Agro-Logistics and Market Integration Hub (ALMIH)

Project Pre-Feasibility Study Development of Agro-Logistics and Market Integration Hub (ALMIH) in West Part of Amahara National Regional
State
A concept note from Indian success stories and is only adapted structurally to our countrys context while it needs further refinement for its technicality & functionality by agricultural specialists. Submitted to: ANRS 2012 Bahidar By Mesfin Raji Kiltu, EMBA
Pre-Feasibility Study
[Agro-Logistics and Market Integration Hub (ALMIH)]
Development of Agro-Logistics and Market Integration Hub (ALMIH) in West Part of Amahara National Regional State
Project Pre-Feasibility Study
By
Mesfin Raji Kiltu
June 2012 Bahidar
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Preface
In every developmental endeavour, sustainability is one of the major critical issues that are to be given great emphasis based on systemic intervention. The provision of policies and strategically emulated agendas by their own virtue has substantive advantages in crafting the direction and soundness of purposes. Transformation from agrarian economy to modern economy needs an immense effort not only allocation of resources but solicitation of innovative ideas and systems which deemed to be beneficial for accelerating the planned developmental programs. On account of this notion, we can learn a great deal from developing nations who already make use of their expertise knowledge and large expenditure for testing and verifying of system functionality. The simplest thing to do is to search for these sound projects and make an adaptation to our country specific. This concept note is one among such manoeuvres to ensure sustainability in agriculture and alleviate poverty.
The project was formerly produced and submitted to Bahirdar University as part of a term paper for the study of Masters of Business Administration in Executive. In preparing the former as well as this revised document, even though I played the leading role & devoted much of the time, energy and efforts from inception to preparing the whole document, I extend my thanks to the following colleagues of mine; Amlaku Adamu, Tamirat Dejene, Kindyehun Egezew, Gashaw Awoke, Tadesse Eshetu, and Zerihun Tesefaye and would like to acknowledge their contribution as group member in giving me constructive comments and in providing me with the relevant statistical data. Therefore, they also indeed deserve for the credit perhaps, I didnt consult with them on submission of the document to third parties since for good reason I took the full responsibility in doing so. Finally, what I would like to emphasis at this point is I am providing the project to the regional government in the notion of contributing something valuable even though I may not specialized in the field but the document may serve as a start point as it is stated clearly in the cover page, and advice the pertinent bodies to make arrangement for a thorough review of the document by agricultural specialists before endorsing, pending or totally rejecting the project idea since it cost nothing other than benefiting the society at large.
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Table of Contents
PREFACE.................................................................................................................................. III TABLE OF CONTENTS ......................................................................................................... IV LIST OF FIGURES .................................................................................................................. VI LIST OF TABLES ................................................................................................................... VII LIST OF APPENDICES ....................................................................................................... VIII ACRONYMS ............................................................................................................................. IX EXECUTIVE SUMMERY ......................................................................................................... X LIMITATION OF THE STUDY ............................................................................................ XII 1. INTRODUCTION .................................................................................................................. 1 1.1. Background of the project .............................................................................................. 2 1.1.1. Demographic situation of the Amahara ................................................................. 2 1.1.2. Socio-Economic condition ..................................................................................... 2 1.1.3. Agro ecology .......................................................................................................... 3 1.2. Purpose, objectives & scope of the project .................................................................... 6 1.2.1. Purpose of the project ............................................................................................ 6 1.2.2. Project General Objectives .................................................................................... 6 1.2.3. Project Specific Objectives .................................................................................... 6 1.2.4. Scope of the Project ............................................................................................... 7 1.3. Name and description of the service for the project .................................................... 9 1.3.1. The concept of Agro-Logistics and Marketing Integration Hub ............................ 9 1.3.2. Components of ALMIH ........................................................................................ 10 1.3.3. Market Integration Center (MIC) ........................................................................ 10 1.3.4. Product Collection Centre (PCC) ........................................................................ 11 1.3.5. Agro-processing projects development ................................................................ 13 1.4. 1.5. 1.6. 2.1. 2.2. 2.3. Benefits of an Agro-logistics Hub ............................................................................... 13 Life span of the project ................................................................................................ 14 Project sponsor ............................................................................................................. 15 Government Policies .................................................................................................... 15 Need for Integrated Approach...................................................................................... 16 Linkages with existing Marketing Channels ................................................................ 17
2. COMPATIBILITY WITH GOVERNMENT PRIORITIES ............................................ 15
3. APPROACH & METHODOLOGY ................................................................................... 17 4. MARKET PLANNING AND DEMAND ANALYSIS ...................................................... 18 4.1. 4.2. Situational analysis ...................................................................................................... 18 Market characterization and demand forecasting ........................................................ 24 4.2.1. Demand and supply factors.................................................................................. 24 4.2.2. Demand & Supply Forecasting ............................................................................ 25
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Pre-Feasibility Study 4.3.
Value Chain and Marketing strategy of the project ..................................................... 20 4.3.1. The agro-industry system ..................................................................................... 20 4.3.2. Aggregation of outputs as a viable marketing strategy ....................................... 20
4.4.
Materials and Input Supplies Study ............................................................................. 21 4.4.1. Grain Crops ......................................................................................................... 21 4.4.2. Agricultural Inputs ............................................................................................... 21 4.4.3. The role of Farmers Cooperatives ....................................................................... 22
5. TECHNICAL AND TECHNOLOGICAL ASPECTS....................................................... 24 5.1. 5.2. Technical & technological requirements of the project ............................................... 27 Location and site Selection .......................................................................................... 28 5.2.1. Locations for Development of Agro-Logistics and Marketing Hub ..................... 28 5.2.2. Possible Locations for Development of Agro-Logistics Hub ............................... 28 5.2.3. Proposed site of ALMIH in West Gojjam Zone .................................................... 31 5.2.4. Details of Agro and Horticultural produce of B/dar Zuria and Mecha weredas. 31 5.2.5. Accessibility of the selected site to the rest of West part of Amhara regions ....... 32 5.3. 5.4. Options for Project Implementation ............................................................................. 33 Modes of Implementation ............................................................................................ 35 5.4.1. Role and obligations of the Private Partner for development of ALMIH ............ 37 5.4.2. Role and obligations of the ANRS for development of ALMIH ............................ 38 5.4.3. Payment Terms and Mechanism .......................................................................... 38 6. ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT...................................... 39 7. FINANCIAL ANALYSIS AND FORECAST .................................................................... 41 7.1. 7.2. Investment costs of the pilot project ............................................................................ 42 Projected cash flow ...................................................................................................... 43
8. PROJECT RISK ................................................................................................................. 45 9. SOCIAL COST BENEFIT ANALYSIS.............................................................................. 46 9.1. 9.2. Considerations.............................................................................................................. 46 Determination of social value of the project ................................................................ 48
10. CONCLUSION AND RECOMMENDATIONS ................................................................ 51 REFERENCES ........................................................................................................................... 52 APPENDICES ............................................................................................................................ 53
List of Figures
Figure 1: ANRS Government Revenue and Expenditure from 1995-2010 .................................. 2 Figure 2: Trend of Agricultural Productivity over the past eight years (Qt/ha) ............................ 4 Figure 3: Production (P) (Millions of Qtls) versus Cultivated land (C) (Millions of Htrs) .......... 4 Figure 4: Areas and Production through Irrigation from 2001-2010 ............................................ 5 Figure 5: Topographic map of ANRS ........................................................................................... 5 Figure 6: Conceptual framework of Agro-logistics and Market Integration Hub......................... 9 Figure 7: Flow of produce in the agro logistics and marketing integration hub ......................... 11 Figure 8: Flow of Inputs in the agro logistics and marketing integration hub ............................ 11 Figure 9: Curtailment of the Agro-supply Chain ........................................................................ 12 Figure 10: Hub and Spoke Mechanism ....................................................................................... 13 Figure 11 : Flow Chart of the Approach and Methodology for the Study .................................. 18 Figure 12: Marketing activities (Purchasing) of cooperatives in five years in Qt ...................... 24 Figure 13: The product Value chain ........................................................................................... 20 Figure 14: Farm Input Utilization Practices in the period of 2003/04- 2009/10 ......................... 22 Figure 15: Established Cooperatives and their membership during the past five years only ..... 23 Figure 16: Marketing activities of Agricultural related cooperatives from 2005/06 - 2009/10 .. 23 Figure 17: Hypothetical Model of Flow of goods to ALMIH from all PCCs ............................. 33
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List of Tables
Table 1: Distinguishing features between ALMIH and ECX ..................................................... 17 Table 2: Marketing activities of cooperatives/unions from 2005/06 to 2009/10 in qt ................ 24 Table 3: Total Supply forecast of agricultural products and inputs for the years (2010-2014) .. 26 Table 4: West part of Amhara's available Freight Potential ....................................................... 26 Table 5: Five years Forecasted marketable freights in West part of Amhara in million qt ........ 27 Table 6: Location advantage of the Zonal Administrations on selected parameters................... 28 Table 7: Composite score of the Zones under each parameter based on suitable weightings .... 30 Table 8: Details of Cultivated land and Production around selected project site ....................... 32 Table 7: Risks associated with the implementation options ....................................................... 34 Table 8: Comparative study amongst the modes of implementation .......................................... 37 Table 9: Breakup of the project Cost .......................................................................................... 43 Table 10: Revenue and Expenses Estimates for the first 5 years of operations (Million Birr) ... 44 Table 11: Cash flow over the next five years (Million Birr)....................................................... 45 Table 12: Social cost benefit analysis of the project ................................................................... 49
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List of Appendices
Appendix 1: Area Allocation of the Facilities Proposed for the ALMIH in west part of Amhara .................................................................................................................................................... 53 Appendix 2: Assumptions for the Project ................................................................................... 54 Appendix 3: Agricultural and horticultural production and supply of inputs in Amhara in the year 2009/10................................................................................................................................ 56 Appendix 4: Selection parameters and composite scores of weredas in west Gojjam Zone ...... 57
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Acronyms
ADLI ALMIH ANRS BOFED CSA ECX FDRE GDP GTP IRR MIC MOFED NPV PASDEP PCC SWOT UNIDO USD Agricultural Development Led Industrialization Agro-logistics and Market Integration Hub Amhara National Regional State Bureau of Finance and Economic Development Central Statistics Authority Ethiopian Commodity Exchange Federal Democratic Republic Ethiopia Growth Domestic Product Growth and Transformation Plan Internal Rate of Return Market Integration Center Ministry of Finance and Economic Development Net Present Value Plan for Accelerated and Sustained Development to End Poverty Produce Collection Center Strength, Weakness, Opportunity, and Threats United Nations Industrial Development Organization United States Dollar
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Executive Summery
Despite its richness and abundance of natural potential, Amhara region is not doing very well yet in boosting its competitiveness in the domestic and overseas markets. Regardless of large quantity, high diversity and general attractiveness of agricultural and horticultural supplies, several constraints exist in the value chain. According to some observations, exceedingly price escalation and too fragmentation and fluctuation of outputs are an important bottleneck in value chain of agricultural produce. Examples of other agro logistical bottlenecks are sub optimal post harvest processes and a lack of conditioning throughout the agro chain. To be able to overcome some of the bottlenecks, new logistic concepts are required. One possible solution is to increase the shelf life of the products. For example by means of enhancement of the cultivation process (cutting back plants, using fertilizers), improvement of the selection process (check on quality and ripeness), pre-cooling of the products and conditioning of the chain. Based on these premises ALMIH is conceived. The central idea is that Amhara region serves as a hub (central collection and distribution point) for the regional and national market of local food grains, fruits, and vegetables. ALMIH offers opportunities for taking lead and adding value. The general idea of this concept is that Amhara, a producer of considerable amount of agricultural crops, fruits, and vegetables both in volume as varieties, could develop towards a regional market place or hub where products not only from farmers of the region but also from regional producers are brought to this hub where (potential) buyers are also present. The hub potentially supports the development of more efficiency along the value chains of the various produce at offer as well as an improved functioning of the markets. Hence, based on the above premises, this project is designed with a total capital outlay of nearly 766.5 million Birr. The project is designed to serve the whole Amhara especially individual and organized farmers are believed to benefit at large from the project outputs. This pre-feasibility study is conducted for one of the two projects which will be developed in the region and expected to be established in between the area adjacent to weredas of Bahirdar Zuria and Mecha to serve the West part of Amhara
region. The second project will be for the East part of Amhara region and will be developed after this project proved functional and getting it into operational. The projects profitability is determined to show NPV = 153.05 million birr, IRR= 17.65%, and Discounted Pay Back period of 4.07 years if is being operated as private firm. The projects social cost benefit analysis has also shown that its profitability indexes will get more acceptable even from the societal benefit point of view. It is my strong conviction that the regional government will be interested to put the project into effects at all its disposal either independently or as partnership with the available resources despite the big investment outlay that the project requires.
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Limitation of the Study

Even though every effort has been made to follow the project formulation procedures and produce the pre-feasibility study document based on the selected project idea, due to the projects intriguing nature, complexity, and the requirement of having sufficient time and technical capability compounded by the newness of the concept in the country compelled me to prepare the projects pre-feasibility study document only at the present condition. Therefore, it is my strong belief that the facts and findings given in the document should be updated and supported with rigorous assessment to verify their authenticity with sufficient time of inquiry. Secondly, despite having limited resource at hand some of the topic provided in the document require detailed workout by specialists with multidisciplinary involvement and at least should be attached to practical experiences so as to enhance the credit worthiness of the conceived idea.
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1. Introduction
It is becoming almost a decade now for Ethiopias economic growth in getting its grip and pace profoundly and achieving its milestones. Agriculture sector is still playing the leading role and serves as the backbone of the economy in driving the service and industry sectors for gradual transformation that will be taking place within the next twenty years. However, the periodical and cyclical drought and environmental impacts coupled with traditional and poor agricultural practices creates a stumbling block and threatened the sustainability of the result obtained so far. Amhara region is full of untapped natural resources but its richness will be substantial and meaningful if and only if it is supported by modern practices and techniques to cope up with the agility of technological advancements. Following the relative success of PASDEP, the Government of Ethiopia has developed a macro development agenda to sustain and reinforce the progress of this tangible outcome the Growth and Transformation Plan (2010/11- 20014/15). The GTP maintains ADLI as a foundation of policy development, and targets an economic growth rate of 14.9 percent. ADLI continues as a foundation of development and the GTP also aims to create favourable conditions for the industry to play a key role in the economy. This project is conceived taking the outstanding achievements as an opportunity to show my ambition and strong commitment to the agriculture led transformation initiative for the government and contribute modern concept of agricultural management system that will boost the competitiveness of the sector in domestic and international markets. I found it to be worthy to note that the data gathered in producing the document are used all from secondary sources especially from the yearly reports of statistical bulletin and developmental indicators of the Regional Bureau of Finance and Economic Development (BoFED) and yearly Agricultural Sample Survey Reports of Central Statistics Authority (CSA) unless specified exclusively. Nonetheless, all the graphs and tables are produced by the author of this document based on either cross-sectional or time serious data from the sources of same.
By Mesfin Raji | Introduction
1.1. Background of the project

1.1.1. Demographic situation of the Amahara
According to Development Indicators of Amhara Region produced by BoFED (2009/10), the demographic situation of the Amhara region shows an annual growth of 1.8 percent which leads the total population size to 18.2 million as of 2009/2010. The population of the region accounts roughly 22.78 percent of the total population of the country while in terms of area the region contributes around only 15 percent. Regarding the settlement pattern, the overwhelming majority, i.e. nearly 87.4 percent of the population, resides in rural areas and is engaged mainly in agriculture. In addition, population distribution is uneven among zones and Woredas. The report has indicated that generally, the highlands are densely populated than the lowlands and the age structure of the population, 42.59 percent are age 14 and under and those who are greater than or equal to 65 constitute 3.97 percent of the population. Remarkably, the young age dependency ratio is 79.69 and that of the old age is 8.53 percent this makes the societal dependency ratio as 87.13 per cent.
1.1.2. Socio-Economic condition
Over the past six consecutive periods of 2005 to 2010, the total revenue of the region grows from year to year. However, the revenue covers only 22.53% of the expenditure and still more is to be done to expand the capacity of covering the expenses(BoFED, 2009).
Revenue in million Capital 7,000 Amount in Million(Birr) 6,000 5,000 4,000 3,000 2,000 1,000 Expenditure in million Recurrent
Figure 1: ANRS Government Revenue and Expenditure from 1995-2010 By Mesfin Raji | Introduction 2
With regard to investment, the region is working hard to attract investors by availing a comprehensive incentive packages at its disposal. The current Status of Licensed Investment Projects (1992/03 - June 2009/10) in the region show that a total of 2,348 Agricultural related projects have been given Investment Certificate but out of which only 591 (25%) are entered implementation phase creating 222, 872 employment opportunity(BoFED, 2009). In Amhara National Regional State, though agriculture contributed about 55.8 percent of the total regional GDP accounting for employment of 88.7 percent of the total population (BOFED, 2006), no aggregate data is available that shows the recent contribution for the country GDP in each economic activities. As per the brief note released by MoFED about the countrys estimate in 2003 EFY(MoFED, 2003); Consumption has registered about 91.2% of GDP of which the share of Government is 8.1% and the remaining balance (83.1%) is attributed to the Private final consumption. Rate of Investment has reached 25.5% of GDP and has registered 30.3 % annual average growth over the last eight years. Domestic saving has been 8.8% of GDP and Export has been 16.8% of GDP and has registered 32.1 % annual average growth over the last eight years. Import has been 31.8% of GDP and has registered 30.1 % annual average growth over the last eight years.
1.1.3. Agro ecology
Crop production is the major agricultural activity in the region with the largest share. In this regard, different annual crops (cereals, pulses, oil seeds, fibers, cotton and root crops) & Perennials are grown in different parts of the region based on their agroecology suitability condition. Cereals account for more than 72 percent of cultivated land and 81 percent of total crop production. The principal cereal crops in the Amhara region are teff, barley, wheat, maize, sorghum and oats. Pulses and oil crops are the other major categories of field crops (BoFED, 2010). Thus, in the region there is high potential for specialization. The region experiences bi-modal type of rainfall distribution where there is large coverage rainy season Meher which encompassing all areas of the region and small rainy season Belg which covers the Eastern parts of the region.
By Mesfin Raji | Introduction 3
However, the lions share of the bulk of crop production in the region is during Meher season (BoFED, 2010a; CSA, 2009).
Natioonal 18 16 Productivity in qt/ha 14 12 10 8 6 4 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Regional
Figure 2: Trend of Agricultural Productivity over the past eight years (Qt/ha)
According developmental indicators report released by BoFED (2009 and 2010), during the past six years from the year 2004/05 to 2009/10 the total Grain Crops cultivated area of the region has exhibited an increment of 18.3% from 3.36 to 4.0 million of hectare of land in area cultivated and an increment of 51.7% from 37.63 to 57.1 millions of quintals in production.
Cereals (P) Cereals (C) 50 45 Production in Million 40 35 30 25 20 15 10 5 0 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 1.5 1 0.5 0 Pulses (P) Pulses (C) Oilseeds (P) Oilseeds (C) 3.5 3 2.5 2
Figure 3: Production (P) (Millions of Qtls) versus Cultivated land (C) (Millions of Htrs)
Regarding irrigation development practices, within the past six years from the year 2004/05 to 2009/10 the cultivated area and production level has increased from
232,650 to 444,620 hectare (91.1%) and the yield from 13.68 to 51.38 million quintals (275.6%) respectively.
Area/ha/ in 000' 600.00 500.00 400.00 300.00 200.00 100.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Production/Qtls/ in 100,000'
Figure 4: Areas and Production through Irrigation from 2001-2010
According to BoFED, 2008/09 the region owns about eight major lakes that cover an area of 2,543 Sq. Km among which Lake Tana share 95% of all the total size of the lakes. Its topography ranges 29.6% below 1500 meter, 53% ranges from 15002500 meter, 16.5% ranges from 2500-3500 meter, and 0.9% above 3500 meter. The region is more vulnerable for torrential flooding and erosion due to its terrain characteristics of about 44.8 % has a slope of greater than eight degrees.
Figure 5: Topographic map of ANRS
Purpose, objectives & scope of the project

1.2.1. Purpose of the project
Harnessing the opportunity presented by global trends and local advantages require an enabling framework to accelerate growth. Thus, the purpose of this project is to address the key concerns affecting the agricultural growth by improving productivity, minimizing post harvest losses, enhancing post harvest processing and value addition, enhancing value realization through better marketing channels, sustainable practices in production, processing, branding, marketing, etc. and create job opportunity.
1.2.2. Project General Objectives
Since the development of agro-logistics infrastructure in any location is dependent upon the quality of delivery mechanisms that are designed as a part of any such facility, the nature of the intended project is physical, strategic, and developmental investment having the following main objective: To create an enabling agricultural institutional structure for addressing supply chain alignment with domestic and international requirements by enhancing the quality, transportation and distribution of grain crops and inputs, improvement of market access through market Intelligence, and to facilitate flow of investment and modern agricultural management practices in the regional state.
1.2.3. Project Specific Objectives
The Specific Objectives are the following: To address the Supply Chain Management Issues uneconomic scale of operation, lack of consistency in supply and quality, lack of cost competitiveness, inadequate & inappropriate storage and distribution
infrastructure, lack of technical support for the sector, etc. To Develop infrastructure for handling, preserving, processing and marketing of agro produce and centralized distribution network for agricultural inputs To Enhance the shelf life of perishable fruits and vegetables and encourage product diversification and value addition for better profitability To minimize wastage at all stages in the food processing chain by the development of infrastructure for storage, transportation and processing of agrofood produce
To create brand image for unique agro food products of Amhara and develop key products to gain market dominance To create new markets and new product lines and develop alternate marketing channels To encourage high realization and value added exports meeting international standards To create employment opportunity for people living around the project
Finally, Special emphasis shall be laid down to make small-scale agro based processing in the state to remain competitive in global markets.
1.2.4. Scope of the Project
The project operates in ANRS focusing on all agricultural and horticultural activities excluding livestock and it is envisaged to cover facilities such as: a) Warehousing Storage allows accumulation of stock to be transported in bulk quantities thereby reducing the transportation costs. Various warehousing services like sorting, grading, labelling, picking, re-bagging, inspection etc. will be provided at the logistics hub. There are a variety of warehousing services planned for the facility, and the layout and facilities have been planned to cater to all of these services. Warehousing enables a concern to achieve the economies of large-scale production, large scale buying and selling, etc. as the goods may be kept in stores. b) Transportation logistics Transportation logistics is a part of the supply chain dealing with the transportation of goods/ commodities from the point of production to the end customer (or point of consumption) or to transhipment centers for exports. The regions agricultural practice is tremendously uses the transport sector to address the ever increasing demand of the farmers for agricultural inputs and outputs especially moving of fertilizers and improved variety of seeds from dry and wet ports of the country to the farming sites and carrying away the produce to the market. Amhara region has an annual freight potential of 60.9 million quintal of all agricultural crops, 1.5 million quintal of fertilizers, and 3 million quintal of seed that needs to be transported from place to place.
c) Cold Storage Perishable goods are among the major commodities grown in the region. Approximately 40% of the perishable goods grown in the region get damaged before they reach the market. To attract horticulture commodities to the logistics hub, modern cold storage units have been planned. Modern cold storages would be supported by pre-cooling units. d) Grain & Horticulture Procurement For successful procurement of grain and horticulture produce, the wholesale market needs to facilitate the coming together of farmers, traders, wholesalers, processors and retail chain operators under one roof. The proposed market is conceptualized and designed to ensure transparency and efficiency, encouraging farmers to get maximum advantage. Along with procurement services various other value added services pertaining to agricultural and horticulture produce will further attract this cargo to the logistics hub. e) Agro & Horticulture processing In order to garner the benefit from the horticulture resource looking for alternative means of adding value to the existing agricultural outputs seems imperative for efficient marketing system. To this endeavour the proposed project has a primary objective of promoting and expanding the value adding process by creating a quality process line of grading, labelling, and packaging services aimed at augmenting the export market. f) Market Information Systems At present, market information is disseminated through various media like radio, newspapers, community and public address system at Wholesale Market yards. The information provided by these methods has a limited use and does not provide considerable help to the farmers in taking decisions in marketing of their produce. The farmers are also unable to know about the prices prevailing in other markets, as the Market actors are able to disseminate information mostly in respect of their own markets. Market Information Systems will provide real-time information to the farmers. g) Trading & Collective Marketing The project will also try to equip itself and facilitate the trading system through collective bargaining and exchanging local experiences to optimize the market dynamics so as ensure the owners of the marketable products primarily
benefited. The system adopts professionally managed open auction methods in serving its customers.
1.3.
Name and description of the service for the project

1.3.1. The concept of Agro-Logistics and Marketing Integration Hub
The name of the project is Agro-Logistics and Marketing Integration Hub (ALMIH) and the concept is adapted from Asian countries especially Indian experience of developmental initiatives which is essentially a strategically located multi-modal logistics platform, allowing efficient hinterland operations by incorporating truck-stop facilities, container cranes and gantries, terminal stacking, warehousing facilities, high end food processing facilities and other value added services(ICRA, n d; IDCL, 2009, 2010; Thornton, 2007).
Value added products
Agro Processing
Aggregation of Outputs Horticulture ALMIH Grain Crops
Market
Integration
Transportation & Distribution Agricultural Inputs
Backward Integration
Figure 6: Conceptual framework of Agro-logistics and Market Integration Hub
However, taking the socio-cultural and agro-ecological differences into account ALMIH in Amhara regional state is geared to addresses some of the issues effectively
as they would enable supply chain/ logistics to function much efficiently by removing the cargo bottlenecks in the transit related activities. Integration of such facilities helps in shortening the supply chain for the producers who had to traverse a long marketing channel to reach the market due to unavailability of the necessary infrastructure. From a mere combination of transportation and storage services, agro-logistics is fast emerging as a strategic function that involves end-to-end solutions that improves efficiencies and which would enable apportionment of associated capital costs across a larger base of users leading to significant costs reduction.
1.3.2. Components of ALMIH
The concept of ALMIH aims at developing the backward and forward linkages, streamlining the supply chain from farm to market and also to provide value added services to the stakeholders in the value chain. This is to encourage the farmers to move up the value chain by diversifying to higher margin products and ensure that the produce meets end user and market requirements of quality, grades and standards apart from ensuring reliable and un-interrupted supply of adequate volume of produce. Agro-logistics is an efficient integration of transportation, warehousing, food processing and other value added services enabling value addition at each level of the agro-supply value chain. Warehousing is an important part of this whole system and comprises approximately 20-25% of logistics. Transport comprises 40% of the logistics and the balance is value added services. The facilities that would need to be developed for setting up ALMIH are as set out below.
1.3.3. Market Integration Center (MIC)
The distance factor adds a significant cost to both inputs and outputs and there is little in the way of extension, research, support, marketing or post-harvest management and storage in the more remote locations. Market integration center essentially comprises warehousing, grain processing, logistics services and other relevant value added services. Once the produce arrives, facilities like weighing services, testing & certification, fumigation, storage, cleaning, processing, packaging along with an auction yard with amenities for exports are being proposed under one roof. Moreover, a modern lab testing facility within the same premises will ensure enhancing the crops value. Even a nationally integrated electronic platform through Ethiopian commodity
exchanges (ECX) would be provided to help the farmers to market their produce to a large spectrum of customers. In addition such activities would also reduce seasonality of consumption of the perishable agro-products, increase the viability, profitability and sustainability of production systems through their impact on increasing farm incomes, rural employment and foreign exchange earnings, while reducing marketing risks. The typical flow in the MIC is as set out in the diagram below.
Produce from farmers
Produce received at MIC
Produce unload
Quality Check
Stacking Stacking Compartment Compartment
Grading Compartment
Sorting Sorting Compartment Compartment
Auction
Cold storage
Dispatching Channel
Payment Settlement
Bank Access
Ripening hood
Figure 7: Flow of produce in the agro logistics and marketing integration hub Stacking
Ports/multipli cation centers Inputs received at MIC Inputs Unload Inspecting Distribution to clients Bank Access
Payment settlement
Blending
Figure 8: Flow of Inputs in the agro logistics and marketing integration hub
1.3.4. Product Collection Centre (PCC)
The central idea of the proposed concept is helping farm earnings grow by shortening of the supply chain, establishing cost effective and standardized linkages. The concept intends to revive market extension activity with re-oriented and appropriate physical infrastructure and technological support.

PCC
Farmer/Cooperati ves/Unions
Intermediary 1
Local market
Intermediary 2
Bigger Market
MIC
Value addition and lesser price escalation
Figure 9: Curtailment of the Agro-supply Chain
As illustrated in the figure above, the long agro-supply chain could be curtailed if the entire operations of the intermediaries are replaced by Collection Centers. The collection centres would need to be identified on the basis of expected throughput and logistical feasibility. Development of such nodal collection centers at clusters of woreda level would enable collection of farm produce from the cluster of villages, farmers, and producers. The small hold farmers, village clusters and the various other producers could store their farm produce in their respective collection center storage houses. The function of the collection centres would also include collection of the produce from the woreda cluster storage houses and its transportation to the MIC in ALMIH. This would help in shortening the supply chain for the producers who had to traverse a long marketing channel to reach the market due to unavailability of the necessary infrastructure. The collection centres would also function as a cold/dry storage house for horticultural products until the transport fleet reaches the centre for further transportation. This would result in value addition to the farm produce and maximization of the profit for the farmers with minimizing the number of intermediaries. The collection centres could be located at key production centres to allow easy farmer access and the catchment area of each collection centre is to be based on meeting the convenience needs of farmers, operational efficiency and effective capital utilization of the investment. Further, by adopting the hub and spoke mechanism, these collection
centres could be connected directly to the ALMIH. As illustrated in the figure below, every node in the supply chain i.e. collection centres, farmers unions, and cooperatives are connected directly to the ALMIH. This mechanism would help transporting the farm produce directly to the ALMIH from the nodal centres through a fleet of transport systems and Information Technology (IT) support systems in place.
Market Integration & Access
Collection centre Collection centre
Retail consumer
Farmers/coope ratives/unions
ALMIH
Processors & Exporters
Collection centre
Value adding process
Wholesalers & institutional
Backward linkage
Forward linkage
Figure 10: Hub and Spoke Mechanism 1.3.5. Agro-processing projects development
One of the major drawbacks in the agriculture is the lack of efficient linkage mechanism that supports and guides the transformation process of the local resources into value added products and paves the way to lay ground for the flourishing of agroprocessing industries in the surrounding of the project area. The project will address the issue by identification of the potential of process-able resources, quality enhancement and assurance development, and branding of the regions key agricultural products through its quasi-research and development engagements.
1.4.
Benefits of an Agro-logistics Hub

Agro logistics hub offers several benefits to the different stakeholders in the
value chain as follows: a) Benefits to the Farmers: i. Farmers get multiple choices for marketing their produce apart from the traditional markets.
ii.
Farmers realize the right value for their produce. This is enabled through the assurance of the right price for right quality and correct weighting.
iii.
Greater convenience for selling the farmers produce and the cash settlement is also faster when compared to the traditional markets.
iv.
Availability of better infrastructural facilities which reduce the wastage of the produce.
v.
Minimization of pre and post harvest losses, transit losses and storage losses.
b) Benefits to the Buyers i. ii. Graded and sorted produce is available to the buyer. Produce in the requisite lot sizes is available as a result of which transaction costs are minimized by avoiding collection/ purchase from a large number of sellers. iii. iv. Quality and hygienic produce is available to the buyer. Efficient logistics minimize the wastages of the perishable produce.
c) Overall Benefits i. Access to seasonal and developmental finance implemented and monitored locally. ii. Access to 21st century technology and appropriate mechanisation and particularly: Area specific hybrid seeds and fertilizers. iii. Access to agricultural inputs at the right price in the right pack sizes and on time. iv. v. vi. vii. viii. Provide planning, agronomy and extension services. Access to information communication technology. Centralised marketing and storage. Post harvest management services and processing. A conduit to government and donors to absorb the systemic shocks of droughts and floods.
1.5.
Life span of the project

The project is intended to be implemented and tested within its first phase that
lasts five years including all the development of Statutory & legal frameworks, networking, construction, and procurement of vehicles and equipments tasks will be finalized and during this time the system will be tested and adjustment will be made to
fit for its profitability, adaptability and functionality before it gets fully operational. The second phase is a period of replicating the same project as a ordinary establishment in the other corner of the region based on the location and site selection criterias adopted in this project document. Therefore, the total project life span will only be five years.
1.6.
Project sponsor
Since the nature of the project is related metaphorically to blood vessel of the
major economic activity that is agriculture and have an impact on the vast majority of the regions population, care must be taken for the smooth implementation of the project. However, the project encourages the public- private partnership as long as the government deemed to have the larger stake in sponsoring of the project. It is expected that state owned developmental firms will be actively involve themselves in consolidating and expanding their business for mutual benefit they can reap from the project.
2.
2.1.
Compatibility with government priorities

Government Policies
PASDEP was the fundamental macro growth policy in Ethiopia (2005/06 -
2009/10) and the principle of Agricultural-Development-Led-Industrialization (ADLI), which pays a particular focus on peasant agriculture, was its foundation. ADLI was adopted in mid - 1990's and has guided government programs since then. PASDEP emphasized the need to strengthen rural-urban linkages in order to reduce the negative impact of rural-urban migration and maximize growth and its impact on poverty reduction. PASDEP recognized the central role of improving infrastructure, human capital, and credit markets in rural areas in facilitating rural-urban linkages. The policy addressed rural transformation through commercial agricultural production, and Export oriented agro-processing. The Growth and Transformation Plan (2010/11-2014/15) has an overall objective of attaining broad-based, fast and equitable economic growth over the plan period. These are envisaged to be achieved through strategic pillars. The plan focuses on growth sectors particularly agriculture, industry as it also focuses on social development, infrastructure and governance. GTP and agro-logistics are closely aligned. As GTP focuses on agriculture, agro-logistics can assist this initiative by creating a
By Mesfin Raji | Compatibility with government priorities 15
platform that will be closely linked to managing and facilitating the supply chain of the agricultural practice, marketing, processing and credit provisions. The closest link between GTP and agro-logistics, however, falls directly under the objectives of
Maintaining Agriculture as a Major Source of Economic Growth of GTP that stresses that
fundamentals of the strategy include the shift to produce high value crops, a special focus on high-potential areas, facilitating the commercialization of agriculture, supporting the development of large-scale commercial agriculture where it is feasible. Moreover the policy aspires to create efficient and functioning local agro-logistics transit facilities, it has a direct alignment with growth and transformation efforts(MoFED, 2010).
2.2.
Need for Integrated Approach

The regional government currently has to seek a system that highly managed
and competitive alternate marketing structure that provides multiple choices to farmers for sale of produce along with a comprehensive solution to meet key needs of all the stakeholders. A well integrated approach is required to establish efficient linkages between the farmers, village cluster, producer, and the market centre. This would also include reduction in the involvement of intermediaries in the supply chain, which will further expand the markets for primary agricultural products and add value by vertically integrating such services. The issues which have hampered the growth of the sector have resulted in disadvantageous position for all the stakeholders. Such facilities endeavour to integrate farm production with buyers by; a) Offering access to farmers for sale of produce such as modern electronic auctioning b) Facility for direct sale to domestic trader, exporter, processor and retail chain network under a single roof In addition, it also provides storage infrastructure thus offering the choice to trade at a future date to the participants. It is envisaged to offer a one-stop-solution that provides logistics support including transport services & cool chain support and facility for storage (including warehouse, cold storage, ripening chamber, storage shed, etc), facility for cleaning, grading, sorting, packaging of produce and extension support & advisory to farmers. An integrated facility in terms of a modern Market integration Centre with suitable logistics support would address all the issues in the sector and suit the need of the current situation.
By Mesfin Raji | Compatibility with government priorities 16
Linkages with existing Marketing Channels

The project is somewhat conceptually complemented with Ethiopian
Commodity Exchange (ECX) which is engaged in similar activities but focussed more of on specific exportable commodities. Nevertheless the vision of ECX is to transform the Ethiopian economy by becoming a global commodity market of choice and its mission is to connect all buyers and sellers in an efficient, reliable, and transparent market by harnessing innovation and technology and based on continuous learning, fairness, and commitment to excellence (ECX, 2010; Website, 2011) whereas ALMIHs mission is geared to serve the majority farmers in short term facilitating the transformation of Amharas economy by becoming an efficient domestic agro supply platform and in the long term to be the major agricultural input producer and supplier agent vertically integrating itself with the supply chain. The main distinguishing feature between the two concepts is summarized as follows;
Table 1: Distinguishing features between ALMIH and ECX
Feature Main customer focus Operational rule Major Market Orientation Scope Complementary Service package Additional warehousing facility
ALMIH Restricted to Farmers/cooperatives Listed membership Domestic market Regional Horticulture, transportation, & Distribution of agro-input included Cold room & ripening
ECX Traders and no restriction Registered membership Export market National None
None
During the operational phase the marketing component of ALMIH that of MIC management will be partially outsourced with some of its activities especially those that require international trading and electronic transactions to ECX based on the terms and conditions set between the project sponsor and ECX. The two firms can work in parallel within the general framework of the agro-logistics supply value chain.
3.
Approach & Methodology

The following steps are the modalities that are used in preparing the pre-
feasibility project document; a) The regional economy, agricultural practice and production size and export performance of the state was reviewed; b) The transportation
By Mesfin Raji | Approach & Methodology 17
logistics with respect to land transportation and the type of major transport agents in the region were examined; c) The indicative locations for setting up logistics hubs were identified based on the proposed agro-industrial potential zones and taking into account the key issues in agriculture, and d) An approximate costing for setting up a logistics hub has been estimated. A flow chart indicating the approach and methodology for the Study is provided below.
Review of the Regional states economy, agricultural production sizes and exports potential
Examine Market outlets and existing practices
Assessment of Integration of Agrologistics with market channels
Examine Transport Network and utilities Discussions with:
Project specific analysis: Development of parameters to assess attractiveness of locations for development of ALMIH Assessment of current status of logistics in the identified locations. Estimation of the area required for development of logistics hub/MIC. Identification of facilities to be provided Assessment and inventory of the existing market support infrastructure Development of interlinkages of the ALMIH
Agriculture personnel Representatives of farmer associations Government agencies /Institutions Planning consultants practitioners Desk Review: Primary and secondary research Data collection and analysis Study of similar initiatives Study of relevant acts, policies, and incentives in the state.
Proposed agro-logistics hub Location analysis Financial feasibility analysis
Risk Analysis Key risk identification Mitigation strategies
Project Pre-feasibility Report
Figure 11 : Flow Chart of the Approach and Methodology for the Study
4.
4.1.
Market Planning and demand Analysis

Situational analysis
Some of the challenges and constraints facing the agriculture production
currently in relation to logistics supply, marketing, and transportation are outlined as follows;
By Mesfin Raji | Market Planning and demand Analysis
18
a) The need to diversify into new markets for higher value products, or add value to current products through improved quality, niche markets, etc. and the needs to improve information flows and develop synergy between the different actors in the production and marketing system. b) The agro marketing supply chain prevailing in the region lacks a systematic approach. It cannot afford to go to distant places on account of lack of facilities, expensive transportation and malpractices in assembling markets. This has resulted in formation of long marketing channels, which has also proved to be detrimental to the quality and safety of the perishable products. c) The long chain of intermediaries between the farmer and the market, adds cost but no value to the product. Some study indicate that the escalation in the cost of the produce reach to an extent of 250% of the cost of production at the farm level. d) It has also blocked the flow of market information resulting in exploitation of the farmers. Poor front end infrastructure such as storage facilities, improper warehousing facilities, redundant food processing technology and the farmers inaccessibility to the value added services, results in wastage of 40% of the fruits and vegetables. e) The disadvantageous position in terms of cost and quality arises from the several constraints that exist in the current system of marketing of fresh produce in the region. Some of them are; High level of wastages due to lack of proper handling, storage and transport infrastructure, Lack of grading facilities based on the quality, Long and inefficient value chain with many intermediaries, Lack of packaging facilities, and Lack of efficient prices discovery mechanism. f) The above constraints have an adverse effect on key stakeholders involved in the sector by destabilizing the system creating viz-a-viz; mismatch between demand and supply leading to frequent gluts or short supplies, unrealistic prices in the consumer markets, lack of adequate incentive especially aiding the producers with technological equipments to adopt good management practices, and poor quality of the produce reaching the end consumers.
19
Value Chain and Marketing strategy of the project

4.2.1. The agro-industry system
The different economic activities that result in a marketed product can be represented as a system. The word chain denotes a linear sequence of mutually dependent and primary activities related to input delivery, production, processing, and marketing, etc. The word chain also emphasises that the different actors involved in the different links of the chain are mutually dependent. A weakness of one link will affect the price or attractiveness of the final product and hence all the actors will suffer. There is no point in spending scarce research and development resources on improving production on the farm, if the transportation of the product is expensive, or the processing and marketing are inefficient.
Produce
Stacking
Transporting
Marketing
Processing
Consumer
Input supply chain
Value or market chain
Figure 12: The product Value chain
The input supply chain is the inbound or backward linkages from the farmer back to the input retailer, the transporter/importer, and the producer of inputs such as fertilizers, seeds, etc. On the other hand, Value chain or outbound is the forward linkages that link the farmer to the consumer, via the middle-man, processor, supermarket, etc.
4.2.2. Aggregation of outputs as a viable marketing strategy
The concept of projects marketing strategy emanates from the projects unique features of service delivery mechanism and the overall landscape of the region is segmented into two exclusive independent working areas for the two ALMIH projects which will be established in West and East part of Amhara. The service package for each project area is positioned on aggregation of output and inputs for rendering expedient services to farmers on nominal service charges. Aggregation into agricultural clusters hubs serves to: Reduce the transaction costs, taking both the market to the farming community.
20
Afford access to the agricultural value chain including inputs, services, transport and logistics, processing, retail and in some cases storage and post-harvest management.

4.3.
Increase the flow of information to and from the farming community. Provide non-farm jobs and a local market for food crops. Create a natural medium for the transfer of skills and agronomic extension.
Materials and Input Supplies Study

The project mainly utilizes agricultural raw materials such as Agricultural and
Horticultural crops, fertilizers, and improved seeds. The potential characteristics of each materials explored in the following sub topics.
4.3.1. Grain Crops
According to the agricultural sample survey report of (CSA, 2009), Cereals, Pulses, and Oilseeds are the three major Grain Crops that are produced in the region having a proportion of 80.1%, 16.1%, and 3.8% from the total production respectively. In the same report of the year 2008/09, it was also disclosed that 0.79 million quintal of Vegetables, 3.1 million quintal of Root Crops, 0.16 million quintal of Fruit Crops, 44.2 thousand quintal of Chat, 21.5 thousand quintal of Coffee, and 95.9 quintal of Hops have been produced in the region. Out of the total Meher production Grain Crops significantly account for 93.1% of the production while Root Crops and Vegetables account for 5.1% and 1.3% of the total production. The three major crops and their percentage under each crop category are: Cereals - Teff (27.2%), Maize (20.4%), and Sorghum (20.1%); Pulses Faba beens (36.6%), Chick peas (21.1%), and Field peas (12.4%); Oilseeds Sesame (43.5%), Neug (35.2%), and Rape seed (8.5%); Vegetables Red peppers (66.8%), Green peppers (14.6%), and Ethiopian cabbage (8.0%); Root Crops Potatoes (62.3%), Garlic (23.2%), and onions (13.2%); and Fruit Crops Orange (40.2%), Papayas (23.0%), and Lemons (14.9%)
4.3.2. Agricultural Inputs
The region utilizes the great proportion of the agricultural inputs used as compared to the volume of countrys utilization of inputs. In the same CSA report it was revealed that in 2008/09 only 1.574 million quintal of fertilizers out of which
By Mesfin Raji | Market Planning and demand Analysis 21
1,148,971 quintals of UREA+DAP (73%), 302,883 quintals of DAP (19%), and 122,179 quintals of UREA (8%) were utilized in the region. However, as compared to the countrys level, the regions consumption of fertilizers amount to be 48.2%, 43.6%, and 23.1% in its UREA, UREA+DAP, and DAP application respectively and 37.4% of all the type of fertilizers. With regard to utilization of productive seed, during the year in 2008/09 the region has made use of 3,018,889 quintals of indigenous seed and 55,321 quintals of improved seed which has a 33.6% and 25.2% share from the countrys size respectively. The Pesticide amount is not reported except its application on an area of 244,124 hectare of farm land. Even though, the region has an ample production potential and market access even to the nearby Sudan, it had never reaped the opportunity as it would have supposed to be.
Fertilizers in qt (000') 1400 1200 1000 800 600 400 200 0 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 Improved seed in qt (000') Pesticides ha (000')
Figure 13: Farm Input Utilization Practices in the period of 2003/04- 2009/10
This emphasizes the importance of agriculture and agricultural markets in Amhara. Though Amhara enjoys a leadership position in the production of several agricultural commodities, its share in the global market is minimal due to the lack of competitiveness on cost and quality front.
4.3.3. The role of Farmers Cooperatives
The establishment of farmers cooperatives and unions played a crucial role in removing market failures in both the credit market and in marketing of agricultural products. As it clearly outlined in the countrys GTP stressing the essentiality of making the agriculture marketing system remain in tune to the agricultural production and productivity growth, and since this system is essential for accelerated agriculture growth, focus will be made to lay down an agricultural marketing system starting at
By Mesfin Raji | Market Planning and demand Analysis 22
kebele all the way up to country level. Most importantly the document stressed the creation of transparent, efficient and effective agricultural marketing system that involves farmers cooperatives, modern output market centers and private sector will be established and strengthened. The data obtained in the GTP of the regional government indicate that currently there are 5,977 cooperatives and 43 unions that are functional in the region. At the end of the GTP period, they are expected to grow by 53.4% and 44.2% respectively.
1000 900 800 700 600 500 400 300 200 100 0 No of Members (00') Established Number
Number
2005/06 0 238
2006/07 913.89 282
2007/08 97.38 122
2008/09 267.90 202
2009/10 228.25 142
Figure 14: Established Cooperatives and their membership during the past five years only
The Involvement of cooperatives is mainly on transacting Fertilizers which show 82% and 60% of purchasing and selling of the overall stock respectively during the past five years as compared to their share in Grain crop transaction. However, the overall effect in transaction of both agricultural inputs and production shows significant gap.
Figure 15: Marketing activities of Agricultural related cooperatives from 2005/06 - 2009/10 23
Market characterization and demand forecasting

The agricultural sector suffers multitude problems in bringing sustainable and
dependable food security system in all part of the region. This is characterized by the failure of achieving a comprehensive integration of the output with efficient market outlets. Data obtained from the document of the GTP of the Amhara region shows that currently the marketable amount of grain crops in the region is about 39.7 million quintals which is around 35% of the annual Meher and irrigation production of 112.1 million quintals and it expected to grow by 58.9% at the end of the GTP period (BoFED, 2010b).
4.4.1. Demand and supply factors
Currently farmers cooperatives/unions are the major actors in agricultural input transaction especially in purchasing and selling of fertilizers to the farmers. However the role that they are playing in Grain Crop transaction is almost barely existent. The data obtained from Developmental Indicator of BoFED (2010) indicates that during the past five years the proportion of cooperatives marketing transaction in Purchasing and Selling of agricultural goods from the total available stock is highly irregular and is only 2.12% and 4.43% respectively. The following table and graph summarizes the situation as follows;
Table 2: Marketing activities of cooperatives/unions from 2005/06 to 2009/10 in qt Total Available Purchasing Selling Item % Stock in the % (million Qt) (million Qt) region 1.05 0.4 1.03 0.4 261.30 Grain Crops Fertilizers Total 4.60 5.65 81.9 2.12
Fertilizers (000')
3.40 4.43
60.5 1.66
DAP (000')
5.62 266.92
UREA (000')
Grain Crops (000') 2500 2000 1500 1000 500 0 2005/06 2006/07
2007/08
2008/09
2009/10
Figure 16: Marketing activities (Purchasing) of cooperatives in five years in Qt
24
In order to keep pace with the changes on the demand side, the markets have to evolve rapidly so that the interests of both the farmer and the buyer are taken care of. The key interests of the farmer are: Realization of a higher percentage share of the consumer price. Presence of increased alternatives for the sale of his produce. Provision of better infrastructure for handling the produce. Establishment of a transparent and efficient price discovery system.
The key interests of the buyer are: Availability of graded produce. Availability of quality and hygienic produce. Establishment of a transparent and efficient price discovery system Presence of efficient logistics so as to minimize the wastages during transit services.
4.4.2. Demand & Supply Forecasting
The demand for crop production and input supply which will be going to be handled at least in the coming five years is determined from two perspectives. The first one is sought from the regions GTP document which is found to be optimistic and contrasted with the second perspective which is forecasted based on the available data documented and is found to be suitable for casual trend analysis. However, since data for the Belg Crop production, Vegetables, Root crops, and Fruits is obtained for only single year of 2010/11(CSA, 2011), the forecasting is carried out taking the average increment of the other forecasted figures which is done using time series projection method. Nothing is indicated in the GTP document about horticultural production. The detail is shown in the table below.
25
Table 3: Total Supply forecast of agricultural products and inputs for the years (2010-2014) Present assessed capacity 1 Meher Crop Belg Crop Irrigation Crop Fertilizers Improved Seed Vegetables Root Crops Fruit Crops Total Volume Productivity 60.7 0.50 51.38 1.30 0.05 0.79 3.1 0.16 118 14.1 Forecasted need five years from now 2 80.05 0.68 53.56 2.03 0.07 1.07 4.19 0.22 141.87 18.56 GTP baseline 2010 3 61.91 3.41 51.38 2.2 0.13 119.03 15.1 GTP forecasted need in 2014
(Base case scenario)
Item
(Million Qt)
Increment in % 1 to 2 3 to 4 146.2 100 94.6 140.1 1300 123.8 146.4
4 152.42 6.82 100.00 5.30 1.82 0 0 0 266.36 37.20
31.9 35.0 4.2 56.2 40 35.0 35.0 35.0 20.2 31.6
The table indicate that within the next five years the total volume of crop production and agricultural input supply will be expanded between the conservative 20.2 percent to optimistic 123.8 percent. Therefore, at present condition west part of Amharas marketable potential of agricultural and horticultural produce and inputs is 28.54 millions of quintals or 2.9 million metric tonnes by volume.
Table 4: West part of Amhara's available Freight Potential Particulars Regional Agro volume in millions of qt 112.60 0.79 3.10 0.16 1.30 0.05 118.00 West part of Amhara Utilization rate 67% 76% 78% 66% 78% 61% West part of Marketable surplus Amhara of food items in Volume in millions of qt millions of qt % Volume 75.44 35 26.40 0.60 35 0.21 2.42 35 0.85 0.11 35 0.04 1.01 100 1.01 0.03 100 0.03 79.61 28.54
Grain Vegetables Root Crops Fruit Crops Fertilizers Improved seeds Total
Based on our analysis to determine the current agro-logistics supply in the projects operational geographic area, we could further determine the annual supply that could be available within the project area in five years. The following table summarizes the calculated figures in each year.
26
Table 5: Five years Forecasted marketable freights in West part of Amhara in million qt Yearly volume of freight under GTP & Nominal Forecasting Particulars Year 1
GTP Grain Vegetables Root Crops Fruit Crops Fertilizers Improved seeds Total 27.37 0.00 0.00 0.00 1.01 0.03 29.17 Forecast 26.4 0.21 0.85 0.04 1.01 0.03 28.54 GTP 35.72 0.00 0.00 0.00 1.79 0.30 37.81
Year 2
Forecast 27.67 0.23 0.92 0.04 1.15 0.03 30.05
Year 3
GTP 44.08 0.00 0.00 0.00 2.57 0.57 47.22 Forecas t 28.95 0.25 1.00 0.05 1.30 0.04 31.57
Year 4
GTP 52.44 0.00 0.00 0.00 3.35 0.84 56.63 Forecas t 30.22 0.27 1.07 0.05 1.44 0.04 33.08
Year 5
GTP 60.79 0.00 0.00 0.00 4.13 1.11 66.03 Forecas t 31.49 0.28 1.14 0.05 1.58 0.04 34.59
5.
5.1.
Technical and technological aspects

Technical & technological requirements of the project
As it is been cited in (Bosona, 2010) the technological dimension of innovation
through the food supply chain such as advanced information and communication technology (e.g. e-commerce) systems are increasingly becoming the backbone of integrated supply chains (Trienekens et al., 2003). This project is designed mainly based on the conceptual theoretical framework operating elsewhere around the world. The specific technical requirement and technological capabilities of managing the overall operation would rest on the level of practical knowledge that is expected to be gained through on-site visit of similar initiatives. Therefore, it is advisable to arrange experience sharing tour especially to India for further refinement of the pre-feasibility study. The technological aspect is figure out to be less complicated and requires technicians graduated from technical and vocational schools in terms of physical handling of operations. However, there is some speciality required in the area of horticulture and food management which are currently started to be available in the countrys labour market. The projects peculiar quality that makes different from others is its utilization of electronic platforms of Integrated Data Management Systems (IDMS) in its value chain by linking all its inbound and outbound operations with counterparts and speed up the service delivery time. All the PCCs operating under ALMIH will have direct electronic connection through wide area networking. However hardware, software, and networking will pose special technical challenges in regional
27
By Mesfin Raji | Technical and technological aspects
setting despite the governments relentless effort to expand the network to the remote areas of the country.
5.2.
Location and site Selection

5.2.1. Locations for Development of Agro-Logistics and Marketing Hub
The project intends to establish two agro-logistics hubs and its location for the development of ALMIH is determined based on six parameters that make the location potentially feasible. These are; a) Population density per Sq. Km b) Productivity in Qt/ha c) Area of Irrigated land in ha d) Land usage in ha (annual/temporary crop land use, permanent crop land use, fallow land use, grazing land use, wood land use, and other land use), and e) Agricultural input supply in Qt (Fertilizers and Improved Seeds) Based on the regions geographical topography the two locations were determined by segmenting into West and East part of Amhara sub-regions.
5.2.2. Possible Locations for Development of Agro-Logistics Hub
As a starting point in determining the exact site of ALMIH in the sub-regions, latest figures of secondary data collected by BoFED of the year 2009/10 were used as shown in the following table.
Table 6: Location advantage of the Zonal Administrations on selected parameters
Irrigated land in ha (000') Land usage in ha (000') Input Supply Fertilizers in Qt (000') Improved seed in Qt (000')
Zone WEST AMHARA West Gojjam North Gonder South Gonder East Gojjam Awi Nationality EAST AMHARA North Wello South Wello North Shoa Waghimera Oromo Nationality
Population density/km2
Productivit y (Qt/ha)
167.00 69.30 153.80 162.20 121.00 129.70 150.90 121.30 51.10 115.20
17.41 14.60 12.95 16.28 12.89 14.50 13.31 14.11 11.39 13.20
9.10 6.23 8.81 14.34 30.04 8.79 7.59 15.15 1.46 4.72
471.87 570.16 418.61 473.26 227.25 252.08 423.45 436.60 70.90 52.02
660.45 114.50 138.57 559.52 161.94 31.58 119.81 312.67 0.10 1.47 28
25.94 7.76 11.30 22.16 9.15 7.07 14.26 26.27 1.17 0.45
Four step processes is followed in determining the two potential ALMIH sites; 1. Relative scores were calculated for each location under each parameter indicated above. The formula utilized for calculating the score is as set out below. Relative score for each location under each parameter (SR): (SL/SH *100) Wherein; SL: Value of the parameter for the location under consideration. SH: Highest value across all the locations under consideration and for the parameter being considered. For example: Calculations of relative score for East Gojjam under the population density parameter is as set out below. i. Population density of East Gojjam zone is approximately 162.2 per Sq.Km (SL). ii. Highest population density amongst all the locations listed in the table above is of West Gojjam zone and is approximately 167 per Sq.Km (SH). iii. Relative score of East Gojjam under population density parameter (SR) = (162.2/167*100) = 97.13. iv. Similarly the relative score of East Gojjam under other parameters viz. productivity, Irrigated land area, Land usage, and Input supply (fertilizers & improved seeds) is 93.3, 47.74, 83.0, 84.72, and 84.35 respectively. 2. Suitable weightings of 25%, 25%, 15%, 15%, and 20% have been assigned to each of the five parameter viz. population density, productivity, irrigated area available, land usage, and input supply respectively. Further split is made for input supply of 10% and 10% for fertilizers and improved seeds respectively. Higher weightings have been assigned to the Population, Productivity, and agricultural input as they are believed to be the major determinant factors for market, production and consumption pattern and responsible for the core activities carried out within the intended project; Less weightings have been assigned for irrigated land available and land usage due to the coverage proportion as compared to non-irrigated land and the incorporation of other nonarable area. All the weightings believed to depict the potential of the selected zone to serve the capacities envisaged for the ALMIH and also the growth in demand in the future years. 3. A composite score is calculated for each of the identified locations based on the formula set out below.
By Mesfin Raji | Technical and technological aspects 29
Composite Score (Cs) = Weightings assigned to the parameter X Relative score under each parameter (SR). For Example: Calculation of the composite score for East Gojjam is as set out below. i. Relative scores of East Gojjam are 97.13, 93.3, 47.74, 83.0, 84.72, and 84.35 under the parameters of Population, Productivity, Irrigated land area, Land usage, and Input supply (fertilizers & improved seeds) ii. Composite score of East Gojjam;
Cs = (97.13*25%+93.3*25%+47.74*15%+83.0*15%+84.72%*10%+84.35*10%) = 84.12
4. The location with highest composite score was ranked the highest. Therefore, West Gojjam zone from West part of Amhara and North Shoa zone from East part of Amhara are selected as the two potential locations that ALMIH will be developed. The ranking of the locations based on the composite score calculated for each of the locations is set out in the table below.
Table 7: Composite score of the Zones under each parameter based on suitable weightings
Irrigated land in ha (000') 15% Land usage in ha (000') 15% Input Supply Fertilizers in Qt (000') 10% Improved seed in Qt (000') 10%
Zone
Population density/km2 25%
Productivity (Qt/ha) 25%
Total Score
100%
Weightings
WEST AMHARA West Gojjam East Gojjam South Gonder Awi North Gonder East Amhara North Shoa South Wello North Wello Oromiya Waghimera 25.00 24.28 23.02 18.11 10.37 18.16 22.59 19.42 17.25 7.65 25.00 23.39 18.60 18.51 20.97 20.27 19.12 20.83 18.96 16.35 4.54 7.16 4.40 15.00 3.11 7.56 3.79 4.39 2.36 0.73 12.41 12.45 11.01 5.98 15.00 11.49 11.14 6.63 1.37 1.87 10.00 8.47 2.45 2.10 1.73 4.73 1.81 0.48 0.02 0.00 9.87 8.44 4.30 3.48 2.95 10.00 5.43 2.69 0.17 0.45 86.83 84.19 63.79 63.18 54.14 72.21 63.88 54.44 40.12 27.04
However, despite the prevailing financial and technical limitation in establishing the two ALMIHs at the same period, it is advisable to implement the projects one a time. Therefore, according to the selection requirement and the scores obtained in the above table, West Gojjam Zone will be the prioritized and selected location for the implementation of the pilot project.
30
5.2.3. Proposed site of ALMIH in West Gojjam Zone
In order to determine the specific place of the project site the same technique is used as above except in this case some change was made in the type of parameters. The parameters for determining the woreda upon which the project site will be developed are; Population size Productivity of both Meher and Irrigation production in Qt/ha Distance of Woreda center to B/dar in Km, and Unutilized land area Since Population and Productivity are the two main determinant factors that show the projects growth potential, the site selection is seen differently from additional two perspectives. The project sites ease of connectivity to road outlets both to Sudan and Djibouti ports which was subtracted from the total composite score to give advantage for locations nearer to Bahirdar and sufficiency of extra land for the construction of project infrastructure and relocation of farmers in case of the displaced preference to pursue as peasant for some time. Hence, based on our calculations (see Appendix 4) the project site will either be in Bahirdar Zuria Wereda or can be adjusted to second alternative of Mecha Wereda due to the availability of the Grand Koga Irrigation project. The best alternative is to place the project somewhere in between the intersection of the two Weredas along the main high way.
5.2.4. Details of Agro and Horticultural produce of B/dar Zuria and Mecha weredas
Data obtained from West Gojjam Department of Agriculture indicate that the total irrigated and Meher season production of agro and Horticulture produce in the two woredas which are surrounding the selected project site covers 24% cultivated area and 27% in production level out of total zones potential(DOA, 2011). Surprisingly however, looking at the proportion of irrigation practices from the total area of the wereda for the two werdas as compared to the rest weredas practices in the zone shows Bahirdar Zuria stands first by 17% utilization rate whereas Mecha stands fourth with 6.7% from thirteen weredas despite having the grand irrigation project within its
territory. The details of cultivation and production pattern of the two weredas in the year 2009/10 is summarised in the following table;
Table 8: Details of Cultivated land and Production around selected project site
Type of Crops Cereals Teff Finger millet Wheat Barely Oats Rice Maize Pulses Field peas Hourse beans Haricot beans Chick peas Lentil Grass peas Gibto Oilseeds Niger seeds Linseed Sesame Peanut Kimemakime Vegetables Bahirdar Zuria Wereda Meher Irrigation 1,824,479.8 151,930.5 68,218.5 303,958.5 59,439.0 48,465.0 2,835.0 1,341,563.8 -
2,240,848.5
173,814.3 11,355.0 36,937.8 17,884.6 36,018.0 664.0 70,955.0 19,538.0 17,805.0 938.0 595.0 200.0 13,603.9 209,412.5
1,360,957.9
44,632.8
1,557,521.2
Production of 2009/10 in Quintals Mecha Wereda Total Meher Irrigation Meher Irrigation 2,146,401.4 110,602.2 3,970,881.2 262,532.7 33,279.0 101,497.5 350,186.0 654,144.5 33,614.0 93,053.0 109,145.0 157,610.0 100.0 100.0 2,835.0 1,620,077.4 - 2,961,641.2 57,071.5 230,885.8 3,557.5 14,912.5 25,749.0 62,686.8 17,884.6 12,320.0 48,338.0 350.0 1,014.0 10,010.0 80,965.0 5,085.0 5,085.0 96,745.0 116,283.0 84,315.0 102,120.0 3,540.0 4,478.0 8,890.0 9,485.0 200.0 6,010.0 1,049.8 19,613.9 45,682.6 2,358,784.7 497,379.0 997,826.8 706,791.5
2,803,606.9
1,109,478.8
Gross prodn
4,233,413.9
230,885.8
116,283.0
3,065,576.2 7,711,455.4
65,296.5
5,044,455.4
2,667,000.0
It is to be noted that the volume of production of the two weredas amounts around 26.7% ,10.1%, and 7% from the Zones, West part of Amharas, and Regions production of all the Agricultural and Horticultural production that is harvested in Meher and Irrigation respectively.
5.2.5. Accessibility of the selected site to the rest of West part of Amhara regions
The total space in which the project will be erected requires an area of 427,000 Sq.meter and apportioned for its facility accordingly (see Appendix 1) and since the selected project site is located nearer to the seat of the regional government administration, the road infrastructure of all the weredas situated in west part of Amhara would lead them easily to the project site. Even though the exact path and location of PCCs should be determined by further studying the geographic and landscape suitability for freight transportation, the
theoretical model of flow of production from each PCC to ALMIH is depicted in the following graphic picture;
Figure 17: Hypothetical Model of Flow of goods to ALMIH from all PCCs 5.3.
Options for Project Implementation
The project facilities could be developed by Government Agencies (GA) concerned either by deployment of its own resources or under an appropriate public private partnership (PPP) framework. The two primary development options comprise; Option 1: Development, Operation and Maintenance by GA Option 2: Development, Operation and Maintenance by Private Player Option 1: Development, Operation and Maintenance by GA. Under this option, the following activities would need to be undertaken by GA. a) Select a contractor to undertake development of the project facilities. b) Hire skilled manpower for carrying out the operations and maintenance of the developed facilities. Option 2: Development, Operation and Maintenance by Private Player with GA playing the role of a facilitator In this option, development, operation and maintenance would be undertaken by a private operator(s). The private operator(s) would need to carry out their roles and responsibilities as per the contractual agreement signed with ANRS.
A comparative analysis of the risks associated in an event of implementation of the two options discussed above is set out in the table below:
Options
Parameters Manpower Skill Set
Impact Development, Operation and Maintenance by GA.
ANRS would need to appoint technical consultants for developing a strategy for development of ALMIH in Amhara. ANRS would also be required to hire skilled manpower to operate and maintain the project facilities. Development, Service Since payments to operational staff are not performance Operation and Delivery based and often their motivation levels are low, this could Maintenance by affect the level of service delivery. Government Finances GA would need to mobilize finances for procurement of tools / equipment and vehicles and for development of project facilities. Projects Risks The projects related risks such as design risk, cost over-run risk, time risks etc. and adherence to applicable laws would be retained by GA. Manpower GA would need only supervisory staff as the private operator would be responsible for deployment of staff for providing services as envisaged. Skill Set The onus of providing skilled manpower would be with private operator. Service As the payment to the operator would be made subsequent Development, Delivery to demonstration by him of adherence to performance Operation and standards specified by GA, the service delivery levels Maintenance by would be high. Private Player. Finances The private operator would need to mobilize finances for procurement of tools / equipment and vehicles and for development of project facilities. Projects Risks The projects related risks such as design risk, cost over-run risk, time risks etc. and adherence to applicable laws would be retained by private operator. Table 9: Risks associated with the implementation options
Under Option 1, GA would not only retain all the Project related risks and be required to raise finances for undertaking the Project, but would also need to monitor and manage the operational staff. In contrast, if GA implements the Project under Option 2, it would need to appoint private sector operator and recruit only sector specialists for overseeing their activities. In this regard there are potential candidates who are a dependable development partner and are already engaged in similar activities in the region with good reputation like Tiret Endowment Company would be attracted to
take part on the project as it might help consolidate its operational activities through the project by reducing its operational costs. Tiret under its conglomerate has an efficient freight transport, Tikur Abay Transport and agricultural input distribution, Ambassel firms which will give the company an equity advantage over its competitors. In view of the local situation, and from the point of view of effective implementation of the Project, Option 2 is more suitable for development of ALMIH in Amhara.
5.4.
Modes of Implementation
The following are the various modes of implementation under Option 2 that could be considered for the development of the ALMIH: a) Lease ANRS will transfer the land to the private partner on the date of execution of agreement for the development of ALMIH. The private partner will develop the project facilities. Basic infrastructure and amenities like roads, drainage systems, street lighting, water supply, power/electricity, communication networks telephone connections, cable and internet connectivity as per requirements of agro-logistics industry would be provided by the private partner. In addition to providing infrastructure requirements, the private partner could also be responsible for maintenance and management of the common facilities for a stipulated period of time. The private partner would be responsible for raising finances and carrying out the construction activities. b) Joint Venture between ANRS and a private developer A Special Purpose Mechanism (SPM) could be created by ANRS and the private developer under this option. The equity contribution of ANRS could be in the form of land for development of the ALMIH. The SPM could develop the project facilities. Basic infrastructure and amenities like roads, drainage systems, street lighting, water supply, power/electricity, communication networks telephone connections, cable and internet connectivity as per requirements of ago-logistics industry would be provided by the SPM. In addition to providing infrastructure requirements, SPM could also be responsible for maintenance and management of the common facilities for a stipulated time period. SPM would be responsible for raising finances and
carrying out the construction activities. The roles and responsibilities of the SPM are set out below a. Mobilisation of finances and development of envisaged facilities as per the scope of project. b. Develop the facilities in accordance with design and construction requirements set out by ANRS. c. Maintenance of common facilities for a period of stipulated time period. d. Market the project. e. Share the revenue with ANRS as per the agreement. c) Concession The private partner could develop the project facilities. Basic infrastructure and amenities like roads, drainage systems, street lighting, water supply, power/ electricity, communication networks telephone connections, cable and internet connectivity as per requirements of agro-logistics industry would be provided by the private partner. The private partner would be responsible for raising finances and carrying out the construction activities. The ownership of the land and the properties developed would remain with the Government throughout the concession period.
Structure Lease Merits Ownership of the Land would be vested with ANRS for a stipulated period of time. The development risk to be borne by the private partner. No marketing responsibility to ANRS. Demerits
Joint Venture
Concession
Developer would have to pay a huge upfront payment to ANRS. Mortgage rights would not be exercisable by the private partner although the land acquisition cost would be borne by the private partner. Land acquisition cost to be borne by the private partner. ANRS losses ownership of the land after the project development. All risk to be borne by the private partner during the development of the project. Combination of sale and lease ANRS loses ownership over part of the structure. site area. ANRS could realise a portion Allocation of share a major issue. of the revenues upfront. In case of pre-termination, handover could lead to prolonged disputes. Ownership of the property vests with ANRS at Time for development all times. may increase slightly. Private partner is allowed flexibility to develop All risk borne by 36
the area in accordance with bye-laws and in private partner and may adherence to the minimum requirements set by require higher returns. ANRS. Skills required for No marketing responsibility to ANRS. contract management. The land and the facilities developed on it would be transferred back to ANRS at the end of the concession period. Assured and fixed revenue stream. Uniform quality of services. Risk of time bound completion and revenue risk is transferred to the private partner Table 10: Comparative study amongst the modes of implementation
Considering the issues discussed above, the requirement of upfront finances, manpower and associated risks, it is proposed to develop the Project under a Concession framework due to the following advantages; Mobilization of finances would be the responsibility of the private partner. The entire finance required for the Project would have to be raised by the private partner within a pre-specified time frame. Therefore, the Government would not be responsible for raising the funds for meeting the initial capital expenditure. ANRS would lay down the technical specifications for the construction and subsequent operations and maintenance of the Project, which would have to be adhered to by the private partner. In the event that the private partner fails to meet the technical specifications laid down by Government, ANRS would have the option of substituting the private partner. The risk of time-bound completion of the Project would be passed on to the private partner. Since the revenue streams from the Project would commence only after completion of the Project, it would be in the interest of the private partner to complete the Project as early as possible. GA may also stipulate a penalty to be paid by the private partner in case of delay in implementation of the Project. The risk of over-runs in construction cost and operational expenses would be passed on to the private partner. Since the private partner is responsible for the implementation of the Project, any increase in cost of the Project would also be borne by him.
5.4.1. Role and obligations of the Private Partner for development of ALMIH
37
The private partner would be responsible for development of project facilities which have been categorized into seven broad activities namely; 1. Development of project facilities core facilities, specialized infrastructure, common utilities, roads and other utilities; 2. Procurement of equipments as envisaged for the operation of the project facilities; 3. Procurement of trucks required for the transportation of produce from collection centres to the MIC; 4. Operations and maintenance of the project facilities; 5. Make annuity payment to the GA on a quarterly basis; 6. Obtain necessary permits as required under Applicable Law for development and operation and maintenance of the project facilities. 7. Pay all taxes, duties and outgoings, including utility charges relating to the project facilities, as may be applicable.
5.4.2. Role and obligations of the ANRS for development of ALMIH
1. Provide land to the private developer free of all encumbrances; 2. Provide assistance in obtaining required information/data from the stakeholders; 3. Provide assistance to obtain all clearances.
5.4.3. Payment Terms and Mechanism
Payment terms and mechanism would primarily depend upon the viability of the project. In case the project is not viable on the stand-alone basis, financial support would need to be provided to the private partner by ANRS in terms of one time capital grant or in terms of operational grant during the operational period. In case the project is viable on stand- alone basis, private partner would share operational profits with Government. Sharing of profits could be carried out in two ways as set out below; a) Percentage wise sharing of profits Private partner could share operational profits with GA at a mutually agreed percentage sharing mechanism. Percentage sharing could be ascertained based on the investments of the respective parties. Disadvantage of such mechanism is to develop transparency in the fund flow during the operational period. Revenue risk is mutually shared between the private partner and GA. b) Fixed Annuity Payments
In this option private partner would need to make mutually agreed fixed payments to GA at regular intervals (say monthly or quarterly). Estimation of the fixed payments could be ascertained based on the projected cash flows envisaged for the project. Advantage of such mechanism is that GA could be assured of the fixed payments during the concession period and private partner would, well in advance, be aware of the fixed liabilities during the operational period. Revenue risk is passed on to the private partner.
6.
Environmental and Social impact assessment

The Environmental impact assessment should take into account the following
points both at construction and operation phases: Measures to mitigate the adverse environmental impacts during construction phase; a) Site preparation The development of site will involve the movement of top soil, removal of trees, shrubs, soils, rocks, debris etc. The site grading operation will also involve stock piling of backfill material. All the distorted slopes need to be stabilized suitably. During dry weather, control of the dust nuisance created by excavation, levelling and transportation activities will be carried out by water sprinkling. It should be ensured that both petrol and diesel powered construction vehicles are properly maintained to minimize smoke in the exhaust emission. b) Sanitation The construction work force shall be provided with sufficient sanitation facilities in order to maintain adequate hygienic conditions. Low cost sanitation system like septic tanks / soak pits will be provided. This will be done by provisions in contracts with the contractors. c) Construction equipment & waste The project would involve lot of construction activities for infrastructural facilities and thereby structures are likely to come up on the proposed site and would thus involve the use of construction equipment/instruments. These at times would require onsite maintenance and repairing. It will be ensured that both petrol and diesel powered construction vehicles are properly maintained by the contractors to minimize pollutant emission from exhaust. The vehicle maintenance area will be so located that contamination of surface water bodies
By Mesfin Raji | Environmental and Social impact assessment
39
by accidental spillage is avoided. Unauthorized dumping of waste oil will be prohibited. d) Installation of machineries The project would involve the use of modern machineries like drying and ripening refrigerators and forklifts for manoeuvring stacks of pallets from place to place that needs care of spillage of gases and falling of loads on human beings. There should be an informative safety signs in all work areas and premises. e) Storage of hazardous material/dumping materials Petrol, diesel, lubricating oil etc. will be required to be stored at site. These materials will be stored as per stipulated safety standards. Also a lot of material may be generated for disposal during construction activity. These, if disposed off haphazardly can pollute the nearby water bodies adversely. They would increase the accident incidences also. Utmost care will be taken to store these materials at a suitable place and then disposed off at a place in consultation with and as per the implementation guideline. f) Site security and Safety To ensure that the surrounding population is not exposed to these hazards, the site will be properly secured by fencing or by construction of a boundary wall and also guards will be posted at entry points. First aid facilities should be created at different locations for immediate assistance in case of emergencies and accidents. In case inflammable materials are to be kept at the site, they should be stored and handled in accordance with guidelines of inspectorate of safety and health of the state and central governments. Fire hydrants and extinguishers should be located at all vulnerable sites. Measures to mitigate the adverse environmental impacts during operation phase; a) Operation of various collection, and disposal facilities for emission, wastewater and solid waste. The scrap materials generated would include packaging materials, scrap wood, cardboard, plastics, unused metal pieces, garbage in the form of papers, cloth fibers, polythene bags, electric components, wire, scrap metal, glass bottles, thermocol etc. Most of the above material is useful. A special place will be
By Mesfin Raji | Environmental and Social impact assessment 40
designated for administering the whole of the food park area to collect these generated Non Hazardous solid waste, which can be recycled. b) Health facility Medical facilities, first aid centre and health centre near the site, which would be provided by project authorities, will help to protect the health of the project staff. c) Green Space An additional mitigation measure that has a broad definition in as much as it can be used to alleviate a number of adverse impacts due to air and noise emissions is the development of a green space around the facility. It has been proposed to develop green belt around the compound as per the master planning guidelines. These would not only absorb air and water pollutants but also help in arresting noise and soil erosion and creating favourable aesthetic condition. Pollutants in air settle on the ground and vegetation of surrounding area. Plants interact with the pollutants, absorb them and thus remove them from the atmosphere. Plants intercept incoming and outgoing radiation, precipitation and wind and thus have a marked effect on the microclimate. They filter dust from the air and absorb it. The importance of plants in reducing the pollution hazard is therefore of considerable significance. d) Manpower for environmental management. It is imperative that a concrete and feasible plan be made to promote employment to the local people with equal opportunities to people.
7.
Financial analysis and forecast

The Agro-Logistics Hub is an integral mix of specialized infrastructure with
processing requirements of envisaged industry. Hence, it is imperative to understand the various specialized infrastructure facilities required to be housed in the hub meeting the needs of the captive market and this could be one of the single largest factor in deciding the viability of the project. As a conscious strategy, it is proposed to establish the ALMIH at nearby Merawi town which would propel the industrial growth in the region. The development of the first pilot ALMIH has been spread over the period of 5 years.
By Mesfin Raji | Financial analysis and forecast
41
Investment costs of the pilot project
The following assumptions were used in calculating the projects initial outlay; The 2009/10 total marketable agricultural & horticultural produce (meher and irrigation) of the region was 116.65 million quintals (Forecasted five years from now = 139.77 qtls) West part of Amhara Share from the total Production - 67% of the total production = 78.16 million of quintals Marketable surplus - 35% of the yearly marketable surplus (referenced from GTP) = 27.35 million of quintals (Forecasted five years from now = 32.77 qtls) Inputs 1.35 million quintals (Forecasted five years from now = 2.1 million qtls) Total size of logistics 28.7 million qtls per annum (up to 34.87 million qtls in five years) Lease of land 100 birr/Sq.meter Required number of vehicles [NB: All prices include transportation costs] Heavy trucks - 40 (uplifting capacity 40 tonnes/truck)[Unit cost 3.6million birr] light trucks- 70 (uplifting capacity 20 tonnes/truck)[Unit cost 1.35million birr] light trucks installed with refrigerator- 25 (uplifting capacity 20 tonnes/truck) [Unit cost 1.58 million birr] Station wagon 4[Unit cost 2.0million birr] Four wheel drive pickups- 6[Unit cost 1.5million birr] Motor bicycles- 10[Unit cost 80thousand birr] Forklifts 2[Unit cost 1.5million birr] Weighbridge 40 tone (3 meter * 12.3 meter) 1[560,000]
All 135 trucks can uplift 80 tonnes/week X 52 = 561,600 tonnes per annum which is only 20% of all the logistics Capacity utilization of the project: 50% in the first year of operation and increase by 5% each year. Escalation of prices: 5% year on year during the projects period. All service charges exclude VAT (for periodic costs see Appendix 2)
The estimated break-up of the project cost is set out in the table below
By Mesfin Raji | Financial analysis and forecast 42
Table 11: Breakup of the project Cost
No 1 2 3 4 5 6 7 8
7.2.
Particulars Amount in Birr Civil works and land acquisition Land leasing cost Outdoor works Site preparation and development Buildings and structures Machinery and Equipments Working Capital Contingency (5%) Total
280,500,000.00 42,700,000.00 16,000,000.00 21,800,000.00 200,000,000.00 399,460,000.00 50,000,000.00 36,498,000.00 766,458,000.00
Projected cash flow
The details of revenues and expenses sources are as set out below 1) Rental Receipts The operating income from rental receipts includes rentals for premises rented for warehouse facilities, cold storage facilities, commercial space, various office and services, etc. These will be the incomes which will be generated year after year. Corresponding to these incomes, the expenditures will cover items like general maintenance, power supply charges, maintenance of water supply and distribution, general maintenance of constructed premises, major repairs of road, water supply system, establishment expenditure for administering and maintaining the specialized infrastructure facilities provision for business promotion expenses, service facilities, etc. 2) Revenues from Grading and Sorting Grading and sorting facilities are provided to the small and marginal farmers, large hold farmers, producers etc. to provide value additions to the agro produce and hence help market the produce better, resulting in higher revenue to the farmers. Nominal charges are envisaged to be collected from the users for utilization of such services. 3) Operation of Transport Fleet Nominal charges could be collected from the small and marginal farmers/large hold farmers/producers for transporting the produce from the collection centres to the ALMIH and inputs back to farmers localities. The revenue and expenses estimates for the first 5 years of operations are as set out in the table below.
By Mesfin Raji | Financial analysis and forecast 43
No A
Table 12: Revenue and Expenses Estimates for the first 5 years of operations (Million Birr) Particulars Year 1 Year 2 Year 3 Year 4 Year 5 Revenues Warehouse rentals Sorting and grading facilities Weigh bridge Operation of trucks Commercial space rentals Cold Storage rentals Total Revenues Expenses Administrative expenses Water supply charges Power supply charges Transport fleet Fuel charges Repairs and maintenance Transport fleet. Other Maintenance Charges Total Expenses Annual Net Profit 173.50 39.38 0.16 7.09 0.26 10.40 230.78 8.69 0.10 0.13 15.06 0.79 1.30 26.076 204.70 199.98 43.31 0.17 7.80 0.29 12.42 263.98 8.69 0.11 0.14 16.57 0.87 1.39 27.77 236.21 228.88 47.25 0.19 8.51 0.32 14.62 299.77 8.69 0.12 0.15 18.07 0.95 1.47 29.46 270.31 259.57 51.19 0.20 9.21 0.34 17.01 337.52 8.69 0.13 0.16 19.58 1.03 1.55 31.15 306.37 292.04 55.13 0.22 9.92 0.37 19.57 377.25 8.69 0.14 0.18 21.09 1.11 1.64 32.85 344.40
The following assumptions were used in preparing the projects cash flows; The investment outlay on the project will be 766.5 million Birr. This consists of 680 million on plant and machinery and 50 million on working capital with 36.5 million contingency. The entire outlay (V) will be incurred at the beginning of the project. 30% of the project is assumed to be financed with 229.9 million of equity capital (E), 20% of the project will be financed with 153.3 million of preference capital (P), and the remaining 50% of the capital will be financed with 383.2 million of debt capital (D) from bilateral/multilateral sources. The project is estimated to have an investment rate (Re) of return 15% and preferred capital will carry a dividend rate (Rp) of 14%, debt capital will carry an interest rate (Rd) of 10.5%. At the end of 5 years, fixed asset will fetch a net salvage value of 149.4 million whereas net working capital will be liquidated at its book value. The effective tax rate (Tc) will be 30%. Plant and machinery will be depreciated at the rate of 25% per year as per the declining book value method of depreciation. Hence, the formula that is used in calculating the WACC is as follows; WACC = [(E/V) x Re] + [(P/V) x Rp] + (D/V) x Rd X (1-Tc)
44
By Mesfin Raji | Financial analysis and forecast
Based on the calculation, WACC will found to be 11%.

Table 13: Cash flow over the next five years (Million Birr) No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 Years Capital requirement (with 5% contingency) 0 (763.92) (44.80) (16.80) (22.89) (210.00) 1 2 3 4 5
Land leasing cost

Outdoor works Site preparation and development
Buildings and structures
Machinery and Equipments (419.43) (50.00) Working Capital requirement Revenues Expenses (other than deprec. & Int.) Depreciation (yearly 25% at DBV) PBT (8-9-10) Income Tax (30%) PAT (11-12) Net salvage value Recovery of WC Initial outlay (763.92) Operating cash inflow (10+13) Terminal cash inflow Net cash flow (16+17+18) (763.92) Discounted at 11% cost of capital (763.92) NPV 153.05 Discounted Pay Back (years) 4.07 IRR 17.65% 230.78 26.07 157.36 47.35 14.20 33.14 263.98 27.76 118.02 118.19 35.46 82.73 299.77 29.45 88.51 181.80 54.54 127.26 337.52 31.14 66.39 239.99 72.00 168.00 377.25 32.84 49.79 294.61 88.38 206.23 149.37 50.00 256.02 199.37 455.39 270.25
190.50 190.50 171.62
200.75 200.75 162.94
215.78 215.78 157.77
234.38 234.38 154.39
Since the project NPV is positive and IRR 17.65% is still greater than the cost of capital 11%, it shows the Project is profitable in implementing in the Amhara region. It will recover its investment cost within the first phase of the project. This is good news for the development of the second phase of the project in Eastern Amhara Region.
8.
Project Risk
The anticipated risk associated with the execution of the project that is expected
to come is listed with mitigating measures as follows; Use of supplementary irrigation significantly will reduce the risk of low yields or crop failures and attracts private sector investment.
By Mesfin Raji | Project
Risk
45
Rigorous screening of contract growers in terms of credit and husbandry rating through community representatives will reduce the risk of side marketing and poor farming practice
Peer review mechanism will be used in many schemes where groups instituted self policing and underwrote the loans of all members of the group. Insurance of crop inputs and in some cases the entire crop may prove a major incentive to investors as well as farmers. Access to storage facilities such as grain silos might reduce the risk of price volatility.
9.
9.1.
Social cost benefit analysis

Considerations
The social cost benefit analysis is carried out following the UNIDOs five step
approach in which only two of the major steps emphasized in the report. The remaining three steps namely; adjustment for the impact of the project on saving and investment, adjustment for the impact of the project on income distribution, and adjustment for the impact of the project on merit/demerit goods will be further assessed in the future depending on the necessity that arise by the sponsor. Since the financial profitability of project is already determined in the first step of the UNIDOs approach, the second step is obtaining the net benefit of the project measured in terms of economic (efficiency) prices. Therefore, cost benefit analysis of the project was determined using the shadow pricing of resources taking the following factors into account; a) Choice of numeraire, b) Concept of tradability, c) Sources of shadow prices, d) Treatment of taxes, e) Externalities, and labour. a) Choice of numeraire In general, based on UNIDOs specification, numeraire is determined at; domestic currency in Birr, constant price, and net present Consumption of the agricultural and horticultural produce. b) Tradability The project utilizes both tradable and non-tradable resources in which the tradable resources are valued at their border price. Hence, all vehicles used for transportation and machineries which are used for cold storage, sorting and grading were valued using the international currency USD translated in domestic currency at
By Mesfin Raji | Social cost benefit analysis 46
market exchange rate (20 birr/USD). Whereas, the value on non-traded good such as grain crops, vegetables, and agricultural inputs are measured in terms of what domestic consumers are willing to pay for the service provided by the project because still the government is striving to fulfil the countrys food self-sufficiency level in all agricultural produces. Therefore, on the output side, since the impact of the project is to increase the consumption of the product in the economy, the measure of value is taken the marginal consumers willingness to pay. Hence, the following price adjustment was carried out based on shadow prices; Warehouse fasciitis birr 20/metric tonne Cold storage fasciitis birr 25/metric tonne Grading and sorting facilities birr 700/metric tonne Weighbridge birr 70/truck Freight transportation birr 5/km On the input side also, since the impact of the project is to reduce the availability of the input to other users, their willingness to pay for that input is considered as social value. Hence, the following price adjustment was carried out based on shadow prices; Power supply birr 2/kwh Water supply birr 15/cubic meter
c) Sources of shadow pricing In calculating the social cost and benefit of the project, UNIDO approach was used that suggests three sources of shadow pricing, depending on the impact of the project on national economy. Therefore, from the projects objectives point of view the impact of the project is assumed to be mainly influences the consumption in the economy which evidently makes our basis of shadow pricing to become the consumers willingness to pay. d) Treatment of taxes Since the projects operation augments domestic production significantly, no tax was levied in calculating the social value of the project. e) Externalities The project is figure out to impart both benefit and negative consequences on the locality of the project area in terms of creating job opportunities and clustering of agro-processing plants within the vicinity of the project that may considered as a
By Mesfin Raji | Social cost benefit analysis 47
benefit to the society around the project. However, the development of such big project by itself needs conducive landscape and work area that can only be realized at the expense of displacement or relocation of settlement areas. In this case some households will definitely be affected by the measure that would be taken. Hence, due to its complexity of valuing the benefit at this stage the negative effects just incorporated by assuming somewhat 10% of the cost of setting up of the plant as cost of negative externalities. f) Labour inputs The project is assumed to be run totally by local expertise and workforce however takes labor away from other employments, and the shadow price of labor is taken only for non-professionals that is assumed to be equal to what other users of labor are willing to pay for this labor. Average wage rate; Field supervisors birr 1,500/person/month Drivers birr 2,000/person/month Other staffs birr 1,500/person/month
At present conditions, for professionals the market is assumed relatively free and there is no shadow price for wage in the labour market.
9.2.
Determination of social value of the project

Valuation of the project from social point of view was done taking the factors
outlined under the preceding topic and contrasting the project from private and social point of view. The details are given in the following table.
By Mesfin Raji | Social cost benefit analysis
48
No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Table 14: Social cost benefit analysis of the project Form Private Investor point of view (Million Birr) Years 0 1 2 3 4 5 One Shot Costs
From social point of view (shadow pricing)(Million Birr) 0 1 2 3 4 5
land acquisition Civil works Machinery and Equipments

Skilled Labour Semi-skilled Labour Working Capital requirement Subtotal of One Shot Costs Benefits/revenues Warehouse facilities Cold Storage facilities Grading and Sorting facilities Operation of freight transportation Weighbridge Commercial space rent Subtotal of Benefits Periodic Costs Power supply Water supply Rolling stock(Fuel) Repairs and maintenance Miscellaneous 5% Subtotal of Periodic Costs
(44.80) (249.69) (419.43) (3.00) (38.40) (50.00) (805.32) 173.50 10.40 39.38 7.09 0.16 0.26 230.78 0.13 0.10 15.06 0.79 1.30 17.38 199.98 12.42 43.31 7.80 0.17 0.29 263.98 0.14 0.11 16.57 0.87 1.39 19.07 228.88 14.62 47.25 8.51 0.19 0.32 299.77 0.15 0.12 18.07 0.95 1.47 20.77 259.57 17.01 51.19 9.21 0.20 0.34 337.52 0.16 0.13 19.58 1.03 1.55 22.46 292.04 19.57 55.13 9.92 0.22 0.37 377.25 0.18 0.14 21.09 1.11 1.64 24.15
(261.58) (466.04) (3.00) (27.30) (50.00) (807.92) 347.00 17.33 55.13 17.72 0.22 0.26 437.66 0.00 0.25 0.19 15.06 0.79 1.19 17.48 399.97 20.70 60.64 19.49 0.24 0.29 501.33 0.00 0.28 0.21 16.57 0.87 1.27 19.19 457.77 24.37 66.15 21.26 0.26 0.32 570.13 0.00 0.30 0.23 18.07 0.95 1.37 20.92 519.14 28.35 71.66 23.03 0.29 0.34 642.81 0.00 0.33 0.25 19.58 1.03 1.44 22.62 584.08 32.62 77.18 24.81 0.31 0.37 719.35 0.00 0.35 0.26 21.09 1.11 1.52 24.33
49
No 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38
Years
Form Private Investor point of view (Million Birr)

2 3 4 19.07 20.77 22.46 244.90 279.00 315.06 118.02 88.51 66.39 126.88 38.06 88.82 190.49 57.15 133.34 248.68 74.60 174.08 5 24.15 353.09 49.79 303.30 90.99 212.31 149.37 50.00 (807.92) 206.84 206.84 167.87 221.85 221.85 162.22 240.46 240.46 158.40 262.10 199.37 461.47 273.86 0
From social point of view (shadow pricing)(Million Birr)

1 2 3 17.48 19.19 20.92 420.18 482.14 549.21 4 5 22.62 24.33 620.18 695.03
0 1 Subtotal of Periodic Costs 17.38 Net Profit 213.40 Depreciation (yearly 25% at 157.36 DBV) PBT (24-25) 56.04 Income Tax (30%) 16.81 PAT (26-27) 39.23 Net salvage value Recovery of WC Initial outlay (805.32) Operating cash inflow (25+28) 196.59 Terminal cash inflow Net cash flow (31+32+33) (805.32) 196.59 Discounted at 11% cost of (805.32) 177.10 capital NPV 134.13 Discounted Pay Back (years) 4.19 IRR 16.58%
420.18 420.18
482.14 482.14
549.21 549.21
620.18 620.18
695.03 695.03 50.00
420.18 (807.92) 420.18 (807.92) 381.98 1,501.20 2.02 58.2%
482.14 482.14 398.46
549.21 549.21 412.63
620.18 620.18 423.59
695.03 420.18 1,115.21 692.46
NB: The NPV and IRR of the Private shows some variation from the previous figure due to a rounding of error in the computation
50
10. Conclusion and recommendations

The genesis of agro-logistics somewhat related to the idea of Harvard professor Michael Porter who introduced the concept of industry clusters to denote the grouping of actors involved in one industry (different firms producing one or related products, their suppliers, buyers and supporting services, etc.) in a specific location(ICRA, n d). Efforts to link small-scale farmers to markets face a number of constraints some of them are: a) The need to diversify into new markets for higher value products, or add value to current products through improved quality, niche markets. b) The need to build economies of scale to compete with large farms and increase bargaining power with buyers that require certain quantities, e.g. through collective action, farmer associations, etc.; c) The risks associated with change: e.g. the change to new production systems or to new relationships with other actors. d) The need to reorient research and extension from a supply-driven mode of generating information led by researchers to a demand-driven or client-oriented mode of service delivery. e) The need to improve information flows and develops synergy between the different actors in the production and marketing system. Therefore, the conceived projects main objectives will be met if only if there is a robust and dependable supply value chain start to stimulate the agricultural practices. That is what the government is planned and anticipating to transform the countrys agrarian mode of cultivation and boost its competitiveness in the global market.
By Mesfin Raji | Conclusion and recommendations
51
References
BoFED. (2009). Development Indicators of Amhara Region (2009/10). ANRS (p. 10). BoFED. (2010a). 2009/10 Budget year Annual Statistical Bulletin. BoFED. (2010b). Amhara National Regional State GTP (Amharic version). Working paper. Bosona, T. G. (2010). Cluster Building and Logistics Network Integration of Local Food Supply Chain. SLU, Swedish University of Agricultural Sciences (p. 9). CSA. (2009). Area and Production of Crops (Private Peasant Holdings, Meher season). Agricultural sample survey 2008/2009 (2001 E.C.) (Vol. 2009, pp. 27-38). CSA. (2011). Area and Production of Belg Season Crops for Private Peasant Holdings. Agricultural sample survey 2010/11 (2003 E.C.) (Vol. V, pp. 24 & 40). DOA, W.-G. (2011). West Gojjam Department of Agriculture 2003EC Annual report. ECX. (2010). Rules of The Ethiopia Commodity Exchange. ICRA. (n.d.). Agribusiness & Markets Key Concepts. Learning Materials, 1-8. IDCL. (2009). Development of Agri-Logistics Hub In Various Regions of Karnataka. Government of Karnataka. IDCL. (2010). Pre-Feasibility Study for (Storage & Distribution) Logistics Architecture in Karnataka. Government of Karnataka (Vol. II). MoFED. (2003). Brief Note on the 2003 (EFY) GDP Estimates series. Ethiopian Government (Vol. 2003, pp. 1-8). MoFED. (2010). Ethiopia GTP English. Working paper. Thornton, G. (2007). Setting up Composite Logistics Hub at Pawarkheda, District Hoshangabad in state of Madhya Pradesh on PPP Model. Government of Madhya Pradesh (pp. 1-76). Website. (2011). ECX. Retrieved October 5, 2011, from www.ecx.com.et
By Mesfin Raji | References
52
Appendices
Appendix 1: Area Allocation of the Facilities Proposed for the ALMIH in west part of Amhara No A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 B C Particulars Common facilities (Specialized Infra, Utilities and Special Amenities) Auction Centre Loading, Unloading and dispatch centre Quality Testing Laboratory Admin Block Commercial Block Security Block Sub-Station Generator Room Weigh Bridge Room Cold Storage Warehouse Playing field for outdoor Games Grading and Packaging Hall Other amenities (canteen, Hotel, bank etc.) Rejected Produce Shed Truck parking Area Driver Dormitories Dispensary Fuel Station Service Station Admin Office - logistics Centre TOTAL A Roads, foothath and Parking area Open Space Total (A+B+C) Unit Area
Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m Sq.m
15,000 46,000 1,000 1,500 15,500 500 1,000 1,000 150 4,400 160,000 10,500 4,700 16,800 1,000 15,000 5,000 1,000 3,000 1,000 1,500 306,550 70,225 50,225 427,000
By Mesfin Raji | Appendices
53
Appendix 2: Assumptions for the Project
Assumption taken in calculating Revenues and expenses of the Project

1. Revenues a) Service charges Receipts i. Warehouse facilities Annual total Agricultural Freight available 2,754,000 tonnes Rentals assumed to be Birr 10 per tonnes per month. ii. Cold storage facilities Annual total Horticultural Freight available 110,000.0 tonnes Rentals assumed to be Birr 15 per tonnes per month. iii. Commercial space Space available is to an extent of 50,000 square meter. Lease rentals assumed to be Birr 10 per square meter per month. b) Grading and Sorting Facilities Capacity of the sorting and grading lines: 500 tonnes per day. Rentals: Birr 500 per metric tonne. c) Weigh Bridge Number of trucks utilizing the facility: 20 trucks per day. Rentals per truck: Birr 50 per truck. d) Operation of trucks Number of trucks to be operated: 135. Total distance travelled per annum per truck from the collection centres to the ALMIH: approximately 50,000 kilometre Revenues from operation of truck: Birr 2 per kilometre of distance travelled. 2. Operating Expenses a) Administrative expenses Salary expenses General Manager : Birr 20,000 per month Assistant Manager (2 nos.): Birr 15,000 per month per person Field supervisors(10 nos.): Birr 4, 000 per month per person Driver and assistants (270 nos.): average salary of Birr 2,000 per month per person Others (20 nos.): average salary of Birr 3,000 per month per person b) Water Supply Charges Quantity of water required to be supplied to the facilities: approximately 2000 cubic meter per month. Water charges: Birr 8.2 per cubic meter. c) Power supply charges Electric consumption Amount of electric power required to be supplied to the facilities: approximately 20,000 kwh per month.
By Mesfin Raji | Appendices 54
Electric charges: Birr 1.0 per kwh. d) Rolling stock expenses Total distance travelled by the transport fleet per annum: approximately 6,750,000 kilometers Fuel mileage: 4 kilometers per litre of fuel. Cost of fuel: Birr 16 per litre. Repairs and Maintenance cost: Rolling Stock Approximately 5% of the cost of the rolling stock. Other maintenance cost 5% of the project cost.
55
Appendix 3: Agricultural and horticultural production and supply of inputs in Amhara in the year 2009/10
Zone Cultivated Area in ha Irrigatio n West Amhara West Gojjam East Gojjam Awi South Gonder North Gonder Sub total East Amhara North Shoa South Wello North Wello Oromiya Waghimera Sub total Region
15,145.0 7,590.0 8,787.0 4,724.0 1,460.0 37,706.0 106,222.0 522,856.0 430,849.5 258,094.5 61,564.6 103,612.2 1,376,976.7 4,052,411.3 538,001.0 438,439.5 266,881.5 66,288.6 105,072.2 1,414,682.7 4,158,633.3 7,108,359.0 5,627,709.0 3,698,082.0 839,381.0 1,188,346.0 18,461,877.0 56,721,903.0 89,661.1 36,284.4 31,804.4 30,136.2 187,886.1 785,621.4 374,559.3 170,768.7 140,367.2 8,003.5 693,698.7 3,084,025.8 17,995.2 229.4 5,318.9 23,543.5 70,189.2 7,590,574.6 5,834,991.6 3,870,253.6 874,836.1 1,196,349.5 19,367,005.3 60,661,739.4 14.1 13.3 14.5 13.2 11.4 66.5 14.1 312,670.0 119,810.0 31,580.0 1,470.0 98.0 465,628.0 2,100,608.0 26,270.0 14,260.0 7,070.0 450.0 1,170.0 49,220.0 125,530.0 338,940.0 134,070.0 38,650.0 1,920.0 1,268.0 514,848.0 2,226,138.0 9,095.0 14,343.0 30,041.0 8,809.0 6,228.0 68,516.0 567,549.4 580,180.4 254,362.0 534,730.2 738,612.6 2,675,434.5 576,644.4 594,523.4 284,403.0 543,539.2 744,840.6 2,743,950.5 9,214,516.0 9,097,746.0 3,377,272.0 6,228,764.0 10,341,728.0 38,260,026.0 239,754.7 120,373.0 66,442.6 43,544.5 127,620.5 597,735.3 538,947.3 462,880.2 218,027.4 766,202.3 404,270.0 2,390,327.1 43,385.0 348.0 2,912.8 46,645.7 10,036,603.0 9,681,347.2 3,664,654.8 7,038,510.8 10,873,618.5 41,294,734.1 17.4 16.3 12.9 12.9 14.6 74.1 660,450.0 559,520.0 161,940.0 138,570.0 114,500.0 1,634,980.0 25,940.0 22,160.0 9,150.0 11,300.0 7,760.0 76,310.0 686,390.0 581,680.0 171,090.0 149,870.0 122,260.0 1,711,290.0
Meher Production in Qt Grain Crops Vegetables Root Crops Fruits Total
Meher
Total
Produc tivity (Qt/ha)
Input Supply in Qt Fertilizers Improved seed Total
56
Appendix 4: Selection parameters and composite scores of weredas in west Gojjam Zone
Distance of Woreda center to B/dar in Km 30% 0.00 35.20 42.20 161.30 59.30 101.50 165.30 149.60 61.80 257.20 228.20 171.70 253.00 Max Unutilized land area in ha 25% 68.91 100.00 69.83 52.52 51.85 72.04 38.26 40.48 40.37 57.66 43.43 65.55 43.01 100.00 10.34 15.00 10.47 7.88 7.78 10.81 5.74 6.07 6.06 8.65 6.51 9.83 6.45 45% 45% 44% 57% 56% 39% 72% 50% 50% 65% 49% 46% 51% 72% 62.24 62.47 60.65 79.65 78.23 54.55 100.00 69.32 68.97 90.92 68.44 63.28 70.72 100.00 15.56 15.62 15.16 19.91 19.56 13.64 25.00 17.33 17.24 22.73 17.11 15.82 17.68 Productivity (Meher+ Irrigation) Qt/ha 30% 50.96 46.31 53.33 57.82 35.67 38.20 40.09 44.43 24.81 51.79 54.60 37.24 48.91 57.82 88.13 80.10 92.24 100.00 61.69 66.07 69.34 76.85 42.91 89.57 94.43 64.42 84.59 100.00 26.44 24.03 27.67 30.00 18.51 19.82 20.80 23.05 12.87 26.87 28.33 19.32 25.38 52.34 50.54 48.39 38.98 38.92 32.42 32.26 29.01 28.96 28.25 25.34 24.95 20.00
RI
CI
Woreda
Population size 15%
RI
CI
RI
CI
RI
CI
Total Score
Bahir Dar Zuria Mecha Yilemana Densa Sekela South Achefer North Achefer Womberema Burie Gonji Kolela Dega Damote Quarite Jabitahenan Dembecha
0.00 13.69 16.41 62.71 23.06 39.46 64.27 58.16 24.03 100.00 88.72 66.76 98.37 100.00
0.00 4.11 4.92 18.81 6.92 11.84 19.28 17.45 7.21 30.00 26.62 20.03 29.51
191,141 277,388 193,693 145,673 143,830 199,823 106,135 112,295 111,974 159,946 120,473 181,841 119,308
277,388.0
257.20
57

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Project Pre-Feasibility Study Development of Agro-Logistics and Market Integration Hub (ALMIH) in West Part of Amahara National Regional

[Agro-Logistics and Market Integration Hub (ALMIH)]

Project Pre-Feasibility Study

Mesfin Raji Kiltu

June 2012 Bahidar

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

2. COMPATIBILITY WITH GOVERNMENT PRIORITIES ............................................ 15

Pre-Feasibility Study 4.3.

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

Limitation of the Study

By Mesfin Raji | Introduction

[Agro-Logistics and Market Integration Hub (ALMIH)]

1.1. Background of the project

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

By Mesfin Raji | Introduction

[Agro-Logistics and Market Integration Hub (ALMIH)]

Figure 4: Areas and Production through Irrigation from 2001-2010

Figure 5: Topographic map of ANRS

By Mesfin Raji | Introduction

Pre-Feasibility Study 1.2.

[Agro-Logistics and Market Integration Hub (ALMIH)]

Purpose, objectives & scope of the project

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

Name and description of the service for the project

Aggregation of Outputs Horticulture ALMIH Grain Crops

Transportation & Distribution Agricultural Inputs

Figure 6: Conceptual framework of Agro-logistics and Market Integration Hub

[Agro-Logistics and Market Integration Hub (ALMIH)]

[Agro-Logistics and Market Integration Hub (ALMIH)]

Stacking Stacking Compartment Compartment

Sorting Sorting Compartment Compartment

1.3.4. Product Collection Centre (PCC)

[Agro-Logistics and Market Integration Hub (ALMIH)]

Value addition and lesser price escalation

Figure 9: Curtailment of the Agro-supply Chain

[Agro-Logistics and Market Integration Hub (ALMIH)]

Collection centre Collection centre

Processors & Exporters

Value adding process

Wholesalers & institutional

Benefits of an Agro-logistics Hub

[Agro-Logistics and Market Integration Hub (ALMIH)]

Life span of the project

[Agro-Logistics and Market Integration Hub (ALMIH)]

Compatibility with government priorities

[Agro-Logistics and Market Integration Hub (ALMIH)]

Need for Integrated Approach

Pre-Feasibility Study 2.3.

[Agro-Logistics and Market Integration Hub (ALMIH)]

Linkages with existing Marketing Channels

Approach & Methodology

[Agro-Logistics and Market Integration Hub (ALMIH)]