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Werhouseing

The project proposal outlines the establishment of a warehouse and storage facility in South Wollo, Kombolcha City Administration, aimed at improving access to agricultural inputs like seeds and fertilizers. With a total investment of 10 million Birr, the project is expected to create 40 jobs and enhance agricultural productivity, benefiting the local economy and community. The initiative aligns with Ethiopia's Agricultural Development Led Industrialization strategy, addressing the need for improved seed supply and storage solutions to support smallholder farmers.
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0% found this document useful (0 votes)
135 views41 pages

Werhouseing

The project proposal outlines the establishment of a warehouse and storage facility in South Wollo, Kombolcha City Administration, aimed at improving access to agricultural inputs like seeds and fertilizers. With a total investment of 10 million Birr, the project is expected to create 40 jobs and enhance agricultural productivity, benefiting the local economy and community. The initiative aligns with Ethiopia's Agricultural Development Led Industrialization strategy, addressing the need for improved seed supply and storage solutions to support smallholder farmers.
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROJECT PROPOSAL

ON
WAREHOUSE AND STOREGE
FACILITY

PROJECT TO BE IMPLEMENTED IN SOUTH WOLLO


KOMBOLCHA CITY ADMNSTRIATION, AMHARA REGIONAL
STATE

PROMOTER:

February 2025

S/W/Kombolcha

Table of Contents
EXECUTIVE SUMMARY....................................................................................................4
1. INTRODUCTION..........................................................................................................5
1.1. Background of the Promoter....................................................................................6
1.2. Project Justification..................................................................................................8
1.3. Objective of the Project..........................................................................................10
1.4. The Socio-Economic Significance of the Project...................................................10
2. Description of the Project.............................................................................................12
3. The Project Area...........................................................................................................14
3.1. Location..........................................................................................................14
3.2. Floor layout Plan.............................................................................................16
3.2.1. Land Use Plan.................................................................................................17
3.3. Location Map of the Area......................................................................................18
4. THE MARKET STUDY AND STORAGE CAPACITY............................................19
4.1. Market Study..........................................................................................................19
4.1.1. Demand and Supply for Improved seeds in Ethiopia.....................................19
4.2. Market Prospects....................................................................................................27
4.3. Storage Capacity and service program...................................................................27
4.4. Service Charge.......................................................................................................28
5. TEHCNICAL STUDY.................................................................................................28
5.1. Description of the Project Service/ Product Mix...................................................28
5.2. Construction and Civil Work.................................................................................28
5.2.1. Construction Schedule....................................................................................28
5.2.2. Architectural Design & Layout.......................................................................28
5.2.3. Construction Plan and process........................................................................29
5.3. Utilities...................................................................................................................30
5.4. Project Implementation...........................................................................................30
6. MANAGEMENT AND ORGANIZATIONAL STRUCTURE...................................31
6.1. Organization and Management...............................................................................31
6.2. Man Power.............................................................................................................31
6.3. Organizational Structure.........................................................................................31
7. FINANCIAL REQUIRMENT AND ANALYSIS.......................................................34
7.1. Total Investment Cost............................................................................................34

7.1.1. Fixed Investment.............................................................................................34


7.1.2. Initial Working Capital...................................................................................36
7.1.3. Pre-service Expenses......................................................................................36
7.2. Operating Expense at Full Capacity.......................................................................37
7.3. Financial Analysis and Statements.........................................................................38
7.3.1. Underlying Assumption..................................................................................38
7.3.2. Sources of Fund..............................................................................................39
7.3.3. Bank Loan Repayment Schedule....................................................................39
7.3.4. Depreciation Schedule....................................................................................39
7.3.5. Revenue Schedule...........................................................................................39
7.3.6. Balance Sheet (Beginning)..............................................................................40
7.3.7. Financial Statement.........................................................................................40
7.3.8. Financial Analysis...........................................................................................41
EXECUTIVE SUMMARY
1.Project Name warehouse and storage facility
2. Nationality Ethiopian
3.Project Owner xxxxxxx
4.Project location
In south wollo kombolcha city administration , Amhara
regional state
5.Project Composition Storage facility for agricultural inputs like improved seeds,
maize, tiff, flour fertilizers and agrochemicals.

6.Primeses Required 4,000 M2

7. Total Investment Cost Br. 10,000,000 from this amount 30 %( Br. 3,000,000) from
owner equity and 70 %( 7,000,000) from bank loan.
8. Employment Opportunity The total manpower required for the plant will be 40
Employees at full capacity.
 Permanent workers 24
 Skilled 19
 Unskilled 5
 Temporary workers 16
 Skilled 1
 Unskilled 15
9. Social and Economic Benefit Provide quality flour mill service, increase agricultural
productivity, employment, generation of income, stimulates
Town economy and benefits local people.
Type of business ownership Privately owned business enterprise
1. INTRODUCTION
It has been more than two and half decades since the government of Ethiopia had formally
adopted Agriculture Development Led Industrialization (ADLI) as its development strategy
in 1994. The main goal of this strategy is to attain fast and broad-based development within
the agricultural sector and to make this sector's development to power broad economic
growth. ADLI had been further rationalized as the basis of the poverty reduction program
subsequently adopted by the government in 2002 (MoFED, 2002), a program is officially
known as Sustainable Development and Poverty Reduction Program (SDPRP).

Agricultural inputs system in Ethiopia represents the entire complex organizational,


institutional, and individual operations associated with the development, multiplication,
processing, storage, distribution, and marketing of seed in the country. Farmers,
particularly smallholder ones, are involved in multiple kinds of seed systems, which can
guarantee them in obtaining the quantity and quality of seeds they need and to market their
produce.

The Government of Ethiopia has conducive agricultural investment policies and


regulations to increase and provide different support for farmers to upscale the productivity
of agriculture.

To this effect, the owner of the envisioned storage facility will be suited in the intended
Project area. This project study is undertaken to check the market, technical and financial
feasibility of this project. The output of the study is very encouraging for the owner to
establish the project in kombolcha city administration. The owners of the project have great
interest and determination to commence the project. Hence, they expect to get the
necessary support from the regional and local governments to realize the project.
1.1. Background of the Promoter
Major Stores are owned by Government, Public Enterprises, Private Commercial
Companies and Individual Traders. The major owners of storage facilities are:-
• The Ethiopian Grain Trade Enterprise (EGTE),
• The Ethiopian Food Security Reserve Administration (EFSRA),
• The Disaster Risk Management and Food Security Sector (DRMFSS),
• The Merchandise Wholesale & Import Trade Enterprise (MEWIT),
• The Agricultural Input Supply Enterprise (AISE),
• The Ethiopian Seed Enterprise (ESE),
• Bureau of Agriculture (BoA),
• Farmers‟ Cooperative Unions,
• NGOs
EGTE has a total store capacity of approximately 800,000 MT throughout the country;
GTE is the biggest store owner in Ethiopia. Many of its warehouses are in Addis Ababa,
Nazareth, Dire Dawa, Shashemene, Mekelle are leased to WFP, EFSRA and ECX.
EFSRA has a total of 322,000 MT warehouse capacities in 7 strategically located sites (see
below); EFSRA is the second biggest store owner in the country.
MEWIT: The Merchandise Wholesale & Import Trade Enterprise (MEWIT) is a
governmental enterprise engaged in importing and distributing consumer goods like V. oil,
Pasta & Macaroni, wheat flour, sugar, cement etc. It owns stores throughout the country.
Many of its warehouses are also leased to NGOs, other Companies and WFP.
AISE: The Agricultural Input Supply Enterprise (AISE) is a governmental enterprise,
engaged in importing and distributing mainly fertilizers and agricultural inputs. It has
stores throughout the country. WFP leased one of its warehouses in Mekelle.
ESE: The Ethiopian Seed Enterprise (ESE) has also warehouses in some locations of the
country. WFP leased one of its warehouses in Kombolcha.
BoA: Bureau of Agriculture (BoA) has also warehouses in regional level.
NGOs: Llike CARE, CRS, CONCERN, ICRC, MEKANEYESUS, WVI etc. own and
lease warehouses in towns Nazareth, Dire Dawa, Mekelle, Kombolcha and in areas like E.
and W. Harerge, Borena Zone, SNNPR etc. where they are active.
Farmers’ Cooperative Unions FCU‟s own and lease stores to store their produce,
agricultural inputs etc. throughout the country.
Private Warehouse Owners: An approximately more than 300,000MT capacity stores are
owned by private owners mainly in towns like Addis Ababa, Nazareth, Dire Dawa,
Shashemene, Gondar and Mekelle.
CURRENT SITUATION OF STORAGE IN THE COUNTRY & WFP WAREHOUSES
Currently WFP is facing acute warehouse space shortage especially in SOs Nazareth and
Dire Dawa. In order to solve this problem in Dire Dawa, WFP has got a 6000 MT
warehouse space from DRMFSS and hired additional 2 warehouses with total capacity of
5500 MT after long negotiation with DRMFSS and searching suitable warehouses from
private owners. Negotiation with EGTE to get additional warehouses in Nazareth failed
since EGTE is expecting 202,000 MT of a shipment of Wheat from February to April
2010. Almost all private owned big warehouses are occupied by fertilizer importers and
getting a suitable warehouse to hire is becoming difficult. Not only the unavailability of
warehouse but also the cost of hiring a privately owned warehouse has been increased from
the usual 5-6Birr/MT/Month to 20- 25Birr/MT/Month in Nazareth. A total of 276,000 MT
of fertilizer is expecting to arrive from February to April 2010 and many big warehouses
will not be free until the end of April 2010 Except Somali Region, about 63 % of the WFP
warehouses in SOs are leased from EGTE, MEWIT, ESE and AISE.
Government and Commercial Storage
Ethiopian Grain Trade Enterprise is re-established in accordance with Regulation No.
58/92 of the Councils of Ministers and completed merger with Ethiopian Oil Seeds and
Pulses Export Corporation. EGTE has the capacity to store more than seven million
quintals of grain in its warehouses situated in different parts of the country. The Enterprise
has Transport Department with Heavy and Light trucks to transport grain from place to
place and for customers to their specific location.
Related Services
 Rental of warehouses and store management.
 Fumigation service and issuance of quality certificate.
 Weigh bridge services.
 Modern machine cleaning services for different type of grain.
 Transportation services, and
 Provide market information on request.
Ethiopia commodity exchange

The Ethiopia Commodity Exchange (ECX) is an organized marketplace, where buyers and
sellers come together to trade, assured of quality, quantity, payment, and delivery. The
Exchange is jointly governed by private-public Board of Directors. ECX offers an
integrated warehouse system from the receipt of commodities on the basis of industry
accepted grades and standards for each traded commodity by type to the ultimate delivery.
Commodities are deposited in warehouses operated by ECX in major surplus regions of the
country. At the ECX warehouse, commodities are sampled, weighed and graded using
state-of-the-art technology grading and weighing equipment. ECX warehouses issue an
Electronic Goods Received Note and provide the depositor or his/her representative with a
signed print copy. The Electronic Goods Received Notes are not negotiable, transferable or
represent legal title to the deposited commodity. The depositor has to get Electronic
Warehouse Receipt issued by the ECX Central Depository in order to establish legal title to
the deposited commodity. The Deposited commodities are stored using global standards of
inventory management which rely on First-In-First-Out principles, rotation, and careful
environmental control. ECX Inventory Management system guarantees the quality and
quantity of the commodity throughout the pre-determined period of storage. Further, ECX
warehouses are insured at maximum coverage to protect against loss and damage of
deposits.

1.2. Project Justification


With 85% of the population living in the rural areas and depending on agriculture for
livelihood, there is no doubt for the economic importance of the agricultural sector for
sustainable development and poverty reduction in Ethiopia. The agricultural sector
accounts for more than 40% of national GDP, 90% of exports, and provides basic needs
and income to more than 90% of the poor. A better performed agricultural sector has
provided growth to the overall economy, improved the food security and reduced poverty
in the recent years.
The Government has put in place an "Agricultural Development Led Industrialization”
(ADLI) strategy which aims to use the agriculture sector as the base for the country's
overall development. The strategy core center is the enhancement of the productivity of
small scale farmers and food security improvement both in the rural and urban areas. The
government also introduced specific services and provided technical and institutional
support to farmers, in its drive to increase food production through intensive cultivation.
These included fertilizer supply and distribution, improved seed supply and distribution,
development of small-scale irrigation, conservation of natural resources and environment,
agricultural research and extension work as well as marketing and price policy.

The effectiveness of such services and research generated inputs are governed by the
strength and efficiency of support services such as extension, credit and input supply,
including the supply of improved seed. As it embodies the plant genetic potential,
agricultural inputs is base for increased production and productivity while also addressing
the country’s food security and poverty reduction challenges.

Despite the importance of agricultural inputs for improving productivity of small-scale


farmers, access to this invaluable technology can be constrained by many factors,
including an underdeveloped seed industry. Currently, government and private seed
companies in Ethiopia typically supply no more than 10% of seed of most food crops.
Such institutions typically produce basic and certified seed in centralized facilities.

Seed is a key input for improving crop production and productivity. Increasing the quality
of seeds can increase the yield potential of the crop by significant folds and thus, is one of
the most economical and efficient inputs to agricultural development (FAO, 2006).

Generation and transfer of improved technologies are critical prerequisites for agricultural
development particularly for an agrarian based economy such as of Ethiopian. Despite the
release of several technologies, particularly of improved crop varieties, there has been
limited use of improved seeds by the majority of farmers (CSA, 2010).
Among others, unavailability of quality seeds at the right place and time coupled with poor
promotion system, is one of the key factors accounting for limited use of improved seeds,
which further contributing for low agricultural productivity. Poor availability and
promotion of improved seeds is due to inefficiency of the seed systems of the country.

Farmers can access seed both from formal and informal sources. However, the formal
system supplies only a small proportion of the demand. This has contributed to the wide
use of low yielding local varieties, low quality seed and limited use of improved
agricultural technologies. The reality is well known; low production and productivity. Self
Help Africa’s experience shows that cooperative based seed multiplication has the potential
to significantly increase food security and farm income for rural households.

1.3. Objective of the Project


The main objective of this project is to building cost efficient and location centered
improved agricultural inputs facility in s/w/kombolcha
In line with the above objective, the project has the following main objectives;
 To give access for improved seed to farmers and cooperatives
 To facilitate the distribution of agricultural inputs
 To keep the quality of agricultural inputs

1.4. The Socio-Economic Significance of the Project


The envisaged project deemed to add to the economic development of the nation in general
and zone and town in specific with following ways:

1. Provide Quality storage service

By storing agricultural inputs in better place, the project will keep the of the quality of the
improved seeds.
2. Increase agricultural productivity

As it is well known, agricultural inputs has a great role in agricultural productivity. Hence,
the availability of this agricultural inputs storage facility will increase the agricultural
productivity in the Wereda or District.

3. Source of Revenue

As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes and payroll income tax are collected from undertaking business
activities. Therefore, the agricultural inputs storage facility will serve as sources of
revenue for the town as well as for the region.

4. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self-employment or employment
in other organization. Hence, this project will hire 40 citizens.

5. Benefit for the Local Community

As a union responsibility the building will engage in different development activities on the
surrounding areas. This will better worth the community and contribute for the
development of the nation.

6. Stimulate the industrial city Economy Activity

The envisioned agricultural inputs storage facility has positive externality in the city as
well as in the Wereda that will encourage the economic movement of national, Regional
and local economy. There will be economic relationship and transactions among different
actors.
2. Description of the Project
The Proposed project is to establish Ware house and Storage Facilities in kombolcha city.
Storage/warehouse facilities are locations where food and non-food commodities are stored
pending onward movement.

A warehouse is the point in the supply chain where raw materials, work-in-process (WIP),
or finished goods are stored for varying lengths of time.
Term “Warehousing” is referred as transportation at zero miles per hour. Warehousing
provides time and place utility for raw materials, industrial goods, and finished products,
allowing firms to use customer service as a dynamic value-adding competitive tool.
• The warehouse is where the supply chain holds or stores goods.
• Functions of warehousing include
– Transportation consolidation
– Product mixing
– Docking
– Service
– Protection against contingencies
WAREHOUSE ACTIVITIES
• Receive goods
• Identify the goods
• Dispatch goods to storage
• Hold goods
• Pick goods
• Marshal shipment
• Dispatch shipment
• Operate an information system
TYPE OF WAREHOUSING
• Public Warehousing
• Private Warehousing
• Contract Warehousing
• Multi-client Warehousing

Function of storage facilities / warehouses


The key functions of warehousing facilities is described below:
Creation of time utility: There are products which are produced continuously throughout
the year while consumption is seasonal. Storage enables goods to be made available to
buyers whenever they are in demand.
Creation of place utility: Another function of storage is to make goods available to a
buyer at his place of business when he needs them. It creates place utility by warehouses
location, e.g., a retailer can obtain goods within a few hours or minutes by contacting the
wholesaler's storage.
Finance function: Storage helps to obtain or raise loans by providing collateral security of
the goods stored.
Creation of form utility: Certain commodities improve in quality or desirability while in
storage, e.g., curing of tobacco, liquor etc. Thus, storage creates form utility in certain
goods.
Stabilizing prices: Another functions of storage is to stabilize price by making the goods
available in the market whenever there is demand.
Regular production: Storage performs the function of smoothing out irregularities in
production, and to make available a free supply in the market at all times.
Ability to face natural calamities: Storage enables the society to face natural calamities
such as floods, famine, drought, etc. In such emergencies, commodities can be made
available from the storage facilities.
Reduction of Risk: Storage reduces the risk of the owner of the goods as the owner of
goods can store merchandise with reputed warehouses which absorb a part of the risk.
Saving in Transportation Costs: Storage allows accumulation of stock to be transported
in bulk quantities thereby reducing the transportation costs.
Economies of large-scale: Storage enables a concern to achieve the economies of large-
scale production, large scale buying and selling, etc. as the goods may be kept in stores.

3. The Project Area


3.1. Location

The envisaged project is established in kombolcha city, S/W/Kombolcha ,Amhara regional


state . The town is located around 375 Km2 from Capital City of Addis Ababa.

The envisaged storage and distribution facility is planned to be located in kombolcha city
particularly the industrial zone, Amhara regional government, is 375KMs far away from
the capital city and located in west of Addis Ababa.

One of the favorable condition of the project area in terms of the topographic aspect is its’
flatness, which in effect, make the construction process easier and cost effective.

Kombolcha city is situated a fertile area known for its natural resources. The area is
surrounded by different chains of hills and mountains including .
It is established with the objective, to provide the following services to the farmers.
 Provision of agricultural inputs (both chemical and biological,
 Marketing / procurement / of agricultural inputs
 Provision of multiple credit service
 Capacity building mainly in the area of managerial and leadership skill
 Provision of small scale farming tools and other farm inputs at reasonable price
 Distribution of up to date market information
3.2. Floor layout Plan
3.2.1. Land Use Plan
The project required a total of 4,000m2 land required to construct the improved seeds
storage and its facilities. Land use plan indicated in table below.

Table Land use Plan


SN Description Land m2

1 Warehouse (50*48) 2400


2 Office(14*5) 70
3 Guard house 10
4 Loading & Unloading 1200
5 Parking and Green Area 320
Total 4,000.00M2
3.3. Location Map of the Area
4. THE MARKET STUDY AND STORAGE CAPACITY

4.1. Market Study


The market Demand Focus on Agricultural inputs mainly improved seeds, fertilizers and
agrochemicals as shown below;

4.1.1. Demand and Supply for Improved seeds in Ethiopia

Since the establishment of Ethiopian Seed Enterprise as the first public and formal seed
sector, the enterprise has remained the sole producer and supplier of improved seeds for
over three decades. The enterprise is also playing the leading role for the advent of
organized seed production and supply system in the country. Despite the better capacity
ESE has, seed supply remained far behind the demand in those years. The huge gap
between the demand and supply has existed in the history of the enterprise. Stimulated by
the fast agricultural development growth over the last seven years, demand for improved
seed is still increasing rapidly from time to time in the country. The overall annual average
seed requirement for cereals, pulses and oil crops is estimated to be over 400,000 tons
(Marja H. et al., 2008). However; the average yearly supply of improved seed doesn’t
exceeds 20,000 tons since the establishment of ESE.

In the recent years, following the establishment of several private and public seed
enterprises by the regional governments increased the number of actors involved in the
seed sector. The Ethiopian government took the initiatives of organizing and bringing
together those actors and combining their efforts to increase improved seed supply in the
country.

As a result of shift in seed multiplication strategy, production and supply of improved


seeds particularly that of hybrid maize and wheat was considerably improved since the last
three years. Determination of farmers‟ seed demand followed by demand-oriented seed
multiplication and supply is one of the strategies undertaken. Besides, increasing the
number of actors involved in the seed businesses is another key initiative of the
Government in support of the seed system. Among others, establishment of regional public
seed enterprises and offering special supports to the private seed sector can be mentioned
as typical examples. The majority of actors, however, often involved in seeds of crops that
can offer those profit margins and some of useful crop varieties demanded by farmers were
remain neglected. In order to avoid this limitation and fill seed supply gaps the government
has also launched a program called “crush seed multiplication” since the last three years.
The program has been executed by the coordination of
Ethiopian Institute of Agricultural Research (EIAR), ESE & MoARD on three strategic
crops, namely: maize, wheat, and rice. As a result of this initiative, there have been
tremendous contributions to the formal sector and the huge gap between demand and
supply of initial seed has been narrowed down. To this effect, basic seed supply of hybrid
maize exceeded the demand by 2010/11 production year in the history of seed supply in the
country (Table below). The program, however, has limitations in terms of long-term
ownership and sustainability as it is undertaken by a „Technical Committee” (TC)
containing experts from the three organizations. Thus, in order to sustain the program and
undertake other similar initiatives, the input supply system, which has currently been
operated by the TC, should be institutionalized and strengthened in such a way that it could
take the entire ownership.

Table. Demand and supply of hybrid maize basic seed over the last five years (2005/06-
2009/10)

Source: MoARD, 2010

Despite the aforementioned several efforts undertaken by the government, there is often
shortage of source seed, which limits commercial seed production in the country, mainly
due to mismatches between seed demand and supply (Table below). One of the reasons for
the mismatch is that there is limited capacity to supply as much source seed as demanded
and multiplication of initial seed, which subsequently delivered to mass producers, is not
supported by irrigation and almost totally depend on main season rainfall. The other main
reason is that demands of farmers often become volatile, indicating problems related with
demand assessment and forecast during planning process, suggesting demand re-vision
based on the dynamic condition of farmers‟ situation has paramount importance.

Moreover, seed production supply system in the country has focused only on hybrid maize
and wheat varieties that limited farmers‟ option to other beneficial crops. This makes
farmers merely depend on farm-saved varieties which are genetically low productive. As
depicted in Table 8, the overall seed supply of all crops is 28%, and the maximum supply
of 31% was for cereals out of all crops grown in Ethiopia

Table - Comparison between improved seed demand and supply over the last three years
(2008/09 to 2009/10)

Source: MoARD, 2010

Although the gap still exists in the case of certified seed supply for both hybrid and non-
hybrid crops, there is also an increasing trend over the last four years in fulfilling the
demand (Table below).

Table- Demand vs. supply of certified seeds of hybrid and non-hybrid (in qt) over four
years
Source: MoARD, 2010

Another intervention was scaling-up of proven technologies available in the research


system, a strategy initiated and undertaken by EIAR. The main objective of technology
scaling-up was stretching to potential technology application ecologies in Oromia, Amhara,
South, and Tigray regions, and in four emerging regions mainly pastorals and agro-
pastorals (such as Somali, Afar & Benishangul Gumuz regions) with appropriate
technologies best fitting to their respective situation.

This initiative has contributed significantly to productivity, production, and benefits. The
strategy is focusing on creating integration among all actors mainly research, extension and
farmers with the support of administrative organs and NGOs. This approach has played a
significant role in putting huge amount of seeds in the hands of small scale farmers, which
potentially enhance the informal system. In 2009/10 cropping season, about 67,393 quintals
of seeds were produced in the above mentioned regions through scaling up program
(Asnake F. et al. 2010: unpublished data. The 2009/10 cropping season seed multiplication
and distribution data shows that from 360,272 quintals of seeds allotted to regions only
264,039 quintals (73.29%) had reached to farmers and finally planted. This indicates that
ESE and RSEs have significant amount of carry-over seed stock every year, while several
farmers are not getting access to improved seeds. This problem was attributed to poor seed
marketing (promotion and sales outlets) for reaching end users and/or the inabilities of the
enterprises to meet the farmers need in terms of varietal choice and product quality ( Table
below).
Table-Amount of improved non hybrid seeds (in qt) collected and planted by regions
during 2010/11 cropping season
Source: MoARD, 2010

Seeds Supply by ESE


The majority of commercial seed production in Ethiopia is in the hands of ESE for several
years since its establishment. Currently, however, three regional seed enterprises: Oromiya
seed enterprise (OSE), Amhara seed enterprise (ASE), and Southern seed enterprise (SSE)
have emerged with the aim to supply improved seeds for their respective region. In
addition, the number of private farms involved in seed production is increasing particularly
in Amhara and SNNP regions that have an important role in national seed supply.

Most of ESE seed production has been taking place on its own farms, state farms and
contractual farmers‟ fields. Over the past decades, annual seed sell of ESE was between
7,000 to 22,000 metric tons (ESE, 2010). Most recently, the enterprise has been taking shift
in strategy and as a result of crush seed production programs undertaken in 2009/10
cropping season, ESE alone produced about 54,326 tons of certified seeds, of which 52,430
tons (96.51%) is for cereals (Table below).
This shows that there is a 61% increase in supply as compared to what was supplied in the
preceding year (2008/09 cropping season). As indicated in the table, from cereals, about
78% of the produce was the share of wheat seed.

Table - Annual certified seed supply by ESE over the last five years (in tons)

Source: ESE, 2006-2010


Seed Supply by the Research System (NARS)
Once a new variety is developed and released from the national agricultural research
system (NARS), be it at the federal or regional level, it is mandatory that the variety should
be put into the seed production system. This requires a sequence of seed multiplication
over several seasons as several classes of seed: as nucleus, breeder, pre-basic, and basic in
order to get adequate amount for commercial seed production (certified seed). Since the
first three seed classes are mainly produced in the research stations, seed supply by the
national agricultural research system (NARS) is focusing mainly on these seed classes
which often provided to seed producers to further multiplication as basic seed followed by
certified seed.

There has been chronic shortage of initial seeds and the research system couldn’t satisfy
the demand of commercial seed producers. On the other hand, since the seed system of the
country is not well developed, the little amount of seed produced hasn’t been channeled
into the appropriate seed system. After the development of the five years strategic plan,
however, there has been development in the NARS seed system mainly of EIAR, which
has changed its direction towards client-driven quality seed production in required quantity
using supplemental irrigation. As discussed in the earlier sessions, the strategic plan also
makes use of special approaches such as crush seed multiplication in order to augment seed
production under normal season (rain fed) conditions, thereby fill the initial seed shortage.
Table- Seeds of different classes produced by EIAR during 2009/10 cropping season

Source: EIAR, 2010

Table-Performance of breeder, pre-basic and basic seed production by EIAR and ESE
during 2009/10 production year

Source: EIAR, 2009/10

Demand and Supply for Herbicides and Fungicides


Ethiopia imports a variety of herbicides and fungicides from a number of European and
Asian countries. The amount of herbicides and fungicides imported during the period 2000-
2011 is presented in table below.

Table -Import of Herbicides And Fungicides (Tons)


Source: - Ethiopian Revenues and Customs Authority

Import of herbicides in the past 12 years has shown a general increasing trend although
there were years where a drastic fall of import and huge growths are observed. During the
period 2000 – 2003, the imported quantity ranges from 1,019 tons to 1,462 tons with a
mean figure of 1,223 tons. In the middle of the data set i.e. 2004--2007, the yearly average
quantity of import has increased to 2,136 tons, which is an increase of 46% compared to
the previous year’s annual average.

The imported quantity during year 2008 has fell drastically to a level of 14 tons. However,
during the years 2009 and 2010 the imported quantity sharply increased to 3,793 tons and
4,936 tons. These are the periods in which the highest volume of import was registered.
The extreme increases again were followed by a substantial decline in the year 2011, in
which the recorded import is 1,774 tons.

With regard to fungicides the data presented in Table 3.1 does not show any trend. The
data is highly erratic jumping to a very high quantity in some years and a sudden decline in
other years. During the period 2000-2007 the imported quantity ranges from the lowest 168
tons to the highest 747 tons with a mean figure of 353 tons. Import during year 2008 is
almost nil with only 10 tons but revived in the next three years (2009-2011) to an annual
average of 408 tons.
In order to take into account the fluctuations observed in some years the recent three years
average level of import is considered to reflect the present demand. Accordingly, the
present demand for herbicides and fungicides is estimated at 3,500 tons and 408 tons,
respectively.
Fertilizer consumption (metric tons) in Ethiopia
Fertilizer consumption measures the quantity of plant nutrients used per unit of arable land.
Fertilizer products cover nitrogenous, potash, and phosphate fertilizers (including ground
rock phosphate). Traditional nutrients--animal and plant manures--are not included. For the
purpose of data dissemination, FAO has adopted the concept of a calendar year (January to
December). Some countries compile fertilizer data on a calendar year basis, while others
are on a split-year basis. This page has the latest values, historical data, forecasts, charts,
statistics, an economic calendar and news for Fertilizer consumption (metric tons) in
Ethiopia.

Targeted User
The target customers of the envisioned agricultural inputs storage facilities are the
members farmers and cooperatives Farmers unions, NGO, industry parks, privet
customer’s since they bought agricultural inputs from the union.

4.2. Market Prospects

Based on market study, the demand for agricultural storage facilities is very high.
Therefore, the envisioned project will be successful by entering in to this market in the
town.

4.3. Storage Capacity and service program

The envisioned storage facility has a capacity to store 100,000 quintal at different seasons
per year at full capacity of operation. It has also a capacity to park 10 trucks per day.
Initially the project utilizes 80% of its operation, 90% in the second year of operation and
full capacity at the third year of operation.
4.4. Service Charge

Out of the total selling price of the improved seeds by the union, Birr 35 is a service charge
for the storage facility per quintal. This service facility charge is added to the total price.
The parking service is Birr 10 per day.

5. TEHCNICAL STUDY
5.1. Description of the Project Service/ Product Mix
The envisioned agricultural storage facilities will store different inputs mainly improved
seeds, fertilizers and agrochemicals of the union before its distribution to farmers and
cooperatives. Besides, it also gives parking service.

5.2. Construction and Civil Work

5.2.1. Construction Schedule


The construction project is proposed to be started on the 2nd year of acquisition of the land,
and is expected to be finished on the 3rd year. As seen in the abbreviated construction
schedule above, a majority of the schedule’s time is made up of five major activities:
Concrete, Building Enclosure, Masonry, Mechanical & HVAC and Electrical Install.
Concrete activities include processes such as placing foundations and slab on deck. The
storage facility Enclosure phase includes erecting the scaffolding that will allow for
exterior sheathing installation and bricklaying.

5.2.2. Architectural Design & Layout


There will be a professional architectural design for the envisioned improved seeds storage
facility.
5.2.3. Construction Plan and process
The project team developed a coordinated project schedule and construction plans that
would reflect the expectations for an actual construction project. The project schedule was
developed using the preliminary designs given to the project team.

Additionally, the group considered typical construction activities and durations taken from
similar construction projects as well as realistic constraints on building development. For
instance, it is necessary for the structural frame to be completed before concrete can be
placed for the slab on deck. Hand drawn construction plans detailing site entrances and
storage areas were coordinated with the project schedule to give the reader visualizations of
the construction site set up through various periods of the construction process.

The construction process for this project is normally a disjointed three stages development
by which the conceptualized need of the promoter of this project is translated into a
functional facility that will meet their needs in terms of time, cost and quality.

Based on a general program of the project owners the consultant who is going to be hired
makes site studies, develops structural designs, prepares drawings and specifications,
determines quantities involved and estimated the resultants costs. All these activities will
be done in the first phase of the project which is the design stage after the document are
produced by the designers have been received, and the works secured the project is
supposed to enter the tendering stage. At this stage contractors study the project document
analyze and subsequently determine the construction methods, built up their unit rates and
submit their bids for the works. The promoter of this project intends to compare the bids
and award the contract for the lowest responsible bidder. This, is of course, presupposes
that the favorable proposal does not exceed the allocated budget.

After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and cash
flow forecast.
5.3. Utilities
A number of utilities would be put in place in order to ensure smooth functioning of the
storage facility. These utilities include:

a) Water Supply,
b) Supplementary Electricity supply,
c) Paved Road Transportation,
d) Drainage Facility
e) Telephone line
F) Fuel

5.4. Project Implementation


The project's implementation is expected to take 20 months. The major activities include
Bank loan processing, construction of the building, cleaning the area around the building,
procurement of equipment’s and start rendering services. The time schedule for the above
mentioned major activities is presented below:

Table-Project-Implementation-Schedule
SN Activities Date

1 Project Approval July 2017


2 Bank loan processing November 2017-Decmber 2017
3 Site Development January 2018
4 Building and construction Work February 2014-Febraryu 2018
5 Purchasing of Machines and Equipment’s March-April 2018
6 Service execution May 2018
6. MANAGEMENT AND ORGANIZATIONAL STRUCTURE

6.1. Organization and Management


The organizational structure should be in a way that the company able to achieve its
objectives as well as the satisfaction of standard requirement.

6.2. Man Power


The total manpower required for the plant will be 40 employees at full capacity.
 Permanent workers 24
 Skilled 19
 Unskilled 5
 Temporary workers 16
 Skilled 1
 Unskilled 15

6.3. 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
manager with the responsibility of supervising the overall activity of the plant. Depending
up on the nature of the center and the amount of work to be performs; there exist auxiliary
units under the general manager.

Employees under each unit will be supervised by the department head that is accountable
for the general manager. General Manager is appointed by board of director.

31
Fig Organization Structure of the Building

Board

General Manager

Storage General Service


Administration Dept. Department

Store Section Finance Section

As clearly shown in the organizational structure, the center organization has one general
manager and two main sections. Under the general manager there are the, General Service
Department and storage Administration department. Under storage Admin dep’t there exist
two sections i.e., HRM and Finance and general service. The following section deals with
the duties and responsibilities of each department.

A. The General Manager’s Duties and Responsibilities


 He/she will plan, organize, direct and control the overall activities of the Storage
facility.
 He/she will devise policies and strategies that will enable the center to be profitable.
 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the Storage facility to increase customer’s satisfaction.

32
 He/she will plan, organize, direct and control the human and non-human resources of
the Storage facility so as to achieve the short and long run objectives of the
organization.
B. Storage Facility Administration Department
 The Storage facility Administration Department of Storage facility has two main
sections (Store and Finance Section). It has responsible for undertaking the following
activities:
 Manage the human resources and control employee’s activity
 Will non-human resources of the project, which include: effective handling of the
different improved seeds of the storage facility, and devise strategies of controlling
against fraud and damage.
 Will record and control the improved seeds inventory to the storage with right price at
the right time.
 Will plan, organize direct and control the financial transaction of the storage facility by
using all the necessary documents.
 Will develop sound financial control system by developing modern financial control
systems.
 Will prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body(farmers and union)
C. General Service department
This department organizes and supervises the responsibilities of maintenance,
gardening, cleaning, vehicle and security staffs.

33
7. FINANCIAL REQUIRMENT AND ANALYSIS

7.1. Total Investment Cost


The total amount of money that is required to establish the envisaged Improved Seeds
Storage facility is Br. 10,000,000.

Table Summary of total initial investment cost


SN Description Cost in Birr
1 Land, Building & Construction 6,937,000.00
2 Building, Machines & Equipment’s 235,000.00
3 Vehicle 1,950,000.00
4 Office Equipment 136,300.00
Total Fixed Investment Cost 9,258,300
5 Pre service Expense 27,000
6 Initial Working capital 238,510
Total 9,523,810
Contingency (5 %) 476,190.48
Total Initial Investment Capital 10,000,000

7.1.1. Fixed Investment


A. Land, Building & Construction

SN Description Land in M2 Unit Cost in Total cost in Br


Br

1 Warehouse (50*48) 2,400.00 2,350.00 5,640,000.00


2 Office(14*5) 70.00 3,000.00 210,000.00
3 Guard house 10.00 1,500.00 15,000.00
4 Loading & Unloading 200.00 1,000.00 200,000.00
5 Parking and Green Area 320.00 850.00 272,000.00
6 Fence and others ----- ------ 200,000.00
7 Site Development ----- ------ 150,000.00
8 Design and Supervision ----- ------ 250,000.00
Total 3,000.00 6,937,000.00

34
B. Warehouse Machineries and Equipment’s

SN Description Measurement Qty Unit cost in Total cost in Br.


Br
1 Generator Unit 1 80,000.00 80,000.00
2 Maintenance kit Set 1 35,000.00 35,000.00
4 Warehouse equipment’s Set 1 100,000.00 100,000.00
5 Fire Unit 2 10,000.00 20,000.00
extinguisher( Security
Equipment)
Total 235,000.00

C. Vehicle

SN Description Qty Unit Price in Br. Total Price Remark


in br.
1 Mini Bus 1 700,000.00 700,000.00 Duty free
2 FSR Isuzu 1 1,250,000.00 1,250,000.00 Duty free
truck
Total 1,950,000.00

D. Office Equipment’s

SN Description Measurement Qty Unit cost in Total cost


br. in Br
1 Managerial Tables Unit 3 4,500.00 13,500.00
2 Managerial chairs Unit 3 3,500.00 10,500.00
3 Computer Tables Unit 1 2,500.00 2,500.00
4 Office table Unit 4 2,100.00 8,400.00
5 Office Chair Unit 8 1,350.00 10,800.00
6 Secretarial table with Unit 1 3,000.00 3,000.00
chairs
7 Computer with printer Unit 1 15,000.00 15,000.00
8 Shelf Unit 2 6,000.00 12,000.00
9 Filing Cabinets Unit 1 2,500.00 2,500.00
10 Guest chairs Unit 6 1,100.00 6,600.00
11 Fax & Telephone Unit 1 1,500.00 1,500.00
Machine
12 Carpet and Curtain LS 50,000.00
Total 136,300.00

35
7.1.2. Initial Working Capital

The initial working capital is estimated to be Birr. 238,510.

7.1.3. Pre-service Expenses


SN Description Cost in Br.
1 Project proposal 12,000.00
2 Billboard and Advertisement 10,000.00
3 Licensing fee and others 5,000.00
Total 27,000

36
7.2. Operating Expense at Full Capacity1
a. Salary Expense

SN Position No Qualification Monthly Annual


salary in Salary in Br
Br
A Permanent Worker
1 General Manager 1 BA in Management 2,500.00 30,000.00
2 Secretary 1 10+2 in secretariat 1,000.00 12,000.00
Science
3 Finance & Admin. 1 BA in mgt/Acct 2,000.00 24,000.00
Head
4 Store man 3 10+2 in management 1,200.00 43,200.00
5 Accountant 1 Diploma in Accounting 1,500.00 18,000.00
6 Guards/Security 6 Basic 800.00 57,600.00
7 General Service head 1 Diploma in Management 1,500.00 18,000.00
8 Casher and recorder 2 10+2 in Bookkeeping 1,200.00 28,800.00
9 Cleaner 4 Unskilled 700.00 33,600.00
10 Driver 2 10 completed 1,200.00 28,800.00
11 Maintenance Officer 1 10+2 in General 1,300.00 15,600.00
Mechanic
12 Gardner 1 Unskilled 700.00 8,400.00
Sub Total 24 318,000.00
B Temporary Worker
1 Auto-mechanic 1 Diploma in Auto 2,000.00 24,000.00
mechanic
2 laborer 15 Unskilled 700.00 126,000.00
Sub Total 16 150,000.00
Total 40 468,000.00
Benefit( 20 %) 93,600.00
Grand Total 561,600.00

b. Operating Expenses

1
At 2nd year of operation

37
SN List of Items Total cost Annual Assumptions Used
Cost in br.
1 Audit and Legal fee 18,000.00 Br. 1500 br per month
2 Stationery Supplies 4,800.00 Br. 400 /Month
3 Property Insurance 69,370.00 1 % of the Building Cost
4 Cleaning Supplies 6,000.00 Br. 1200 Per month
5 Uniforms 2,160.00 Br 180 per pcs for 10
people
6 Water consumption 5,000.00 2500 M3 by 2 br
7 Electric consumption 5,800.00 10000KWH By 0.58 br
8 Fuel 125,400.00 6270 lit @ Br. 20
9 Telephone & fax 12,000.00 Br. 1000 per month
10 Repair expense 104,055.00 1.5 % of building cost
11 Miscellaneous Costs 36,000.00 Br. 3000 per month

Total 370,585.00

7.3. Financial Analysis and Statements

7.3.1. Underlying Assumption


The financial analysis of the storage facility is based on the data provided in the preceding
sections and the following assumptions.
A. Construction and Finance

Construction period 1 year


Source of finance 30% equity and 70% loan
Bank interest rate 11.5%
Loan period 10 years
Salary and wages increase by 2% per year
Operating Costs Increase by 3% per year
Revenue (Rent) increase by 2% per year

B. Initial Working Capital 3 months


C. Depreciation

38
Building 5%
Building Machinery and equipment 10%
Deprecation of Vehicle 20%`
Office Equipments 10%

7.3.2. Sources of Fund


SN Description % share Amount
1 Owners Share 30% 3,000,000
2 Bank Loan 70% 7,000,000
Total 100% 10,000,000

7.3.3. Bank Loan Repayment Schedule


Principal Interest (8.5 Total Annual Remaining
Year Payment %) Payment in br. Balance
0 0 00 00 7,000,000
1 1,400,000 595,000 1,995,000 5,600,000
2 1,400,000 476,000 1,876,000 4,200,000
3 1,400,000 357,000 1,757,000 2,800,000
4 1,400,000 238,000 1,638,000 1,400,000.00
5 1,400,000 119,000 1,519,000 0.00

7.3.4. Depreciation Schedule


Original Value Depreciation Depreciation Per
SN Description In Birr rate in % year in Birr
1 Construction and Building 6,937,000 5 346,850.00
2 Vehicle 1,950,000 20 390,000.00
Bldg. Machines & 235,00
3 Equipments 0.00 10 23,500.00
4 Office Equipment 136,300 10 13,630.00
Total 9,258,300 773,980.00

7.3.5. Revenue Schedule


The revenue of the envisaged project that will be generated from service charge over the
selling price of the improved seeds at full operation is shown in the table below.
Table- Revenue of the Project
SN Description Qty Service Annual Assumption
Charge revenue

39
in Br
1 Storage facilities in Quintal 100,000 35 3,500,000
2 Parking Service per car 1,080. 10 10,800 3 cars park per
00 days
Total 3,510,800

7.3.6. Balance Sheet (Beginning)


Asset
Current Asset Amount in Br
Cash 2,453,190
Inventory of raw materials and
inputs 238,510
Total Current Asset 2,691,700
Fixed Asset
Land, Building and Construction 6,937,000.00
Bldg Machineries and Equipments 235,000.00
Office Equipment 136,300.00
Total fixed Asset 7,308,300
Total Asset 10,000,000
Liability
Account payable 7,000,000.0
Owners Equity
Capital 3,000,000.0
Total Liability & Owners’ Equity 10,000,000

7.3.7. Financial Statement


1. Income Loss Statement, projected

Revenue Year 1 Year 2 Year 3


and after
Rent Income 2,808,640 3,159,720 3,510,800

Expenses
Salary Expense 477,360 505,440 561,600
Operating Expenses 370,585 370,585 370,585
Deprecation Building 346,850.00 346,850 346,850
Deprecation Bld. Machineries and 23,500 23,500
Equip 23,500.00
Deprecation of Vehicle 23,500.00 23,500 23,500
Deprecation office Equip 13,630.00 13,630 13,630
Interest Expense 595,000.00 476,000.00 357,000.00
Total Expense 1,850,425 1,759,505 1,696,665
Profit Before Tax 958,215 1,400,215 1,814,135
Tax(30% ) 287,465 420,065 544,241
Net Profit 670,751 980,151 1,269,895

40
2. Cash Flow statement
Year Year 0 Year 1 Year 2 Year 3 and
after
Equity Capital 3,000,000
Loan principal 7,000,000
Net sale 0 2,808,640 3,159,720 3,510,800
Total cash in flow 10,000,000 2,808,640 3,159,720 3,510,800
cash payment
Salary expense 0 477,360 505,440 561,600
Investment 9,258,300 0 0 0
Pre operating Expense 11,950 0 0 0
Operating cost 0 370,585 370,585 370,585
loan repayment 0 1,995,000.00 1,876,000.00 1,757,000.00
Tax payment 0 287,465 420,065 544,241
Total payment 9,270,250 3,130,409 3,172,089 3,233,425
Cash surplus / Deficit 729,750 -321,769 -12,369 277,375
Cumulative cash flow 729,750 407,980 395,611 672,985

7.3.8. Financial Analysis


I. Profitability

According to the projected income statement, the building will start generating profit in the
1st year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is
viable.

II. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back
period. The building’s total investment will be fully recovered at the 13 years of operation.

41

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