Summary of Melka Sadi-Amibara Irrigation Project Feasibility Study
1. Project Overview
The document presents a feasibility study for the proposed Melka Sadi-Amibara Irrigation Project in Ethiopia, conducted by ITALCONSULT for the Imperial Ethiopian Government's Awash Valley Authority (AVA). The study covers various aspects including economic, financial, market, and technical considerations.
2. Key Components of the Study
2.1 Economic Situation Analysis
The study examines Ethiopia's predominantly agricultural economy, labor costs, and price trends. Key points:
- Unskilled labor costs estimated at Eth.$0.85/day (real cost)
- Projected annual productivity growth of 2.5-3.7%
- Assumption of stable exchange rates throughout project life
2.2 Manpower Availability
Analysis of labor supply for the project:
- Abundant unskilled labor available from overpopulated Southern Highlands
- Shortage of skilled technicians, agronomists, and engineers
- Need for foreign personnel in key positions
2.3 Market Analysis
Detailed examination of potential crops and their market prospects:
| Crop | Key Findings |
|---|---|
| Cotton | Growing domestic demand, potential for import substitution, competitive prices |
| Tobacco | Primarily for export, competitive on world market, needs organizational effort |
| Oil Seeds | Groundnuts most promising, domestic demand increasing |
| Cereals (Maize) | Mainly for domestic consumption, quality advantage over traditional producers |
| Vegetables | Strong export potential to Europe, especially sweet peppers and eggplants |
| Livestock Products | Beef and milk production for local consumption |
2.4 Processing Industries
Assessment of needed processing facilities:
- Cotton ginning plants required
- Tobacco drying plants essential (included in project costs)
- Vegetable conditioning centers needed for export quality
- Private sector seen as capable of providing these facilities
2.5 Credit Situation
Analysis of financing options:
- Short-term credit available from commercial banks at ~8.5%
- Medium-term credit potentially from Development Bank of Ethiopia (7-9%)
- Suppliers' credits available for equipment (10%, 2-year terms)
- Special consideration needed for settlement scheme financing
2.6 Farm Size Determination
Analysis of optimal farm sizes:
- Minimum feasible size: ~400 ha (due to tax policies)
- Optimal size: ~1000 ha or more (economies of scale)
- Unit costs decrease significantly with larger farm sizes
3. Key Tables and Projections
3.1 Labor Cost Projections
| Years | Real Rate (Eth.$/day) | Market Rate (Eth.$/day) |
|---|---|---|
| 1968 | 0.85 | 1.25 |
| 1969-1973 | 0.95 | 1.40 |
| 1999-2003 | 1.87 | 2.78 |
3.2 Crop Price Projections
| Product | Present Price (Eth.$) | Future Price (1972/73 onwards) |
|---|---|---|
| Cotton (per ton) | 590 | 540 |
| Tobacco (per ql) | 130 | 130-190 |
| Maize (per ton) | 115-155 | 115 |
4. Conclusions
- The project appears economically feasible with careful crop selection
- Major crops recommended: cotton, tobacco, vegetables (for export), maize
- Private sector involvement crucial for processing and marketing
- Credit availability needs to be coordinated before implementation
- Optimal farm sizes should be 400-1000+ ha for economic viability