Table of Contents

I. Executive summary 2
1.1 Company Profile of the firm 3

1.2 Vision, Mission Goal, location and Site. 3

II. Objectives of the business Plan 4

2.1mpact on the Business

Plan........................................................................................................5

2.2 Rational For Grant Support, 5

2.3 PAKANA food processing P.L.C /SLOT Analysis/ 6

3. Market and Business Analysis of the blended food industry 7

4. TECHNICAL STUDY 9
4.1 Blended and fortified emergency foods, 9

4.2
processing.....................................................................................................................
...................10

4.3 Packaging 10

4.4 Meeting the local demand for raw materials.................................................................11

4.5 Competition 11

4.6 Production Capacity and Production Program 14

5.1 Projected Local and Export Sales 15

5.2 Sales projection 16

5.3 Promotion 17

6 Organization and Management 17

6.1 Organization 17

6.2 Manpower 19

6.3 Objectives of this capacity building grant support and project benefits:- 19

Figure 1: Project Implementation Time Schedule, 2016 21

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 PAKANA FOOD PROCESSING PLC

BUSINESS PLAN PRESENTED TO ETHIOPIAN COMPETITIVENESS

FACILITY/ECF/ GRANT SUPPORT PROGRAM

I. Executive Summary

This time for our country is a time of transformation and that Ethiopia has embarked on
development activities to become one of middle income countries by the year 2025. In the
Industrial development strategy it is mentioned that Value addition as the base to transform and
attain rapid and sustainable economic growth. The industrial sector is expected to take the lead of
economic growth from agriculture sector to manufacturing.
The growth of manufacturing industries in Ethiopia has stimulated and increased the
productivity of farmers and increased supply of inputs for these industries and capacitated
higher levels of investment in infrastructure, human capital and technologies to manage
efficiently at higher levels of manufacturing. So manufacturing industries can support and
propel the sector, Moreover, the current investment flow and market in these areas are very
promising that initiates many investors to engaged in the sector. Furthermore, the Government
of Ethiopia has conductive investment polices and regulation that further attract the private
sectors involvement in economic development of the nation through the various investment
incentives.
In this regard, the PAKANA Food processing company has been in the business of producing
blended food products especially corn soya blend or called CSB+ and feed processing. The
company is located in Oromiya regional state Bishoftu city administration and undertaken this
business plan study to confirm for the capacity building support grant from Ethiopian
Competitiveness Facility to enhance its efficiency and productivity. Productivity and efficiency
can be improved by doing additional capacity development tasks like quality test facility
(laboratory facility) improvement, fulfilling international standards like food safety management
required by international customers, preparing expansion feasibility study for product
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diversification and deployment of international experts to train local staff in doing research and
development and new products development. The promoter is very dedicated to complete this
project with in short period of time probably in the coming half year with cost sharing bases.
The details of activities are listed in the annex implementation schedule.
I.1 Company Profile of the firm
PAKANA Food processing company P.L.C is a manufacturing company engaged mainly in
CSB+ products/ corn soya blended foods processing. Casually the company is also engaged in
some processed feed products. The companys major market is purely targeted for drought
affected citizens mostly the World Food Program and the Ethiopian Government. The Company
has been in the business for the last 5 years doing the same business at low capacity
utilization.
This year the company has made a dramatic development in the capacity utilization by
producing corn soya blended products and feed to the drought affected areas taking the order
of Government to sufficiently deliver the need. Moreover, PAKANA food industry planned to
produce new branded baby foods and join biscuit market.
1.2 VISION, Mission, Goal and Location,

PAKANA food processing P.L.C has a vision to transforming its production business in to one of the
best world known globally competitive business in light manufacturing or agro based food industry
by 2020 and delivers its products with worldwide accepted standard.

MISSION
The mission of PAKANA food processing P.L.C is to own the leading supplier of corn-soya blended
and other blended product demand of Ethiopia and take a good share of East African market.
The Company is committed to building long-term relationships with customers, realizing the
need of customers through enhancing their quality confidence basis and supply high quality
diversified baby foods.

GOAL
The goal of the company is steady expansion and becoming supplier of high quality fortified
processed food products to the domestic market, establishes an efficient sales and distribution net
work in the whole Africa. make the products be ready for use in the conventional market.

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1.3 Project location & site

The company is located at Oromia regional state in the town of Bishoftu 38 k/m far from Addis
Ababa. The company encompasses a factory building with stores and office building with
social facilities, a green area, parking place and other facilities. Currently the site of the
company is highly developed with expected standard in food safety and good manufacturing
practices with state of the technology. the place or the location is an ideal place for food
processing. The company is owned by joint venture who have been in the same business
before privately.

II. Objectives of the business Plan

The main objective of this business plan is to address its objective of increasing its efficiency
and completeness so as to be able to supply standardized corn soya blend products for
domestic market as well as to the international market that is being supplied to the drought
affected areas of our country. Moreover, the company is planning to diversify its operation to
produce new branded food products like baby foods, flour, pasta & macaroni manufacturing
based on research and development.

The objective of this grant request plan is to use the full capacity of the company, to create
more job opportunity for our society and also to add values on the farmers products like maize,
soya, wheat crops. Furthermore aim is to contribute its own share in the nations sustainable
development, food security and poverty reduction program. Produce high-quality blended
CSB+, baby foods, pasta & macaroni by by-products and bring to the market at a reasonable
price in addition to the emergency demand fulfilment.

Having this objective in mind PAKANA food processing industry has initiated this business proposal
to get capacity building support and pay its part in achieving the desired result through the support
of Development partner Ethiopian Competitiveness Facility ECF.
The capacity building activities are, Hiring of experts for market assessment and workers training,
conducting skill upgrading training for management and staff workers, being amend the already
certified with the required certification (ISO 22000:2005), developing new products by employing
international experts who have hands on skill in the sector. Fulfilling lab equipment to test and
maintain its product quality from raw material purchase up to final product and visit to learn best
performing African companies. Hence, capacity building support which amounts to USD 67,500.00
is expected to be secured from ECF in cost sharing.

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2.1 Impact on the Business Plan

Value addition in food industry especially blended supplementary foods has enormous advantage in
terms of getting more additional income about 30-40 percent margin, creating job opportunity,
introducing and transferring technology furthermore it has a push factor for improving productivity
and quality of crops through creating backward and forward linkage with farm plantation.
Hence, the Government of Ethiopia is seriously encouraging local companies to upgrade their
facilities so as to produce more value adding products and fulfill domestic demand to prohibit
importation of similar products.
Establishing and supply diversified blended foods and diversify new products, which originates
from our tradition, built on experience, and Establish internationally accredited and processing
industry;
Strengthen and expand the existing market and enter in to neighbouring countries export market
with reasonable volume, process at a full capacity about 12,400 tons yearly and create
managerial and technical competency to improve the quality and productivity.

2.2 Rational For Grant Support,

Food industries must go from primary processing to fortified food enriched with vitamins and
minerals so as to provide end users or consumers get healthy foods,
Maximize the capacity utilization of the company by producing different products through
product development and diversifying product lines.
Strength the agriculture- industry supply chain linkage like maize, soya, wheat, beans etc. these
crops are among the most valuable primary crop with excess production in our country, maize
as an instance is the first in value and volume of production and also weak in taking as a means
of input for industry.
Various incentives are provided by Government of Ethiopia to promote value addition and for
crops like maize that is being produced by small holder farmers..
More importantly the growing economy of Ethiopia is an opportunity for the local investors as
entrepreneurs to look for international market.
It is a prior agenda for the country to address the necessary blended foods and related items to
the drought affected citizens by providing enriched foods to babies, pregnant women.
Hence it is the right time to capacitate industries like PAKANA food processing working in such
blended products that are being supplied to Government demand as a means of import substitute
and visualize the export market.

2.3 PAKANA food processing P.L.C /SLOT Analysis/

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 Strength
Sufficient experience of the entrepreneur in the field
to run the intended project..
Commitment to use latest technology (state of the
art technology, fast processing capacity)
Well established infrastructural facility that meets
international standard and suitable location for
market.
Interdependence & understanding of staff and
share holders.
Well established market network, communication
and strong customer relationship in international
market.
Opportunities
Diversified agro ecological condition for naturally
growing a wide range of varieties of raw materials,
like maize and soya beans.
Existence of favourable policy environment &
Limitations
Financial constraint as the sector requires huge
money to fully run the business.
Luck of skilled professional staff particularly for
international market assessment and product
diversification of Research and development.
Laboratory facilities are not properly organized
due to knowledge gap in the sector.
Low productivity of the indigenous wheat and
other raw material.
Threats
Low level of cooperation among stakeholders
to improve the CSB+ products.
Un predictable maize and soya price in the

domestic market high fluctuation

resources that could be mobilized
Access to required maize variety on time,
Good relations & links already created with
inconsistent supply.
partners, input suppliers, and international buyers.
Delicate regulatory work in the domestic market
Growing domestic market demand for readymade
to look after hygiene food safety and quality.
food staff products.
High Government and international development High probability of Price fluctuation of
partners are eager to give capacity building support agro products like maize, soya and wheat.
including joint purchase of minerals and vitamins.

2.4 Mitigation Mechanisms for Weakness and Threats

As it is common in all areas of business the manufacturing of food sub sector is also facing
limitations and weakness, so management has to plan proactively how to overcome or at least
minimize them. Some of the mitigating means are:-
The management has to mobilize and initiate strongly other companies to work together in
common issues so that the low level of cooperation among stakeholders will come together to
improve the CSB+ products.

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 Company management will make a study and strength supply chain relationship to have enough
stock on the proper time to overcome Un predictable price of raw materials and create Access
to required maize variety on time, inconsistent supply.
Strength the laboratory facility and train inspection team skill to protect buying inferior quality
raw materials.
Deploy international expert to make R/D study for new product development and Improve
laboratory work and processes follow up to look after hygiene food safety and quality.
Plan to get additional merchandise loan from banks in-order to address financial constraint as
the sector requires huge money to fully run the business.

3. Market and Business Analysis of the blended food industry

3.1 Historical background of blended supplementary food products in Ethiopia

The History of blended/fortified/ industrial food products production and processing in Ethiopia goes
back to the time of 1973 famine that affected most part of the country. During that time it was only a
small quantity of raw blended foods had been produced in the country. Prior to that time the
technology for producing a pre-cooked product did not exist in the country. The coarsely milled raw
blended food product had to be cooked for a minimum of 45 minutes and this produced a porridge
which was often unpalatable and difficult to digest. the initial production of supplementary foods
processing have been produced by a company called FAFA Food complex, the whole project
initiation emerged by the Ethiopian food and nutrition institute under the food corporation of the
time, one of the first to invest in the necessary technology to produce a pre-cooked blended food.
This company had previous experience in the production of baby foods, biscuits, and other fortified
and blended food items.

3.2 The Development Trend of Blended Food Industry

As the development of manufacturing industry had been growing bit by bit so also processed
blended and fortified food industry growth trend very slow. Although the technology of blended food
process is a multipurpose technology, until recent years the companies are producing one single
products called famix or corn soya blend or CSB+ which is fully demanded by the emergency relief
and supplementary school feeding programs.. Within the last ten years the number of companies
reached now to ten. Most of the companies are operating at below 30% capacity utilization.
Companies mostly focus on the market demand of international donors and non government
organization like the WFP, UNICEF and others.

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The low capacity utilization is on one hand due to the level of technology and non meeting
international quality standards and on the other hand the level of skill in managing the market
weakened. Hence the Government of Ethiopia is importing similar products from abroad through
world Food Program and organizations like UNICEF forced to support specifically selected
company to produce similar products locally instead of importing. UNICEF and also WFP supported
the companies in consultation, buying necessary technology and a vitamin and mineral fortified pre-
cooked blended food was produced. UNICEF Ethiopia got permission to use some funds supplied
by donors for the emergency program to establish wel standardized company and financed the
purchase of basic parameter in franchise from France and bought some equipment for the
company.

3.3 Regional Market Demand

The use of supplementary blended and fortified foods has been common in emergency situations
for a number of years. The use of such foods has given rise to much consider about involving health
care workers, nutritionists, logisticians, donors and administrators. Five years ago in Kenya the
demand for relief foods including foods for supplementary feeding program was enormous. Since
then the sector is moving forward in all parts up to the level of establishing processing companies.
The humanitarian crisis in Somalia was being recognized and assistance flowed in while Somali
refugees flowed out into Kenya, Ethiopia and other neighboring countries (350,000 in total). By
unhappy coincidence Kenya experienced, at the same time, one of its worst droughts in recent
memory, and the sector contributed to the alleviation of shortage of blended foods.

With the sudden increase in demand for blended foods the usual supply from the USA proved
insufficient and slow and a number of people, led by WFP and UNICEF, in Kenya began to examine
the issue of establishing local production. After all, it was argued, there is rarely an absolute
shortage of maize and soya in Africa and supporting the local economy is one of the most
appropriate investments which industrialized nations can employ in their efforts to provide
meaningful assistance to developing countries.

Meanwhile food security would have deteriorated further. Similarly the South Sudan refugees who
are residing Ethiopia and Uganda are part of this product demand. Donors fulfill these demands by
importing from Europe and The United states of America. Thus, there is no doubt that the need for
quality investment in blended food industry is a necessity for import substation as well as for
neighboring countries export. Therefore, the regional investment for blended food industries is
increasing as the demand for the product is needed. the unique feature of the sector is countries

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like Kenya and Ethiopia are shifting from import to produce domestically, and in the near future both
countries will become self sufficient and develop to go for international market.

The other important country well-known in producing the CSB+ or similar fortified blended products
is The South Africa. South Africa is a net exporter of this products and the level of technology, the
supply chain and industries producing ingredients like vitamin premix are strongly working closely in
the country.

4. TECHNICAL STUDY

4.1 Blended and fortified emergency foods,

Food is one of the basic necessities of human beings. Industrially processed food from flour
such as blended and fortified foods are used both for emergency as well as for conventional
market at all levels of age. In developed world such products are very common to the daily use
as they have high nutritional values. In Ethiopia there are only few relatively modern local
factories that manufacture the products. Currently, a large portion of the demand for these
products is satisfied though local production. However, still some considerable part of the
demand is fulfilled though imports.

There is a huge gap in the demand and supply market of blended and fortified foods in the
country. The large capital requirement of the project and the skill shortage to implement the
quality standard requirements raises significant barriers to entry which constrains new entrant
into the market. So the project is differentiated on the basis of manufacturing, investment costs,
facilities, quality and food safety management, linkages with the international chains and
market standing.

Furthermore, the raw materials required for the factory of the project are widely available in the
market; employees should be treated as the main assets of the project. Therefore, no negative
effects are perceived on its viability due to this aspect. As the project will be providing
employment opportunities for the local people, therefore, its risks are considered as further
reduced.

4.2 Uses of Blended Food Products

The commonly produced blended emergency foods are UNIMIX, FAMIX, CSB+, CSB++ and others
can be used essentially for supplementary feeding programmes for children below 5 years and

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lactating mothers, severely affected mal nutrition people, people with HIV+ with low level of CD4
count and for school feeding program. However, in situations where general ration deliveries have
failed, it is known that the supplement is probably eaten by all of the family members. Alternatively
in some regions biscuits and porridge have been used in school feeding programmes. The mostly
used inputs are maize, soya, minerals and vitamins for CSBs, FAMIX and UNIMIX use differently
wheat beans and milk with sugar in addition to the ingredients used in CSBs. plumpi-nut and sups
are made from nuts edible oil, sugar and vitamins too.

4.3 Packaging
Initial packaging for the blended food was in reinforced paper similar to that used for American CSB
but in response to cries of desperation from aid workers, who had to cope with tearing and bursting,
improved packaging has been developed and has now been in use for over a year. The coated
polypropylene bag with inner polythene liner (also produced in the country) has the advantage of
being stronger and more durable and is capable of withstanding the frequent loading and off-loading
encountered in most emergency situations. It is good to hear that the bags also have an after shelf
life as shelter material. Packaging of food aid products are now developed to see the manufacturing
date and batch number to clearly see the shelf life.

4.4 Meeting the local demand for raw materials

The factory now has the capacity to produce 2,400 tons per month and has produced over 50,000
qt. over the past three months. The local purchase of high quality raw material has proved easy on
occasion, despite the fact that high quality maize is usually available in the region, the trading part
in the involvement of traders made it so difficult to depend on the sustainability supply of quality and
getting at the reasonable price. The productivity of maize increasing from year to year as the central
statistics authority announced that before last year production was about 39,325,217qt. having the
productivity of 25q/ha and this year it has reached to 64,915,402.92 million quintals having the
productivity rate of 32q/ha, the growth is about 20% and this growth is made for the last five years.
Recently it has had to be exported to Kenya by WFP. This occurred as a result of the excess
production made last year and to protect the farmers benefit the excess volume has been exported.

Soya beans are usually in plentiful supply in the country. The big portion of the soya bens are used
for edible oil processing industries as a raw material. Alternatively for blended food products other
legumes have been used but soya is preferred due to its high oil (protein and energy) content. If

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 other legumes are used oil has to be added in order to comply with UN nutritional specifications.
soy beans are very important in maintain the quality of seed from deterioration due to post harvest
handling.

4.5 Competition
The number of companies registered in the sector is about ten of which six of them are operating in
good position; the major donors of pre-cooked food are the United States, Italy Belgium, Kenya and
South Africa. The fact that USAID donates the food and sends money for transport (for food
supplied by the US only) makes it very difficult for the local company to compete with USAID. The
European Union and a number of bilateral donors are increasingly encouraging local purchase of
foods for emergencies as a result organizations like WFP and others prefer to import such products
from abroad because the local companies have big gap in negotiation. The details of competitors
are listed below with their technical capacity.

Table 4-1 List of Competitors of CSB+ producing local companies

S/ Name of Industry Address Area of work Technol Annual

N. ogy Capacity
(tons/ year)

1 FAFA FOOD COMPLEX Saris/kaliti CSB+, FAMIX, Baby foods, Roaster 60 tons/week
flour CSB+

2 HEALTH CARE Foods P. Kaliti CSB+, Baby foods, edible oil Roaster 50tons/week
CSB+
3 ABAY INTERNATIONAL Kaliti CSB+ only Extruder 60 tons/week
FOODS
4 KIDAN INTERNATIONAL Kaliti CSB+ only Extruder 50 tons/week
FOODS
5 NORISH FOODS Kaliti CSB+ only Extruder 80 tons/week
COMPLEX
6 GUETS AGRO Hawasa CSB+ and baby foods Roaster 50 tons/week
INDUSTRY
7 EAST AFRICAN TIGER Kaliti CSB+ and flour Extruder 60tons/week
BRANDS
8 SAKA BUSINESS Legtafo CSB+ and flour Extruder 80tons/week
GROUP

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9 METENA SHS FOODS Bishoftu CSB+ Roaster 50tons/week
COMPLEX

4.6 Competitors Analysis, as it is illustrated above the number of companies is about nine of
these actively working companies are about six with different level of efficiency. some of the
companies are working at better level of capacity utilization about 70-80% of capacity utilization
companies like FAFA and Health Care are grouped in this sector. The reason for better capacity
utilization is mainly due to the product diversification and brand name established since their
establishment. While others like Norish, Abay and kidan are operating below 40% due to the single
product type that is CSB+.

PAKANA food processing as a an independent company uses the strength and weakness of these
competitors as a means of input to upgrade its capacity and improve the level of performance from
best learning practice, hence one of the objective of this project paper is to develop new products
and make product diversification as a means of increasing capacity utilization. Similarly new
product development paves the way for PAKANA to establish brand for the company and build
image and good will in the market. Also will take a lesson from the weakness of these companies
and plan to address the challenges faced by them.

4.7 Quality Control,

The maintenance of a high standard of quality and hygiene has been a challenge which the
Ethiopian companies and the Government of Ethiopia have taken the issue very seriously that
certain measures were taken to capacitate the facilities and skill of Ethiopian Conformity
assessment Enterprise in order to test necessary quality parameter with in the country. Fortunately
some private companies like BLESS Agri food laboratory is on operation to give the quality testing
as an alternative opportunity can be used. In this regards the support of international organizations
like WFP and others are greatly appreciated. A vitamin, mineral mix, tailored to the needs of each
organization has been developed in co-operation WFP. In line with this PAKANA food processing
company is taking serious measures starting from raw material purchase up to processing, final
packaging line and delivery shipment series of quality inspection made apart from that workers in
the factory are regularly briefed on hygiene issues and undergo a cleaning procedure before
entering the factory each day.

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The advantages to users of a locally produced blended food have been widely acknowledged. The
most obvious advantage has been the speed with which an organization can respond to an
emergency with an appropriate food. The response time has now been reduced from over six
months (from overseas) to a few weeks (when produced locally). The second major advantage is
that the organization can order a product which has the appropriate nutritional content for each
situation. Furthermore, the product is freshly produced for each order and so has a shelf life of a
minimum of six months without the use of any artificial preservatives.

Over the past five months, confidence has grown in the ability of local companies to produce a high
quality blended CSB product. We have to make additional promotion to do for donors have become
aware of the need to support food sector growth through local purchase and are moving away from
the automatic importation of food commodities from their own countries. Although this idea of
establishing local production of a pre-cooked blended food was born from a need arising in
emergency situations, the demand for such a food is now also growing in Ethiopian market and it is
hoped that in the near future the pre-cooked blended food will be produced for the ordinary retail
market.

4.8 Production Capacity and Production Program

Based on the potential market study, the processing capacity of the plant has a capacity of
2400tons/month. The full capacity is being attained by working three shift a day having eight
working hours and 320 working days a year, The annual processing capacity is about 28,000tons in
three shift. The company imported and installed state-of-the-art plant, double extruder machinery
and mixing equipment based on the latest technology. This gives the company additional
advantages from the point of view of efficient raw material consumption, lower wastage, higher
process speed and consequently higher output, lower utility costs, lower maintenance costs etc
The company is also planning to import high Tec- multipurpose packaging machine as packaging is
a major player in the promotion of food grade products and also install latest quality testing
equipment.

This production program is scheduled based on two shift working program and depending on the
orders and demands of the current market the project can operate more to satisfy the need.
Therefore, in-order to go hand in hand with this production program in-addition to the production
capacity product development, quality testing equipment and skill upgrading and market promotions
etc are so critical.

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4.9 Past Years Sales Performance
The performance of the company in the last three years was very low due to management limitation
and the use of weak market strategy of only looking the World Food program. It was only in 2013
year that the company received an order from the program and that is even very small as compared
to the capacity of the company.
The current situation is a paradigm shift of capacity utilization from the companys point of view as
Government gave order through the ministry of Industry to produce this product for emergency use
purpose. Hence projection of Sales in financial aspect the company is expected to get a sales
turnover of about 120 million ETB this year based on the current market by processing 2400quintal
of corn soya blend at a selling price of 1250birr/qts. and the order was very small 19,200Q and only
completed in two months time. This will bring about a sales volume of 24, million birr and a gross
profit of 20% and that is about birr 4.8million ETB to the Company in the current year is anticipated
to increase at an increasing rate in the following years through market penetration, increasing
further capacity development through product development and search more market in the
neighboring countries.
The company production and sales volume and amount is shown in the following table

Table 5.1: Past production performance

S/N Item description Year of operation
2011/12 2012/13 2013/14 2014/15
1 CSB+ === 24,000Q === 19,200Q
2 Feed and feed
supplement ==== 20,000Q 26,700Q 34,000Q
3
Total 44,000Q 26,700Q 53,200Q

Table 5.2 past years domestic sales performance in ET. Birr

S/N Item description Year of operation
2011/12 2012/13 2013/14 2014/15
1 CSB+ sales, Birr === 24,000,000 === 24,000,000
2 Feed and feed
supplement ==== 18,000,000 25,365,000 34,000,000
3
Total 42,000,000 25,365,000 58,000,000
Data from PAKANA financial report

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 5.1 Projected Local and Export Sales
Although the focus of PAKANA food industry is purely for domestic and import substitution market,
the international market demand for CSB++ has been analyzed as part of global nature and shows
that commercially well processed CSB+ demand is increasing as the drought affecting areas of
East African regions persistently victim adding the dislocation of people of refuges is increasing.
The recent study on malnutrition under year 5 and pregnant women Ethiopian condition depicts that
35% of the drought affected population which is about 3.5 million people need such products.
Realizing the un-fulfillment of local supply from companies the Government of Ethiopia agreed to
import some portion from abroad through WFP.

5.2 Imported CSB products from different parts of the world

The import of CSB and similar supplementary foods is significant as we can produce the same
product with in the country with intensive capacity building task specifically in meeting the food
safety standard, as it now practiced by the ministry of Industry and the food, beverage and
pharmaceuticals industry development institute is doing. To assure the level of competence food
safety testing skill and facility is also takes paramount importance. this is also requires a capacity
building task to come up to the standard as it is being underway to fulfill the necessary equipment
and skill of the experts in the Ethiopian conformity assessment Enterprise.

Table 5-3 Import of CSB products for the last three years in tone and ET birr
YEAR OF Imported CSB products Share of Domestic
Volume in tons Value000 Tax paid,000
IMORT production
2010/11 37,958 326,231 53,231 =
2011/12 34,817 699,310 140,162 =
2012/13 34,298 898,069 566,636 30%
2013/14 18,865 418,496 214,019 25%
2014/15 28,510 501,138 276,643 20%
Total 154,448 2,843,037 1,250,693
Source, Ethiopian customs and revenue Authority

Therefore, looking the local and export demand for CSB+ product, this grant support for product
development and diversification project is highly reliable
Based this analysis and idle capacity of PAKANAs next three years domestic and export sale is
shown in the following table.

Table 5.4: PAKANA food industry next three years sales projection000

S/N Description Year under consideration Total Export share

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 2015/16 2016/17 2017/18 2016/17 on
1 CSB+ Food
72,000 238,000, 79,000 87,000, 10% of total sales
sales, Birr
2 Feed sales, 5% of the total
34,000 102,400, 37,400 41,000
Birr sales
Total 106,000 340,400, 116,400 128,000,
Projection sales data based on 10-12% increment every year.

This projection is made with the assumption that the company will get better market share of the
domestic demand by its best performance and free access to export to neighbouring countries
through WFP and other donor support agencies. Moreover, there will be good support and efficient
service from relevant stakeholders in the export market.

Thus PAKANA food processing industry as newly entrant to the export market will work more
and do the following market strategy to identify new and additional demand:-
Improve its communication system (through internet, participating of known food aid meetings
and seminars to introduce its products by developing product catalogues and publication of
brochure.
Make survey for further research and development to develop new products and distribute
samples to buying agencies.
Improve packaging and labeling to better promote the products
Adjust and modernize the distribution system so as to satisfy its foreign buyers.
Develop a well articulated middle term strategy and implementation plan to actively compete in
the global market.

5.2 Promotion
It is critical that the PAKANA food processing company has to inform, announce and aware
the target customer about the availability, quality and uniqueness of the products and
communicate the benefits of those products. Intensive promotions will made by professionals,
The major elements of communications media plan include:-
Web Development that will provide basic information about the business, the product, links to
their presence on the conventional use of supplementary foods.
Opportunities to attend international trade fairs and Exhibitions;
Subscribing and appearing on international fairs, associations, websites and magazines; and
organizing events or sponsoring similar events in target customers.

6 Organization and Management

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 6.1 Organization

The Company has a different line of business like feed and other flour processing but convinces it
needs to have a separate organizational structure for the CSB+ products management. this need to
be organized in a manner that enables to efficiently meet its quality, operational, financial and
physical targets. Currently, The working units are organized on the basis of similar tasks combined
and to be managed functionally. This organization structure will remain in place as far as the
complexity and breadth of operation of the firm is not altered to a substantial degree. Hence, the
organization structure of PAKANA blended food product processing is pictorially represented below
by comprising the following major divisions;

There are functional department under the General manger like Commercial division responsible for
procurement, marketing, sales, and promotion issues; Quality control department to manage the
quality and laboratory tasks and fulfill the prequalification of different ISO- standards, quality control
test verification. production and technique department is also one the basic area that needs special
focus in fortified food process follow up, production, operational efficiency regular maintenance etc.,
Administration and finance division is responsible for recruitment, selection, placement,
performance evaluation, training and rewards, managing the overall financial transaction, budget
and control, Property administration including warehouse and inventory.

The organizational structure of the PAKANA blended food processing factory,

General
Manager

Quality Control Audit and

Legal

Commercial Administration Production &

Commercial
Division & Finance Technique
Division
Division Division

Marketing Production
Personnel
and General
Service
Sales & Technique &
distribution General
Maintenance
accounts
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 Procurement

Stores

Figure 1 Organizational Structure of PAKANA Blended Food Factory

6.2 Manpower
The factory staffed its workforce by professional, semi professional, skilled and non skilled
workers as per the professions and skills requirements of the tasks. Specific job Title and
description, compensation scheme, including job responsibilities & authorities, qualification for
relevant position are designed in the companys human resource policy and procedure guide.
Currently, the total number of permanent workers is 110 (of which 55 are female) and about 30
part time workers.

The factory plans to hire more than ten additional workers other than those working temporarily
and aims to convert the temporary workers to permanent. The company has a sensible human
resource plan to upgrade the staff and empower women in its leadership position.

Conclusion: - The objectives of this capacity building grant support and project benefits:-

1. To show PAKANA food industry line of blended foods quality and competiveness profitability of
the existing operation and demonstrates the practicality of future business economically,
socially promising.
2. Indicate company management strength to expand and diversify its operation transform and
meet the demand of food quality blended and fortified food for emergency need in drought
affected areas, and stretch its market share from the current import substitution to neighboring
countries export market.
3. To get assistance to improve the technical capacity in meeting the international standard
requirements through improving and upgrading lab equipment, testing facilities, deploying
international expert for product development through research and development work.
4. play its role in meeting the 2nd GTP of our country, create more job opportunity, contribute its
share for the development of the country through import substitution, paying taxes to the
government, and satisfy the customers by delivering hygienic quality foods, Moreover,

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As per this grant support business plan the company is expected to increase its processing capacity
by 30%, through technical and technology upgrading and its work efficiency by more than 40%
through skill upgrading and training and market development support and in-effect increase its
export market, Hence, this business plan has four major areas of support:

Table: 6-1 Desired activities and cost of implementing the project Costs, Benefits and
Funding Needs
S. r. Major activities to be taken for intervention Expected
budget USD

1 -Deployment of international expert for six months to make research and 24,700.00
development work for product development and product diversification.
Improve the existing product branding.
Ensure the process quality execution and give on job training for local staff.
2 Design and establish best website to promote the company and new 4,500.00
products to get additional market.
-Hire local qualified training agency to give regular quality and food safety 8,000.00
training to all staff as per the gap analysis result.
3 -Work on QMS systems audit and product qualifications that fulfill the global
7,500.00
competiveness through qualified local consultants
4 Deploy high profile local market experts for one or two month to revise and 6,500.00
redesign marketing and distribution system to capture additional market.
5 Exposure visit of best performing countries like S. Africa blended food 3,800.00
industries by two Quality control department staff members for
benchmarking plan of action.
6 -Fulfill high standard laboratory equipments and testing facilities. 11,500.00

Estimated Grand total budget is eighty one thousand and one hundred
USD only of which 25% or around 16,870.00USD will be covered by the
PAKANA food processing company. 67,500.00

6.2 Core Problems, Causes, and Designed Intervention

1. Shortage of trained and experienced experts in blended food processing like CSB+ in
the country, which can ensure the process quality. hence employ international experts for
short period and train local staff. Facilitate best learning practice abroad for quality
control people to get exposed for bench marking best quality control process.

2. Challenge to meet Quality requirement of WFP standard and chemical and

microbiological tests result, this needs regular training of local workers in the company or
outside by independent qualified training agency like ECAE or BLESS lab.

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 3. Low capacity utilization due to single product line production process /only CSB+/ that
needs research and development to get new product and diversify the product line. this
will be made by an international experts which have hands on expertise.
4. Until now No electronically linked market to promote our products and needs to design
and install standard website to promote and get additional customers.
5. Capacity limitation of laboratory tests due to incomplete accessories and reagents to
operate the full lab equipment at hand. Study skill gap of staff and give regular training to all
staff as per the gap analysis result.
Figure 1: Project Implementation Time Schedule, 2016
Activity March April May June July Aug Sep Oct Nov

Project appraisal & Approval

Deployment of international expert for six

months to make research and
development work
Employ consulting agency to design and
establish best website to promote and get
additional market.
-Hire local qualified training agency to
give regular quality and food safety
training to all staff as per the gap analysis
result.
- Work on QMS systems audit that fulfill
the global competiveness
Deploy high profile local market experts
for one or two month to revise and
redesign our product marketing and
distribution system to capture additional
market.
-Fulfill expected high standard laboratory
equipments and testing facilities.
Exposure visit of best performing blended
food industries by two Quality control
department staff members for
benchmarking plan of action.
This schedule is tentative can be adjusted by ECF depending on the current situation

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To: - Ethiopian Competitiveness Facility (ECF)

Addis Ababa, Ethiopia

Dear Sir/Madam,

Subject: - Project grant support proposal for emergency blended food processing

PAKANA food processing company one of the seven selected blended food processing companies

ordered to produce CSB+ foods for emergency supply to the drought affected areas of our country.

The companys market is purely targeted to emergency drought affected people and has a single

product line. The Company has been in the business for the last 5 years. Starting from year one the

company has been making sound full investment in making the process high tech quality operation,

trained a number of local young personnel and certified process line with ISO standards. The single

product line coupled with the challenges of meeting the quality standard requirement of international

corn soya blended foods, forced to go for capacity building support to overcome these critical

factors hindering the company from using the maximum capacity.

In-order to boost and maximize production capacity and achieve the designed plan the company

would like to present this capacity building support for your Good office. The support package

includes deployment of high profile international expert in research and development skill, market

and Quality infrastructure development etc. We are very much confident that the support will give

us opportunity to improve our capacity utilization, fulfill the international food quality requirement,

advance our quality products, upgrading skill of our staff, meeting the customers demand and

diversify our area of market operation.

Therefore, hoping that we will get immediate reply, we would like to present our business proposal

with details of activities and projected cost with this attached letter of application.

We thank you,

Managing Director,

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 Ato Weba e

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