Establishment of coffee plantation
Project Profile on the Establishment of coffee plantation
This project profile deals with the establishment of coffee plantation in Amhara National Regional State. The following presents the main findings of the study
Demand projection divulges that domestic as well as export demand for coffee is substantial and is increasing with time. Accordingly, the plantation will produce 600 quintals annually. The total investment cost of the project including working capital is estimated at Birr 984.37 million and creates more than 49 job opportunity and Birr 505.04 thousand of income
The financial result indicates that the project will generate profit beginning from the second year of operation. Moreover, the project will break even at 47.6% of capacity utilization and it will payback fully the initial investment less working capital in 2 years and 8 months. The result further show that the calculated IRR of the project is 31.2% and NPV discounted at 18% of Birr 371,082.99
In addition to this, the proposed project possesses wide range of economic and social benefits such as increasing the level of investment, tax revenue and employment creation.
Generally' the project is technically feasible, financially and commercially viable as well as socially and economically acceptable. Hence the project is worth implementing.
2.Product Description and Application
The potential of coffee production in Ethiopia is very high as a result of altitude, ample rainfall, optimum temperature, suitable planting material as well as fertile soil. Furthermore, the country is of particular value to the world as it is the home or the origin of Coffee Arabica with best inherent quality and production potential. In Ethiopia, coffee is grown at various altitudes ranging from 550-2750 meters above sea level.
Currently coffee is produced using three very distinctive methods. These are: the forest system, the small farm or cottage system and the plantation system. The forest system means coffee grows under a forest canopy and needs very little human interference. The small farm or cottage system is the most popular method for producing coffee in Ethiopia representing about 95% of all coffee production. The cottage system consists of small backyard gardens with a few coffee trees, which are harvested by hand. The plantation system, which is becoming increasingly popular, is farming on a larger scale using modern processing equipment and ensures more quality assurance advantages.
Basically, coffee plantations grow coffee trees for the domestic and for foreign markets. The plantation is run on the basis of modern farm management system with the purpose of maximizing production and profitability.