Table 1.

project profile

1 Project Name Wet processing of coffee

2 Project owner Emito G/mikeal
3 Nationality Ethiopia
4 Project Location South west region kafa zone Gimbo Woreda yeyibito kebele
5 Project composition Wet coffee proccesing
6 Premises required 2.225 hectars
7 Initiona investment coast A total investment of the of the project is estmeted to be birr
5,052,000 from this 30.72% (1.552,000) birr will be coverd by the
promoter of the project while the rest 69.28% (3,500,000) birr will be
coverd by the financial institutions.
8 Employment opportunity A full capacity of the farm will hire a total of workers 13 labours
force . from the total employees ,3 are permanent and 10 are
temporary or seasonal.
9 Technology Recycling Water
10 Market share 100% export
11 Benefits of the project Source of income, employment ,value add in agricultural
sectors ,foreign currency earning and transformation of agricultural
technology etc
.Executive.summary

Wet coffee processing project is among few project which increase productivity and quality of coffee
production in Ethiopia by introducing modern wet coffee processing technology in the sector economy

The proposed project is owend by Emito Gebre mikael Wolde senbet aiming at planting wet coffee
processing machine in south *west Ethiopia region ;kafa zone zone Gimbo Yeyibito Kebel the total
intertement capital requirment for the proposed project is estimated 5052000million out of this 69.28%
coverd by bank loan and 30.72% from owners equity the present demand for the proposed project is
estimated at 40 to per annum and its projected to each at 140 tones by the year 2023.

The proposed project will earn 703,580.93 profit in its first year by exporting 40 tones of coffee been of
establishment. The proposed project will create 3 permanent and 10cosal job opportunities for the local
people .The total area of the land required for the project establishment is 2.225 hectares.

The proposed wet coffee processing project will target economic advantage and is thus stirring to achieve
the planned benefits from wet coffee processing industry by giving due to empharis to high quality of
coffee been.

1.2 Introduction

Coffee is one of the mast important traded commodities in the world.The sector’s trade structure and
performance have large dev’t and poverty implications, given the high concentration of production by
small holders in poor developing countries coffee’s global values chains are quickly transforming
because of this shifts in demands and an increasing emphasis on product differentiation in importing
countries.

Ethiopia is endowed with a good production env’t for growing coffee with a combination of appropriate
attitude, temperature, rain fall, soil type and PH.

Ethiopia is the center of origin of coffee Arabica the country possesses a diverse genetic base for this
Arabica coffee with considerable potential to sell a large number of specialty coffee. Coffee production in
Ethiopia is almost exclusively situatede in the two regions south west Ethiopia and oromia in the south
west of the country .

Small holder farmers produce 95% of Ethiopia’s coffee it is produce under several type of production
system,including forest ,semi forest ,garden and plantation coffee .forest coffee is growth in the wild
under natural forest cover and is gatherd by farmers from trees with minor tree maintenance . semi forest
coffee is also grown in forest condtions but there is some limited maintenance by farmers ,mostly annual
weeding .this type of coffee has clearly delineated boundaries of owner ship ,although the type trees
usually are located away from agricultural plots.
Garden coffee is defined by as coffee from trees planted by farmers in the vicinity if their residence .it’s
often inter cropped with other crops or trees .plantation coffee is growth an large commercial
farms ,private as well as state farms modern production practices –such as irrigation ,modern in put vse
mulching stumping and pruning –are often applied this case while reliable recent stastics are lacking, it is
estimated that these diffent production systems. Make up about 30,35,50 and 5 % respectively of total
coffee production in the country.(Kufa 2012)

There have been significant domestic policies reforms in the last decade affected the structured the
performance of the coffee export sector . first from December 20,2008 on words it became mandatory for
private trades to sell the coffee through the Ethiopian commodity exchange ( ecx) a new modern
commodity exchange . ECX trades standard coffee contracts base on ware house respect system with a
standard parameters for coffee grades ,transaction size ,payment and delivery . the first level quality
control is centralized and undertaken in nine liquoring and inspection units in major production areas.
The establishment of the ECX has led to important changes in the structure of the coffee value chain
(gebre-madihin,2012)

After remaining mucilage is broken down by the fermentation and washing off, the resulting bean is
dried ,following which the parchment skin is removed by milling. The washing process provides a means
for controlling quality since unsuitable cherry can be more easily identified and rejected when the cherry
is ripe than after it has been sun dried.

Washed coffee production required adequate watter supply ,the availability of feeder roads (since it is
necessary to bring the ripe coffee beans to the washing station quickly before they spoil), and suitable
varities of coffee .

The plant will be established on area of 2.225 hectars thst will be utilized based on the land vse plan of
the project, Besically ,the project will comprises of machinery house ?shade, pared field to wet laeration
coffee cherry, ware house with paper ventilation and storage structure ,office guard
house ,lagon,fermentation tanks and other relevant structures that are believed to augment coffee quality.

2.1 the significance of the project

The envisaged project deemed to add to the economic development of the nationin general and zone and
district in specific with the following ways.

A, source of revenue

As a public policy of any nation ,the government collects different forms taxes from diffent
bussinessorganization ,and individuals . among the different form of taxes,business in come taxes ,pay
roll income tax and VAT are collected from undertaking business activities .there fore ,the project will
serve as sourceof revenue for the zones as well as for the regions.

B. Employment opportunities

One of the problems that our country faced is unemployment. There fore ,the current objective of the
government is working on taking the problem of unemployment and forestering the development process
either through creating self employment or employment in other organization ,hence ,this project will hire
3 individual in permanent and 10 casual worker.

2.2 project locatrion

Kaffa zone extends astronomically located between 7.17970 or 7’10’47’ north latitude and 36.04790or
360 2’52’ east longitude and 1795 meters in elevation. it is boarded by Sudan on the west ,on the north
west by illubabor,on the by wollega ,on the north east by Shewa, on the east by konta zone , and on the
north east by south omo because of geographical location the kaffa zone near to largest market center
which has a great advantage for accessing road product to the market and creates idea condition for
provision of demand commodity to the local communities.

The total surface area of the tones is 10602.7 square kilometers. The total population of the tones is
1281344 with 632596 men’s and 648752 women’s . the kaffa zones was divided into 12 woreda and 5
town administration .Bonga is the capital city of kaffa zones. Gimbo is one the 12 woreda of the zone
found at south west of the country located at south west direction on 28 km away from capital town of
kafa zone. The project site is only about 42km away from the Gimbo woreda’s (vfa).

2.3 project objectives

The project is basically planned to be established with an objective of generating profit for the promoter
by producing of washed coffee bean. However its initiation will benefits the public by plannining its
significant part in solving the existing social and economic problems. In this respect the project is aimed
to promote the following objectives .

 Supplying high quality of coffee bean to the world market and entering foreign currency to the
country
 To provide value adding service to the area by using coffee as primary product.
 Provide direct and indirect employment to working labor force
 Facilitate the transfer of improved technologies and bases for the national industry development
 Increase government revenue through the different forms of taxes to facilitate social economic
development.

3. Market study

3.1. Market analysis

Coffee is the largest commodity market in Ethiopia has remained the largest producer of coffee in the
world for two countries . imports of arebic coffee in the united states have increased ninty four
percent in the past five years and consumption of coffee with in Ethiopia has seen similar increases.
In addition ,demand for green coffee is above the market clearing level and market price and crop
yield estimates are at an all time high ,

The increases in the number of independent speciality

Roasters in the world has contributed to and is an indicator of the increased demand for coffee . with
in the larger coffee market is our target market is the speciality coffee bean. This discerning
customers went the highest quality coffee bean. They serre the growing “government” coffee market
and are represented by large American campanies like starbucks and thousands of smaller speciality
roasters. The Arabica bean is considered to be best in the world and as such , the demand for Arabica
beans is high on the speciality roaster market . speciality roasters are willing to pay more for Arabica
beans and attempt to distinguish them selves via the characteristics of the bean they use i.e the
location in which it was grown ,farming method ,bean size,etc. the final consumer is relatively price
insensitive if the coffee is good ,has won awards ,or is compitable with a popular trend . we estimate
that especiality roastering in the us alone is a (SUSD) one billion Market.

3.1.1 Local Market

a) Overview of the performance of the local coffee sub sector in Ethiopia is endowed with a good
production environment for growing coffee with a combination of appropriate altitude ,
tempreture ,rain fall,soil type and PH .Ethiopia is a center of origin for coffee Arabica in south west
Ethiopia region in our zone kafa.

The country possess a diverse genetics base for Arabica coffee with the considerable hetroginity ,
Ethiopia produces a range of distinictive Arabica coffees and has considerable potential to produce
number of speciality coffees. There are four type production system in Ethiopia , forest coffee ,semi
forest coffee ,garden coffee and plantation coffee . during the period 2004-2013 the land area cropped
by coffee shows significant growth,increasing from 232439 hectare to 528751 hectares ,registering
an average growth rate of 10.17% local production of coffee also exhibits a substantial growth
increasing from 225362 tones in year 2001 to 373941 in the year 2012 registering an average annual
growth rate of 5.44% during the period 2000-2013 ,the maximum export of the coffee from Ethiopia
was 211981 tone in 2010,while the minimum was 89220 tone in 2001 , how ever during the period
under consideration ,on average the countries was exporting about 155785 tons of coffee per annum
during the period under consideration (2000-2013), export of coffee has registered an average annual
growth rate of 6.25%interms of value, export coffee has increased from birr 2.09 billion in 2000 to
 birr 11.39 billion in 2.13 registrating an average annual growth rate of 20.39% although coffee is still
the dominant forign exchange earner to the Ethiopian economy ,considering the unique natural
endowment and the special varities of coffee produced in the country. Which are highly valued by
importing countries, it can be concluded that the economy is not benefiting from its coffee resource
potential for example during the period 2009-2013,the average unit value of coffee exported from
Ethiopia infact west European countries are not producer of coffee but they have specialized in
import for agreen coffee from developing countries where the resource is available and then
processing the product (Value adding) and re-exporting.

Accordingly ,in order to fully exploit the country coffee resource potential ,developing local value
addition capability is indispensable.

b) past supply Trend

the local demand for roasted and milled coffee is supplied through local production and import ,on
the other hand the local market for decatefinated coffee ,extract and and coentrates of coffee and
soluble or instant coffee is largely met through import .the finding on the trend in the past supply of
the products under considerationis summarized below

Decaffenated green coffee Ethiopia produces asmall amount of decaffeinated green coffee ,which is
exclusively targeted at export market on the other hand ,the country imports in significant amount of
the product, during the period 2002-2007, the average annual import was about 1.47 tons valued at
birr 29997 however ,during the recent six years (2008-2013) ,import of decaffeciated green coffee has
increased to 7.15 tons in average per annum ,valued at birr 794335 Demmand projection.

Urbanization and income are found to be the major determination of the future demand for value
added coffee products, hence a growth rate of 5% ,which is slightly higher than the urban population
growth rate and much lower than income growth rate ,is taken to forecast the future demand

3.1.2 Export Market

a) Trend in Global Import and export

During the period 2008-2012, global production of coffee has increased from 7.71 million tons to 9
million tons the major coffee producer in the world are brazil on average according for 37% of the
total world production followed by Vietnam (15%) , Indonesia(7%) and Colombia (6%) , Ethiopia is
ranked fifth with an average share share of 4% . global total export of coffee ( in all forms ) ,during
the period 2004-2013 ,has increased from 5.7 millions tons valued at 9.17 billion USD to 8.18 million
tons valued at 28.61 billion USD ,registering an average annual growth rate of about 4.15% and
15.27% interms of volume and value ,respectively .During the period 2004-2013 Brazil followed by
Vietnam ,Colombia and Germany were the leading exporter of coffee.

Decaffienated green coffee in global in export of decaffinated green coffee has increased from 168058
tons in 2004 valued at USD 347.93 million to 240447 tons in 2013 valued at birr 914.16
million ,registering An average annual growth rate of 4.37 % and 13.82% interns of volume and
value ,respect tively .Germany followed by mexico ,Spain,Canada and finance are the leading
decafficated green coffee exporters. USA is the leading decafficted green coffee exporters .during the
period 2004-2013 USA on average ,accounts for 58.91 of the total global import of decaffeinated green
coffee .the other major importers of the product include Spain ,italy and Belgium.

3.2 marketing strategy and plant capacity

a) company summary

The proposed wet coffee processing plant will be a new establishment that drives from a motive of
exprianced role model farmer to bring wet coffee processing plant and producing high quality products to
local and international markets. Its corporate governance philosophy will end over to exceed regulatory
and legal requirements by adopting several voluntary practises aimed at high level of business
ethics ,effective supervision and enhancement to value for all stockholders.

b) marketing implementation analysis

The main focus will be in reaching the new markets of the nations and of neighbouring and other African
(Angilo,Arabs and francophone). Asia pacific and the middle east countries.it will also be concerned
about the competation from other firms. An advantage the campany has is the widely differenciated
product range that it willdevelop producing high quality of coffee bean helps US in getting an easy of
penetrating the new markets .human resource is on of the most important aspects in this plan . we would
always like to make Sure that it has highly motivated staff as this is directly proportional to good
production both in the qualitative and Quantitative aspects.

It is planned to do this by coming up with schemes of rewarding the employes. It will also make sure the
personal are the best interms of product know-how and it is ready to carry out frequent training towards
this end.

4 product description and plant capacity

4.1 product description

The wet method involves use of several water in stages most where by stages. This ripe cherries method
involves fully washed conventional are transformed in to wet perchment processing, coffee under water
red unit cherries in the mucilage are pulped ,is degraded fermented . fermentation period so that in it most
can be early washed cases Varies from temperature 12 of to 48 hours the locality.

The stage in wet processing

I, selective picking of cherries

Coffee cherries for wet processing should cherries be nature have adequate and fully ripe .since ripe
cherries had adquatly pulped and mucilage which facilitate pulping .cherries in mixed stages of maturity
would couse pulping andfermantation which have problems.series of negative consequences for the
quality.
II, sorting of the product

The first operation in coffee processing following picking the sorting the purpose of which is to remove
undersiable objects such as leaves, twigs ,stones,as well as diseased or past infected ,immature ,over ripe
and dry cherries undersized cherries which would escape pulping are also removed and processed by dry
method ,and may be used for own consumption.

Use clean material such as canvas ,during trays or mesh wire but dei ,cherries should not come in to
contact with the soil during sorting.

III) checking and adjustig the pulper

Checking and waking the neccessary adnustment to the pulping machinery is a crucial activitity prior to
pulping

Pulpers are adjustable to be able to pulp different size of chears .

Perform test run with sample cherries and do adjustment of the machine based on the beans or passage of
many unpulped cherries together with the pulped ones. Adjustment is normally done three times during
the processing season at the begginin,middle and end season the pulper should be kept in clean and good
mechanical order

IV ) pulping ; pulping is the mechanical removal from the cherry of the produce red outer parchment skin
and pulp coffee the cherry this to increase is performed the parchment by swueeting coffee the lubrication
out the pulp ,from and the facilitated mucilage formed by between the but over npe pulp in andcherries
the parchment ,the mucilage layer is dried cherries ,it is not fully up,while in the developed green
so ,pulping under both condition large number will in result of dameged beans due to lack of adequate
mucilage pulping done via a stream is of water which helps the berries to be fed to the pulper . the water
also facilitates separation of the parchment coffee and the pulp.

V) drying parchment ; freshly harrested and pulped coffee has high moisture content .for example, after
the parchment coffee has been washed and drained ,it will have a moisture content of 50-65% drying is
thus the process of reducing the moisture content of this product down to 10-11.5 . drying of pulped
coffee is a critical operation and is done with care as coffee of excellent origin can lose its quality of
drying not done properly .under drying courses rapid fading of bean order while over drying leads to
unnecessary whight losses and quality degradation . at 10.5% moisture content the parchment is fully dry
and safe for storage attitude moisture content and 60% relative humidity ,the coffee suffers no quality
losses if properly stored

VI) procedures in drying parchment coffee

Drying is being done on raised beds to allow a cration and avoid getting in to contact with soil. Drying of
parchment can be categorised into two; skin drying and final drying during skin drying ,clean portable
hand trys (of 2xlm) made of 4mm mesh wire nailed on wooden frames are used .pulped washed
parchment is thinly spread over the try (maximum 3cm to give 10 kg/m ) to promote trough drainage of
moisture and skin drying ,frequently structure and remove pulped,unpulped and defective beans ,since all
these are clearly seen at this stage .at this stage all the moisture adhering to parchment is removed and the
skin dries.

VII) determine proper dryness of coffee

When the back side of the bean is dark and the remaining part is green ,its moisture content is a estimated
to be 10-13 fully dry coffee will attain light blue green colour and hard to break this stage the moisture
content is above 10-11.5% .it is also possible to test the degree of dryness of the beans by biting them.

4.2 plant capacity and production program

1. Plant capacity

Based on the out come of the market study and considering the minimum economic scale of
production ,the envisage plant will have a capacity of 40 tons of washed coffee per annum at full
capacity . this capacity will be attained by working a single shift 8 hours per day and 90!working days
per years

2. Production program

With an assumption that through time during the initial stage will be required for market penetration and
technical skill dev't ,the envisaged plant will start production at 40% of its related capacity which will
growth 50% in the second year .full capacity will be reached in the reached in the third year and onwards.

Detail of the annual production program are shown in the following table

Table 2

Sr no. Description unit of measure production year

1 washed coffee. Ton 40 50 100

2 capacity utilization rate % 40 50 100

4.3 technical study

4.3.1 material and input

Row material and auxiliary material

The principal raw material required by the haviling plant is clean wet coffee which is going to be
obtained from the local coffee grewer farmers,local traders and merchants engaged in coffee production.

The local community will serve as out of growers to project and maintain their clientele to the project.

Table 3 raw material of the project

Red coffee
Year price for purchasing red coffee price total

1 2010 42001 kg 8 birr 33600

2 2011 48001kg 10 birr 48000

3 2012 12001kg 12 144000

4 2013'25001kg 15 375000

5 201412000kg 25

The major auxiliary materials in the production of washed coffee is comprise picking materials of various
types and size. The packing materials to be used by the plant are sacks bag. The proposed lacking sites of
sacks bag for pikin of coffee are 100kg . the limited annual requirement for bag qt 100% capacity
utilization rate and the corresponding cost estimation are given below table beg of required site ,quality
and desired numbers of colors can be available from local private factories on an order basis

Table 4

Type unit price/unit quantity total

100kg packing size No 100 100 10000

Bed wire metre 6000 10 600000

Weight scale No 5000 2 10000

B) utilities

Electric power and water are the only power and utilities required for the envisage plant

The annual requirement for power and utilities at full capacity production of the plant and the total
estimated cost are shown in table

Table 5 annual utilities requirement and estimated cost

Sr No Description unit of measure require quantity unit pric cost F.C L.C total

1 electric power kwh 120000 0.5778 69.34 69.34

2. water m3 150 10.00 1.50 1.50

Total 70.84 70.84

4.4 Engineering

1. machinery and equipment

The plant machinery and equipment required for the envisaged plant is wet coffee processing machine.
List of machinery and equipment to be acquired for the project and the estimated cost are given in
reaction 5

4.4.1 source of technology

Even thouth , the promoter is expected to assess the differen potential suppliers of the envisaged
technology for while a campany based in Ethiopia will be among potential client to arial the intended
technology.

4.5 land use plan

The major portion of the plot will be allocated to plant erecting,warehovse and shade with open space to
work comfortable. Accordingly ,the land vse plan is presented in the table below

Table 6

Land use plan

Sno description area (m2) %

1 factory house 400

2 warehouse 48

3 shade and open house 40

4 office 50

5 green area 400

Total 938m2

5 financial requirement

The financial resource is the prime resource for under taking any activities . hence for implementing the
project is a total odf 5052000 ETB is required .from this 30.72% 1552000 birr will be coverd by the
promoter of the project while the rest 69.28% 3500000 birr will be coverd through loan from bank at the
prevailing interest rate. There fore the said amount finance is needed for undertaking the following

5.1 land development ,building and construction

The total land area required for coffee washing plant is 938m 2.the cost buildings and construction is
estimated at 1545000 detailed financial requirement presented in the following table

Table 7

Land development ,building and construction

A land ,building and construction

Sn descripition of works total cost in birr

1 building construction 1500000

2 site development 25000

Design and supervision 20000

Total 1545000

B machinery and equipment

The total cos of machinery and equipment is estimated at 1280000

Table 8 machinery and equipment

Sn description measurement qty unit cost in bir total cost birr

Coffee processing machine unit 1 860000 860000

Sacks bag unit 100 100 10000

Wire for bed preparation metre 100 600 60000

Generator unit 1 260000 260000

Weighting scale unit 1 10000 10000

Security equipment unit 1 80000 80000

Total 12800000

C) office equipment

Sn description measurement qty unit cost birr total

Office table with chair unit 4 8000 32000

Shelf unit 1 8500 8500

Filing cabinet unit 1 6500 6500

Guest chairs unit 1 8000 8000

Fax and telephone unit 1 6000 6000

Total 61000

5.2 working capital

5.2.1 operating expense at full capacity

A salary expense

The wet coffee havling plant will creat job opportunity for the for more than 13 labour force. From the
total employee 3 are permanent and 10 are causal workers that are planned to be drown from the local
community accordingly from permanent workers 1 atre females and 2 are males employers. The
proposed manpower requirement and the estimated annual labour cost include frige benefits is presented
in the table below

Table 9 man power requirement and annual estimated cost

A salary expense

Sn position No Qualification monthly salary annual salary

1 Coffee processing opprator 1 level IIIin accounting 3000

2 marketing 1 diploma 1500

3 Guard/security 1 basic 1500

Total 3 6000

Benefits (20%)

Grand total

5.2.1 oprating expense

Table 10 oprating expense

Sn list of items annual cost in birr list of items annual cost assumption used

1 cost for red coffe purchaising red coffee purchiseing 800000

2 stationary supply 2 stationary supplies 4000 83.3 / month

3 promotional cost 2 promotional cost 560000 lumpsum

4 property insurance 3 property insurance 200000 107/0 of the building

5 electric consumption 7 electric consumption 12500 2000 kw/h

8 puel 80000