Uganda Coffee Cup Intl Business Plan 23.09.2015

BUSINESS PLAN:
SCALING UP & OPERATION
OF A
COFFEE PROCESSING & EXPORTING
ENTERPRISE
BASED IN UGANDA
BY
UGANDA COFFEE CUP INTERNATIONAL LTD.
UGANDA COFFEE CUP INTERNATIONAL LIMITED

P.O. BOX 10279,
KAMPALA,
UGANDA.
Cell Phone: +256-776-810987/752-810987
Landline: +256------------------
Fax: +256------------------
E‐Mail: jamesssemanda7@gmail.com
SEPTEMBER 2015
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UGANDA COFFEE CUP INTL LTD
A. TABLE OF CONTENTS
S/NO. DESCRIPTION PAGE
1.0 EXECUTIVE SUMMARY 1

1.1 Business Profile 1
1.2 Business Location 2
1.3 Business Objective 2
1.4 The Team 3
1.5 Funds Required 3
1.6 Investor Equity 3
1.7 Management Equity 4
1.8 Production & Export Plan 4
1.9 The Market 4
1.10 Marketing Strategy 5
1.11 Personnel Policy 5
1.12 Financial Performance 5
1.13 Keys to Success 7
1.14 Mission 7
1.15 Vision 7
2.0 PURPOSE OF THE DOCUMENT 8
3.0 INTRODUCTION & BACKGROUND 9

3.1 Overview of Uganda’s Agricultural Sector 9
3.2 Importance of the Coffee Sub-sector in Uganda 10
3.3 The National Coffee Policy 11
3.4 Objective and Scope of the Business Plan 13
4.0 THE OFFER & PROJECT PROFILE 14

4.1 Project Brief & Opportunity Rationale 14
4.2 Funds Required 14
4.3 Investor Equity 18
4.4 Management Equity 18
4.5 Board of Directors’ Composition 18
4.6 Investor Claw Back Strategy 18
4.7 Total Project Cost 18
4.8 Project Financial Performance Parameters 19
Business Plan Corporate Document

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5.0 THE ORGANIZATION/COMPANY 21
5.1 Registered Name 21
5.2 Commencement of Operations 21
5.3 History 21
5.4 Mission Statement 22
5.5 Vision Statement 22
5.6 Organizational Objectives 22
5.7 Organizational Values 23
5.8 Founders and Management Team 23
5.9 Major Milestones Achieved to Date 23
5.10 Business Structure 24
5.11 Shareholding Structure 24
5.12 Board Structure 24
6.0 PRODUCTS AND SERVICES 26

6.1 Green Bean Coffee 26
6.2 Competitive Comparison 27
6.3 Sales Literature 27
6.4 Sourcing 27
6.5 Technology 28
6.6 Future Products 28
6.7 Milling, Packaging & Marketing of Cereals 28
6.8 Training 29
7.0 COFFEE SUB-SECTOR MARKET ANALYSIS 30

7.1 Coffee Production and Supply in Uganda 30
7.2 Coffee Marketing and Consumption in Uganda 32
7.3 Functional Analysis of Uganda Coffee Value Chain 36
7.4 Opportunities in Robusta Coffee 44
8.0 MARKETING PLAN & IMPLEMENTATION STRATEGY 48

8.1 Competitive Edge 48
8.2 Strategy Pyramid 48
8.3 UCCIL’s Overseas Market & Strategic Plan 49
8.4 Pricing Strategy 50
8.5 Sales Strategy 50
8.6 Strategic Alliances 52

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9.0 TECHNOLOGY AND PROCESSES 53
9.1 Plant Production Programme 53
9.2 Raw Materials & Utility Inputs 54
9.3 Technology & Engineering 55
9.4 Project Location & Facilities 63
9.5 Layout of the Coffee Processing Plant Site 64
10.0 HUMAN RESOURCES & MANAGEMENT STRUCTURE 65

10.1 Organizational and Manpower Structure 65
10.2 Management Team Gaps 69
10.3 Personnel & Payroll Plan 69
10.4 Training Requirement 70
10.5 Feedback and Control 70
11.0 SCHEDULE OF IMPLEMENTATION 72
12.0 FINANCIAL EVALUATION 74

12.1 Capital Cost of Project 74
12.2 Financial Plan 76
12.3 Profit & Loss Account 76
12.4 Rates of Return 77
12.5 Payback Period 77
12.6 Capital: Output Ratio 78
12.7 Cash Flow 78
12.8 Balance Sheet 80
12.9 Break-Even Analysis 81
12.10 Value Added/Contribution to GDP 82
13.0 PROJECT ECONOMICS 83

13.1 Project KPIs 83
13.2 Jobs Creation 83
13.3 Government Revenue 84
13.4 Development Impacts 84
14.0 KEY SUCCESS FACTORS 87
15.0 CONCLUSION 88

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B. LIST OF TABLES
T/NO. DESCRIPTION PAGE
1 Total Initial Project Investment Cost 19
2 Key Project Performance Parameters 20
3 SWOT Analysis of the Uganda Coffee Value Chain 46
4 Sales Forecast 51
5 Annual Coffee Out-turn and Export Programme 53
6 Uganda Coffee Export Grades 59
7 Estimated Cost of Machinery and Equipment 62
8 Land, Buildings and Civil Works Cost 63
9 Manpower Requirement and Annual Labour Cost 71
10 Initial Capital Investment Cost of Project 74
11 Summary Profit & Loss Account for First Six Years of the Project 77
12 Rates of Return 77
13 Calculation of Payback Period for Equity and Total Investment 78
14 Capital: Output Ratios 78
15 Projected Cash Flows 79
16 Projected Balance Sheet 80
17 Break-Even Analysis in Project Year 5 81
18 Value Added/Contribution to GDP 82

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19 Project Economics 83
19-1: Total Project Cost (Planned Investment) 83
19-2: Project Returns 83
19-3: Financing Structure 83
20 Investment to Jobs Created Ratio (IJCR) 84
21 Corporate Income Tax Payments 84
22 Key Assumptions and Project Summary Results 89

22-1: Operating Assumptions 89
22-2: Economy-Related Assumptions 89
22-3: Production/Processing Assumptions 89
22-4: Financial Assumptions 90
22-5: Revenue Assumptions 90

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C. LIST OF FIGURES
F/NO. DESCRIPTION PAGE
1 Performance Highlights (PY2 – PY5) 6
2 Uganda coffee plantation and harvest periods 26
3 Coffee production and area harvested in Uganda 30

3-1: Trends of coffee production in Uganda 2007/08 - 2011/12 30
3-2: Trends in area harvested under coffee production, 2006 – 2012 31
4 Regional Share of Coffee Production in Uganda – 2012 31
5 Source of coffee by Traders 32
6 Retail prices of coffee 33
7 Coffee export volumes and main destinations 35

7-1: Uganda’s coffee export volumes - trends 35
7-2: Main destinations of Uganda’s coffee exports in January 2014 35
8 Coffee value chain core processes map 38
9 Technical functions of actors 39
10 Geographical trade flows of coffee in Uganda 43
11 Coffee Processing Flow Chart 60
12 Coffee Huller 61
13 Coffee Bean Colour Separator 61
14 UCCIL Organizational Chart 65
15 Project Implementation Milestones 73

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D. LIST OF FINANCIAL ANALYTICAL SCHEDULES
S/NO. DESCRIPTION PAGE
01: Key Assumptions and Project Summary Results 89
02/1: Initial Project Investment Costs 91
02/2: Source and Structure of Project Financing 92
03: Estimation of Robusta Coffee & Maize Sales Revenues 93
04: Loan and Interest Service Schedule 94
Calculation of Working Capital: I Minimum Requirements of Current Assets and

05/1: Liabilities 95
05/2a: Calculation of Working Capital: II Annual Production Cost Estimates (Coffee Export) 96
05/2b: Calculation of Working Capital: II Annual Production Cost Estimates (Maize Milling) 97
Calculation of Working Capital: II Annual Production Cost Estimates (Industry

05/2c: Composite) 98
05/3a: Calculation of Working Capital: III Working Capital Requirements (Coffee Export) 99
05/3b: Calculation of Working Capital: III Working Capital Requirements (Maize Milling) 100
Calculation of Working Capital: III Working Capital Requirements (Industry

05/3c: Composite) 101
06: Fixed Assets and Depreciation Schedule 102
07a: Change in Total Investment Costs (Coffee Export) 103
07b: Change in Total Investment Costs (Maize Milling) 103
07c: Change in Total Investment Costs (Industry Composite) 104
08a: Change in Total Assets (Coffee Export) 104

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08b: Change in Total Assets (Maize Milling) 105
08c: Change in Total Assets (Industry Composite) 105
09a: Projected Cash Flow Table (Coffee Export) 106
09b: Projected Cash Flow Table (Maize Milling) 107
09c: Projected Cash Flow Table (Industry Composite) 108
10a: Projected Cash flow Table and Calculation of Present Value (Coffee Export) 109
10b: Projected Cash flow Table and Calculation of Present Value (Maize Milling) 110
10c: Projected Cash flow Table and Calculation of Present Value (Industry Composite) 111
11a: Projected Income Statement (Coffee Export) 112
11b: Projected Income Statement (Maize Milling) 113
11c: Projected Income Statement (Industry Composite) 114
12a: Projected Balance Sheet (Coffee Export) 115
12b: Projected Balance Sheet (Maize Milling) 116
12c: Projected Balance Sheet (Industry Composite) 117
13a: Calculation of Payback Period (Coffee Export) 118
13b: Calculation of Payback Period (Maize Milling) 119
13c: Calculation of Payback Period (Industry Composite) 120
14: Business Ratios/Ratio Analysis 121
15: Sensitivity Analysis 123

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E. LIST OF BOXES
B/NO. DESCRIPTION PAGE
1. Internal Coffee Trading 33
F. LIST OF APPENDICES
A/NO. DESCRIPTION PAGE
1. Inventory of Exporters and Buyers of Uganda’s Coffee 124

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F. LIST OF ABBREVIATIONS & ACRONYMS
CORI : Coffee Research Institute

CQI : Coffee Quality Institute
EAC : East African Community
EAFCA : East African fine Coffees Association
EU : European Union
FAO : Food and Agriculture Organization
FAOSTAT : Food and Agriculture Organization Statistical Division
FAQ : Fair Average Quality coffee
GDP : Gross Domestic Product
GNI : Gross National Income
GoU : Government of Uganda
Ha : Hectare
ICO : International Coffee Organization
KARI : Kawanda Agricultural Research Institute
KPI : Key Performance Indicator
LEAD : Livelihoods and Enterprises for Agricultural Development
MAAIF : Ministry of Agriculture, Animal Industry and Fisheries
MT : Metric Tons
NAADS : National Agricultural Advisory Development Services
NARO ; National Agricultural Research Organization
NGO ; Non-Governmental Organization
PMA : Plan for the Modernization of Agriculture
PY : Project Year
R&D : Research and Development
SACCO : Savings and Credit Cooperative Society
SCAA : Specialty Coffee Association of America
SSA : Sub-Saharan Africa
SWOT : Strengths, Weakness, Opportunities, and Threats
UBOS : Uganda National Bureau of Statistics
UCCIL ; Uganda Coffee Cup International Limited
UCDA : Uganda Coffee Development Authority
UEPB ; Uganda Export Promotion Board
UGX : Uganda Shillings
UIA : Uganda Investment Authority
UNADA ; Uganda National Agro-Input Dealers Association
UNAFFE : Uganda National Farmers Federation
UNBS : Uganda National Bureau of Standards

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UNDP : United Nations Development Programme
USAID : United States Agency for International Development
USAID-APEP: United States Agency for International Development – Agricultural
Productivity Enhancement Program
USD : United States Dollars
USDA : United States Department of Agriculture
VCA : Value Chain Analysis
WFP : World Food Programme

UGANDA COFFEE CUP INTL LTD Business Plan Corporate Document
1.0 EXECUTIVE SUMMARY
The purpose of this business plan is to raise US$ 3.5 million from an investor.
UGANDA COFFEE CUP INTERNATIONAL LIMITED (UCCIL) proposes to apply
the funding to acquisition of coffee processing and export grading plant machinery and
equipment to enable it purchase, process, grade, package and export not less than
10,920 MT per annum of the world-renowned Ugandan coffee to the lucrative overseas
export markets – notably in the European Union and Middle East.
1.1 Business Profile
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) prepares green Robusta

coffee beans grown in Uganda for exportation to European specialty roasters as well as
to the large coffee trading companies in the EU and Middle East green coffee markets
like ECOM, Louis Dreyfus, Neumann, VOLCAFE, and Olam International to mention
but a few. Our business plan is to expand UCCIL‟s coffee production and export
capacity from 182,000/60kg bags (10,920 MT) per year to 268-270,000/60kg (16,134 MT)
per year. Our coffee stands out from that of the competition. UCCIL prepares the top
ten percent, in terms of quality standards, of all Robusta beans on the market. Our
customers seek this product as it provides them with a point of differentiation to
specialty roasters. In order to maintain these high quality standards in its green coffee
exports, it is highly necessary to acquire, install, and operate top-of-the-range coffee
export grading machinery so that UCCIL continues satisfying the market and getting
additional green coffee purchase contracts to grow its business portfolio.
Currently, Uganda produces 240,000 Metric Tonnes of coffee per annum of which 80%
is Robusta coffee and 20% is the highland-grown Arabica coffee. UCCIL expects to
purchase, prepare and export 210 Metric Tonnes of Robusta per week that calculates to
10,920 Metric Tonnes of Robusta to be exported per annum (or approximately 5.69% of
Uganda‘s current Robusta coffee production) as its starting operational benchmark.
UCCIL is contributing land (29 acres near Kampala – the Ugandan capital), existing site
warehouse infrastructure and management expertise as its equity contribution towards
the total project investment of the proposed coffee export enterprise. The company is in
need of a foreign investment partner to provide financing for acquisition of primary
and secondary coffee processing technology, plant site civil infrastructure development,
transportation vehicles (2 units), and working capital in form of equity capital or as a
medium-term loan. Besides, the company would like the foreign investment partner to
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also establish market links and improve expertise in the primary and secondary
processing of coffee.
Additional business activity by UCCIL will include the processing and trading of other
primary agricultural commodities produced in Uganda such as maize, rice, and soya
beans that are expected to generate an additional source of revenue for the Company.
1.2 Business Location
The UCCIL's main warehouse is located in Nakaseke South, Luwero district – which is
only about 30 kms to the north of Kampala city. The UCCIL business office is located at
Maganjo Zone B in Wakiso district – which is actually a northern suburb of Kampala
city. The warehouse has the capacity to prepare and store approximately 6,000 60kg
bags of exportable coffee beans. The proposed new warehouse and preparation facility
site will also located at the same site in Luwero district north of Kampala. The new
facility will be 900 square meters and will have 8 selecting machines with capacity to
prepare 10,000 bags for exportation and 20,000 bags for storage. The proposed facility
will also handle shipping.
Basic utility infrastructure such as electricity and water are readily available at the
company‘s physical premises (at the site – for installation of the coffee processing and
grading plant machinery and equipment), although it will be necessary to install a back-
up 200 kVA diesel generator to cover for any abrupt power outages that may occur
during operations.
1.3 Business Objective
The objective of UCCIL includes:
 Export good quality and quantity of Washed & Sun-dried (Unwashed) coffee to
overseas market and thereby contribute to foreign exchange earnings of the
country.
 Maximize profit of the investor through the introduction of efficient and cost
effective methods of business operations.
 Export certified organic coffee to EU & Middle East and other export
destinations.
 Contribute in Investors Earnings.
 Create additional employment opportunities.
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The company has been involved in purchasing of both unwashed and washed coffees
that is processed to confirm with Ugandan standard as well as client requirements and
trading it internally in Uganda since 2007. This business plan proposes on scaling up to
the level of buying significant volumes of organic coffee from coffee farmers in Uganda,
export grading the coffee and finally export it to the growing world markets.
1.4 The Team
The Management team is highly motivated, experienced and well qualified. UGANDA
COFFEE CUP INTERNATIONAL LTD (UCCIL) is led by a committed management
team of two, who hold 60% of the equity and two board positions. The international
investor will receive two seats on the board and an independent chairman will be
appointed.
1.5 Funds Required
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) seeks a total investment of

US$ 3.5 million from an investor who has experience in the coffee processing and/or
coffee marketing industries. This investment financing is being sought is primarily to be
used for project capitalization and infrastructure development purposes that are
categorized as follows:
 US$ 1,149,490 to be used to purchase and install new primary and secondary
coffee processing machinery and equipment including coffee cherry hulling and
grading equipment.
 US$ 85,720 to be used to acquire transportation trucks for transportation of raw
coffee from the source areas and movement of export-grade coffee beans to the
road/rail dispatch terminals.
 USD 464,790 to be applied as working capital consisting of plant machinery and
equipment installation charges, making payments for pre-operational expenses
and contingencies, and defraying the raw material cost of purchasing coffee raw
beans from the various suppliers in Uganda.
1.6 Investor Equity
For the US$ 3.5 million investment, the investor will receive a 40% equity stake in
UCCIL. The financial projections forecast an Internal Rate of Return of 27.15%,
providing the investor with cash return 8.67 times their original investment at the end
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of Year 10. If the Board unanimously decides, dividends may be distributed; however,
this business plan does not contemplate any dividend payments, only capital gains.
1.7 Management Equity
The Management team has invested US$ 4,467,000 in UCCIL (in equivalent value
existing assets and services) via the same company – UGANDA COFFEE CUP
INTERNATIONAL LTD in return for their 60% equity share in UCCIL.
1.8 Production & Export Plan
UCCIL plans to hull, grade and export 210 metric tonnes of green bean coffee per week
or 10,920 metric tonnes of green bean coffee per annum in the first year of business (PY
2). The secondary coffee processing and export grading output will then grow at an
annual incremental rate of 5 percent to reach 310.27 metric tonnes of green bean coffee
per week or 16,134 metric tonnes of green bean coffee per annum in the ninth year of
business (PY 10).
1.9 The Market
Since UCCIL is located in central Uganda, it will mostly deal in the export of Ugandan
Robusta coffee to the international markets – being mostly the European Union and
other significant Middle Eastern and North African importers of Ugandan coffee such
as Sudan, Morocco, Bahrain, Saudi Arabia, Oman, Lebanon, and Jordan. Other
countries that UCCIL will export its green coffee beans to include Switzerland, Japan,
China, South Korea, USA, and Australia.
Uganda produces what is generally considered by the market to be the world‘s best
volume Robusta coffee. Uganda coffee is mainly exported as FAQ (Fair Average
Quality) based on different grades and coffee types as specified by the coffee
regulations of 1994. These grades are based on variety, bean size, quality or place of
origin. Robusta variety is mostly exported as Screen 15. Other forms include; washed
Robusta, Org. Robusta, Screen 18, Screen 17, Screen 15, Screen 14, BHP 1199 and other
Robustas.
Almost all coffee trading activities in Uganda end in Kampala as over 95% of the coffee
traded within the country goes to the export market through Kampala. This is because,
a majority of exporters and key transport and export facilitation infrastructure and
services are located in Kampala.
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UCCIL will be sourcing its Robusta coffee cherries for primary processing and export
grading from producer organizations, and coffee cooperatives. The company will also
be using the numerous intermediate coffee traders, brokers, coffee hullery owners, and
its own agents of exporters to source for FAQ coffee for secondary processing into clean
graded coffee and exporting it.
1.10 Marketing Strategy
Our marketing strategy is to expand production capabilities in order to fulfill the

requests of coffee importers with whom we currently deal for larger orders which we
are unable to currently fulfill. In addition, UCCIL seeks to establish additional contracts
with importers in other EU and Middle East countries and increase the volume of green
coffee sold on the Ugandan market. We intend to first maximize quantity of coffee sold
within existing channels and second, establish additional accounts through targeted
marketing efforts
1.11 Personnel Policy
We intend to compensate our personnel well, so as to retain their invaluable expertise

and to ensure job satisfaction and enrichment through delegation of authority. We
intend to achieve optimal productivity whilst realizing the full potential of each of our
employees through provision of health care, generous profit sharing, plus a minimum
of three weeks‘ vacation. Awards will be given out to outstanding individuals for hard
work and output – which will not only feature as a token of our appreciation to our
employees, but also to instill a sense of fun into the work environment and promote the
maintenance of high standards.
1.12 Financial Performance
The total capital investment cost of the proposed UCCIL coffee-processing and export
enterprise is US$ 7.967 million. Out of this total capital investment cost, USD 4,350,000
(54.60%) is the value of the existing site land; USD 1,800,000 (22.59%) will be used to
construct additional site infrastructure including an export warehouse and office
building; USD 1,149,490 (14.43%) will be used for the purchase of coffee processing
plant machinery and equipment; and USD 464,790 (5.83%) will spent as working capital
comprising of plant machinery installation and commissioning costs, raw coffee
purchase finance, and contingencies and pre-operational expenses.
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The coffee exporting enterprise is to be financed through 43.93% debt and 56.07%
equity. The project NPV is around USD 4,234,184 at a discount factor of 17%, with an
IRR of 30.36%, payback period of 4.50 years and Break-even capacity utilization of
25.61%. The legal status of this business is proposed as ‗Limited Liability Company‘.
We project composite coffee export sales turnover to increase from more than USD
20,541,408 in the first year (Project Year 2) to USD 23,779,247 the fourth year (Project
Year 5), and almost USD 30,349,015 in the ninth year (Project Year 10). Out of these
amounts, pre-tax profits (operating profits) increase from USD 2,948,518 in Project Year
2 to USD 3,413,278 in Project Year 5 and USD 4,356,303 in Project Year 10.
Relevant ratios such as the percentage of net profit to total sales, return on equity and
return on total investment show promising returns (Refer to Schedule 14 on pages 123 –
124).
Investment cost and income statement projection are used in estimating the project
payback period. The projects will payback fully the initial investment in 4.50 years
(Refer to Schedule 13 on page 122).
Ultimately the attractiveness of our venture lies with the fact that customers will choose
our green coffee beans above those of competitors because of their high quality. Hence
UCCIL's ongoing initiatives will be to drive sales, market share and productivity so as
to provide additional impetus towards attainment of the corporate goals and objectives.
NOTE: All currency figures in this plan are in US Dollars (USD).
Figure 1: Performance Highlights (PY2 – PY6)

Sales Gross Margin Net Profit
25,000,000
20,000,000
15,000,000
US$
10,000,000
5,000,000
0
PY 2 PY 3 PY 4 PY 5 PY 6
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1.13 Key to Success
The keys to success for UCCIL are:
 Establishing and maintaining working relationships and contractual agreements

with European/Middle Eastern coffee importers and coffee brokers and
wholesalers.
 Increasing our profit margin with the use of improved technology in the new
facility.
 High level quality control.
 Effectively communicating, to current and potential customers, our position as a
differentiated provider of one of the highest quality Robusta beans in the world.
 Individualized customer service - providing our customers with what they want,
when and how they want it.
 Integrating the changing market fundamentals into the business.
 Long-term partnership with both the coffee producers/primary coffee processors
in Uganda and our customers so as to acquire a guaranteed market.
 The commercial viability of this project depends upon the availability of regular
Robusta coffee raw material supplies.
 To become an established and strong coffee exporter, aggressive marketing
efforts are recommended.
1.14 Mission
UCCIL seeks to serve overseas coffee importers and enthusiasts by exceeding minimum
acceptable quality standards and by providing the highest quality product at the lowest
possible price. We value our relationships with current and future customers and hope
to communicate our appreciation to them through our outstanding, guaranteed product
quality, personal service, and efficient delivery. Our commitment to our customers and
the country of Uganda will be reflected through honest and responsible business.
1.15 Vision
Through our diverse professional skills and clarity of purpose and values, we aim to
become a dynamic, competitive, and financially-solvent coffee exporting business
within the next three years.
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2.0 PURPOSE OF THE DOCUMENT
The objective of this Business Plan is primarily to inform the primary project promoters
– being the UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) and
RIVERLAND UGANDA RURAL DEVELOPMENT (RURD) as well as the prospective
international Joint Venture (JV) investment partners about the basic project operation
and business performance indicators that will facilitate the assumption and
implementation of key decisions to finance and roll out the coffee processing and
exporting enterprise based on Uganda‘s world renown Robusta coffee. This Business
Plan also forms the basis of an important investment decision and in order to serve this
objective, the document/study covers various aspects of project concept development,
start-up, and production, marketing, finance and business management. The document
also provides some sector information and domestic market scenarios, which have
some bearing on the project itself.
The purpose of this document is also to facilitate the main project investors with
information on the aspects and advantages of investing in secondary coffee processing
and export by providing them with a macro and micro perspective of the dynamics of
coffee trading as one of the leading globally traded commodities in the hope that the
information provided herein will aid potential investors in crucial investment decisions.
This report is based on the information obtained from industry sources as well as
discussions with market place players. In the financial model, since forecast/projections
relate to the future periods, actual results are likely to differ because of events and
circumstances that do not occur as expected.
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3.0 INTRODUCTION & BACKGROUND
3.1 Overview of Uganda‟s Agricultural Sector
Uganda's favorable soil conditions and climate have contributed to the country's
agricultural success. Most areas of Uganda have usually received plenty of rain. In
some years, small areas of the southeast and southwest have averaged more than 150
millimeters per month. In the north, there is often a short dry season in December and
January. Temperatures vary only a few degrees above or below 20°C but are moderated
by differences in altitude.
These conditions have allowed continuous cultivation in the south but only annual
cropping in the north, and the driest northeastern corner of the country has supported
only pastoralism. Although population growth has created pressures for land in a few
areas, land shortages have been rare, and only about one-third of the estimated area of
arable land was under cultivation by 1989.
Agriculture is a core sector of Uganda's economy and the largest employer. Over 85
percent of Uganda‘s total export earnings and close to 23.7 percent of the total Gross
Domestic Product (GDP) are generated from the agricultural sector. Similarly, the
agricultural sector is the major source of livelihood for about 90 percent of the
population, providing direct employment to more than 73 percent of the country‘s
population (MoFPED, 2009). A total of 6,810,000 ha (16,828,000 acres), or one-third of
the land area, is under cultivation. Subsistence production remains the pattern; 70% of
the area under cultivation is used to produce locally consumed food crops. Over 80 per
cent of women are employed in the sector and it contributes about 75 per cent of
agricultural production. Plantains, cassava, sweet potato and maize are major
subsistence crops. The major export crop is coffee, but tea, tobacco and cotton are also
important.
While some steps are being taken to provide insurance against crop failures, access to
finance for small-scale farmers is limited. The high cost and limited availability of
improved farm inputs, including hybrid seeds and post-harvest technology, over-
stretched extension services, poor transport networks, a lack of market information,
inadequate production and post-harvest facilities, and weak value chain linkages all
hinder and frustrate subsistence farmers.
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3.2 Importance of the Coffee Sub-sector in Uganda
Coffee has traditionally been a very important crop to Uganda. Robusta coffee has long
been known to the Baganda (the largest ethnic group in Uganda), and was used in their
ritual of ―blood-brotherhood" and coffee chewing still retains some ritual significance.
As a cash crop, its importance dates as far back as the beginning of the nineteenth
century and it is noted that there was considerable trade in coffee and as a result it is
not surprising that in the early reports on Uganda, coffee was considered to be a
potentially important export crop.
Coffee has been the largest single earner in Uganda‘s economy since the early 1970s,
contributing over 70 percent of the national foreign exchange. In the 1980s, its
contribution rose to over 95 percent. However, with the collapse of world prices in 1990,
its contribution dwindled to 65 percent. The contribution of the coffee sector to
Uganda‘s total earnings has also continued to decline from the 1990s to date to reach the
current level of 17 – 20 percent following the liberalization of the coffee sector and the
successful implementation of export diversification policies by the government over
this period.
However, it is still noteworthy that coffee remains Uganda‘s most selling agricultural
commodity and a major foreign exchange earner, contributing a significant share of the
total export revenue in the last decade.
Export statistics indicate that coffee fetched the biggest revenue from 2005 to 2011.
In 2005, Uganda earned $172million (Shs434.2billion), $189million (Shs477.3billion) in
2006 and $265million (Shs669.2billion) in 2007. In 2008, coffee exports brought home
$403million (Shs1.02trillion), the highest export earnings in the decade, although in
2009, this declined to $280million (Shs707billion) and rose again to $283million
(Shs714.6billion) in 2010.
According to the UCDA December 2012 report, coffee exports in the 2011/12 season
increased by 11 per cent following periods of drought during the year, which hurt
harvests.
The exports from UCDA for 12 months (January-December 2012) totalled 2.65 million
bags worth $379 million (Shs957 billion) comprising Robusta—1.84 million bags and
Arabica—810,000 bags.
Slightly above 76 per cent of the total volume was exported by 10 exporters out of the 28
10
exporters that performed in the month. UCDA projects the coffee exports to hit three
million 60-kg bags in the season that run from October 2012 to September 2013.
Currently, Uganda is the second largest producer in Africa, after Ethiopia, eighth
largest coffee producer in the world, and the world‘s fourth largest Robusta producer.
The majority of its Robusta exports are to Europe, the US, India and Russia among
others. Approximately up to 30 per cent of Uganda‘s export revenue comes from coffee,
and Uganda is internationally considered an important coffee producer, exporting
around 3 million bags of coffee per year. However, locally, it is estimated that only
three per cent of Uganda‘s population consume coffee.
Coffee contribution has nonetheless remained an important cash crop in Uganda as

more than 1.5 million households representing over 9 million Ugandans are engaged in
coffee production and depend on it for family income and employment. Almost 100%
of coffee products are exported, as Ugandans usually drink tea.
The most common coffee variety is the coffea canephora (Robusta coffee), which makes
up 90% of the country's total production and is farmed in a radius of 300 km around
Lake Victoria. It is commonly believed that Robusta coffee is indigenous of Uganda,
when some wild plants of this variety were found near to the Lake Victoria in 1860. The
majority of Ugandan Robusta coffee is a "natural" coffee, obtained using the "dry"
method, but there also exists some "washed" coffee, obtained with the "wet" method.
Obviously, the higher costs and organizational requirements necessary for the wet
method encourage people toward the production of natural coffee, obtained using the
cheaper dry method. Coffea arabica (Arabica coffee) is not indigenous of the country, but
it was introduced from Malawi at the beginning of the 20th century. It is cultivated
mainly in the regions of Mount Elgon and in the west. It is possible to find both washed
(called Bugisu and Wugars) and natural (Drugars) Arabica coffees.
The geographical position of the country, stretched across the equator, allows for coffee
to be harvested in two different seasons.
3.3 The National Coffee Policy
In August 2013, the Uganda cabinet approved and passed the National Coffee Policy,
the guiding instrument of the coffee subsector. The aim of this policy is to lay a strong
foundation for long-term competitiveness that is socially, environmentally and
economically sustainable and also ensure that Uganda coffee flourishes throughout the
world.
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3.3.1 The Need for a National Coffee Policy
Coffee still remains the leading commercial agricultural commodity and major foreign
exchange earner accounting for nearly 20 percent of all exports by value during the past
several years. In addition, nearly 1.5 million, mostly rural households (approximately 9
million people) depend on coffee related activities for their livelihood.
Previously, government policy on the subsector was contained in various documents

and implemented by different institutions. The National Coffee Policy has brought
together several issues affecting the subsector into one document so that the Industry
can grow and surpass its previous level as the leading producer of coffee in Africa and
beyond.
Following the approval and launch ofthe National Coffee Policy, the subsector now has
a clear instrument for guiding its development and growth.
3.3.2 Guiding Principles for the National Coffee Policy
The implementation of the National Coffee Policy will be guided by six principles:
 Coffee production, processing, marketing shall be undertaken by the private
sector as individual farmers, farmer organizations and business companies.
 The sub sector shall operate under a liberalized market environment within the
framework of a regulatory body.
 Coffee development services will be provided to all farmers with special
emphasis on women and youth. Through farmer organizations, small holder
farmers shall be empowered to participate at all stages of the coffee value chain.
 Small holder farmers shall, through farmer organizations, participate at all stages
of the coffee value chain.
 Service delivery shall be guided by the needs of all actors in the value chain.
 Value addition shall be pursued at all stages of the coffee value chain.
3.3.3 Objectives of the National Coffee Policy
To realize the goal of the coffee industry, coffee industry stakeholders will pursue seven
key objectives in the medium to long-term. These include:
 Coffee Production and Productivity  Coffee Laws and Regulations
 Coffee Research  Value Addition
 Coffee Extension  Domestic Coffee Consumption
 Coffee Farmers‘ Organizations
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3.4 Objective and Scope of the Business Plan
The purpose of this Business Plan is to establish the need for up-scaling a coffee trading
enterprise from an internal trading outfit to a fully-fledged green bean coffee export
enterprise based in Uganda. The business scale up includes the acquisition, installation
and operation of modern primary and secondary coffee processing plant equipment
including 3 coffee hullers and a variety of export-grading equipment. The project scope
also includes the set up and operation of additional crop processing equipment such as
a maize mill and a rice mill at site that will mill and package maize and rice products
for the Ugandan consumer market. The installed primary and secondary coffee-
processing equipment will start off in the first year (Project Year 2) of business
operation with the processing, grading, packaging and export of 10,920 metric tons of
coffee and will increase by at least 5 percent per annum to hit a coffee green bean export
volume of 16,134 metric tons by the ninth year of the project (Project Year 10). Maize
milling on the other hand will process and output 6,000 metric tons of assorted maize
flour products per annum throughout the business analysis period of 10 years.
The scope of the study is thus to undertake, inter alia, need assessment, technical
evaluation, assessment of governance and management structure and financial
evaluation of the project, on the basis of which recommendations are to be developed
for setting up the said project.
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4.0 THE OFFER & PROJECT PROFILE
4.1 Project Brief & Opportunity Rationale
4.1.1 Project Brief
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) is working in association

with RIVERLAND UGANDA RURAL DEVELOPMENT (RURD) in the area of coffee
cherry primary and secondary processing, grading, packaging and export to the
international coffee export markets of EU and Middle East and North Africa that
usually Ugandan coffee. Both UCCIL and RURD are Ugandan-incorporated business
legal entities. UCCIL is focusing on buying and preparing raw coffee in parchment
form, or coffee in its post-harvest stage for export as exportable coffee green beans. The
finished product, green Robusta coffee beans are packaged in 60kg sacks and sold on
the European Union (EU) and Middle Eastern & North African markets. Our target
customers are primarily European importers and Middle Eastern wholesalers who
provide high-quality beans to the specialty roasting market.
All the coffee that UCCIL deals in is exclusively green coffee, grown around the Lake
Victoria crescent in the central, south-eastern, southern, and south-western parts of
Uganda. Beans in parchment are purchased directly from growers and are de-husked
and packaged into 60kg sacks in the UCCIL's plant. The final product is suitable for sale
and exportation. UCCIL will also buy and mill cereal and legume crops like maize,
beans and soya beans as an additional but related business activity at the plant site.
The major challenge that UCCIL is currently facing is to penetrate the international
market and become one of the leading green bean coffee exporters in Uganda as the
resurgent coffee production boom in Uganda is now taking centre stage once again on
the international coffee market. The management of UCCIL is quite keen to develop
partnerships with international investors interested to in secondary processing and
export of quality Ugandan Robusta coffee to the international market.
The company plans to acquire primary and secondary coffee processing plant &
equipment and warehousing capacity that will enable it to process (by hulling), grade,
and package and export good quality Robusta green beans to the aforementioned
international markets on a continuous, sustainable and incremental basis. Penetrating
the international coffee market by UCCIL is not possible at the moment as the company
lacks the technology and engineering capacity to enable the purchase of raw coffee,
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hulling it, packaging it and exporting it in the desired export-grade green coffee bean
form by the international coffee market.
Currently, Uganda produces 240,000 Metric Tonnes of coffee per annum of which 80%
is Robusta coffee and 20% is the highland-grown Arabica coffee. UCCIL expects to
purchase, prepare and export 210 Metric Tonnes of Robusta per week that calculates to
10,920 Metric Tonnes of Robusta to be exported per annum (or approximately 5.69% of
Uganda‘s current Robusta coffee production). This means that the sourcing of the raw
material in Uganda will not present much of a challenge in spite of the keen
competition that currently exists in the domestic coffee industry given the growing
annual domestic production of raw coffee in Uganda and the solid 15 years‘ experience
that the top management of UCCIL possesses in coffee trading business and will
definitely apply to its maximum advantage in developing and growing the company.
The company has no problem regarding labour as Uganda has been a coffee growing
country since the mid-1930s and there exists plenty of skilled and experienced labour
force to hire with the requisite know-how in primary and secondary processing, as well
as the export grading, quality testing and packaging operations of the green coffee
beans to the international coffee markets.
Basic utility infrastructure such as electricity and water is readily available at the
company‘s physical premises (the site for installation of the coffee processing and
grading plant machinery and equipment), although it will be necessary to install a back-
up 200 kVA diesel generator to cover for any abrupt power outages that may occur
during operations.
UCCIL is contributing land (29 acres near Kampala – the Ugandan capital), existing site
warehouse infrastructure and management expertise as its equity contribution towards
the total project investment cost of the proposed coffee export enterprise. The company
is in need of a foreign investment partner to provide financing for the acquisition of
primary and secondary coffee processing technology, plant site civil infrastructure
development, transportation vehicles (2 units), and working capital in form of equity
capital or as a medium-term loan. Besides, the company would like the foreign
investment partner to also establish market links and improve expertise in primary and
secondary processing of coffee.
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4.1.2 Opportunity Rationale
Uganda is heavily dependent upon agricultural exports, which account for over 85% of
export earnings. As the country is landlocked and transport costs are an important
consideration, high value export crops are required. Uganda‘s export sector in both
volume and value continues to be dominated by traditional cash crops, namely Coffee,
Tea, Cotton and Tobacco. Traditional crops alone accounted for 27.53% of the export
earnings in 2013 with coffee contributing the highest proportion of17.67%. Despite the
fluctuation of world coffee prices and its declining share of Uganda‘s export earnings,
coffee still remains the engine of the national economy – at least for the time being until
the developing oil industry comes on stream in 2017-18.
82% of the population is based in the rural areas and small holders produce Uganda‘s
exports almost entirely. Over 1.5 million households directly depend on coffee growing
and trading for their livelihood. Average incomes are very low with GNI under US$ 600
annually per capita. An efficient coffee farmer, from an average size Robusta plot might
expect to earn approximately US$ 5,140 annually as a result of his personal and his
family‘s labour and using improved (clonal coffee) varieties. Less efficient farmers
cultivating older and unimproved stock could expect to earn around US$ 1,440 per
annum.
Uganda‘s annual average coffee production for the last years stands at approximately
3.5 million per 60kg bags – highs of 4.5 million and lows of 3.0 million bags. In Uganda,
Robusta coffee accounts for 80% of production and Arabica coffee accounts for 20%.
Uganda is the natural home of Robusta coffee, growing at an altitude range of 900-1500
metres above sea level. Around the late 1960‘s, about 0.74 million bags of Uganda‘s
coffee exports were washed Robusta. Today all the Robusta is sold as natural (dry
processed) coffee, except for negligible amounts which are washed and pulped.
However, a serious program of re-establishing the wet processing of Robusta has
commenced. Arabica coffee is grown at altitudes of 1300-2300 metres above sea level.
Uganda‘s produces a moderate quality of Arabica, however Uganda‘s Robusta is noted

for being of high quality, often considered the industry standard. It continues to achieve
a premium in the market, above that of Vietnam and Indonesia, which helps justify the
high export cost.
With the liberalisation of the coffee industry including the abolition of the state
monopoly of coffee marketing, a promising environment for business activities has been
created. Increased competition as already favoured efficiency at all levels. Compared to
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times when the market was strictly regulated, coffee farmers experienced a significant
increase in the farm gate prices for coffee. While formerly only about 20% of export
prices reached farmers and production costs have hardly been met, coffee earns about
60% of export prices at farm gate level today. Increased competition, improved flow of
information, and vertical integration of exporters reducing the number of
intermediaries are the main reasons.
With the success of the Uganda government‘s efforts to increase coffee production
throughout the country since 2005 through the rehabilitation of old coffee trees,
introduction of higher yielding clonal coffee varieties, the introduction of the coffee wilt
disease resistant varieties, the streamlining of agro-input supplies, and the
improvement of extension services, coffee production volumes have dramatically shot
up to over 4 million bags per annum (240,000 metric tons) and moved Uganda to
become the ninth most important global coffee producer. Increased coffee production in
Uganda is also good news for the coffee farmers and other Uganda coffee value-chain
actors like the intermediate coffee traders and coffee processors/exporters as they get
access to bigger volumes of Robusta and Arabica to export to the increasing global
demand in the traditional markets of North America, European Union, Middle East and
North Africa, and the far East.
With increasing worldwide demand for Ugandan coffees, there is also a need for
Ugandan coffee traders to scale up their green coffee hulling and grading capacities and
become more competitive so as to cope with the ever-improving green coffee bean
quality requirements and stringencies being dictated by international coffee buyers in
the global coffee market.
4.2 Funds Required
A total investment of US$ 3.5 million is sought from an investor who has experience in
the coffee processing and/or coffee marketing industries. This investment financing is
being sought is primarily to be used for project capitalization and infrastructure
development purposes that are categorized as follows:
 US$ 1,149,490 to be used to purchase and install new primary and secondary
coffee processing machinery and equipment including coffee cherry hulling and
grading equipment.
 US$ 85,720 to be used to acquire transportation trucks for transportation of raw
coffee from the source areas and movement of export-grade coffee beans to the
road/rail dispatch terminals.
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 USD 464,790 to be applied as working capital consisting of plant machinery and
equipment installation charges, making payments for pre-operational expenses
and contingencies, and defraying the raw material cost of purchasing coffee raw
beans from the various suppliers in Uganda.
4.3 Investor Equity
For the US$ 3.5 million investment, the investor will receive a 40% equity stake in
UCCIL. The financial projections forecast an Internal Rate of Return of 27.15%,
providing the investor with cash return 8.67 times their original investment at the end
of Year 10. If the Board unanimously decides, dividends may be distributed; however,
this business plan does not contemplate any dividend payments, only capital gains.
4.4 Management Equity
The Management team has invested US$ 4,467,000 in UCCIL (in equivalent value
existing assets and services) via the same company – UGANDA COFFEE CUP
INTERNATIONAL LTD in return for their 60% equity share in UCCIL.
4.5 Board of Directors‟ Composition
The Board will be comprised as follows:
 Investor (3 positions)
 Management Team (3 positions)
 Independent Chairperson (1 position)
4.6 Investor Claw Back Strategy
If the Management team fails to achieve at least 90% of the key performance criteria
contained in this business plan (subject to negotiation including a mechanism for
measuring the investor's, directors performance and operational support) over the ten
years, the investor will be entitled to claw back from the Management team, at no cost,
20% of the management team's equity, therefore raising the investor's holding to 50%.
4.7 Total Project Cost
The total capital investment cost of the proposed UCCIL coffee-processing and export
enterprise is US$ 7.967 million. Out of this total capital investment cost, USD 4,350,000
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(54.60%) is the value of the existing site land; USD 1,800,000 (22.59%) will be used to
construct additional site infrastructure including an export warehouse and office
building; USD 1,149,490 (14.43%) will be used for the purchase of coffee processing
plant machinery and equipment; and USD 464,790 (5.83%) will spent as working capital
comprising of plant machinery installation and commissioning costs, raw coffee
purchase finance, and contingencies and pre-operational expenses.
The project cost breakdown is given in Table 1.
Table 1: Total Initial Project Investment Cost (UShs)

S. No. Project Investment UCCIL Investor‟s Total
Component Equity Equity/Debt
Finance
1. Land 54.60% 4,350,000 - 4,350,000
2. Buildings 23.85% 100,000 1,800,000 1,900,000
3. Processing Plant & Equipment 14.01% - 1,116,000 1,116,000
4. Utilities (power connection) 0.09% 7,000 - 7,000
5. Miscellaneous Equipment 0.42% - 33,490 33,490
6. Vehicles 1.20% 10,000 85,720 95,720
7. Installation & Commissioning 0.36% - 28,740 28,740
8. Pre-Operational Expenses 0.38% - 30,330 30,330
9. Contingencies 0.25% - 20,000 20,000
10. Initial Coffee Purchase Capital 3.84% - 305,720 305,720
11. Additional Working Capital 1.00% - 80,000 80,000
12. TOTAL PROJECT FUNDING 100.00% 4,467,000 3,500,000 7,967,000
13. %age of Total Project Funding 56.07% 43.93% 100.00%
4.8 Project Financial Performance Parameters
The key project performance parameters for the UCCIL coffee-processing and export
business are highlighted in Table 2 below:
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Table 2: Key Project Performance Parameters (USD)
KPI/Year Year 2 Year 3 Year 4 Year 5
Sales 20,541,408 21,568,478 22,646,902 23,779,247

Operating Profit 2,948,518 3,095,943 3,250,741 3,413,278
Tax 832,055 771,283 792,972 848,483
Net Profit / [Loss] 1,941,462 1,799,660 1,850,268 1,979,794
Gross Margin 25.23% 25.23% 25.23% 25.23%
Operating Margin 14.35% 14.35% 14.35% 14.35%
Net Margin 9.45% 8.34% 8.17% 8.33%
Return on Investment 24.37% 22.59% 23.22% 24.85%
Fixed Assets Turnover 6.02 6.86 7.88 9.12
Debt Coverage Ratio 13.41 4.20 3.68 4.01
Times Interest Earned Ratio 16.85 17.69 20.64 25.28
Break-even Point (BEP): USD 23,779,247 at a capacity utilization of 25.61%

Payback Period (Loan): 4.50 Years
NPV at 17%: USD 4,234,184
IRR: 30.36%
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5.0 THE ORGANIZATION/COMPANY
5.1 Registered Name
Uganda Coffee Cup International Limited.
5.2 Commencement of Operations
UGANDA COFFEE CUP INTERNATIONAL LTD was registered in the Republic of

Uganda in 2007 and commenced internal coffee trading operations during the same
year. Though still a relatively young company, the directors realize their Company's
good product market prospects and opportunity for growth given implementation of
the appropriate strategies, aided by the necessary finances.
5.3 History
Since 2007, UCCIL have been doing internal coffee trading in Uganda involving the
purchase of parchment Robusta coffee from the primary producers in the coffee-
growing areas of central and western Uganda, hulling it, and selling it as primary
processed coffee to various green coffee bean exporters that are currently active in the
local coffee sub-sector. UCCIL has been doing a modest but consistent internal coffee-
trading business for the last 8 years to have acquired sufficient expertise to attempt
expanding its portfolio of business to the international coffee commodity markets, and
has also built significant capital assets of its own such as a 29 Acre land space on the
outskirts of Kampala city – where most of the export-destined coffee is bulked,
processed, graded and packaged for export; built a sizeable coffee storage warehouse
[60 ft (18 meters) x 80 ft (24 meters) = 432 square meters] at site; and installed a 3-phase
power line with a step-up transformer that it will use to scale up the coffee export
processing industrial and storage infrastructure in the short-term. The immediate- to
medium-term objective of UCCIL is to mill and process large quantities of Ugandan
Robusta and Arabica coffee cherry and parchment on a weekly basis with a view to
exporting it to Sudan, other countries in the Middle East, and the European Union.
UCCIL would also like to enter into an exclusive Joint Venture Partnership Agreement
with an external investor interested in the processing and export of Ugandan coffee and
other primary agricultural commodities whereby they would be willing to stake
investment capital into the proposed JV partnership to roll out and progress the project.
21
5.4 Mission Statement
UCCIL seeks to serve overseas coffee importers and enthusiasts by exceeding minimum
acceptable quality standards and by providing the highest quality product at the lowest
possible price. We value our relationships with current and future customers and hope
to communicate our appreciation to them through our outstanding, guaranteed product
quality, personal service, and efficient delivery. Our commitment to our customers and
the country of Uganda will be reflected through honest and responsible business.
5.5 Vision Statement
Through our diverse professional skills and clarity of purpose and values, we aim to
become a dynamic, competitive, and financially-solvent coffee exporting business
within the next three years.
5.6 Organizational Objectives
The objectives of UGANDA COFFEE CUP INTERNATIONAL LTD:
1. To develop a company whose main goal and vision is to exceed customers‘

expectations. We intend to process, grade and export high-quality Ugandan
green coffee beans to supply not only our existing clients but also venture into
the bigger and lucrative European and Middle Eastern green bean coffee
markets.
2. To pursue and attain ambitious coffee export sales targets so that the company
can hire and retain fully-trained salaried staff – hence creating gainful
employment opportunities. We want UCCIL to be a household name in which
the community has pride as job providers.
3. To create a sustainable and vibrant coffee-trading business, surviving off its own
cash flow. The objective for the company is not only to sustain itself financially
but also to stimulate a trickledown effect which will in turn lead to improved
and sustainable livelihoods for the primary coffee producers in Uganda.
4. Finalize Joint-Venture (JV) partnership contract with strategic foreign investor by
January 2016.
5. Achieve a green coffee bean processing and sales target of 182,000/60kg bags per
year right from the first year of business commencement (Project Year 2) and
increase output by a margin of 5% per annum to over 282,000/60kg bags per in
the ninth year of business operations (Project Year 10).
22
6. Establish strategic relationships with 10-15 European and Middle Eastern coffee
importers within the first three years of full business operation.
7. Increase gross margins in the next three years.
8. Achieve recurring profits of a minimum US$ 1.9 million by Project Year 5.
5.7 Organizational Values
 Transparency in all dealings with key stakeholders

 Commitment to customers
 Innovative attitude to product diversification
 Collaborative approach to new markets
5.8 Founders and Management Team
The Management team is comprised of James Ssemanda and Hajji Mayanja Mohammed
Sadik. The Management team is highly motivated, experienced and well qualified. The
team is strongly positioned to take advantage of this opportunity. The team has:
 Proven business start-up skills, with bottom line responsibility

 Experience in business start up (finance, marketing, operations and legal aspects)
 Personality profiles that reflect the synergies of cohesive group dynamics
James has significant skills and experience in coffee marketing and strategy. Hajji
Mayanja Mohammed Sadik has strong business development and international
networking skills and public relations capabilities.
5.9 Major Milestones Achieved to Date
 Incorporation of UCCIL as a legal business entity in Uganda with the requisite

business licences and trade certifications;
 Acquisition of a 29-acre land space near Kampala as a significant project investment
asset;
 Accumulation of significant experience, expertise and know-how in domestic and
export coffee trading operations within the Ugandan context;
 Development of a serviced 432 square meter warehouse at the project site;
 Competitor analysis undertaken to establish UCCIL‟s opportunities and prospects in
the sourcing, procurement, and export of coffee in the Ugandan coffee industry;
 Commitment of management team through investment of its own internal funds;
 Development of a Business Plan.
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5.10 Business Structure
The proposed business structure is:
UCCIL (Uganda
Management International
team‟s company) Investor
40%
60%
UCCIL (Operating
Entity)
5.11 Shareholding Structure
The current company shareholding structure is as follows:
Shareholder Shares held (USD) [%age]

1. James Ssemanda 4,000,000 40%
2. Mayanja Mohammed Sadik 2,000,000 20%
3. Floating Shares* 4,000,000 40%
NB: 1 USD = UGShs. 3,000

*The presently unallocated floating shares worth 40% of the UCCIL company shareholding
stock will be converted into the International Investor‘s 40% shareholding stake in the UCCIL
operating entity.
5.12 Board Structure
The International Investor, in addition to the capital introduced to the venture, will also
have experience in dealing with and/or making contacts in the international coffee
market place – especially with the large green coffee buying houses in Europe, the
Middle East and elsewhere.
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UCCIL will have two directors on the Board, and the International Investor will also be
represented by two directors on the same Board – adding up to four directors.
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6.0 PRODUCTS AND SERVICES
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) deal exclusively in green

coffee, grown in the low altitude areas of central, eastern, western and south-eastern
Uganda and one-hundred percent Robusta. Beans in parchment are purchased directly
from growers and are de-husked, graded and packaged into 60kg sacks in the UCCIL's
coffee-processing plant. The final product is suitable for sale and exportation.
6.1 Green Bean Coffee
Coffee has long been the leading export commodity of Uganda. Arabica and Robusta
coffee are the two most common types grown in Uganda. Arabica coffee has better yield
and is commonly found in the high altitude areas of the eastern, western, and southern
regions of the country in agricultural production Zone 10 (USAID-APEP, 2008). Robusta
coffee, on the other hand, is a native Ugandan coffee type grown in almost all parts of
Uganda. Robusta coffee is grown in Zones 6, 7, and 9. For both coffee types, a number
of varieties are found. Robusta coffee can be produced as clonal coffee, a fast-maturing
and better yielding type (USAID-APEP, 2008). Most coffee on the local market is Clonal
Robusta and other Robusta coffee varieties.
Figure 2: Uganda coffee plantation and harvest periods

REGIONS Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep.
CENTRAL MAIN CROP (Robusta) FLY CROP (Robusta)
FLY CROP MAIN CROP
MASAKA (Robusta) (Robusta)
MAIN CROP
EASTERN (Robusta) FLY CROP (Robusta)
MAIN CROP
BUGISU/SEBEI (Robusta) FLY CROP (Robusta)
WESTERN FLY CROP (Robusta) MAIN CROP (Robusta)
FLY CROP
WEST NILE MAIN CROP (Robusta) (Robusta)
Source: Uganda Coffee Development Authority
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6.2 Competitive Comparison
In order to differentiate our product, coffee, which is a commodity, from the product
offering of competitors, all beans are guaranteed fresh and shipped within seven days
of preparation. In addition, all beans are sorted at ninety-five percent screen 18 and
above compared to the industry standard ninety percent screen of 15 and above. The
beans shipped by UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) are
therefore larger than most and are guaranteed fresh. In addition, all of the farms from
which UCCIL purchases coffee adhere to environmentally sound farming practices and
avoid the use of pesticides and chemicals in crop production.
There are approximately 28 competitors in Uganda who offer a product similar to ours.
Our research indicates that with the additional capacity we would become one of the
top ten, in terms of quantity, providers. We will have the advantage of established
sourcing and distribution channels as well as reputation. In addition, improvements to
our marketing efforts will further separate us from the larger market and from our close
competitors.
6.3 Sales Literature
UCCIL will strive to work with at least two European or Middle East coffee importers
who can handle all of our shipments. Likewise, we have dealt with the same Ugandan
wholesalers, for internal sales, each year. Sales to this point have been handled through
personal selling. Additional sales literature will include a website, direct mail to
specialty roasters and importers, and print advertising in several trade publications
including Tea and Coffee Trade Journal and the International Coffee Report, which are both
digital business publications that target European and international business dealing
with issues relevant to the coffee industry.
6.4 Sourcing
Both the existing and the proposed facilities are ideally located in around Kampala in
central Uganda and a central convergence point in Uganda for Robusta coffee deliveries
from the important crop production areas of western, southern (Masaka), south-eastern
(Busoga) and West Nile in north western Uganda. The coffee beans produced in these
regions of Uganda are of the highest quality. With additional financing, we would be
able to buy larger volumes at lower prices. We now buy from one or more of six private
growers or grower cooperatives. Contracts are secured six months in advance of
harvest.
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6.5 Technology
Improvements in technology will include the use of partially automated selecting

machines which will allow for increased production capacity with a lower machine-to-
operator ratio than we currently employ. Additional storage capabilities will decrease
shipping charges and will reduce the need for permanent shipping employees by thirty-
five percent. High-technology information system upgrades will improve all aspects of
business, especially inventory control, tracking of shipments, and communication with
clients in import countries.
6.6 Future Products
Alternative to the Robusta bean, Coffea Arabica, though it shares some similarities with
the Arabica bean, is very different. Unlike Robusta whose native habitat is the Lake
Victoria Crescent, Arabica coffee is an introduced crop originating from
Ethiopia. Arabica coffee is more competitive on the international market because of its
superior quality. Uganda Robusta too has intrinsic quality attributes which even attracts
a premium on the international coffee market. The Arabica species grows at much
higher elevations, better soil rich areas, and is the source of the world‘s finest coffees.
On the other hand, the new Arabica variety, (Tuzza), commonly referred to as catimors
perform well in low altitude areas of the country predominantly zoned for Robusta
coffee, (1,200-1,500 m). At high altitude this variety succumbs to Coffee Berry Disease
(CBD) and yields are poor. The origin of catimor arabica is Papua New Guinea and the
variety is known for its high yielding capabilities, drought resistance and tolerance to
diseases.
By providing the finest species of coffee, UCCIL has taken the first step towards a
differentiated product. To further distinguish our coffee, we adhere to higher quality
standards than approximately ninety-five percent of the market. We have assumed the
position of a specialized provider of exceptional Robusta coffee. Our customers,
European and Ugandan specialty roasters, recognize UCCIL for our ability to provide
the type of beans they require to produce award winning coffee.
6.7 Milling, Packaging and Marketing of Cereals
In addition to the hulling, grading and packaging of coffee beans for export, UCCIL
shall also mill other cereals like rice and maize into flour for sale on the local market.
By-products like maize bran shall be processed into animal feeds and sold on the open
market. UCCIL expects to generate revenues from the sale of the products, to study the
28
market and explore the possibility of adding and expanding into other products.
UCCIL will offer a narrow range of milled cereal products; mainly maize flour, packed
in PVC bags of 10kgs, 25kgs and 50 kgs.
6.8 Training
We intend to partner with the local authorities, lead international development agencies
and the government in providing training and advisory services regarding improved
farming methods, the use of fertilizers, crop protection products and other agro-
chemicals, and improved coffee wilt disease-resistant varieties (especially the use of
improved clonal coffee seeds). This is aimed at enabling the coffee producer to earn
more per unit acreage but it also ensure that we get the best quality coffee cherries and
hence roll out more market-competitive products. We shall also set up a shop to
provide essential farm inputs like hoes, pangas (machetes), slashers, knapsack sprayers,
etc. This is aimed at simplifying life for the farmer, which will in turn generate
confidence in our company among the rural coffee producer communities in Uganda.
29
7.0 COFFEE SUB-SECTOR MARKET ANALYSIS
7.1 Coffee Production and Supply in Uganda
Production of coffee in Uganda has been increasing rapidly (Figure 3). Ugandan
Robusta coffee production continues to grow although Arabica production remains
depressed, leaving Uganda less affected by falling prices, given the lower price declines
of Robusta relative to Arabica. Though coffee production is on an increasing trend, over
the last 5 years, the volume produced has decreased by about 5% by volume while land
under cultivation has increased by 23% (USDA, 2012; FAOSTAT, 2012). Nevertheless,
earnings only increased 1.2% despite a 29% increase in the volume of sales. The
decrease in coffee productivity, despite the increase in production, is attributed to
factors such as pests and diseases, unpredictable weather conditions, volatile market
prices, low yielding varieties and loss of Uganda‘s global market share (World Bank,
2011). For instance, Robusta coffee has been largely destroyed by coffee wilt disease
affecting over 50% of both young and old Robusta coffee trees since 1993 (World Bank,
2011).
The acreage under coffee production ranged from 0.1 ha to 12 ha per household with an
average of 0.5 ha. Eighty percent (80%) of the coffee grown in Uganda is Robusta.
Figure 3-1: Trends of coffee production in Uganda 2007/08 - 2011/12 (USDA, 2012)
250
209
196 200
193
Production Volume ('000 MT)
200 179
172
157 162
154
150
123
100
49
39 39 38
50 30
0
2007/08 2008/09 2009/10 2010/11 2011/12
Arabica Robusta Total
30
Figure 3-2: Trends in area harvested under coffee production, 2006 – 2012 (FAOSTAT,
2014)
Area Harvested ('000 Ha)
Area Harvested ('000 Ha)
400
345
350 320 320 310
Area harvested ('000 Ha)
285
300 270
250 220
200
150
100
50
0
2006 2007 2008 2009 2010 2011 2012
A realistic estimate for the total area under production in Uganda is 310,000 hectares,
with Robusta at 285,000 ha and Arabica at 25,000 ha. Most coffee is grown in the central
region as can be seen in the chat below.
Figure 4: Regional Share of Coffee Production in Uganda – 2012
Regional Share of Coffee Production
12.60% 1.00%
7.00%
9.70%
69.60%
CENTRAL SOUTH WESTERN WESTERN EASTERN WEST NILE
Source: UCDA 2012
31
7.2 Coffee Marketing and Consumption in Uganda
Coffee trade in Uganda involves local traders (popularly known as middlemen and/or
assemblers) who purchase from individual farmers and farmer groups. The coffee is
then sold to medium and large scale traders and exporters. The price of coffee and
coffee products is set through competitive market forces (as mentioned by 52% of
traders) while the buyer determines the price in other instances.
Figure 5: Source of coffee by Traders
Source of Coffee by Traders

Source of Coffee by Traders
40
35
Percentage of Traders
30
25
20
15
10
0
Individual Farmers Middlemen Fellow Traders Farmer Groups
Most of the coffee produced and traded in Uganda is exported to international markets.
Consumption of coffee in Uganda is generally low with an estimated per capita
consumption of 0.25kg/yr (ICO, 2012). According to UCDA 2009, the consumption of
coffee is slowly increasing due to consumption by young Ugandans, most of whom are
not regular consumers), who regard the coffee offered by hotels, restaurants and coffee
shops as good quality coffee. The common coffee powder brands on the market include;
Nescafe, Good African coffee, Star café and Nguvu.
32
Figure 6: Retail prices of coffee (UGX/Kg)
Average Retail Prices
Average Retail Prices
45,000
40,000
40,000
Retail Price (UShs/kg)
35,000
30,000
25,000
20,000
20,000 16,000
15,000
10,000 8,000 7,500
5,000
0
Nescafe Starcafe Africafe Good Day Nguvu
Instant
Box 1: Internal Coffee Trading

The intermediaries make up the second link in the chain and within this link there are
also different categories. This link of the value chain is the most complex because none
of the small medium or lager coffee traders involved in the link between producers and
exporters is registered. They have no domiciles, hire primary processing services and
have a higher turnover as they also trade in produce and other items. Because of this,
UCDA has not been registering them. It is very hard to explicitly correlate the volumes
attributable to each size of trader. They are however estimated to be over 6,000 internal
coffee traders. The smaller intermediaries trade less than 230,000 kg of coffee a year and
use mainly bicycles aggregating from as small as 1 kilo to a bag of 80 kgs. The smaller
traders make up the biggest number close to over 4,000. Those trading up to 920,000 kg
a year are considered medium-sized intermediaries; these use motor cycles and smaller
tracks and most times sub contract the smaller collectors/traders. Their number is
estimated at 1,800.
.
Finally, those trading more than 920,000 kg, in other words, over 20,000 bags of coffee
are large intermediaries and they usually sell directly to the exporters, managing their
own logistics channel. The small and medium-sized intermediaries work in most cases
for the larger ones and must meet the rules and requirements set by them. The large
intermediaries maintain a good network of information (i.e. prices, premiums, and
volumes traded locally and internationally) and some have upgraded to selling
graded7.3coffees to exporters
Coffee to maximize
Exports and Imports the earning at this stage of the value chain.
in Uganda
33
Although the contribution of coffee to total export earnings declined marginally from
17.9% (181,324 MT) in 2009 to 17.5% (159,433 MT) in 2010, the nominal value increased
from US$ 280.2 million to 283.9 million on account of improved prices on the
international market (MAAIF, 2011). In 2011/12, coffee exports for the first seven
months of 2011/12 totaled 89,063 MT valued at US$ 221.2 million compared to 90,344
MT valued at US$ 203.1 million for October – April 2010/11, representing a slight drop
of 1.42% in volume and a rise of 8.9% in value (UCDA, 2012). According to UCDA
(2012), close to 160,000MT of coffee was exported from Uganda in 2009/2010. For the
years 2007 to 2010, the exports decreased by over 17% with Robusta comprising 80% of
the total coffee exports on average.
Between December 2013 and November 2014, 3.48 million bags worth Shs1.1 trillion
($405 million) were exported. This performance exhibited a decline from the 3.65
million bags worth $430 million (Shs1 trillion) earned the same period from December
2012 to November 2013,‖ the report noted. From December 2013 to November 2014 and
between December 2012 and November 2013, there was a 4.8 per cent and 6.1 per cent
decline in both volume and value, respectively.
Uganda coffee is mainly exported as FAQ based on different grades and coffee types as
specified by the coffee regulations of 1994. These grades are based on variety, bean size,
quality or place of origin. Robusta variety is mostly exported as Screen 15. Other forms
include; washed Robusta, Org. Robusta, Screen 18, Screen 17, Screen 15, Screen 14, BHP
1199 and other Robustas. On the other hand, Arabica is exported as drugar, Bugisu AA,
Organic-Bugisu, Bugisu AB, Mt Elgon, Rwenzori, Okoro A, Organic Okoro, Bugisu
Supremo, Organic Drugar and Wugar. Exporters and different value chain actors
identified Organic, 4C (Common Code for Coffee Communities), Fair trade, UTZ
certified and Rain Forest Alliance as some of the standards the coffee exports conform
to.
The major exporters in Uganda include; Ugacof (U) Ltd, Kyagalanyi Coffee Ltd, Olam
(U) Ltd, Kawacom, Savannah commodities, Ibero, Gumutindo, Kampala Domestic
Store, Job Coffee, Busigu Cooperative Union, and Great Lakes (see Appendix 1 for the
rest of exporters and major buyers). Most of the coffee from Uganda is shipped to the
European Union 1 (accounts for 73.83%), Sudan, Morocco, Switzerland, Japan, South
Korea and many other countries as shown in Figure 7 (UCDA, 2014).
1EU countries are: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, The Netherlands, and UK.
34
Figure 7-1: Uganda‟s coffee export volumes - trends (UCDA, 2013)
250
215 210
193 189
200 183
162 163 163 167 164
160
Volume ('000 MT)
150 144 149

150 129
119 120 123
114
100 84
49 48 46
36 34 39 37 40
50 31 30
0
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14
Robusta Arabica Total Exports
Figure 7-2: Main destinations of Uganda‟s coffee exports in January 2014 (UCDA,
2012)
Importing Country
80 73.83
Percenatge to Destination
70
60
50
40
30
20 14.22
10 6.04
2.17 1.47 1.22 1.05
0
Importing Country
Regarding imports, coffee imports to Uganda are negligible with no recorded formal
data published to explain the demand and characteristics of these imports. Though not
formally recorded, Uganda imports Arabica coffee from DRC, Rwanda and Burundi,
and most of this is eventually re-exported.
35
7.3 Functional Analysis of Uganda Coffee Value Chain
7.3.1 The Coffee Value Chain Map in Uganda
Figure 8 shows the key interrelated and structured processes that enable coffee as a
finished product reach the final consumer.
7.3.2 Technical Functions of Coffee value Chain Actors
The different stages of the coffee value chain in Uganda, the function at each stage, the
agents playing the different roles and the outputs at the different stages of the chain
were identified and mapped (Figures 8 and 9). The value chain actors comprise of input
providers, producers, assemblers, processors and traders, who sell to consumers.
Input suppliers: The sources of inputs for coffee production include: research and
development institutions, which supply seedlings to UCDA that in turn multiplies them
and supplies them to private agro-input dealers, local coffee nurseries, ACEs, NAADS
and District Farmers‘ Organizations. The coffee seedlings usually supplied by local
nurseries are Robusta clonal cuttings and Robusta clonal elite.
Other inputs are supplied either by the private sector or NGOs. Private sector service
providers are organized under the umbrella organization, Uganda National Agro-Input
Dealers Association (UNADA), which has a total of about 2,200 members spread across
the country. NGOs that supply seedlings are particularly common in northern and
eastern Uganda. The major buyers of coffee seedlings are individual farmers who
account for 53% of the buyers. Other buyers of seedlings are: farmer groups (23%),
institutions (12%) and NAADS (12%). For more efficient and profitable operations,
input suppliers reported that they had particular information needs like understanding
the size, location and requirements of the market for inputs and the coffee beans, as
well as more understanding of good agricultural practices for coffee production.
Most input suppliers are located in Kampala and other up-country towns. They mostly
supply farm implements, coffee seedlings, fertilizers and pesticides for use in the coffee
farms. They also provide after sale services such as training on product usage and offer
some extension services to the coffee producers.
Producers: Mostly coffee is produced by smallholders who have an average of 0.4 ha

and harvest about 0.5kg/tree. Approximately 80% of these farmers grow the traditional
36
Robusta coffee, which requires less inputs compared to improved Robusta varieties like
clonal elite and clonal cuttings. It should be noted that some farmers still get their
seedlings from own bushes and own gardens. The main inputs in coffee production are
land, labour, seed, herbicides, pesticides and fertilizers. Most of the labour used in
coffee farms is manual especially at harvest time when the coffee berries are picked by
hand. Among the activities and functions undertaken by the technologies collectively,
marketing was the most dominant, followed by access to inputs, production, access to
capacity building trainings, access to credit, primary processing of coffee (milling/wet
processing), storage and social support to group members.
Producers usually undertake wet processing by outsourcing the services of hullers.

Some producer organisations/co-operative unions have their own hullers and are able
to integrate production and hulling. The producer organisations and/or cooperatives
are also involved in bulking of coffee to facilitate collective marketing.
Nearly all the produced coffee is sold at farm gate since it is a major source of income
for 1.32 million smallholder households (MAAIF, 2010). At the farm-level, several
marketing outlets were identified. These are: selling coffee to cooperative unions,
village collectors, brokers/agents, exporters and coffee processors. Most farmers sell
coffee within their districts and neighbouring districts. Virtually all harvested coffee is
sold (99%) and majority of interviewed farmer groups (52%) sell their coffee in semi-
processed form commonly referred to as Fair Average Quality (FAQ) while 48% of the
farmer groups sell it in raw form, commonly referred to as ―kiboko‖. For example, in
Mubende, farmer business entities sell FAQ directly to the exporters after hulling thus
eliminating middlemen. Farmer groups and cooperatives not only sell their coffee
within the major producing and trading districts in the country but also to export
markets such as the European Union, Sudan, Switzerland and USA (UCDA, 2011).
Examples of such cooperatives include Gumutindo, Bugisu Cooperative and ACPCU.
37
Figure 8: Coffee value chain core processes map
International Regional Uganda

Consumers Importers Consumers
Importers
Retailing Small & Large Local retailers of

Exporters (n=29) instant/brewed coffee
Trading Cooperative
exporters Brokers
Tertiary
Domestic coffee
Processing
roasters (n=12)
Farmers & factories
e.g. Hima cement
Secondary
Export grading factories
Processing
(n= 19 active ones)
Bulking Producer Organizations Green Coffee Brokers/Village

& Coffee Cooperatives Traders Collectors
(n= 345)
Primary Hullers/Dry Processors We Processors

Processing (n=369) (n=26)
Production Producer Organizations Individual Producers (Majority Small-scale)
Inputs UCDA, NAADS, Cooperatives, Private Agro-input dealers, NGOs, Coffee nurseries
Research
Coffee Research Institutes – CORI, KARI, NACCRI
Legend:
Chain Integration
Inputs FAQ Parchment Kiboko Graded FAQ Husks Roasted Coffee Service Outsourcing
38
Figure 9: Technical functions of actors
Input Production Assembling Processing Trading

Provision
Coffee Producers Producer Wet Exporters Retailers of

Nurseries, (Individual Organizations, Processors & (small & Instant/
Government and produce Coffee Hullers, large), Brewed
& NGOs groups) Cooperatives, Export Cooperative Coffee
programs, Village Grading Exporters
Agro-input Collectors/ Factories and
dealers, Brokers and Roasters
UCDA ….
Supply farm Land Bulking, Wet Weighing and Retailing of

implements preparation, Transporting, processing, packaging, instant coffee
and coffee Planting, Marketing on Washing, Sorting, and brewed
seedlings Weeding, behalf of Drying, Transporting coffee
Fertilizers and producers, Sorting, and Shipping
Extension and chemicals Processing Checking for of Coffee
advisory application, and/or dryness,
services to the Harvesting, outsourcing Hulling,
coffee Wet processing Quality
producers processing, services on control and
Sorting, behalf of the size grading,
Drying, farmers. Gravimetric
Packaging sorting/de-
into sacks, stoning,
Collective Packaging
production into sacks,
and Roasting
marketing
Rural traders/brokers or company agents: They provide the brokerage function

between farmers, coffee exporting companies and processors/traders thus termed as
the middle men of the value chain and are a vital source of information to actors on
either side of the chain. They often advise the big traders, processors or exporting
companies on when sufficient stocks have been bulked in order to arrange for
transportation.
They are based at the villages and purchase coffee cherries or Kiboko on behalf of the
green coffee traders. Another set of traders/brokers is usually stationed at the hullers,
39
waiting to buy farmers‘ milled coffee. Brokers are usually paid on commission, which
ranges from 20 UGX/Kg to 50 UGX/Kg. These rural traders also buy coffee cherries,
dry them before taking them to the hullers from whom they out-source the hulling
services. They also buy dried coffee cherries from farmers and then sell to exporters
(35%) and other big traders (13%). The exporting companies then sell directly to export
markets.
Traders were noted as the biggest drivers of poor quality, as reported by the majority of
coffee farmers and some experts in a validation workshop for this report. This is
because they are mainly driven by volumes, and not quality. They often buy premature
coffee beans, poorly dried cherries, and have poor storage facilities, which further
deteriorate the quality of the beans. When the coffee beans are received by the big
exporters, who have grading facilities, over 50% of the beans are rejected on account of
poor quality. The farmers, especially members of ACEs, said that the traders do not pay
much attention to the quality because the price they receive for the beans almost
doubles the farm-gate price, and the profits they make are still very attractive and
compensate for the rejected coffee beans. This practice has also been reported to
encourage stealing and selling of raw coffee beans from farmers‘ gardens, as well as low
attention to quality by a number of farmers, due to lack of incentives for production of
good quality coffee, making the farmer the biggest loser in the value chain.
On the other hand, the farmers involved in production of sustainable coffee seem to
have better incentives for producing better quality coffee due to the different incentives
in place e.g. free washing facilities, collection centres, training in good agricultural
practices, premium prices for premium quality in some instances, fair trade benefits and
bonuses at the end of the year. All these have driven production of better quality coffee,
although despite the high investment by processors in this production of premium
quality, about 30% of the harvested coffee is still side sold to other traders and
processors, who have not invested in the incentive system.
Processors: Coffee is either dry or wet processed. According to World Bank, 2011, there
are about 26 independent wet processors in Uganda. Wet processing involves cherry
separation, pulping and washing. The mucilage layer is removed by bio-chemical
enzyme activity through controlled fermentation to give ‗fully washed‘ coffee. It can
also be removed mechanically using a mechanical mucilage remover. Some producers
are wet processing at farm level thus, presenting an opportunity for increased vertical
integration and better prices for the farmers.
40
Dry processing involves drying and hulling which results in clean dry coffee beans
referred to as FAQ (Fair Average Quality). According to World Bank, 2011, there are
about 369 hullers in Uganda. Coffee processing equipment owned by processors
include hullers, mixers and sieving machines. The average installed capacity for these
machines is 28MT/day. However, the processors are currently able to process
11MT/day of coffee representing 39% capacity utilization. The main causes of such low
utilization are power disruption and low coffee supply.
Coffee (Kiboko or cherries) is processed to FAQ, parchment or by products such as BHP

or husks used as manure and a source of heating energy for other industries. The FAQ
coffee is then transported to exporters or export grading factories for secondary
processing. Secondary processing, also known as export grading transforms the clean
coffee (FAQ) into the various coffee grades that meet the international standards. The
process involves cleaning FAQ, drying the coffee if wet (moisture content over 13 %)
and then size grading using perforated screens to the desired size. The sorted beans are
then gravimetrically sorted to have uniform specific density before bagging off and
loading into containers for transportation to major export markets through the port of
Mombasa. This is done by export grading factories (UCA, 2012). There are 25 coffee
export grading factories with a combined capacity of 162 metric tons/hour. All these
plants are owned by the exporters are most of them are new with state of the art
technology.
About 45% of Ugandan Arabicas are wet processed and 55% are dry processed --- and
are called DRUGAR (Dry Uganda Arabica) from Kasese. The most abundant and
simplest method of processing Robusta is the natural or dry method.
In 2008/09, UCDA had 345 registered primary processing factories for dry Robusta
coffee milling (kiboko); 132 of them have 2 hullers and 210 have 1 huller. The ideal dry
mill should have 3 hullers but only 3 factories which have 3 hullers were registered in
Coffee Year 2008/09: Igara Coffee Factory, Ishaka; Bushenyi; Kanana Coffee Factory,
Mityana and Rukungiri Coffee Factory.
Each huller, on average, produces 500kg [0.5 tons] per hour which works out at 4 tons
per 8 hour day or 1,056 tons a year per huller. In 2008/09, Uganda had a combined total
of 483 operational hullers with a combined processing capacity for clean exportable
coffee of 510,048 tons. Taking last [2008-2009] season‘s export of Robusta coffee volumes
that were 144,308 tons, it‘s evident that there is a serious over capacity at the primary
dry coffee processing level with a utilization of only 28.3%.
41
Traders (bulk buyers, wholesalers, retailers): This group includes the rural
traders/village collectors, big town traders or export companies. They purchase most of
the coffee directly from farmers. They are mostly based in the districts of production,
urban areas like Kampala or in upcountry towns. Small-scale traders operate from farm
to farm, or from town to town, with larger traders purchasing from these small traders
and processing the coffee either at private mills (for a fee) or at mills they own. It is
estimated that there are approximately 6,000 middlemen/traders, ranging from very
small to medium-sized, operating in the supply chain (World Bank 2011).
The coffee traders sell 74% of their coffee to exporters, 35% to big traders and 13% to
local processors or roasters. Exporters are the ―pull‖ in the coffee value chain since
almost all the coffee produced in Uganda ends in the export market. Retailers in the
coffee value chain include retail outlets distributing coffee: coffee shops, supermarkets,
open markets, grocery shops, cafes, hotels and restaurants. Identified local roasters
include Star café, Good African coffee, Wangolo processors, Gayaza coffee roasters and
packers Ltd, Kakinzi farm and general works, Dimo Investment company, Zigoti coffee
works Ltd, and Nguvu. Cafes, hotels and restaurants serve ready-to-drink coffee.
Exporters: There are about 42 registered coffee exporting companies in Uganda which
are subsidiaries of large coffee multinational companies such as Abaco International,
Olam International, Bernard Rothfros and Eco Agro-industrialists. Some of the major
exporting companies include; UGACOF, Kawacom, Kyagalanyi, Savannah, Gumutindo,
Busigu cooperative union, Great Lakes and Ibero.
7.3.3 Trade Flows in the Coffee Value Chain
The main coffee producing areas in Uganda are Central, Eastern and Western parts of
the country. Coffee trading takes place in almost all the major urban centres in these
coffee-growing areas (Figure 3.8). However, because most of the planting activity has
taken place over the last two years, there is little participation of the northern region in
the coffee trade flows as reflected in the map. The West Nile region produces Arabica
coffee.
Almost all coffee trading activities in Uganda end in Kampala as over 95% of the coffee
traded within the country goes to the export market through Kampala. This is because,
a majority of exporters and key transport and export facilitation infrastructure and
services are located in Kampala. However, some Arabica coffee, particularly from
Mbale is exported through other routes. The following being the key trade towns: Jinja,
42
Iganga, Mbale, Masaka, Bushenyi, Luweero, Mbarara, Ntungamo, Kasese, Kayunga,
Mityana and Mubende.
In major towns and urban centres in the coffee producing areas, trade is mostly driven
by the existence of primary processing facilities (hulleries) that hull cherry coffee
(Kiboko) into the highly marketable Fair Average Quality (FAQ). Traders, brokers, and
agents of exporters then buy the FAQ coffee from farmers and owners of these hulleries
and transport it to other major towns or Kampala for secondary processing into clean
graded coffee and exporting.
Figure 10: Geographical trade flows of coffee in Uganda
43
Significant production and trade in Arabica coffee takes place in Eastern Uganda
around Mbale. Kasese, Kanungu, Rukungiri and Nebbi districts are also trade hubs for
coffee. Some Arabica coffee comes from the DRC through Nebbi, Kasese, Kabale and
Kanungu to Kampala. The trade of robusta coffee represented in green on the map is
80% of the total coffee produced in the country, while that of Arabica in red represent
20%. Figure 10 shows the geographical trade flows of coffee from different districts in
Uganda.
7.4 Opportunities in Robusta Coffee
7.4.1 Increased Productivity
Uganda produces what is generally considered by the market to be the world‘s best
volume Robusta coffee. If exports were to double, we estimate that it would add (at
current prices) nearly $200m annually to the Ugandan economy; the farm gate price that
was paid to the farmer is Robusta in 2007/2008 is about 68% and 80% respectively. The
farm gate price covers both farmers‘ costs and his/her profits. 70% the export price goes
to the farmer. If all coffee trees in Uganda were rehabilitated and became fully
productive Uganda could more than double its coffee exports (currently averaging at
3million bags).
3 yr rolling GOAL 20122 Value Increased annual

average of revenue
exports 2005/6 to
07/08
60kg bags 000 bags US$/ton US$ NB: 70% of
2.640 m 4,000 1,600 130 million the export
2.640 m 4,500 1,600 178 million price
2.640 m 5,000 1,600 226 million

Source: ICO; 1 bag = 60kg net
The estimated loss of revenue from Coffee Wilt Disease (on an outright basis and using
the annual prevailing market prices during the period) in the last 10 years has been over
$800m. This is lost revenue to Uganda, of which probably more than $500m would have
been paid to the producers [70% of the export price for their costs and margin],
represents a major loss of revenue to Uganda‘s coffee farming households.
2 This is a target of the National Coffee Production Campaign lead by UCDA

44
7.4.2 Wet Processing
When wet processed, Uganda Robusta has a particularly impressive cup which is
generally considered to be of superior quality retaining its flavour characteristics very
well, something which is not always the case with other washed Robustas. The
potential of Robusta coffee generally to attract substantial interest from the specialty
trade has been demonstrated. 20 years ago, washed Robustas could be found in several
places, but they now remain exported only from India and marginally Guatemala.
Robustas constitute the largest pool of improvable and affordable coffees.
Fully washed Robustas would attain the Specialty Robusta Grade3 and their cup would
fall between Columbia mild and other mild category. If Uganda fully washed 50% of
their 3,500,000 bags of Robusta export and sold as Specialty Grade; the current
differentials [enjoyed by India and Indonesia] is US$0.50/lb; this would represent a net
gain of US$ 115,741,500.
The semi-washed Robusta would attain a Premium Grade between other mild category
and Brazil category. If Uganda semi washed 50% of their 3,500,000 bags of Robusta
export and sold as Premium Grade; the current differentials [enjoyed by India and
Indonesia] is US$0.30/lb; this would represent a net gain of US$ 69,489,000.
The identified strengths, weaknesses, opportunities and threats to the various actors
along the Uganda coffee value chain are listed in Table 3 below.
3Specialty Coffee Association of America [SCAA] and Coffee quality Institute (CQI)] have developed Robusta coffee
specialty protocols that were introduced to international coffee buyers at the EAFCA conference in February, 2010
and the response from the market was excellent. UCDA with CQI and other Robusta producing countries (India,
Indonesia, etc) have now developed the protocols for the Specialty Robusta Coffees.
45
Table 3: SWOT Analysis of the Uganda Coffee Value Chain
Strengths Weaknesses
 Coffee trade in Uganda is relatively better structured than most  There is poor and inconsistent quality control of coffee across the
commodities due to existence of support institutions and the ready chain coupled with limited capacity to monitor and enforce quality
export market; standards;
 Local brands are well established;  The productivity of coffee of 0.5 Kg/tree/season is still low
 The chain has a critical mass of actors at most of the stages; compared to 2 – 3 kg per tree if the right agronomic practices are
 Availability/existence of proven technologies; applied;
 Sector is attractive to private sector service providers e.g.  There is limited access to improved planting materials;
transporters, insurance, finance, market information due to the  There is still inadequate supply of coffee to the traders;
associated returns to investment;  There is low local consumption of coffee and coffee products in
 There exist proven models for structuring the value chain to Uganda and the East African region, leaving the coffee prices highly
maximize inclusiveness. vulnerable to the global market prices;
 There is limited willingness for formal market linkages with farmers;
 Crop and weather Insurance are still highly demanded, but
underdeveloped products due to high costs of investment and
limited understanding by key actors and stakeholders;
 There is limited R&D capacity;
 There are inadequate appropriate financial products, especially for
farmers and the big exporters of coffee.
Opportunities Threats
 Sustained demand for Ugandan coffee in importing countries;  Pests and diseases (e.g. coffee wilt disease, twig borer etc.);
 Increasing consumption of coffee at national and regional level,  Fluctuating world coffee prices and unstable exchange rate regimes;
albeit modest;  Increased supply from large-volume producer countries e.g. Brazil
 Potential to capture a high proportion of the FOB Kampala price; and Vietnam;
 On-going national level initiatives to grow more coffee;  Inadequate infrastructure especially to effectively connect different
 Growing segments of the specialty coffees especially UTZ, RFA, VC actors located in different geographic areas;
Fairtrade in importing countries;  Unpredictable weather that affects productivity;
 High availability of agricultural financing looking for investment  Competition for land within high producing areas like the central
(FDI, Equity investors, international/regional/development banks) region (competition with traditional crops and urbanisation); and
46
in the organised Value Chain;  Low and reducing involvement of the youth in the sub-sector.
 Unexploited land and water resources with potential to produce
more coffee especially in Northern Uganda;
 Availability of local fabricators, especially for processing equipment;
 Increasing alternative use.
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8.0 MARKETING PLAN AND IMPLEMENTATION STRATEGY
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) strategy is to expand

production capabilities in order to fulfill the requests of importers with whom we
currently deal for larger orders which we are unable to currently fulfill. In addition,
UCCIL seeks to establish additional contracts with importers in other EU and Middle
East countries and increase the volume of green coffee sold on the Ugandan market. We
intend to first maximize quantity of coffee sold within existing channels and second,
establish additional accounts through targeted marketing efforts.
8.1 Competitive Edge
UCCIL competitive edge comes from the advantage of having established relationships
with EU and Middle East coffee importers, and Ugandan coffee growers, green coffee
brokers and wholesalers. UCCIL has received affirmation of the demand for their
product in the form of requests from importers for larger product shipments. Ours is a
superior product offering because of the larger average size of the bean and because we
purchase from growers who rely on the use of chemicals and pesticides less than two
percent of the time (organically grown coffee). In addition, prompt preparation and
shipment provides importers with a product that is up to one month fresher than beans
sold by many exporters.
8.2 Strategy Pyramid
Our main strategy is to communicate the unique and desired attributes of our coffee to
larger segments of the EU and Middle East markets. We sell a superior product, yet one
that can be considered a commodity. It is therefore important that we effectively
communicate the unique aspects which make it ideally suited for a niche market.
The unique aspects of our products include superior product selection and preparation,
quality assurance, and efficient distribution. These are things we have done since we
started doing business. The tactics we will use to communicate these strengths include,
personal selling and improved communication capabilities via information system
improvements and a sophisticated website.
As tactics below the pyramid, we have identified three specialty publication in the
European Union and one in Uganda in which we will run print ads. We also plan to
increase personal selling efforts to additional EU and Middle East coffee importers. Part
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of the personal selling will include invitations to coffee in these global coffee markets
importers to visit our facilities, at our expense.
8.3 UCCIL‟s Overseas Market & Strategic Plan
The company has established a good and reliable coffee exporting market destinations
at least permanently in Europe and Middle East countries. In Europe, we export to UK
and Germany, which are one of the largest Ugandan Coffee importing countries in
Europe in addition to France, Italy, Netherlands, Spain and Switzerland.
In the Middle East, UCCIL targets to export its Uganda green coffee beans to Bahrain,
Saudi Arabia, Oman, Lebanon, Jordan. These countries are importing a bulk of
Ugandan sun dried and washed coffee.
We believe that unique quality and characteristics of Ugandan coffee provides

opportunities to competitive trade in the country. The company plans to sell its
unwashed and washed coffees to all destinations either directly to clients who are based
overseas or via commercial agents stationed here in Kampala.
The company has a ten-year plan (first 10 years of the project) in which it projects to
purchase, process and export a total of over 120,410 tons of coffee from the different
Robusta coffee production areas of Uganda and a plan of working with the coffee
farmers, producer organizations, coffee cooperatives and green coffee traders to buy
coffee direct from them by certifying the coffee for being organic. It has a plan of
staying competitive by selling organic coffee to the world market.
The company has a plan of having organic coffee hulling (3 units) with electronic
sorters at its primary and secondary coffee processing plant site. The planned primary
and secondary coffee processing plant will have a capacity of hulling 10,000 tons of
clean coffee. It is assumed that 80% of the machinery capacity will be utilized for
UCCIL‟s own coffee. The remaining 20% capacity will be for rent to satisfy the existing
huge demand of hulling in Uganda. The machinery to be imported will be of best
standard and at reasonable cost. UCCIL will install all the primary and secondary
coffee processing plant machinery at its exiting land space of 29 acres in Luwero district
which is just within the vicinity of Kampala at a distance of only about 30 kms to the
north of Kampala and is already sufficiently serviced with the requisite power and
water infrastructure.
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8.4 Pricing Strategy
Because UCCIL adheres to higher quality standards, the price of our coffee will be
slightly higher (four to nine percent) than the indicative market average. The import
market largely determines the price of imported coffee in the European Union and
Middle East. Beans that do not meet UCCIL quality standards will be resold on the
Ugandan market at the current market price. Green Robusta coffee, on the import
market, now sells for US$ 94.29/60kg bag. According to UCCIL pricing strategy,
UCCIL coffee would sell for approximately US$ 101.83/60kg bag. Importers have to
this point been willing to pay the additional cost.
8.5 Sales Strategy
UCCIL strategy focuses first on meeting the increased demand from importers with
whom we have established relationships for larger orders. These importers are critical
to our ability to acquire additional accounts on both in the European Union and Middle
East markets without having to spend a great deal on sales efforts. Secondly, we will
focus on increasing the volume, while maintaining the percentage of sales, of beans sold
to the existing European and Middle Eastern coffee importers. When we have reached
maximum sales to existing channels we can then shift the majority of our focus to
securing additional coffee export accounts.
8.5.1 Sales Forecast
The following Table 4 shows our present sales forecast. We project healthy growth in
sales for the business period from Project Year 2 to Project Year 10 and we project to
grow in export volumes at a modest rate of 5 percent per annum until we reach 16,134
Metric Tons per annum in Project Year 10, representing a growth of 47.74 percent over
the business forecast period.
Table 4 also shows the sales forecasts for the maize products that are included as
additional sources of income for UCCIL. Maize sales forecasts are for three products –
being the two top grades of maize flour (Grade 1 and Grade 2 maize flour) and maize
bran that will be sold to the animal feed millers in Kampala. Direct cost of sales
incurred in coffee trading are for the sourcing of parchment coffee from the primary
coffee producers and cooperative organizations. Direct cost of sales incurred in maize
milling are for the purchase of maize grain and other raw material inputs including
packaging materials and bag stitching thread.
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Table 4: Sales Forecast (In US$)

Year PY 2 PY 3 PY 4 PY 5 PY 6 PY 7 PY 8 PY 9 PY 10
Unit Sales
Robusta Coffee (MT) 10,920 11,466 12,039 12,641 13,273 13,937 14,634 15,366 16,134
Grade 1 Maize Flour (MT) 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320
Grade 2 Maize Flour (MT) 960 960 960 960 960 960 960 960 960
Bran (MT) 720 720 720 720 720 720 720 720 720
Total Unit Sales (MT) 16,920 17,466 18,039 18,641 19,273 19,937 20,634 21,366 22,134
Unit Prices
Robusta Coffee (US$/kg) 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70
Grade 1 Maize Flour (US$/kg) 0.4 0.42 0.44 0.46 0.49 0.51 0.54 0.56 0.59
Bran (US$/kg) 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09
Sales
Robusta Coffee (US$) 18,532,800 19,459,440 20,432,412 21,454,033 22,526,734 23,653,071 24,835,724 26,077,511 27,381,386
Grade 1 Maize Flour (US$) 1,693,440 1,778,112 1,867,018 1,960,368 2,058,387 2,161,306 2,269,372 2,382,840 2,501,982
Grade 2 Maize Flour (US$) 272,832 286,474 300,797 315,837 331,629 348,210 365,621 383,902 403,097
Bran (US$) 42,336 44,453 46,675 49,009 51,460 54,033 56,734 59,571 62,550
Total Sales (US$) 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210 26,216,620 27,527,451 28,903,824 30,349,015
Direct Unit Costs

Parchment Coffee (US$/kg) 1.29 1.29 1.29 1.29 1.29 1.29 1.29 1.29 1.29
Maize grain & packaging costs 0.22 0.23 0.24 0.25 0.27 0.28 0.29 0.31 0.32
(US$/kg)
Direct Cost of Sales
Parchment Coffee (US$) 14,040,000 14,742,000 15,479,100 16,253,055 17,065,708 17,918,993 18,814,943 19,755,690 20,743,474
Maize grain & packaging costs 1,317,978 1,383,877 1,453,071 1,525,724 1,602,010 1,682,111 1,766,217 1,854,527 1,947,254
(US$)
Total Direct Cost of Sales (US$) 15,357,978 16,125,877 16,932,171 17,778,780 18,667,719 19,601,104 20,581,160 21,610,218 22,690,729
8.5.2 Sales Programs
Personal selling: Through personal contact we need to confirm in writing orders for
larger quantities of our product from with European and Middle East coffee importers.
In addition, we need to establish sales agreements with at least six, possibly ten,
additional European and Middle East coffee importers. James Ssemanda is responsible
for searching and securing these additional coffee export accounts, and will have a
budget of US$ 10,000 to capture these markets.
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8.6 Strategic Alliances
Our most valued alliances are those we will have developed with European and Middle
East coffee importers. They have the ability and willingness to purchase larger
quantities of our products and recommend us to other importers. Additional alliances
with trucking and shipping contractors are currently established.
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9.0 TECHNICAL AND OPERATIONAL ASPECTS
9.1 Plant Production Programme
9.1.1 Plant Production Programme
Based on the market study, the green bean coffee outturn capacity of the envisaged
coffee secondary processing plant is 60 metric tonnes of processed export-grade green
coffee beans per day that calculates to 350 metric tonnes of processed export-grade
green coffee beans per week.
The annual UCCIL coffee processing programme is formulated on the basis of its coffee
FAQ Robusta procurement, the sales market forecast and selected plant outturn
capacity. It is assumed that the plant will achieve 60% capacity utilization rate in the
during the first year of business operation (Project Year 2) to hull, grade and export 210
metric tonnes of green bean coffee per week or 10,920 metric tonnes of green bean coffee
per annum in the first year of business (PY 2). The secondary coffee processing and
export grading output will then grow an annual incremental rate of 5 percent to reach
310.27 metric tonnes of green bean coffee per week or 16,134 metric tonnes of green
bean coffee per annum in the ninth year of business (PY 10). The milling, grading and
export out-turn of green bean coffee is shown in Table 5.
Table 5: Annual Coffee Out-turn and Export Programme

Description/Year PY 2 PY 3 PY 4 PY 5 PY 6 PY 7 PY 8 PY 9 PY 10
Green Bean
Coffee (MT p.a.) 10,920 11,466 12,039 12,641 13,273 13,937 14,634 15,366 16,134
Capacity
utilization, % 60.00% 63.00% 66.15% 69.46% 72.93% 76.58% 80.41% 84.43% 88.65%
PY: Project Year
9.1.2 Production Scheduling
The secondary coffee processing and grading process will be supported by

sophisticated production management software. It consists of a fully relational database
which keeps track of inventory and invoicing and it produces detailed job cards for
each day's operations.
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9.2 Raw Materials & Utility Inputs
9.2.1 Raw & Auxiliary Materials
The principal raw material required by the primary coffee processing plant is
parchment Robusta coffee and clean (but ungraded) coffee by the secondary coffee
processing plant. The UCCIL coffee processing plant will be sourcing both types of
coffee as its principal raw material from its contract suppliers and primary producers
depending on the seasonality of the crop in Uganda to ensure that there is year-round
supply of the commodity to the processing plant. The purchase of clean but ungraded
coffee – known as FAQ (Fair Average Quality) is by far the easiest and quickest raw
material procurement option though its price is more than double that of the parchment
coffee in Uganda owing to its clean form and higher competition amongst the coffee
exporters to buy it as it does not involve any primary processing. In seasons, where
supplies of FAQ coffee are tight and slow, the secondary option would to be to procure
the raw material as parchment coffee (known as kiboko in Uganda) and then do primary
and secondary processing on it before export. Parchment is much more easily
obtainable and more readily available year-round – hence its lower sourcing prices in
Uganda.
The major auxiliary materials in the processing and export of green bean coffee
comprise exclusively of 60 kgs bags capacity of hessian fabric and stitching thread.
9.2.2 Supplies and Inventory
Efficient and accurate stock control is vital for the processing, grading and export of
green bean coffee. Stock will be managed through in-house software, specifically
designed for the UCCIL‟s coffee processing and grading process. The system should
enable management to instantly access:
 All parts and materials on hand

 Raw materials required to meet orders placed
 Raw material suppliers database with lead times, credit terms, price and contact
details
 Under and over stock warnings
 Payment due date and credit position
 Quality control is a standard procedure at the completion of every task.
In addition, checkpoints within the production process will be put in place to guarantee
standards.
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9.2.3 Utilities
The major utility required by the plant is electricity. Annual electric consumption of the
plant at 100 per cent capacity utilization rate is estimated at 253,807 kWh and the
estimated cost at the rate of USD 0.135 per kWh will amount to USD 34,264.
Potable water will be required for personal use and quality control laboratory. Annual
water requirement is estimated to be 1,800 cubic meters. Annual cost of water at the rate
of USD 0.965 per cubic meter amounts to USD 1,737.
The total utilities bill per annum in the first year of operations (PY2) is therefore
estimated to be USD 36,000 and it will be inflation-adjusted at an incremental rate of 5
percent per annum.
9.3 Technology & Engineering
9.3.1 Technology
Primary Coffee Processing
A) General information - Fruit to FAQ:
The ripe coffee fruits (cherries) go through a number of operations aimed at extracting
the beans from their covering of pulp, mucilage, parchment and film to improve their
appearance. The resulting clean coffee (FAQ) can then be roasted and ground to
obtained the coffee powder which if fit for human consumption. There are two main
techniques used to obtain the clean coffee;
1. Wet processing in which the fruit is processed in three stages:
 Removal of pulp and mucilage followed by washing to obtain clean wet

parchment
 Drying of the parchment coffee
 Removal of the parchment and film through hulling followed by grading to
obtain the desired grades (sizes) of the clean coffee.
2. Dry processing which involves two stages:
 Drying of the cherries (usually under the sun) and

 Removal of the dried coverings (husks) in a mechanical operation (hulling).
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Wet processing is done for the choice Arabica coffees produced at high altitudes (over
1,500 m above sea level) in the Mount Elgon areas in the East, the Highland areas of
Nebbi in the North and the mountainous areas of Kisoro and Rukungiri in the
Southwest. The coffees so produced are generally described as ‗mild‘.
Dry processing produces coffees that are described as ‗hard‘. These are mainly the
Robustas grown around the Lake Victoria basin and they account for about 85 % of
Uganda‘s total annual production. The wet processed (washed) coffees are generally
superior to the dry processed in terms of physical appearance and the cup taste.
B) Wet processing:
1. Cherry separation:
The harvest often includes unripe, immature cherries, dried cherries, twigs and leaves.
These are lighter than the mature ripe cherries and can therefore be removed by a
floatation process which can be done in a simple vat or mechanically in a washer
separator, which floats off the undesired impurities and also washes the ripe cherries.
2. Pulping:
The cleaned cherries are then pulped – a process in which the wet beans are squeezed
out from the cherries leaving the pulp. Pulping can be done using a hand-pulper with a
capacity of about 300 Kg/hr of fresh cherries. The capacity may be increased by the
incorporation of an electric motor or a diesel/petrol engine. Larger units of up to 4.0
T/hr are available at central pulping stations. The wet parchment beans have a
mucilage layer around them that is removed by bio-chemical enzyme activity through
controlled fermentation to give ‗fully washed‘ coffees.
If the mucilage is mechanically removed the coffees produced are referred to as semi-
washed.
3. Washing:
After the mucilage is degraded it is removed by washing in a washing channel or vat
filled with water. The density of the parchment coffee is slightly higher than the water
and the beans will sink to the bottom of the vat. It is therefore necessary to continuously
stir the beans using rotary stirring rods or manually using spades in the washing
channel.
In a mechanical mucilage remover, mucilage degradation and washing are done in a

single operation.
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4. Drying:
The wet parchment free of mucilage at moisture contents of 50 – 60 % is then dried on
suitable raised drying tables to the required 12 % to ensure their conservation.
Mechanical driers to hasten the drying regime can be used after draining off some of the
water.
C) Dry Processing:
1. Harvesting:
The harvested cherries are usually not sorted before commencement of the drying
regime. Careful harvesting to exclude immature cherries and extraneous matter e.g.
stones is essential.
2. Drying:
The drying regime should begin immediately after harvest to avoid the development of
undesirable taints and moulds. The cherries are spread out to dry in the sun on suitable
drying surfaces e.g. raised trays or tarpaulins. The coffee must be frequently stirred to
achieve uniform drying. The coffee should not be rewetted at any time during the
drying regime.
Drying will be complete when the dried cherries (kiboko) have attained moisture
content of 13 – 14 %.
D) Hulling:
In the wet method the dried coffee beans have a parchment covering while in the dry
method, the beans are covered with the husk. These are removed in a mechanical
operation known as hulling. The hullers usually rotate at a speed of 450 – 800 rpm.
Higher speeds result into a polished appearance but also increase the breakages. There
are about 250 active hulleries now operating throughout the country.
The resulting clean dry coffee beans are in both cases referred to as FAQ (Fair Average
Quality). The FAQ is then sorted according to size using perforated sieves and by
specific gravity in a gravity table or by pneumatic sorting in a catador.
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Secondary Coffee Processing
FAQ to green Export coffee:
Over 95 % of the total annual coffee production is exported as green beans. Secondary
processing also known as export grading transforms the clean coffee (FAQ) into the
various coffee grades that meet the international standards. The process involves
cleaning the FAQ, drying the coffee if wet (M.C over 13 %) followed by size grading
using perforated screens of the desired size. The sorted beans are the gravimetrically
sorted to have uniform specific density before bagging off and loaded into containers
for transportation to the ports.
Currently, there are about 19 active export grading factories, four of these are located in
the Bugisu region, one is located in Mbarara town in the Western region and the rest are
in Kampala.
1. Pre-cleaning and de-stoning:

The FAQ coffee collected from the various suppliers is of mixed quality depending on
the individual suppliers storage and handling techniques. The coffee is often wet (M.C
> 14 %) and includes extraneous matter e.g. stones, chaff etc. The FAQ passes to the pre-
cleaner where the undesirable impurities that are often lighter than the good beans are
removed. The wet FAQ passes to a drier. Dry coffee then continues to a destoner where
the denser stones are eliminated.
2. Size grading:
The cleaned coffee then passes to a grader, which often consists of a box fitted with
screens of various sizes in descending order. The larger beans are retained on the
required screen and pass to a lateral exit.
3. Gravimetric sorting:
Although the sorted beans are now of the same size, they may vary in weight mainly
due to poor agronomic practices especially the harvesting of immature cherries. The
coffee passes over a gravity table where separation occurs at various points on the
fluidized bed.
4. Bag-off:
The coffee is then bagged in jute bags of 60 Kg which are then loaded into a container
for transportation to the port.
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The following are the Ugandan export grades:
Table 6: Uganda Coffee Export Grades

Arabica Robusta
Washed Natural Washed Natural
1. Bugisu AA Drugar A Screen 1900 Wur
A B 1800
PB C 1700
B 1600
C 1500
E 1400
2. Wugar A
B
C
Drugar = Natural Dry Uganda Arabica

Wugar = Washed Uganda Arabica (other than Bugisus)
Wur = Washed Uganda Robusta.
Other improved grades for the niche markets include Organic and Specialty coffees.
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Figure 11: Coffee Processing Flow Chart
Dry Semi-Washed Washed
Natural Honey Process Wet Hulled (Fully) Washed Kenya Process

Pulped Natural Giling Basah
Harvesting
Depulping
Demucilating/fermentation in water
Mechanical removal of most of the pulp/biochemically
preparing for removal of pulp
Washing
Removal of pulp/pectin layer
Soaking
Partial drying Extra
(40%) cleaning/development of
amino acids & proteins
layer
Drying (10-12%)
Sorting, storage & resting
Hulling
Removal of parchment
Shipping
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9.3.2 Engineering
Processing Machinery and Equipment
The total cost of machinery and equipment is estimated at USD 1,149,490 out of which
USD 1,116,000 will be spent on the actual primary and secondary coffee processing
equipment. Detailed list of machinery and equipment and their cost estimates are given
in Table 7.
Figure 12: Coffee Huller
Figure 13: Coffee Bean Colour Separator
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Table 7: Estimated Cost of Machinery and Equipment
Item Description Units Unit Cost Total Cost
(USD) (USD)
A. PRIMARY COFFEE PROCESSING
Main Hopper 1 2,000 2,000
Pre-Cleaner 1 25,000 25,000
Wet Silos 1 50,000 50,000
Drier - 10 MT/Hr 1 96,000 96,000
Dry Silos 2 10,000 20,000
Destoner 1 24,000 24,000
Hulling Units comprising of: pre-
cleaner, de-stoner, huller, pre-passer,
and catador 3 52,000 156,000
Polishing Unit 1 25,000 25,000
Electric Generator (200 kVA) 1 50,000 50,000
Elevators 2 10,000 20,000
Sub-Total 344,000 468,000
B. SECONDARY COFFEE
PROCESSING
Grader Size grading 2 26,000 52,000
Grading Tables 3 24,000 72,000
Colour sorters 3 110,000 330,000
Colour separation 3 40,000 120,000
Elevators/Motors 8 3,000 24,000
Maize Mill 1 25,000 25,000
Rice Mill 1 25,000 25,000
Sub-Total 648,000
C. MISCELLANEOUS EQUIPMENT
Coffee cherry hulling manual 1 500 500
Weighing scale (small) 1 500 500
Weighbridge with accessories 1 30,000 30,000
Retention boxes 7 70 490
Moisture meter 1 2,000 2,000
Sub-Total 33,490
TOTAL COST 1,149,490
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Land, Buildings & Civil Works
The total land area available for the coffee processing plant is 29 acres. The total built-
up area is estimated at 1,832 square meters which is about half-an-acre. The rest of the
available land space will be used for expansion and installation of additional coffee
processing facilities and buildings infrastructure as the enterprise expands and grows in
output volume and business turnover. The total cost of buildings and civil works, at the
rate of USD 1,500 per m2 for the warehouse and USD 900 per m2 for the administration
block, is estimated at USD 1.8 million as Table 8 below details.
Table 8: Land, Buildings and Civil Works Cost

Item Description Units Unit Cost Total Cost
(USD) (USD)
Land 29 acres 150,000 4,350,000
Warehouse 900 sqm 1,500 1,350,000
Administration Building 500 sqm 900 450,000
TOTAL COST 6,150,000
Vehicles
UCCIL requires 2 (two) trucks- each one (10 metric tons), for picking up the parchment
and FAQ from the rural coffee collection centers and delivering it to the coffee
processing plant on a routine weekly basis. Each truck is estimated to cost USD 42,860
(UGX 150,000,000) and USD 85,720 (UGX 300,000,000) for the two trucks.
9.4 Project Location & Facilities
The UCCIL's main warehouse is located in Nakaseke South, Luwero district – which is
only about 30 kms to the north of Kampala city. The UCCIL business office is located at
Maganjo Zone B in Wakiso district – which is actually a northern suburb of Kampala
city. The warehouse has the capacity to prepare and store approximately 6,000 60kg
bags of exportable coffee beans. The proposed new warehouse and preparation facility
site will also located at the same site in Luwero district north of Kampala. The new
facility will be 900 square meters and will have 8 selecting machines with capacity to
prepare 10,000 bags for exportation and 20,000 bags for storage. The proposed facility
will also handle shipping.
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9.5 Layout of the Coffee Processing Plant Site
The coffee processing plant layout includes the following facilities and structures:
1. Administration office building
2. Warehouse for raw material (unprocessed coffee)
3. Primary and secondary coffee processing plants (housed within the main
warehouse)
4. Warehouse for clean and graded coffee for export
5. Room for registry of incoming goods and outgoing goods
6. Guard house and restrooms
7. Washroom for administrative and clerical staff
8. Simple maintenance room/workshop
9. Washroom for employees
10. Vehicles parking & loading space
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10.0 HUMAN RESOURCES & MANAGEMENT STRUCTURE
The coffee roasting, grinding & packing plant will create job opportunities for 72
persons. Detailed descriptions are found in the following sub-sections.
10.1 Organizational and Manpower Structure
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) is organized into three

functional areas: product sourcing, sales, and marketing; production and logistics; and
finance and administration.
The organizational chart of UCCIL is shown in Figure 14 below.
Figure 14: UCCIL Organizational Chart
General
Manager
Production Sourcing, Sales & Finance &

& Logistics Marketing Administration
Plant
Operations
& Raw Sales and Human Accounting
Processing Material Marketing Resources and Finance
Procurement
Quality
Control
Transport
Shipping
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The following are the key responsibilities of each of UCCIL‟s departmental heads:
Accounting & Finance Manager:
 Develop all financial strategies, policies and procedures for the company.
 Set the long term objectives of the department and communicate it to the
subordinates.
 Review of payment vouchers, journal entries, credit/debit notes, along with
source documents.
 Prepare the periodical financial statements that represent the organizations
financial position, including comprehensive income statement, balance sheet,
cash flow statement, and changes in shareholders' equity statement.
 Monitor the results of periodical cash count as well as the physical count and
ensuring their compliance with the accounting records.
Sales and Marketing Manager:
 Set the short- and long-term objectives of the department and communicate it to
the subordinates.
 Coordinate with the production and logistics department to ensure that coffee
export consignments to customers are dispatched and delivered on time.
 Follow up on marketing campaigns and ensure that they are directed towards
the targeted market.
 Monitor and follow up with export account managers to achieve sales targets
and supervise the sales cycle.
 Make thorough assessments of the demand and supply of coffee in the world
and as well as the price situations in the world market.
 Intensively deal with the processing of export documents and including
controlling of the freight conditions at the port of Mombasa. Process and follow
up L/C with the concerned advising and correspondent banks.
Head of Procurement/Purchasing:
 Sourcing Strategy: implementation and participation in mid-term reviews on

Supplier Management Plan.
 Green Coffee Policy: preparation of Monthly Proposal and presentation to
Management. Execution and Reporting.
 Supplier Selection Process.
 Sustain and develop Category knowledge and intelligence.
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 Supplier Performance Reviews: lead reviews; build and maintain long term
relationships.
 Drive Cost improvement projects.
 Stakeholder management: lead monthly reviews and manage the action plan.
 Set the long-term objective of the department and communicate it to the
subordinates.
 Purchase the required coffee from the contract suppliers, primary
producers/organizations, coffee cooperatives and green coffee traders in
Uganda.
 Monitor the stock level in the warehouse and ensure availability of stocks when
needed.
 Supervise physical counts in the company warehouse and preparing the stock
count reports and communicating them to the Financial Department.
 Plan and supervise UCCIL‟s purchases across all departments at all times to
ensure maximum availability of supplies.
Transport and Logistics Manager:
 Plan and coordinate the international shipment of coffee consignments.

 Coordinate, monitor and manage the purchasing and logistics function including
warehousing and distribution, packaging, shipment tracking, and expediting to
maximize efficiency and optimize productivity in the warehouse.
 Liaise with relevant internal sections (Production, QC, Marketing and Sales), and
external parties (Suppliers, Clients) on delivery requirements.
 Ensure all shipping documents and coordination are dealt with efficiently to
achieve no shipment failure.
 Ensure that coffee shipments are in compliance with the laws and regulations
governing the coffee export industry.
 Keep track of invoices and prepare reports to expedite the billing process.
Quality Control Manager:
 Lead and conduct quality assessments (sensory and physical evaluation) tests on
coffee during the certification process.
 Provide technical advice and training (internal/external) in areas of quality
control in the processing and handling of coffee.
 Make recommendations for adjustments to features of the certification system
where deemed necessary.
67
 Provide the General Manager and other relevant personnel with advice and
prescriptions relating to quality assurance matters.
 Ensure the routine inspection of the UCCIL coffee processing plant.
 Perform periodic quality inspections for in-process and processed export-grade
green coffee beans.
 Prepare and submit the annual budget (recurrent/capital) for the quality control
department and participates in reviews of the same.
 Setting the short- and long-term objectives of the department and communicate it
to the subordinates.
 Coordinate with heads of departments to ensure that processes in each
department are incompliance with UCCIL‟s Quality Standards.
Human Resources Manager:
 Set the department long and short-term objectives and communicate them to all
key staff.
 Supervise the activities and employees of the human resources section, and
assure they are in compliance with the approved systems, policies and
procedures, and delegated authorities.
 Develop and execute a strategic human resources management plans; taking into
consideration immediate and long-term staff requirements in terms of numbers
and skill levels and assure the development of resources in line with the
company's overall strategies.
 Review process and authorize employees‘ transactions which include, but are not
limited to, new hires, promotions, salary transactions, assignment changes,
terminations, bonuses, retirements … etc.
 Ensure the provision of needed general services to all sections and prioritize
service providing if needed.
Plant Operations & Processing Manager:
 Setting the department long and short- and long-term objectives and
communicate them to all subordinates.
 Supervise and oversee the production processes, set up the production schedule
for UCCIL‟s different product lines, and adjust schedules as needed.
 Take responsibility for the sorting, processing, grading and packaging of coffee
for export.
 Ensure that the primary and secondary coffee processing operations are cost
effective and within the assigned budget.
68
 Ensure that green coffee beans for export are processed and export-graded on
time, and are of good quality that is in compliance with the minimum coffee
industry standards
 Work closely with UCCIL‟s other sections heads to implement the UCCIL‟s
policies and meet the organization objectives.
 Supervise and motivate the production and logistics department team and
ensure that Health and Safety guidelines are followed.
 Identify training needs of section employees and make the necessary
recommendations to the upper management.
10.2 Management Team Gaps
We currently lack a full-time professional who can deal with the changing legal and
financial aspects of international business. We have relied on legal consultants but are
now analyzing the possibility of adding an additional position to deal exclusively with
international issues. In addition, as we continue to grow and hire more personnel, we
may hire a controller.
10.3 Personnel & Payroll Plan
We believe this plan meets the commitments of our mission and business objectives. We
intend to grow into a large coffee trading organization, though in doing so we will
ensure that we wish to stay responsive to customers‘ orders and requests. We want the
company to stay lean and flexible so that we can respond to our markets' needs quickly.
As we expand and increase in size we do expect to increase our personnel.
UGANDA COFFEE CUP INTERNATIONAL LTD (UCCIL) recognizes that our

employees contribute fundamentally to the Company's long-term prosperity,
acknowledging our obligation to remunerate them competitively. We intend to
compensate our personnel well, so as to retain their invaluable expertise and to ensure
job satisfaction and enrichment through delegation of authority. Our compensation will
include a competitive salary, generous profit sharing, plus a minimum of three weeks‘
vacation. As time progresses we intend to enhance our capacity to attract and retain
people of quality, inter alia, through benefits such as housing and family education
grants.
The proposed manpower requirement and the estimated annual labour cost including
fringe benefits are given in Table 9.
69
10.4 Training Requirement
The quality controller and production supervisor should be given on-the-job training
for a period of one month by experts of the supplier of the machinery and equipment.
The three machine operators should also obtain a 15 days on–the–job training on how to
operate the equipment and handle the inputs. The estimated training cost is USD 1,500.
10.5 Feedback and Control
1. Important notices and developments will be continuously communicated to

employees to keep them abreast of developments and promoting a sense of
belonging and oneness in the organization.
2. We will encourage our employees to put forward any suggestions they might
have regarding the improvement of any of the company's functions-an open
door philosophy. Such a culture will enhance innovativeness and creativity, in
turn leading to job satisfaction and enrichment.
3. We intend to make sure that our employees understand the goals of the firm, are
customer focused, proud of their work and work as a team. This will encourage
employees to become entrepreneurial and customer responsible, in addition to
unifying staff in customer focus and values.
70
Table 9: Manpower Requirement and Annual Labour Cost
Position Nos Monthly Total Annual Salary
Salary (USD) Monthly (USD)
Salary (USD)
General Manager 1 2,000 2,000 24,000
Production & Logistics Manager 1 1,600 1,600 19,200
Machine Operators 10 360 3,600 43,200
Machine Helpers (Semi-Skilled) 20 180 3,600 43,200
Maintenance (Elect. & Mech.) 2 600 1,200 14,400
Quality Control Staff 4 480 1,920 23,040
Sourcing, Sales & Marketing Manager 1 1,600 1,600 19,200
SM Support Staff 6 720 4,320 51,840
Admin. & Finance Manager 1 1,600 1,600 19,200
Admin. & Accounting Staff 5 720 3,600 43,200
Clerical Staff 5 360 1,800 21,600
Other Staff 16 180 2,880 34,560
TOTAL 72 29,720 356,640
Fringe Benefits (40% of the above) 142,656
TOTAL ANNUAL WAGE BILL 499,296
71
11.0 SCHEDULE OF IMPLEMENTATION
It is expected that it will take approximately 6 months to have this project put into
operation from the day funds for its execution are secured. The preparatory stage which
involves the eventual approval for funding is assumed to take 3 months from the date
of its final submission to project financiers by the project promoters. The follow-on
project implementation activities are expected to take an additional 6 months to
completion – which altogether adds up to 9 months. This has been rounded off to 1 year
to factor in a three (3) months contingency period to cover for any unforeseen time and
cost overruns in the course of civil infrastructure development and set up at site and
any delays that might occasioned in procuring, delivering and installing any of the
other project‘s capital equipment at UCCIL‟s existing land facility.
The following Gantt chart presented in Figure 16 highlights the important project
implementation milestones.
72
Figure 15: Project Implementation Milestones
Commence Operations
Commissioning of Coffee
Processing Plant
Three (3) months contingency
planning period
Establish coffee export accounts
Recruitment of other Company
Staff
Hiring Key Executives
Arrangements for Robusta
Coffee supply
Industry Plant & Equipment:
Installation & Commissioning
Coffee Processing Plant &
Equipment: Shipment &
Delivery
Coffee Processing Plant &
Equipment: Identification of
Equipment Suppliers/Opening
of LCs and Order of Equipment
Site
Development/Infrastructure &
Civil Works
Negotiation and ratification of
JV Partnership with
International Investor
Seed Financing
Period (Months) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
73
12.0 FINANCIAL EVALUATION
This section evaluates various financial aspects of the project (cost of project, earnings
forecast, rates of return, payback period, cash flow, balance sheet, etc.). Wherever
calculations, workings, etc. are voluminous, a summarized version is presented in this
chapter and detailed calculations are given in the relevant Schedules of Financial
Analysis on pages 89 to 123.
12.1 Capital Cost of Project
Total project cost including working capital is estimated at US$ 7,967,000. Schedule
02/1: Initial Project Investment Costs on page 91 provides the details on project capital
investment costs. The major breakdown of the total initial investment cost is shown in
Table 10.
Table 10: Initial Capital Investment Cost of Project (In US$)

Description Local Foreign Total
Currency Currency
A. EXISTING ASSETS
Land Assets 4,350,000 0 4,350,000
Buildings (warehouse) 100,000 0 100,000
Utilities 7,000 0 7,000
Vehicles 10,000 0 10,000
Sub-Total Existing Assets 4,467,000 0 4,467,000
B. PLANNED INVESTMENT
Coffee Plant Buildings 1,800,000 0 1,800,000
Coffee Processing Plant 0 1,116,000 1,116,000
Miscellaneous Equipment 0 33,490 33,490
Vehicles 0 85,720 85,720
Installation & Commissioning 0 28,740 28,740
Sub-Total Planned Investment 1,800,000 1,263,950 3,063,950
Fixed Cost 6,267,000 1,263,950 7,530,950
Working Capital 436,050 0 436,050
TOTAL PROJECT COST 6,703,050 1,263,950 7,967,000
Funds will be required for purchase and installation of the primary and secondary
coffee processing plant machinery, finance the construction of additional warehouse
and administration building, purchase coffee transportation trucks (2 units), and pay
74
for the coffee plant installation and commissioning charges. The production process of
the primary and secondary coffee processing plant is a continuous process and capacity
has been calculated basing on 12 hours per day. It is expected that this primary and
secondary coffee processing plant will run for 365 days a year and in the second year
capacity utilization will start off 60%, for the reason that the project has to utilize
economies of scale to break even early and effectively service debt.
Land:
The total available land for this project keeping in mind the possible future expansion is
29 acres. This project land is spread out in various locations that are located within a 50
kms radius of Kampala – the Ugandan capital.
Based on the available information the cost of land in areas surrounding Kampala is
assumed at USD 150,000 per acre (including the developmental cost) – basing on the
fact that it is near the principal commercial and economic hub of Uganda and the added
fact that in touches on the major trunk roads into and out of Kampala city. Being
located only 24 kms from Kampala along the Kampala – Mityana highway, the cost of
land in this area is high owing to its close proximity to the capital city and the fact that
the proposed industrial plot directly touches on the main road. The total cost of the
developed and serviced land for the 29 acres USD 4,350,000.
Building & Construction:

The building area comprising of the main administrative building, coffee go-downs
(warehouses), offices, Quality Control labs, etc. would be 1,832 sq. Mtrs. The cost of
construction would again vary depending on the structure and the materials to be used.
It has been assumed that the average cost of construction would be USD 900 per sq. Mt.
for the coffee warehouse and USD 500 per sq. Mt. for the administration building
(office block). Thus the total cost of building and other civil works will be USD
1,900,000 – including the existing warehouse valued at USD 100,000.
Machinery and Equipment:

Coffee plant equipment and machinery comprises of two parts: the primary coffee
processing section and the secondary coffee processing line. Primary coffee procsseing
machinery and equipment comprises of: the main hopper, a pre-cleaner, 2 wet silos, a
dry silo, a destoner, 3 hulling units, a polishing unit, a 200 kVA generator, and 2
elevators that collectively cost USD 468,000. The secondary coffee processing section
will have 2 graders, 3 grading tables, 3 colour sorters, 3 colour separation units, 8
elevators/motors, a maize mill, and a rice mill with a sub total cost of USD 648,000.
Additional items include miscellaneous equipment consisting of: 1 small weighing
75
scale, 1 weighbridge (for loaded trucks), 7 retention boxes, 1 moisture meter and a
coffee cherry hulling manual with a sub total cost of USD 33,490. This adds up to a total
coffee plant machinery and equipment cost of USD 1,149,490.
Transportation Vehicles:
UCCIL requires 2 (two) trucks – each one (10 metric tons), for collecting and
transporting parchment and FAQ coffee from the rural production areas to the coffee
processing plant site on a routine weekly basis. Each truck is estimated to cost USD
42,860 and USD 85,720 for the two trucks
Working Capital:
Milk is a business in which cash flow is very high and companies in the industry tend to
generate cash surpluses on a regular basis, most of the raw coffee is purchased on a 1-
week cash basis and the finished product is sold on cash. Some advances are paid
especially during the off-season when coffee supplies from the hinterland are at low
ebb. Working capital is mostly required to pay for the initial purchases of raw
unprocessed coffee from the coffee producers and primary processors in Uganda‘s key
Robusta coffee production areas of central, southern, western, south-eastern and north-
western Uganda, as well as to pay for other industrial consumables, packaging material,
export grade coffee that is already baggaged in 60 kgs bags and set for shipment to
Mombasa port, export paperwork and documentation, for payments of utility bills,
wages, fuel for vehicles and for industrial and vehicle spares. The start up Working
Capital requirements have been estimated at USD 464,790 for the first two - four weeks
of operation.
12.2 Financial Plan
The project is proposed to be financed through a combination of company equity and

development banking institutional financing in the ratio of 56:44 approximately. The
financial models show the medium-term loan bearing an interest rate of 5 percent per
annum payable over a period of ten years. Schedule 02/2: Source and Structure of
Project Financing on page 92 hereby refers.
12.3 Profit & Loss Account
A summarized version of the profit & loss account is given in Table 11 below.
76
Table 11: Summary Profit & Loss Account for First Six Years of the Project (In USD)
Description Year 2 Year 3 Year 4 Year 5 Year 6
Sales 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210
Less: Raw Materials 15,357,978 16,125,877 16,932,171 17,778,779 18,667,718
Gross Profit 5,183,430 5,442,602 5,714,732 6,000,468 6,300,492
Less: Operating Costs 2,234,913 2,346,658 2,463,991 2,587,191 2,716,550
Operating Profit 2,948,518 3,095,943 3,250,741 3,413,278 3,583,942
Less: Interest service 175,000 175,000 157,500 135,000 112,500
Less: Loan service 0 350,000 450,000 450,000 450,000
Provision for Tax 832,055 771,283 792,972 848,483 906,432
Net Profit 1,941,462 1,799,660 1,850,268 1,979,794 2,115,009
Cum. Retained Earnings 1,941,462 3,741,123 5,591,391 7,571,186 9,686,195
12.4 Rates of Return
On the basis of the earnings forecast and related projections, rates of return for the
project are calculated below:
Table 12: Rates of Return (In Percentages)

Gross Profit to Sales 25.23 25.23 25.23 25.23 25.23
Operating Profit to Sales 14.35 14.35 14.35 14.35 14.35
Net Profit to Sales 9.45 8.34 8.17 8.33 8.47
Net Profit to Total Investment 24.37 22.59 23.22 24.85 26.25
12.5 Payback Period
Payback period for the project, both in terms of owner‘s equity and total investment, is
calculated below:
Total Capital Investment = US$ 7,967,000

UCCIL‘s Equity = US$ 4,467,000
―Profits‖ = Net Profit + Interest + Depreciation
77
Table 13: Calculation of Payback Period for Equity and Total Investment
Year Amount paid back from “Profits” Balance of Total Balance of Total Equity
Investment
1 0 -7,967,000 -4,467,000
2 2,346,255 -5,620,745 -2,120,745
3 2,204,453 -3,416,291 83,709
4 2,237,561 -1,178,730 2,321,270
5 2,344,587 1,165,858
6 2,457,302 3,623,160
Payback period for Equity = 4.50 Years

Payback period for Total Capital Investment = 2.04 Years
12.6 Capital: Output Ratio
Capital output ratios, representing the production potential of the project in relation to
the investment involved in its establishment, are calculated below:
Table 14: Capital: Output Ratios (In USD)

Total Investment 7,967,000 _ _ _ _
Sales (Output) 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210
Capital: Output Ratio 1: 2.58 1: 2.71 1: 2.84 1: 2.99 1: 3.13
12.7 Cash Flow
The projected cash flow for the first six years of the project is shown hereunder:
78
Table 15: Projected Cash Flows (In USD)
Project Year 1 2 3 4 5 6
Costs (US Dollars)
A. Cash inflow 7,967,000 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210
1. Financial resources _ _ _ _ _
Total 7,967,000
2. Sales revenue total _ 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210
B. Cash outflow -7,967,000 -24,501,092 -20,124,311 -21,165,972 -22,183,886 -23,349,422

1. Total assets schedule
including replacements -7,967,000 -5,837,146 -291,493 -305,338 -320,433 -432,222
2. Operating Costs _ -17,592,890 -18,472,535 -19,396,162 -20,365,970 -21,384,268
3. Debt Service
a) Interest _ -175,000 -175,000 -157,500 -135,000 -112,500
b) Repayments _ 0 -350,000 -450,000 -450,000 -450,000
4. Corporate tax _ -832,055 -771,283 -792,972 -848,483 -906,432
5. Dividends 4% on equity _ -64,000 -64,000 -64,000 -64,000 -64,000
C. Surplus / deficit 0 -3,959,684 1,444,168 1,480,930 1,595,361 1,618,787
D. Cumulative cash bal. 0 -3,959,684 -2,515,516 -1,034,586 560,775 2,179,563
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12.8 Balance Sheet
Projected balance sheet for the first six years of operation is shown below:
Table 16: Projected Balance Sheet (In USD)

CAPITAL EMPLOYED: YR.1 YR.2 YR.3 YR.4 YR.5 YR.6
Share Capital 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
Retained Earnings 1,941,462 3,741,123 5,591,391 7,571,186 9,686,195
Shareholder's Equity/Deficit 3,541,462 5,341,123 7,191,391 9,171,186 11,286,195
Long-Term Liabilities 3,500,000 3,500,000 3,150,000 2,700,000 2,250,000
7,041,462 8,841,123 10,341,391 11,871,186 13,536,195
EMPLOYMENT OF CAPITAL:
Plant Buildings 1,900,000 1,805,000 1,710,000 1,615,000 1,520,000 1,425,000
Plant Equip. & Machinery 1,123,000 1,010,700 898,400 786,100 673,800 561,500
Miscellaneous Equipment 33,490 30,141 26,792 23,443 20,094 16,745
Vehicles 95,720 76,576 57,432 38,288 19,144 95,720
LONG-TERM ASSETS: 3,152,210 2,922,417 2,692,624 2,462,831 2,233,038 2,098,965
CURRENT ASSETS: 5,710,690 7,810,976 9,597,911 11,413,091 13,271,671
Accounts Receivable 1,466,074 1,539,378 1,616,347 1,697,164 1,782,022
Stock (Inventory) 4,272,159 4,485,767 4,710,055 4,945,558 5,192,836
Bank Balance and Cash 98,913 103,494 107,575 111,688 116,054
Other Current Assets -126,456 1,682,337 3,163,934 4,658,681 6,180,759
CURRENT
LIABILITIES/DEBT: 1,591,645 1,662,477 1,719,351 1,774,944 1,834,441
Accounts Payable 1,416,645 1,487,477 1,561,851 1,639,944 1,721,941
Current Portion of Long-term
Liabilities 175,000 175,000 157,500 135,000 112,500
NET CURRENT ASSETS: 4,119,045 6,148,499 7,878,560 9,638,148 11,437,230
TOTAL CAPITAL 7,041,462 8,841,123 10,341,391 11,871,186 13,536,195
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12.9 Break-Even Analysis
The project‘s commercial break-even level (profitability break-even) in Project Year 5 is

calculated below:
Table 17: Break-Even Analysis in Project Year 5 (In USD)

Items Variable Cost Fixed Cost Total Cost
Raw materials 17,778,779 0 17,778,779
Salaries & wages 475,784 158,595 634,379
Utilities 31,256 10,419 41,675
Repairs & Maintenance 22,497 11,248 33,745
Advertising & Promotion 138,915 69,458 208,373
Travel 27,783 13,892 41,675
Postage & Stationery 521 174 695
Telephone Charges 6,946 2,315 9,261
Other Sales & Marketing Expenses 37,044 18,522 55,566
Processing & Export Costs 1,071,523 357,174 1,428,697
Insurance 69,458 34,729 104,186
Other Miscellaneous Exp 13,892 4,631 18,522
Consumable Stores 6,946 3,473 10,419
Depreciation 0 229,793 229,793
Financial Expenses 0 135,000 135,000
TOTAL 19,681,342 1,049,421 20,730,763
Sales Value of Production = US$ 23,779,247
Break-even Sales = 1,049,421 1,049,421 1,049,421

1 – 19,681,342 1 –0.828 0.172
23,779,247
Break-even Sales = US$ 6,089,559
Capacity utilization required to Break-even = US$ 6,089,559 x 100 = 25.61%

US$ 23,779,247
Margin of Safety = 100% – 25.61% = 74.39%
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12.10 Value Added/Contribution to GDP
Implementation of the project is expected to have a beneficial economic impact on

regional/national economic development. The project‘s contribution towards the
country‘s Gross Domestic Product (GDP) is estimated below.
Table 18: Value Added/Contribution to GDP (In USD)

Value of Production (Sales) 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210
Less Intermediate Input:
Raw Material 15,357,978 16,125,877 16,932,171 17,778,779 18,667,718
Processing & Export Costs 1,234,163 1,295,871 1,360,664 1,428,697 1,500,132
Plant & Office Overheads 1,308,313 1,373,728 1,442,415 1,514,535 1,590,262
Depreciation 229,793 229,793 229,793 229,793 229,793
Total Intermediate Inputs 18,130,246 19,025,269 19,965,042 20,951,805 21,987,905
Value Added 2,411,162 2,543,210 2,681,860 2,827,443 2,980,304
Value Added as % of 11.74% 11.79% 11.84% 11.89% 11.94%
output
Value Added per Worker 33,488 35,322 37,248 39,270 41,393
(US$)
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13.0 PROJECT ECONOMICS
13.1 Project KPIs
The total investment capital required for expanding and scaling up the proposed
UGANDA COFFEE CUP UINTERNATIONAL LTD‟s primary and secondary coffee
processing plant in Uganda is USD 3,500,000. With existing project equity assets valued
at USD 4,467,000, the total value of the coffee processing and exporting project
including scale-up is USD 7,967,000. The capital cost incurred in acquiring new primary
and secondary coffee processing equipment and putting up industrial housing is USD
2,949,490 and the working capital plus pre-operating costs and physical contingencies is
USD 464,790. The total cost, project returns and financial plan are summarized in
Tables 19-1 to 19-3 below.
Table 19-1: Total Project Cost (Planned Investment) - (In UgShs)

Account Head Total Cost (USD)
Capital Cost 7,502,210
Working Capital + Pre-Operating Expenses 464,790
Total Project Cost 7,967,000
Table 19-2: Project Returns (In UgShs)
NPV (UShs) @ 17% 4,234,184
FIRR 30.36%
Payback Period (Years) 4.50
Table 19-3: Financing Structure (In UgShs)
Financing Ratio USD
Existing Equity Assets 56.07% 4,467,000
Debt 43.93% 3,500,000
Total Project Financing (Existing + Planned) 100.00% 7,967,000
13.2 Jobs Creation
The UGANDA COFFEE CUP UINTERNATIONAL LTD primary and secondary

coffee processing and exporting enterprise will create 72 direct employment
opportunities and thousands in indirect jobs through the interlinked distribution and
marketing induced activities.
The net employment effect is generally expected to grow in tandem with the gradual
commercial development of the coffee trading enterprise and the consolidation of its
business/marketing position within the local and export markets.
83
The throughput of the UGANDA COFFEE CUP UINTERNATIONAL LTD‟s raw
material purchase and primary and secondary coffee processing activity on the
domestic market will definitely induce a positive beneficial growth impact on other
inter-related areas that will lead to the creation of more jobs for a broad category of both
skilled and semi-skilled labour.
As a measure of national economic benefit, the calculation below gives an indication of

the investment to jobs created ratio (Over the 10-year financial analysis period).
Table 20: Investment to Jobs Created Ratio (IJCR)

Coffee Processing and Exporting Enterprise Total Initial No. of Jobs IJCR (In
Investment* (In Created UShs/job)
USD)
UCCIL 7,967,000 72 110,653
* Total investment excluding existing assets
13.3 Government Revenue
The proposed primary and secondary coffee processing project is vested with a
sustainable and financially sound income-generating base that will yield substantial
revenue for the Government Treasury in the form of Corporate Income Tax (CIT) and
personal income taxes paid out annually. Financial analyses in Schedules 9c (page 108)
and 11c (page 114) show the Corporate Income Tax (taken at 30% of gross income) –
building upon incremental trend. Total CIT payments to the Government exchequer are
summarized in Table 21 and represent the aggregate annual CIT projections from
Project Year 2 to Project Year 10.
Table 21: Corporate Income Tax Payments

Coffee Processing and Exporting Total CIT Payments for PY 2 – Average CIT
Enterprise PY 10 (In USD) Payments/Annum (In
USD)
UCCIL 8,409,606 934,400
The project management however generally expects to surpass these corporate tax
revenue projections by exceeding the stated sales projections and thus make bigger
Corporate Income Tax revenue cheques to Government a feasible and practical reality.
13.4 Development Impacts
With the liberalisation of the coffee industry in Uganda including the abolition of the
state monopoly of coffee marketing, a promising environment for business activities has
84
been created. Increased competition in the coffee sub-sector has already favoured
efficiency at all levels. Compared to times when the market was strictly regulated,
coffee farmers have experienced a significant increase in their farm gate prices for
coffee. While formerly only about 20% of export prices reached farmers and production
costs have hardly been met, coffee now earns about 60% of export prices at farm gate
level today. Increased competition, improved flow of information, and vertical
integration of exporters reducing the number of intermediaries are the main reasons.
The UCCIL company on its part will deliver its own specific inputs into the production,
primary processing, and bulking levels of the Uganda coffee value-chain that will
deliver a number of benefits including the training of coffee farmers to improve coffee
quality, assistance to convert to organic production, access to transparent market
information, exposure to new market opportunities and greater involvement in the
company‘s operation which will enhance their mutual trust and commitment.
As part of its corporate social responsibility (CSR) to the coffee producers, UCCIL will
show coffee farmers how to turn coffee production and marketing into a commercially
viable business.
The expected socio-economic benefits of UCCIL‟s inputs and coffee trading activities
include offering the coffee farmers a bigger percentage of the green coffee bean export
price (at about 60 percent of the export price value) that will enable the coffee farmers
with sufficient net incomes to be able to afford schooling for their children as well as
adults; investment into purchase of better coffee farming equipment together with the
financial resources that will enable them to maintain such equipment in good condition.
There is also an overall positive impact of the UCCIL coffee export activity through
capacity building, as a result of the increasing awareness of the benefits of education.
The human capital is therefore influenced positively by the capacity building both
directly as well as indirectly.
Another potential result of the increase in profit from coffee will be the increase in
coffee cultivation. This would result from the fact that farmers have more money to
invest and have a larger incentive to invest in coffee cultivation considering the increase
in expected future returns.
Finally, it can be mentioned that the broad socio-economic impact relates to the
livelihoods of farmers in many different ways; through different types of assets,
through structures and processes that shape the livelihoods of the coffee farmers, the
85
livelihood strategies to achieve certain livelihood outcomes, and the livelihood
outcomes. This broad impact corresponds to the broad scope of the UCCIL coffee
export enterprise activity and will increase the sustainability of the measured socio-
economic impact and assures the expansion of those impacts into an even larger
positive future impact.
86
14.0 KEY SUCCESS FACTORS
The keys to success for UCCIL are:
 Establishing and maintaining working relationships and contractual agreements

with European/Middle Eastern coffee importers and coffee brokers and
wholesalers.
 Increasing our profit margin with the use of improved technology in the new
facility.
 High level quality control.
 Effectively communicating, to current and potential customers, our position as a
differentiated provider of one of the highest quality Robusta beans in the world.
 Individualized customer service - providing our customers with what they want,
when and how they want it.
 Integrating the changing market fundamentals into the business.
 Long-term partnership with both the coffee producers/primary coffee processors
in Uganda and our customers so as to acquire a guaranteed market.
 The commercial viability of this project depends upon the availability of regular
Robusta coffee raw material supplies.
 To become an established and strong coffee exporter, aggressive marketing
efforts are recommended.
87
15.0 CONCLUSION
It can be concluded from the foregoing business analysis and financial modelling that
the proposed full-scale establishment and operation of the proposed UGANDA
COFFEE CUP INTERNATIONAL LTD‟s coffee processing and exporting enterprise
based in Uganda (one of the world‘s largest coffee producers and exporters) is
extremely viable from a financial and commercial point of view; and it is further
recommended that an early decision to facilitate it with the requisite project financing
be expedited such that implementation of the project follows the fastest track possible
for the benefit of the project promoters, the International Investment partner, the coffee
sub-sector, and the Ugandan economy at large.
88
Schedule 01: Key Assumptions and Project Summary Results
Table 22-1: Project Assumptions

Period of construction & machinery shipment 6 Months
Total Land Area 29 Acres
Total Covered Area (processing facilities + built up area) 1,832 Square Meters (0.458 Acres)
Business analysis period 10 Years
Table 22-2: Plant Operating Assumptions

No. of working days in one year 300
No. of working shifts per day 1
No. of working hours in one shift 10
Annual plant operating expenses growth rate 5%
Depreciation Rates
Coffee Processing Plant Buildings 5%
Coffee Processing Plant Equipment & Machinery 10%
Utilities & Others 10%
Miscellaneous Equipment 10%
Vehicles 20%
Table 22-3: Production/Processing Assumptions

Robusta coffee direct unit cost (US$/kg) 1.70
Robusta coffee annual direct unit cost growth rate 0% p.a.
Maize grain direct unit cost (US$/kg) 0.22
Maize grain annual direct unit cost growth rate 5% p.a.
Maize milling out-turn ratios:-
Grade 1 Flour: 72%
Grade 2 Flour: 16%
Bran: 12%
89
Table 22-4: Revenue Assumptions
Robusta coffee annual sales volume (Year 1) 10,920 Metric Tons
Robusta coffee unit sales price (US$/kg) US$ 1.70/kg
Robusta coffee annual sales volume growth rate 5% p.a.
Robusta coffee unit sales price growth rate 0% p.a.
Maize Flour Grade 1 annual sales volume (Year 1) 4,320
Maize Flour Grade 2 annual sales volume (Year 1) 920
Bran annual sales volume (Year 1) 760
Maize Flour Grade 1 annual sales volume (US$/kg) US$ 0.40/kg
Maize Flour Grade 2 annual sales volume (US$/kg) US$ 0.29/kg
Bran annual sales volume (US$/kg) US$ 0.06/kg
Maize products annual sales volume growth rate 0% p.a.
Maize products unit sales price growth rate 5% p.a.
Table 22-5: Financial Assumptions

Debt (International Investor‘s Equity Finance) 56.07%
UCCIL Equity 43.93%
Interest Rate on medium term debt 5%
Grace Period 2 Years
Debt payments per year (Loan Annuities/Year) 1
Exchange rate US$ 1 = UGX 3,500
1 Euro = US$ 1.083
Inflation rate 5%
90
Schedule 02/1: Initial Project Investment Costs (In USD)
Description Cost (USD)

Land 4,350,000
Buildings 1,900,000
Processing Plant & Equipment 1,116,000
Utilities (power connection) 7,000
Miscellaneous Equipment 33,490
Vehicles 95,720
Fixed Cost 7,502,210
Installation & Commissioning Costs 28,740
Pre-Op Expenses 30,330
Contingencies 20,000
Initial Coffee Purchase Capital 305,720
Additional Working Capital 80,000
TOTAL PROJECT COST 7,967,000
91
Schedule 02/2: Source and Structure of Project Financing (In USD)
S. No. Project Investment UCCIL Investor‟s Total
Component Equity Equity/Debt
Finance
1. Land 54.60% 4,350,000 - 4,350,000
2. Buildings 23.85% 100,000 1,800,000 1,900,000
3. Processing Plant & Equipment 14.01% - 1,116,000 1,116,000
4. Utilities (power connection) 0.09% 7,000 - 7,000
5. Miscellaneous Equipment 0.42% - 33,490 33,490
6. Vehicles 1.20% 10,000 85,720 95,720
7. Installation & Commissioning 0.36% - 28,740 28,740
8. Pre-Operational Expenses 0.38% - 30,330 30,330
9. Contingencies 0.25% - 20,000 20,000
10. Initial Coffee Purchase Capital 3.84% - 305,720 305,720
11. Additional Working Capital 1.00% - 80,000 80,000
12. TOTAL PROJECT FUNDING 100.00% 4,467,000 3,500,000 7,967,000
13. %age of Total Project Funding 56.07% 43.93% 100.00%
92
Schedule 03: Estimation of Robusta Coffee & Maize Sales Revenues
Project Year PY 2 PY 3 PY 4 PY 5 PY 6 PY 7 PY 8 PY 9 PY 10
Unit Sales
Robusta Coffee (MT) 10,920 11,466 12,039 12,641 13,273 13,937 14,634 15,366 16,134
Grade 1 Maize Flour (MT) 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320 4,320
Grade 2 Maize Flour (MT) 960 960 960 960 960 960 960 960 960
Bran (MT) 720 720 720 720 720 720 720 720 720
Total Unit Sales (MT) 16,920 17,466 18,039 18,641 19,273 19,937 20,634 21,366 22,134
Unit Prices
Robusta Coffee (US$/kg) 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70 1.70
Bran (US$/kg) 0.06 0.06 0.07 0.07 0.07 0.08 0.08 0.08 0.09
Sales
Robusta Coffee (US$) 18,532,800 19,459,440 20,432,412 21,454,033 22,526,734 23,653,071 24,835,724 26,077,511 27,381,386
Grade 1 Maize Flour (US$) 1,693,440 1,778,112 1,867,018 1,960,368 2,058,387 2,161,306 2,269,372 2,382,840 2,501,982
Grade 2 Maize Flour (US$) 272,832 286,474 300,797 315,837 331,629 348,210 365,621 383,902 403,097
Bran (US$) 42,336 44,453 46,675 49,009 51,460 54,033 56,734 59,571 62,550
Total Sales (US$) 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210 26,216,620 27,527,451 28,903,824 30,349,015
93
Schedule 04: Loan and Interest Service Schedule (In USD)
Section Years
LOAN AMOUNT
(USD) 3,500,000
Year 1 2 3 4 5 6 7 8 9 10 Total
Loan Repayment 0 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500 980,000
Interest 0 0 350,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000 3,500,000
94
Table 05/1: Calculation of Working Capital: I Minimum Requirements of Current
Assets and Liabilities
(a) Accounts receivable: 30 days at production costs minus depreciation and

interest
(b) Inventory:
Raw Materials: 30 days
Labour Costs: 90 days
Coffee Processing Operations: 60 days
Machinery & vehicle maintenance: 180 days
Work in progress: 9 days of coffee raw materials + salaries & wages +
utilities + repairs & maintenance + postage &
stationery + telephone charges + advertising &
promotion expenses + other sales & marketing
expenses + processing & export costs + consumable
stores + other miscellaneous expenses
Finished products: 45 days of coffee raw materials + salaries & wages +
utilities + repairs & maintenance + postage &
stationery + telephone charges + advertising &
promotion expenses + other sales & marketing
expenses + processing & export costs + consumable
stores + other miscellaneous expenses
© Cash-in-hand: 15 days, see separate calculations at the bottom of this
schedule
(d) Accounts payable: 30 days of coffee raw materials + utilities + postage &
stationery + telephone charges + travel expenses +
advertising & promotion expenses + other sales &
marketing expenses + processing & export costs +
insurance costs + consumable stores.
N.B.: All the local cost price factors for the coffee processing plant costs/inputs, utilities
and working capital are indicated US dollars for the ease of computational and financial
analysis.
95
Table 05/2a: Calculation of Working Capital: Annual Production Cost Estimates in USD (Coffee Processing & Export)
ACCOUNT HEAD FINANCIAL YEAR OF OPERATION
YEAR 1 2 3 4 5 6 7 8 9 10
Operating Costs USD)
Raw materials 14,040,000 14,742,000 15,479,100 16,253,055 17,065,708 17,918,993 18,814,943 19,755,690 20,743,474
Salaries & wages 500,000 525,000 551,250 578,813 607,753 638,141 670,048 703,550 738,728
Utilities 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594
Repairs & Maintenance 28,650 30,083 31,587 33,166 34,824 36,565 38,394 40,313 42,329
Postage & Stationery 300 315 331 347 365 383 402 422 443
Telephone Charges 4,000 4,200 4,410 4,631 4,862 5,105 5,360 5,628 5,910
Travel 21,000 22,050 23,153 24,310 25,526 26,802 28,142 29,549 31,027
Advertising & Promotion 144,000 151,200 158,760 166,698 175,033 183,785 192,974 202,622 212,754
Other Sales & Marketing Expenses 24,000 25,200 26,460 27,783 29,172 30,631 32,162 33,770 35,459
Processing & Export Costs 1,062,734 1,115,871 1,171,664 1,230,247 1,291,760 1,356,348 1,424,165 1,495,373 1,570,142
Insurance 72,000 75,600 79,380 83,349 87,516 91,892 96,487 101,311 106,377
Other Miscellaneous Exp 10,000 10,500 11,025 11,576 12,155 12,763 13,401 14,071 14,775
Consumable Stores 6,000 6,300 6,615 6,946 7,293 7,658 8,041 8,443 8,865
Cost of Sales 15,930,684 16,727,218 17,563,579 18,441,758 19,363,846 20,332,038 21,348,640 22,416,072 23,536,876
Financial Costs (US$)

Interest on Medium Term Loan 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
Total Financial Costs 404,793 404,793 387,293 364,793 342,293 319,793 297,293 274,793 252,293
Total Production Costs 16,335,477 17,132,011 17,950,872 18,806,551 19,706,139 20,651,831 21,645,933 22,690,865 23,789,169
96
Table 05/2b: Calculation of Working Capital: Annual Production Cost Estimates in USD (Maize Milling)
YEAR 1 2 3 4 5 6 7 8 9 10
Raw materials 1,317,978 1,383,877 1,453,071 1,525,724 1,602,010 1,682,111 1,766,216 1,854,527 1,947,254
Salaries & wages 48,000 50,400 52,920 55,566 58,344 61,262 64,325 67,541 70,918
Utilities 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594
Repairs & Maintenance 500 525 551 579 608 638 670 704 739
Travel 15,000 15,750 16,538 17,364 18,233 19,144 20,101 21,107 22,162
Processing & Packaging Costs 171,429 180,000 189,000 198,450 208,373 218,791 229,731 241,217 253,278
Insurance 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594
Cost of Sales 1,662,206 1,745,317 1,832,583 1,924,212 2,020,422 2,121,443 2,227,516 2,338,891 2,455,836

Interest on Medium Term Loan 0 0 0 0 0 0 0 0 0
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
97
Table 05/2c: Calculation of Working Capital: Annual Production Cost Estimates in USD (Industry Composite)
YEAR 1 2 3 4 5 6 7 8 9 10
Raw materials 15,357,978 16,125,877 16,932,171 17,778,779 18,667,718 19,601,104 20,581,159 21,610,217 22,690,728
Salaries & wages 548,000 575,400 604,170 634,379 666,097 699,402 734,372 771,091 809,646
Utilities 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656 53,188
Repairs & Maintenance 29,150 30,608 32,138 33,745 35,432 37,204 39,064 41,017 43,068
Travel 36,000 37,800 39,690 41,675 43,758 45,946 48,243 50,656 53,188
Processing & Export Costs 1,234,163 1,295,871 1,360,664 1,428,697 1,500,132 1,575,139 1,653,896 1,736,591 1,823,420
Insurance 90,000 94,500 99,225 104,186 109,396 114,865 120,609 126,639 132,971
Cost of Sales 17,592,890 18,472,535 19,396,162 20,365,970 21,384,268 22,453,482 23,576,156 24,754,964 25,992,712

Interest on Medium Term Loan 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
98
Schedule 05/3a: Calculation of Working Capital: Working Capital Requirements in USD (Coffee Processing & Export)
X Y Requirements (USD)
Minimum Coefficient Full-Capacity
days of
Item of coverage turn-over 2 3 4 5 6 7 8 9 10
I. Current Assets
A. Accounts receivable 30 12 1,327,557 1,393,935 1,463,632 1,536,813 1,613,654 1,694,337 1,779,053 1,868,006 1,961,406
B. Inventory
a) Raw Materials 30 12 1,170,000 1,228,500 1,289,925 1,354,421 1,422,142 1,493,249 1,567,912 1,646,307 1,728,623
b) Salaries & Wages 90 4 125,000 131,250 137,813 144,703 151,938 159,535 167,512 175,888 184,682
c) Plant Operations 60 6 187,564 196,942 206,789 217,129 227,985 239,384 251,354 263,921 277,117
d) Maintenance & Repair 180 2 14,325 15,041 15,793 16,583 17,412 18,283 19,197 20,157 21,165
e) Work-in-Process 9 40 395,942 415,739 436,526 458,352 481,270 505,334 530,600 557,130 584,987
f) Finished Products 45 8 1,979,711 2,078,696 2,182,631 2,291,762 2,406,350 2,526,668 2,653,001 2,785,651 2,924,934
C. Cash-in-hand (from V below) 15 24 85,320 89,222 92,589 95,953 99,532 103,336 107,378 111,669 116,221
D. Current assets _ _ 5,285,419 5,549,325 5,825,698 6,115,717 6,420,284 6,740,126 7,076,008 7,428,730 7,799,135
II. Current Liabilities

A. Accounts payable 30 12 -1,282,670 -1,346,803 -1,414,143 -1,484,850 -1,559,093 -1,637,047 -1,718,900 -1,804,845 -1,895,087
III. Working Capital

A. Net Working Capital 4,002,749 4,202,522 4,411,555 4,630,867 4,861,191 5,103,079 5,357,108 5,623,885 5,904,048
B. Increase in Working Capital _ 199,773 209,032 219,312 230,325 241,888 254,029 266,777 280,163
IV. Total Production Costs _ _ 16,335,477 17,132,011 17,950,872 18,806,551 19,706,139 20,651,831 21,645,933 22,690,865 23,789,169
Less: Raw Materials _ _ 14,040,000 14,742,000 15,479,100 16,253,055 17,065,708 17,918,993 18,814,943 19,755,690 20,743,474
Conversion Costs _ _ 18,000 18,900 19,845 20,837 21,879 22,973 24,122 25,328 26,594
Depreciation _ _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
15 24 2,047,684 2,141,318 2,222,134 2,302,866 2,388,759 2,480,072 2,577,076 2,680,054 2,789,307
V. Required Cash Balance _ _ 85,320 89,222 92,589 95,953 99,532 103,336 107,378 111,669 116,221
99
Schedule 05/3b: Calculation of Working Capital: Working Capital Requirements in USD (Maize Milling)
days of
I. Current Assets
A. Accounts receivable 30 12 138,517 145,443 152,715 160,351 168,369 176,787 185,626 194,908 204,653
B. Inventory
a) Raw Materials 30 12 109,831 115,323 121,089 127,144 133,501 140,176 147,185 154,544 162,271
b) Salaries & Wages 90 4 12,000 12,600 13,230 13,892 14,586 15,315 16,081 16,885 17,729
d) Maintenance & Repair 180 2 250 263 276 289 304 319 335 352 369
e) Work-in-Process 9 40 40,730 42,767 44,905 47,150 49,508 51,983 54,582 57,311 60,177
f) Finished Products 45 8 203,651 213,833 224,525 235,751 247,539 259,916 272,912 286,557 300,885
D. Current assets _ _ 551,727 579,314 608,279 638,693 670,628 704,159 739,367 776,336 815,152

A. Accounts payable 30 12 -133,976 -140,674 -147,708 -155,093 -162,848 -170,991 -179,540 -188,517 -197,943

A. Net Working Capital 417,752 438,639 460,571 483,600 507,780 533,169 559,827 587,819 617,210
Depreciation _ _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
15 24 326,229 342,540 359,667 377,650 396,533 416,360 437,177 459,036 481,988
100
Schedule 05/3c: Calculation of Working Capital: Working Capital Requirements in USD (Industry Composite)
days of
I. Current Assets
A. Accounts receivable 30 12 1,466,074 1,539,378 1,616,347 1,697,164 1,782,022 1,871,123 1,964,680 2,062,914 2,166,059
B. Inventory
a) Raw Materials 30 12 1,279,831 1,343,823 1,411,014 1,481,565 1,555,643 1,633,425 1,715,097 1,800,851 1,890,894
b) Salaries & Wages 90 4 137,000 143,850 151,043 158,595 166,524 174,851 183,593 192,773 202,411
d) Maintenance & Repair 180 2 14,575 15,304 16,069 16,872 17,716 18,602 19,532 20,508 21,534
e) Work-in-Process 9 40 436,672 458,506 481,431 505,503 530,778 557,317 585,183 614,442 645,164
f) Finished Products 45 8 2,183,361 2,292,529 2,407,156 2,527,514 2,653,889 2,786,584 2,925,913 3,072,209 3,225,819
D. Current assets _ _ 5,837,146 6,128,639 6,433,977 6,754,410 7,090,912 7,444,286 7,815,375 8,205,066 8,614,288

A. Accounts payable 30 12 -1,416,645 -1,487,477 -1,561,851 -1,639,944 -1,721,941 -1,808,038 -1,898,440 -1,993,362 -2,093,030

A. Net Working Capital 4,420,501 4,641,161 4,872,126 5,114,466 5,368,971 5,636,248 5,916,935 6,211,704 6,521,258
Depreciation _ _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
15 24 2,373,913 2,483,858 2,581,801 2,680,516 2,785,292 2,896,432 3,014,253 3,139,091 3,271,295
101
Schedule 06: Fixed Assets and Depreciation Allowances (In USD)
Project Year 1 2 3 4 5 6 7 8 9 10
Initial Dep Dep Dep Dep Dep Dep Dep Dep Dep
Asset Value Allowance Allowance Allowance Allowance Allowance Allowance Allowance Allowance Allowance
Plant Buildings 1,900,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000
Processing Plant and

Equipment 1,066,000 106,600 106,600 106,600 106,600 106,600 106,600 106,600 106,600 106,600
Utility & Others 7,000 700 700 700 700 700 700 700 700 700
Diesel Electric Genset 50,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Miscellaneous Equipment 33,490 3,349 3,349 3,349 3,349 3,349 3,349 3,349 3,349 3,349
Motor Vehicles 95,720 19,144 19,144 19,144 19,144 19,144 19,144 19,144 19,144 19,144
TOTALS 3,152,210 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
102
Schedule 07a: Change in Total Investment Costs in USD (Coffee Processing & Export)
Period Construction Full Capacity
Year 1 2 3 4 5 6 7 8 9 10 Total
1. Fixed Investment Costs 7,502,210 0 0 0 0 0 0 0 0 0 7,597,930

a) Initial fixed investment costs 7,502,210 0 0 0 0 0 0 0 0 0 7,502,210
b) Replacement 0 0 0 0 0 95,720 0 0 0 0 95,720
2. Pre-operational expenses 464,790 0 0 0 0 0 0 0 0 0 464,790
3. Working Capital increase 0 4,002,749 199,773 209,032 219,312 230,325 241,888 254,029 266,777 280,163 5,904,048
Total Investment Costs 7,967,000 4,002,749 199,773 209,032 219,312 326,045 241,888 254,029 266,777 280,163 13,966,768
Schedule 07b: Change in Total Investment Costs in USD (Maize Milling)

Year 1 2 3 4 5 6 7 8 9 10 Total
1. Fixed Investment Costs 25,000 0 0 0 0 0 0 0 0 0 25,000

a) Initial fixed investment costs 25,000 0 0 0 0 0 0 0 0 0 25,000
b) Replacement 0 0 0 0 0 0 0 0 0 0 0
3. Working Capital increase 0 417,752 20,888 21,932 23,029 24,180 25,389 26,658 27,991 29,391 617,210
Total Investment Costs 35,000 417,752 20,888 21,932 23,029 24,180 25,389 26,658 27,991 29,391 652,210
103
Schedule 07c: Change in Total Investment Costs in USD (Industry Composite)
Year 1 2 3 4 5 6 7 8 9 10 Total

b) Replacement 0 0 0 0 0 95,720 0 0 0 0 95,720
3. Working Capital increase 0 4,420,501 220,660 230,964 242,341 254,505 267,277 280,687 294,769 309,554 6,521,258
Total Investment Costs 7,967,000 4,420,501 220,660 230,964 242,341 350,225 267,277 280,687 294,769 309,554 14,583,978
Schedule 08a: Change in Total Assets in USD (Coffee Processing & Export)
Year 1 2 3 4 5 6 7 8 9 10 Total

b) Replacement 0 0 0 0 0 95,720 0 0 0 0 95,720
3. Current Assets increase 0 5,285,419 263,906 276,373 290,019 304,567 319,842 335,881 352,722 370,405 7,799,135
Total Assets 7,967,000 5,285,419 263,906 276,373 290,019 400,287 319,842 335,881 352,722 370,405 15,861,855
104
Schedule 08b: Change in Total Assets in USD (Maize Milling)
Year 1 2 3 4 5 6 7 8 9 10 Total
1. Fixed Investment Costs 25,000 0 0 0 0 0 0 0 0 0 25,000

a) Initial fixed investment costs 25,000 0 0 0 0 0 0 0 0 0 25,000
b) Replacement 0 0 0 0 0 0 0 0 0 0 0
3. Current Assets increase 0 551,727 27,586 28,966 30,414 31,935 33,531 35,208 36,968 38,817 815,152
Total Assets 35,000 551,727 27,586 28,966 30,414 31,935 33,531 35,208 36,968 38,817 850,152
Schedule 08c: Change in Total Assets in USD (Industry Composite)

Year 1 2 3 4 5 6 7 8 9 10 Total

b) Replacement 0 0 0 0 0 95,720 0 0 0 0 95,720
3. Current Assets increase 0 5,837,146 291,493 305,338 320,433 336,502 353,374 371,089 389,691 409,222 8,614,288
Total Assets 7,967,000 5,837,146 291,493 305,338 320,433 432,222 353,374 371,089 389,691 409,222 16,677,008
105
Schedule 9a: Projected Cashflow Table in USD (Coffee Processing & Export)
Period Const Full Capacity
Year 1 2 3 4 5 6 7 8 9 10 *Sal val Total

Costs (US Dollars)
A. Cash inflow 7,967,000 18,532,800 19,459,440 20,432,412 21,454,033 22,526,734 23,653,071 24,835,724 26,077,511 27,381,386 _ 212,320,111
1. Financial resources total
2. Sales revenue total 7,967,000 _ _ _ _ _ _ _ _ _ _ 7,967,000
_ 18,532,800 19,459,440 20,432,412 21,454,033 22,526,734 23,653,071 24,835,724 26,077,511 27,381,386 _ 204,353,111
B. Cash outflow
1. Total assets schedule including
replacements -7,967,000 -22,183,238 -18,242,291 -19,189,851 -20,108,960 -21,170,750 -22,090,190 -23,156,897 -24,277,726 -25,455,384 11,741,842 -192,100,445
2. Operating Costs
3. Debt Service -7,967,000 -4,120,013
-5,285,419 -263,906 -276,373 -290,019 -400,287 -319,842 -335,881 -352,722 -370,405 11,741,842
a) Interest _ -15,930,684 -16,727,218 -17,563,579 -18,441,758 -19,363,846 -20,332,038 -21,348,640 -22,416,072 -23,536,876 _ -175,660,712
b) Repayments
4. Corporate tax _ -175,000 -175,000 -157,500 -135,000 -112,500 -90,000 -67,500 -45,000 -22,500 _ -980,000
5. Dividends 4% on equity _ 0 -350,000 -450,000 -450,000 -450,000 -450,000 -450,000 -450,000 -450,000 _ -3,500,000
C. Surplus / deficit _ -728,135 -662,167 -678,400 -728,182 -780,116 -834,310 -890,875 -949,932 -1,011,603 _ -7,263,720
D. Cumulative cash balance

_ -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 _ -576,000
*Salvage values. Land: 4,350,000; 1/2 of buildings: 950,000; Working Capital: 6,441,842 11,741,842
106
Schedule 9b: Projected Cashflow Table in USD (Maize Milling)

Costs (US Dollars)
A. Cash inflow 35,000 2,109,038 2,214,490 2,325,215 2,441,476 2,563,549 2,691,727 2,826,313 2,967,629 3,116,010 _ 23,290,448
2. Sales revenue total 35,000 _ _ _ _ _ _ _ _ _ _ 35,000
_ 2,109,038 2,214,490 2,325,215 2,441,476 2,563,549 2,691,727 2,826,313 2,967,629 3,116,010 _ 23,255,448
B. Cash outflow
1. Total assets schedule including replacements -35,000 -2,381,854 -1,946,020 -2,040,121 -2,138,927 -2,242,673 -2,351,607 -2,465,987 -2,586,086 -2,712,191 5,917,210 -14,983,254
2. Operating Costs
3. Debt Service -35,000 -551,727 -27,586 -28,966 -30,414 -31,935 -33,531 -35,208 -36,968 -38,817 5,917,210 5,067,058
a) Interest _ -1,662,206 -1,745,317 -1,832,583 -1,924,212 -2,020,422 -2,121,443 -2,227,516 -2,338,891 -2,455,836 _ -18,328,426
b) Repayments
4. Corporate tax _ 0 0 0 0 0 0 0 0 0 _ 0
5. Dividends 4% on equity _ 0 0 0 0 0 0 0 0 0 _ 0
C. Surplus / deficit _ -103,920 -109,117 -114,572 -120,301 -126,316 -132,632 -139,263 -146,227 -153,538 _ -1,145,886
D. Cumulative cash balance _ -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 _ -576,000
*Salvage values. Land: 4,350,000; 1/2 of buildings: 950,000; Working Capital: 617,210 5,917,210
107
Schedule 9c: Projected Cashflow Table in USD (Industry Composite)
Costs (US Dollars)
A. Cash inflow 7,967,000 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210 26,216,620 27,527,451 28,903,824 30,349,015 _ 234,468,157
2. Sales revenue total 7,967,000 _ _ _ _ _ _ _ _ _ _ 7,967,000
_ 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210 26,216,620 27,527,451 28,903,824 30,349,015 _ 226,501,157
B. Cash outflow
1. Total assets schedule including
replacements -7,967,000 -24,501,092 -20,124,311 -21,165,972 -22,183,886 -23,349,422 -24,377,797 -25,558,884 -26,799,812 -28,103,575 11,821,258 -212,310,493
2. Operating Costs
3. Debt Service -7,967,000 -5,837,146 -291,493 -305,338 -320,433 -432,222 -353,374 -371,089 -389,691 -409,222 -4,855,750
11,821,258
a) Interest _ -17,592,890 -18,472,535 -19,396,162 -20,365,970 -21,384,268 -22,453,482 -23,576,156 -24,754,964 -25,992,712 _ -193,989,138
b) Repayments
4. Corporate tax _ -175,000 -175,000 -157,500 -135,000 -112,500 -90,000 -67,500 -45,000 -22,500 _ -980,000
5. Dividends 4% on equity _ 0 -350,000 -450,000 -450,000 -450,000 -450,000 -450,000 -450,000 -450,000 _ -3,500,000
C. Surplus / deficit _ -832,055 -771,283 -792,972 -848,483 -906,432 -966,942 -1,030,139 -1,096,158 -1,165,141 _ -8,409,606
D. Cumulative cash balance

_ -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 -64,000 _ -576,000
*Salvage values. Land: 4,350,000; 1/2 of buildings: 950,000; Working Capital: 6,521,258 11,821,258
108
Schedule 10a: Projected Cashflow Table and Calculation of Present Value in USD (Coffee Processing & Export)
Construction
Investment Costs -7,967,000 _ _ _ _ _ _ _ _ _ _ -7,967,000

Net Profit after Tax _ 1,698,981 1,545,055 1,582,933 1,699,092 1,820,272 1,946,723 2,078,709 2,216,507 2,360,407 _ 16,948,680
Depreciation _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 _ 2,068,137
Interest Add back
Mid-term Loan _ 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500 _ 980,000
NET CASH FLOWS -7,967,000 2,103,774 1,949,848 1,970,226 2,063,885 2,162,565 2,266,516 2,376,002 2,491,300 2,612,700 11,741,842 23,771,659
Discount Factors at 14% 0.8772 0.7695 0.675 0.5921 0.5194 0.4556 0.3996 0.3506 0.3075 0.2697 0.2076 _
PV at 14% -6,988,652 1,618,854 1,316,148 1,166,571 1,071,982 985,265 905,700 833,026 766,075 704,645 2,437,606 4,817,219
NPV at 14% 4,817,219
PV at 17% -6,809,395 1,536,807 1,217,485 1,051,510 941,338 842,968 755,203 676,685 606,382 543,442 1,784,760 3,147,185
NPV at 17% 3,147,185
Internal Rate of Return = 27.15%
NPV at 14% = $4,817,219
NPV at 17% = $3,147,185
109
Schedule 10b: Projected Cashflow Table and Calculation of Present Value in USD (Maize Milling)
Construction
Investment Costs -35,000 _ _ _ _ _ _ _ _ _ _ -35,000

Net Profit after Tax _ 242,481 254,605 267,335 280,702 294,737 309,474 324,948 341,195 358,255 _ 2,673,734
Depreciation _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 _ 2,068,137
Interest Add back
Mid-term Loan _ 0 0 0 0 0 0 0 0 0 _ 0
NET CASH FLOWS -35,000 472,274 484,398 497,128 510,495 524,530 539,267 554,741 570,988 588,048 5,917,210 10,624,081
PV at 14% -30,702 363,415 326,969 294,350 265,151 238,976 215,491 194,492 175,579 158,597 1,228,413 3,430,730
NPV at 14% 3,430,730
PV at 17% -29,915 344,996 302,458 265,317 232,837 204,462 179,684 157,990 138,979 122,314 899,416 2,818,539
NPV at 17% 2,818,539
NPV at 14% = $3,430,730
NPV at 17% = $2,818,539
110
Schedule 10c: Projected Cashflow Table and Calculation of Present Value in USD (Industry Composite)
Construction
Investment Costs -7,967,000 _ _ _ _ _ _ _ _ _ _ -7,967,000

Net Profit after Tax _ 1,941,462 1,799,660 1,850,268 1,979,794 2,115,009 2,256,197 2,403,657 2,557,702 2,718,662 _ 19,622,413
Depreciation _ 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 _ 2,068,137
Interest Add back
Mid-term Loan _ 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500 _ 980,000
NET CASH FLOWS -7,967,000 2,346,255 2,204,453 2,237,561 2,344,587 2,457,302 2,575,990 2,700,950 2,832,495 2,970,955 11,821,258 26,524,808
PV at 14% -6,988,652 1,805,443 1,488,006 1,324,860 1,217,779 1,119,547 1,029,366 946,953 870,992 801,267 2,454,093 6,069,654
NPV at 14% 6,069,654
PV at 17% -6,809,395 1,713,940 1,376,461 1,194,187 1,069,366 957,856 858,320 769,231 689,429 617,959 1,796,831 4,234,184
NPV at 17% 4,234,184
NPV at 14% = $6,069,654
NPV at 17% = $4,234,184
111
Schedule 11a: Projected Income Statement in USD (Coffee Processing & Export)
Year 1 2 3 4 5 6 7 8 9 10
Sales _ 18,532,800 19,459,440 20,432,412 21,454,033 22,526,734 23,653,071 24,835,724 26,077,511 27,381,386
Raw Materials _ 14,040,000 14,742,000 15,479,100 16,253,055 17,065,708 17,918,993 18,814,943 19,755,690 20,743,474
GROSS PROFIT _ 4,492,800 4,717,440 4,953,312 5,200,978 5,461,026 5,734,078 6,020,782 6,321,821 6,637,912
Less: Operating Costs

(excl. Raw Materials) _ 1,890,684 1,985,218 2,084,479 2,188,703 2,298,138 2,413,045 2,533,697 2,660,382 2,793,401
OPERATING PROFIT _ 2,602,116 2,732,222 2,868,833 3,012,275 3,162,888 3,321,033 3,487,084 3,661,439 3,844,510
Less: Accrued interest on

Medium-Term Loan (@ 5% p.a.) _ 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Less: Annual Repayments _ 0 350,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000
NET PROFIT BEFORE TAX _ 2,427,116 2,207,222 2,261,333 2,427,275 2,600,388 2,781,033 2,969,584 3,166,439 3,372,010
Corporation Tax 30% _ 728,135 662,167 678,400 728,182 780,116 834,310 890,875 949,932 1,011,603
NET PROFIT _ 1,698,981 1,545,055 1,582,933 1,699,092 1,820,272 1,946,723 2,078,709 2,216,507 2,360,407
Accumulated Net Profit (Loss) _ 1,698,981 3,244,036 4,826,969 6,526,062 8,346,333 10,293,056 12,371,765 14,588,272 16,948,680
Net Profit Margin _ 0.0917 0.0794 0.077 0.079 0.081 0.082 0.084 0.085 0.086
Gross Profit Margin 0.242 0.242 0.242 0.242 0.242 0.242 0.242 0.242 0.242
Rate of Return on Investment _ 21% 19% 19.87% 21% 22.85% 24.43% 26.09% 27.82% 29.63%
Operating Profit Margin _ 0.140 0.140 0.140 0.140 0.140 0.140 0.140 0.140 0.140
112
Schedule 11b: Projected Income Statement in USD (Maize Milling)
Year 1 2 3 4 5 6 7 8 9 10
Sales _ 2,008,608 2,109,038 2,214,490 2,325,215 2,441,476 2,563,549 2,691,727 2,826,313 2,967,629
Raw Materials _ 1,317,978 1,383,877 1,453,071 1,525,724 1,602,010 1,682,111 1,766,216 1,854,527 1,947,254
GROSS PROFIT _ 690,630 725,162 761,420 799,491 839,465 881,439 925,510 971,786 1,020,375

(excl. Raw Materials) _ 344,229 361,440 379,512 398,488 418,412 439,333 461,299 484,364 508,582
OPERATING PROFIT _ 346,402 363,722 381,908 401,003 421,053 442,106 464,211 487,422 511,793

Medium-Term Loan (@ 5% p.a.) _ 0 0 0 0 0 0 0 0 0
Less: Annual Repayments _ 0 0 0 0 0 0 0 0 0
NET PROFIT BEFORE TAX _ 346,402 363,722 381,908 401,003 421,053 442,106 464,211 487,422 511,793
Corporation Tax 30% _ 103,920 109,117 114,572 120,301 126,316 132,632 139,263 146,227 153,538
NET PROFIT _ 242,481 254,605 267,335 280,702 294,737 309,474 324,948 341,195 358,255
Accumulated Net Profit (Loss) _ 242,481 497,086 764,422 1,045,124 1,339,861 1,649,335 1,974,283 2,315,479 2,673,734
113
Schedule 11c: Projected Income Statement in USD (Industry Composite)
Year 1 2 3 4 5 6 7 8 9 10
Sales _ 20,541,408 21,568,478 22,646,902 23,779,247 24,968,210 26,216,620 27,527,451 28,903,824 30,349,015
Raw Materials _ 15,357,978 16,125,877 16,932,171 17,778,779 18,667,718 19,601,104 20,581,159 21,610,217 22,690,728
GROSS PROFIT _ 5,183,430 5,442,602 5,714,732 6,000,468 6,300,492 6,615,516 6,946,292 7,293,607 7,658,287

(excl. Raw Materials) _ 2,234,913 2,346,658 2,463,991 2,587,191 2,716,550 2,852,378 2,994,997 3,144,746 3,301,984
OPERATING PROFIT _ 2,948,518 3,095,943 3,250,741 3,413,278 3,583,942 3,763,139 3,951,296 4,148,860 4,356,303

Medium-Term Loan (@ 5% p.a.) _ 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Less: Annual Repayments _ 0 350,000 450,000 450,000 450,000 450,000 450,000 450,000 450,000
NET PROFIT BEFORE TAX _ 2,773,518 2,570,943 2,643,241 2,828,278 3,021,442 3,223,139 3,433,796 3,653,860 3,883,803
Corporation Tax 30% _ 832,055 771,283 792,972 848,483 906,432 966,942 1,030,139 1,096,158 1,165,141
NET PROFIT _ 1,941,462 1,799,660 1,850,268 1,979,794 2,115,009 2,256,197 2,403,657 2,557,702 2,718,662
Accumulated Net Profit (Loss) _ 1,941,462 3,741,123 5,591,391 7,571,186 9,686,195 11,942,392 14,346,049 16,903,751 19,622,413
114
Schedule 12a: Projected Balance Sheet in USD (Coffee Processing & Export)
CAPITAL EMPLOYED: YR.1 YR.2 YR.3 YR.4 YR.5 YR.6 YR.7 YR.8 YR.9 YR.10
Share Capital 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
Retained Earnings 1,698,981 3,244,036 4,826,969 6,526,062 8,346,333 10,293,056 12,371,765 14,588,272 16,948,680
Shareholder's Equity/Deficit 3,298,981 4,844,036 6,426,969 8,126,062 9,946,333 11,893,056 13,971,765 16,188,272 18,548,680
Long-Term Liabilities 3,500,000 3,500,000 3,150,000 2,700,000 2,250,000 1,800,000 1,350,000 900,000 450,000
6,798,981 8,344,036 9,576,969 10,826,062 12,196,333 13,693,056 15,321,765 17,088,272 18,998,680
EMPLOYMENT OF CAPITAL: `
Plant Buildings 1,900,000 1,805,000 1,710,000 1,615,000 1,520,000 1,425,000 1,330,000 1,235,000 1,140,000 1,045,000
Production Plant Equip. & Machinery 1,123,000 1,010,700 898,400 786,100 673,800 561,500 449,200 336,900 224,600 112,300
Testing Equipment 0 0 0 0 0 0 0 0 0 0
Miscellaneous Fixed Assets 33,490 30,141 26,792 23,443 20,094 16,745 13,396 10,047 6,698 3,349
Vehicles 95,720 76,576 57,432 38,288 19,144 95,720 76,576 57,432 38,288 19,144
LONG-TERM ASSETS: 3,152,210 2,922,417 2,692,624 2,462,831 2,233,038 2,098,965 1,869,172 1,639,379 1,409,586 1,179,793
CURRENT ASSETS: 5,334,234 7,173,215 8,685,782 10,212,874 11,768,961 13,550,932 15,468,786 17,528,531 19,736,474
Accounts Receivable 1,327,557 1,393,935 1,463,632 1,536,813 1,613,654 1,694,337 1,779,053 1,868,006 1,961,406
Stock (Inventory) 3,872,542 4,066,169 4,269,477 4,482,951 4,707,099 4,942,453 5,189,576 5,449,055 5,721,508
Bank Balance and Cash 85,320 89,222 92,589 95,953 99,532 103,336 107,378 111,669 116,221
Other Current Assets 48,815 1,623,890 2,860,084 4,097,157 5,348,677 6,810,805 8,392,779 10,099,801 11,937,339
CURRENT LIABILITIES: 1,457,670 1,521,803 1,571,643 1,619,850 1,671,593 1,727,047 1,786,400 1,849,845 1,917,587
Accounts Payable 1,282,670 1,346,803 1,414,143 1,484,850 1,559,093 1,637,047 1,718,900 1,804,845 1,895,087
Liabilities 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
NET CURRENT ASSETS: 3,876,564 5,651,412 7,114,138 8,593,024 10,097,368 11,823,884 13,682,386 15,678,686 17,818,887
TOTAL CAPITAL 6,798,981 8,344,036 9,576,969 10,826,062 12,196,333 13,693,056 15,321,765 17,088,272 18,998,680
115
Schedule 12b: Projected Balance Sheet in USD (Maize Milling)
Share Capital 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
Retained Earnings 242,481 497,086 764,422 1,045,124 1,339,861 1,649,335 1,974,283 2,315,479 2,673,734
Long-Term Liabilities 0 0 0 0 0 0 0 0 0
1,842,481 2,097,086 2,364,422 2,645,124 2,939,861 3,249,335 3,574,283 3,915,479 4,273,734
Plant Buildings 0 0 0 0 0 0 0 0 0 0
Production Plant Equip. & Machinery 25,000 22,500 20,000 17,500 15,000 12,500 10,000 7,500 5,000 2,500
Miscellaneous Fixed Assets 0 0 0 0 0 0 0 0 0 0
Vehicles 0 0 0 0 0 95,720 76,576 57,432 38,288 19,144
LONG-TERM ASSETS: 25,000 22,500 20,000 17,500 15,000 108,220 86,576 64,932 43,288 21,644
CURRENT ASSETS: 1,953,957 2,217,761 2,494,630 2,785,217 2,994,489 3,333,750 3,688,891 4,060,708 4,450,033
Accounts Receivable 138,517 145,443 152,715 160,351 168,369 176,787 185,626 194,908 204,653
Stock (Inventory) 399,617 419,598 440,578 462,607 485,737 510,024 535,525 562,302 590,417
Other Current Assets 1,402,229 1,638,447 1,886,350 2,146,524 2,323,861 2,629,591 2,949,524 3,284,372 3,634,880
CURRENT LIABILITIES: 133,976 140,674 147,708 155,093 162,848 170,991 179,540 188,517 197,943
Accounts Payable 133,976 140,674 147,708 155,093 162,848 170,991 179,540 188,517 197,943
Liabilities 0 0 0 0 0 0 0 0 0
TOTAL CAPITAL 1,842,481 2,097,086 2,364,422 2,645,124 2,939,861 3,249,335 3,574,283 3,915,479 4,273,734
116
Schedule 12c: Projected Balance Sheet in USD (Industry Composite)
Share Capital 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000
Retained Earnings 1,941,462 3,741,123 5,591,391 7,571,186 9,686,195 11,942,392 14,346,049 16,903,751 19,622,413
Long-Term Liabilities 3,500,000 3,500,000 3,150,000 2,700,000 2,250,000 1,800,000 1,350,000 900,000 450,000
7,041,462 8,841,123 10,341,391 11,871,186 13,536,195 15,342,392 17,296,049 19,403,751 21,672,413
Plant Buildings 1,900,000 1,805,000 1,710,000 1,615,000 1,520,000 1,425,000 1,330,000 1,235,000 1,140,000 1,045,000
Production Plant Equip. & Machinery 1,123,000 1,010,700 898,400 786,100 673,800 561,500 449,200 336,900 224,600 112,300
Miscellaneous Fixed Assets 33,490 30,141 26,792 23,443 20,094 16,745 13,396 10,047 6,698 3,349
Vehicles 95,720 76,576 57,432 38,288 19,144 95,720 76,576 57,432 38,288 19,144
LONG-TERM ASSETS: 3,152,210 2,922,417 2,692,624 2,462,831 2,233,038 2,098,965 1,869,172 1,639,379 1,409,586 1,179,793
CURRENT ASSETS: 5,710,690 7,810,976 9,597,911 11,413,091 13,271,671 15,371,258 17,622,609 20,032,527 22,608,150
Accounts Receivable 1,466,074 1,539,378 1,616,347 1,697,164 1,782,022 1,871,123 1,964,680 2,062,914 2,166,059
Stock (Inventory) 4,272,159 4,485,767 4,710,055 4,945,558 5,192,836 5,452,478 5,725,101 6,011,356 6,311,924
Other Current Assets -126,456 1,682,337 3,163,934 4,658,681 6,180,759 7,926,972 9,807,235 11,827,461 13,993,863
CURRENT LIABILITIES: 1,591,645 1,662,477 1,719,351 1,774,944 1,834,441 1,898,038 1,965,940 2,038,362 2,115,530
Accounts Payable 1,416,645 1,487,477 1,561,851 1,639,944 1,721,941 1,808,038 1,898,440 1,993,362 2,093,030
Liabilities 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
TOTAL CAPITAL 7,041,462 8,841,123 10,341,391 11,871,186 13,536,195 15,342,392 17,296,049 19,403,751 21,672,413
117
Schedule 13a: Calculation of Payback Period in USD (Coffee Processing & Export)
YEAR/ITEM 2 3 4 5 6 7 8 9 10
Net Profit 1,698,981 1,545,055 1,582,933 1,699,092 1,820,272 1,946,723 2,078,709 2,216,507 2,360,407
Interest 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
"Profit" 2,103,774 1,949,848 1,970,226 2,063,885 2,162,565 2,266,516 2,376,002 2,491,300 2,612,700
Year Amount paid Balance of

back from total
"profits" Investment
1 0 -7,967,000
2 2,103,774 -5,863,226
3 1,949,848 -3,913,378
4 1,970,226 -1,943,152
5 2,063,885 120,734
6 2,162,565 2,283,298
7 2,266,516 4,549,814
8 2,376,002 6,925,816
9 2,491,300 9,417,116
10 2,612,700 12,029,817
Pay Back Period = 4.94 YEARS
118
Schedule 13b: Calculation of Payback Period in USD (Maize Milling)
YEAR/ITEM 2 3 4 5 6 7 8 9 10
Net Profit 242,481 254,605 267,335 280,702 294,737 309,474 324,948 341,195 358,255
Interest 0 0 0 0 0 0 0 0 0
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
"Profit" 472,274 484,398 497,128 510,495 524,530 539,267 554,741 570,988 588,048

back from total
1 0 -35,000
2 472,274 437,274
3 484,398 921,672
4 497,128 1,418,801
5 510,495 1,929,296
6 524,530 2,453,826
7 539,267 2,993,093
8 554,741 3,547,834
9 570,988 4,118,823
10 588,048 4,706,871
119
Schedule 13c: Calculation of Payback Period in USD (Industry Composite)
YEAR/ITEM 2 3 4 5 6 7 8 9 10
Net Profit 1,941,462 1,799,660 1,850,268 1,979,794 2,115,009 2,256,197 2,403,657 2,557,702 2,718,662
Interest 175,000 175,000 157,500 135,000 112,500 90,000 67,500 45,000 22,500
Depreciation 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793 229,793
"Profit" 2,346,255 2,204,453 2,237,561 2,344,587 2,457,302 2,575,990 2,700,950 2,832,495 2,970,955

back from total
1 0 -7,967,000
2 2,346,255 -5,620,745
3 2,204,453 -3,416,291
4 2,237,561 -1,178,730
5 2,344,587 1,165,858
6 2,457,302 3,623,160
7 2,575,990 6,199,150
8 2,700,950 8,900,100
9 2,832,495 11,732,595
10 2,970,955 14,703,550
120
Schedule 14: Business Ratios/Ratio Analysis (Industry Composite)
Period Construct Full Capacity
Year 1 2 3 4 5 6 7 8 9 10
Sales Growth 5% 5% 5% 5% 5% 5% 5% 5%
Percent of Total Assets
Accounts Receivable 16.98% 14.66% 13.40% 12.44% 11.59% 10.85% 10.20% 9.62% 9.11%
Inventory 49.49% 42.71% 39.05% 36.24% 33.78% 31.63% 29.72% 28.04% 26.53%
Other Current Assets -1.46% 16.02% 26.23% 34.14% 40.21% 45.98% 50.91% 55.16% 58.83%
Total Current Assets 66.15% 74.36% 79.58% 83.64% 86.34% 89.16% 91.49% 93.43% 95.04%
Long-term Assets 33.85% 25.64% 20.42% 16.36% 13.66% 10.84% 8.51% 6.57% 4.96%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 18.44% 15.83% 14.26% 13.01% 11.93% 11.01% 10.21% 9.51% 8.89%
Long-term liabilities 40.54% 33.32% 26.12% 19.79% 14.64% 10.44% 7.01% 4.20% 1.89%
Total Liabilities 58.98% 49.15% 40.37% 32.79% 26.57% 21.45% 17.21% 13.70% 10.79%
Net Worth (Total Capital) 81.56% 84.17% 85.74% 86.99% 88.07% 88.99% 89.79% 90.49% 91.11%
Percent of Revenues
Revenues 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 25.23% 25.23% 25.23% 25.23% 25.23% 25.23% 25.23% 25.23% 25.23%
Management / Administration 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04% 0.04%
Net Profit (after Interest & Tax) 9.45% 8.34% 8.17% 8.33% 8.47% 8.61% 8.73% 8.85% 8.96%
Main Ratios
Current 3.59 4.70 5.58 6.43 7.23 8.10 8.96 9.83 10.69
Quick 0.90 2.00 2.84 3.64 4.40 5.23 6.05 6.88 7.70
Total Debt to Total Assets 40.54% 33.32% 26.12% 19.79% 14.64% 10.44% 7.01% 4.20% 1.89%
Pre-tax Return on Net Worth 78.32% 48.13% 36.76% 30.84% 26.77% 23.80% 21.53% 19.75% 18.30%
Pre-tax Return on Assets 32.13% 24.48% 21.92% 20.73% 19.66% 18.70% 17.83% 17.04% 16.33%
Business Vitality Profile

Revenue per Employee $285,297 $299,562 $314,540 $330,267 $346,781 $364,120 $382,326 $401,442 $421,514
121
Schedule 14: Business Ratios/Ratio Analysis (Industry Composite) (continued…)
Additional Ratios 1 2 3 4 5 6 7 8 9 10
Net Profit Margin 9.45% 8.34% 8.17% 8.33% 8.47% 8.61% 8.73% 8.85% 8.96%
Return on Equity 54.82% 33.69% 25.73% 21.59% 18.74% 16.66% 15.07% 13.82% 12.81%
Activity Ratios
Accounts Receivable Turnover 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 1.40
Collection Days 30 30 30 30 30 30 30 30 30
Inventory Turnover 3.59 3.59 3.59 3.59 3.59 3.59 3.59 3.59 3.59
Accounts Payable Turnover 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20
Payment Days 30 30 30 30 30 30 30 30 30
Total Assets Turnover 2.38 2.05 1.88 1.74 1.62 1.52 1.43 1.35 1.28
Fixed Assets Turnover 6.02 6.86 7.88 9.12 10.19 12.01 14.38 17.56 22.03
Debt Ratios
Debt to Net Worth 0.99 0.66 0.44 0.29 0.20 0.13 0.08 0.05 0.02
Current Liability to Liability 0.45 0.47 0.55 0.66 0.82 1.05 1.46 2.26 4.70
Debt-Service Coverage Ratio 13.41 4.20 3.68 4.01 4.37 4.77 5.22 5.72 6.29
Liquidity Ratios
Net Working Capital $4,420,501 $4,641,161 $4,872,126 $5,114,466 $5,368,971 $5,636,248 $5,916,935 $6,211,704 $6,521,258
Interest Coverage [Times
Interest Earned Ratio - TIE] 16.85 17.69 20.64 25.28 31.86 41.81 58.54 92.20 193.61
Additional Ratios
Assets to Revenue 0.42 0.49 0.53 0.57 0.62 0.66 0.70 0.74 0.78
Current Debt / Total Assets 2.03% 1.67% 1.31% 0.99% 0.73% 0.52% 0.35% 0.21% 0.09%
Acid Test 0.90 2.00 2.84 3.64 4.40 5.23 6.05 6.88 7.70
Sales/Net Worth 5.80 4.04 3.15 2.59 2.21 1.94 1.73 1.56 1.43
122
Schedule 15: Sensitivity Analysis (Composite Mixed Farm) (In USD „000s)
Items PAT BEP IRR Payback
Base Case 1,979,794 25.61% 30.36% 4.50 Yrs
Increase in Operating Costs by 5% 1,889,243 27.07% 29.33% 4.63 Yrs
Selling Prices up by 25% 6,141,143 10.45% 77.12% 2.34 Yrs
Decrease in Raw Materials by 10% 3,224,309 17.86% 44.46% 3.35 Yrs
Increase in Raw Materials by 10% 735,280 45.23% 16.34% 7.88 Yrs
Key:
BEP: Break-Even Point
IRR: Internal Rate of Return
PAT: Profit after Tax
123
APPENDIX 1: INVENTORY OF EXPORTERS AND BUYERS OF UGANDA‟S COFFEE
UGANDA COFFEE EXPORTERS UGANDA COFFEE IMPORTERS
Ugacof (U) Ltd Abaco International
Kyagalanyi Coffee Ltd. Olam International
Olam (U) Ltd Sucafina
Kawacom (U) Ltd Ecom Agro industrial
Ibero (U) Ltd Bernhard Rothfos
Savannah Commodities Ltd. Volcafe
Job Coffee Ltd. Coex Coffee
Kampala Domestic Stores Aldwami
Great Lakes (U) Ltd. Icona Café
Panafric Impex Tata Coffee
Nakana Coffee Factory Strauss Commodities
Penform Trading Company Ltd. Socadec
Kamba Petroleum Coffee Services
Armajaro Coffee Exporters Ltd. Armajaro
Kitasha Coffee Buyers Ltd. Decotrade
Lakeland Holdings Ltd. Bercher
Ankole Coffee Producers Coop Supremo
Risala Ltd. Africa Tea and Coffee
LD Commodities Louis Dreyfus
Mbale Importers & Exporters Guzman
Gumutindo Hamburg Coffee
Wabulungu Multi-Purpose
Kaweri Coffee Plantation Ltd
Bakwanye Trading Company Ltd
Coffee Services Ltd
Ankole Coffee Processors Ltd.
Bukonzo Joint Cooperative
Gatto Estates
124

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BUSINESS PLAN:

SCALING UP & OPERATION

COFFEE PROCESSING & EXPORTING

UGANDA COFFEE CUP INTERNATIONAL LTD.

UGANDA COFFEE CUP INTERNATIONAL LIMITED

S/NO. DESCRIPTION PAGE

1.0 EXECUTIVE SUMMARY 1

2.0 PURPOSE OF THE DOCUMENT 8

3.0 INTRODUCTION & BACKGROUND 9

4.0 THE OFFER & PROJECT PROFILE 14

Business Plan Corporate Document

6.0 PRODUCTS AND SERVICES 26

7.0 COFFEE SUB-SECTOR MARKET ANALYSIS 30

8.0 MARKETING PLAN & IMPLEMENTATION STRATEGY 48

Business Plan Corporate Document

10.0 HUMAN RESOURCES & MANAGEMENT STRUCTURE 65

11.0 SCHEDULE OF IMPLEMENTATION 72

12.0 FINANCIAL EVALUATION 74

13.0 PROJECT ECONOMICS 83

14.0 KEY SUCCESS FACTORS 87

Business Plan Corporate Document

T/NO. DESCRIPTION PAGE

1 Total Initial Project Investment Cost 19

2 Key Project Performance Parameters 20

3 SWOT Analysis of the Uganda Coffee Value Chain 46

5 Annual Coffee Out-turn and Export Programme 53

6 Uganda Coffee Export Grades 59

7 Estimated Cost of Machinery and Equipment 62

8 Land, Buildings and Civil Works Cost 63

9 Manpower Requirement and Annual Labour Cost 71

10 Initial Capital Investment Cost of Project 74

13 Calculation of Payback Period for Equity and Total Investment 78

14 Capital: Output Ratios 78

15 Projected Cash Flows 79

16 Projected Balance Sheet 80

17 Break-Even Analysis in Project Year 5 81

18 Value Added/Contribution to GDP 82

Business Plan Corporate Document

20 Investment to Jobs Created Ratio (IJCR) 84

21 Corporate Income Tax Payments 84

22 Key Assumptions and Project Summary Results 89

Business Plan Corporate Document

F/NO. DESCRIPTION PAGE

1 Performance Highlights (PY2 – PY5) 6

2 Uganda coffee plantation and harvest periods 26

3 Coffee production and area harvested in Uganda 30

4 Regional Share of Coffee Production in Uganda – 2012 31

5 Source of coffee by Traders 32

6 Retail prices of coffee 33

7 Coffee export volumes and main destinations 35

8 Coffee value chain core processes map 38

9 Technical functions of actors 39

10 Geographical trade flows of coffee in Uganda 43

11 Coffee Processing Flow Chart 60

13 Coffee Bean Colour Separator 61

14 UCCIL Organizational Chart 65

15 Project Implementation Milestones 73

Business Plan Corporate Document

S/NO. DESCRIPTION PAGE

01: Key Assumptions and Project Summary Results 89

02/1: Initial Project Investment Costs 91

02/2: Source and Structure of Project Financing 92

03: Estimation of Robusta Coffee & Maize Sales Revenues 93