Yidnekachew Dabessa good food award winner, USA 2018

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YIDNEKAHEW DHABESSA COFFEE PLANTATION

This study intends to establish a commercial coffee farm in Ethiopia, Jimma Zone of Oromia National Regional State, Limmu Kossa Woreda, located about 75km away from the town of Jimma.  The farm is planned to be developed on 106 ha of land, of which an average of 1,219 quintals of clean coffee will be annually produced at full maturity.

According to recent data from ICO, in international market, the world total   demand for coffee was estimated at 135 Million bags and actual supply was remained to be 121 million bags. The deficit was about 8%. And ICO’s forecast reveals that the world demand is expected to grow by about 3% in the year 2010/11.  

BACKGROUND INFORMATION

Ethiopia, a birth place of coffee Arabica, is the first and fifth largest coffee producer  in Africa and the world, respectively. Coffee is the major export commodity cultivated in Ethiopia. Coffee grown in Ethiopia is well known all over the world for its excellent quality and flavor, Mocca.

According to the information provided by the Ministry of Agriculture and Rural Development (MOARD), Ethiopia earned close to 528  million US dollars, by exporting 172,000 tons  of its  total production during the current budjet year ,2010. Annual production of the country is estimated at 400,000 tons of clean coffee.

At present, the contribution of  the coffee sub sector in driving foreign exchange earnings in the national foreign exchange earnings  is estimated  to be  40%. Moreover, coffee contributes 25% of GNP, 10% of GDP, and 25% for employment oportunity for the nation as a whole.

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The total  area is planned to be developed   in three consecutive years. Thus, owing to the nature of maturity period of coffee tree - which starts to give yields right from the 4th year - revenues will commence to accrue at the beginning of the 4th year from the 1st year plantation.

The total investment capital required to reach full capacity is Birr 7,718,602 and that is planned to be invested   fully in 3 years of implementation period. Of the total investment cost, it is envisaged that 40% (Birr 3,087,441) be financed through own source and the rest 60% (Birr 4,631,161) is planned to be financed through bank loan.

The project is financially viable with an internal rate of return (IRR) of 49 % and a net present value (NPV) of Birr 55.4 million, discounted at 8.5 %.

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