The paper presents economic value of the design and manufacturing of essential oil production plant as a strategy for rural poverty alleviation in rural Ethiopia. The level of technology for small scale essential oil industry is characterized for rural community in Ethiopia. The adaptation of oil distillation technology for essential oil production is proposed for small scale industrial entrepreneur. Steam distillation method is selected considering the constraints to meet the socio-economic level of the rural community. The distillation plant has been modelled based on local resources and the first prototype has been manufactured and tested. The study showed that the small scale manufacturing industry in the country do not have the capacity to manufacture the complete distillation plant system with the required precision for standard quality of oil at affordable cost. Thus, the design and the experiment in the use of a prototype small size distillation unit showed that the technology is appropriate for essential oil distillation with low cost and minimal decrease in oil quality.