How much money would I need to lease 500 ha of land in Humera

Hello

the land lease is the smalest part of all you have to think about, if you go and rent 500ha, for sure it will be not more than 180 Birr per ha and year from Gouvernement. For sure you can rent from local farmers directly, but highly risky and it has a limite in time (be carefull their are quite a few tricy legal steps you must follow), private lease is a civil agreemet between 2, so up to you both to agree on the Price!

Land lease is not significant for your Business. The crushal parts you have to look at are:

1. is the land free, or do you have to pay compensation to local farmers - you can estimate between 5 to 10 years average income as a scale for compemsation!
2. is the land clear and leveled, land Clearing from trees and Bushs is very expensive it will cost a lot of time, diesel and man power. Diificult to tell you a number with out seeing tha land, but for sure 500 Euro per ha!
3. capex cost, meaning infrastucture, mashines etc, you will Need tractors, do not even think about working with rent on this scale!
4. Irrigation, yes sesame you will farm by rain feed, but you should have a look at this for the future!
5. opex cost, all operational cost before any cahsflow reachs you, labour, chemicals, fertlizer, diesel, energy etc
6. develop a B-Plan first before even thinking about 500ha and get a understanding, you will see land lease is Peanuts comapred to all the rest!

In General land lease is a regional matter, for the amount the region will Charge you. Your scale might be already above the limite for local agreements you might go through the federal ministry of agriculture for the legal part.

But, a big but.

In the past a lot of "Investors" took a lot of land with a lot of promisses, with out having the capaceties to develop, financialy, know how and mindset. The government reacted to this and nower days you Need to prove at least min of 30% of the needed capital for your Project.

The question of what is the needed capital is basicaly set by the officials and not by your B-Plan. I know only for sure for horticulture sector (flowers, fruit and vegetable), where you are asked to make a down paiment of 60.000 Birr per ha, due that officials take 180.000 Birr per ha as the needed Investment Minimum for horticulture. - Which I can confirm as a agronemist! You can see this Regulation is linked with the development bank regulations for loan applications.

Just now a lot of land is taken back from government from "Investors" who did´t do what they have promissed. Many People took even land just for speculating, trying to sell the land title, creating a lot of Problems not only for officials, mainly for serious Investors!

Have look at the cost factor book from the Investment agency

http://www.ethiopiaembassy.ru/pages/doc … _COSTS.pdf

Oliver

Oliver puts it ever so accurately. The minimum investment levels for foreign investors are US$200,000 now, or more depending on your project. Problems with non-serious investors are not being taken lightly.

I have seen many People going into agriculture and a lot have ´failed because of under finance, suddenly facing cash flow Problems and ending up losing all.

In generaly I know that I stress out the negative and risk part a lot, but that is what help. it will not help any one to talk nice and good, as such Kind of People you meet at every Corner, giving you some sweet tast of Investment, which is easy because ist not their Money.

Especialy if the Investors back ground is not agriculture it can become very risky. I know cases where Investors with no back ground recieved advise on capex, invested all in a state of art flower farm, but no one told them that they Need Money to run the Project. Today their is a empty flower farm and a broken Investor!

People buy a green house, for more than 15 Euro per sqm, but no one tells him, "hey you Need to recover your green house every 3 years"

So I am happy if I am wrong with my negative advise, but my profesional ethics gives me a Obligation to stress out the Problems and risks.

Oliver

What if an investor has a yellow card is the minimum still 200k?

yes, the same. I know very well because we have a case in our Company where a local cooperative even wants to invest and is facing this Problem. So no difference, which is corect because the law or Regulation is linked to the Project and the legal personalety of the Investor, not his Skin colour.

Their are no statistics available on this issue, but reviewing my personal experience I observed that mostly local or Diaspora ethiopians taking land with out any plan, idea and capaceties. Sorry to say this, but that is how I observed this!

Oliver

by the way a smal Detail but not unimportant if you consider sesame - WIND - sesame is in the final stage very sencetive with wind, if you miss the right harvest Moment just by a day you can loss all, sesame is not as barly strongly fixed, it is easely drashed by a bit wind, so prove your land on the wind questions, wind breaks, time of wind in a year (seasons) etc

Oliver

So if I do not have at least 200k dollars I will not be able to invest in sesame production in Ethiopia?

I can not say so or confirm this, this would Need some more Detail planing

1. you can use a local bank loan by the Development Bank, which will finance up to 70% of your Project,.... see Details

2. it depending how you plan your cash flow, you might or should develop the farm in phases, according to your capaceties, not only from the financial aspect also human resource Needs a step by step development

3. if you are a ethiopian dioaspora their are some Advantages, their is a Special proclamation (law) for Ethiopians who want to return, I do not know them in Details by the government is supporting you even more than other foreign Investors

4. you could take one or 2 Partners on baord, have a look arround your friends

Your fianal Investment decission you can only make on a real Business plan! You must invest time into this now

Oliver

For a scale of 500 ha how many tractors would you say would be sufficent? Would it be smart to buy new or used tractors?

Hello

second Hand tractors will do well, if they have some Thing around 4000 MSH (mashine hours) not more,

check the brand, the best tractor has no value if you cant get spearparts ,

good market for second Hand is south africa

beside this you could start just with a tractor enting Service, get 2 tractors with the needed implements and start with providing Service, you Charge local farmers per ha.

Land you can aply later

How many tractors you Need is depending on the crop, the scale of tractor, the Driver etc

Oliver

What is the going rate to rent a tractor to local farmers?

Can you give an example of a second hand tractor you bought, Such as the model and make and machine hours, And how much did it cost and how much was transport cost?

hello we used new tractors, due that it is more difficult for non ethiopian to get second Hand mashine into Ethiopia.

I can recomend claas tractors from south africa, due that their is a good claas work shop in Addis. Please look in the Internet.

The rest i can not tell you, it Needs better understanding of the Region you want use them, what or which work the farmers request etc

Finanly you realy have to work yourself into the ,subject you can not relay your Investment on Information only from other People, this sounds no unfriendly but i do not help you by telling you all Details.

Basiacaly one of the number one reasons People failing in their Investment in Ethiopia is that they do not know themself enough the Business field.

Oliver

Yes I understand I have plans to go to Ethiopia and spend a couple of months there to survey the market.

Do you have any contact info in addis where I can buy a new tractor?