Cash collateral for establishing semi-oil refinery at Admas Union <p>Through Agriterra  a social impact investor  stemming from a main Dutch Farmer Organization (LTO)  has shown appetite to provide cash collateral of 250.000 Euro in order to leverage the loan for Admas Farmers Cooperative Union for the purpose of setting up an semi-oil refinery plant. This initiative is regarded as pilot  aiming to lead to better investment opportunities and stimulate financial access for cooperatives. During the course of the pilot  other investors or ways to expand/up-grade this initiative will be inquired. The impact investor is aware of the complex financial situation in Ethiopia  which makes it difficult to withdraw investment capital out of the country. If there is an option to repatriate the funds after five years  this is welcomed  but is not a precondition. If repatriating the fund is not possible  another options will be outlined on how the remaining funds could be allocated locally. <br>The social impact investor and NIB have found each other around the ambition to finance ADMAS’ business initiative to establish a semi-oil refinery plant.</p> <p>- establishing a semi-oil refinery plant in Wolkite</p> <p>Agriterra would like to deposit 250.000 Euro on the account of Admas Farmers Cooperative Union  serving as a cash collateral  which aims to leverage the loans Admas aims to enter for the purpose of setting up an oil-refinery plant. Agriterra deposits a cash collateral on the Admas account - new ring-fenced account - on which money is blocked and only services as collateral for the loan for the oil-refinery.</p>
<p>The cash colleteral leverages a 15 million ETB loan at NIB bank for the establishment of a semi-oilrefinery plant. Admas farmers’ cooperative union (Wolkite town) will establish a semi refinery Niger seed oil business. Key product is Niger seed oil  which local consumers use for cooking and baking. Niger seed oil is highly preferred for its taste  suitability for cooking and for its quality. Furthermore Niger seed oil is valued for its healthiness compared to palm oil  or other locally produced crude oils. Next to the consumer oil  the by-product oilcake has a sound commercial value as animal feed for cattle and chickens. The oil will be bottled  branded  packed in a carton and will be marketed to the domestic market. The by-product  oil cake  will be sold locally as animal feed. </p>
<p>Market and customers <br>Edible oil consumption is rising and is expected to continue increasing. The market study showed that there is a sound market for Niger oil in Ethiopia. Households  hotels  restaurants and cafeterias doing business with lower income groups have high preference for Niger seed oil for its taste  suitability for cooking and for its quality. The targeted markets are Guraghe zone  Jimma zone  West Shewa and Addis Ababa markets. Consumer households  traders  business organizations like hotels and institutional buyers like hospitals and government agencies will be the main targeted customers. The total market size for the target market is estimated at 40 653 tons of edible oil. Out of this the share Admas is expected to produce around 6111 tons. In Ethiopia it is not allowed to sell crude oil from various seeds  Niger seed is an exemption and can be sold in a semi-refined manner. </p>
<p>Competition<br>Main competition is expected to come from small scale crude oil producers  medium and large scale producers and imported palm oil. From the small scale crude oil producers is not much genuine competition to be expected. Their processing technologies are not sustainable and far from hygienic. Furthermore their operations are often not legal since they process also other oilseeds  which are not allowed to be marketed without further refining. Although state subsidized palm oil is flooding the market  consumers have still preference for locally produced vegetable oils  particularly Niger seed oil.</p>