Contents

Executive Summary.....................................................................................................................................2
1.Introduction..............................................................................................................................................3
1.1. Brief of the promoters’ business profile......................................................................................4
1.2. Project Justification..........................................................................................................................5
1.5. Project Location Background and Required Land.............................................................................8
2. Agro Ecological Zone and Investment Policies Of Ethiopia..................................................................11
2.1. The Ethiopia Agro Ecological Zones................................................................................................11
2.2. Agricultural policy of Ethiopia.........................................................................................................12
3. The Market Study and Project Capacity................................................................................................13
3.1. Overview.........................................................................................................................................13
3.3. Competition................................................................................................................................15
3.5. Capacity utilization.........................................................................................................................16
3.6. Pricing.............................................................................................................................................16
3.7. Marketing and Marketing Strategy.................................................................................................16
4. Technical Study of The Project.............................................................................................................17
4.1. Product Mix....................................................................................................................................17
4.3. Agricultural Technologies...............................................................................................................19
4.5. Farming Process..............................................................................................................................19
4.5.1. Land Development...................................................................................................................19
4.5.2. Land Preparation, Sowing and Fertilization.............................................................................19
4.5.3. Pre-harvest Management.........................................................................................................19
4.5.4. Post-harvest Management........................................................................................................19
4.7. Project Design and Engineering......................................................................................................20
4.8. Utilities............................................................................................................................................20
4.9. Project implementation Plan..........................................................................................................20
5. Organization and Management..............................................................................................................21
6. Financial Requirement and Analysis.....................................................................................................22
Total Initial Investment Cost..................................................................................................................22
Fixed Investment...............................................................................................................................22

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 Financial Analysis and Statements.........................................................................................................28
Underlying Assumption.....................................................................................................................28
Sources of Fund.................................................................................................................................29
Loan Repayment Schedule................................................................................................................29
Depreciation Schedule.......................................................................................................................29
Revenue Projection............................................................................................................................30
Balance Sheet (Beginning)................................................................................................................30
Income Loss Statement......................................................................................................................31
Cash Flow Statement.........................................................................................................................31
Financial Evaluation...................................................................................................................................32
Economic Benefits.....................................................................................................................................32
EnvironmentaloImpact Of The Project......................................................................................................33
Conclusion.................................................................................................................................................35

Executive Summary
Project name Mixed Farm on Cereal Crop production farm

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Project owner Mr Miftahu Jemal Abdu (Bure Woreda Farmer)

Nationality Ethiopian

Project location Medale Site, Jajjabe /Megersa/ Kebele, Bure Woreda,

Ilubabor Zone,Oromia regional state

Project Produce different Cereal Crops mainly Wheat, Maize, Niger

composition Seed, Sesame and Rice

Source of Land Government

Premises required 100 hectares

Initial investment A total investment of the project is estimated to be Br.

cost 1,500,000.00 From this 20% (300,000) will be covered by
the promoter of the project while the rest 80 % (1,200,000)
will be covered by financial institutions.

Employment At full capacity the farm will hire a total of 90 workers

opportunity
 15 permanent Workers

 75 temporary or seasonal Workers

Technology Technology used by the project to be Modern Agricultural
Technologies in the production of those Proposed cereals
Products

Farm input and raw Improved seeds, fertilizers (Both Urea and DAP), Agro
material chemicals (Herbicides (HC), Pesticides (PC), Fuel for
tractors, Irrigation input and PP bags for packaging.

Market share 70% for domestic and 30 % for export

Benefits of the Source of income ,employment, production and supply of

project crops, value add in agricultural sector, foreign currency
earning and transformation of agricultural technology etc

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 1.Introduction
Ethiopia’s economy is chiefly agricultural, with more than 80% of the country’s Population
employed in this sector. The size of Ethiopia s livestock resource is the largest in Africa and the
tenth largest in the world. While the contribution of the livestock industry to the country's total
exports is currently low compared to its potential. This sector holds great promise as a source of
export diversification for the future. Other Parts of his sector with substantial opportunities for
new investment include plantation crops (Such as tea, coffee and tobacco): production and
processing of oil crops and cotton fish farming: horticulture and floriculture (fruits, vegetables
and flower and poultry, and forestry and forest by-products Although Ethiopia lies within the
tropics temperatures range from a mean annual high of 86 degrees Fahrenheit to mean annual
low of 50 degrees Fahrenheit. Government of Ethiopia has conducive investment policies and
regulations that further attract the private sectors involvement in the economic development
through the various investment and business endeavors. To this effect the owner of the
envisioned project. has planned to invest in Medale Site, Jajjabe /Megersa/ Kebele, Bure
Woreda, Ilubabor Zone, Oromia Regional state in high value crop production. This project study
is done to confirm the market. Technical and financial viability of this project The result of the
study 1s very sound and promising tor the owner to commence the project in the town. In
additional the soil study result confirmed that the area is very suitable for crop production.
The aim of this project plan is to request project expansion in neighboring to previous land since
they have fully developed the former investment land in a sustainable, economically, socially
and environmentally viable to goal of their plan.
The promoter is very dedicated to commence this project hence they expect to get the necessary
support from the regional and local government to make the project functional.
1.1. Brief of the promoters’ business profile
The promoter of this project has a successful business activity for the last decade. Especially in
agricultural sector they have realized Modern agricultural project using modern tools and other
farm input through irrigation by producing Seasonal a year in Bure Woreda on 100 ha land.
Currently they have 100 % developed the previous investment land their activity is very
appreciable and a center of experience sharing. The promoter is also active in public
participation on woreda and Kebele level on various development activities in school funding,
access road construction and clean water supply. In addition their project is contributing into

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local and national GDP by taxation, employment opportunity and national food security. Their
land is fully cultivated and occupied by various economical crop, vegetable and fruit. Having a
detailed knowledge in Agri Business especially by Providing high quality of product like
wheat,rice,bana,pinapple,sugarcane bean to the local market. Being in the agri business, it has
able to create employment access to a minimum of 96 persons which are regularly earning their
income from the business performance. Taking into account his business experience and staff
management experience in the current business the promoter has decided to expand his realm in
agricultural activity and to intensify production capacity in Ilubabor zone of Bure woreda,
Medale Site, Jajjabe /Megersa/ Kebele to create employment opportunity, to generate revenue to
the public, to develop an idle land and resources in the project area.

The Promoters agricultural background, and the aspiration to intensify his farming and
production the promoter has establish this proposal to guide its vision to involve in further
intensifying the meager resources he owned from the former business. The desire to undertake
Farming investment made the promoter to find suitable land in to establish irrigated modern
agricultural farm business and to supply its product to local to as well as foreign markets. Hence,
this proposal has been prepared to elaborate the nature of the intended business, types of business
to be managed, proposed manpower and investment cost, projected revenue and the like to state
the rationale to implement the project in the stated area.

1.2. Project Justification

Ethiopia’s crop agriculture is complex involving substantial variation in cops grown across the
country in different region and ecologies. Five major cereal (corn, wheat, Niger seeds, sorghum
and peanut are the common agriculture and food economy accounting for about three-quarters of
total area cultivated, 29 percent of agricultural GDP in 2005/06 (14 percent of total GDP) and 64
percent of Calories Consumed. There has been substantial growth in cereals, in terms of area
cultivated, yields and production since 2000, but yields are low by international standards and
Overall production is highly susceptible to weather shocks, particularly droughts.
Thus, both raising production levels and reducing its variability. are essential aspects or
improving food security in Ethiopia, both to help ensure adequate food availability. as well as to
increase household incomes.

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Ethiopia is the third largest populated country in Africa with a total population number of 77.4
million (2005), out of which 84% of the populations reside in the rural area.
About 80 percent of the economically active population is engaged in agriculture. The Cultivated
area covered in 2005/06 was about 11.3 million ha, of which 10.5 million ha and 0.77 million ha
covered with annual and permanent crops respectively. Agriculture in Ethiopia has a major
influence on all development processes in the country. as some 85% of the total employment and
9o%% of the country s export are based on agriculture (Environmental Policy. 199/). It also
contributes about 50% of the country s gross domestic product (GDP) and supports around r0%
of the raw material requirements of agro-industries. This high proportion of the country's
economic gains made from agriculture depends mainly on the existing diversity of indigenous
crops/plants and livestock. Crop production is estimated to contribute on average about 60%.
Livestock 27% and forestry and other subsectors around 13% of the total agricultural value
(Ministry of Water Resource, 2001).
Only 40 years ago, Ethiopia exported an average or Sum, of 1000 tons of grains and legumes to
its East African and Arabian Peninsula neighbors annually (Hailu,1991). Cereals production has
remained flat since the early 1970s however. With more than a doubling of population between
1970-30 available food per-capita is declined in recent year. The country has become
increasingly dependent on supplies of the donated food in recent year. Yet become Ethiopia is
endowed in a wealth of natural resource increasingly systems, many with adequate rainfall and
soils fertile enough to sustain a Wide variety of crops.
Only 40% Potential arable land, and less than 5% of irrigable land, is currently being used
(Faught 1988, cited in Stroud and Mulugeta 1992). Agricultural practices and farming systems in
Ethiopia are based on diverse agro-ecological conditions that in turn require varying approaches
in crops production. In general term the agro-climatic zones of the country can be grouped into
three types Kolla (warm semi-arid, at 500-1500m above sea level),Woinadega (cool semi-arid at
1500-2400m) and Dega (cool and humid, higher than 2400m).More recent discipline oriented
Studies further distinguish and define this agro-ecological classification by linking related biotic
factors such as annual rainfall, altitude and temperature (Negash et al, 1989).
The government of the country has been excreting its maximum effort to expand investment
opportunities in the country by designing different policies and strategies that will facilitate
investment through attracting both domestic and foreign investors.

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Likewise, the Oromia regional state government has been working day and night to make
poverty history by making its door open to investors both (domestic country and foreign) to
come and invest in the region. Therefore, it is this ample opportunity that attracts the new
investors to come to Oromia for investing in crop production. Hence, being one of the crop
producers has its own contribution to satisfy the demand of the current market. he crops
production project is planned to Supply different crops types mainly Wheat, Maize, Niger Seed,
Wheat, Peanut Soya Bean and Chickpea. The present economic policy of the country is highly
inviting the private sectors to invest their capitals to agricultural to Sector. As a result, the
investors respond to the government's invitation by contributing their share to the development
process the project is needed because of the highly growing population of the country and its
need of more crops supply and to obtain foreign Currency to the nation.

1.3. Objective of the Project

The main objective of the project is to produce high value crops mainly Niger Seed. Wheat and
Rice, a through modern practice in combination with ground water at Bure woreda, Ilubabor
Zone, Oromia Regional state.
Present activities

Currently, the project is embarking on the introduction of farming of Wheat, Nigger seed and
Rice crop within the member of the project. However, most member groups have been largely
engaged in individual farming activities and animal husbandry.

Planned activities

Depending on the availability of funds, the project intends to embark on the cultivation of 100
hectares of major food crop and the raising of livestock (piggery and small ruminants).

Project support duration

The project is soliciting assistance for a period of One (1) year. Thereafter it will be in position
to finance its operation from the revolving fund that will be established.

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1.4. Socio-Economic Benefits of the Project

The project has the following benefits,

 It will commence the production of organic crops though scientific methods and modern
technology.
 It will provide job opportunity for 90 people
 Will serve as the source of government revenue through business income tax.
 It will introduce modern technology that related to crop production by using different
new varieties crops of high yield.
 It will serve as a role model for other investors who wants to invest in similar business
undertakings in Ethiopia in general and Oromia in particular.
 It will contribute somewhat to the governments objectives of reducing the problem of,
un-employment through creating employment opportunities to thee citizens
 It will generate foreign exchange earnings for the country since the product is exported to
abroad.
 It will provide selected seeds for farmers in the area
 It will contribute some to the area of self-food sufficiency in crop production if gaps are
created.
1.5. Project Location Background and Required Land

A. Location
The proposed project is found in Medale Site, Jajjabe /Megersa/ Kebele, Bure woreda, Ilubabor
Zone, Oromia Regional State. It is situating in the southern part of Ilubabor Zone. Because of
Geographical Location (i.e. near to the largest market like Gambela Region. the district has a
great advantage for accessing the local products to the market and great ideal location for
provision of the demanded commodities to the local societies. Also the woreda has around 24
rural kebeles and two (2) urban towns.

The project site is sited about 778 km distant from Finfine/Addis Abeba, the capital city, and
178km from the capital Town of the Ilubabor zone.

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The proposed project will require 100 ha a total area of land. The proposed land is almost flat
land in which the altitudes varies between 1250 to 2500 a.s.l in which the proposed project will
used for Seasonal Farming and for others purpose

B. Relies, Drainage and Climate.

Relief: The present land configuration of the district is the result of tertiary volcanic (Acidic
volcanic and basaltic flow).The largest part of the district areas belongs the part of South-western
highland and associated with lowland in the south part of the district.

The district has two different altitudes; the vast southern, central and the south western part that
lies with elevation between 1500 and 2000 meter above sea level (63%) are characterized by flat
land. The Northern, western and eastern part of the district lies between 2000 and 2500 meter
above sea level (37%) altitude.

The lower elevations of the district are found on the Gibe river valley part of the district
1,250m.a.s. l and its altitude increasing toward the south part of the district. There is no well-
known mount in the district. The highest elevation of the district is 2,500 Meter above sea level .

Climate: -Climatically, Most part of the district to sub-tropical (bada-dere) and coal (bada) agro-
climates. These two climates do respectively constitute 65% and 20% of the district areas. The
western parts do have cool agro-climatic condition with the mean annual temperature ranges
between 170c – 200c which western part of the district downs classified to sub-tropical climate
with mean annual temperature range 200c – 230c. The rainfall of the district is weekly bimodal
with spring a small rainy season during the months of June, July and August. The west area of
the district annual rainfall varies between 1400mm – 1900mm

C. Soils, Vegetation and Wild Life

Soil: -Chromic & pellic Vertisols, Orthic acri sols and Dystric Nitosols are the major soils types
found in the district. The western and northern part of the district covered by Chromic & pellic
Vertisols while the eastern portion of the district covered by Dystric Nit sols. All the soils types
have good agricultural potentialities.

Vegetation covers. Almost the district areas covered by 65%, 25%, 7.3% and 2.70% do consist
of cultivation, forest, grassland and woodland respectively. The natural vegetation is destroyed
by human intervention. And dense forest does ideal for the harvesting of the natural coffee.

9
Wild Life. The distinguishing feature of the entire of the district is the relative abundance of
bird’s sparsely of mammals, reptiles, and Invertebrates. There is no reserved area for its
conservations.

D. Socio Economic Activity

Agriculture: -Agriculture is the main stay the district of the population and hence it provides
almost the largest shares livelihood of the population. However, it is characterized by lack of
access to modern technology, market, low productivity, dependency on rainfall and lack of
irrigation practice, etc. As a result, the sector is remained subsistence in its nature.

Despite of this fact the district is potential rich particularly for farming practice. The district does
have ideal agro-climatic conditions (dominates by subtropical and cool) that suitable for
production of cereals.

Mixed farming is a common practice prevailing in the district. As a result, the livelihood of the
rural people is dependent on both crop farming and livestock rearing.

Population: Bure Woreda has a total population of 73,000.

The median age of the district population is which indicate that the district population is
extremely young that characterized by high technology to fertility rate and require huge capital
investments to support it. Thus; population variables and economic development in developing
countries has indirect interdependence to each other.

Implementation strategy
The under mentioned strategies will be carried out to achieve the set objectives:

- Community mobilization and sensitization for the further understanding of the project.
- Training of Labour to enhance the capacity of implementation, monitoring and
management of especially agricultural project.
- Purchase and distribution of viable seeds. The group and the trained executive members
will ensure that certified seeds approved by the seed board are bought.
- Supervision, monitoring, reporting and evaluation of project activities.

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Project sustainability:

It is expected that with the provision of funds, the project will be able to achieve its objectives.
The maintenance of the project will enhance by one (1) type of account that is already
established.

2. Agro Ecological Zone and Investment Policies Of Ethiopia

2.1. The Ethiopia Agro Ecological Zones

Ethiopia has five main agricultural production systems. These can be grouped into three major
systems (Feyissa, 1999): The highland mixed-farming system practiced in areas of higher
elevation, usually above 2000m as a crop-livestock complex involving the cultivation of diverse
crops. Continuous cropping alternates with the production of legume and oil crops as a means of
maintaining soil fertility. Peanut, oats and highland legume crops dominate.

The low plateau and valley mixed-farming system practiced in the intermediate or 1ow nigh
lands, mountain foothills and upper valleys, at elevations ranging from 1500 to 2000m.Both crop
and livestock productions are economically essential, crop production is dominated by sorghum
and Niger Seed followed by wheat, Corn and some legume and oil crops.

The pastoral and agro-pastoral farming system is practiced in the arid and semi- arid zones
mainly at elevations below 1600m and with annual rainfall less than 450mm.
In the arid zone, nomadic and semi-nomadic pastoral livestock production dominates, with
camels and goats as important components. In the, semi-arid Zone, semi-nomadic or sedentary
agro pastoral production is practiced with sorghum and Niger Seed as main crops. Livestock
production in the semi-arid zone focuses on cattle and sheep. Water and range developments are
important elements for improving both crop and livestock production under this system major
staple food in Ethiopia vary according to cultural and agro ecological condition Ethiopian end
uroerologa durim) and the Wiaju tetraploid Sesama Central and south eastern parts of the
country. Other important staples are peanut in highland: corn (Eragrostis tef) with its wide
adaptation to various agro-ecologies sorghum, Niger Seed and millets in the lowlands; and
different root crops such as enset (Enset ventricosum) and yam (Dioscorea spp). Major legume
crops are horse bean (Vicia faba), pea (Pisum sativum).

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2.2. Agricultural policy of Ethiopia

Privatization Programme the Ethiopian Government launched a programme for the privatisation
of state owned enterprises in early 1995. Accordingly, the Ethiopian Privatization Agency (EPA)
was established to implement the privatization programme in. the same year, he Government has
laid the ground to privatize most of the state owned enterprises to the private sector.
Accordingly, EPA has received a stock of 113 state owned enterprises from the government Tor
privatization in the years ahead. As indicated in EPAS Work schedule, out of these enterprises, a
total of 43 states owned enterprises are in the pipeline for privatization in the near future. Most of
these enterprises fall under manufacturing, construction, agriculture and agro-industry. Hotels,
transport, trade and mining sectors. There is a strong commitment from the Government side to
fully privatize state enterprises in the coming in few years. Detailed information on the
process of privatization can be obtained from the Ethiopian Privatization Agency.
Agriculture
Agriculture is the main stay of Ethiopia's economy providing employment to 85 per cent of the
population. The sector contributes about 45 per cent of the GDP and 62 per cent of total exports
with coffee alone accountings of total exports2001/2002. Furthermore, agriculture plays a crucial
role in providing raw material inputs for the local industry endowed with wide ranging agro
ecological zones and diversified resource. Ethiopia grows all type of cereals, fibers, crops, all
seeds, coffee, tea, flowers,fruits,and vegetable.The potentially irrigable land is estimated at 10
million hectares. Ethiopia has the largest livestock population in Africa. Fishery and forestry
Resources are also significant. Considerable opportunities exist for new private investment in the
production and processing of the above agricultural crops and resources. The following areas in
particular, have been identified to offer plenty of opportunities to private investors. Food Crops
The food crops grown include Corn, wheat, Niger seed beans, peas, lentils, soya beans,
chickpeas etc. In 1992/2000, Ethiopia produced 11.4 million tons of these 1000 crops on about
8.9 million hectares of land. This is far short of the country s demand for these crops. Great
opportunities, therefore, exist for commercial production and processing of these food crops.
Some pulses can also be produced or processed for the export market. Oil crops such as
rapeseed, linseed, groundnuts, sunflower, ginger seed and cottonseed serve as raw material
inputs tor the edible Oil industry.

12
 3. The Market Study and Project Capacity

3.1. Overview
Cereals and pulses are important food and cash crops for farmers and rural households in
Ethiopia. Wheat, sorghum, and Niger Seed supply over 50% of average daily caloric intake.
Cereal production. Accounts for roughly 60% of rural employment and 807% of total cultivated
land. Households spend an average of 40% of their total food budget on cereals. Pulses occupy
13% of cropland in Ethiopia and are the second most important element in the national diet after
cereals. Despite the economic and food security importance of these crops, data and opinion
suggest a yield gap: actual stallholder farm yields do not achieve estimated potential yields for
wheat, sorghum, Niger Seed lentil and peas. Furthermore, cereal prices in Ethiopia tall between
import and export parity prices, limiting their international trading prospects. Although there are
significant Sesame imports, these reflect the influx of food aid and not competitive trade on the
international market.

The purpose of this study is to help estimate yield gaps in important Ethiopian crops in order to
identify potential areas for productivity gains particularly pea According to the World Food
Programme, 46% of the Ethiopian population is undernourished underscoring the importance of
increasing domestic food productivity. FAO details available for wheat, sorghum, Niger Seed
lentils and peas, which form the bulk of this analysis. Corn is not reported separately by the
FAO, and is instead likely reported with other minor cereal crops under the category cereals, not
elsewhere specified similarly. Other pulses are reported under the aggregate categories 'not
elsewhere specified.

Production, consumption and market for crops in Ethiopia Table 1: Peas in Ethiopia

2005 2006 2007

Production( tones) 167,021 182,268 210,095

Local supply (tones) 205,886 198,331 233,682

Percent of local supply from domestic production 96% 92% 90%

Trade surplus /deficit (tones) -8,865 -15,063 -23,587

Average yield (Kg/ha) 779 817 948

East African regional average yield(Kg/ha) 692 702 781

Source: EAOSTAT

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I. Production

Peas include garden peas and field peas are one of the oldest crops grown in Ethiopia. they are
widely planted in the mid-to-high altitude areas of Oromia, Tigray, Amhara and SNNP region
small holder are the main producer and use no chemical

II. Productivity

The Ethiopian export promotion agency reports that research field using improved technologies
and inputs achieved yield as high as 4000-6000 kilogram per hectares. In contrast pea yield in
Ethiopia since 2000 have fluctuate between 678 (2001) and 1085 (2008) kilogram per hectares.

In 2007, Ethiopia produced 90% of the peas consumed. Ethiopian yields ere e above East
African (120%) and African (130%) average yields, but achieved only by 3% of average world
pea yields. If Ethiopia were able to achieve average yields, it could produce 123% of the local
supply quantity. The Ethiopian Export Promotion Agency highlights use of improved seed as
crucial to increasing pea productivity. National research has led to 13 improved varietals released
since 1981, which yield 2,500 to 4,500 kilograms per hectare under good management conditions
in research fields. On-farm yields average 1,000 to 3.000 Kilograms per hectare.

III Constraint

The members of the project are in dire need to develop them, but could not afford the provision
of basic inputs. The major problem faced by the project and which it will try to address is the
lack of the most appropriate agriculture inputs to restart normal production activities. These
inputs include farm equipment’s, seeds, planting materials, and livestock for restocking of lost
animals. Other issues: -

- Lack of the capacity to provide support service.

- The neglect of people with disabilities in development activities.
IV. Consumption

The majority of peas produced are consumed domestically and peas are an important part of the
daily diet for most Ethiopians

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V. Marketing

Similar to lentils, peas are usually available at local markets from wholesalers, retailers and
directly from producers at weekly markets in rural areas.

Vi. Constraints to Agricultural Productivity in Ethiopia

Key constraints to agricultural productivity in Ethiopia include low availability of improved or

hybrid seed. Lack of seed multiplication capacity for profitability and efficiency of fertilizer use
due to the lack of complimentary improved practices and seed. and lack of irrigation and water
constraints In addition, lack of transport infrastructure investments in productivity increases
higher up the food value chain, such as through marketing and transportation infrastructure,
would increase prices farmers receive for Output while also putting downward pressure on urban
to prices.

There is no evidence of an expansion of the frontier, which would indicate technological change
or intensification. As Dercon and Hill (2010) also question the reliability of the CSA yield data
and point to a small household survey (Minot, 2008) and satellite data suggesting that CSA data
may Overestimate yield gains. Given that there has been little expansion in the use of modern
inputs such as fertilizer (on a kilogram per hectare basis) improved seed, and irrigation, there are
additional grounds to question the validity of the CSA data. However, an important caveat in this
argument concerns the quantity of land under cultivation

3.3. Competition
There are different forms of competition that may face this project. These are price and non-price
based competition. Moreover, there are different competitions that will compete with the project
under discussion either directly or indirectly by both in the domestic and foreign market. But the
project under discussion has diversified marketing strategies that could enable it come up with
the different competitors in the market. Moreover, the Project will frequently conduct
Competitors research which focuses on, the strength and the weaknesses, the different
competitor's strategies, the techniques they use in rendering the service, their customer handling
methods, their product quality and others.

15
Table 2: Schedule of production plan

SN Description Plot in hectare Unit Qty/ha

1 Wheat 32.34 “ 30

2 Niger Seed 32.34 “ 42

3 Rice 32.32 “ 40

Total 97

As clearly indicated in the production plan of the project the crops producing within three
months’ period, which is it deemed to be produced twice a year

3.5. Capacity utilization

Based on the market condition of the project, the envisioned project is planned in three phases
(1st year 70% 2nd year 90%and 3rd 100% to reach full capacity.

3.6. Pricing
The pricing of the project at farm

Table 3: Farm Gate Price

SN Description UOM Unit price in Br.

1 Wheat Quintal 4000

2 Niger Seed Quintal 4000

3 Rice Quintal 4000

3.7. Marketing and Marketing Strategy

The market of the project outputs is mainly targeted for domestic and export market. The
products will be sold at Buno Bedele, Jimma Zone and Addis Ababa city. Which is the nearest
market center and in Addis Ababa depending on the free market price. The main project
marketing strategies are satisfying the customer demand and maintain long lasting market
relationship.

The proposed project will supply 70% of its product for domestic market and 30 % for export

16
 4. Technical Study of the Project

4.1. Product Mix

The envisioned project will produce the following pulses/crops through Seasonal rain water.

I. Niger Seed
The seed of the African yellow daisy Guizotia abyssinica, Nyjer is known by many names.
Originally called Niger in ference to Nigeria and the plant's origin, the name was trademarked as
Nyjer in 1998 by the Wild Bird Feeding Industry to clarify pronunciation. Many backyard
birders also call the seed thistle, but in fact Nyjer is not related to thistle plants or seeds. It is
believed that calling the seed thistle may have e popular because goldfinches, which adore Nyier
also feed on thistle and use thistle down to construct their nests.

II. Rice
Rice belongs to the family “Gramineae” and the genus “Oryza”. There are about 25 species
of Oryza. Of these only two species are cultivated, namely Oryza sativa Linus and Oryza
glaberrima Stead. The former is originated from North Eastern India to Southern China but
has spread to all parts of the world. The latter is still confined to its original home land, West
Africa. Rice (Oryza sativa Linu) is one of the main staple foods for 70% of the population of
the world. Africa produces an average of 14.6 million tonnes of rough rice in the years 1989-
1996 on 7.3 million ha of land equivalent to 2.6 and 4.6 percent of the world total production
and rice area respectively. Africa also consumes a total of 11.6 million tonnes of milled rice
per year, of which 3.3 million tonnes (33.6%) is imported (FAO, 1996).
Rice is among the important cereal crops grown in different parts of Ethiopia as food crop.
The country has immense potentials for growing the crop. It is reported that the potential rice
production area in Ethiopia is estimated to be about 5.4 million hectares. According to
National Rice research and document strategy (2009), the trend in the number of rice
producing farmers, area allocated and production shows high increase rate especially since
2006. The number of farmers engaged in rice production has increased from about 53
thousand in 2006 to about 260 thousand in 2008. Similarly, the area allocated has increased
from about 18 thousand in 2006 to about 90 thousand ha in 2008 along with production
increase from about 150 thousand tones in 2006 to about 286 thousand tones in 2008.

17
III. Wheat
Wheat is a key food staple that provides around 20 percent of protein and calories consumed
worldwide. Demand for wheat is projected to continue to grow over the coming decades,
particularly in the developing world to feed an increasing population, and with wheat being a
preferred food, continuing to account for a substantial share of human energy needs in 2050
(Wageningen FSC, 2016). Based on recent trends, an increasing number of poor consumers in
low- and middle-income countries will want to eat wheat-based food at an affordable price as
populations and economies grow, women and men seek employment in cities, and dietary habits
change. Projections regarding wheat demand growth to 2050 abound and vary widely around an
average of approximately +50%, relative to 2010. The bulk of increased consumption is expected
to occur in developing countries where studies predict demand growth of 34-60% by 2050
(Valin, 2014). Of particular urgency is demand growth out to 2030, when world population
growth is predicted to peak (e.g. 1.15% p.a. in 2010; projected to decline to 0.75% p.a. by 2030
and 0.50% p.a. by 2050). GDP in developing countries is projected to grow at 4.3-5.3% p.a.
(2015-18; low income countries at 6.2-6.6%, World Bank, Global Economic Prospects, 2016)
across income levels, with a positive income elasticity of demand for wheat. China and India,
which are home to half the world’s poor (Sumner, 2012), already produce and consume 30% of
global wheat. By 2023, demand for wheat is expected to grow by 22% in India, 20% in Pakistan
and 19% in North Africa (OECD-FAO, 2014). Wheat agri-food systems prevail in North Africa
and West Asia but both have proven volatile areas where wheat prices and food insecurity over
the last decade triggered civil unrest and massive migration to Europe. Fueling the instability is
the region's wheat import dependency: wheat imports totaled 41 million (M) tons in 2015. In
rapidly urbanizing sub-Saharan Africa, wheat consumption is expected to grow 38% by 2023,
with imports at 24 M tons in 2015 and at a cost of $8 billion. (Source: USDA, Index Mundi,
2016).

4.2. Farm Inputs and Raw Materials

The major inputs and raw materials required for this project are improved seeds fertilizers (both
Urea and Dap), Agro-chemicals Herbicide (HC) and pesticides (PC). Fuel for tractors. These
inputs are easily available in the local market, Ethiopian Seed Enterprise, Agricultural Input
supply corporation of the Ministry of Agricultural and fro Bureau of the regional State. All

18
necessary Inputs are mostly available in local market. The cost estimation of the agricultural
Inputs are indicated on section 6.1.3 of this study.

4.3. Agricultural Technologies

The project will use the following modern agricultural technologies in production of those
products (Sun flower Maize Niger Seed, Peanuts, sesame, soya beans and chick peas).

 Improved inputs(mainly seeds and fertilizer)

 Broad Bed Maker (BBM)
 improved input (mainly seeds and fertilizers)
 Broad bed mixer
 Crop rotation
 Land use planning
 Afforestation
 Demonstration of different technologies on occasional filed days

4.5. Farming Process

4.5.1. Land Development

Like other crops, Land clearing, leveling. Seasonal Crop farm system, and access and farm road
construction will be the land development activities for crop production tractor, leveling and
surveying instruments are expected to be employed for land development purpose.

4.5.2. Land Preparation, Sowing and Fertilization

Land development for crop production is followed by land preparations operation
includes ploughing. disking and harrowing. Sowing follows harrowing with fertilization.
For land preparation tractors with various bottoms like disc plough, disc harrows. Seed.
Fertilizers and drillers will be employed in general

4.5.3. Pre-harvest Management

The pre-harvest management in Crop production usually involves seasonal rain weeding and
cultivation insect pest and disease control, rain water application using different canals gravity
and weed control will be performed by casual labor. Moreover, Insect pest and disease control
will be performed by motorized sprayer.
4.5.4. Post-harvest Management
Post-harvest in Crop production farm comprise picking. Sorting. Grading. Packing transporting.
Storing and marketing general terms, picking, sorting and grading are expected to be carried out

19
manually by casual labor, while transporting or product will be done by tractor driven trailers
and trucks, from the farm and stores to markets respectively.

4.7. Project Design and Engineering

The proposed project comprises stock of different components to be executed different phases of
the project life. These activities include: Design and Construction of various buildings (store),
importing of few machineries and farming.

4.8. Utilities
The project needs to have the following utilities
 Seasonal rain
 . Fuel
 Supplementary Electricity supply.
 Telephone line
 Paved Road Transportation and Drainage Facility

4.9. Project implementation Plan

The project's implementation is expected to take 8 months. The major activities include
Bank loan processing. Construction of the building. cleaning the area around the
building. Procurement of equipment’s and starts rendering services. The time schedule for
the above mentioned major activities is presented below.
Table 4: Project-Implementation-Schedule

SN Activities Date

1 Land Approval April,2024

2 Bank loan processing May. 2024

3 Building and construction work Jun-July 2024

4 Site Development and land development Aug ,2024

5 Farming system development Aug 2024- Nov 2024

6 Purchasing of Machines and Equipment May-Jun ,2024

7 Planting of crops Jun ,2024

20
 5. Organization and Management
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
a CEO with the responsibility of supervising the overall activity of the plant. Depending
up on the nature of the center and the amount of work to be performs; there will be
auxiliary units under the general manager. At full capacity the farm will hire a total of 90
workers.
 15 permanent Workers
 75 temporary or seasonal Workers
Fig. Management structure of the project

CEO

Legal Advisor General Manager Internal Auditing and

Inspection

Production Marketing Department General Administration

Department

As clearly shown in the organizational structure, the crop production project has CEO three
Departments under the general manager, Advisor and the internal Auditing and Inspection. These
departments are the Production Department, The Marketing Department, and the General Service
Department. Under each Department there are different sections which are undertaking different
activities Employees under each unit will be supervised by the unit head that is accountable to
the general manager. Hence the following section deals with the duties and responsibilities of
each division.

21
 6. Financial Requirement and Analysis

Total Initial Investment Cost

The total amount of money that is required to establish the envisaged Crop
Production Project is estimated to be: 1,500,000

Table the total Initial Investment Cost

SN Description Cost in ETB Birr

1 Land, Building and Construction 291,600
2 Machine and Equipment 316,667
3 Vehicles 316,667
4 Equipment and tools 98,100
Total Fixed Investment Cost 1,034,000

5 Pre service Expense 17,50.00

6 Salary Expense
6 Operation Expense 350,000
Total 1,432,500
Contingency (5%) 67,500.00
Total Initial Investment Cost 1,500,000

Fixed Investment
A. Land and Building

S.N Description of works UOM Total Coast

Unit coast in Birr

1 land preparation & site devt ha 98 3,000.00 144,000

2 office and residence m2 500 5,000.00 250,000

3 warehouse m2 200 400.00 80,000

4 green area, garage & parking ha 1 5,375.00 5,375

5 Farming system & infra-structure devt ha 98 10,000.00 50,000

7 Design and supervision 15,000.00

9 1st Year land lease & (10%) down payment - free

Total 291,000.00

22
 B. Factory Machineries
The Farm Tools and Requirements

SN Description Measurement Unit Qty Total Cost

1 Hoes No. 50 130 65,000
2 Spades No. 15 120 1,800
3 Axles No. 15 200 3,000
4 Water Pump No. 15 150 2250
5 Workers Home LS 1 24,000 24,000
equipment
6 Other Agri Equipment LS 1 20,000 20,000
7 Trailer No. 1 120,000 120,000
8 Plough No. 1 180,000 180,000
Total 316,667.00

C. Vehicles

SN Description Qty Unit Price Total Price Remark

In ETB in ETB
1 Tractor 1 316,667 316,667.00
Total 316,667.00

D. Office Equipment

SN Description Measurement Unit Qty Total Cost

1 Managerial Tables Unit 3 3,600 10,600
2 Managerial Chairs Unit 3 2,000 6,000
3 Office table with chair Unit 3 3,000 9,000
4 Sectorial table with chairs Unit 3 2,500 7,500
5 Computer with chairs Unit 3 28,000 84,000
6 Shelf Unit 4 4,500 18,000
7 Filing cabinets Unit 4 3,500 14,000
8 Guest chairs Unit 3 2000 6,000
9 Fax & Telephones Unit 3 2,500 7,500
10 Carpet and Curtain LS 4 3300 13200
Total 98,100
E. Initial Working Capital

The initial Working Capital is estimated to be 350,000 ETB

F. Pre- Operating Service Expense

SN Description Cost in ETB

1 Project Proposal, EIA and Licensing Fee and 17,500.00

23
 others
Total 17,500.00

Operating Cost and at Full Capacity

i. Direct Cost
1. Direct Cost

S/N Type of Area(Ha) Requirement Unit Cost Total Total Cost

Crop Lit/Hectares Birr/Lit Requirement in Br
1 Wheat 25 46 18.5 21,125 21,125
2 Maize 25 48 18.5 21,125 21,125
3 Niger 12.5 52 18.5 10,562.50 10,562.50
4 Seed 12.5 50 18.5 10,562.50 10,562.50
5 Sesame 12.5 51 18.5 10,562.50 10,562.50
6 Chick 6.25 51 18.5 5,281.25 5,281.25
Pea
7 Soya 6.25 54 18.5 5,281.25 5,281.25
Bean
Total 100 84,500 84,500

2. Improved Seed Requirement and Cost

S. Type of Area(Ha) Requirement Unit Cost Total Total Cost

N Crop Kg/Hectares bir/Quintals Requirement In Br
1 Wheat 25 30 4000 60,000 1,500,000
2 Maize 25 12 2000 12,000 150,000
3 Niger 12.5 25 1600 20,000 250,000
4 Seed 12.5 30 2050 30,750 12,826
5 Sesame 12.5 32 2200 35,200 12,826
6 Chick 6.25 30 2000 30,000 187,500
Pea
7 Soya 6.25 30 2200 33,000 206,250
Bean
Total 100 220,950 2,306,562.50

24
 3. Fertilizer Requirement and Cost
S/ Type of Area(H Unit Cost br Total Cost br Total
N Cop a) DAP+URE

Qt/Ha UREA

Qt/Ha UREA
Requirement

Requirement
A

Requiremen

Requiremen
Qt/Ha DAP

Qt/Ha DAP
1 Wheat 25 1 1 25 25 1200 15,000 60,000 750,000 810,000
2 Maize 25 1 1 25 25 1200 15,000 60,000 750,000 810,000
3 Niger 12.5 1 1 12.5 12.5 1200 15,000 30,000 375,000 405,000
4 Seed 12.5 1 1 12.5 12.5 1200 15,000 30,000 375,000 405,000
5 Sesame 12.5 1 1 12.5 12.5 1200 15,000 30,000 375,000 405,000
6 Chick 6.25 1 1 6.25 6.25 1200 15,000 15,000 187,500 202,500
Pea
7 Soya 6.25 1 1 6.25 6.25 1200 15,000 15,000 187,500 202,500
Bean
Total 100 100 100 3,240,000

4. Chemical Requirement Herbicide(HC) and Pesticide(PC)

S/ Type of Area( Requirem Require Require Requir Unit Cost br Total Cost br Total
N Cop Ha) ent ment ment ement DAP+U
Lit/Hect Lit/Hect Lit/Hect Qt/Hec REA
HC PC HC t PC
1 Wheat 25 1 3 50 150 250 200 12,500 30,000 42,500
2 Maize 25 1 3 50 150 250 200 12,500 30,000 42,500
3 Niger 12.5 1 3 25 75 250 200 6,250 15,000 21,250
4 Seed 12.5 1 3 25 75 250 200 6,250 15,000 21,250
5 Sesame 12.5 1 3 25 75 250 200 6,250 15,000 21,250
6 Chick Pea 6.25 1 3 12.5 37.5 250 200 3,125 7,500 10,625
7 Soya Bean 6.25 1 3 12.5 37.5 250 200 3,125 7,500 10,625
Total 100 170,000

5. Labor Requirement and Cost

SN Type Crop Area/Ha/ Req. Unit Cost Total Total Cost

Md/Hec Birr/md Requirement in br
md
1 Wheat 25 130 50 6,500 162,500
2 Maize 25 130 50 6,500 162,500
3 Niger 12.5 70 50 3,250 162,500
4 Seed 12.5 65 50 3,250 81,250
5 Sesame 12.5 70 50 3,250 81,250
6 Chick Pea 6.25 30 50 1,625 40,625
7 Soya Bean 6.25 20 50 1,625 40,625

25
 Total 100 435 50 21,750 2,175,000

1. Indirect Cost(Other Operating Cost)

The Total Operating Cost for Crops Production/Farming Was 8,800,817.50 ETB birr.
Overall Operating Expenses (Direct + Indirect)

SN List of Items Annual Cost List of Items Annual Cost in

in birr Birr
1 Directing Operating Cost 7,976,062.50 7,976,062.50
2 Indirect Operating Cost 824,75.00 824,75.00
Total 8,800,817.50

Expenses
I. Raw Material and Inputs.
The Factory will purchase the raw Materials from Different parts Oromia regional State
Illubabor Zone, from Farmer and MSE.

Year Total RM Cost/ETB

1 3,600,565
2 4,800,753
3-10 6,000,941

II. Salary Expense

SN Description No Qualification Monthly Annual

Salary ETB Salary ETB
1 General Manger 1 BA/Agronomy 4,500 37,000
2 Farm Head 1 BA/Crop 4,000 48,000
Production
3 Crops Experts 1 Dip Crop/Plant 2,000 24,000
Science
4 Administer and 1 BA/Purchasing 3,000 36,000
Finance Dept
5 Purchase and Store 2 Dip/Acct 2,000 48,000
Keeper
7 Marketing and Sales 1 BA/Marketing 3,000 77,000
8 Accountant 1 Dip/Acct 2,000 48,000
9 Cashier 1 Dip/Acct 2,000 48,000
10 Agri Machine 2 10th Complete 1600 62,000
Operator
11 Cleaner 2 Unskilled 800 65,000

26
12 Guards 2 Dip/Mgt 2,000 58,000
13 Temporary 75 Basic 800 1,056,000
Total 2,016,000

III. Other operating Expenses

SN Description Annual Cost ETB Assumption Used

1 Property And Insurance 22,500 1.5%ofFixed Investment Cost
2 Audit and legal fee 12000 1000 per month
3 Uniform 9570 33*350 birr
4 Telephone, Fax and 12,000 1000per month
Postal
5 Cleaning Goods Supplies 9600 800 per month
6 Repair and Maintenance 128,040 1.5%ofFixedInvestment Cost
7 Stationery and other 12,000 1000 per month
office Supplies
8 Electricity 120,000 10,000 per month
9 Water 6500 1.5*3,000m3
10 Fuel 240,000 6000litr*20/year
12 Oil and Lubricant 24,000 %10 of fuel Cost
13 Miscellaneous Expense 24,000 2000/Month
Total 718,675.00

Financial Analysis and Statements

Underlying Assumption
The Financial Analysis of the Envisioned plant is based on the Data provided in the
preceding sections and the Following Assumptions.

A. Construction and Finance

Construction Period 1 years
Source of Finance 20% equity and 70% Loan
Tax Holidays 2 years
Bank Interest Rate 10%
Raw Materials and Operating Cost Increase By 5% after 3 Years
Salary and Wages increase by 2% after 3 Years
Price of Processed food Products Will Increase By 5% after 3 years
B. Depreciation

27
 Building 5%
Office Furniture 10%
Machinery Equipment 10%
Vehicles 20%
C. Working Capital
Accounts Receivable 30 Days
Raw Material Local 30 Days
Work in Progress Daily
Finished Product 5 Days
Accounts Payable 30 Days

Sources of Fund
SN Description % Share Amount in ETB
1 Owners Share 80 1,200,000.00
2 Bank Loan 20 300,000.00
Total 100 1,500,000.00

Loan Repayment Schedule

Year Principal Payment Interest (10%) Total Annual Remaining
Payment in ETB Balance in ETB
0 0 0 0 1,200,000.00
1 1,200,000.00 120,000.00 240,000.00 1,080,000.00
2 1,200,000.00 108,000.00 228,000.00 960,000.00
3 1,200,000.00 96,0000.00 216,000.00 840,000.00
4 1,200,000.00 84,000.00 204,000.00 720,000.00
5 1,200,000.00 72,000.00 192,000.00 600,000.00
6 1,200,000.00 60,000.00 180,000.00 480,000.00
7 1,200,000.00 48,000.00 168,000.00 360,000.00
8 1,200,000.00 36,000.00 156,000.00 240,000.00
9 1,200,000.00 24,000.00 144,000.00 120,000.00
10 1,200,000.00 12,000.00 134,000.00 0

Depreciation Schedule
SN Description Original Value Depreciation Rate Depreciation per
In ETB in % Year
1 Construction and Civil 291,000 5 14,750.00
Work
2 Machinery & Equipment 316,667.00 10 31,666.70
3 Vehicles 316,667.00 20 63,333.40
4 Office Equipment 98,100.00 10 9,810

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 Total 1,022,434 119,560.10

Revenue Projection
Based On the price and the Capacity Program of The factory indicated in previous
Chapter, the revenue of the Factory projected as indicated in the table below.

SN Description Qty Year 1/birr Year 2/birr Year 3-10/birr

1 Profit from Mixed Farm ETB 10,359,132 13,812,176 17,265,200
and other Related
Products
Total Revenue Project. Birr 10,359,132 13,812,176 17,265,220

Balance Sheet (Beginning)

Asset
Current Asset Value in ETB
Cash 248,000
Inventory of Raw Materials and 350,000.00
Inputs
Total Current Asset 598,000.00
Fixed Asset
Land, Building and Construction 291,000
Machineries and Equipment’s 316,667.00
Vehicles 316,667.00
Office Equipment 98,100.00
Total Fixed Asset 1,034,000.00
Total Asset 1,500,000.00
Liability
Account Payable 1,200,000.00
Owner Equity
Capital 300,000.00
Total Liability and Owners Equity 1,500,000.00

29
 Income Loss Statement

Revenue Year 1 Year 2 Year 3-10

Sales Revenue 13,359,132 16,812,176 20,265,220
Purchase of Raw Material 3,200,565.00 4,600,753 6,000,941
Gross Profit 10,158,567. 12,211,423 14,264,279
Expenses
Salary Expense 1,209,600.00 1,612,800.00 2,016,000
Other Operating Expenses 431,205.00 574,940.00 718,675.00
Deprecation Building 14,750.00 14,750.00 14,750.00
Depreciation Mach and 31,667 31,667 31,667
Equipment
Depreciation Vehicles 63,333.40 63,333.40 63,333.40
Depreciation Of Office 9,810 9,810 9,810
Equipment
Interest Expense 120,000.00 108,000.00 54,000.00
Land Payment free free free
Total Expense 7,182,742 7,696,454 7,388,648
Profit Before Tax 2,975,825 4,515,969 6875631
Tax(%30) 892,747.50 1,354,490.70 2,062,689.30
Net Profit 2,083,077.50 3,161,478.30 4,812,941.70

Cash Flow Statement

Year Year 0 Year 1 Year 2 Year 3-10
Equity Capital 300,000.00
Loan Principal 1,200,000.00
Net Sale 13,359,132 16,812,176 20,265,220
Total Cash In Flow 1,500,000.00 13,359,132 16,812,176 20,265,220
Purchase of Raw 0 3,200,565 4,600,753 6,000,941
Materials
Salary Expense 0 1,209,600.00 1,612,800.00 2,016,000
Investment 1,500,000.00 0 0 0
Other Operating cost 0 431,205.00 574,940.00 718,675.00
Loan Repayment 0 120,000.00 108,000.00 54,000.00
Land payment 0 0 0 0
Tax Payment 0 892,747.50 1,354,490.70 2,062,689.30
Total Payment 1,500,000.00 8,847,804 11,223,448 13,024,028
Deficit/Cash Surplus 0 8,847,804 11,223,448 13,024,028
Cumulative Cash 0 8,847,804 20,071,252 33,095,280

30
 Return to Equity 0 8,847,804 11,223,448 13,024,028

Financial Evaluation
1. Profitability

According to the projected income statement, the project will start generating profit in the 3 rd
year of operation. Important ratios such as profit to total sales, net profit to equity (Return on
equity) and net profit plus interest on total investment (return on total investment) show an
increasing trend during the lifetime of the project.

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

2. Break-even Analysis

The break-even point of the project including cost of finance when it starts to operates at full
capacity (year 4) is estimated by using income statement projection.

BE = Fixed Cost / Sales – Variable cost = 34.25 %

3. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back period.
The project's initial investment will be fully recovered within 3 8/12 years.

4. Internal Rate of Return and Net Present Value

Based on the cash flow statement, the calculated IRR of the project is 13% and the net present
value at 8.5% discount rate is Birr 2.29 million.

Economic Benefits
The project can create employment for 90 persons. In addition to supply of the domestic needs,
the project will generate Birr 0.89 million per annum in terms of tax revenue when it starts to
operate at full capacity. Moreover, the Regional Government can collect employment, income

31
tax and sales tax revenue. The establishment of such factory will have a foreign exchange saving
effect to the country by substituting the current imports.

Environmental Impact of the Project

This project has the following impact on the environment on operational phases

1. Impact on Ground Water

Agrochemicals that may leach in from the farm fields are the main pollution sources that can
cause a likely significant impact on the ground water bodies found in the project area. The
company will use and apply pesticides and fertilizers that are registered under the applicable
National and International laws.

2. Impacts on soil

One of the impacts that can be anticipated to arise as a result of the activities of the present
development project is its impact on soil. The crop production will not generate wastes that
would affect the soil in the project area. Therefore, impact prediction and analysis on soil will
focus on the irrigation related activities of the proposed development project.

a) Soil salinity
Soil salinity in any given irrigation scheme can arise from one or combination or the following
causes the first cause that can bring about salinity in irrigated soils is associated with the quality
of the water used for the irrigation itself. Salts carried in the irrigation water are able to build up
in the soil profile, as water is removed by plants and by the atmosphere at a much faster rate than
salts. In this respect, the FAO guidelines for irrigation water quality indicates that waters with
electrical conductivity (ECw) value of less than 0.7 dS/m are considered to be completely safe
and he guideline put no restriction on its use for irrigation purpose Moreover waters which have
an ECw value of 0.7-3.0 dS/m considers it be basically safe with slight to moderate restriction on
its use as it moves toward the upper limit of the range.

The other cause for the emergence of salinity in soils application of artificial fertilizers and
pesticide on the farming fields. Salutes applied to the soil in the form of artificial and natural
fertilizer as well as some pesticide wills not all are used on the crop. Excess nutrient that is not
assimilated by the crops will start to accumulate soil. Salts which occur naturally in soil may
move into solution or may already be in solution in the form of saline groundwater. Where the
groundwater level is both high and Saline, Water will rise by capillary action and then evaporate;

32
leaving salts on the surface aid e upper layers of the soil. Thus, under such mechanisms, salts
present in soils or Saline ground-waters can also cause soil salinity.

The likeliness of the irrigation activities of the present development project to cause soil salinity
in the project area is almost zero. Ground waters in the area are generally low in EC value.
Clearly, when combining these evidences together, it appears that the Contribution of ground
water and the soil itself for salinity build up is quite low. However, Since the ground water table
in some of the command area is shallow and especially so during the rainy season, care will be
taken to appropriately manage the irrigation system to prevent any rise of the ground water
table.In general, the predicted impact of the proposed project on soil salinity will be less
significant. However, necessary precautionary measures and appropriate irrigation management
methods will be put in place as mitigation measures to prevent the impact.
b) Water logging

Water logging is a phenomenon that lowers land productivity through the rise in groundwater
table Close to the soil surface. Due to farm management and appropriate irrigation system, water
logging won’t cause a problem for the envisioned farm.

c) Soil erosion

Soil erosion is another impact that can arise from irrigation development project because
irrigated land is wetter, it is less able to absorb rainfall and runoff will therefore be higher. Since
the project irrigation system is modern and there will be effective water management in place
which will not cause soil erosion.

1. Impacts on terrestrial fauna and flora

a) Impacts on terrestrial flora

Impacts on terrestrial fauna in the project area does not contain forest, there is no forest as habitat
for wild animals.in some parts of the project footprint there are scattered acacia trees. The
irrigation development will not affect areas of wildlife habitats, and not disrupt habitat use
patterns of the wild animals.

b) Impacts on terrestrial flora

The project activities that will affect the vegetation and the terrestrial habitats will include land
clearing and leveling. Building access roads and establishment of site facilities when the project
is implemented there would be a consequent change in the natural Vegetation of the area. The
present bush and grass lands will be changed to fruit farms.

2. Impacts on Socio Economic Environment

a) Loss of land under various land use types

33
If the land is covered by shrub land bushes and scattered acacia trees are used for casual
livestock grazing. However, Livestock grazers have sufficient available land rest of the valley to
allow them to continue their grazing activities. Therefore, changing this area into an intensive
agricultural land does not affect the livestock production in the area.

b) Communicable Diseases prevention and control

Any communicable disease in an individual or in à community results from a dynamic

interactions of the agent, the host and the environment in order to prevent and/or Control the
spread of infectious diseases. The chain can be broken by attacking the agent protecting the host
or changing the environment

3. Environmental heath: safe water supply and sanitation

The basic sanitary facilities in the project areas are almost nonexistence and those available may
not be properly used. The project water sources there is safe water Supply through the project
premises and basic sanitations are in place.

3. Health Care Facilities and Health Programs

Scarcity of resources either in terms of professional human resources and materials for health
services seems to have affected the health delivery system and its development to enable control
of infectious diseases, which may possibly reflect themselves at the regional and national levels.
Standard health care facilities in the project areas are very few and those available are not
equipped and staffed adequately. As a result, they cannot handle cases of different types locally
and the available referral health facilities are constrained only with minor cases.
In General, the project will undertake a separate to identify its impact and suggested
environmental mitigation measure.

Conclusion
Consideration of private profitability apart the project is also economically and socially very
profitable with significant contributions to the national, regional and local development efforts.
At country level the project will contribute to export growth which is one of the major objectives
of the Growth and Transformation Plan of the Federal government of Ethiopia. The regional and
local governments will also benefit from taxes and employment creations. The indirect benefits
will contribute to the growth of project area and the surrounding population. Thus weighed from
every angle the project is justifiably sound

34
35