Hare Mixed Farm BP

Project Proposal for Mixed Farming Complex April 2024
Contents
Contents ............................................................................................ 1
0. Executive Summary ......................................................................... 5
CHATER ONE: INTRODUCTION .............................................................. 6
1.1. Background ................................................................................. 6
1.2. Basic Information of The Enterprise .............................................. 6
1.3. Objective of the Study and Methodology .......................................... 7
1.3.1 Objectives of the Study................................................................ 7
1.3.2 Methodology .............................................................................. 7
1.3.2.1. Deskwork ............................................................................... 7
1.3.2.2 Primary Data Collection ............................................................. 8
1.4. Description of the Project ............................................................... 8
1.5. Purpose of the Project ................................................................. 10
1.5.1. Access to resources ............................................................ 10
1.5.2. Availability of infrastructure ................................................. 10
1.6. Access to markets or Market niche .......................................... 11
1.7. Capability and Competence .................................................... 11
1.8. Favorable location ................................................................ 11
CHAPTER TWO: DESCRIPTION OF THE PROJECT AREA ......................... 12
2.1. The Project Area ...................................................................... 12
2.2. Specific Project Area Description ................................................... 12
2.2.1. Location of the Project ........................................................... 12
2.3 Climatic conditions .................................................................... 13
2.3.1. RAIN FALL ......................................................................... 13
1|Page By: Elmi Ali Sultan

2.3.2. Temperature ...................................................................... 14
2.3.3. Wind conditions .................................................................. 14
2.4. Topography ............................................................................. 15
2.5. Geology .................................................................................. 15
2.5.1. Soil ..................................................................................... 15
2.5.2. Soil & Land Suitability Study ................................................. 15
2.5.2.1. General .......................................................................... 15
2.5.2.2. Description of the command soil ......................................... 16
2.5.2.3. The soils of the study area ................................................ 16
2.5.2.4. Soil Suitability Conclusion .................................................. 17
2.6. Hydrology ............................................................................... 17
2.7. Environmental Degradation ....................................................... 18
2.7.1. Natural degradation ............................................................ 18
2.7.2. Livestock .............................................................................. 18
2.7.3. Biological environmental (flora and fauna) ................................ 19
2.7.3.1. Flora .............................................................................. 19
2.8. Water supply ........................................................................... 20
2.9. Electricity ................................................................................ 20
2.10. Transport .............................................................................. 20
2.11. Commercial and economic activities .......................................... 21
2.12. Poverty situation .................................................................... 22
2.13. Settlement in project site ........................................................ 22
2.14. Land use ............................................................................... 23
2.15. Present Agricultural Conditions .............................................. 23
2|Page By: Bustaan Agro-Industrial Company

2.16. Existing Crop Calendar (rain-fed agriculture) ........................... 23
2.17. Livestock Production............................................................. 24
CHAPTER THREE: MARKET ANALYSIS .................................................. 25
3.1. General ..................................................................................... 25
3.2. Competitiveness ......................................................................... 25
3.3. Potential Markets ..................................................................... 26
CHAPTER FOUR: TECHNICAL ANALYSIS ................................................ 27
4.1. Production Capacity & Programme ................................................ 27
Table: Production Programme ............................................................. 27
4.2. Raw Materials ............................................................................ 28
4.3. PROJECT EXECUTION PLAN........................................................ 28
4.4. Organization, Management and Manpower ..................................... 29
4.4.1. Organization ........................................................................... 29
CHAPTER FIVE: FINANCIAL ANALYSIS .................................................. 30
Table: Machineries requirement .......................................................... 30
Table: Cost of Building & construction .................................................. 30
Table: Vehicles ................................................................................. 30
Table: Fixed Assets ........................................................................... 30
Table: Depreciation ........................................................................... 31
Table: Repair and maintenance costs based on the standard rate............. 31
Table: personnel plan ........................................................................ 31
Table: Sales Forecast......................................................................... 32
Table: Cost of sales (per year) ......................................................... 32
Table: Costs of sales forecast.............................................................. 32

Table: operating expenses.................................................................. 32
Table: Annual Operating Costs ............................................................ 33
Table: Working Capital Determination .................................................. 33
Table: Planned Investment for the whole project ................................... 33
Table: Loan Repayment Schedule ........................................................ 33

0. Executive Summary
This project proposes the establishment of a Mixed Farming Complex Project for the
production of both livestock and crop products in Harey Kebele of Shinile Wereda,
Siti Zone.
The promoter plans to effectively utilize a total land area of 1,000 Hectares in order
to fully engage in the production of different kinds of crops and livestock at a large
scale. As such, the mixed Farm project will have two Components that are planned
to be implemented at Harey Kebele of Shinile Wereda in a total of 1,000 hectare
land. The components are:
 Component One: A Livestock Farming Practice for the production of Goats,

Camels and Cattle integrated with a Feedlot and Dairy Processing Facilities.
 Component Two: A Groundwater based surface irrigation project for the
production of Vegetables, fruits, Cereals and Fodder Grasses. This
component shall be integrated with an Animal feed processing Facility.
Table: Crop & Livestock Species in the Mixed Farm

Project Sub-component:
More details
Crop Production
 Hey, Alfa alfa and Sudan Grass and other species of
Fodder Grasses
grasses.
Fruits  Mangoes, Bananas, Avocados, Oranges, Lemons, etc..
 Tomato, Cabbage, Onion, Pepper, Salad, Garlic,
Vegetables
Cucumber
Cereals  Barely, Wheat, Maize, Corn, Sorghum, Oats, etc.,
More details
Livestock Production
 production of sheep & Goat for Meat and
Sheep & Goat
 Goat Milk production
 Beef Cattle Fattening and
Cattle
 Dairy Cows Production
Camel  Keeping Camels for both milk & meat production
The total initial investment required to start up the project estimated at Birr
15,000,000.00, from which Birr 4,500,000.00 shall be the owner’s equity while the
remaining 10,500,000.00 shall be financed by Bank loan.
The project is financially viable with an internal rate of return (IRR) of 71% and a
net present value (NPV) of Birr 31.94 million discounted at 8.5 %. At full capacity
operation, the Farm will create employment opportunities for 209 persons.

CHATER ONE: INTRODUCTION

1.1. Background
Ethiopia is predominantly an agriculture country. About 40% of the Gross
Domestic Product and 90% of the Crop sector predominates the agricultural
sector. Besides, nearly 86% of the active rural labour force is engaged in
agriculture.
The agriculture sector is stagnant sector in Ethiopia, although the sector is

very important in the rural economy because of its contribution to the value
addition and diversification of income generation and foreign exchange
inflows to the country.
Ethiopia has a fairly well distributed rainfall and moderate temperature that
allows Production of a variety of tropical and sub-tropical crops and
livestock. This is complimented by fairly fertile soils which support the
production of very high quality and nutritious crops.
1.2. Basic Information of the Enterprise
Name: Bustaan Agro-Industrial Company
Business Type: Mixed Farming
Location: Harey Kebele of Shinile Wereda
Bustaan Agro-Industrial Company is the owner of the envisaged project. The

Company is established with the objective of operating a large scale Mixed
Farming Enterprise in Harey Kebele of Shinile Wereda, Somali Regional
State.

The Project was conceived and developed by the members of the Company
with the intent to apply their extensive technical knowledge, experience and
contacts in the industry to building a successful profitable enterprise.
Members of the Company believe that to participate in this business is a
moral imperative to respond to the scarce agricultural products in the
country specifically in the Somali Region of the country.
Hence, there is a strong self-interest by the owners of the project in

fostering prosperity to this country in general and in Somali Region in
particular through operating in this Mixed Farming Project on a larger scale.
1.3. Objective of the Study and Methodology
1.3.1 Objectives of the Study

The main objective of the study is to conduct a full-fledged feasibility study
for the Mixed Farm Project that constitutes technical factors affecting the
project implementation such as analysis of the physical environment, market
analysis, capacity, implementation, financial analysis and cost-benefit
(economic) as well as environmental impact analysis
1.3.2 Methodology
In general, to attain the above stated objectives the consultant has
developed the appropriate methodology which utilizes both quantitative and
qualitative data/ information from both primary and secondary sources.
Accordingly the methodology and approach employed to conduct the
feasibility study is discussed hereafter.
1.3.2.1. Deskwork
Deskwork was the principal data-gathering instrument employed in the
study. The collected secondary data was analyzed objectively to identify

major marketing variables such as the supply and demand trends etc. The
deskwork involves review of documents and publications collected from
different sources.
1.3.2.2 Primary Data Collection

The activities performed at this stage have served as the basis for an in-
depth understanding of the market for the Project’s products. The data
collected has served as a basis for preparation of marketing strategy. The
primary data was collected through a rapid assessment.
1.4. Description of the Project

The capacity of the envisaged Farm is proposed to be as follows, by taking
into consideration the market study and minimum economics of scale.
 Component One: A Livestock Farming Practice for the production of

Goats, Camels and Cattle integrated with a Feedlot and Dairy
Processing Facilities.
 Component Two: A Groundwater based surface irrigation project for
the production of Vegetables, fruits, Cereals and Fodder Grasses. This
component shall be integrated with a Animal feed processing Facility.
Table: Crop & Livestock Species in the Mixed Farm

More details
Crop Production
 Hey, Alfa alfa and Sudan Grass and other
Fodder Grasses
species of grasses.
 Mangoes, Bananas, Avocados, Oranges,
Fruits
Lemons, etc..
Vegetables  Tomato, Cabbage, Onion, Pepper, Salad,

Garlic, Cucumber
 Barely, Wheat, Maize, Corn, Sorghum, Oats,
Cereals
etc.,
More details
Livestock Production
 production of sheep & Goat for Meat and
Sheep & Goat
 Goat Milk production
 Beef Cattle Fattening and
Cattle
 Dairy Cows Production
 Keeping Camels for both milk & meat
Camel
production
Our market study suggested that there is a huge demand for the Farm’s
products both domestically and on the international market.
Table: Farm Description
Component one: Animal Production

Project Sub-Component Annual capacity in heads Land, Hectare
Cattle production 5,000 100
Goats & Sheep Production 20,000 100
Camel Production 3,000 100
Component Two: Crops Production
Project Sub-Component Annual Yield in tons Land, Hectare
vegetable Production 100 200
fruit 120 200
cereal 40 100
grass 100 200
Total 1,000

1.5. Purpose of the Project

The purpose of this project is to increase the competitiveness of the Region’s
crop and livestock products in both the domestic and export markets by
investing in a large scale mixed farming enterprise.
Ethiopia is well connected to the international world markets by a major

international Airport with sufficient cargo flights out of Ethiopia Airlines. There is a
direct railway and road transport to the port of Djibouti for delivering the finished
products to the market by sea.
The primary objective of this project is to play role on the eradication of

poverty. The project has the following specific objectives:
 To supply crop and livestock products to local and export market

 To create additional job opportunities in the administration,
 To transfer knowledge to the surrounding farmers
 To generate additional foreign currency to the country
 To contribute to the development of the region.
1.5.1. Access to resources

The production of crops and livestock is largely dominated by small scale farm
holder producers covering many parts of the Central, Eastern and Western
parts of the country.
The raw materials and inputs needed for operation of our mixed farm project
are readily available, locally. Production can be stimulated easily for scaling up,
once sufficient demand and capacity is established.
1.5.2. Availability of infrastructure

By this proposal, the promoter requests a total land area of 1,000 Hectares
in order to fully engage in the production of different kinds of crops and
livestock at a large scale.
10 | P a g e By: Bustaan Agro-Industrial Company

As such, the mixed Farm project will have two Components that are planned
to be implemented at Harey Kebele of Shinile Wereda in a total of 1,000
hectare land. The components are:
 Component One: A Livestock Farming Practice for the production of

Goats, Camels and Cattle integrated with a Feedlot and Dairy
Processing Facilities.
 Component Two: A Groundwater based surface irrigation project for
the production of Vegetables, fruits, Cereals and Fodder Grasses. This
component shall be integrated with a Animal feed processing Facility.
1.6. Access to markets or Market niche

Ethiopia is already exporting different kinds of crop and livestock products to
the different countries, though not in a value added form. Current exporters are
reporting more demand for and a diversity of different kinds of crop and
livestock products from their buyers in line with the current trends of
consumers.
1.7. Capability and Competence

Ethiopia has a pool of competent and well educated labour force that will
provide a base for recruiting appropriate staff for the project.
1.8. Favorable location

Ethiopia is located at the heart of Horn Africa, with numerous water bodies and
fertile soils that are driving production of a variety of crops and livestock for
export and regional market.
Shinile is ideal place for this mixed farming project because the area has
good domestic and foreign markets, strong linkages with the surrounding
regions.

Existence of specialized services related to enhanced customs services,

shipping and logistic services, quarantine service, banking and insurance
services, increased trend of information technology based services utilization
capacity and coverage are the main conducive environment for the project.
CHAPTER TWO: DESCRIPTION OF THE PROJECT AREA
2.1. The Project Area
Region --- Somali Regional State

Zone --- Siti
Wereda --- Shinile
Kebele --- Harey
The project area is located in the lower flat plain of Harey kebele of Shinile
Wereda. The plain is situated in the northern west zone of Somali National
Regional State in Sitty Zone situated at 27km from Dire Dawa and 547km
from Addis Ababa.
2.2. Specific Project Area Description

The project is proposed to be located at Harey kebele of Siti Zone. The space
required for establishing the processing facility is estimated to be around
1,000 hectares.
2.2.1. Location of the Project

The project area for the Harey Mixed Farming project is situated in the
Somlai Regional State, Siti Zone, Shinile Woreda of Harey kebele at some 40
km from the Ethiopia and Djibouti Border (near Ali Babieh) along the Rail
and road leading from Djibouti to Dire Dawa and Addis Ababa.

It is bordered on the south by Dembel, on the southwest by Shinile, on the

west by Erer, on the north by Djibouti, on the east by Somaliland and on the
south east by Jijiga Zone. The area is remote with a mobile nomadic
population and inadequate infrastructure.
The Harey Mixed Farming project area can be accessed via the main Asphalt
road which runs from Dire Dawa to Djibouti though Shinile and Dewele and
the Ethio - Djibouti rail way line.
Further, the area is characterized by strong and consistent wind originated

from the Gulf of Aden. The project area covers a land that is flat,
uninhabited, and covered with almost no vegetation.
2.3 Climatic conditions

Climatically, it is mostly deserted with high average temperatures and low
bi-modal rainfall, According to the geotechnical investigation, the area is
usually characterized by strong wind, high temperature and low humidity.
The highest day and night average temperature recorded is 380C (measured
in July to august) and the lowest is 16C (measured in February) the average
day and night temperature of the site is 27.70C. There is little seasonable
and regular rainfall with a mean annual rainfall of 318 mm.
2.3.1. RAIN FALL

There are no meteorological stations in the project area. Nonetheless,
various reports indicates that the project area rainfall is very low, with a
mean annual rain fall of less than 318 mm.
The rainfall of the project area shows a distinct bimodal distribution pattern.
The main wet season (Long rains) normally starts in late March and lasts
until late May. The short rains start in late July and last until beginning of
September. In addition to the low rainfall received in the project area, an
important characteristic of the rainfall received is the high variability.

Such a situation is manifested through sudden floods that result from heavy
rains in the region. Evaporation is very high and minimal water requirements
for growing crops exceed rainfall the whole year.
Figure: Wet and Dry Seasons in Somali Region
Source: Field surveys conducted by SCUK/DPPB. Food security monitoring

and early warning programme revised 2004.
2.3.2. Temperature
Shinile Wereda is one of the hot and arid areas in Ethiopia. According To a
study conducted by the Somali Regional State Environmental Protection
Authority, the highest day and night average temperature recorded was
380C (measured in July to August) and the lowest was 160C (measured in
February). The average day and night temperature of the site is 27.70C. The
hottest season in the project area is between May and August.
2.3.3. Wind conditions

Winds are channeled by the Rift Valley, coming from the Gulf of Aden and
reaches Shinile unobstructed due to the levelness of the re as topography.
The seasonal variation of the wind direction shows a very consistent wind
direction from October to May, the months with the strongest wind speeds,
and still rather consistent wind directions for the summer months, at a 1500
shift.

2.4. Topography
The proposed project area is situated at the eastern end of the Ethiopian Rift
valley, at an altitude varying between 720m and 770m above sea level.
Average elevation in the Shinile Woreda is 766m above sea level; the terrain
is completely flat and covered with almost no vegetation and a firm
sand/gravel ground. There is a dry river bed at a 60m lower elevation on the
western flank of the site that drains the occasional summer rainwater. Hilly
terrains are located north of Shinile away from the project site.
2.5. Geology
2.5.1. Soil
The bed rock in the project site is sandstone and this is covered by
sediments of sand, gravel and silt. Basalt is found on the top of hilly areas
north of Shinile.
According to researches done on the Shinile zone of the Somali Regional

State (Haile, 2008, Gezahegn, 2006), the soils in the area are eutric flub
soils, orthic solonchaks and eurtic regosolos. Land use pattern in the zone
show that 86.35%, 3.38%, 3.77% and 3.55% are covered by unutilized
land, shrub, bush and grazing lands, respectively.
Fluvisols are young soils developed in recent alluvial deposits of river plains,
deltas, former lakes and coastal areas. Soil conditions are highly variable. In
arid regions, they are saline--which is the case for the proposed project
area. Nonetheless, fluvisols are generally good agricultural soils and often
intensively used.
2.5.2. Soil & Land Suitability Study

2.5.2.1. General
Basically soil is known to be the source of life. Every living thing depends on
soil for its existence. Crop production requires sufficient supply of water

either from rainfall or irrigation sources. And the major source of water for
the plant root zone is soil water which firstly stored in the soil during rainfall
or irrigation time. Apart from this, soil provides essential plant nutrients,
support plants by holding down their root masses against wind action. Thus,
detail physical and chemical investigation for an agricultural soil is found to
be important for sustainable crop production.
2.5.2.2. Description of the command soil

The command area has flat plain landform with gentle and slightly increasing
slope (0.1-2%) situation in all of the command areas. Some dead water
ways and small gullies with short lengths and shallow depths are also
observed in their naturally well conserved condition. The soil in the proposed
command area has sufficient depth, for most of agricultural crops to be
grown by irrigation. It is more of alluvial nature, with a deep self-mixed A
horizons dominated by reddish brown to light color and high content of
sandy loam. It has medium to high water holding capacity and fair to
medium infiltration rate especially in some pocket lands within the command
area. As the proposed command area is bare land, no crop observed in the
field during the assessment period. No rock outcrops are observed in the
command area and most parts are covered by lowland shrubs.
2.5.2.3. The soils of the study area

Based on the basic physical characteristics of the command soil, the irrigable
land falls under Class I and Class II which is suitable for irrigation
development with certain amendments. However, as physical observation
made during the field assessment there is some soil erosion by runoff water
during the period of rainfall and requires certain conservation measures for
sustainable irrigation utilization. Contour farming, strip cropping, terracing,
stone mulching/bund, use of permanent crops on the upper slopes, and the

likes could be some of the conservation measures to be taken during

irrigated crops production.
The following measurements and soil characteristics analysis report gives

ample information on the soil of Shinile area. The analysis was made as part
of the ESIA Study conducted for the Ethio-Djibouti Trans-Boundary Water
Supply Project.
2.5.2.4. Soil Suitability Conclusion

Generally, the project soil has sufficient depth with high water holding
capacity. This is very suitable for production of most agricultural crops. The
pH values of all sampled soils are somewhat higher, which is a common
phenomenon for dry environments of the eastern part of the country. This
high pH value indicates that the soils are of alkaline nature and some soil
amendment measures such as application of gypsum (Ca2SO4) and other
basic anion containing materials and use of salt tolerant crops are very
crucial.
However, exchangeable sodium percentage (ESP) and EC values are

minimum indicating that the alkalinity nature of the soil is not limiting factor
for crop production. Most of the chemical properties are under normal
conditions and those which are not in their normal conditions can be
amended by different soil and crop management activities, during the
cultivation seasons. Thus, generally the project soil is possible for irrigation
development with the amendment practices recommended in the physical
and chemical analyses during the course of crop production.
2.6. Hydrology
There is no indication of presence of perennial surface water bodies in the
project area. Occurrence of ground water at shallow depth is not anticipated

due to permeable nature of the overburden (alluvial and wind deposits) and
very low rainfall intensity.
Long-term meteorological data does not exist for the Shinile Zone, but
community perceptions suggest that rainy seasons have shortened during
the last decade-- with rains starting later and ending earlier-- and that rain
frequency, distribution and predictability is decreasing. Water sources in the
area are mainly rivers, shallow wells, natural ponds, artificial reservoirs and
boreholes. The commonest, however, are shallow wells (mostly in seasonal
river beds) but their yields and quality decline in dry season.
Water quality is often a problem for all sources-- boreholes are better but
are very few. Water scarcity is an endemic problem in most areas,
particularly those with no permanent water points.
2.7. Environmental Degradation

2.7.1. Natural degradation
Gullies/erosion is the commonest type of natural degradation that is clearly
observed in the proposed project area. The area is dry and highly wind.
Consequently, soil wind erosion is highly prevalent with dust devils.
Moreover, sand sheets and dunes appear with frequent sand storms. The
project area is characterized by flat terrain and very low and erratic rainfall
intensity. However, arid areas are also exposed to heavy torrential rain that
can result in flash flooding, resulting in heavy erosion and formation of
gullies in the project area.
2.7.2. Livestock
Main feed resources for livestock in the area are natural pastures
(herbaceous vegetation composed mainly of grasses, forbs and browses
(Shrubs, tree leaves and pods). Different grass species are highly important
in terms of palatability and enhancing milk production of cattle when they
are consumed. However those species are dangerously affected by

infestation of prosodies juliflora, an invasive species which has suppressed

most of the indigenous vegetation, prosodic julflora tends to form dense
impenetrable thicket. Hence, livestock are not able to graze underneath and
have difficulties in movement and accessing river water.
A creeping problem of environmental deterioration is linked to an emerging

trend of widespread tree felling for conversion to charcoal. In an area where
resources are very scarce, this will have a clear negative impact on the
environment.
Combined natural and human induced environmental degradations are also

common in the area. In this regard, overstocking, overgrazing and
deforestation are cited as sources of environmental changes and rangeland
degradation. These factors also have facilitated the disturbance of the
ecosystem and enhanced the effect of droughts in the region.
2.7.3. Biological environmental (flora and fauna)

2.7.3.1. Flora
The vegetation in the deserts of the Somali regional state is phyto -
geographically constituted of Somalia Massai type with Semi-desert
scruvkand. The plant types are Acacia and commpihora joined by Euphorbia
and Aloe, as well as grass species such as Dactylocatenium Egypt and
pancium tyrgidum (Tilahun etal 1996). The range lands of Jigjiga and Shinile
Zones are mainly charaterzied by dense shurub and bush land dominated by
Acacia etbaica, A. nilotica, A. seyal, A. Senegal, A. bussei, A, brevispica,
Balanties glabra, commiphora Africana, euphorbia grandis and Grewiavillosa
spp.
The medium height grassland is dominated by Chrysopogon plumulosis and

andropogon greenwayi. Other important species in the grassland
associations are Cenchrus Ciliars, Aristida adscensionis, Cynodon dactylon,
hetropogon controtus, sprobouls marginatus, harpachne schimperi (ICRA,

1997). The rangeland which is the sole provider of food for all types of
animals is overgrazed and degraded in most parts of the vast plains.
Although scarce and increasingly being depleted, vegetation plays an

important role in the life of pastoralists and agro-pastoralists of the project
area. They provide firewood and charcoal and also they are the main
materials in construction of houses and feed for the livestock including
camel, cattle, goats and shoats. Some of the shrubs are also valued as
medicinal source.
2.8. Water supply

Out of the total population of the Woreda, only 10% get pure water from few
shallow and deep bore holes. Water from the bore holes can be salty such as
at Dewele’s boreholes so that only livestock can use it.
As far as livestock watering is concerned, this is available only during rainy

times. In dry seasons and during drought years, pastoralists are forced to
travel long distances in search of water and pasture. Moreover, concerning
animal health service there is no any animal health service for all the
kebeles.
2.9. Electricity
The 230 KV transmission line connecting Dire Dawa and Djibouti is passing
by Shinile, supplying Djibouti with 35 MW produced power to an average
price of USD 7 cents per kw/h. Shinile is connected to the transmission line
with its own distribution network.
2.10. Transport
Lack of infrastructure is the major bottleneck for the development of the
Woreda. Except the main road concerting Dire Dawa to Djibouti and the
railway connecting Dire Dawa and Djibouti, there are no roads to connect

Kebeles to the Woreda Town. The Town is not properly planned and needs a
master plan that takes in to consideration future development interventions.
2.11. Commercial and economic activities

The livelihood of the Woreda population mainly depends on livestock rearing.
The majority of the population in the area depends on the income generated
from this economic activity while the remaining few depend on trading.
However, the absence of veterinary services, proper range management as
well as a traditional and backward method of animal husbandry has resulted
in food insecurity challenges for the local community.
The Zonal capital serves as the market center for the area. Nonetheless,
other trading centers dwellers of the Shinile Woreda frequently visit are
Gadamaiti, Beki, Dire Dawa, and Djibouti. These trading corridors are also
sources for food and other goods including rice, whet, flour, pasts, sugar,
new and second hand clothes, and all types of household items. The main
commodities sold by pastoralists in the area are livestock and to a lesser
extent livestock products (milk and ghee).
Lack of demand for hides and skins in the region means these are hardly
sold at all. Trade (particularly livestock sales) with the rest of Ethiopia is
very limited. The interface markets with the rest of Ethiopia are Negelle, Dire
Dawa, Meisso, Moyale and Babile, where livestock is sold for consumption in
the Ethiopian highlands and as raw materials for export oriented
slaughterhouses. But the volume of trade is very small.
The reasons suggested for this poor trade with other Ethiopia areas include
poor transport links and lack of historical trading and understanding between
such distant areas (Ethiopia main meat processing plants are very far from
the region) cause such trading to be perceived as risky. Other sources of
income and trading activities include collection and sale of construction
materials, firewood, charcoal, gums and resins and engagement in unskilled

labor activities such as working in tea shops and livestock herding for the
richer households.
2.12. Poverty situation

The Shinile Woreda is among the poverty stricken areas in the region.
Wealth in this area is generally determined by livestock holdings, particularly
camels, shoats and cattle. There is relatively little employment to be found
outside the towns, other than seasonal agricultural labor, and sometimes
livestock herding. In the area, it can be generalized; the skilled labor force is
extremely limited.
Consequently, acute poverty prevails in the project area creating a situation

where individuals and households cannot afford basic food and non-food
items. The main causes of poverty in the project area include.
 Severe droughts resulting from very low and unpredictable rainy

seasons.
 Inadequate water for domestic and non-domestic use
 Under developed livestock /livestock products markets and
unwillingness to sell livestock (which is traditionally a measure of
wealth and status in the area).
 Lack of employment opportunities.
 Over-dependency on relief food.
2.13. Settlement in project site

From site visit and information from the Woreda, currently there are no
settlements as well as no grazing or water point sites. However, it is
indicated by the Wereda officials that there are mobile pastoral communities
who claim ownership of the site area. Therefore, the consultant recommends
that The promoter should facilitate with the responsible government body, to
clear the situation by providing appropriate compensations.

2.14. Land use

The land use of the area surrounding the project site is determined by the
climatic conditions and the natural resources available in the area. The
surface is almost barren with few scattered bushs. The severe climatic
conditions make it difficult for most domestic animals to survive; however,
some livestock may occasionally occur during rainy seasons.
The major land use types in the command area include bare land abandoned
for long time, and desert bush land.
As the information obtained from the local community, physical observation

made in the field during the assessment period and according to the
information obtained from Shinile woreda, the land use type of the woreda is
indicated as follows:
2.15. Present Agricultural Conditions

There is no Agricultural activity at the project area. As the area is desert
with little natural rainfall and no available surface water resources,
traditional and subsistence type of livestock farming practice is the only
agricultural activity practiced by the community surrounding the project
area.
2.16. Existing Crop Calendar (rain-fed agriculture)

The agro-climatic zonation for this particular area is hot and dry tropics
(more of dry lowland having mono-modal, erratic and insufficient rainfall
distribution with scattered desert bushes). As the information obtained
from regional bureau of agriculture, woreda agriculture office, and from the
interview of local community indicated the project area

has no sufficient experience of crop production both with rainfall and

irrigation. The major limiting factor is the insufficient amount and
distribution of rainfall and little experience of irrigation activity from ground
water resources.
2.17. Livestock Production
Livestock production is a major component of the farming system in the
project area. It is also one of the economic activities for provision of dairy
products, transportation and for household income generation. According to
the information obtained from woreda livestock agency and health clinic, and
the community, animal disease is not as such common in the woreda and
the project area, however, Pasturollosis, Faciolla, Newcastle, and ecto-
parasites are the most prevalent diseases in the area.
Vaccination and treatment is the major means of preventing these diseases

and farmers use their traditional healing mechanisms practiced from
generation. In the area natural grazing is the major sources of feed for
livestock. Communal grazing land is the common means of grazing
arrangements among the farmers of the area.

CHAPTER THREE: MARKET ANALYSIS
3.1. General
Local production of crops and livestock will attract a good market only if it is
competitive enough in price and quality.
The future demand for crops and livestock is thus contingent upon income,
price and change in consumption habit of the population, particularly the
urban population.
Having considered all those factors impinging on demand for modern food
items, demand for the project outputs is forecasted to grow at the average
growth of the national economy during the recent past, i.e 7% per annum.
3.2. Competitiveness
Somali Region has a higher potential for supply for crops and livestock.
Looking at the trend in consumption, especially in the Djibouti and other
international markets where consumers are now looking for health and
convenience is more competitive and suited to respond to this market trend,
as can be elaborated below:
Ethiopia’s crops and livestock are known in the international market for their
uniqueness from two angles.
1. The excellence in terms of quality and taste (without additives or artificial

preservatives).
2. The fact that they can be exported in the organic quality, unlike many
other countries that are competing with Ethiopia is the largest producer
and exporter of internationally certified organic crops and livestock.

3.3. Potential Markets

The Saudi Arabia and the EU present the most potential market for livestock
and crop products. Currently, over 105 companies export crop and vegetable
products to the EU and Saudi Arabia, and according to enquiries available at
the organic trade point at NOGAMU, a number of importers from Europe are
interested in organic fruits, vegetables and livestock. The main target will be
the processors and food distributors, especially in the Saudi Arabia, UAE, UK,
Netherlands, Germany and France.

CHAPTER FOUR: TECHNICAL ANALYSIS
4.1. Production Capacity & Programme

Table: Farm Capacity
Component one: Animal Production
Project Sub-Component Annual capacity in heads Land, Hectare
Cattle production 5,000 100
Goats & Sheep Production 20,000 100
Camel Production 3,000 100
Component Two: Crops Production
Project Sub-Component Annual Yield in tons Land, Hectare
vegetable Production 100 200
fruit 120 200
cereal 40 100
grass 100 200
Total 1,000
It is anticipated that the Farm would start production at 75% of its capacity
and would reach at 85% during the second year, and 100% during the third
and subsequent years of its operation.
Table: Production Programme

Year 1 2 3 4
Capacity utilization (%) 70 80 90 100

4.2. Raw Materials

The major raw materials required for the Farm are seeds, pesticides, animal
feed and others. Proper maturity and the degree of freshness are very
important aspects that determine the quality of the product.
Table: Raw Material required per annum
No. Description Unit Cost (Birr)

1 seeds LS 480,500.00
2 Pesticides and other inputs LS 505,000.00
3 Animal heads LS 19,000,000
Total 19,985,500.00
4.3. PROJECT EXECUTION PLAN

The promoter has started conducting a thorough research and analysis of
Ethiopia Mixed Farming sector since 2016. However, as for the project’s
execution the plan is as follows:
 Phase 1: Project Preparation - (company creation and project site

concession negotiation)
 Phase 2: Technical Work - (technical specifications, environmental
studies and business plan)
 Phase 3: Project Construction – (start of project work, construction
and commissioning)
 Phase 4: Operations Start
Regarding the life span of the project, the promoter plans to operate the
Mixed Farming Complex for as long as the business is sustainable.

4.4. Organization, Management and Manpower

4.4.1. Organization
Good organization and management structure is the major factor success for
any project. The promoter is the General Manager of this project. The
General Manager is responsible in planning, organizing and monitoring the
overall operation of the project. The Farm will be organized having three
main units responsible for administration & finance division, Production and
Technical Division, and Marketing and Research Division that are
accountable to the general manager.
The head of administrative and finance will do all administrative tasks like
customer relations, financial account, budgeting and other similar activities.
Technical works and production, machinery maintenance will be under close
supervision of technical & production head and the marketing &sales division
head follows the overall market situation such as sales promotion, purchase
of inputs and sales of output as well as distribution. Having assisted by three
division heads with her experience and educational background, the general
manager will lead the project smoothly. The organizational set up of the
project will be as follows:
Fig: Organizational set up of the project
General Manager
Adminstyartive
Production and Techinical Marketing and Sales
and Finance
Department Department
Department
Techinical Production Finance Market and

HRM section Sales section
section section section Research section

CHAPTER FIVE: FINANCIAL ANALYSIS
Table: Machineries requirement

No. Description Value, Birr
1 Farm Machineries and 23,147,147.64

Equipment
Total 23,147,147.64
Table: Cost of Building & construction

No Description Value (Birr)
1 Site clearing and Land Preparation (200Ha) 6,000,000.00
2 Borehole construction 6,200,000.00
3 Irrigation facilities 9,000,000.00
4 Storage Facilities 5,300,000.00
5 Office and Stores 5,137,500.00
7 Garage 206,250.00
Total 31,843,750.00
Table: Vehicles
No Description Value (Birr)
1 ISUZU-FSR (4) 11,875,000.00
2 Vehicles for management and service for workers ( 10,812,500.00
Total 22,687,500.00
Table: Fixed Assets

No. items value (Birr)
1 Machinery and Equipment 23,147,147.64
2 Building & construction 31,843,750.00
3 Vehicles 22,687,500.00
Total 67,678,397.64

Table: Depreciation
Description Depreciation rate Original value Annual Dep.
Machineries 0.10 23,147,147.64 314,714.76
Buildings 0.10 31,843,750.00 1,184,375.00
Vehicles 0.10 22,687,500.00 268,750.00
Total Fixed Asset 67,678,397.64 1,767,839.76
Table: Repair and maintenance costs based on the standard rate

Description Percentage Total investment Repair & maintenance
Machineries 0.03 23,147,147.64 94,414.43
Buildings 0.05 31,843,750.00 592,187.50
Vehicles 0.10 22,687,500.00 268,750.00
Total Fixed Asset 67,678,397.64 955,351.93
Table: personnel plan

Salary
S.N Description No. Qualification Experience (Birr)
I Administrative staffs Monthly Annual
1 Manager 1 Economist 3years 10,000.00 120,000.00
2 Executive secretary 3 Secretary 2years 2,000.00 72,000.00
Finance &
3 administration head 3 Accounting 2years 4,000.00 144,000.00
4 Accountant 6 Accounting 2years 1,500.00 108,000.00
5 Cashier 8 High school Graduate 2years 800.00 76,800.00
6 Clerk 12 High school Graduate 0 years 700.00 100,800.00
9 Quality control head 9 Food science 2years 1,500.00 162,000.00
12 Commercial head 3 Marketing 3years 1,800.00 64,800.00
Personnel of direct
13 labor 3 Management 2years 1,500.00 54,000.00
14 Store keeper 9 12 graduate 2years 850.00 91,800.00
15 Purchaser 9 Procurement 2years 800.00 86,400.00
16 Salesperson 24 High school Graduate 2years 800.00 230,400.00
19 Laborer 132 - 0years 600.00 950,400.00

20 Janitors 26 - 0years 700.00 218,400.00

25 Grease & oil man 6 TVT Graduate 2years 500.00 36,000.00
Drivers 6 TVT Graduate 0 year 1,000.00 72,000.00
Guard 9 - 0 year 500.00 54,000.00
Total 269 2,641,800.00
Employees benefit
(25% BS) - 660,450.00
Grand Total 3,302,250.00
Table: Sales Forecast

1st year 2nd year 3rd year 4th year
Capacity utilization 0.70 0.80 0.90 100.00
Sales 25,060,000.00 28,640,000.00 32,220,000.00 35,800,000.00
Table: Cost of sales (per year)

Description Value (Birr)
Raw material 1,885,500.00
Packing materials 1,100,000.00
Total Costs of products sold 2,985,500.00
Table: Costs of sales forecast

Costs of sales
forecast Year 1 Year 2 Year 3 Year 4 Year 5
Capacity utilization 0.70 0.80 0.90 100.00 332,550.00
Total costs of sales 689,850.00 788,400.00 985,500.00 1,034,775.00 1,086,513.75
Table: operating expenses

Items Value (Birr)
Distribution Expenses 2,382,355.98
Fuel Expenses 1,120,263.59
Depreciation 1,753,125.00
Maintenance and Repair 950,937.50

Salary Expense 3,302,250.00

Total Operating Costs 9,508,932.07
Table: Annual Operating Costs

Description Year 1 Year 2 Year 3 Year 4
Capacity utilization 0.70 0.80 0.90 1.00
Total Operating Costs 6,656,252.45 7,607,145.66 8,558,038.86 8,814,780.03
Table: Working Capital Determination

Days of Required working
Direct costs coverage capital
Raw material 120 295,166.67
Packing materials 120 33,333.33
Wage and Salaries 120 825,562.50
Distribution Expenses 120 794,118.66
Fuel Expenses 120 373,421.20
Total working capital required 2,321,602.36
Table: Planned Investment for the whole project

Description Costs (Birr)
Machineries 23,147,147.64
Buildings 31,843,750.00
Vehicles 22,687,500.00
Total Fixed Asset 67,678,397.64
Total working capital required 2,321,602.36
Total Investment Costs 15,000,000.00
Table: Loan Repayment Schedule

Year Loan Interest (8.5%) Outstanding
Repayment Balance
0 20,000,000
1 2,000,000 1,700,000 18,000,000

2 2,000,000 1,530,000 16,000,000

3 2,000,000 1,360,000 14,000,000
4 2,000,000 1,190,000 12,000,000
5 2,000,000 1,020,000 10,000,000
6 2,000,000 850,000 8,000,000
7 2,000,000 680,000 6,000,000
8 2,000,000 510,000 4,000,000
9 2,000,000 340,000 2,000,000
10 2,000,000 170,000 0
Table: Profit and Loss Statement

Description Project Years
1 2 3 4 5
Sales 25,060,000 28,640,000 32,220,000 35,800,000 39,380,000
Direct cost of sales 689,850 788,400 985,500 1,034,775 1,086,514
Gross Profit 24,370,150 27,851,600 31,234,500 34,765,225 38,293,486
Operational expense 6,669,643 7,622,449 8,575,255 8,832,513 9,097,488
Profit before tax and 17,700,507 20,229,151 22,659,245 25,932,712 29,195,998
interest
Depreciation 1,767,840 1,767,840 1,767,840 1,767,840 1,767,840
EBITDA (Earning before 19,468,347 21,996,991 24,427,085 27,700,552 30,963,838
tax, interest and
depreciation)
Interest expense 1,530,000 2,000,000 2,000,000 2,000,000 2,000,000
Profit tax (35%) 0 0 7,230,736 8,376,449 9,518,599
Net profit 16,170,507 18,229,151 13,428,509 15,556,263 17,677,399
net profit margin ratio 65 64 42 43 45
Table: Cash Flow Statement

Production Year
Cash in flow 0 1 2 3 4 5
Owners' equity 46,000,000
Existing Bank

Loan
Additional Bank 54,000,000
Loan
Net Profit 0 16,170,507 18,229,151 13,428,509 15,556,263 17,677,399
Depreciation 0 1,767,840 1,767,840 1,767,840 1,767,840
Total Cash in 15,000,000 16,170,507 19,996,991 15,196,349 17,324,103 19,445,239
flow
Cash out flow
Replacement 0 0 0 0 0
loan repayment 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
Capital 17,678,398 - - -
Expenditure - -
Working capital 2,321,602 - - - - -
Existing Working
capital
Pre-operating 0
expenses and
interest
Total Cash out 15,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000
flow
Net Cash Flow 0 14,170,507 17,996,991 13,196,349 15,324,103 17,445,239
Cash balance 16,492,109 34,489,100 47,685,449 63,009,552 80,454,790
Table: Balance Sheet Statement

Description Investment Production
Year
ASSETS 0 1 2 3 4 5
Current Assets
Cash 2,321,602 16,492,109 34,489,100 47,685,449 63,009,552 80,454,790
Other Current 0 0 0 0 0
Assets
Total Current 2,321,602 16,492,109 34,489,100 47,685,449 63,009,552 80,454,790
Assets
Fixed Asset

Machineries 3,147,147.64 2,832,433 2,517,718 2,203,003 1,888,289 1,573,574

Buildings 11,843,750.0 10,659,375 9,475,000 8,290,625 7,106,250 5,921,875
0
Vehicles 2,687,500.00 2,418,750 2,150,000 1,881,250 1,612,500 1,343,750
Total Fixed Asset 17,678,398 17,678,398 15,910,558 14,142,718 12,374,878 10,607,039
Pre-operating Costs 0 0 0 0 0 0
Total Asset 15,000,000 34,170,507 50,399,658 61,828,167 75,384,430 91,061,829
LIABILITIES
Short term liability - - - - - -
Long term liability 14,000,000 12,600,000 11,200,000 9,800,000 8,400,000 7,000,000
(Bank Loan)
Sub Total 14,000,000 12,600,000 11,200,000 9,800,000 8,400,000 7,000,000
CAPITAL
Owner's Equity 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000
Retained Earnings 0 16,170,507 34,399,658 47,828,167 63,384,430 81,061,829
Earnings 16,170,507 18,229,151 13,428,509 15,556,263 17,677,399
Sub Total 6,000,000 22,170,507 40,399,658 53,828,167 69,384,430 87,061,829
Total Liability & 15,000,000 34,770,507 51,599,658 63,628,167 77,784,430 94,061,829
Capital
Net Worth 6,000,000 21,570,507 39,199,658 52,028,167 66,984,430 84,061,829

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Project Proposal for Mixed Farming Complex April 2024

0. Executive Summary ......................................................................... 5

CHATER ONE: INTRODUCTION .............................................................. 6

1.1. Background ................................................................................. 6

1.2. Basic Information of The Enterprise .............................................. 6

1.3. Objective of the Study and Methodology .......................................... 7

1.3.1 Objectives of the Study................................................................ 7

1.3.2 Methodology .............................................................................. 7

1.3.2.1. Deskwork ............................................................................... 7

1.3.2.2 Primary Data Collection ............................................................. 8

1.4. Description of the Project ............................................................... 8

1.5. Purpose of the Project ................................................................. 10

1.5.1. Access to resources ............................................................ 10

1.5.2. Availability of infrastructure ................................................. 10

1.6. Access to markets or Market niche .......................................... 11

1.7. Capability and Competence .................................................... 11

1.8. Favorable location ................................................................ 11

CHAPTER TWO: DESCRIPTION OF THE PROJECT AREA ......................... 12

2.1. The Project Area ...................................................................... 12

2.2. Specific Project Area Description ................................................... 12

2.2.1. Location of the Project ........................................................... 12

2.3 Climatic conditions .................................................................... 13

2.3.1. RAIN FALL ......................................................................... 13

1|Page By: Elmi Ali Sultan

2.3.2. Temperature ...................................................................... 14

2.3.3. Wind conditions .................................................................. 14

2.4. Topography ............................................................................. 15

2.5. Geology .................................................................................. 15

2.5.1. Soil ..................................................................................... 15

2.5.2. Soil & Land Suitability Study ................................................. 15

2.5.2.1. General .......................................................................... 15

2.5.2.2. Description of the command soil ......................................... 16

2.5.2.3. The soils of the study area ................................................ 16

2.5.2.4. Soil Suitability Conclusion .................................................. 17

2.6. Hydrology ............................................................................... 17

2.7. Environmental Degradation ....................................................... 18

2.7.1. Natural degradation ............................................................ 18

2.7.2. Livestock .............................................................................. 18

2.7.3. Biological environmental (flora and fauna) ................................ 19

2.7.3.1. Flora .............................................................................. 19

2.8. Water supply ........................................................................... 20

2.9. Electricity ................................................................................ 20

2.10. Transport .............................................................................. 20

2.11. Commercial and economic activities .......................................... 21

2.12. Poverty situation .................................................................... 22

2.13. Settlement in project site ........................................................ 22

2.14. Land use ............................................................................... 23

2.15. Present Agricultural Conditions .............................................. 23

2|Page By: Bustaan Agro-Industrial Company

2.16. Existing Crop Calendar (rain-fed agriculture) ........................... 23

2.17. Livestock Production............................................................. 24

CHAPTER THREE: MARKET ANALYSIS .................................................. 25

3.1. General ..................................................................................... 25

3.2. Competitiveness ......................................................................... 25

3.3. Potential Markets ..................................................................... 26

CHAPTER FOUR: TECHNICAL ANALYSIS ................................................ 27

4.1. Production Capacity & Programme ................................................ 27

Table: Production Programme ............................................................. 27

4.2. Raw Materials ............................................................................ 28