Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Table of Contents
1.Executive Summary..............................................................................................3 2.Product Description and Application.................................................................3 3.Market Study, Farm Capacity and Production Program.................................4
3.1Market Study...........................................................................................................................4 3.1.1Present Demand and Supply............................................................................................4 3.1.2Projected Demand............................................................................................................5 3.1.3Pricing and Distribution...................................................................................................5 3.2Farm Capacity.........................................................................................................................5 3.3Production Program................................................................................................................6
8Financial Analysis................................................................................................10
8.1Underlying Assumption .......................................................................................................10 8.2Investment.............................................................................................................................12 8.3Production Costs...................................................................................................................12 8.4Financial Evaluation.............................................................................................................13
1. Executive Summary
This project profile deals with the establishment of an assorted vegetable production farms in Amhara National Regional State. The following presents the main findings of the study Demand projection divulges that the domestic demand for vegetable products is substantial and is increasing with time. Accordingly, the planned plantation is set to produce 450 quintals of various types of vegetables. The total investment cost of the project including working capital is estimated at Birr 621,349.01 and creates job opportunities for 58 citizens. The financial result indicates that the project will generate profit beginning from the first year of operation. Moreover, the project will break even at 63.25% of capacity utilization and it will payback fully the initial investment less working capital in three years. The result further show that the calculated IRR of the project is 26.70% and the NPV discounted at annual rate of 18% is Birr 183,953. In addition to this, the proposed project possesses wide range of economic and social benefits such as increasing the level of investment, tax revenue, employment creation and better public health and nutrition, and modernization and commercialization of agriculture. Generally the project is technically feasible, financially and commercially viable as well as socially and economically acceptable. Hence the project is worth implementing.
requirement. Combining different kinds of vegetable production creates better opportunity for crop rotational practices and gives advantage of utilizing common faculties such as washing, cleaning cooling and storage facilities. Plus marketing assorted vegetables facilitate an increase marketable volume by attracting more customers.
The Amhara Region has large areas and water resources suitable for the production of assorted vegetables. Compared to cereals, pulses and oil crops, vegetables are very high in productivity per unit of land which can play substantial role to increase the food supply of the region. With a growing urban population, which is totally market dependent, and the current food supply shortage, expansion in vegetable production will play a significant role in increasing food supply of the region.
On the other hand, unbalanced and inadequate nutritional status of the people is still a central problem in the region. Deficiency of essential food elements, such as protein, vitamins and minerals are widely observed as basic food intake is below the minimum requirement in the region. Increase in blindness due vitamin a deficiency is an alarming circumstance in region. Therefore, vegetables are important source of vitamins, minerals and also good sources of protein as well.
Year
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
3.2
Farm Capacity
The envisaged plantation produces 450,000 kg of various types of vegetables in a year by producing three rounds in one year.
3.3
Production Program
The program is scheduled based on the consideration that the envisaged farm will work throughout the year except for Sundays and public holidays. During the first year of operation the farm will operate at 75 percent capacity and then it grows to 90 percent in the 2 nd year. The capacity will grow to 100 percent starting from the 3rd year. This consideration is developed based on the assumption that there is ample demand for the product so that market and logistics barriers would be eliminated with in the first two years of operation.
All raw materials are available in the local market. Cooperating with local agriculture bureaus is important.
4.2
The annual raw material and utility requirement and the associated cost for the envisaged farm is listed in table 2 here under
Table 2: Raw Material Requirements Full Capacity
No. 1 2 3
Unit 10 3 10
Price (Birr) Local Total 10,000 10,000 24,000 24,000 9,000 9,000 43,000 43,000
The annual utility requirements are calculated as follows: Electricity 20000kw Birr 11,000 Furnace Oil 8000lit Birr 756,000, and Water 1000m3 Birr 2,650 Therefore, the total annual utility cost is assumed to be Birr 69,650. 6
6 Farming Technology
6.1 Production Process
The production process involves many steps. 1. Clearing the plot The site should be as near as possible to a source of water. This may be a spring, river, little stream, well or artificial reservoir. The soil must always be damp. It will have to be watered often even during the rainy season. Before sowing, remove all the plants and trees on the plot. Shade and the roots of trees prevent vegetables from growing well. Roots of trees take out of the soil mineral salts which should feed the vegetables. 2. Sowing The seeds are sown either directly in the open beds or in a nursery bed. a. Sowing in open beds Certain vegetables do not need to be transplanted. They are sown; they grow and ripen, and are harvested all at the same place. Examples are carrots, beans, okra, and radishes. b. Sowing in a nursery bed The nursery bed is a bed set aside for sowing seeds. When the seeds have grown into young seedlings, these seedlings are transplanted into another bed. Examples are green or sweet peppers, lettuces, tomatoes, leeks, cabbages. c. Sowing in rows or seed holes
2
.Idid
Sowing in rows Lines are traced with the cord and the seeds sown along the lines. The distance between rows varies according to the size of the vegetables. Sowing in seed holes Little holes are made along the lines, and one or several seeds are placed in each hole. The distance between holes is different according to the size of the vegetables. 3. Taking care a. Watering
Vegetables need plenty of water to develop their roots and leaves. Vegetables do not grow well in dry soil; the soil of the beds must always be moist. In the dry season, each bed of 10 square meters needs about 7 watering cans full of water every day.
c. Mulching
In order to protect the soil from the sun and to enrich it with organic matter, cover the soil with straw or herbage. This is called mulching.
d. Tying
Certain vegetables are softer and sell at a better price when they are blanched. You can prevent them turning green by tying together the leaves, for example, endives; or by covering the base of the plant with earthfor example, leeks.
e. Putting up shelters
In regions where the sun is very hot, or the rain very heavy, the young plants must be protected. Over every vegetable bed, put up a shelter made of palm fronds or matting.
6.2
Basically, the planting and harvesting of vegetables do not require much tools and equipments. Tractor is used while preparing the land for the first planting period and therefore, the envisaged plantation shall use hired tractor while preparing the land. The plantation however, needs to acquire 10 medium capacity water pumps and the associated equipments for irrigation purpose. In addition various hand tools are also demanded. The cost of agricultural tools is estimated to be birr 40,000. The water pumps and equipments can be purchased from local suppliers.
6.3
The envisaged assorted vegetable plantation requires 10 hectares of land. It also requires 100m2 area for office, store and other related facilities. The land rate is estimated at Birr 800; while the construction is estimated at Birr 100,000.
The list of human resource requirement for the envisaged plantation is stated in table 3 below.
Salary/Wage (Birr)
Job Title
1 Manager 2 Horticulturists 3 Laborers 1 2 3 4 5 6 7 Support Staff Administration & Finance Accountant Cashers Sales Clerks Store Keeper Driver Guards Total Employment Benefits 20% of Annual Salary
No.
Monthly Annual 1 4,000 48,000 3 2,500 90,000 40 400 192,000 1 1 2 3 1 1 5 58 2,000 1,000 850 600 600 850 350 24,000 12,000 20,400 21,600 7,200 10,200 21,000 446,400 89,280 535,680
7.2
Training Requirement
Commercial vegetable plantation is a risky business which requires utmost care. Therefore, appropriate trainings are imperative for all workers. Annual budget of Birr 53,000 is allotted for training purpose and it is included in the working capital.
8 Financial Analysis
8.1 Underlying Assumption
The financial analysis of vegetable plantation is based on the data provided in the preceding chapters and the following assumptions.
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Preparation period Source of finance Tax holidays Bank interest rate Discount for cash flow Value of land Spare Parts, Repair & Maintenance
2 year 40% equity and 60% loan 2 years 12% 18% Based on lease rate of ANRS 3% of fixed investment
B. Depreciation Building Machinery and equipment Office furniture Vehicles Pre-production (amortization) 5% 10% 10% 20% 20%
C. Working Capital (Minimum Days of Coverage) Raw Material-Local Supplies in Stock Spare Parts in Stock and Maintenance Work in Progress Finished Products Accounts Receivable Cash in Hand Accounts Payable 30 30 30 10 15 30 30 30
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8.2
Investment
The total investment cost of the project including working capital at full capacity is estimated at Birr 621,349.01 as shown in Table 4 below. The Owner shall contribute 40% of the finance in the form of equity while the remaining 60% is to be financed by bank loan.
Table 4: Initial Investment and Working Capital
Cost
40.00 100,000.00 75,000.00 250,000.00 40,000.00 465,040.00 23,252.00 488,292.00 133,057.01
621,349.01 *Pre-production capital expenditure includes - all expenses for pre-investment studies, consultancy fee during construction and expenses for companys establishment, project administration expenses, commission expenses, preproduction marketing and interest expenses during construction.
Total
8.3
Production Costs
The total production cost at full capacity operation is estimated at Birr 778,168.73 as detailed in Table 5 below.
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Financial Evaluation
Profitability
According to the projected income statement attached in the annex part (see annex 3) the project will generate profit beginning from the first year of operation. Ratios such as the percentage of net profit to total sales, return on equity and return on total investment are 1.44%, 18.27% and 3.91% in the first year and are gradually rising to 24.80%, 25.14% and 62.85%, respectively. The first year profit amount Birr 9,713. Annual profits increases and reach the maximum Birr 156,216 at the eighth year. The income statement and all other profitability indicators show that the project is viable. II. Breakeven Analysis
The breakeven point of the project is estimated by using income statement projection. Accordingly, the project will break even at 63.25% of capacity utilization.
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III.
Payback Period
Investment cost and income statement projection are used in estimating the project payback period. The projects will payback fully the initial investment less working capital in third year of operation. IV. Simple Rate of Return
For the envisaged plantation the simple rate of return equals to 20.1%. V. Internal Rate of Return and Net Present Value
Based on cash flow statement described in the annex part, the calculated IRR of the project is 26.7% and the net present value at 18 % discount is Birr 183,953.44. VI. Sensitivity Analysis
The envisaged plantation is profitable even with considerable cost increment. That is the plantation maintains to be profitable starting from the first year when 10 % cost increment takes place although the total profit drops to Birr 821,701. If sales revenue drops by 10%, total profit drops to Birr 494,714. However, in both cases the project remains profitable.
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B. Tax Revenue In the project life under consideration, the government will collect about Birr 445,530 from corporate tax payment alone (i.e. excluding income tax, sales tax and VAT). Such result create additional fund for the regional government that will be used in expanding social and other basic services in the region C. Employment and Income Generation The proposed project is expected to create employment opportunity to 58 citizens of the region. D. Pro Environment Project The proposed production is environment friendly. E. Public Health and Nutrition Eating fresh and clean vegetables improves and public health and nutrition. F. Modernization of Agriculture The proposed project compliments to the concerted efforts to modernize and commercialize Ethiopian agriculture.
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ANNEXES
16
PRODUCTION
2 85% 60,955 3,987 3,987 0 680 1,294 17,002 34,005 83,455 56,131 196,553 83,455 83,455 113,098 13,306 3 90% 64,541 4,222 4,222 0 720 1,370 18,002 36,005 88,364 59,432 208,115 88,364 88,364 119,751 6,653 4 100% 71,712 4,691 4,691 0 800 1,522 20,003 40,005 98,182 66,036 231,239 98,182 98,182 133,057 13,306
(continued)
PRODUCTION
8 100% 71,712 4,691 4,691 0 800 1,522 20,003 40,005 98,182 66,036 231,239 98,182 98,182 133,057 0 9 100% 71,712 4,691 4,691 0 800 1,522 20,003 40,005 98,182 66,036 231,239 98,182 98,182 133,057 0 10 100% 71,712 4,691 4,691 0 800 1,522 20,003 40,005 98,182 66,036 231,239 98,182 98,182 133,057 0
PRODUCTION
2 774,818 9,818 0 0 9,818 765,000 765,000 0 0 691,980 0 0 0 23,124 561,984 0 44,737 62,135 0 82,838 196,966 3 814,909 4,909 0 0 4,909 810,000 810,000 0 0 737,785 0 0 0 11,562 594,767 32,040 37,281 62,135 0 77,124 274,090 4 909,818 9,818 0 0 9,818 900,000 900,000 0 0 817,025 0 0 0 23,124 660,334 41,607 29,825 62,135 0 92,794 366,883
PRODUCTION
2 765,000 765,000 765,000 0 0 575,290 0 0 0 13,306 561,984 0 189,710 -219,792 115,464 -279,000 3 810,000 810,000 810,000 0 0 601,420 0 0 0 6,653 594,767 0 208,580 -11,212 107,583 -171,417 4 900,000 900,000 900,000 0 0 715,247 0 0 0 13,306 660,334 41,607 184,753 173,541 80,757 -90,660
(Continued) 9 900,000 900,000 900,000 0 0 727,284 0 0 0 0 660,334 66,950 172,716 10 900,000 900,000 900,000 0 0 727,284 0 0 0 0 660,334 66,950 172,716 1,239,656 27,966 183,953
183,953.44
26.7%
3
90%
4
100%
5
100%
75%
675,000 675,000 0 331,044 343,956 50.96 236,524 107,432 15.92 97,719 9,713 0 9,713
765,000 765,000 0 375,183 389,817 50.96 257,951 131,866 17.24 44,737 87,128 0 87,128
810,000 810,000 0 397,253 412,747 50.96 268,665 144,082 17.79 37,281 106,801 32,040 74,761
900,000 900,000 0 441,392 458,608 50.96 290,092 168,516 18.72 29,825 138,691 41,607 97,084
900,000 900,000 0 441,392 458,608 50.96 290,092 168,516 18.72 22,369 146,147 43,844 102,303
8
100%
9
100%
10
100%
100%
900,000 900,000 0 441,392 458,608 50.96 235,441 223,166 24.80 14,912 208,254 62,476 145,778
900,000 900,000 0 441,392 458,608 50.96 235,441 223,166 24.80 7,456 215,710 64,713 150,997
900,000 900,000 0 441,392 458,608 50.96 235,441 223,166 24.80 0 223,166 66,950 156,216
900,000 900,000 0 441,392 458,608 50.96 235,441 223,166 24.80 0 223,166 66,950 156,216
900,000 900,000 0 441,392 458,608 50.96 235,441 223,166 24.80 0 223,166 66,950 156,216
PRODUCTION
2 739,510 393,519 5,961 17,002 34,005 83,455 56,131 196,966 0 345,991 465,040 0 23,252 142,301 0 0 739,510 83,455 83,455 0 310,675 310,675 0 248,540 248,540 0 0 9,713 87,128 0 87,128 3 757,046 482,205 6,312 18,002 36,005 88,364 59,432 274,090 0 274,841 465,040 0 23,252 213,451 0 0 757,046 88,364 88,364 0 248,540 248,540 0 248,540 248,540 0 0 96,842 74,761 0 74,761 4 801,813 598,122 7,013 20,003 40,005 98,182 66,036 366,883 0 203,690 465,040 0 23,252 284,602 0 0 801,813 98,182 98,182 0 186,405 186,405 0 248,540 248,540 0 0 171,603 97,084 0 97,084
Continued 8 1,170,702 1,087,662 7,013 20,003 40,005 98,182 66,036 856,423 0 83,040 465,040 0 23,252 405,252 0 0 1,170,702 98,182 98,182 0 0 0 0 248,540 248,540 0 0 667,764 156,216 0 156,216 9 1,326,919 1,260,379 7,013 20,003 40,005 98,182 66,036 1,029,140 0 66,540 465,040 0 23,252 421,752 0 0 1,326,919 98,182 98,182 0 0 0 0 248,540 248,540 0 0 823,981 156,216 0 156,216 10 1,483,135 1,433,095 7,013 20,003 40,005 98,182 66,036 1,201,856 0 50,040 465,040 0 23,252 438,252 0 0 1,483,135 98,182 98,182 0 0 0 0 248,540 248,540 0 0 980,197 156,216 0 156,216
PRODUCTION
10