illubabora
is named for the former province Illubabor. It is bordered on the south by the Southern
Nations, Nationalities and Peoples Region, on the southwest by the Gambela Region, on the
west by Kelem Welega Zone, on the north by West Welega Zone, and Benishangul-Gumuz
Region, on the northwest by East Welega Zone, and on the east by Jimma. Towns and cities
in Illubabora include Bedele, Gore and Metu.
The Central Statistical Agency (CSA) reported that 14,855 tons of coffee were produced in
this zone in the year ending in 2005, based on inspection records from the Ethiopian Coffee
and Tea authority. This represents 12.9% of the Region's output and 6.5% of Ethiopia's total
output.[1]
Historically, Illubabora has been considered one of the food-exporting areas of Ethiopia, but
beginning in 1997 poor crops harvests and the appearance of crop diseases such as Grey leaf
spot, caused by the fungus Cercospora zeaemaydis (not previously common in Ethiopia) led
to a deterioration in conditions. By 1999, signs of the seriousness of the situation included
empty household granaries, people begging and committing crimes in the hope they will be
fed in jail, sending children to live with relatives or friends, and reduced student enrollment
in schools
Climatic conditions:
In the district the amount of temperature that receives is greatly modified by latitude and
longitude extent. Based on altitude the districts are classified in to three-agro climatic
specials Oil Seed production farm District namely, High land, Midhigh land and lowland.
Matu district is characterized by a great diversity of temperature as a result its wide range of
altitudinal extent. In the Eastern part of lowland area along Dual River the area experience
moderately warm temperature. This thermal District covers 21% of the total area of the
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district. Semi highland temperature areas of the district are found in all part of the area except
in the northern part of the district. These thermal Districts cover 63.6% of the total areas of
the district. High land temperature areas of the district are found north part of the district
along Matu district which account 15.4%.
Rainfall: The annual average rainfall of the wereda ranges from 740mm with the range of
580 to 900
Temperature: The average annual temperature is about 22.1oc, maximum 28.5oc and with
minimum of 18.5 ocand about 67% of the the woreda
2 Castor Production 20
3 Groundnut production 20
4 Chickpea 20
5 Pea 10
6 Sorghum 10
7 Beans 10
Total 200
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Location
The envisaged project is established in MATU district. The districts is located at a
distance of surrounding 480 km far from Addis Ababa to the east part of the country
east.
The total land required for the project is about 200 hek.
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1.4.5. Soils
In Matu zone, about 25 types of soil (according to Atlas of bale zone, July 2011) have been
identified. The major are as follow;
1. Chromic and Pellic Vertisols: These are clay Black Basaltic soil which mostly develop
from tertiary volcanic rocks this soil are very fertile they fairly good Agricultural potential.
However, they have a limited agricultural use. The Soil shrink, develop deep cracks and
become very hard in dry season. They swell and become sticky during the wet (rainy)
Seasons. Besides, because of their low permeability, they are more prone to water logging
during the rainy season.
2. Dystric, Chromic, Eutric, Calcic and Vertic Cambisols: They develop from recent
lava and linked with sedimentary rocks .Their Agricultural value is limited as they are mostly
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found on rugged and steep terrain. For this reason this type of soil left under natural plant
cover.
3. Chromic, Orthic and Vertic Luvisols (associated with alluvial accumulation of high
clay continent): Soils are usually dark brown or reddish and suitable for agricultural
activities.
4. Dystric and Eutric Nitosols (deep with high clay continent): Soils have good
agricultural potential (good physical and chemical properties, stable structure and high
moisture storage capacity).
It is approximately 409 km form Addis and it has a very attractive climate for the growth of
different kinds of cereals such as wheat, barely, teff and etc. In addition, it is very conducive
for the production of different fruits and vegetables. Moreover, the investment office of the
zone has been exerting its maximum effort to boost the investment opportunities of the zone
through different promotional strategies. The present favorable economic situation put the
Zone at the advantage of attracting the private sector investment. The establishment of new
Hotels and other infrastructural development are among others very crucial for attracting
investors in the Zone. Hence, the establishment of such project is very important in creating
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employment opportunity in the area both for skilled and unskilled labors. Other than being
employed in government and private organization, most of the population of the town is
engaged in trade, be it formal or informal. Unlike the urban people, the rural population is
engaged in farming. Therefore, aside with all other projects which are undertaken so far by
private and government, this project is deemed to provide employment opportunities both
perm ant and temporary for about 500 individuals at the initial period and will continue
employing every year. From this total employment opportunity generated by the project 100
are skilled labors 400 are unskilled labors.
PART TWO
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2.2. Competition
There are different forms of competition that may face this project. These are price and non
price based competition. Moreover, there are different competitors that will compete with the
project under discussion either directly or indirectly both in the domestic and foreign market.
But the project under discussion has diversified marketing strategies that could enable it cope
up with the different competitors in the market. Moreover the Project will frequently conduct
competitors research which focuses on, the strength and the weaknesses, the different
competitor’s strategies, the techniques they use in rendering the service, their customer
handling methods, their product quality and others.
It is this combination of productivity and responsibility that most accurately describes the
term "Sustainable Crop Production Systems." The production process of this project is
environmentally benign as it produces organic crops. Different types of cereal crops are
grown and harvested under a wide range of climatic and diverse geographical conditions,
using various agricultural inputs and technologies, and on farms of varying sizes. Biological,
chemical and physical hazards may therefore vary significantly from one type of production
to another. In each primary production area, it is necessary to consider the particular
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agricultural practices that promote the production of cereal crops, taking into account the
conditions specific to the primary production area, type of products, and methods used.
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• Irrigation of crops that will receive little or no post-harvest wash treatments prior to
packing, such as field-packed produce.
Water for fertilizers, pest control and other agricultural chemicals
Water used for the application of water-soluble fertilizers and agricultural chemicals in the
field and indoors should not contain microbial contaminants at levels that may adversely
affect the safety of fresh fruits and vegetables. Special attention to the water quality should
be considered when using fertilizer and agricultural chemical delivery techniques (e.g.
sprayers) that expose the edible portion of fresh fruits and vegetables directly to water
especially close to harvest time.
Hydroponic water
Plants grown in hydroponic systems absorb nutrients and water at varying rates, constantly
changing the composition of the re-circulated nutrient solution.
Because of this:
• Water used in hydroponic culture should be changed frequently, or if recycled, should be
treated to minimize microbial and chemical contamination.
• Water delivery systems should be maintained and cleaned, as appropriate, to prevent
microbial contamination of water. Therefore, the owner has deep rooted experience in this
area.
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pollination and pest management. Diversity above ground also suggests diversity in the soil,
providing better nutrient cycling, disease suppression, tilt, and nitrogen fixation. Good
organic farmers mimic the biodiversity of nature through practices like intercropping,
Companion planting, establishment of beneficial habitats, and crop rotation (sometimes
referred to as companion planting across time).
The effort to increase biodiversity works hand-in-hand with enterprise diversity, which is
often (but not necessarily) an objective on organic farms.
Humans and other animals extract minerals, along with sugars and proteins, from the food
they eat. Plants, too, obtain minerals — and a wide range of vitamins, antibiotics, and other
useful compounds— through digestion. However, plant digestive systems are not internalized
as they are in animals. Plants must rely on the external digestive processes of the soil system
within reach of their roots — a zone called the rhizosphere.
Whether conventional or organic, all farmers are concerned with pests. They spend a lot of
time and resources controlling them. However, in the organic “world view,” pests — whether
weeds, insects or diseases — are not simply scourges. They are indicators of how far a
production system has strayed from the natural ecosystems it should imitate. Certain weeds,
for example, tend to predominate when soils are too acidic or too basic; some become a
problem when soil structure is poor and conditions become anaerobic; others may be
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stimulated by excessive fertilizer or manure salts. Organic proponents also believe that insect
pests are attracted to inferior or weak plants — the result of poor crop nutrition. Their logic
continues by asserting that pests are naturally repelled by vigorous, well-nourished plants.
This belief is often challenged, and significant research remains to be done. As scientific
understanding has grown, insect pest outbreaks are also being understood as imbalances in
the whole agro ecosystem and how it is managed. In nature, massive pest outbreaks are
relatively rare and short-lived, due to the presence of natural predators, parasites, and disease
agents that quickly knock the pest numbers back down to a moderate level. In farming
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problems. These biological controls help keep pest numbers at levels where further cultural
activities or relatively mild pesticides are (usually) adequate to assure a crop. In some
instances, biological control can be so effective that no additional action is even needed by
the farmer. Some see biological control as a default benefit of the soil fertility practices of
organic farming. The diversity of crops in a soil-building rotation, the use of cover crops, and
other practices build a diverse soil biology that works to keep soil pests in check. They also
provide substantial aboveground habitat for beneficials.
2.2.2.9. Sanitation
Sanitation can take on many forms:
• Removal, burning, or deep plowing of crop residues that could carry plant disease or insect
pest agents
• Destruction of nearby weedy habitats that shelter pests
• cleaning accumulated weed seeds from farm equipment before entering a new, “clean” field
• sterilizing pruning tools
As in human and animal health, sanitation practices can go a long way in preventing crop
pest problems. However, many practices— such as clean cultivation, deep plowing, and
burning crop residues — can increase erosion and reduce biodiversity. Thus, they may
conflict with sustainability. Good organic growers recognize this and treat those practices as
transitional or rescue options, rather than relying on them on an annual basis.
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biologically active zones of the soil, rather than burying them deeply where decomposition is
anaerobic (oxygen-starved). Leaving soils completely bare and vulnerable to erosion is
discouraged; fall moldboard plowing is certainly frowned upon. Cultivation in organic
systems often rises to the level of art. Row-crop farmers frequently use blind cultivation —
shallow tillage, which largely ignores the crop rows—beginning shortly after seeding until
the plants are but a few inches high. Rotary hoes, wire-tooth harrows, and similar equipment
can be used for blind cultivation, delaying the first flush of weeds and giving the crop a head
start.
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poorer soils and on those that have been heavily exploited through non-sustainable farming
practices.
To correct mineral deficiencies in organically managed soils, organic growers often apply
ground or powdered rock minerals. The most commonly used rock mineral is high calcium
aglime. Dolomitic limestone, various rock phosphates, gypsum, sulfate of potash-magnesia,
and mined potassium sulfate are also common. These are all significant sources of primary
(P, K) and/or secondary (Ca, Mg, S) plant nutrients. The savvy organic grower applies
significant amounts of these materials only with the guidance of regular soil testing. Less
common are other rock powders and fines that are limited sources for the major nutrients but
are rich in micronutrients or have some other soil improving characteristic.
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PART THREE
ORGANIZATIONAL STRUCTURE
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be a
CEO with the responsibility of supervising the over all activity of the plant. Depending up on
the nature of the center and the amount of work to be performs; there will be auxiliary units
under the general manager. Employees under each unit will be supervised by the unit head
that is accountable for the general manager.
CEO
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Production
Department Marketing Department
General Administration Department
As clearly shown in the organizational structure, the crop production project has CEO, three
Departments under the general manager, Advisor and the internal Auditing and Inspection.
These departments are the Production Department, The Marketing Department, and the
General Service Department. Under each Department there are different sections which are
undertaking different activities.
Hence the following section deals with the duties and responsibilities of each division.
3.1. The General Manager’s Duties and Responsibilities
He will plan, organize, direct and control the overall activities of the production center.
He will devise policies and strategies that will enable the project to be profitable and etc
3.2. General Administration and Finance Department
Is responsible for undertaking the following activities
To plan, organize direct and control the financial transaction of the project by using
necessary document.
To develop sound financial control system by developing modern financial control
systems.
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To prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body.
To control the human and non human resources of the project, which include:
effective handling of the different inventories of the project, and devise strategies of
controlling against fraud and damage and etc
3.3 . The Marketing Department
Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
Will develop the marketing strategies for future Integrated Agro Processing center’s
development.
Conduct both foreign and domestic market research for expanding the sales of the
company
Will develop effective customer handling strategies and etc
3.4. The production Department
It is the core department of the project as it handles and administer over all the production
scheme of the company and it encompasses sections like: cleaning of the production area,
preparation of selected seeds, planting, harvesting and other post harvest activities.
Thus it undertakes the following activities:
producing produces with less prices so as to make the company more competent
Produce products in different types so that customers have diversified choices.
PART FOUR
4. FINANCIAL REQUIREMENT
The financial resource is a prime resource for undertaking any activities. Hence for
implementing this project a total of 17,000,000.00 Eth birr is required. From this
30% birr will be owner’s contribution while the rest 70% Eth birr will be covered by bank
loan. Therefore the said amount of finance is needed for undertaking the following:
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No Description Cost
1 Fixed Investment
1.1 Land, Building and Construction 4,760,000 0.00
1.2 Machines and Equipment’s 3,740,000 0.00
1.3 Vehicles and Motors 510,000 0.00
1.4 Office Furniture and Equipment 340,000 0.00
Total Fixed Investment Cost 9,350,000 0.00
2 Operating Expense 0.00
2.1 Raw Materials Purchase and Products 3,400,000 0.00
2.2 Salary Expense 1,700,000 0.00
2.3 Other Operating Expense 510,000 0.00
2.4 Pre-operating Expense 340,000 0.00
Total Operating Expense 5,950,000 0.00
Contingency (Lump sum) 10% 1,700,000
Total Investment Cost 17,000,000 0.00
unit cost in
NO Description Plot in m2 Total cost
birr
Office and
1 200 4500 1,500,000
Residences
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Stores and
2 500 2500 1,750,000
warehouses
Total 4,760,000
Different tools
5 “ 20000
and equipments
Total 3,740,000
Vehicles
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The company requires the above vehicles and farm machines. Currently, the company is
using a hired tractor for undertaking its harvesting schemes.
4.2 Expenses
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However the land under consideration is very fertile and as such does not consume excessive
chemical fertilizers. Moreover, the company itself will produces its own selected seeds and
thus reduce the cost of selected seeds used in the production. Therefore, the unit cost of
production is as follows.
Moreover, all the crops are not equally consuming the inputs. Therefore the company will
work on reducing costs by designing tightened cost reduction strategies. Additionally the
crop does not consume excessive fertilizer and thus it only need different pesticides at the
time of blooming. Again, the owners will implement the project after three months of taking
the land, and he will do the project phase by phase so as to use the working capital from the
project.
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N.B. The above salary expense includes the salary of both skilled and unskilled labors.
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6 Water - - - 2,000
7 Electricity - - - 10,000
8 * Fuel Expense - - - 39,046
9 Telephone - - - 12,000
10 Repair expense - - - 20,000
11 **Lubricants 6400
11 Miscellaneous Costs - - - 5000
Total 510,000
No Description Cost
1 Project proposal 10,000
2 Licensing fee and others 5,000
3 0thers 325,000
Total 340,000
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Balance Sheet
Asset
Current Asset
Cash 2,550,000
Inventory of raw materials and inputs 3,400,000
Total Current Asset 5,950,000
Fixed Asset
Land, Building and Construction 4,760,000
Machineries and Equipment’s 3,740,000
Office Equipment 340,000
Vehicles 510,000
Total fixed Asset 9,350,000
Total Asset
Liability
Account payable 11,900,000
Owners Equity 5,100,000
Capital
Total Liability & Owners’ Equity 17,000,000
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4.6. Assumptions
Salary expense increased by 5% after 2013 onwards, raw material purchase assumed to
be increase by 5% starting from 2013,
Sales by 20% starting from 2012,
Operating expense is increased by 10% starting from 2013
Raw material purchase increased by 10%
Moreover, the owner will sign the contract with different buyers and will receive money
from the buyers as a down payment for supplying the crops.
Therefore, the money received from the buyers will be used for transportation, insurance
and all other relevant costs.
Deprecation expense is assumed on straight line method
For Office equipment the life time is assumed to be 5 years and rate of dep.20%
For Farm equipments life time is 5 years. at 20% dep. rate
For Building the life time of 20 years with dep. rate of 5%
For Vehicles life 5 years dep. Rate of 20%.
4.7. Summary
As clearly the income statement shows, the promoter of the project will return her initial
investment costs within the first three month of operation because she will export to different
Middle East country. In general, the financial statement of the project shows that this project
under discussion will cover its entire investment costs with in short period of time. Hence
the promoter of the project has along term plan of engaging in other agro processing business
enterprises. Additionally, in the coming future the project owner has a plan to engage in other
businesses in near future.
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