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Consultant in Ethiopia Home Blog About us Feasibility Study| Business Plan Project Pro les
Certi ed Audit Firm, Feasibility Study, Business Plan,
Project Proposal, Investment Consulting Firm in
Ethiopia.

Agricultural Mechanization
Services Business Plan in
Ethiopia.
by Suleman Mossa

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Agricultural Mechanization Services Business Plan in Ethiopia.

Product  Description: 

The  other  familiar  name  of  agricultural  mechanization  service  is  rental  service  of 
agricultural  machinery,  equipments,  tools  and  technical  advices.  These services
include the provision of modern agricultural machinery and equipment for ploughing,
harvesting, processing, transporting and storing on rental basis and the acquisition of
technical  know-how  through  technical  advices  by  paying  fees  for  advisors.  Services 
that  are provided  through  agricultural  mechanization  are  substitutes  for 
mechanization  of  farms  and  other  agricultural  activities  performed  by  owning  the
machinery  and  equipment. These  types  of  services  enable  farmers  to  use modern 
farm machinery  and  equipment with out burdening  each  farmer  or  group  of  farmers 
in  owning  expensive  farm  machinery  and  equipment. 

Agricultural  mechanization  services  reduce  farming  time  and  enable  farmers  to

The consultation will be done with the payment of reasonable fees.  The  main 
advantage  of  these  rental  centers  to  farmers  is,  they  enable  group  of  farmers  with 
adjacent  farms  to  rent  (in  group)  agricultural  machinery  such  as  a tractor  for 
plowing  the  adjacent  farms  as  a  unit.  This  will  reduce  the  rental  cost  for  each 
farmer  and  will  also  minimize  the  operation  expenses  of  the  farm  mechanization 
service center.

Market Potential:

More than 3 million hectares of land in the Amhara Region is under cultivation. Under
normal conditions, One tractor plows about 10 hectares per day. For one cycle of
plowing, 300,000 tractor-days are needed to plow the 3 million hectares of  farm  lands
of the Region. This is the highest potential demand  for tractor services in the Region.
But  many  farms  in  the  Region  are  too  steep  and/or  too  rugged  for  using  tractors 
for  plowing. 

In  addition  many  other  farms  are  also  lled  with  small  and  big  boulders  which 
make them  unsuitable  for  tractor  plowing.  Given  these  unfavorable  conditions,  we 
can  assume  that  about  40  percent  of  farms  in  the  Region  are  suitable  for  tractor 
plowing.

 This  means about  120,000  tractor-days  are  required  to  perform  one  cycle  of 
plowing  in  the  Region.  This  is  the  highest  realistic  potential  demand  for  tractor 
rental  services.  

 Let  us  get  closer  to the ground and see  the potential zones of  the Region which will
use  tractor services with  the highest economic and  nancial bene ts. The  rst
candidates are most parts of East and West  Gojjam  and  Awe  zones,  areas  around 
Lake  Tana  in  North  and  South  Gondar  Zones  and  West  Gojjam,  some  valley  plains 
in  North  and  South  Wollo  zones,  and  the  highland platen of North Shewa. 

These areas of the Amhara Region can have suf cient demand for agricultural
machinery rental services which will make the center nancially viable.

“Source  of  raw  material”: 

This  project  idea  deals  with  the  provision  of  services  and  as  such  it  does  not 
require  the  use  of  “raw  materials”.  However,  the  main  inputs  for  the provision of
the services will be working hours of the various types of agricultural machinery and
equipment to be rented/hired by clients..

“Process and Technology”:- 

The main  process  or  activities  for  providing  agricultural machinery  rental  services 
are  establishing  the  center,  constructing machinery  shades  and  a small  repair  and 
maintenance  workshop,  purchasing  the  most  important  pieces  of  machinery  and 
equipment  (such  as  tractors,  harvesters…),  developing  and  implementing  an
effective and appropriate marketing strategy and nally providing dependable
machinery rental services.

Estimated  Investment: 

For  a  rental  center  which  will  have  about  10  tractors  one  harvesters  and  other 
assorted  type  of  agricultural  implements  and  tools,  the  estimated

investment requirement will be:-

Buildings/shades 300 m2 at Birr 2000/m2      = Birr      600,000

Agricultural Machinery ………………………       = Birr    2,500,000

Working capital……………………………….          = Birr       500,000

                                                             Total    = Birr   3,600,000

Bene ts: 

Enables  farmers  to  perform  agricultural  activities  on  optimal  periods  of  the 
various  farming  cycles,  increases  agricultural  productivity  and  production,  releases 
farmers

from some farm work and creates the opportunity to work on other income generating
activities, decreases the need of oxen for plowing and increases the possibility of
fattening and for sale.

Location:

East and West Gojam, Awi around Lake Tana, other areas of the Region suitable for
large-scale farm mechanization.

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