PRE-FEASIBILITY STUDY
2019
PRE-FEASIBILITY STUDY
FOR THE ESTABLISHMENT OF MULTIPLE PHASES PROJECTS IMPLEMENTATION
OCTOBER, 2019
ADDIS ABABA
YEKRANDE INTEGRATED FARM PLC
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PRE-FEASIBILITY STUDY
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PRE-FEASIBILITY STUDY
FOR THE ESTABLISHMENT OF MULTIPLE PHASE PROJECT
ON
APIARY DEVELOPMENT AND GROWING FARM CROPS
MANUFACTURING (AGROPROCESSING) PROJECT LINE
ESSENTIAL OIL EXTRACTED FROM DEIFFERENCE SPICES
PROMOTER:
PROPOSED PROJECT LOCATION: SNNPR, GURAGHE ZONE, CHEHA WOREDA
PREP. BY: BIMAS CONSULTING SERVICES PLC
Cont. Detail: Abenet Ajeme
Tel:
+251-911-547-774/+251-936-690-978
E-mail: bimasconsult@gmail.com
abi.academic2022@gmail.com
Website: www.bimasconsult-et.com
SEPTEMBER, 2018
UPDATED; (OCTOBER, 2019)
ADDIS ABABA, ETHIOPIA
GSS AGROPROCESSING AND INTEGRATED FARM PLC
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TABLE CONTENT
I.
EXCUTIVE SUMMARY………………………………………………3
II.
BACKGROUND INFORMATION …………………………………...6
III.
MARKET STUDY……………….……………………………………14
IV.
TECHNICAL STUDY…………………………………………………26
V.
ORGANIZATIONAL & MANAGEMENT…………………..………39
VI.
FINANCIAL PROJECTION………………………………………….40
VII.
ANNEXES ……………………………………………………………………………….43
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I. EXECUTIVE SUMMARY
 Overview
The agricultural sector development with two phases engagement that consists of growing farm
crops and industrial based processing; generally named as Integrated Commercial Farming & Agro
Processing Projects are a sector with no doubt among the leading industry in most countries of the
world. It is the industries that produce raw materials for industries and food as-well-as health care
products for the populace.
Because of the significant role the agriculture sector plays, the government of most countries
ensures that they go all the way to subsidize seedlings, fertilizers, and farming implements and
machinery for farmers and also encourage entrepreneurs to go into various kind of farming including
cattle fattening. There are several business opportunities available in the agricultural industry and one
good thing about the industry is that there is market for all the produce from the industry.
On the other hand, the fundamental fact about Ethiopian agriculture sector is that crop farming has
the dominant role over animal farming nationwide. With agriculture contributing to about 68 percent of
Ethiopia’s GDP and with food alone accounting for between 45-51 percent of the average household
income, agriculture is no doubt the backbone of Ethiopia’s economy, employing approximately 62% of
the total population. The sector also accounts for over 73% of Ethiopia’s exports trades.
With climate change and unreliability of rainfall patterns in some years, farmers are facing a huge
challenge of sourcing water for their crops in arid and semi-arid areas and during dry seasons or
drought. This long time challenge has become a setback to food production and food security
especially in low land areas of the country where most farmers rely on rainfall for agriculture and
yet we let runoff and roof water go to other locations, during the rain seasons, and later cry over
food insecurity.
If only we could harness better farming technologies such as irrigation especially farming, which not
only guarantees increased yields per acre, but also guarantee all year supply of produce. Irrigation
is not only critical for food security but also guarantees all year income for any one engaged in such
investment, thus making agriculture a sustainable economic sector. Hence, by considering several
factors and to take its part to contribute in national development, especially in development of
Guraghe Zone; GSS Plantation Integrated Farm Plc has envisioned participating in investment
activities that integrate the two Phases Project implementations.
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Accordingly, the envisaged company plan is to develop Integrated Commercial Farming of Organic
Fruits, Vegetables, Spices & Herbs, and Beehive products for industry raw material which considered asPhase-I project implementation. Whereas, the Agro-processing/Industry based products manufacturing
activity is the second business line (Phase-II) project implementation to be undertaken by the company.
Thus, the purpose of this document is to facilitate pre-investment opportunities, such as, Securing
Project Land for Crop Farming and Agro-Processing plant establishment, Licensing, and Legalization as
well as to present the intended project Potential Indication.
 Establishment
GSS Plantation Integrated Farm Plc is an Ethiopian owned private limited company founded by Ato
GSS Plantation and the Co-founder Ato Brhanu Kassa. The intended project especially Commercial
crops farming (Phase-I) project is proposed to be located in SNNP Regional State, Guraghe Zone,
Cheha Woreda and the surrounding vicinity. On the other hand, the second phase project
implementation by its nature is classified under manufacturing sector; it requires basic
infrastructures like industrial capacitated power supply and other necessary inputs considered by
such project. Hence, the proposed location for Agro-processing plant erection (Phase-II) project is
also within the stated vicinity to crop farming and/or nearest towns as convenient as enabling the
company to undertake the project implementation efficiently towards the ultimate target set-forth.
 Project Compositions
The envisaged Integrated Commercial Farm Company has an interest to start the investment
implementation with priority focus (Phase-I project) on Commercial Oriented Crop Farming (i.e.
Apiaries Development, Growing Spices, Organic Fruit and Vegetable, etc) with quality and
supportive manner generally in the country and particularly in the specific locality. Furthermore, the
company will implement the Phase-II project, which is Agro-Processing (Manufacturing) Operations
that strategically intended to Extract Essential Oil from organic farm crop varieties (Spices).
 Market Issues
As a matter of fact, one of the new trends in farming industry is that with the recent advancement in
technology agricultural investment participants can now improve the various products of the
farming operations. It is now, easier for sector, especially for our country comfortably to actively
participate on the kind of any investment operations of their choice and gain huge market share
while the sector focuses on competent quality farm products. Hence, despite the fact that market is
available for every product lines of the project and to absorb the intended Farm Products and
Services, the company is confident enough that the project will not face market difficulties so it
makes the business ever green.
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 Technical Aspects
Regarding the technical aspects of the project, there are several issues to be raised including:
Location analysis, Land allocation & usage, Production capacity & program, Machinery & inputs,
Production System and techniques, etc. Thus, technical implementation in each Phase of envisaged
farming as-well-as agro-processing projects will go through the use of Systematic Land allocation,
Modern Farm inputs and technologies, improved farm Management system, Irrigation Farming
system and related advanced manufacturing techniques to realize end results and ensure project
viability and sustainability.
 Management Structure
The Company will be structured by hiring sector experts and professional management team at all level
of the farm to ensure efficiency and better productivity. Therefore, Farm specialist, Skilled, Semi-skilled
and Supportive staffs are all inclusive of project personnel at different stages of farm operations. Thus,
the project will provide job opportunities for 62 permanent employees and for about an average of 500
casual/temporary labourers per year.
 Financial Aspects of the Project
The project has envisaged to be established as a commercial oriented farm company with initial
investment cost estimated about ETB 63.25 million. Hence, specifically, the Integrated Farm Project is
proposed Integrate the crop farming and Agro-Processing by considering as Phase-I & Phase-II. It is
crucial to have a separate budget for investment costs of each project phase and implementation lines
as a step-by-step cost determination is indicated in main section of this document. However, for this
summary section only the Total required investment cost is stated with capital source structures. Thus,
out of the total initial investment cost, the owner’s equity contribution will be expected to about ETB
15.75 million) and ETB 47.50 million will be sought from external financer as a long term bank loan.
Based on the proposed market share and product pricing assumptions the envisaged phase-by-phase
project development and integration will financially be viable in both extremes. Hence, the project
return will start by generating net profit of ETB 6.04 million and reached 23.90 million during 1st and
10th years respectively. Furthermore, the liquidity observed from integrated project implementation
shows that it will have positive net cash flow of ETB 21.67 million during start-up and reaches 156.81 at
the end of 10th year.
 Parameters for Investment Decision
The financial evaluation of envisaged integrated project shows that parameters considered for
investment decision are positive and acceptable in both project cases. Accordingly, IRR After and before
tax is about 147% and 152% respectively; whereas, the NPV is about ETB 547.22 million. This
parameter evaluation implies that the pay-back period of an integrated project will be during the 3rd
Year of operations.
Therefore, the project creates backward linkage with the local farmers and agriculture sector
facilitators for sources of input and forward linkage with exporters, domestic traders, and
manufacturing industries.
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II. BACKGROUND INFORMATION
2.1
ESTABLISHMENT
 Company Name: ……….GSS Plantation Integrated Farm Plc
 Company Address: ……..Addis Ababa, Arada Sub-City,
Wor.-04 (A & B Building)
 Contact Detail: …………
 Proposed Location: ……..SNNPR, Guraghe Zone, Cheha Woreda
 Project Type: …………...Apiary dev’t & Commercial Crop Farming (Phase-I)
Agro-Processing (Essential Oil Extraction) (Phase-II)
 Legal Formation: ……….Private Limited Company (Plc)
 Company Status: ………New (Under Formation)
 Investment Permit: ……...Under Process
 Trade Registration:. ……..Under Process
 Trade License; …………..To be Processed
2.2
PROJECT OBJECTIVES
The Company has planned to achieve set of objectives by implementing the envisaged projects with
enhanced crop farming and extracting organic Essential oil reliable production capacity from
different spices products. Hence, implementation of the underlying Phase project has intended to
attain set of objectives at three (3) different levels:
2.2.1 Regional and National Level Objective
The proposed project if it implemented will contribute to the attainment of the national government
strategies on eradicating poverty in the country and contributed to the attainment of Millennium
Development Goals (MDGs) of the United Nations. The project could even fill the gap of the
increasing demand of diversified farm products in the domestic and global market as well as to play
a significant.
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2.2.2 Sectorial and Community Level Objectives
 To Contribute in the employment condition of the vicinity,
 To increase farm productivity,
 To enhance the entrepreneurial skills and knowledge among the community
 To introduce new concept within the farming community how the beekeeping
activities will support as an input for agricultural productivity by playing a role in
crop seed pollination.
 To create quality product development and marketing linkages for small holder
farmers operating in surrounding community,
 To widen the establishment of commercial farm in the areas and encourage
potential access to capitalization.
 To increase present commercial farming level of the society and help augment the
per capita income of the community
 To eventually use the modern technology for heightening the level of community
awareness on the high potentials of commercial farming
 To contribute on the overall attainment of the Province/Woreda administrative
strategy as an Agri-industrial focus.
2.2.3
Project specific objective includes:
 Primarily to secure Land of 150 hectare for envisaged Phase-I project implementation
and adequate Land as appropriate for the Phase-II Agro-processing plant establishment.
 To embark on a sustainable plan to achieve a reliable sources of farm products
 To produce and supply reliable and diversified commercial farm products for local
and global market, which encompasses at full capacity:-
 Apiary development and distribution with the capacity of 2500 beehives,
which in turn enables the project producing organic Honey of 80 tons/year.
 Spices production of different varieties with a total yield of 1500 tons/year
 Fruit and Vegetable farming having a yield of 1500 tons/year at full capacity
 Cattle fattening with a capacity of 3000 cattle heads/year, and
 Forage development having yield capacity of 3500 tons/year
 To enhance the technical skills and thereby decreasing the incidence of low
productivity, and
 To attain target profit earnings that allow the company for further investment
expansion in other regional areas
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2.3 VISION STATEMENT
Our Vision is to become one of the leading Industry Focused Commercial Farm Developer not just
in Ethiopia, but also in the African continent.
2.4
MISSION
The mission of the company is to own a well operated integrated Commercial Farming and Agroprocessing business which always inspired to operate towards the sustainable community
development strategies. The company’s goal is to implement attainable production and supply of top
quality and value added farm products for national and international markets.
2.5 PROJECT RATIONALE
2.5.1 Favorable natural conditions and resources
 Ethiopia is center of origin for several spices and varieties of fruit seed breeds.
 There is a vast area of suitable land for the production of agricultural commodities
including spices in the country and thus it is possible to increase spice production.
 The diverse climatic conditions of Ethiopia are suitable for the commercial farming of
different type of products in different areas of the Country particularly in SNNPR.
2.5.2 Enabling economic policy environment
 The Government of Ethiopia gives priority to exportable agricultural products.
 The government gives attractive incentive packages which includes, amongst
others, a tax holiday Vs financing possibilities & assistance for obtaining land.
 Land can be leased on long term at very favorable conditions, labor is relatively
available and loans can be obtained at advantageous terms.
 Other important advantages of the region are the personal safety and the fact that
government offices work according to procedures.
2.5.3 Strategic location and International recognition
 Ethiopia has a long history of Agricultural products for the domestic market and
has a unique, indigenous product, for global markets
 Ethiopia grows a variety of incense, perfumes and other aromatic materials that
are important in international trade since ancient times.
 Currently, Ethiopia is one of the few countries that dominate the world markets
for incense and myrrh competitively with few others countries.
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Huge and increasing demand
 Ethiopia is one of the countries with high local Agri-product consumption.
 There are good potentials of the local market for household and institutional consumption.
 There is increasing number of buyers/traders/exporters and manufacturers, choose to buy
farm products directly from Ethiopia
 With regards to spices and medicinal herbs, 80 to 90% of humans and animals are
estimated to be treated with plant-based medicines.
 The industrial demand for essential oils and extracts in the country is met through imports.
This suggests the existence of huge demand for essential oils extracted from agricultural
products in the country.
These indicate the possibility of efficiency for integrated commercial farm production and easy
conversion of Ethiopian agricultural products to other assets and the country become leading
producer & supplier of Integrated Farm Products in the world within short period of time.
Thus, the rationale behind establishment of two Phases Project by GSS Plantation Commercial Farm
PLC, is the motive derived from the above listed reasons and visionary plans of the company to
contribute its part in development strategies of the country.
2.6
KEYS TO SUCCESS
The keys to success for intended Multiple Phase Project, which will comprise integration between
Commercial Crops Farming project and Processing with Value Addition of Farm products, are:
 Availability of Healthy and Organic sources of production inputs resources
 Un-met demand and good potential market needs for intended agro products
 Suitability of Climate condition of SNNR in general and Project site in particular
 Access to credit provision at lower interest rate as compared to the business’s return
 Attractive investment policy and other incentive packages for Agriculture sector development
as well as for Agro-processing investment projects
 Long years of pertinent work experiences of project promoters along with knowledge about
the sector and intended investment area.
 Diversified and Integrated farm approach is also the fundamental factor, where one
component helps to improve productivity of the other component (for instance, Bees for Crop
plants productivity).
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2.7 PROJECT SUMMARY
GSS Plantation Integrated Farm Plc is an Ethiopian owned private limited company founded
by Ato GSS Plantation and the Co-founder Ato Brhanu Kassa. The envisaged Integrated
Commercial Farm Company has an intention to start the investment implementation with
priority focus (Phase-I project) on Commercial Oriented Crop Farming (i.e. Growing Spices,
Organic Fruit & Vegetable, and Apiaries Development) with quality and supportive manner
generally in the country and particularly in the specific locality.
Furthermore, the company will implement the Phase-II project, which is Agro-Processing
(Manufacturing) Operations that strategically intended to Extract Essential Oil from organic
farm crop varieties (Spices). The project has envisaged to be established as a commercial
oriented farm company with initial investment cost estimated about ETB 63.25 million and
proposed to be located in SNNP Regional State, Guraghe Zone, Cheha Woreda. In this regard,
the company is currently performing various pre-project implementation activities, such as,
Legalization of project concept, documentation process and all related arrangements with
concerned stack-holders.
On the other hand, the second phase project implementation by its nature is classified under
manufacturing sector; it requires basic infrastructures like industrial capacitated power
supply and other necessary inputs considered by such project. Hence, the proposed location
for Agro-processing plant erection (Phase-II) project is also within the stated vicinity to crop
farming and/or nearest towns as convenient as enabling the company to undertake the project
implementation efficiently towards the ultimate target set-forth
2.8
PRODUCTS DESCRIPTION AND APPLICATION
Regarding Farm Products composition, the Integrated Farming and Agro-processing projects
of the company encompasses, Beekeeping (Honey and other Hive Production), Growing
Different Spices, Fruit and Vegetable Farming as Phase-I; whereas, the Agro-Processing
(Phase-II) project among other plans to be undertaken in products manufacturing process will
have a primary focus on Extracting Essential Oil Products from Herbs and Spices specially
sourced by the farm itself.
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2.8.1 Beekeeping (Apiary Development)
One of the modern bees keeping equipment comprises improved beehives. The manufacturing and
availing of this item will have a profound impact on the development of the apiculture sub-sector in the
country. Beekeeping is one of the specific project activities that the company will focus on under the
envisaged project. The expected output of beekeeping is obviously encompasses Organic Honey, Wax,
Pollen, Bee venom, etc.
 Honey Production
Honey is chosen as the main product to sell since it directly relates to the beekeeping activities and
knowledge the company wishes to sustain and share. Honey is naturally sweet, tasty, healthy, and
enjoyable, which makes it a product for all audiences regardless of demographic. It can be used for
cooking, baking, sweetening, eating and even wound treatment. Honey has been highly prized for its
flavor, as well as nutritional and medicinal values by the local communities. In areas deficient in other
sugar sources, it is highly sought after for its sweetness and energy-giving properties.
According to information compiled in the National Apiculture Research and Development Strategy
Program (ARSD 2014), Ethiopia ranks 10th and 4th in the world in honey and wax production,
respectively. In Ethiopia, honey is almost exclusively used for local consumption, and to a very large
extent (80%) for brewing of mead, locally called ‘Tej’. Almost no wedding or other cultural,
religious and social events can be imagined without the honey wine ‘Tej’.
 Beeswax
Wax is useful primarily for honey comb, cosmetic industries, candle making, ointment and cream,
varnishes and polishes, creating special forms and surfaces for artistic sculptures and for queen cups
preparation to be used for queen rearing to develop and multiply bee colonies. In Ethiopia, wax is largely
collected from traditional hives rather than the moveable frame hives. The wax yield from traditional
hives is estimated to be 8–10% of the honey yield, compared to 0.5–2% from frame hives. Hence, the
envisaged project plan is to work on improved yield of wax production by using proper extracting
technologies.
 Other beehive products
Although demand and utilization of some beehive products have not been practiced in Ethiopia,
there other products of hives can be mentioned. Such as: Royal jelly, pollen, and bee venom which
are in very high demand globally.
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Spices production (Ginger, Black Cumin and Rosemary)
i.
Ginger
The root of Zingiber officinal (Ginger) is the first Oriental spice to be used worldwide. It’s hot,
biting flavor is essential to curry powder yet also contributes to sweet baked goods such as Coconut
bread and essentially used in the food preparation, in preparing non-alcoholic beverages, medicines
and many other applications. Fresh ginger is used in many if not most Ethiopian dishes, along with
garlic and onions, ginger is a big player. Fresh ginger is used in many Ethiopian dishes.
ii.
Black Cumin
Black cumin plant is a type of spice which harvested by hand and their tiny black seeds are the
second most popular seed after pepper seeds. Traditional culinary practices in Ethiopia include the use
of the seeds and powder for baking breads, as additions to pepper sauces and in the preparation of
clarified butter.
iii.
Rosemary
Rosemary is a type of spices with good remedy for depression, nervous tension, headaches and
migraines. It is also recommended to relieve from poor circulation and liver function and for
menstrual irregularities. It is also believed that the rosemary oil stimulates hair growth and improves
the condition of hair, and it is thus a common ingredient of hair-care products today.
2.8.3 Fruits and Vegetable Farming
Fruits are important in the provision of food nutrients such as vitamins and minerals and carbohydrates,
income for the producers and to some extent foreign exchange for the country. As an integral part of
commercial farming plan, the underlying project intends to cultivate three major fruit plants; such as:
Papaya, Avocado and Mango trees. The primary fruit plant that the project intended to cultivate will be
papaya, which is most likely to be harvested by first year of plantation. However, the project will
consider Avocado and Mango plants cultivation on same farm land, whereas, the harvest period of these
fruit plants shall be considered after fourth and/or fifth year.
In addition, the Farm project also comprises of some vegetables, like Garlic and Onion which are most
important commonly used and cultivated bulbous crop in the worldwide. In Ethiopia, both Onion and
Garlic are produced for fresh market, dehydrated as ingredient for food processing, and food supplement
output like dehydrated powder and specially aged garlic extract is hilly applicable in day-to-day use of
almost every households as a fundamental component in many of various cultural and modern dishes.
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2.8.4 Essential Oil (Products of Agro-Processing)
An essential oil is an aromatic volatile substance. It is named after the French word 'essence', (not
the English word 'essential'). It is extracted by distillation from a single botanical species. Essential
oils are found in hundreds of products but are generally used as odorants, flavourings, and
pharmaceutical ingredients. As odorants, they are used in perfumes, lotions and other cosmetics,
soaps, detergents, and other products ranging from animal feed to insecticides. As flavourings, they
are present in a wide variety of foods, including soft drinks, baked products, ice creams, candy,
confections, etc. As pharmaceutical ingredients, essential oils are used in dental products such as
toothpaste, aromatherapy and phyto-therapy products, and a large number of medicines.
2.9 PROJECT BENEFITS
2.9.1 Direct Social Benefit
Basically, the strategic plan of the company is to provide project related training to indigenous
people to help broaden their skills, identify new product uses and build market access. Hence, the
most desirable effects of the projects will greatly improve the living condition of the people
specifically more on the increase of farmer’s family income which will afford them to basic access
on health services, better education of their children and access to employment opportunities. The
project will strengthen the engagement of communities with private sectors and build community
capacity in leadership and entrepreneurship.
2.9.2 Economic Benefits
The project will improve a positive impact in the rural economy of the Region in general and
increase in per capita income of the households as well as the income of the Cheha-Woreda in
particular. Furthermore, it will contribute to foreign currency earnings of the country by exporting
most of intended farm products.
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III. MARKET STUDY AND PLANT CAPACITY
3.1 MARKET OVERVIEW
Agriculture and Agri-products marketing is one of the major activities in the project region. Trading
is almost entirely private, mainly smallholder producers, with no involvement of the public sector.
There are few restrictions and control of agricultural product marketing, but local authorities have
some regulations and charge fees. Traders and brokers operate at all segments of the market.
Moreover, stock movement between markets is largely unregulated. The peculiar Agriculture
production system in the country in general is the pastoral production system that is based on
extensive grazing of communal land for livestock. There is strong traditional farming in the
intensively cultivated mixed production system in the highland areas of the country. These
production systems are acknowledged for possessing better quality indigenous Beekeeping, Cattle
fattening, sheep and goat breeds as well as crop related farms, which can serve as a supply of agriproduct improvement programs.
On the other hand, Spices are the aromatic parts of plants that are used as ingredients in food to
enhance colour, flavour and aroma of the food. The farms producing spices are widely distributing
across wider geographies in the world. Regarding fruit and honey production, there is a change in
feeding behavior -in Ethiopia and other parts of the world -in favor of fruits and vegetables; hence
future reliable domestic and foreign market for fruit produces are in place. Honey production line
also considering a huge market demand with the potential of 60,000 tons/year of production, natural
or organic honey, there is high export demand in Europe as well. However, the current export
volume of the country is not more than 1000 tonns/year
According to studies, Ethiopia is a country with suitable agro-ecologies for various agricultural
products. The various highland and lowland areas are suitable for diversified spices, pulses, and oil
seeds among others. But unfortunately, it had not established itself as a significant international
supplier until recently. Currently, Ethiopian Institute of Agricultural Research (EIAR) is conducting
research pertinent to the spices sub-sector in some of its specialized and semi- specialized research
centers such as Tepi which is a major spices research centre, Araca, Jimma and Bako research
centers
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3.2 FARM PRODUCTS SUPPLY Vs DEMAND ANALYSIS
3.2.1 Beehives Development and Demand
Ethiopia is one of the countries in the world with a long tradition of beekeeping. The country is
estimated to have the largest bee colonies in Africa with over ten million bee colonies. The most
important honey production regions in Ethiopia are Oromia (about 46 percent of total production),
Southern Nations Nationalities and Peoples Regional State, S.N.N.P.R., 22%) and Tigray (5%).
The large majority of beekeepers in the country are still producing honey using traditional hives.
Apiculture experts all agree that beekeepers who have adopted wooden frame hives can easily
increase their production of honey manifold compared to the traditional or the intermediate hives.
Currently, the demand for modern beehives is met through domestic production. According to
Ministry of Agriculture as of 2016 there are estimated 11,143,030 beehives, of which 10,605,120 are
traditional, 509,800 are modern and 28,110 are intermediate. In determining the present demand for
beehive frames it is conservatively assumed that existing traditional beehives will be replaced with
modern ones in the coming 50 years. The present effective demand for beehive frames is thus
estimated at 212,102 pieces per annum (i.e. 2% of the existing traditional beehives).
3.2.2 Spices Production Vs Demand
i.
Production Potential
Ethiopia has a long history of spices, herbs and aromatics occurrence and ancient trade with India
and other countries dating back to around 912 B.C. The average land covered by spices is
approximately 222,700 ha and annual production and supply of spices to the market in 2017 was
about 278,000 ton (EIA data of 2017). In Ethiopia, more than 50 types of spices are produced and
the major spices cultivated nationwide are ginger, hot pepper, fenugreek, turmeric, coriander, black
cumin, cardamom, and black pepper.
According to the data obtained from EIC for 2018, the average spices farming reaches about 224,350
ha of land, with spice production capacity of 294,500 tons per year. Potential areas for the cultivation of
spices are Amhara; Oromiya; Southern Nations, Nationalities, and Peoples; and Gambella regions (EIC
2018), with the total potential for low land spice farming is estimated to be 275,000 hectares. Hence,
likely there is a growing demand for unprocessed and ground spices as well as spice extracts such as
essential oils and oleoresins. It is believed that an immense market potential is forecast due to the
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organic nature of Ethiopian spices. A lot of effort is being made to improve the pre- and postharvesting processes by the private sector with the assistance of the government.
The spice sub-sector has seen positive trend from time to time in terms of attracting buyers from all
corners of the world although much still remains to be done given all the potentials, opportunities
and its long history of cultivation and use. This has been the result of the especial emphasis given by
the government to the development of the sector as has been doing for the other sub-sector too.
ii.
Spices Supply Process
The spices supply process in Ethiopia involves a number of activities that include: input supply,
seed/ variety selection, seed bed and transfer plot preparations, seed multiplication, land preparation,
sowing/planting production, farm crop protection, weed and pest protection, harvesting, thrashing,
semi/full drying and use of appropriate methods of drying, cleaning from foreign matters/ admixture,
proper packing and use of appropriate type of packing material, collection/bulking of the harvested
spices, supplying, wholesaling, grinding/processing at milling facilities and also factories (including
oleoresin preparations), retailing, and domestic consumption, and exporting to overseas markets (EIC).
iii.
Spices Market Demand
Spices cultivation is scattered throughout Ethiopia and is carried out by smallholder farmers. In most
cases, traders act as middlemen between farmers and spice extraction factories hiring trucks to collect
spices from farm gate or intermediate markets. Spice is an important additive to Ethiopian meals.
Therefore, the domestic demand for spices is large.
The current estimate of world imports of spices is 5.25 million tones valued at US $ 1,500million, with
an annual growth rate of 4 percent. This is against a world production of 8.5 million tones valued at US
$ 25 billion. The difference between world production and import is domestic consumption of producing
countries. As far as the product mix is concerned, the bulk of spices are exported in “whole” or “un
ground” form, while only 15-20 percent of spices are sold in ground form, as mixtures of ground spices
and as essential oils and oleoresins.
The substantive shift towards natural products in the West has stimulated the demand for spices in recent
times. Added to this is the new demand wave for organic spices in Europe, USA and Japan. Though the
size of this market is small (around 1 percent of the total market), the annual growth rate is to the tune of
25-30 percent. Hence, there is a large and growing world demand for unprocessed and ground spices as
well as spice extracts such as essential oils and oleoresins (EIA, 2018).
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PRE-FEASIBILITY STUDY
2019
3.2.3 Fruit and Vegetable Production Vs Demand
i. Production and Supply of Fruit Crops
Ethiopia’s fruit productions and exports play a significant role in the local economy as a means of
earning livelihoods for nearly five millions farmers, creating jobs and generating foreign exchange
revenues. Also, the fruit crops sub-sector is one of the priority strategic sectors recognized by the GOE
for its potential for private sector investments and exports. The GOE Second Growth and
Transformation Plan (GTP II covering 2015-2020) provided a greater emphasis aimed at increasing
production of fruit crops nearly by half. Production is projected to reach approximately one million
metric tons by the end of 2020. SNNP, Oromia, and Amhara regional states are the major growing areas
of edible fruits. These regions have the largest potential for production increases using rain-fed as well
as irrigated commercial farming systems.
The major fruit crops produced and exported are bananas, mangos, avocados, citrus, pineapples, papayas,
and strawberries. Fresh fruits’ contribution to Ethiopia’s export earnings is fairly small but it is growing
quickly. According to National Bank of Ethiopia, fresh fruits combined with vegetables generated US $56
million in export sales, accounting for about two percent of Ethiopia’s total agricultural exports in MY
2016/17. During the same period, total exports of fresh fruits reached 21,000 metric tons valued at US $8
million. Although imports are growing faster than exports, Ethiopia is a net exporter of fresh fruits.
Exports are mainly destined to low-end regional markets such as Djibouti, Somalia, and Sudan.
Meanwhile Ethiopia imports fresh fruits from Saudi Arabia, France, and South Africa.
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