UNN-48
oN
AGRICULTURAL SECTOR SURVEY
INDONESIA
(in fpur volumes)
VOLUME II
ANNEXES 1 TAROUGH 5
April 10, 1974
This report was prepared at the request of the Government of Indonesia. The
views and recommend,tions contained in the report are those of the authors
rather than those of the World Bank Group.   The Government of Indonesia and
the authors are responsible for the release and distribution of the report.


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NOTE
The Agricultural Sector Survey report is based on data collected
by a Bank mission to Indonesia in March 1972. Some of its major findings
and conclusions have been overtaken by evc nts. Therefore., this report is
not intended to represent the Bank's current assessment of Indonesia's
agricultural sector. Nevertheless., much of the technical data presented
in the Annexe8 remains valid and it should be useful to the Government of
Indonesia, IGGI members and to other coiuitries, agencies and institutions
interested in the development of Indonesia.
kpril 10, 1974


ANNEX 1
Page  1
INDONESIA
AGRICULTURAL SECTOR SilRVEY
NATURAL RESOURCE BASE
1.        After careful review of all maps, data and information available
and observations by members of the mission, it has been estimated that
Indonesia has a land resource base for agricultural development of
approximately 60 million ha. By contrast, only 17.5 million ha are presently
cultivated and some 12 million ha are under forestry concessions. The
potential for expansion of agricultural activities is, therefore, clear.
2.        This potential is not uniformly distributed throughout Indonesia.
On the contrary, it appears that cultivation in Java has already proceeded
beyond the ecological limit in some areas, causing serious problems of erosion
and watershed deterioration. In the Outer Islands, on the other hand, and
particularly in Sumatra and Kalimantan, vast unexploited land resources exist.
3.        Topographic map cover, land use and soil surveys are at present
grossly inadequate to permit comprehensive resource development planning. It
is proposed that a coordinated program to correct these deficiencies be
immediately undertaken. Given financial and manpower constraints, the
program should concentrate on areas .ich, on the basis of existing knowledge,
have the highest development potential. These include extensive areas in
Sumatra and Kalimantan plus-smaller areas in South Sulawesi. It is further
proposed that a positive effort be made to reappraise the entire range of
needs and possibilities for soil conservation, reafforestation and flood
control in Java.
Environment
4.        Although the numerous islands that constitute Indonesia extend
over a wide area--over 17* of latitude and 47* of longitude--, the entire
country is within the tropic zone. However, there are inherent-differences
in climate, rock type, and topography which give rise to considerable variations
in derived soil and natural vegetation. These factors result in a very
heterogeneous natural resource base, and make the country difficult to
describe in terms of general characteristics. Nevertheless, Indonesia is
comparatively well endowed in land resources, and abundant opportunities
exist, particularly in the Outer Islands, for more extensive or intensive use
of the land.   The emphasis in this section is to give a broad picture of
regional differences which are likely to,influence the suitability of parti-
cular areas for certain crops.


ANNEX 1
Page 2
5.        Geology. An arc of volcanic rocks of widely different composition
forms the mountainous backbone of Sumatra and Java. In contrast, sedimentary
formations characterize the other islands; many of these formations are
metamorphosed and interspersed with plutonic rocks and they extend over a
wide compositional range.
6.        Climate. Monsoons are a dominant characteristic of the climate.
They are associated with changes in the normal pattern of tradewinds--
interruptions that are caused by the withdrawal of air across the Equator
during the Asian and Australian summer months. Such conditions guarantee
adequate rainfall for a wide range of agricultural crops throughout much
of the year. Relative humidities are high, with yearly minima around 60%
and maxima around 90% for most areas, and means around 75-85%. Temperatures
at low altitudes can vary from a minimum of about 22*C to a maximum of around
320C.
7..       The Archipelago is subject to imonsoonal northern winds in the
early months of the year. Because the winds are deflected by the rotation
of-the earth, they blow from the northeast on the north side of the Equator
and from the northwest to the south side. After this northern wind dies down
in April, the southern monsoon begins, firstly in the south part of the
Archipelago and then spreading over the Archipelago between May and July or
August; these winds are in opposite directions to those experienced during
the northern monsoon. Variable winds mark the change-over between the monsoons
in November and April-May.
8.        Local differences, which can be quite considerable, are largely
influenced by topographic features in relation to the dominant wind directions
and by the size of the larger islands, particularly Kalimantan and Sumatra.
A marked regional difference, well illustrated in the annual isohyet map,
is afforded by the rainfall pattern. There is a progressive lessening of
precipitation towards the southern and eastern parts of the Archipelago.
The climate is thus drier in Java, Sulawesi and the Nusa Tenggara Islands than
in the larger islands of Sumatra and Kalimantan. Typical differences between
drier and wetter areas (at sea level) can be illustrated by 30-year averages
for Padang, on the west coast of Sumatra, with 4,760 mm, and Kupang, in Timor
to the East with only 1,460 mm.
9.        Local systems of strong land and sea breezes, superimposed on
the main trade wind systems, are experienced in the coast areas. In the
mountainous regions, similar systems due to intense insolation are common.
The strongest winds, of cyclonic character, are most frequently experienced
in the islands of the southeast, including Sulawesi, but most other areas
experience occasional squalls and whirlwinds, which fortunately are very
local.
10.       The local and regional differences in climate, due to the factors
described above, and to the considerable variations in humidity and length
or strength of the resulting dry seasons, strongly influence the choice of
crops, their planting dates, and the management systems adopted. An under-
standing of climatic settings is of fundamental importance to the development
of a sound agricultura1 development strategy.


ANNEX 1
Page 3
11.       A climatology classification system, referred to as the Schmidt-
Ferguson System, was introduced in 1950 as a practical aid for planning
to agricultural and forestry research. This system, which is frequently
referred to in literature on Indonesian agriculture, offers considerable
scope for investigating correlations between climate and plant suitability
in different situations. Such work, which does not appear -to have been
carried out in any depth in recent years, would be well worth pursuing
because of the possibilities it offers for establishing optimum, marginal,
or unsuitable zones for the planting of specific crops.
12.       Soils. In spite of a long tradition of soil investigations, the
depth of current knowledge about Indonesian soils is extremely variable, and
is inadequate for even the broadest type of land use planning over many areas.
This state of affairs is explained largely by the tremendous area of the
country and the difficulty of carrying out investigations in tha densely
forested, more sparsely inhabited regions.
13.       The most useful map of Indonesian soils is the one recently
?repared under the auspices of the FAQ/UNESCO (the Soil Map of the World
Project), which provided the basis of the simplified Soil maps attached.
For example, this map clearly illustrates the nature of the soils on the
islands of Sumatra and Kalimantan: the huge extent of sedentary, or dryland,
soils, variously described as red-yellow podzolic soils, red-yellow ferralsols,
and ferruginous tropical soils--those most likely to be suitable for general
agricultural purposes--together with the extensive development of more moist,
alluvial and swamp soils which are in general better suited for paddy culti-
vation (unless artificially drained).   This is in contrast to the mountainous
regions, particularly in Sulawesi and many of the smaller islands, where
lithosols and certain types of andosols predominate, and where agricultural
usage is restricted by paucity or shallowness of soils due to steepness of
slope or adverse climatic conditions. Comparison of this map with population
density data gives some impression of the relative opportunities for
agricultural settlement in the various provinces.
14.       In general, the available information and observations confirm
the superiority of the soils of Java, Bali and Lombok, which are in large
part developed from intermediate to basic volcanic rocks, as compared with
the soils developed over similar terrain elsewhere. This fact must be
highly significant in explaining the relative overcrowding of these three
islands, which together with the neighboring but geologically different
island of Madura, have been preferentially settled since earliest historical
times.
15.       The absence of reliable data on soils outside these more densely
settled areas represents a most serious constraint on planning for new land
developments, particularly in the Outer Islands. For this reason, the
expansion of the soil survey organization deserves a much higher priority
than it presently receives. This priority is underscored by the current
emphasia on clearing forested lands in these Outer Islands to accomodate
migrants from the heavily populated islands of Java, Madura and Bali; and
by the compelling need to expand considerably the Government-supported
settlement program in the near future.


ANNEX 1
Page  4
16.       Topography. The terrain can be classified into three elementary
groups: mountainous land, .defin.d by the 200 meter contour; swampy land,
defined by the prevalence of swamp symbols on existing maps; and an inter-
mediate grou2 of almost level or gently undulating to hilly land. The
boundaries correspond quite closely to some of the boundaries shown on the
simplified soil map. Further emphasis is given to the relative extent of
the opportunities, in area terms, for future expansion of agriculture in the
two large islands of Sumatra and Kalimantan. In contrast, the island of
Sulawesi, as well ad most of the smaller islands in the Nusa Tenggara and
Maluku groups, have iproportionately much more area in the mountainous group.
Because these mountlin regions are for the most part steeply sloping, with
only limited areas of plateau terrain, they are prone to accelerated soil
erosion if their natlural vegetation cover is disturbed. The consequences
from populating such regions can already be seen on Java, where some mountainous
areas are becoming steadily denuded of their soils.
17.       Water. Thh isohyet map illustrates the wide variations in annual
rainfall. In spite of the seasonal differences, Indonesia is for the most
part well-watered. The regions of lowest annual precipitation--including
much of central and 6ast Java, Bali, the Nusa Tenggara Islands and the
southeastern and northern parts of Sulawesi--also have the strongest dry
season conditions. This factor largely explains the cultivation in these
islands of crops such as maize, tobacco, sugarcane, or cotton, which are
drought resistant and/or encumpass a dry season in the optimum growing cycle.
18.       This dry season characteristic must also be responsible for the
uncommon understanding of water conservation principles in this region, and
the tradition of using irrigation on quite steeply sloping as well as on
almost flat land. In recent decades, large-scale multiple cropping irrigation
systems have been constructed to enable the year-round cultivation of rice--
the most demanding crop in water use terms. With irrigation, the highest
yields are obtained during the natural dry season, due to the more plentiful
sunlight during these7months.
19.       In other paits of Indonesia, where rainfall is more profuse and
regular, tree crops such as rubber and oil palm, tea and coffee, are more
prevalent. Means for iremoving excess moisture, particularly in the water-
logged and swampy lowlands, are often more important than the introduction
of additional water through improved irrigation systems.
20.       There appear to be good possibilities of developing new agricultural
systems, including mixed farming with crop rotations incorporating dry paddy,
sorghum, cassava and perhaps fodder grasses or legumes. A wide variety of
crops grow well under the moist climate prevailing in these western and
northern regions withoiAt the provision of costly irrigation facilities. On
the other hand, the justification for providing irrigation water to rice
growing areas with adequate rainfall on comparatively free draining level lands
needs to be very carefully evaluated against the opportunity costs. Other
cropping patterns, including tree crop monoculture and various intercropping
possibilities as well as the rotational systems mentioned above, may offer
more economic alternatives to large scale irrigation works which, when
commissioned, commit the land indefinitely to a wet paddy dominated economy.


ANNEX 1
Page 5
Base Maps and Photographs
21.       A prerequisite for accurate land use and natural resource inventories
is a good basic topographic map cover. Indonesia is particularly deficient
in.such a cover at the present time. Maps are on a scale of 1:250,000 or
1:200,000 (1 to 1 million in a few places) for most of the country. The
compilation scale being used for current surveys is 1:50,000. Java is the
best mapped of all the islands, and a portion of Central Java is now available
on a scale of 1:25,000. Most maps that exist, and many are out of print,
were made before World War II by laborious ground survey methods. So far
as human detail is concerned, these are now so seriously outdated that they
are misleading for most development planning purposes. No supplement or
revision has been made to the National Map Catalogue subsequent to 1955, and
very few new maps, as distinct from reprints and revision maps, have been
produced since that date. Aerial photographic coverage is limited to less
than 40% of the total land area. Much of this coverage is more than five years
old, and on scales of 1:50,P00 or more--two disadvantages which seriously
limit their use for most thematic mapping purposes.
22.       The need for more and better base maps is appreciated in Indnnesia.
The Government has planned for a considerable expansion in topographic ,
mapping activities during the First Repelita. And there are now more than 20
geodetic teams in the field; suppo,jrt is provided by a photogrammetric unit
and the normal ancillary cartographic and print shop facilities. The first
new maps will be published during the 1972-73 fiscal year, and the optimum
annual production capacity of about 100 maps, mostly on 1:50,000 scale, will
hopefully be reached before the end of the current five year plan. Even at
this ambitious production rate, which takes into account a generous amount
of Australian technical assistance in the ground control, aero-triangulation
and computation fields between 1970 and 1978, it is likely to take about 50
years to complete the standard mapping program for the entire country. The
current bottleneck in production is understood to be in the Cartographic
Department, where establishment and budgetary constraints are preventing the
recruitment of the necessary drafting staff.
23.       Aerial photography, which is carried out either directly by
Government teams or by air charter operators under contract, is integrated
with the topographic mapping program through a liaison committee, BAKOSURTANAL
This committee is also responsible for approving requests for aerial photography
from other Government agencies and from the private sector.
24.       The goal is to obtain complete photographic coverage of Indonesia,
if possible during the Second Repelita. However, in view of the huge area
involved and the likely high cost and logistic constraints, it would be
advisable to limit the Government financed program for the next five-year
plan to a small number of carefully chosen areas deserving of development
planning priority. Some proportion of the total land area, perhaps 20%, could
be specified as the target. Such a selection should be made at a central
planning agency level, after consultation with the relevant agencies of
Government. To allow for changing priorities, some flexibility should be
permitted in such a five-year program. A standing interagency technical
committee, under the chairmanship of an appropriate Ministry or of BAPPENAS,


ANNEX 1
Page 6
should be able to establish the correct priorities and effect the necessary
coordination. The possibilities for the use of earth satellite imagery can
greatly speed up this process. Imagery of good quality is already available
for large parts of the country and could fill in gaps in aerial photo
coverage and produce substantial amounts of new information for resource
use planning at relatively low cost..
25.       Finally, a brief comment on the current security restrictions which
limit access to topographic map indices. It appears that there is a need
for a fuller understanding, on the part of the military authorities who
control the topographic mapping and aerial photography programs, of the
importance of these valuable base mapping documents to the land resource
inventory and development planning agencies of government.
Land Use
26.       The land area of Indonesia amounts to about 2 million sq km, or
202 million ha (Directorate of Topography figures). The greater part of
the land area is covered by forest. Most of the remainder is given over to
agriculture, including a considerable area of secondary grassland following
from shifting cultivation. No up-to-date breakdown of overall land use by
area, based on recent survey, is available. The most useful map showing land
use remains the vegetation map, prepared by L.W. Hannibal and published on a
scale of 1:2.5 million in 1950 (a reduced and simplified copy is reproduced
The "going" estimate of forest areas, as an aggregate, is approximately
120 million ha. As for harvested or planted areas of the main crops, the
recently published N,-tional Fertilizer Study put the aggregate (for 1969/70)
at 18.8 million ha. Allowing for double cropping, the effective cropland
is estimated at 17.5 million ha. The remaining land area, amounting to about
64 million ha, must therefore be covered variously by secondary grassland
(alang-alang), 1/ natural savannah, or rocky wilderness except for small
areas occupied by urban settlements and associated infrastructure, mining
and quarrying.
27.       Survey Activity.  Government is already taking important steps
toward compiling more accurate data, via surveys of land use or vegetation
patterns. The most ambitious of these surveys is that being undertaken by
the Directorate General of Agraria of the Ministry of Home Affairs commencing
in 1969. This survey is designed to provide a land use map coverage for
the whole of Indonesia by 1974, on scales of 1:50,000 or 1:100,000 (depending
on availability of topographic base maps and degree of land use detail
requiring survey). Printed maps are already available for a large part of
Java, and for a few places in the other important islands where the main
survey effort is now being concentrated. Some 200 surveyors are at work--
generally without the aid of aerial photographs, except in a few regions where
fresh photography taken for other purposes is available--traversing the main
1/   Alang-alang is the Indonesian term for Imperata cylindrica, a coarse
noxious grass with little or no nutritional value.


ANNEX 1
Page 7
crop groups and other mappable land use categories, the boundaries of which
are tied to existing topographic bench marks, etc. The invaluable result
will be a reasonably accurate medium-scale spatial representation of the
national land use pattern, from which a much improved series of land use
statistics could be compiled. Crosschecks on accuracy could then be made
between these statistics and the data from agricultural censuses.
28.       Complementary to the Agraria land use survey, forest inventory
work is being undertaken by the Directorate General of Foresty. This effort
is directed mainly towards forest type mapping in the more productive forest
regions.
29.       Other organizations involved in related work include the Soil
Research Institute and the Topographic Directorate. The Soil Research
Institute is preparing land use maps, with the aid of a UN specialist, in
support of soil survey operations; these include the UN Land and Water
Resources Development Survey of Southeast Sumatra, for which an aerial photo
cover on 1:50,000 scale has recently been obtained. The Topographic Directorate
is outlining the boundaries of the broader land use categories for its Re-
tographic map series. It is possible that some university groups may also be
conducting land use surveys as part of research or instructional programs.
30.       The involvement of several governmental agencies in various aspects
of land use mapping gives rise to a need for an interagency coordinating
committee. Purposes would be to rationalize classifications, establish
survey priorities, and allocate work responsibilities, so as to ensure the
best use of available manpower.
31.       The Cadastral Survey. Except for outdated surveys of the estate
landholdings and the earlier Government reserves (the boundaries of which
are quite often misleading under present circumstances), cadastral data are
limited to relatively small areas comprising the urban centers, and some
of the more heavily populated rural regions, principally in Java. At the
current rate of cadastral survey, it is estimated that a complete cadastre
will not be available for another 300 years.
32.       Census Data. The 1963 Agricultural Census and related data reveal
the following summary information:
-    There were 12,236,000 farms covering 12,884,000 ha, equivalent
to an average farm size of 1.1 ha; of the total, 7,884,000 were
fully owned, 3,559,000 were partly owned, and 833,000 were
"fully not owned". 1/
-    The fully owned farms covered 9,089,000 ha; the partly owned
3,255,000 ha; and the "fully not owned" 540,000 ha.
1/   Only holdings of 0.1 ha or larger, however, were included in the
Census.


ANNEX 1
Page 8
-    Owner operated farms amounted to 10,663,000 ha, and the
remaining' 2,221,000 ha were operated by other than the owner.
- 4,075,000 ha'was sawah land and the remaining 8,809,000 ha dry
land.
-    Irrigated sawah amounted to 2,351,000 ha of which 2,265 ,000 ha
was gravity fed and the remaining 86,000 ha mixed.
-    Shifting cultivation amounted t. 1,249,000 ha and of this
1,244,000 was dry paddy, i.e. 99.59% of land subject to shifting
cultivation was under dry paddy.
-    There were 1,152 estates containg 820,000 ha of rubber,
oil palm, tea, sugarcane, coffee, tobacco, zacao, fiber or
cinchona, plus an unspecified area of coconuts, kapok, coca,
nutmeg, pepper, cassava, gutta percha and essential oils
(Statistics for Estate Agriculture, 1963).
33.       The equivalent 1970 statistics for estates, of which there were
about 350 public owned and 693 private owned, including 139 under foreign
ownership, are given in Table 7.
Land Capability Appraisal
35.       Even though current data is sparse, much more could be done in
the way of analysis, particularly with reference to project identification
and help in the selection of priority areas for fuller investigation.    The
proposed UNDP Land Capability Appraisal project is designed to demonstrate
the usefulness of a selective approach. This project, which commenced in 1972
should continue *at least until 1978, and will considerably strengthen the
ability of the Soils Research Institute to provide information on land
suitability for agriculture; the results should be of direct application at
the level of central planning represented by BAPPENAS. The project has two
main objectives: first, to collect and interpret data in a way which will
assist Government in preparing the Second Repelita (1974/79); and second,
as a longer term objective, to provide land resource and capability information
on a continuous basis. as an aid to policy formulation and planning at national
and regional levels.
36.       To obtain full benefit from the project and to ensure continuity,
it will be necessary tojincrease the professional staff of the Soils Research
Institute, possibly two or even threefold, within the period of the project.
Also, the development budget should be increased enough to reequip the
Institute and, in particular, to launch reconnaissance type surveys of unin-
habited forest land. It will also be essential for the Institute to establish
a regular and close rapport with the planning staff, not only of the
Ministry of Agriculture, but also of BAPPENAS, where the ultimate decisions
on project identificatiqn and priority are generally reached, for it is at
this level that the technical advice can be most crucial, in the land use
planning field.


ANNEX 1
Page 9
37.       At the risk of repetition, it is emphasized that land capability
appraisal in Indonesia must consider the varied climatic, geologic and
topographic factors which have interacted to produce different soils over
quite wide areas. For example, the climatic factor has resulted in a distinct
differentiation, particularly in the case of the more mature sedentary profiles,
between the soils of Java, Madura, Bali, the Nusa Tenggara Islands and
Sulawesi, which include large extents of soils with high pH's, and the soils of
Sumatra, Kalimantan and West Irian, which are characterized by more acid
pH's. The geologic factor imparts not only a strong regional variation in
soil group patterns, as for example in areas of more basic volcanic origin,
as contrasted to areas of sedimentary and more siliceous tgneous rock. The
geologic factor also gives rise to variations which can strongly influence the
inherent fertility of soils, and thus affect the suitability and management
capability of the land. For this reason, reconnaissance geology maps, which
cover 80% of the country, can be very useful in inferring agricultural
suitability for areas not covered by soil maps based on systematic field
surveys. Finally, the topographic factor has influenced the development
of extensive areas of organic and low humic gley soils, particularly in
Sumatra, Kalimantan, and West Irian, which present a very different range of
problems to the alluvial soils commonly developed in the flatter areas of
law-lying land on the other islands, particularly Java.
38.       As a particular caution, the uniqueness of Java, together with its
satellite islands of Madura, Bali and Lombok, with their unusually fertile
soils of recent volcanic origin, comparatively dry climate and seasonal
rainfall variability, favorable relief and relative absence of problematical
hydromorphic soils, argues against the preparation of development plans for
other areas based on experience gained in the Javanese context.
39.       For this discussion of agricultural sector strategy, based on land
resource potentials, agricultural regions are considered in terms of island
groupings that do not split administrative boundaries. The areas, populations,
and population densities of the regions are summarized in Table 1.
Table 1: DEMOGRAPHIC DATA
Population
Area     Population (1971)         Density
(sq km)        ('000)          (Persons/sq km)
Java, Madura and Bali         139,667       78,220                 560
Sumatra                       524,097       20,820                  39
Kalimantan                    550,203        5,107                   9
Sulawesi                      229,108        8,535                  37
Nusa Tenggara and Maluku      154,304        5p577                  36
Indonesia without West
Trian                    1,597,379      118,259                  74
West Irian                    421,981          923                   2
Indonesia                   250199360      119,182                  5


ANNEX 1
Page 10
40.       Java. Included in this region are the islands of Madura and Bali,
all of which have much in common with the main island, including a similar
geologic history. This region comprises six most densely populated Indonesian
provinces. Because practically no land which is suitable for agriculture
remains unoccupied or uncultivated, intensification of smallholder agriculture
is crucial to the further development of this region.
41.       A variety of means can be suggested, including double or triple
cropping of traditional crops, particularly rice, alternate off-season
cropping, intercropping, and introduction of crops (or livestock) to particular
areas on a sole cropping or rotational basis. The approach would be a
broadly based effort based on heavy capital inputs for better water control,
credit, and on the efforts of a well staffed extension service backed by a
research organization capable of producing technological innovations of proven
economic value to the industry. Since it will take many years for adequate
administrative capacity to be created, short-cut methods will have to be
adopted. In practice, this means looking to the international community for
new varieties and methods which have been proven in,other countries, and
which might be adapted to the regional conditions.   The BIMAS program for
rice clearly demonstrates the possibilities of this approach. Programs to
provide credit, inputs and advice should be broadened to other crops--maize
is a particularly appropriate crop in this respect, in view of the range of
maize varieties now available for adaptability trials.
42.       However successful such an approach might be in improving yields
and hopefully, the net incomes of the farmers, the central problem will
remain--that of equating population pressures for maximum land utilization
with the establishment of a sustained yield agricultural system that would
be best suited to the land resources. The creation of alternate sectoral
employment opportunities within the region, and an increase in the number of
transmigrants to other regions, will undoubtedly help to relieve the pressures.
But they cannot in themselves halt the gradual degradation of land which is
taking place in many areas. Some steps in the right direction are being
taken. These include the reafforestation program and the "greening movement"
sponsored by the Forest Department, and the FAO Upper Solo Basin Project,
which aims to rehabilitate approximately 60,000 ha of badly eroded land
covered by limestone derived soils of low fertility, and a further 160,000 ha
of steeper land covered by rather richer volcanic soils, But these efforts
cover only a small portion of the affected land. Efforts are limited in the
main to the worst affected areas, where concern is heightened by the damaging
consequences of the increased silt load carried by the rivers and deposited
in the plains, together with the increased incidence of catastrophic flooding,
rather than by the reduction in productivity of the eroded lands themselves.
43.       A more positive effort is urgently required.   Greater use of
appropriate crops and pasture would be the least disruptive solution.
It is apparent that some land should be taken out of cultivation in line
with fundamental conservation principles. A reappraisal of the entire range
of needs and possibilities for soil conservation, reafforestation and flood
control, appears timely. The responsibility is at present too heavily
placed on the Forest Department. Fortunately, the backdrop of available
evidence is much more substantial for the Java region than with other regions.


ANNEX 1
Page 11
The FAO Land Capability Project should help considerably in evaluating the
optimum potentials of the land to sustain agriculture as compared with
productive or protective forest. Also, the recently completed land use
survey undertaken by Agraria will provide necessary data on areas of land
presently under various, crops or other usage.
44.       Sumatra. This region, which here includes the neighboring smaller
islands administered from the main island, has less than a quarter of the
population of the Java region and more than three times its area. Further-
more, it has a smaller proportion of mountainous land, roughly one-third,
as compared with about 40% in Java. The Sumatra region presents a very
considerable potential for agricultural development.
45.       The greatest potential is within the large contiguous central
zone of almost flat to hilly lands at elevations below 200 meters, situated
immediately east of the Barisan Range, and partly in the extensive swamp
lands which fringe the eastern shore. Both these zones are mainly covered
with forest. An excepcion is found at the northern and southern ends of
the central zone where the forest has been cleared to make.way for extensive
areas of estate crops around Medan and small farmer transmigration areas
of Lampung Province. It should be noted that the soils in these two
developed areas are apparently atypical and probably of rather higher
inherent fertility as compared with those in the interior areas. Similarly,
the development of the soils in the eastern swamp zone is largely confined
to readily accessible areas near the mouths or along the banks of the
larger rivers, as at Palembang and Djambi.
46.       Unfortunately, not enough is known about the soils in the
remainder of either of these zones to permit precise statements on crop
suitabilities. Extensive soil surveys below the exploratory level have
not been carried out in the undeveloped( segments. Indirect evidence,
mainly of a geologic nature, suggests that inferences from reconnaissance
soil surveys in the developed lands may be of questionable validity. However,
the soils of interest are grouped as red-yellow podzolic soils in the
central zone and as organic soils in the swamp zone on the FAO Soil Map.
This broad categdrization is sufficient to indicate that the soils are of
a type similar to those which are extensively devoted to agriculture, and
especially to tree crops in other humid tropical areas, and that similar
developments should be possible within these zones. However, more detailed
soil knowledge should be considered a prerequisite to large scale organized
settlement, if such development is intended to' provide a standard of
farming above the purely subsistence level.
47.       The central zone covers almost 35% of the island, equivalent to
almost 18 million ha, and geologic evidence (e.g. the composition of rock
formations) suggests there are considerable differences in soil quality at
the series level, and hence in the suitability of specific areas for
particular crops. A reconnaissance soil survey program, directed primarily
towards the more accessible areas of greatest agricultural potential,--
as inferred from available data--should be given the highest priority. The
land immediately north of the most recent settlement zone in Lampung Province


ANNEX ?
Page 12
and in the adjoining part of South Sumatra Province appears to be a parti-
cularly promising candidate for further investigation.
48.       The keen interest in possible beef cattle development schemes
has led to much discussion of the extensive grasslands in the Outer Islands.
Several such areas occur within the central zone in Sumatra, including the
Padang Lawas, an approximately 150,000 ha area of grasses with occasional
isolated trees developed over almost flat to gently rolling land adjoining
the eastern foothills of the Barisan Range about 100 km southeast of Lake
Toba; several smaller patches, mainly of alang-alang, occur within Lampung
Province, mostly to the north of Metro and Kotabumi, and in South Sumatra
Province around Perbumulih and Sekaju.
49.       The grasslands in the south of Sumatra appear of fairly recent
origin, and are probably a consequence of shifting cultivation on former
forest land. The Padang Lawas tract, judging from the absence of any large
population on the periphery of the area, is probably much older. The
failure of secondary forest species to become reestablished could be sympto-
matic of very low levels of natural soil fertility. The extent to which
the fertility can be improved through use of fertilizers, and the cost,
require careful investigation before development capital is committed on a
large scale.
50.       The soils within the swamp zone, which likewise covers about 18
million ha, present an even greater evaluation problem. There are very
considerable access difficulties, which make ground survey a most time-
consuming and arduous undertaking. It is apparent that they contain a
high proportion of problematical soils, some of which have very serious
limitations affecting their suitability for agriculture. This uderlines
the importance of carrying out a soil survey, at least at the reconnaissance
level as a prelude to any form of large scale organized settlement.
51.       The UNDP/FAO Southeast Sumatra Land and Water Development Project
is therefore most timely. This project aims at surveying 4 million ha of
land, covering parts of both zones of interest in southeastern Sumatra, as
a preliminary to an overall development plan. Completion of the plan will
be undertaken as a second phase of the project, provided the results
from the first phase survey are satisfactory. Simultaneously with the
first phase, detailed planning is being carried out on two 20,000 ha blocks,
selected for pioneer settlement and rehabilitation respectively, at
Tjintamanis, near Palembang, and at Melitang, near Martapura, where Japanese
consultants have been engaged as subcontractors. Also, similar planning
studies were subsequently added for three other areas--Upang West, Menggala,
and Ogan-Karamasan -- and indications are that irrigation and/or drainage
will be required for successful development of their alluvial or organic
soils. There is danger that this simultaneous study of proposed project
areas could conflict with the broader evaluation of resource potentials
over the entire 4 million ha. It is noted, for example, that the proposed
projects are all situated on soils characteristic of the swamp zone, to the
exclusion of the dry land zone. The comprehensive survey of the entire
4 million ha should be given first priority before detailed studies of parti-
cular projects in the area are undertaken.


ANNEX 1
Page 13
52.       The remainder of Sumatra is mountainous, composed largely of
volcanic rocks, and containing a wide variety of geomorphic forms.   The
upper cones of the volcanoes and the steep sides of the main ridges are
patently unsuitable for sustained yield agriculture. However, the bottom
lands and the lower, more gently sloping sides of the many valleys--along
which the main access routes are invariably positioned--offer excellent
though limited opportunities for the development of mixed farming. These
systems might incorporate wet paddy on the valley bottom alluvials, where
advantage can be taken of the regular stream flow and appreciable gradient,
or of dry land annual crops which can be grown on the same soils after
drainage, or with minimal irrigation from the nearby streams during times
of drought. Permanent crops, including fruit for local consumption as well
as estate crops, could be grown on the nonirrigable sites, in combination
with buffalo or cattle which could graze on the paddy land during the off-
season or on the surrounding hillsides and other waste lands. The increase
in elevation as the valleys penetrate the mountains provide an additional
opportunity to vary the crops.
53.       The relatively prosperous farming communities of West Sumatra
Province, where the Minangkabau people live, demonstrate the feasibility of
diversified farming on Sumatra. Probably the widest range of crops in
Indonesia is grown in this area. Success can in large part be attributed
to the range of crop opportunities offered by the varied terrain And fertile
soil, and not least, to the ingenuity of the individual farmer and his
responsiveness to new ideas. Extension assistance has been initiated by a
German Technical Cooperation Agricultural Advisory Group working in this
Province.
54.       The Regional Planning Project, currently being undertaken by the
University of Bonn, is providing a wealth of detail concerning the agricul-
tural economy, by means of a land use survey conducted by questionnaire
throughout the Province. Results to date indicate several important trends.
There is population pressure on the agricultural lands in most villages;
out-migration is taking place to other provinces, to Jakarta, and even
abroad as far as Malaysia; and more intensive use is being made of the
lower hillsides, which are slowly and laboriously being developed to
terraced rice fields.
55.       It is also apparent that deforestation and shifting cultivation
on the hillsides has led to extensive alang-alang growth, which has caused
accelerated runoff and stream flow in the wet seasons and resulted in man-
induced drought conditions prevailing during the drier seasons. The very
dry soil conditions during the low rainfall months, contrasting with the
increased evidence of flash-flooding during heavy rains, has led to spon-
taneous efforts by perceptive villagers towards planting of tree crops
and some reforestation of the hillsides in a few areas. Increased official
assistance would be an appropriate strategy for the Government to adopt in
these areas. The means would be larger scale reforestation or for selected
tree-crop development, particularly rubber, on terraced hillsides, with
the soil further protected against erosion by cover crops and moisture
retention enhanced by siltpitting.


ANNEX 1
Page 14
56.       The flat tablelands or plateau occurring within the mountainous
zone have useful agricultural potentials, although the aggregate area is
not large. The most important area in terms of existing settlement is the
1,200 meter plateau, more than 50,000 ha in extent, immediately north of
Lake Toba, in North Sumatra, which is a major center for vegetable produc-
tion and has been settled for many generations. However, the shifting
cultivation system commonly practiced is very demanding of the soil, which
although physically sound, is now in.a chemically degraded condition as
judged from the yellowed appearance of the secondary regrowth. Much more
attention in the future must be given to nutrient requirements -- the
greatest need is pro1ably nitrogen and phosphorous -- particularly in view
of the increasing population pressure which is forcing a reduction in the
period of natural fallow. There are also unsettled tablelands which
can be identified on,the contour maps. For example, there is an approximately
25,000 ha area between 1,700 and 1,800 m in elevation to the west of Lake
Toba, where the absence of settlement caii probably be explained by the 2ow
fertility of the strongly leached and probably heavily podsolized soils
developed over the ancient land surface. The development potential is very
low in such areas.
57.       In other parts of the Barisan Range, particularly in West
Sumatra, Bengkulu andiLampung, the lower cones of the volcanoes are very
gently sloping to almost level and have fertile soils on ideal sites for
crops suited to the cooler climate several hundred meters above sea level.
Tea estates are foundlon the lower slopes of Mount Kerinci in West
Sumatra; small growers coffee on the lower slopes of Mount Tanggamus near
Kota Agung in Lampung;1 and temperate vegetables on a particularly favorable
site between two adjacent volcanoes at Bukit Tinggi in West Sumatra. These
and other sites are cdmparatively small in area, often only a few hundred
hectares, and their aggregate area may not exceed 500,000 ha or so. Access
is a constraint on early development.
58.       Kalimantan. 'The low population density (9 persons per square km)
and deductions drawn from the limited reconnaissance data on soils pattern
and their quality, combined with the huge area of gently undulating to
hilly land and abundant rainfall, suggest that Kalimantan may have very
considerable potentials for agriculture, in addition to its well recognized
forestry resource. The existing agriculture consists in the main of
traditional shifting cultivation which gives rise to extensive areas of
alang-alang after abandonment.
59.       The proportion of soils developed over steep mountainous
terrain, and having very limited potentials for agriculture, mainly because
of shallowness and susceptibility to erosion, is somewhat larger than in
Sumatra, and amounts to approximately 22 million ha, or more than 40%,
while swamps cover a roughly similar area, estimated at approximately 19
million ha. This leaves an extensive area of sedentary soils developed
over the intermediate zone of gently undulating to hilly land, estimated
at 14 million ha or equivalent to approximately 25% of the island.


ANNEX I
Page 15
60.       The swamp soils have much in common with those of Sumatra. They
include saline soils close to the coast, acid sulphate soils furthel in.and
laid down in brackish water, estuarine or lagoonal conditions, etc., and
frequently organic soils even farther from the coast, and particularly in
the larger swamps between the main rivers. The river banks and the land
neighboring the smaller streams are formed of more recently deposited
alluvial soils, often on distinct levees, which become increasingly common
upstream and on the inland edges of the swamps, where they may be intermixed
with terrace soils of similar but older derivation. More complex patterns of
soil development are found where there are a large number of rivers
crossing a wide plain, or where a major river has developed a braided course
in its lower reaches and is building up a series of deltaic deposits.
Further complicating the picture, the inherent fertility and crop suitability
can vary widely between, and even within, the main types. Because the system
of drainage and/or irrigation improvement and soil amelioration needs to
be carefully tailored to the actual soil and to the micro-relief of the
land, a detailed study of the environmental conditions (soils, land
levels, streamflow, quality, etc.) in each part of any area scheduled
for development is an important preliminary to design of improvement
schemes.
61.       The acid sulphate soils are particularly prone to give trouble
when their natural drainage regime is interrupted, as experience in many
parts of the tropics has shown in recent decades. It is unfortunate that at
least one of the most recently developed transmigration schemes, at Berambai
(590 families 2,842 persons), is largely situated on such soils. Already,
there is evidence of poor and declining yields. The cause is almost
certainly linked with over-drainage of the soils by the deep drainage canals
provided, along with inadequate facilities for flushing out acid water from
the subsoils with fresh river water.
62.       The system being used here, and proposed for an additional
150,000 ha of largely undeveloped swamp land in the immediate neighborhood,
is referred to as the Gadjamada system; it is a modification of the tradi-
tional pasang-surut irrigation-cum-drainage 'system, which takes advantage
of tide changes to provide fresh water for irrigation purposes by means
of canals connected (usually at right angles) to a river bank. The efficiency
of such a system depends on soil, contour, and water quality conditions, and
the right combination may exist in only limited areas within the tidal
reaches of any river system. Where applied, the pasang-surut principle
should be modified to suit the circumstances of each area, both on theoreti-
cal grounds and through successful completion of a pilot project.
63.       At this point, however, investment in irrigation schemes for such
areas should be considered an open question. It may be that more costly
systems, involving the use of an external water supply and an elaborate
irrigation and drainage layout to give exact water control, would ultimately
be more economic. On the other hand, scarce capital might be better spent
on other types of projects, perhaps in other areas: Priority might be
given to development of dry lands with regular and abundant rainfall.
A range of projects was proposed for feasibility study or design in a recent


ANNEX 1
Page 16
report on the Barito Basin, 1/ and it would be an excellent idea to pose
some general questions of economy in the terms of reference. Included are
two rehabilitation projects near Rantau and Banjarmasin, and three other
areas which appear well suited for development near Riam Kanan, Amuntai,
and Banjarmasin, and which apparently include a wide range of soil and
drainage conditions.
64.       The extensive areas of gently undulating to hilly land, lying
between the swamps and the mountains, have soils described variously as red-
yellow podzolic soils and ferralsols on the FAO Soil Map. They remain
largely forested, except for small areas of cultivated land. Agricultural
activities are marked by either tree crops, including rubber, coconuts and
m.ixed fruit trees, or annual crops such as paddy, both wet and dry, maize
and cassava, and abandoned land grown over with alang-alang and secondary
scrub. Most of the soils in these areas are suitable for a wide range of
crops, and they are fortunately free of the toxicity problems which so
often plague the swamp soils. Fertilizer should be effective even on the
poorest soils, provided they are not excessively sandy and free draining,
or impossibly heavy textured and impervious.
65.       The traditional system of shifting cultivation, with dry paddy
as the main crop, is unlikely to be superseded until an outlet is assured
for at least one new cash crop that would provide a surplus for purchase
of fertilizers, or animals to provide draft power and manure under a mixed
farming system. Tree crop agriculture is always a possibility. Rubber
would be the preferable crop for widespread planting, in view of the
familiarity of the growers with this crop, and its relative ease of
marketing. Much could be done to increase the availability of improved
rubber clonal material and planting advice through extension channels.
Government rubber estates, such as Danau Salak Estate (PNP XVIII), where
a new crumb rubber plant has recently been installed, could take part in
such a program, perhaps based on an outgrower system.
66.       Impressive evidence of the possibilities of developing multiple
crop farming systems, with minimal dependence on wet paddy, is afforded
by the Abdul Yani II military migration scheme near Rantau. Here, 400 military
veterans have developed quarter-hectare house lots and 2-1/4 ha field lots
on gently rolling to strongly undulating. land, formerly under alang-alang,
within the last four years. Dry rice, the main crop, is yielding up to 2
tons of paddy in the second year, with the aid of manure provided by cattle
and chickens or from burnt trash. Supplemental crops are yams, groundnuts,
maize, and beans grown in the main fields, and fruits and vegetables grown
on the house lots.
67.       Sulawesi. With approximately half the area (229,000 sq km) and
almost twice the population (8.5 million) of Kalimantan, Sulawesi has a
population density of 37 persons/sq km which is almost the same as Sumatra.
But in contrast to both these islands, Sulawesi has a considerably higher
proportion of land in the mountainous category--almost 70%, equivalent to
1/   Report on "Survey for Development of Barito River Basin, Kalimantan,"         4
OTC, Japan, 1971.


ANNEX 1
Page 17
about 16 million ha. This means that the areas of potentially suitable land
for agriculture, falling into the gently undulating to hilly or swamp land
categories, are limited to a relatively small combined area of little more
than 7 million ha.
68.       A recently published soil survey dealing with more than half of
South Sulawesi Province,1/ which has the highest proportion of nonmountainous
land and also the greatest population density, found some 60% to be hilly
to mountainous with mainly severe, very severe or excessive limitations in
land capability terms. These areas are recommended for forestry use only,
except for small areas having only moderate limitations and therefore
suitable for perennial crops. This survey also draws attention to the
seriously eroded condition of much of the steeper land, which is subject
to shifting cultivation. A case is made for reafforestation of such land
and resettlement of the agriculturists elsewhere. This same region has
witnessed substantial migration from Java during the past 30 years--a
factor which has contributed towards it becoming a major rice producer
with a substantial surplus for export. It is possible that the population
density in terms of land suitable for agriculture is now higher than in any
other province outside the Java region. This makes it a most questionable
long-term prospect for continuing reception of migrants.
69.       The remainder of the island, not covered by the survey, contains
an even higher proportion of steep, mountainous land. Most areas are only
covered by schematic soil maps so that very little can be said about soil
quality. What topological evidence exists suggests some pockets of land
suitable for agriculture, but negligible in area and unlikely to afford
much opportunity for migration after the needs of the existing population in
these areas is taken into account.
70.       One of the most promising areas for development in Sulawesi is
considered to be the Luwu Plain, where plans for settlement of migrants
have existed since 1936, but have been only partly implemented to date.
The project area within the plain, which covers an area of 1.47 million ha
(as defined by the Directorate General of Water Resources Development) was
more than 90% forest covered in 1968, and the remainder is occupied by
40,000 ha of estates, 11,000 ha of dry fields, and 21,000 ha of rice fields.
The soils are variously described in the soil survey report as alluvial,
gley and hydromorphic. The irrigation schemes already completed or under
construction, at Lamasi, Kandjiro, Bone-Bone and Kalaena, with a combined
irrigation potential of 49,000 ha, are predominantly sited on the alluvial
soils. All the schemes are in areas well suited to rice cultivation,
according to a 1971 Netherlands Fact Finding Mission Report.
71.       The Netherlands' report classifies much of the plain outside the
areas of the ongoing schemes, and parts of several of the previously
proposed schemes, as "marshes partially suitable after intensive drainage"
or as "not irrigable or unsuitable soils". These two categories cover the
1/   M. Soepraptohardjo, "Soil Survey for Agricultural Development in South
Sulawesi, Indonesia", World Soil Resources Report 41, FAO, Rome, 1971.


ANNEX 1
Page 18
larger part of the plains, and particularly the central and coastal portions
where the soils are different and possibly inferior. At the same time, they
are likely to require more costly and elaborate engineering works prior to
being brought under crops requiring drainage and irrigation, or to dry land
crops requiring drainage only. Nevertheless, because of the limited
opportunities for large-scale development outside existing settled regions
in the remainder of Sulawesi, the plain is of considerable importance to
future development.
72.       The Government plans to settle some 45,000 migrants on the Luwu
plain during the First Repelita alone. This target appears unduly ambitious
in view of current financial and logistical constraints, the inability of
the irrigation schemes currently being implemented to cope with more than
a few thousand such migrants before April 1974, and the lack of certainty
as to the resource base. There is strong justification for a regional plan
covering the entire plain as soon as possible, based on a comprehensive
study of the resources, primarily soil and water, and an evaluation of their
cropping possibilities within the context of present and projected economic
circumstances of Sulawesi. Such a study should appraise the possibilities
for absorption of migrants over two decades or more, and should include
feasibility reports covering specific projects suitable for early implemen-
tation -- perhaps in the later years of the Second Repelita--assuming that
the.study could be commenced in 1974 and completed within about two years.
73.       Nusa Tenggara and Maluku.   This widely dispersed island region
has an aggregate land area slightly larger than Java, but a population of
only 5.6 million and a density of 36 persons/sq km--approximately, one-
twentieth that of Java. At first sight, these figures may suggest a
promising region in terms of agricultural potential. But, apart from the
coastal fringes which are the principal areas of existing settlement,
many of these islands are characterized by extremely law rainfall and
shallow soils often on steeply sloping land. Extensive cattle ranching
appears to be one of the few opportunities. Rudimentary road and port
infrastructure are additional factors which limit the possibilities for
development.
Summary and Recommendations
74.       The varied ecological conditions within   Indonesia present a
challenge to the development planner: How should he proceed under such
serious data constraints? Climatic differences are considered to be of
prime importance at the present time. It is recommended that much more
attention be given to the determination of the optimum climatic conditions
for individual crops within the country as an aid to site selection at the
broader planning levels. The correlation of reliable yield data for crops
grown on different soils with the major rainfall types of the Schmidt-
Fergusop System could be invaluable for identifying the best regions in


ANNEX 1
Page 19
1/
which to concentrate certain crops. -    This work deserves high priority
in a program of coordinated agronomic research among the several responsible
organizations.
75.       The extensive development of red-brown mediterranean soils and
vertisols on the gently undulating to hilly areas in the drier south and
east of the archipelago, in contrast to the general development of more
acid red-yellow podzolic soils on similar terrain subject to heavier
rainfall elsewhere, reflects the climatic influence. A better understanding
of crop-soil relationships within these and other broad pedological groups
would undoubtedly provide additional evidence for regional specialization
of crops.
76.       The proportion and extent of the three main terrain groups within
the regions, namely mountainous, almost flat or gently undulating to hilly,
and swamp land (Table 2), each of which are characterized pedologically by
a wide variety of soils the full range of which has yet.to be determined
--probably provides the most useful indication of agricultural potentials
for broad planning proposes at the present time.
77.       Among the more interesting features of Table 2 are the varying
proportions of land falling within the three terrain/soil categories on
the main island regions. First of all, note the large amount of land in
Group I (mountainous). Sulawesi is the most mountainous (69%), and Sumatra
is at the other extreme (32%). For planning purposes, it would be unwise
to assume that more than 10-15% of the aggregate mountainous area can be
brought into sustained yield agriculture.
78.       Swampy land covers a relatively small proportion of Sulawesi
(8%) and of the Nusa Tenggara and Maluku island region (3%); while about
a third of Sumatra, Kalimantan and Java fall into this category. A parti-
cularly significant feature of the soils in these swampy areas is the very
high proportion of organic and acid sulphate soils in the largely
undeveloped swamps of Sumatra and Kalimantan, as compared with the
relative absence of these problem soils in Java. The land in Java,
which for the most part has already been developed to agriculture,
contains mostly alluvial and low humic gley soils.   These pedological
differences are suggestive of a very wide range of crop suitabilities
and they give an inkling of the problems, some of which may be insoluble,
inherent to the development of many of the swamp lands in the Outer Islands.
Without more accurate data concerning the patterns and qualities of these
swamp soils, it is impossible to estimate even approximately the areas
which could be developed productively for agriculture, but the figure is
unlikely to exceed 10% in Sumatra and 20% in Kalimantan.
1/   Two recent consultancy reports came to opposite conclusions:   One
recommends increasing the area of sugarcane in Sumatra and Kalimantan,
while the other devises against any such development in these two islands.
This dilemma illustrates the prevailing uncertainties concerning the
suitability of particular sites to specific crops.


Table 2: AREA BY REGICH AN D TYPE OF TERRAIN AND SOIL
TERaAIN/SOIL GROPS
Group I           Group II         Group III         Group IV
Area              Area             Area              Area
Total with Agri. Total with Agri. Total with Agri. Total with Agri.
Area Potential    Area  Potential  Area Potential    Area  Potential
Java, Madura        Ha (Millions)                    5.3     1.1       4.1     3.2      4.6     3.7      14.0     8.0-
and Bali          Proportion of total area (%)   -38     (20)       219   (80)      33-     (80)     100     (57)
Su"atra    "                                        16.4     3.3      17.7    14.2     17.9     1.8      52.0    19.3
32     (20)       34     (80)      34     (10)      100     (37)
Ralimaitan                                         22.3     2.2     14.0     11.2     18.7     3.7      55.0    17.1
41     (10)      25      (80)      34      (20)     100     (1
Sulawesi                                            15.8     1.6      5.4     4.3       1.8     1.1      23.0     7.0
69     (10)     ?3       (80)       8      (60)     100     (52)
Nusa Tenggara                                        5.7     0.6      8.8      7.1      0.5     0.2      15.0     7.9
and Maluku                                        38     (10)      59      (80)       3     (50)      100     (52)
Indonesia (Excluding                                65.5     8.8     49.3     to.0      43.5    10.5     159.0   59.3
West Irian)                                        41     (13)     32      (dO)       27     (25)      100     (37)
Source: Mission estimates.
Group I:     Mountainous land, mainly lithosols and andosols.
Group II:    Almost level or gently undulating to hilly land, mainly red-yellow podzolics, ferralsols, red-brown
mediterranean soils and regosols.
Group III:   Swampy lands, mainly organic soils and alluvials.


ANNEX I
Page 21
79.       The remaining terrain/soil group is intermediate land, described
here as almost level or gently undulating to hilly, which covers slightly
more than 30% of' the country. It affords by far the greatest area for
future agricultural development. The range of soils, which is probably
greater than in either of the other two groups, includes a large number
which are well suited to cultivation with a wide variety of tropical crops,
and it is felt that for long-range planning purposes, 80% of the land in
this category in Java, Sumatra and Kalimantan should be assumed to be suitable
for agriculture on the basis of existing evidence, ard a rather lower proportion,
approximately 50%, in Sulawesi, Nusa Tenggara and Maluku.
80.       On the basis of Table 2, it can be estimated that slightly under
55 million ha of land in Indonesia (not including West Irian) are amenable
to utilization for farming. Since only about 17.5 million ha are currently
cultivated, it can be estimated that there exist an additional 35-40 million
ha of potentially suitable land, which should yield a net cultivable area
of about 30 million ha. Some of this area, however, may lie in already
granted forestry concessions, primarily in Kalimantan.
81.       These figures, which are derived from a preliminary analysis of
the much reduced and simplified data presented on the maps reproduced in
this report, afford considerable grounds for optimism in respect to new
land development opportunities in the future. The satisfactory realization
of these opportunities will require much more detailed information concerning
the extent and nature.of the natural resources, particularly soils, and of
the present patterns of land use than currently exists.
82.       Because of the manpower constraints and the considerable element
of choice in terms of regions and sites, it is felt that much more attention
should be given at the highest levels of planning (BAPPENAS) to the identifi-
cation of land development priority areas. For example, besides the Luwu
region in Sulawesi, mentioned above, two particularly appropriate areas
deserving special study are Lampung-South Sumatra and Southeast Kalimantan.
Environmental conditions in these areas are considered promising for large
scale new agricultural land development activities in the immediate future;
furthermore, both government assisted and spontaneous transmigration activi-
ties are already well-established around existing growth centers such as
Telukbetung and Bandjarmasin.


ANNEX 1
Page 22
Table 3: LAND USE AND VEGETATION
(million ha)
1. Forested Land /1     -    Primary Rain                   80.0
-    Mixed                           1..5
-    Sec,ndary                      19.6
-    Mangrove, Coastal and Swamp    17.7
-    Teak Plantation-                0.9
-    Non-Teak Plantation             0.3     120.0
2.   Agricultural
Cropland2         -    Field Cropa.                   12.9
(harvested or planted).         Paddy                     (8.2,)
Maize                     (2.9)
Capsava                   (1.4)
Vegetables                (0.2)
Groundnuts               (0.4)
Soya, Bea~s               (0.6)
Sweet Potatoe.           (0.4)
-    Permanent Crops                 4.6
Tobacco                   (01)
Sugarcane                (0,,1)
Cloves                   (01)
Rubber                    (2.2)
01]. Pal-                 (0.1)
Cof fee (g0.4)
Tea                       (. 1)
Coconut                   (1.6)     17.5
3.   Other Lands /3,
including         -    Secondary Grassåan,4 nJa.
-    Natural Sav4nah.               n.a.
-    Rocky Wilgnast m.p,
-    UrIa Settlmente            . n.aa
-    Miing and Quarrying            n.a,,    64.4
Total                                                       201.9
ILJ  Compiled from Forest Department sotprces.
/2   Compiläd from Draft Naional Ferjtiizer Study RepArt, 1971.  Total
area under field crops estisa,ted assuing 110% cropping intensity.
3   Compiled by. diffferenc.e from /1 ande a  ,oe and by in ergence from
Vegetation Map of. Inpovesi,~1950.


ANNEX 1
Page 23
Table 4: AREA, POPULATION AND POPULATION DENSITY
BY PROVINCE, 1971
Area/1-   Population-/2    Population Density
(sq km)     ('000 X)       (Persons per sq km)
1. D.C.I. Djakarta                    592       4,576            7,729.7
2. D.I. Jogkarta                    3,090       2,490               805.8
3. Central Java                    34,353      21.876               636.8
4. East Java                       46,866      25,527               544.6
5. West Java                       49,145      21,631               440.1
6. Bali                             5,623       2,120               377.0
7. West Nusa Tenggara              21,740       2,202              101.2
8. North Sumatra                   71,104       6,564               92.3
9. West Sumatra                    49,333       2,792                56.5
10. South & Southeast Sulawesi     116,253       5,903               50.7
11. South Kalimantan                33,966       1,699.              50.0
12. East Nusa Tenggara             48,889       2,291               46.8
13. South Sumatra /3               157,522       6,733               42.7
14. S.T. Atjeh                      59,904       2,083               34.7
15. North & Central Sulawesi       112,855       2,632               23.3
16. Djambi                          61,150       1,006                16.1
17. Riau                           124,084       1,642                13.2
18. Maluku                          83,675       1,084                12.9
19. West Kalimantan                157,066       2,020                12.8
20. Central Kalimantan             156,552         692                4.4
21. East Kalimantan                202,619         696                 3.4
22. West Irian                     421,981         923                 2.1
INDONESIA              2,019,362     119,182
/1   Source: Statistical Pocketbook of Indonesia, 1971, Chapter I, Table 3,
compiled by Directorate of Topography. Other, earlier references, give
the total land area of Indonesia as 1,904,000 sq km.
/2   Biro Pusat Statistik, 1971 Census.
/3   Includes Lampung and Bengkulu.


ANNEX 1
Page 24
Table 5: NUMBER AND AREA OF FARM AGRICULTURE BY PROVINCE, 1963
Number            Area           Average
Province                        ('000 X)          ('000 ha)         Size
West Java                         2,155             1,498            0.7
Central Java                      2,638            1,821             0.7
East Java                         2,790            2,120             0.8
S.T. Jogjakarta                     329              193             0.6
S.C.T. Djakarta Raya                 23               15             0.6
South Sumatra                       663            1,708             2.6
Djambi                               98              286             2.8
Riau                                169              515             3.1
West Sumatra                        323              277             0.9
North Sumatra                       692              855              1.2
S.T. Atjeh                          260              267             1.0
West Kalimantan                     223              708             3.1
Central Kalimantan                   73              389             5.3
South Kalimantan                    202              216             1.1
East Kalimantan                      55              105             1.9
North/Central Sulawesi              260              471             1.8
South/Southeast Sulawesi            514              496             1.0
Bali                                266              251             0.9
West Nusa Tenggara                  250              266             1.1
East Nusa Tenggara                  253              427             1.7
INDONESIA              12,236           12,884             1.1
Source:  Statistical Pocketbook of Indonesia, 1971, Chapter VII.1, Table 6,
page 134, based on Agricultural Cen.es 1963. Number of farms
and,area are understated since holdings smaller than 0.1 ha were
excluded from the Census.


ANNEX 1
Page 25
Table 6: AREA OF FARM AGRICULTURE BY TENURE IN DIFFERENT
PROVINCES, 1963
Fully        Partly       Fully Not
Province                       Owned        Owned          Owned         Total
West Java                        898          518             82         1,498
Central Java                   1,059          705            57          1,821
East Java                      1,056          960            104         2,120
S.T. Jogjakarta                   99           92              2           193
S.C.T. Jakarta                     12           3             0             15
South Sumatra                  1,544          116             48        1%708
Jambi                            256           20             10           286
Riau                             415           64             36           515
West Sumatra                     200           68              9           277
North Sumatra                     647         140             68           855
S.T. Aceh                         183          67             17           267
West Kalimantan                   644          50             14           708
Central Kalimantan               368           19              2           389
South Kalimantan                  166          41              9           216
East Kalimantan                    71          27              7            105
North/Central Sulawesi            386          73             12           471
South/Southeast Sulawesi         350          125            21            496
Bali                              152          73             26           251,
West Nusa Tenggara                181          76              9           266
East Nusa Tenggara               403           19              5           427
INDONESIA            9835540                                 12884
Source: Statistical Pocketbook of Indonesia, 1971, Chapter VVI.1, Table 8,
page 136, based on Agricultural Census 1963. Total area is under-
stated since holdings smaller than 0.1 ha were e7cluded from the
Census.


ANNEX 1
Page 26
Table 7:   PLA4TED AREAS OF ESTATE CROPS, 1970
Gornment
Estates            --Private      atates-------
Crop                (PNP's)            Local Owned    Foreign Owned        Total
Rubber              223,574              164,766        117,964          506,304
Oil Palm             86,640                 1,692        44,903          133,235
Tea                  39,886                16,731         7,743           64,360
Coffee               20,414                19,843         3,522           43,779
Coconut               5,928                9,121          1,400           16,449
Cacao                 5,721                   737           495            6,953
Cinchona     .        1,972                   341           199            2,512
Gutta Percha          1,304                   -              -             1,304
Nutmeg                  ,991                   21            -             2,0.12
Sisal                 12:008                                 -             2,008
Manila Hemp                                   253            -               253
Kapok                -2,589                 5,215            -             7,804
Sugarcane                                   7,841            -             7,841
Tobacco                                       623            -               623
Cloves                    -777                               -               777
Tapioca                                       450            -               450
Cinnamon                 -                    151            -               151
Betelnut                 -                   618             -               618
Total          39Z,027              229,180        176,226         7    433
Source: Directorate C-eneral of Estates.


ANNEX 1
Page 27
Table 8: LEGEND: SOIL MAP OF INDONESIA
legend No. FAO World soil Resources Report               USDA Soil Classifica-
No. 33 Soil Classification                    tion Equivalent
1      ( 5. Lithosols and Rendzinas                   Lithosols
(12. Lithosols, Ferralsols and Red-Yellow      Lithosols and Orthic
Podzolic Soils                            Ferralsols
2      (56. Andosols (Humid)                          Ochric Andosols
(59. Andosols and Ferrasols                    Ochric Andosols
3      (16. Red-Brown Mediterranean Soils and
Lithosols                                 Orthic Luvisols
(18. Red-Yellow Podzolic Scils and
Lithosols                                 Orthic Acrisols
(40. Red-Brown Mediterranean Soils             Chromic Luvisols
(61. Red-Yellow Podzolic Soils                 Orthic Acrisols
(62. Red-Yellow Ferralsols and Red-Yellow
Podzolic Soils                            Orthic Ferralsols
(63. Ferruginous Tropical Soils                Ferric Luvisols/Ferric
Acrisols
(66. Dark Red Ferralsols                       Rhodic Ferralsols
4      (73. Regosols (Coastal Sands)                  Eutric Regosols
(74. Regosols (Volcanic Ash)                   Eutric RegosoZs
(75. Regosols and Vertisols                    Eutric Regosols
(76. Regosols and Rendzinas                    Eutric Regosols
5      (55. Vertisols                                 Pellic Vertisols
(69. Low Humic Gley Soils and Grey Hydromor-
phic Soils                                Mollic Gleysols or
Plinthic Gleysols or
Gleyic Acrisols
6      (77. Alluvial Soils and Low Hunic Gley
Soils                                     Eutric Fluvisols
(78. Alluvial Soils and Saline Soils           Eutric Fluvisols
(79. Acid Sulphate Soils                       Thionic Fluvisols
7      (27. Organic Soils                             Histosols
(31. Podsols and Organic Soils                 Orthic Podsols
Source: Soil Map of South East Asia, First Draft March 1964, by FAO/UNESCO
Soil Map of the World Project.


ANNEX 2
Page 1
INDONESIA
AGRICULTURAL SECTOR SURVEY
WATER USE AND MANAGEMENT
A. Introduction
1.        The control and use of water through irrigation has a long history
in Indonesia. Irrigation systems cover a high proportion of the land devoted
to agriculture, especially in the more intensively developed islands of Java,
Madura and Bali, where rice culture dependent on adequate water supplies is
particularly important to the economy.
2.        At the beginning of the first plan, the irrigation network had
undergone serious deterioration as a result of several decades of neglect.
Rehabilitation, improvements and additions to the existing systems was
uregently needed to increase the productivity of the land and to keep pace
with the food consumption requirements of a rapidly expanding population.
While the most urgent rehabilitation work has been undertaken, there is
still considerable scope for further extensions and improvements.
3.        The effective planning and design of these extensions and improve-
ments will require much more knowledge of the water resource potentials than
currently exists. A major effort is needed to collect and analyze the re-
quired data, and to apply them to specific developments. The need for more
and better trained manpower to carry out surveys, and to design, construct,
maintain and manage irrigation schemes is particularly acute at present.
Steps must be taken to improve the quality of responsible institutes and to
enable them to train adequate numbers of skilled engineers and other relevant
professionals and assistant staffs.
4.        Closer integration of t1he main institutions responsible for water
and agriculture are required at ali levels of government. This would improve
their efficiency and make them more responsive to national priorities as well
as individual needs of farmers.
5.        These and other issues are examined in detail below, and recommenda-
tions are made for strategies to be followed in Java and in the Outer
Islands.
6.        The principal elements of the strategy are as follows:
(a)  Complete the large blocks of rehabilitation as presently
planned ard then proceed to surface water storage schemes,
where economically feasible in Java to augment dry season
water supply.


ANNEX 2
Page 2
(b)  Ensure that adequate drainage facilities are included
in current rehabilitation schemes.
(c)  Examine the possibility of irrigation projects in
the outer islands within the framework of regional develop-
ment objectives, but do not proceed with tidal irriga-
tion systems without careful evaluation of soils.
(d)  Review theigroundwater situation fully after the Madiun-
Upper Solo investigation is complete.
(e)  Examine the means of financing the small scattered
systems still needing rehabilitation that can be com-
pleted by Indonesian authorities alone possibly in con-
nection with the Kabupaten (INPRES) program.
(f)  Encourage a;more intensive program of re-afforestation
in watershed areas.
(g)  Find means of upgrading all training institutions deal-
ing with agriculture and irrigation engineering, both
in quality and output.
(h)  Encourage closer integration and coordination of all
water-oriented activities and agricultural and new land
development activities at all stages beginning with the
early planning.
(i)  Encourage the completion and improvement of on-farm
development using the Kabupaten program.
7.        The above recommendations will necessitate a continuing high level
of capital investment through Repelita II, the second 5-year plan.   Final
figures are not yet available as the Development Budget is now being prepared.
However, indications are the 5-year total of new projects to be initiated
will amount to at least $250 million for rehabilitation and extension of
irrigation, dry season water supply, and other projects to improve drainage,
reduce flooding and in other ways improve irrigation. Actual disbursements
for Development during the 5-year period would reflect continuation of
projects started in Repelita I and completion of some Repelita II projects
after the end of the second 5-year period.
8.        In addition, an annual expenditure of at least $18 million will
be needed to properly operate and adequately maintain irrigation systems
and projects throughout the country. This amount is many times greater than
the funds in the Current Budget used for this purpose. Because of the
importance to increased .agricultural production and to developmeng goals,
operation and maintenance should receive the highest priority and first call
on Government funds and technical energies.


ANNEX 2
Page 3
B. The Present Situation
Background
9.        Irrigated rice cultivation is a long practiced and well understood
art in Indonesia. The small-scale subak (district) irrigation systems of
Bali date back to the 11th Century. Modern canal or gravity irrigation began
in the middle of the 18th Century, during the Dutch period with construction
of the Oosterslokkan or East Canal, east of Djakarta in the western part of
the present Djatiluhur area. The canal was dug by estate owners, but within
a year disputes over water distribution led the Government to take over its
operation and maintenance. Over the next 175,years, many large-scale, run-
of-the-river canal irrigation systems were built to serve millions of hectares,
including both rice fields and sugarcane plantations.
10.       The facilities are of three types: the so-called technical and
semitechnical systems constructed by the irrigation authorities, and non-
technical systems. Technical irrigation is supplied from a weir with
full water measurement and control facilities built into the system down to
but not including the tertiary distribution system. Semitechnical irriga-
tion does not have such water control and measurement facilities. The Govern-
ment ow-1s, operates and maintains the technical and semitechnical systems.
Most of these systems are large-scale gravity systems which depend directly
on river flow. Such systems-serve much of the northern plains of Java.
11.       Non-technical or village irrigation systems, are usually owned,
operated and maintained by villagers. They generally serve less than 500
ha and are often located in the upper tributary areas; some non-technical
irrigation works also exist in low areas, and are commonly called wild
irrigation, because of the relatively lesser degree of water control employed.
Little systematic information and data are available on such systems, though
they are usually fairly well maintained and effectively operated. There is
a governmental restriction that non-technical systems must not interfere with
the technical and semitechnical systems downstream.
12.       By 1937, the irrigated rice area in Java and Madura amounted to
1.25 million ha of technical, 900,000 ha of semitechnical, and 700,000 ha of
non-technical irrigation. Several projects were also completed on the other
islands, notably in southern Sumatra and Sulawesi. These systems were generally
constructed by the Central Government and operated and maintained by the
provincial governments.
13.       A general neglect of the systems began during World War II, and
continued after independence. Average expenditures for maintenance in 1967
were only 2.7% of their 1942 level, in real terms, as budget increases failed
to keep pace with inflation. Water control facilities (barrages, weirs,
checks, etc.) went unrepaired; canals filled with silt and banks caved in
resulting in decreased capacity; water losses increased; and operational staff
declined in numbers, effectiveness and morale. At the same time, massive
deforestation in water-shed areas altered the run-off patterns of the streams


ANNEX 2
Page 4
and thereby increased the problems of maintenance and operation for downstream
systems. As the water supply and government authority decreased, local
institutions for efficient water delivery and equitaL.e distribution also
broke down,
14.       Java has more irrigated area than any other island, and a relative-
ly higher proportion of its rice area is under irrigation. Large-scale,
government-owned technical and semitechnical irrigation is relatively,more
important on Java, compared to the other islands where non-technical irriga-
tion predominates. Java has over three-quarters of the technical and semi-
technical irrigation but only about half,of the non-technical irrigation.
Rainfed and swampland tidal rice account for less than 20% of Java's area
under rice. For thq other islands, swamp/tidal rice accounts for over 40%
of their total rice area. Table 1 compares some of the main rice-producing
islands in terms of irrigated and rainfed rice.
Table 1: RICELAND AREA BY TYPE OF
IRRIGATION AND REGION, 1970
('000 ha)
Under Irrigation             Tidal/             Total
Semi-    Non-technical or Swamp             Riceland
Region          Technical Technical Village     Total Land     Rainfed     Area
Java               1,233        698       755   2,686    94        623     3,403
Bali                  0          33        64      97     0          0        97
Sumatra             110         170       358     638   175        336     1,149
Kalimantan             2         21       125     148    87         96       331
Sulawesi            136          75       130     341     3        181       526
Nusa Tenggara)
and Maluku  )       63          20        74     157    38        113       307
Total Indonesia    1,544      1,017     1,506   4,067   397      1,349     5,813
15.       Sugarcane is the other main crop receiving irrigation and East
Java has about 60,0003ha under technical irrigation. Dry season crops such
as soybeans may also keceive limited supplemental irrigation. Data on irri-
gated area for these crops are not available, but the indications are that
dry season intensity -- fully irrigated area as a percent of net irrigable
area -- is about 25%. 1/
16.       Tidal and s*ampland areas often support wet rice cultivation, where
the water supply is only controllable within narrow limits. In the swamps,
rice is often planteditowards the end of the monsoon when the watertable
recedes, and the subsequent growth of the crop is hcavily dependent on the
rainfall. In the tidal areas, water supply may come from rainfall, or from
tidal flow if the land is suitably situated, and drainage or protective
1/   Dry season intensity is reportedly somewhat greater in the higher village
irrigation systems compared to the larger sustems downstream because the
seasonality of river flows in the higher areas is less extreme.


ANNEX 2
Page 5
devices to prevent excessive irrigation are both important factors affecting
growth and yield. Yields in these types of land are somewhat uncertain,
though probably not so much as for rainfed rice.
17.       Rehabilitation of the irrigation systems was given high priority
in the First Five-Year Development Plan, with almost 60% of the agricultural
development budget allocated to irrigation. On Java, an estimated 1.9 mil-
lion ha out of 2.9 million ha was in need of rehabilitation. IDA has pro-
vided credits to assist in rehabilitating 820,000 ha. In addition, other
areas have been or are under rehabilitation by the Government, with or without
external assistance.
18.       The rehabilitation projects are essentially,deferred maintenance
projects of single crop schemes and should provide relatively quick and high
returns at low cost. However, rehabilitation will not greatly increase the
dry season irrigated area, which amounts to only about 25% of the total
irrigated area owing to the limited dry season river flow in the streams
which supply these irrigation systems. The extent to which the expected
yield increases are attained will, however, depend largely on the effective-
ness of water supply and management at the individual grower level. Although
IDA has received assurances that tertiaries will be improved, progress has
been slow.
Administration of Irrigation Development
19.       Administration for irrigation development is now split among dif-
ferent branches and levels of government. The Central and Provincial Public
Works agencies construct, operate, and maintain irrigation systems down to
the level of the tertiary canals. At the tertiary level and below, develop-
ment depends on the initiative of the village administration assisted by
irrigation advisory committees and by agencies of the Ministries of Agricul-
ture and of Home Affairs.
20.       At the national level, general responsibility for irrigation dev-
elopment rests with the Directorate General of Water Resource Development
(DGWRD) in the Ministry of Public Works and Electric Power. Under the DGWRD,
there are Directorates of Irrigation, Rivers and Swamps, Planning and Program-
ming, Logistics (supply and procurement), and the Institute of Hydraulic
Engineering (research).
21.       The Directorate of Irrigation (DI) deals with construction and
rehabilitation of the irrigation systems which are centrally financed, larger
than 500 ha, and not in the upland areas -- principally the large-scale
canal irrigation systems. Responsibilities include reconnaissance surveys
of project proposals, design and planning, and overall supervision. Projects
are generally executed by provincial services; the DI directs projects of
national importance and assists if difficulties are encountered. Large-scale
undertakings of national importance, usually implemented with foreign assis-
tance, are referred to as Special Projects. A special organization, Projek
Irrigasi IDA (PROSIDA) was created within the Ministry of Public Works to
execute IDA-financed rehabilitation projects.


ANNEX 2
Page 6.
22.       The Directorate of Rivers and Swamps (DRS) has projects for flood
control and swamp and tidal area reclamation. In addition, DRS has primary
responsibility for River Basin Development Projects being planned for the
Tjitanduj and Solo Rivers. For project execution, the DRS also depends
heavily on the Gadjah Mada Technical Faculty for Kalimantan and on the Insti-
tute of Technology at Bandung for Sumatra.
23.       The Directorate of Planning and Programming (DPP) is concerned with
project programming, including priority rankings and the agricultural and
economic studies for project evaluation. Until recently, project investiga-
tion and related studies were.rarely carried out, the emphasis being on con-
struction. The DPP still has a very limited staff. While the total budget
for irrigation totals over Rp 20 billion, the DPP has only three men avai-
able for project review and agricultural studies.
Provincial Services
24.       After completion, a project and its operation and maintenance
generally becomes the responsibility of the provincial Irrigation Services
(IS). The principal exception to this is the Djatiluhur project in West
Java -- the Djatiluhur Dam was completed in 1967 -- which is operated and
maintained by the semiautonomous Otorita Djatiluhur (Djatiluhur Authority)
under the Minister of State for Finance, Economics and Industry. In general
the IS executes and operates projects for irrigation and drainage, hydraulic
structures such as sea dikes, river training and improvements, flood control,
land reclamation and water conservation, and natural disaster warning. The
IS also advises agricultural programs like BIMAS on irrigation matters as
well as playing an increasingly important role in the rural works (INPRES)
program.
25.       In most provinces, the IS is a division of the provincial Public
Works Department (PWD). The exception is the East Java Irrigation Service,
which has its own budget and reports directly to the provincial governor.
Its relative independence, compared to other provinces, allows the East Java
IS to work more closely to the field. This independence is probably a reason
for the relatively better maintenance of the irrigation systems in East Java.
26.       The East Java IS is also separate from provincial public works at
lower levels. East Java has 10 Irrigation Districts, the boundaries of which
follow watershed boundaries. Where necessary, the Irrigation District bound-
aries differ from those of road and highway districts and administrative
units; in other provinces, all the PWD divisions reportedly use the same
districts for irrigation and for road and highways. If Irrigation Sections
and Subsections in East Java also follow watershed boundaries where feasible.
1/   The Dutch formed several irriaation districts along watershed boundaries,
beginning with the Serayu River in 1888, the Brantas River in 182,
and the Serang and Tuntant Rivers in about 19D0. Why this very useful
concept apparently survived only in East Java is not certain.


ANNEX 2
Page 7
Local Irrigation Services
27.       The provincial Irrigation Services and the DGWRD have responsibility
only for primary and secondary canals, though they construct the turnout from
the secondary and up to 50 meters of the tertiary canals which serve indivi-
dual villages or groups of farmers. Local irrigation development depends
heavily on village initiative and comes under the Rural Irrigation Services
(RIS) in the Directorate General of Rural Community Development of the Minis-
try of Home Affairs and the Water Use and Management Service (WUMS) of the
Ministry of Agriculture.
28.       Local irrigation development includes the village-level tertiary
and quaternary distribution systems for the large government-owned systems,
and also the small village-owned systems (farmers may legally take water
only from tertiary or quaternary canals). Kabupatens generally have a pro-
vincial government officer for rural community development, whose duties
include rural irrigation development. The Ministry of Home Affairs' Rural
Irrigation Service itself has regional offices -- with a total of only three
agricultural engineers -- which receive and get project proposals made by
village chiefs.
29.       The Water Use and Management Service of the Directorate General of
Agriculture is primarily an extension unit for local-level irrigation. Its
duties include establishment of local irrigation associations, improvement
of on-farm water management, irrigation courses, pilot schemes and demonstra-
tions in villages, and research on water use. It also provides technical
advice for constructing and improving local irrigation systems. These duties
are assigned to the agricultural extension services at the province and dis-
trict level, but extension coverage is very sparse: for Java, there is only
one extension worker for about 8,000 farmers, and for all Indonesia only one
to 15,000. Irrigation Advisory Committees are being reestablished under IDA
credits in rehabilitation areas.
30.       In summary, Public Works and the Provincial Irrigation Services
construct, operate and maintain large-scale systems down to the tertiary
canal level, while Agriculture and Home Affairs along with the village admin-
istration, have responsibility for irrigation development at the village-
level. The division of responsibility is made according to type.of project
(technical irrigation or non-technical irrigation) rather than delivery of
water so that farmers can use it most effectively. No single agency has
the responsibility and the authority to make irrigation work efficiently
at all levels.
Manpower Training and Research
31.       The Directorate General of Water Resources Development has 139
active projects on hand: 124 under construction, 10 in the planning and
design stage, and five in preliminary stages. These projects range widely
in location and complexity. In addition, operation and maintenance of
existing systems requires many engineers provided by provinces. And a fur-
ther contingent of Indonesian engineers are involved with technical assistance


ANNEX 2
Page 8
and foreign consultant activities in irrigation. Furthermore, the supply
of new engineers must be .divided among construction and maintenance of roads,
bridges and public buildings as well as irrigation, and the private sector.
32,       Indonesia produces each ye   only about 35 or 40 Masters and 100-
150 Bachelors in Civil Engineering.     Only a few of the Masters and about
half of the Bachelors are specifically trained to work on irrigation. The
Water Resources Center at Bandung is a major source of engineers specially
trained in water resources. However, many projects are very short of
engineers for normal operation and maintenance.
33.       The Institute of Technology at Bandung (ITB) and Gadjah Mada
University in Jogjakata together supply most of the masters-level civil
engineers, with a few added by the Institute of Technology at Surabaja and
the Universities of Semarang, Djakarta, Massar and Malang. The Public Works
Technical Academies in Bandung and Jogjakarta produce most of the bachelor-
level engineers. In-service training is not being ignored. The bachelors
course is designed in part to upgrade existing personnel. Also, the Bandung
Technical Academy and a Training Institute in Surabaya give short refresher
courses to canal operators and lower-grade officers. Their refresher programs
started in 1969 and 1970 respectively, with IDA assistance.
34.       The ITB offers the greater opportunity for the Masters student to
become acquainted with irrigated agriculture: three one-semester courses
on introduction to irrigation, irrigation structures, and agricultural
engineering. It appears from course descriptions that some aspects of modern
theory -- such as evapotranspiration in irrigation requirements -- are not
adequately covered. However, the interested student work ahead on his own,
with faculty guidance, at the Institute's Water Resources Center.
35.       Both Gadjah Mada and ITB do project investigation and planning on
a contract basis for the DGWRD. The ITB's Water Resources Center does most
of this work. The research and site investigation is done primarily by eight
or 10 senior-level students directed by a very limited teaching staff. Gad-
jah Nada also has a Water Resources Department in its geography faculty,
though the program has had many problems.
36.       The Institute of Hydraulic Engineering, 2   also at Bandung, does
research and data collection closely related to irrigation. Present activi-
ties include modernization and coordin&,tion of data collection on river dis-
charge, water balance studies and research on irrigation requirements using
lysimeters and pan evapotimeters, a groundwater and sediment movement study
using radioactive tracers, and research and experiments on land use and ero-
sion. The Institute is currently receiving technical assistrance from an
FAO team. The Institute also benefits from associations with the DGWRD's
Design Unit which is located at Bandung.
1/   The Masters of Civil Engineering is a full, five-year college degree
including training in basic project planning, design and supervision.
The Bachelors is a three-year technical course for training and upgrading
lower level technicians, including draftsmen, surveyors, and field supervisors.
2/   Lembaga Penjelidikan Masalah Air, or LPMA.


ANNEX 2
Page 9
37.       The Institute has collected its own records since 1958, and possess-
es older records inherited from the Dutch. Most of the river gauging stations
are on Java or Sumatra. A major problem with the historical data is that
rating curves for the rivers were generally recalculated only once a year,
whereas the high sediment load of these rivers causes constant change in the
river bed configuration. For the purpose of designing systems based on aver-
age annual flows, as done by the Dutch, this measurement of streamflow might
have been sufficiently accurate. Flow rates during the year, however, may
be off by ±15% or more at any given time. Thus the available data is some-
what inadequate for modern methods of irrigation planning and system design.
A major purpose of an FAQ team is to help modernize the methodology of stream
flow data collection.
38.       Other relevant research agencies include the Geological Survey
Directorate in Bandung for groundwater, the Meteorological Service in Djakarta,
and the Soil and Forestry Research Institutes in Bogor. The Institute of
Meteorology and Geophysics in the Ministry of Transport collects rainfall
records from 4,339 rain stations scattered over Indonesia. Many of the
stations date back to 1879. Many collect only rainfall, and few if any
collect data on pan evaporation, which are very useful for irrigation plan-
ning. The latest isohyet map dates from 1929. The Soil Research Institute
has survey and laboratory analysis facilities which could be usefully applied
to the task of site selection in many Development Schemes and to soil improve-
ment problems being experienced in not a few of the existing schemes, espe-
cially in the Outer Islands.
39.       The Forest Research Institute has done some research on the rela-
tionship between land use and erodability in certain areas of Java.   This is
a useful data for irrigation planning with regard to erosion hazards.
C. Irrigation and Intensity of Land Use
40.       A major constraint on increasing the intensity of land use and
yields is the shortage of water in the dry season. Existing irrigation sys-
tems generally irrigate only about 25% of their service area in the dry
season because of insufficient river flows. Rehabilitation of these systems
is expected to raise their dry season intensity slightly.   For Java, the IDA-
financed projects are expected to increase dry season area by perhaps 28,000
ha or so, amounting to about 5% of the project area.. Rehabilitation will
also raise the wet season irrigated area on Java by 19,300 ha, bringing the
total increase to about 9% of the project area. Dry season cropping intensity
is expected to be increased substantially in only a few areas: the largest
single increase is expected to occur in Rentang, where irrigation intensity
could double, from 15 to 30%. For the project areas on Java as a whole, the
dry season intensity after project completion should be 38%.
41.       Better utilization of existing supplies through changes in cropping
patterns, canal systems layout and operation, technology of rice culture,
etc., may permit some further extension to the dry season irrigated area.    In


ANNEX 2
Page 10
addition, improvements to watersheds through improved erosion control may
enable them to retain a little more water for the dry season. But the major
opportunities can only come through increasing the surface water storage for
existing schemes, with some possible augmentation from groundwater sources in
a few cases.
Additional Dry Season Water Supplies
42.       Present run-of-the-river irrigation systems have a pronounced
seasonality in water supply. The extent of the difference between maximum
wet and minimum dry season flows for a few major rivers can be seen in
Table 2. If storage reservoirs proved practicable, the irrigation systems
already developed within the catchments,of these rivers could utilize much
more of the total water available.
Table 2: MAXIMUM AND MINIMUM FLOWS, JAVA RIVERS
(m3/sec)'
River                      Highest                   Lowest
Ciujung                          900                      20
Citarum                        1,100                      28
Cimanuk                          710                      17
Pemali                           680                       7
Comal                            570                      17
Tuntang                          710                      17
Serang                           510                      17
Solo                           2,000                      15
Brantas                        1,100                      74
Pekalen                          320                       5
Sampean                          480                      11
So!rce: "Irrigation on Java", Proceedings of the American Society
of Civil Engineers, 1904, p. 39.
43.       Indonesian experience with large-scale reservoirs is limited to
the Jatiluhur system where rehabilitation is going forward under an IDA
credit signed in 1970. The Citarum River where the dam is located fits
the Indonesian pattern, with a discharge of over 4,000 million m3 from
November to April, and only 960 million from May to October. Reservoir
capacity is 2 billion m3 of effective storage capacity (3 billion m3 gross).
Since 1967, when the dam was completed, the dry season cropped area has in-
creased by about 125,000 ha. In 1971, the irrigated area was close to
190,000 ha in both seasons -- dry season irrigation in the Jatiluhur area
now accounts for almost 25% of Indonesia's total dry season irrigated area.
The reservoir supplies two technical irrigation systems, the oldest of which
was constructed in 1880, Before the dam, much of the presently irrigated
area was under small semitechnical systems and swampland cultivation. Besides
irrigation, the other major benefits from the dam include hydropower (five
25 NW units), flood control, reduction of sediment load on the Citarum
river downstream from the dam, and municipal water supply for Jakarta.


ANNEX 2
Page 11
44.       In addition to Jatiluhur, Indonesia has a total of about 30 com-
pleted reservoirs for irrigation. Seven or eight have capacities between
10 and 100 million m3; Pemali-Comal in Rehab III includes five reservoirs:
the largest two are 90 and 69 million m3. Most reservoirs are in the range
from 1.2 to 100 million m3 and are used only for irrigation. Many are report-
edly in great need of repair. A rough indication of the limited dry season
irrigation potential of these small reservoirs can be seen by noting that
(a) the water requirement for a dry season rice crop may exceed 10,000 m3/ha;
(b) delivery and field water use efficiencies together are probably no more
than 50%; and (c) only part, often as little as 70% of a reservoir's tapacity
is usable storage.
45.       Six or eight reservoirs are-under construction, and about 60 other
reservoir sites are under investigation.   The Karangkates Dam, the largest
under construction in the First Repelita was completed in 1972, is part of
the Brantas Multipurpose Project in East Java. It will add about 20 m3/sec
of flow to the Brantas River during the dry season, enough to irrigate an
additional 19,000 ha downstream. The major purpose of Karangkates, however,
is the generation of hydro-power, reportedly with peaking characteristics
that will most likely result in highly variable irrigation supply. Construc-
tion of the Sempor Dam was scheduled to begin in 1972. It will have about
46.5 million m3 if effective storage,and provide water to double crop over
10,000 ha. IDA-financed studies of reservoir development on the Cimanuk
River or tributaries have begun. The Cimanuk Basin reservoir could en&ole
increased dry season intensity in the Rentang irrigation system (91,000 ha)
as well as providing flood protection to Indramaju and perhaps hydro-power.
46.       While reservoir storage in Indonesia can provide substantial bene-
fits, developments of this type of system face a number of problems. Good
reservoir sites are relatively few in number due to the general characteris-
tics of the Indonesian landform and geological structure, and the resultant
regularity of the river profiles. Good dam sites are also limited for
similar reasons, and construction costs can be inflated by the need to allow
for earthquake hazards in certain areas. Initial construction costs on an
irrigated hectare basis may thus be high, particularly for single-purpose
irrigation projects. Sufficient data are not available to estimate accurate-
ly reservoir costs, which vary greatly from site to site. An additional
consideration, especially in Java, where the population density is high, is
that most potential reservoir sites would flood presently cultivated land
and displace many people, adding an important economic and social cost.
Groundwater Development
47.       Groundwater may afford some potential in the dry season, though
specific data are as yet limited.   In general, the best aquifers are likely
to be some lava*formations in the vicinity of volcanoes, or limestones. An
important example of subterranean drainage of this type is found in the
southern mountain region of Central Java. Alluvial plains along coasts,
rivers and lakes also generally include water bearing formations, though
little is known of their yield characteristics. Quality in some areas may
be poor, especially owing to excessive salinity. Artesian conditions,


ANNEX 2
Page 12
sometimes with a positive head -- no pumping required -- have made it rela-
tively easy to tap for domestic supplies in a few places. A groundwater
investigation financed by IDA in the Madiun-Upper Solo areas of East Java
is underway which could lead to pilot projects and feasibility studies. A
groundwater study for the Kederi-.Nganjuke River area is in progress with
British technical assistance. There are also studies in connection with
municipal water supply systems which should also provide some further data on
groundwater resources.
48.       The Government has very few active programs for exploiting ground-
water resources. The Engineering Geology and Hydrogeology Division of the
Geological Survey Directorate (in Bandung) under the Ministry of Mines has
some responsibility for groundwater investigations. The Division has a few
hydrogeological maps of Java, Bali, Madura, Sumba and Lombok, but these are
not generally supported by test drillings, records of which are limited to
about 1,000 wells scattered over Java, about 600 of which were drilled before
World War II. These records are not sufficient to determine potential yields
or even the overall hydraulic characteristics of the potential aquifers in
terms of transmissibility, storage capability, and recharge. 1/   DGWRD has
recently uitablished a groundwater development project under the Directorate
of Planning and Programming.
49.       Groundwater development certainly merits consideration and investi-
gation as a source of dry season water supply. The Geological Survey, how-
ever, has only a small staff of five or 10 masters-level engineers and about
15 bachelors-level engineers for groundwater survey and investigation, includ-
ing boring test wells. It also has a total of about 13 drilling rigs, only
three of which are relatively modern (1958) and many of which need repair
and spare parts. Total drilling capacity is roughly 4,000 meters per year,
assuming adequate spare parts and repair arrangements. About 15 private
firms also have drilling equipment, most of which is old. To of the largest
can drill a total of about 10,000 meters per year.
Watershed Management
50.       Rivers on Java begin in the central chain of mountains where the
high rainfall constitutes an important part of the water supply feeding
these rivers. The condition of the watersheds is therefore very important
to the downstream irrigation systems since, in the absence of storage facil-
ities they generally depend directly on river flows. Forest originally
protected most of the watersheds against excessive erosion and runoff. With
the increasing pressure of population on available land, forests gradually
disappeared and agriculture is now practiced extensively, especially in
the low and middle level mountain slopes.
1/   According to the Geological Survey Directorate, the best and most com-
plete groundwater report available is a mimeographed, two-volume report
by the U.S. Army, prepared during World War II, which compiln' a-d
analyzed all the data available in that time.


ANEX 2
Page 13
51.       The change in land use has increased erosion and runoff rates
producing a higher silt load in the rivers and altering their flow charac-
teristics. The watershed of the Ngasinan River, a tributary of the Brantas
River in East Java, for example, has suffered 60-70% deforestation in some
areas since World War II. According to the East Java Irrigation Service,
its silt load has increased tenfold and the difference between dry and wet
season river flows has incr&ased substantially.
52.       Downstream, the silt settles in the river beds, raising their
height and increasing the danger of floods. It enters the irrigation sys-
tems, increasing the costs of maintenance and dredging. It necessitates the
construction of expensive silt control facilities in the irrigation systems.
It settles in the paddy fields, raising their height and increasing the
difficulty of providing an adequate water supply from existing canals. In
some areas, these deposits amount to 5-10 mm annually. Fertility renewal,
the major benefit from the silt, was undoubtedly of great important before
the days of chemical fertilizers. This advantage is no longer important,
however,and must now be balanced against the costly, and in some areas
irreversible, damage caused by the increased silt loads.
53.       The more rapid runoff in the wet season increases flooding.    It
reduces water available in the dry season when supplies are already meagre.
The East Java Irrigation Service estimates that before the War it could
irrigate 50% of the canal service area in the dry season, compared to only
30% at present, largely because of the decrease in dry season river flows. 1/
54.       The DGWRD and the Provincial Irrigation Services have an obvious
interest in improved watersheds, but little or no direct responsibility for
their management and improvement. The Department of Forestry in the Ministry
of Agriculture has the main responsibility for reforestation over all of
Indonesia, but its interest is not directed specifically at watershed manage-
ment. According to the Forestry Department, a total of 8 million ha (1.8
million ha on Java) of public forest need reforestation, in addition to con-
siderable amounts of private forest land. The Department's total budget is
Rp 1.3 billion, with Rp 300 million for reforestation of public lands and
Rp 200 million for private lands. The program for reforesting private lands,
the so called "greening movement", relies primarily on extension work and
local initiative. Each farmer receives Rp 1,000/ha for seeds and extension,
to plant cover crops and seedlings. With present budgets and programs, which
permit an annual reforested maximum of approximately 40,000 ha of public land
and 90,000 ha of private land, and a planned commercial cutting target of
double the present level, the net increase in deforested area will likely
increase. As the commercially cut area grows, it will probably absorb an
increasing share of that budget.
1/   Increased area under irrigated paddy upstream and in the uplands could
conceivably reduce available water supplies for the canal system, but
records of cropped area show no such increase.


ANNEX 2
Page 14
55.       Improved watershed control could bring substantial benefits for
future irrigation development. At present, no detailed studies are available
on the effects of deforestation in the watershed areas, the consequences of
this for existing irrigation systems, or of possible solutions. The GOI has
recently proposed a project to be financed by UNDP, titled Upper Solo Watershed
Management and Upland Development. The Solo River is the largest on Java, and
its watershed area has a generally high population density. The project
should provide useful information about watershed rehabilitation, although
it will apparently not consider the effect of watershed improvement on down-
stream irrigation systems.
56.       Large-scale reforestation may not be possible in every area where
excessive erosion and runoff occur. However, changes in agricultural tech-
niques and crop patterns can reduce erosion and runoff significantly and
benefit agriculture in the watershed area as well as in the areas dce'4nstream.
D. Systems Management
57.       The current rehabilitation program, which is intended primarily
to restore the irrigation systems to their design capacities with some im-
provements, will be completed within a few years. Rough projections of
production and yield increases, likely to ensue from this program alone, as
contained in appraisals of the Rehab I-IV projects, are given in Table 3.
While rehabilitation is expected to make only modest improvements in yield
levels -- some 0.3-0.5 t/ha, better results ranging up to 2 t/ha or more are
expected with the use of BIMAS inputs such as high yielding varieties and
fertilizers. While many factors are involved, the provision of better water
supply through rehabilitation is an essential precondition for maximizing
the returns obtainable through BIMAS.
Table 3: ESTIMATED YIELDS BEFORE AND AFTER REHABILITATION
(For IDA Projects)
Before   After   Increase    With BIMAS   Increase
t/ha    t/ha      t/ha         t/ha        t/ha
Rehab 1 /1                  2.7      3.0       0.3         4.0          1.3
Rehab II                    3.0      3.5       0.5         5.0          2.0
Rehab III                   2.5      3.0       0.5          4.8         2.3
Rehab IV /2                 3.3       -         -           4.9         1.6
/1   Yields and production shown in the appraisal for Rehab I are given in
milled rice. They are converted to dry stalk paddy yields at a 50%
conversion rate.
/2   Rehab IV already includes BIMAS (34%), with a large projected increase
(to 60%). Rehab IV yields are thus not comparable to the other project
areas.
Source: IBRD Project Appraisals for Rehab I, II, III, and IV.


ANNEX 2
Page 15
58.       Projected production increases from these IDA projects total
512,000 tons annually, excluding the effect of BIMAS and full realization
of the expected increases in production should occur in 1976 when Rehab IV
will be completed. Continling BIMAS coverage, such as is projected for
Rehab IV, may take up to five years for completion, or up to 1981, and will
add a further substantial production increment. While the yield and produc-
tion increases from rehabilitation, even with BIMAS, may appear rather modest
in relation to Indonesia's total rice production of about 23 million tons of
dry stalk paddy (1970), it is important to realize that improvements to the
primary and secondary water supply and control system are only the first,
albeit most important, steps towards realizing the full capabilities of a
modern irrigation system. In particular, construction and maintenance of
tertiary and quaternary canals and drains, and the fair distribution and
efficient management of available water supplies depend heavily on village
officials and local initiative.
59.       A revision of the General Water Act of 1936, which is based on
irrigation procedures practiced several decades ago, would also contribute
towards realizing the production potentials of the much improved technology
now available.
60.       Two of the most promising possibilities for modernizing Indonesian
agriculture are the new high yielding rice varieties and crop diversification.
Comparison of the basic water management need of these two possibilities
should help clarify some of the major limitations of the present systems
and indicai:e further improvements which might be introduced.
Water Management and Water Control
61.       High Yielding Rice Varieties. The high yielding varieties now
available require a correspondingly hUgh level of water management and
general cultivation standards for optimum yield attainment. This is only
possible if a much greater degree of finesse is given to the control of
water at all levels of the system, which must be responsive to the changing
requirements for water during the nursery, land preparation, transplanting,
weeding, ripening and harvesting phases of the crop cycle.
62.       The availability of water through the system and from direct pre-
cipitation varies considerably between seasons, with drainage assuming a
greater importance in the wet or main season, while the most economical use
of a scarce water resource is a paramount consideration in the dry or off
season.
63.       The assessment of the relative water requirements for the separate
seasons, and the careful preparation of planting calendars suited to the
main varieties to be grown and to the weather and other environmental features,
requires a full understanding of the many factors which govern the growth of
the plant. Close cooperation between irrigation staff, agricultural staff,
and the cultivators is especially important in achieving this understanding,
which becomes increasingly necessary as the technological requirements of
the crop become more specific.


ANNEX 2
Page 16
64.       Crop Diversification. Water control for diversified crops
which require irrigation must be even more exact, with sufficient flexibility
in the system to permit supply and drainage to individual fields, to accord
with requirements of specific crops. These circumstances will further tax
the capability of the water delivery institutions and their ability to respond
to the needs of the individual farmers.
Water Management at the System Level
65.       The Golongan System.  This method of dividing the land within an
irrigation system into several blocks, each of which is irrigated according
to its own schedule, staggered in relation to the others, is designed to
make the most economical use of the available water within the total system.
Such methods of ensuring an equitable distribution of limited water supply
to all the farmers within a system fell itito disuse as the systems deterio-
rated. As a consequence, the farmers closest to the main canals have the
advantage. It is especially important that the rotation principle is rein-
forced within the rehabilitation systems.
66.       District Irrigation Committees.   These committees, along with
others down to the subdistrict and village levels, also fell into disuse
with the deterioration of the irrigation systems. The rehabilitation
projects provide for their reestablishment. Consideration might be given to
the extension of the authority of these committees to the allocation of water
for sugarcane, to supersede the present system in which the exact location
of land depends on direct bargaining between release and plantation officials.
67.       Flood Control and Drainage.   Flood control and drainage are especial-
ly important in the wet season. In some areas, flooding severely damages the
rice crop. A major contributor to the flood problems is the high silt load
of the rivers. The silt settles in the river bed, reducing river channel
capacity. It encourages changes in the course of rivers. At the river mouth,
the coastline is constantly changing, advancing by as much as 10 m annually
in some places.
68.       Rehabilitation should help reduce flood damage by controlling the
irrigation flow and improving the drainage. But in order to do this adequate-
ly, the drainage system must have adequate capacity to carry excess water
from unexpected heavy rains in the wet season. Further drainage improvements
are necessary in all rehabilitation areas.
69.       Flood control aspects of irrigation systems must take into account
the effect on the total catchment area; for reducing the severity of floods
in one place can worsen the situation in another. This fact points up the
importance of overall watershed planning, the responsibility for which at
present rests with several agencies of the Central and Provincial Governments.
Closer coordination is most desirable, but the clear and unambiguous alloca-
tion of responsibility for flood control and watershed planning on those
authorities best equipped to deal with its several aspects would be even
more valuable.


ANNEX 2
Page 17
Wdtr Management at the Local Level
70.       Water Distribution and Drainage. Local water distribution is
primarily from basin to basin, with upper fields draining into lower fields.
Single tertiaries often serve areas of 400 ha, so the same water may flow
through many fields before reaching the drain. The actions of the farmers
near the tertiaries greatly affect farmers further along the chain of fields.
Farmers closer to the source take relatively more than their share of the.
available water. As distance from the tertiary increases, water control
lessens and effective water management becomes progressively more difficult.
Farmers near the end of the chain also receive the drainage water from all
the fields above. Thus, those farmers suffer the most, both in times of water
shortage and water excess. The Prosida Water Management studies (of Rehab I
project areas) show some evidence that yields decrease with distance from
the tertiary.
71.       Development of quaternary canals and drains would help alleviate
this situation. The Jatiluhur Authority, for example, has a pilot project
plan for new areas for tertiary and quaternary development in 20 ha blocks,
at a cost of about Rp 100,000/ha. Tertiary development in a small part of
Jatiluhur area occurred in the late 1960's as part of the Food for Work
program, using PL 480 wheat. This may be one reason for the relatively high
present yields in that particular area.
72.       Drainage is also an important aspect of local water management. To
avoid damaging crops close to the drains, drainage systems must be adequate
to carry away excess irrigation water and excess rain water in the wet season.
It is likely that concern for the drains is limited to the farmers who are
close to the end of the chain of paddy fields, since their crops are the ones
directly damaged by inadequate drains. An adequate extension effort to ex-
plain the cause and nature of these problems, and to demonstrate and advise
particular solutions or improvements, is necessary.
Land Tenure and Location of Landholdings
73.       Fragmented and small-sized landholdings can greatly complicate local
water management. 1/ It is difficult to efficiently serve many small parcels
of land with water individually. The quantities of water required by each
parcel are relatively small. In addition, as the number of parcels increases,
problems of cooperation and coor6iaation also increase.
Water Charges and Rehabilitation Benefits
74.       The rehabilitation project credit agreements have covenants that
water charges will be made at the completion of work. A Presidential Order
of January 22, 1969, authorized provincial governments to levy water charges,
1/   Fragmentation, however, may reduce short-term risk for the individual
farmer if the present irrigation supply is highly variable from place
to place. With several small plots in different locations, he is more
likely to get a good crop in at least one plot every year.


ANNEX 2
Page 18
but collection has not yet started. Traditionally, charges to farmers have
been in the form of a land tax or IPEDA. In some areas, Ipeda is as high as
Rp 3,000 to 4,000/ha each season, but only a very small part of that goes
for O&M of irrigation systems at present.
75.       A committee has recently been established by decree to find an
equitable way of instituting O&M charges. A decision his now to be made
to increase the land tax or IPEDA to cover the operation and maintenance
charges.
E. Priorities and Programs
A General Proposal for Future Irrigation Development
76.       The past and present emphasis on the larger constructional aspects
of irrigation development on the part of the DGWRD is not surprising, in
view of its position as an agency within the Ministry of Public Works and
Electric Power. This circumstance has enabled the Directorate to build up
a sizeable cadre of engineering and support staff which is by training,
experience and inclination especially well equipped to execute the planning,
design, construction, operation and maintenance of the larger irrigation water
supply structures, which are an impressive feature of the Indonesian develop-
ment scene at the present time.
77.       On the other hand, this emphasis on the major water supply facilities
has overshadowed the equal, if not more important, need for adding to the
skills of the individual farmers, and thus improving the technological
condition of the rice growing art, which is now seen to be in great need
of modernization within Indonesia when compared with conditions elesewhere.
78.       The recent introduction of higher yielding varieties and improved
knowledge about their cultivation requirements has further emphasized the
close interrelationship between the several inputs necessary for optimum
growth of rice, of which water is only one, albeit a most important one.
Interdisciplinary effort, particularly between engineers and agriculturists,
with irrigation given greater emphasis as an agricultural input, is partic-
ularly important, and this could best be obtained if irrigation and agricul-
ture could be more closely integrated at the government level.
79.       Because of the importance of irrigation to agricultural production
and national development objectives, the program of rehabilitation, improve-
ment, and extension of irrigation should be continued. In quantitative
terms key elements of the program outlined would indicate targets for the
second Five-Year Plan of:


ANNEX 2
Page 19
Hectares
Java
Storage                                   150,000
Groundwater                                10,000
Low-lift pumping                           50,000
Improvement and rehabilitation            500,000
Outer Islands
Upgrading upland to sawah                 650,000
Improved irrigation and drainage          150,000
Water Resource Development
80.       Surface Storage Development. Additional surface storage develop-
ment should give increasing attention to medium- and small-scale projects,
particularly those located in the tributary areas. When operated as a unit
on the same river, they may provide benefits in addition to irrigation, such
as flood control and hydropower. Complementary agricultural development
planning could be based on tributary or river basin units, in order to match
planning with the particular agroclimatic conditions in each area.
81.       Consolidation of Irrigation Project Activity. Considering Indo-
nesia's limited resources, especially in engineering manpower, some re-eval-
uation of irrigation project ideas seems opportune. Some investments, such
as in tidal and swamp irrigation schemes in the Outer Islands, are apparently
of questionable success, and are understood to be in fulfillment of promises
made years ago to transmigrant settlers, without the benefit of a careful
appraisal of their costs and benefits. These projects should be reconsidered
against the background of alternative.opportunities for the settlers.
82.       Investigation of Non-technical Irrigation. The possibilities for improv-
ing non-technical irrigation should be investigated, especially in the upland
areas. In addition, since these systems are reportedly well operated and
maintained, they may indicate possible improvements (both physical and in-
stitutional) for irrigation at the crucial village level in the large govern-
ment-operated canal systems. The investigation should include possibilities
for integrated tributary area development, possibly.based on small-scale
reservoirs, groundwater development, and conjunctive use'of ground and surface
waters. The DGRD should have direct responsibility for this investigation,
in cooperation with relevant agencies in Agriculture and Home Affairs. This
should also include rehabilitation of small and scattered technical irrigation
schemes. The use of the Kabupaten Program (INPRES) should be encouraged for
village irrigation and on-farm development.
Groundwater Survey
83.       The DGWRD should iave overall responsibility for.groundwater develop-
ment. Responsibility should include exploration, planning and development in
cooperation with relevant agencies (e.g. Geological Survey and Agriculture).


ANNEX 2
Page 20
Provincial Irrigation Services should develop groundwater units which would
plan and execute groundwater projects at and below the province level.
84.       The groundwater program should continue to conduct studies aimed
at identifying areas of high groundwater potential. As better information
is developed on the availability and cost of groundwater, more realistic
plans can be developed.
Increased Water Control
85.       A program to carry out the physical and institutional changes
necessary for increased water control should be commenced as soon as possible.
Among the requirements for water. control are:
-    the physical and institutional capability to deliver and
remove water according to water needs of the crop.
-    adequate feedback and flexibility to insure that irrigation
supplies match crop water needs as closely as possible; and
-    physical and institutional mechanisms which will permit water
transfers to areas of high marginal benefit when water is in
short supply.
In summary, this calls for good water management at all levels, and partic-
ularly at the lower levels of the government organizational structure.
86.       Pilot projects at the tertiary level -- coordinated with higher
levels in the irrigation system -- could furnish the technical and economic
data necessary for evaluating water control and a chance to investigate
various methods of providing water control and payment for it.
Development of Tertiary and Quaternary
Distribution and Drainage Systems
87.       A program of tertiary and quaternary development and drainage
should be a first step toward improving water control. The DGWRD should have
overall responsibility, assisted by relevant agencies in Agriculture and Home
Affairs. Present programs for upgrading the technical competence of ulu-ulusl/
should be enlarged; the encouragement of Irrigation Advisory Committees would
help to modify the present link between the ulu-ulu and the village headman,
thus increasing the responsiveness of irrigation administration to the
farmers' needs.
Improved Watershed Management
88.       The inventory and improvement of watershed conditions are of high
priority. Programs should consider alternative methods of improving water-
shed management, not only reforestation. They should also consider
1/   Village employee for distribution of water at the tertiary level and opera-
tion and maintenance.


ANNEX 2
Page 21
institutional and economic factors. In particular, they should consider
the incentives necessary for watershed improvement at the local level and
soil and water conservation at the farm level.   Soil and water conservation
techniques such as terracing, contour plowing and refotestation can provide
substantial benefits to both the watershed areas and downstream irrigation.
Watershed programs should emphasize the needs of downstream irrigation
facilities, as well as development possibilities in the watershed areas.
89.       The proposed Upper Solo Watershed Vanagement project should provide
much useful information for future watershed management programs. Explicit
consideration of watershed effects on irrigation downstream could greatly
increase the value of that project. The study could also be broadened to
include comparisons of the problems encountered with watershed management
needs elsewhere on Java.
90.       Crop Diversification in the Dry Season.   Future agricultural devel-
opment in the irrigated areas should concentrate on rice. However, the dry
season has great potential for many field crops such as maize and soybeans
and cash crops like sorghum, cotton and tobacco, especially where the dry
season is very pronounced as in East Java. Improved drainage and water
control, coupled with intensive use of modern agricultural technology (e.g.
high yielding varieties and fertilizer), should enable a much greater degree
of diversification in the dry season on irrigated land.
91.       Diversification should enable more irrigated area in the dry season
with the same amount of available water. But during the second part of the
dry season (roughly July-August through September-October), rainfall is very
low in some areas, and river flows are insignificant and undependable. Irri-
gated cotton, for instance, might be planted in the spring and develop well
until the second part of the dry season. At that time humidity is also
relatively low, which is good for disease control in cotton. But that is
also the time when water supplies are most limited and when the avoidance of
water stress becomes most crucial for high yields in cotton. Augmenting dry
season water supplies through, for instance, groundwater development would
facilitate diversification. District Irrigation Committees could specify a
relatively small dry season rice area, leaving extra water available for
irrigating other crops. Policies to reduce dry season rice cultivation
should compensate for relatively high potential rice yields in the dry
season due to more sunlight.
92.       Diversification in the dry season will require substantial changes
in the system of canal irrigation. The present system is designed primarily
to supply continuous water flow to flooded rice, with water flowing from
field to field. Other crops, which cannot tolerate waterlogging, may well
require some other system of supply and distribution which would supply each
field individually and provide better drainage. 1/ In general, these crops
1/   Thailand's experience might be of interest to-Indonesian planners.
The Third Plan emphasizes strongly the need to grow crops other than
rice during the dry season on land devoted to rice during the wet
season. Parts of that program includes distribution system improvement
to supply water to individual farms and provide better drainage, as
well as reservoir storage and flood control.


ANNEX 2
Page 22
require better water control and more precise water management than rice.
To some extent, however, more precise water management requirements for
diversification apply equally to the new high yielding rice varieties, which
are the basis of meeting rice production requirements with the wet season
rice crop. The changes - both physical and institutional - necessary for
increased water control need investigation and costs and benefits need
careful examination before embarking on any substantial investment program.
93.       Water Charges. A first principlc-, of water resource management is
that the costs of operating and maintaining the canal system should be borne
by those who benefit. Water charges should also reflect relative crop water
use; i.e. flooded rice uses. much more water than most other crops and should
therefore pay a higher water charge. This charge may be part of.Ipeda, but
it should be separable and earmarked for irrigation. Theoretically, water
charges should be determined on a volumetric basis, which encourages efficient
use of water. Accurate volumetric measuring under Indonesian field condition&,
however, would be impossible.
94..      Water charges on a per hectare, per crop, per season basis can
reflect relative crop water use. Per hectare charges should reflect the
overall amount of water used. Water charges according to season could re-
flect relative water scarcity, with relatively higher charges in the dry
season, for example, especially for rice. To encourage more efficient use
of water, the land tax in the dry season might be relatively low on crops
which use much less water than rice, such as irrigated corn.
Manpower
95.       Increased Emphasis on Economics and Agriculture in Irrigation
Project Planning. Irrigation project planning should include much more
emphasis on economics and agriculture, rather than concentrating primarily
on engineering as at present. The Indonesian Government has a very active
and extensive program in irrigation, and many active, dedicated and competent
engineers in the program.   Obviously, political and other factors should and
do weigh heavily on project selection. Nevertheless, optimum solutions
depend on adequate investigation and review of projects by economists and
agriculturalists as well as engineers.
96.       Increased Specialization. Present organization under the DGWRD
is based on type of project (e.g. gravity irrigation or swamp reclamation)
rather than function (e.g. planning or construction). This type of organi-
zation promotes the "guild system," whereby the same engineer or engineers
plan and build a project from start to finish. There is considerable scope
for increased efficiency through greater professional specialization.
97.       Education for Irrigation Modernization. Most engineers working
in irrigation are civil engineers. Their troining prepares them for a broad
range of,construction activities, but the educational curriculum is weak
with regard to the operation and management of large-scale canal irrigation,
systems. Further, the supply of engineers, particularly those with special-
ized training in irrigation, seems well below the*needs of the present program


ANNEX 2
Page 23
in irrigation development. In the short run, some reordrring of priorities
would permit greater -oncentration of available engineering manpower whera
t will do the most good. In the long run, however; modernizing irrigation
and utilizing its full potential will require a larger corps of engineers
and water management specialists. A start should be the quantitative and
qualitative upgrading of all present training facilities including heavier
emphasis on modern irrigation science and agriculture (e.g. soil-water-
plant relationships and climatic theory), and economics, in the curriculae.
Eventually these programs could develop into an institution or series of
institutions, such as the Asian Institute of Irrigated Agriculture proposed
by the 1968 ADB Asian Agricultural Survey.


Table 1: S'ANDARD NORMAL RAINFALL (AVERAGE 1931-1969)
Station
Number       Name of Station       Jan. Feb.   Mar.        May June  Ju    A     S      Oct. Nov. Dec.        Total
_27            Djakarta           334    241   201   141   113    97   61    52    78     91   155   196       1,760
163         -Bandung              254   251   255   239   153    86  103    97    81    133   262   245       2,159
Äla           Semarang           276   271   216   193   147    79   87    77    84    148   220    235       2,033
SOg          Djogjakarta         294   319   279   117   156    69  123    77    29     69   183   287       2,002
124b          Surabajat           278   239   213   131   110    55   39    24    12     46   139   232       1,518
107           Kutaradja          168    101   101   116   147    93   84   109   137    195   202   170       1,623
126           Medan              184     68    91   162   182   140  146   176   237    288   201   178       2,053
156b          Pakanbaru           215   191   250   25L   194   113  144   169   186    275   301   284       2,576
44f          Padang             361    252   355   409   340   289  250   350   459    573   581   545       4,764
175          Djambi              286   221   312   305   285   187 147   198   180    306   357   312       3,099
191a          Palembang          254    229   287   242   177   130   98   120   110    174   276   284       2,381
273           Pontianak          272    198   207   252   281   238  179   176   255    332   345   321       3,056
297           Muaratewe          300   306    381   389  304    228  178   209   168    244   380   452       3,539
308b          Band jarmasin      333    362   317   257   257   162  148  14    116    142   222   335       2,755
313d          Balikpapan           -     -     -     -     -     -    -     -     -      -     -     -
326           Samarinda          169    167   187   237   183   170  163   122   134    146   197   213       2,088
331e          Menado              393   400   247   393   254   256  246   170   204    218   294   337       3,352
4l5c          Makasar            572    563   370   177   242    87   68    49    35    127   276   614       3,188
440           Denpasar           353   239    201   120   146   130  145    81    58    146   240   288       2,2.9
446           Ampenan             275   197   131    97   120    88   68    38    34     63   143   178      -1,432
470g          Kupang              341   395   169    83    21    22   24     2     3     43   110   243       1,456
490c          Ambon               129   126   135   168   446   517  679   501   398    154    72   134       3,499
Source: Meteorological and Geophysical Service, Dept. of Air Communication.


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{,r�ып[                  1I,032            1,730         !.1l1    141       ]7г
�     wп  DJвvв             .   271,]е7         !].30о        •t.fг1    ь5      n.s79      75
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fвиЧ 3и1вивl             l0,030           13.725        17,ц7     30       ].03е     г0
ebsth Sи1мс1   •          е,Мь             e,W            е,0Ы    90         e1S     10
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т«•t им.ы 3ивсм
вМ  lвpcavwnt вf
1пlе«1м               а.мs.lи        п7,цr          ]w.tи     и        ют,ц1     н
'                                                е.  Rымвtм е[ iпleatlen
�              )вгсtаl  halect■                           •                   ,
[rwne Dlгь+   •              10.000            ♦,095        е0В   г8       ],393     в0
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s..por              •        и.вю              :.+7о      .л.     с2о3     в...      е0
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Wrt l.ввссв                    1г,033           1,в00     ь,160    23S                               •
!(ви                            ].i00           1.]гS       NN1     27      1,OtS   �   77             .
3ouch 3wсгв                    11,V,7          ],D10      1,5ю   U          1,400       37
7уп9wц                         10.766          г7.170     1.33.]   7       l1,117       !]
v.,t 0).и                      г2,иа          г1;сы       9.вi7   д        11.кг        ст   .
Gntsal .�мв                    х,ба0          10.1ss      ].е]]   xs        с.]32       7s
Jei)в7игев                      l.5ц            {,634     ],G67.   52       ).371       4д
с.и  0)м                       s],ы1          со,оь3      lO,sa]   s1.]    ю,сег        ье.7
ии                              4.107         2.вsб         т9а   1е        t.css       ех
Уие кин ?вn[[вгв                l.3f0           2.]00       300     :е..      е40       ы.•
4oueh квlУпвпевп                г,]2]          z,o]0      1,sw   ►го
•     [eik кв1lьвг.с,вп               а,ооо          1,эsб        too   st.e       sю.        4е.г
w■с каlt.иеи                      !00           7.700     2.700   Ч         1.000       ц
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Саесгвl 5иlвvеа!                t,000           1,710         ь00     ]0      f10       70   '                                          �
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л.lиьи                         16,юо           1,вss          ]ьо   1р      1,]1s       е1
.        а.е.1. 0�вlв                    e.7s2         г,еоь       '   в,оь]   us    �            -
�     '                             4е[вl                        17г.%!         172.40р         ь2.346   47   7ь,]00      S]
Ss[вl Скtмвlов е!
гпциlм                     1.гы.9и        lss.sьa          вь,ж . н      и1.вц       ьь
пп�г. 0! иwипlт�тlок        ,_,1� ои      1.1а:,еа1         ь»,ьsг   w    ые.е»       с0
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/ и11ев 1 иевпдв ehewaA l97•].74.
•                  •       .    �_/  ил}вгt  •l1  !1М).        '                  .
''  '         f   Rojeee вlд; 1М  гвИаЫlсиееоп toe tЬL,000 Иа rleh вксмв(ап !ог 67,000  мдвв еопвlдггвееоп.
�/    hв'вгс elC (ADt1.   -
3/    гги�ве.. •а1  �3W);  гC1ll  с,. daslкп сиАв.   ви lгеlвеб АрQга.ввl 'мв а соСе1 рга)ect ци а[ 2J3.100 hв.
�                 Ы      сlll  l,  i'-г дее![n-вигга�: .КвRл.
� S(   74dat f!w lггl[вtlеп реnцвв.
.                 п.в. • 1в[в алс вvв(1вD3л                                                          ,
1ker.    Т![игвв !в рвгмсhевl[ ап ггеlввеев ва пс Аи`ив[в  1971.
3а,иее:  Dlceeeorrta�eмnl et W[ec еесоипи D+wlopвee[, Gоvвrnвнче о!  2адопиiв.


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table 3 1 ~ECTATsorm PPLOGRUS
ft.I..t 7121*                 Pr~    .          tc-,       ftge! 4   W.rk       Credtt.r       starting Ute       kLI-Att-                                    C0.-ltå.t.
I-Lkn          .1
C.-.-y)     C."~y
V000 M      V000 AO
A.
May S.Ptih                      ~     3               25.00       Irritutm             i m             AP..  196T                        1.050.3   1.348~         mar.a
mbabillt.ti=
TIldda~                         W..& j~               40.000                                                                3              934.5  .1.163.031
Ratt-&                                                                                                                                   1.831.6  .1.473.650
el.p.a samkådit                 C-Eral j~                                                                                                L.121.4   31704.467
vet J~               IM.NO                                             j~    Iglo           6           10.300     2.095,0m               C-KV-te        ot..tt. Dj.til~    ta ccParat* 0~   7.
I-A-COB/S.anab        nöt
3.200                     C-trcen t.
~Gru)
ftadål-Tjraål                   en.trat .1..4        123,OW                                                  1978           kb          10.267.3   2,199.677      K.Tadö
TILudjuag                       W-t Java              24,300                                                                             1,423.2     483.733.3
34.60                                                                              3.252.4   1.223.433.4
T.4j-                           UntM    J..4`          3.6W       Ini&*~              An               om. 1%9              1              1190    1.417~         Ma7`d                  Ochmöltd far ~     ettaom m hat~     1971.
my.tatt
ftn~   tåbåde      cc.tr.i Java          20,0m        Irrlå.tim                           Aft.   1971           3           3.700     1,540,wo
-bblåttatl=
Kant J*¥a                         D-                  J&~                 1961             ty          11.134      7.470.5%       Uppda KM               pr.jacc C&MuG ta 1148.
ta,atz-såffi
Inl.redje
&,..t.. IwIta                   &..t J..&            GD.1m        uris.CIM                            kr.    1971           4            1, am     1.030.0W       Nenju Dimma
vabbilLutma
Kall ftwans                     2~   Java                         Olver tr*Lning                                                         1,7t0     1.473.000      mippm  umet            proj.et oeck phyeledl efflétruttlam  taft.4
må torratc.                                                                                                            ta 1970, lå.MIM    Idugk~   lerv
taaur-el-
U1.9                     Nrtb liumatra                    1,1-4 c~tröt                                1971           3           1~           m.600        Mil~
abaktitellm ut åtver
Predpre                                                         R.CMåltUmfas                         jen.  1973                          200        SI.NO       J.p.»»                 Pr.&@ ad TItt D-agva.
ad ~Lui%                                                                                        tav.
*.part
Uti Pr.s.                       Cwtret Java                       1..te.ttem          99               Jöåt.  1972.                      2~   .4   1.632.0@1                             enal.oftlag &~   ..a .111 b. 1~    64 me
or ta.btt.i "mint~* f~.
S~Tu.lrýd«                      Comitråt Java         30~         Irrlt.tiffi          mellmed         Apr.  1970           a            1.258     1,725,NO       Now                    Ugåna.rt.e O-LIcs te t~       .4 cut 99
rahablåttattem
Djakarta ~   4 c~trot           Djakarta                          71-4 t-tr.1                          Doc. 1971            3            l.",      2.461t.00                             Del .... ån§         .111 b* 99~    4 -t
fomi.
:y.t
-ocr"tt«
mebäbilltatlom of &ITU
ma C4441 Dra«~
m.k. 11.2f~                   Djakarta                         li-ncmiLtfattiff                      kr.   1172           11             153       800.00                              Lac.I ~..-7 (K-~         C h~   t) for
om  MMIdl%                                                                                                             fhallit.tt-    of th. 4.48.ra.
D.             ett TA& mimmg
haala Imma.                     gatt .100                         Irrlå.tt-           IDA              &!-r.  1172                         3M      3.472.WO
rbahilltatt"                                                                                                                      ler              cr.IC.q fa..d.
C,~~~
f.. lerleatt- ta
kdi- Vall.y and
uppr sol. HL-r                ca.tr.I ad                                                                                  21           1.300       290.LO..
ac-     c .!-.dy              c_ft
&~   JA..                       w4 PI mat                                                                                                                                                     and
Gýructlý         AD11                   1972           6            9.200     3.066.0W                                         t. '-   ~   1 M-    f-
;.-1c4.        pr.P-t-
5..&.1 w~                       6-th 9-tra                        Fl~                 Ara                                   3           4.470      å~   .400
CL
G-vente.c hdp% 1972-73.
ård.t-                lpr.j..t.
If~. R-     nc, Duvelop-3, comar     .9 0  Ind-tåtå.


Table 6    TECHNICAL ASSISTANCE PROPOSED FOR 1972-73
Project Title              Province           Donor        Proposed Project Costs    Consultants                 Notes
Foreign    Local
Currency   Currency
('000 US$)  ('000 Rp)
Pemali-Tjoial River
Basin Development          Central Java         IDA                500     50,000
River Dredging and
Improvement               North Sumatra        ADB
I4am Kanan Irrigation       South Kalimintan      Japan             300      250,000
Swamp Land Reclamation
and Tidal Irrigation      South Kalimantan      Japan             400       25,000
Delta Upang Tidal Area
Land Reclamation          South Sumatra         Japan              214      15,000
Studies and Planning on
Development of Danau-
Tempe Area                 South Sulawesi       Japan-UX
Djratanseluna Regional
Plan, Phase II             Central Java         Holland          1,350     40, 000        NEDECO         Extends on-going feasibility
studies and rehabilitation
team planning.
Tjimanuk River Basin
Development               West Java             Holland            500      20,000
Teluk Lada Irrigation       West Java             U.S.A.             250      10,000                       On project list subject to
feasibility report.
Source;  Directorate-General of Water Resource Development, Government of Indonesia.
roI


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рсlоп впд (laad cwteвl                                                   Iи.
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`          1ltvвc PrN/!пг Гви[6c11q   DJвУвг[в        lrpsre всrvlгвв fer рlвдссц         Jвввп/   Од[.   1970       �            оfСв вгFг[в                                                                                  .
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Defflør,              Date    D~   les,            Pr.te.t C                  Cossuttants                                    *t study~   *#
7«elx,. C.rf.«V
t-ssý       V~    RV:
Coasittef, &IJSLJ£j_rt*é
Irrigetto. aø"b v osel            vent Java                                             IDA                                            300              30.900
lrrtg&tl~ st*r~
somsm-61k solo Mvei "atm          9841: 3~          pr.par.ti«    r -ut.r rim and      japen        Har. 1913                          730          4M,652,tøo      Gmt. Mløsleor
1.901btllty $t-dy *g *rø4m%
prujecte.
A.r~PPL%     Marita               Cmtt*l             wppxwg or li,bø et. ha en, tlen    Jølý=        kr.   1972                                        4"~     6    c~. odøst
VAI&~tqa            øsalet  1130,ON ser                                                             (08%)
¥sy t%"                                                                                 Jar=
V.7
X..In 111,*r ~  rei                                                            i",ý
ýtvdy th.s. l
.&«* *n4 to~ of ref*re~
[.r rb... Il>
xr.0c4. Iasl" Kvor control        somt Java                                                                                                              63.0N
gtdy M~ It (10.01blitt
- , dý.s .ýd praject Props-
rett_)
vsagimitty ot&iy or Artise-        UK                                             3M              1,300.0N
tivn ølet« C-attvetten.
Atlab             FØ«I"Itty study et trrtaa-          UK                                                            1."0.0N
-.ýtae Øyet~ toutr=tim.
ifivtatta:til«t»é satt 1-6 ep     Le*~                                                  UK          &fr. im
et ,yå a es rei Hetýøørk 1*                                                                                                                                          6
Loe*~
c."Tet c"a«ltipg %*"tøø           Djakarta          y.r_tad« of RI~       Ugla          UK                              »                               483.000*     lølm[o 6 pa t~#
Dø-løpeent Pl~ ýl exrerte)
~.ra Water R.Ø~rcø Jl.~           lsed*re                                               UK                                             306              3w. om
Roc~    so.Oéø *t 1.11 Talene@    Utt                                                   UK/                                             43                9.000                                          ~4 Preparat[~   og priMity projoeté.
Vater lt«.«ne D5"løp~t                                                                Aeézréltfl
TIl~   k Ikt-er Ikots D~141p-     ungt Java          h.p&,&tlm .1 -Oter plan            vitiloné                                        34              46),~
~nt stdy                                             6.4             etdy of                                                         (got)
Indl.1d_l P-I.ct* p tø
ingle~ntatton 01 aset
rg..t            rebabill-
tatt- #rb~.
TJI~d.j River lagt. Doewler,-      Vest 34-0                                                                                           383               30,M0
-t Study                                                                              AVScr.116
D.t.ran A.81 irris.ttog           W« S~tr*-;         reanibility etýdy for røa-         veer                                           230               23,Om
blIttatløm ~d *Atea*lan,         Cet~ny
L~   l. mater          ta~                           prøveretten *t ~oter rZon          Canada       06*.  t971                        500              åg3.00ci*    C4.t. Flø.tom        Apørateak nýg.19. kø.   lettes the .99. ler tes vs.ka.
t.v_fit 51.4Y                                           1..øtbtlity .[.dy of                                                        (eltý
prcj.cc.
ýtv*r lisst. Davele~  t    Ceatral Java       pr.p.,.tt" of -eter pi- and        Augtralla    bo,ý, '1971                       600               35,Wo       covt. lasten         Appral661 Milblon kom VIOLted the alte for tý,r49 ~kg.
s.røj.
Study,                                                   IbtIlty  týdy of Leidl-
C4"r~ot b.ýtt 1972-73.
-Gwørn& og ¥eter Ite~rte D#wlereie.t.              og ~     ste.
tD  0
ø >4


Table 8: LIST OF MAJOR RESERVOIRS IN INDONESIA IN OPERATION,
UNDER CONSTRUCTION AND PLANNED AS OF 1968
Irrigable Completed
Name               Location         Storage         Area       Year            Status            Purpose
Million m-5        ha
Outer Islands
1. Takisung II         S. Kalimantan        0.755         400          -      Under construction     Irrigation
2. Bati-Bati          S. Kalimantan          n.a.      20,000          -        U                         U
3. Sambodja           E. Kalimantan         5.017       2,000         -
4. Mentiwan           E. Kalimantan        56.908         800          -
5. Djepara             S. Sumatra          77.292       7,000          -            Planned
6. Takisung I          S. Kalimantan        0.900         400.        i               t
7. Kelara             S. Celebes          120.000       6,000 - i
East Java
8. Patjal                   -              41.500      16,000      1966                -n
9. Pridjetan                 -              8.000       2,000      1917                -
10. Dawuhan                   -              5.00       3,000      1962                -
11. Netepure                  -              2.060       2,700       19-1
12. Saradan                   -              1.631       1,300      1942                -i
13. Dangbende                 -              2.400       2,500       1956               -T
14. Telaga Pasir                             2.630        n.a.       1893               -
15. Karangkates               -            340.000      23,000          -      Under construction     Irrigation,
flood con-
trol, power.
16. Seloredjo                 -             62.300       1,500          -                 if            .i
17. Telaga Ngabel             -             40.000      16,200          -            Planned          Irrigation
18. Gendang                   -             60.000       9,000          .                                   a
19. Sekaran                   -              2.000       2,700          -i                                  i
20. Djabung                   -               n.a.       2,400          -Ti                                 n
21. Bl. Ganegane             -                n.a.       2,600          -
22. Sondir                    -              1.200        n.a.          -n                                  n
23. Wlingi                    -             24.000        n.a.          -T                                  n
Central Java
24. Tjatjaban                 -             90.000      41,300       1959               -
25. Malahuju                  -             60.000      14,300       1940               -i
ro


Table 8. (Cont'd)
Irrigable Completed
Name             Location           Storage       Area       Year         Status                Purpose
Million m3      ha
26. Pendjalin                               9.500      30,300      1934          -                  Irrigation
27. Rawapening                             3h.500      40,000      1939          -                  Irrigation,
power
28. Gembong                                 9.620       7,500      1933          -                  Irrigation
29. Gunung Rowo             -               5.000       2,800      1926          -
30. Nglangen                -               1.10h         800       1915          -
31. Tempuran                -               2.143       1,000      1916          -
32. Tjengklik               -              11.100       3,800      1931-
33. Djember                 -               4.154       2,300      1943          -
34. Pumben                  -               1.200       1,h00      1928          -
35. Mulur                   -               5.000       4,500      1921          -
36. Delingan                -               4.000       3,000      1923          -
37. Gebjar                  -               0.701       4,200      1956          -
38. Betek                   -               0.513       5,200      1943           -
39. Krisak                  -               3.000       1,400      n.a.
40. Sempor                                 66.000      18,700          -     Under construction
4l. Ketre                   -               2.661       3,600          -
42. Klege                                   1.h00       1,700          -      Construction
43. Lalung                                  5.000       3,h0          -     Planned
4h. Kaleren                                30.000        n.a.          -                             Irrigation,
power
45. Setre                                    n.a.        n.a.         -
46. Djragung                               63.000      12,700                                        Irrigation
h7. Penahan                                  n.a.       2,500          -
West
T8. Djatiluhur                          3,000.000     240,000      1967                             Irrigation,
power, flood
control
h9. Darma                                  40.000      15,800      1960        -                    Irrigation
50. Situpatek               -              12.000       2,200      1926        -i
51. Tjipanundjang           -              22.000           -      1930        -                    Power
52. Tjiieuntja              -              11.000           -      1924        -
53. Tjipantjuh              -               6.000       6,600         -      Planned                Irrigation     >


Table 8. (Cont'd)
Irrigable   Completed
Name              Location          Storage        Area-      Year       Status                 Purpose
Million m-       ha
5. Tjipanas                 -4.000                      7,100          -      Planned                Irrigation,
power
55. Sekarawanji              -             485.000 -                                                 po
56. Paseh                                  140.000     (92,000          -                             Irrigation,
power, food
control
57. Tarum                               1,500.000        n.a.          -                                II
58. Telaga                   -               n.a.       10,000          -         I                      n
Source: Ministry of Public Works; taken from IBRD, Economic Development of Indonesia, Vol. III, Annex 1 -
Agriculture, February 12, 1968, pp. 64-67.
Note:    Irrigable areas are not necessarily provided with all season water.
0CqiI


ANNEX 3
Page 1
INDONESIA
AGRICULTURAL SECTOR SURVEY
TRANSMIGRATION
A. Backgroundi
Introduction
1.        In most discussions about Indonesia's rural development possibi-
lities and Java's population problem, reference is made to transmigration.
In its widest sense, it refers to the movement of people from the more densely
populated regions to the less populated ones, in search of improving their
economic situation. In this case it includes not only the organized and
spontaneous outflow of people from Java 1/ to the Outer Islands, but also
migration in the opposite direction, e.g. the traditional flow of well-
educated Minangkabau to work in the commercial and government sector on
Java, and migration between the Outer Islands, e.g. Buginese (from Sulawesi)
settling on the coast of Kalimantan and Sumatra and people from Maluku
settling on the coast of West Irian. It would also include the return
to Java of previously migrated Javanese settlers and estate workers.
2.        In a somewhat narrower sense, transmigration refers only to orga-
nized migration of people from Java to the Outer Islands. It covers not
only settlement schemes for landless or near landless Javanese farming
families, but also workers recruited by the estates, forestry enterprises
and mines in the Outer Islands. These activities are organized and/or car-
ried out by a number of private and public institutions, of which presently
the most important - in terms of people migrating - is the Ministry of
Transmigration and Cooperatives (TRANSKOP). This ministry sets up settlement
schemes with the help of a number of other government agencies, and recruits
labor for employment by private or public companies, with the exception of
estate labor, for which the Directorate-General of Estates in the Ministry
of Agriculture is responsible. Settlement schemes have also been set up by
the Ministry of Defense, by the University Diponegoro (Semarang)(about 100
families per year) and by the Catholic and Protestant Churches (200-300
families per year). The University of Indonesia (Jakarta) organizes the
transmigration of some 100-200 skilled workmen per year to the Outer Islands.
1/   In the context of transmigration, Java includes Madura and Bali, unless
indicated otherwise.


ANNEX 3
Page 2
Over-all Migration Between Java and the Outer Islands
3.        Comprehensive records of interinsular migration are not available.
Indications can be found in surveys of passenger traffic on the main
Java-Sumatra ferry, data on organized transmigration and population censuses.
One analysis 1/ of these various elements, covering the period 1960-64,
estimated the annual flow out of Java at 112,000 migrants and the annual flow
into Java at 59,000 in these years (40% to Jakarta), thus showing a net
outflow of 53,000. More than half of the gross outflow consisted of
spontaneous migrants, the remainder being government financed civilian or
veteran settlers and contracted estate workers. It should be noted that,
in 1963 and 1965, an!unusually high number of people were moved following
natural calamities: 32,000 people in 1963, mostly from Bali and 53,000 in
1965, of which half from Central Java.
4.        How have these streams developed in more recent years?  The real
or presumed employment possibilities in Jakarta, Surabaya and some other
towns on Java have continued to attract people from the Outer Islands; the
number of civil servants has been frozen since 1965, but this may have been
compensated by growing employment for skill-requiring jobs in the private
sector. On the other hand, the improved conditions in rural Java have pro-
bably reduced the number of departing spontaneous settlers. For other rea-
sons (budget restrictions and a desire to promote more successful but cost-
lier settlement schemes), the number of organized civilian settlers was
reported as only 12,000 people (2,700 families) per year during 1966-71,
versus an average of nearly 20,000 people (4,700 families) during 1960, 1961,
1962, 1964. Recruitment of estate labor slowed down considerably after 1966,
and the last few years show that returning laborers exceed the number of
new recruits. On the other hand, the rapid development of forest ex-
ploitation occurring in the last few years has required a considerable number
of additional laborers (see Table 4) of whom most have come from Java.
5.        Some scattered indications about the aggregate of these different
movements can be obtained from recent studies of interinsular shipping in
the 10 major ports, and of the Java-Sumatra Ferry (Table 1). These data show
a substantial and growing net inflow into Sulawesi in the late 1960's. For
Banjarmasin (South Kalimantan) figures on incoming and outgoing passengers
were more or less equal, but other Kalimantan ports--not covered by the
studies--must have recorded a sizeable net inflow, namely labor for the
logging industry. Data for the Sumatran ports, other than Lampung, show a
persistent net passenger outflow of several thousands, probably to Java.
6.        The lion's share of interinsular passenger traffic is performed
by the Java-Sumatra Ferry. Data are only available for 1968 and 1970, but
1/   Net Migration between Java and the Outer Islands, by G. McNicoll, in
Bulletin of Indonesian Economic Studes, March 1969.


ANNEX 3
Page 3
these are reported to be representative for at least the last 10 years.
They show a large net outflow from Java to Lampung along this route. I./
7.        The incompleteness of the data is shown by several inconsistencies:
for instance, the net inflow into Sulawesi in 1968 and 1969 does not corres-
pond with a net outflow from Java. Nevertheless, it may be a fair conclu-
sion that in recent years there has been a net outflow of population from
Java to the Outer Islands of some 35-50,000 people per year, mostly to
Lampung and Sulawesi. This net outflow may partly account for the fact that
population growth on Java has been slower than on the Outer Islands--1.9%
p.a. versus 2.4% p.a. during 1961-71.
1/   This is also reflected ) the population growth of Lampung:   between
1961 and 1971 the population increased by 1.1 million, i.e. 5.2% per
year. At least half of this increase can be accounted for by migrants
from Java.


T able 1: INTERININSULAR PASSENGER FLOWS IN 10 MAJOR PORT S
(1000 passengers)
196                                   1967                                 1968                                   1969                                  1970
7-er InIEr+                                                                                                     Nee not +  Net Inlov+  +           Net Inflow   +
:nco-,r.g  Outg!itg; 21ct Dut,lw      nonn        utor        c   uüv In-gtin                et.okow-- lnce-,tn     ng         Net Cu:t0ow- Incc•:in     Outgoing    Net 1>itflcv--
Bituns (X. Su1awesi)                        24           18          +6           22           16          +6           25          14           +11          22         10           +12           n.a.       u.a.           a.
Xakaa.r (S. Sulaesi) ,                    D.&.        n.e.         n.a.         34           30          +4           32          31            +1          37         33           +4            29         36            -7
landjer:-asin (S. K,*i=attan)               17           16          +1            7            7           -            4           4             -           6          6            -             6          6             -
Belavan (N. St.atra)                        n.*.        n.a.         n.a.         34           35          -1           19          24            -5          26         36           -10           n.a. n..
radarg (. S=rIta)                          46           46          -2           27           31.        -4           31          33            -2          33         37            -4          39          39
Pler.ang (S. S-:natra)                     3            2          +1            1            1           -            1           1             -           -          -             -            -          -             -
pardia.3 (L:-npung)                         f.a          f.a         n.a.          ...a.                   n.a.        420         373           +47  .      n..         .a. .a.                430         380           +50
Ek.Z(1. .va)                        .    n..         a.*.         n.*          n.&.          .            .a.       373         420          -47         n'.ö.       n..         n.a.         380        430           -50
Tandjzr,n Triok (W. Java)                   n.a.         n.a.        -.a.         96            1      ,  +15           72          64            +8          92         73           +14          84          62          +22
Se=arang (C. Java)                                                                                         n...  n.a.  n.a.  n.a.  n.a.  n.a.  n.a.  c..  n.a.  n.B.    n...         n.a.           -          3            -3
Surabaja (.. Java)                          n.&.         n.a.        n.a.         D.&.         n,a.          .a.        2           12            +8          10         13            -3          25          22            +3
11  S=atra-Java Terry Service only.     Covers about e7. of all passenger traffie througa thest porta.
Source:    b EECO,'?ort ar DredgIng proIects In -rdore`la, 1971, and additional information from NEDECO.
- KMVSAX, S         :w.a Traetric, Systen, 1971.
- K25AX,     cst 1'3-1973            . Services, 1969.


ANNEX 3
Page 5
B. Transmigration of Estate and Forestry Labor
8.        The first organized transmigration started in the second half of
the last century when the so-called "cultuurstelsel", a system of compul-
sory export crop production by villagers was abandoned and the possibility
was opened for private entrepreneurs to grow such crops on estates. Ini-
tially most of the estates were established on Java, where sufficient labor
was available. With the introduction of estate production on the northeast
coast of Sumatra (later elsewhere in Sumatra, and on other Outer Islands) the
estates became dependent on labor imported from Java and from China, as the
new areas were sparsely populated and the local population not interested
in estate work.
9.        It is not known how many Javanese and Chinese migrated to the
estates before World War II. Considering that in 1927 the estates in the
Outer Islands had reached a total acreage of 2.4 million ha, and assuming
an average labor use of one worker per hectare,1/ there must have been at
least 1.2 million families dependent on estate work. Many of these must at
that time have been second or third generation estate workers; the majority
were, however, new recruits, as many workers preferred to return to Java at
the end of their contract (contracts provided, as they still do today, for
free return transport), and others went to settle as smallholders near the
estates. Even during the 1930'1g, when the estates reduced their activities
considerably, there was a gross inflow of some 10,000 families (i.e. 20,000
workers) per year.
10.       Before World War II considerable numbers of Javanese went to work
in the tin mines of Bangka and Bilitung, while others left for other countries
(e.g. Surinam) to work in estates.
11.       After World War II, the flow of Javanese workers to the estates
in the Outer Islands dropped considerably below prewar levels, but there
is no precise information on the net flows prior to 1967. Table 2 shows the
available data for North Sumatra (including Aceh), which in this context
corresponds closely to the total of the estates in the Outer Islands. They
show that at least since 1968, there has been a small net outflow of labor
from the estates. While this outflow is not important in comparison with
the total number of unskilled permanent labor in Sumatra (about 120,000),
1-. may well become so, if the pzesent drive to increased labor productivity
in the government estates is translated into a labor force reduction rather
than output increase. For several years to come, this may indeed be the
case. In the estates visited, the watchword was consolidation, with little
or no addition to the labor force. At the moment, this attitude reflects
the existence of a squatter problem, which for the moment prevents them
from expanding their cultivated acreage to preindependence levels. The
squatter problem may become more tractable in a few years, but one also
1/   This is lower than the present labor use for the estates outside Java
(see para 20).


ANNEX 3
Page 6
hears comments that "the cost of estate labor is high" and "the estates at
present employ far too many laborers, if compared with Malaysian estates".
Some officials suggest that, if anything, the estates would be better off
to mechanize rather than attract more labor. The evidence suggests, however,
that such assertions should be discounted.
Table 2: MIGRATION OF JAVANESE LABOR TO AND FROM
ESTATES IN NORTH SUMATRA, SINCE 1961
(number of families) /l
Government   Private             Government   Private
Year         Estates     Estates    Total     Estates    Estates    Total
1961         1,454         -        1,454      n.a.       n.a.      n.a.
1962         3,437         -        3,437      n.a.       n.a.      n.a.
1963         5,948         -        5,948      n.a.       n.a.       n.a.
1964         6,237         -        6,237      U.a.       n.a.      n.a.
1965         2,802         -        2,802      n.a.       n.a.      n.a.
1966         4,177        375       4,552      n.a.       n.a.      n.a.
1967         1,468        307       1,775      n.a.       n.a.      600 /2
1968           375         33         408      n.a.       n.a.      450 /3
1969           513        378         891      850        149       999
1970           970        217       1,187    1,115        157      1,272
1971           114         -          114      872        294     14166
1961-1971       27,495       1,310     28,805     n.a.        n.a.     n.a.
/1   There are two workers per family, at the moment of recruitment.
Returning families may, on average, have less than two workers.
/2   All originating from Central Java (Jogjakarta, Solo, Purwokerto,
Wonogiri, Purworedgo, Banjumas, i.e. the lowest income regions of
Java).
/3   Mission estimates on the basis of other data.
Source; BCU-PNP Medan.
12.       Official wage levels for unskilled permanent labor on estates (also
for private estates) are uniform within each of three regions: North Sumatra
and Aceh, Lampung and Kalimantan, and Java. In practice, there may be differ-
ences -- in some cases, workers are reported to receive less than their due.
Workers tend to offset unauthorized deductions by appr'opriating part of the
estate's product, and by growing some food on estate land. The official rates
were as follows in North Sumatra and Aceh in early 1972:


ANNEX 3
Page 7
- Cash wage 84 Rp/weekday, 72 Rp/Sunday        2,500 Rp/month
- Wage in kind: Rice        - (40 Rp/kg)        15 kg per laborer
9 kg for wife (if not
laborer)
7-1/2 kg per child
Sugar     - (95 Rp/kg)          1 kg per laborer
1/4 kg per non-working
family member
Kerosene  - (15 Rp/1)         2.4 1 per laborer
Cloth     - (100 Rp/m)          2 m per laborer
1 m per non-working
family member
For a typical famtly of four, with both man and wife working, the wage
income per family per month is Rp 7,700, or 46,200 Rp/laborer/year. Wages
in estates in other parts of t4e country are 30-40% lower, because of lower
cash wages (40 Rp/day in Java, 32 R/day in Lampung and Kalimantan).
13.       Housing is provided free by the estates. The cost per two-family
house is at present Rp 400,000. Assuming 20,000 Rp/family/year for deprecia-
tion, maintenance and interest, the cost per laborer would be 10,000 Rp/year.
14.       A pension is paid after 30 working years. Although it was not
possible to know how much the pension is, nor whether the amount is related
to the cost of living, it was rep-ted that pension payments were becoming
a financial strain for the PNP's.
15.       The estates organize and pay the transport of the workers and up
to two children (under 10 years) from the recruiting area to the estates.
In the most common case, i.e. transport from Central Java to North Sumatra
estates, these costs amounted in early 1971 to Rp 48,600 per family, 1/ i.e.
Rp 24,300 per worker. Assuming an average stay on the estate of 10 years
(the minimum is five years, the maximum 30 years), this cost item amounts
to 4,200 Rp/year/worker, assuming an interest rate of 12%.
1/   Table 3 provides details.


ANNEX 3
Page 8
Table 3: TRANSPORT COST OF ESTATE LABOR TO
OUTER ISLANDS
(in Rupiahs, per family of 4)
A. From Desa to Jakarta
From Desa to recruiting center                           -
Board and lodging 4 days                              2,720
Medical bcreening                                       200
Political screening                                     250
Photos                                                  200
Pocket Money                                            400
Maintenance barracks                                    150
Recruiting costs, administration, various               300
Train fare to Jakarta                                 3,290
Accompanying costs                                      160
Sub-total        7,630
B. From JakattA to Belawan (port of Medan)
Bus to barracks in Tandjong Priok                       150
Board and lodging 8 days                              6,400
Second medical screening                                120
Clothing                                              2,400
'Pocket money                                            400
Maintenance barracks                                    390
Administration, insurance, taxes                      1,230
Passage to Belawan (2 x 4,160 + 2 x 2,960)           14,24
Reservation and accompanying cost                       33(
Sub-total        25,660
C. From Belawan to estate       about                     9,800
D. Overhead                                               6,500
E. Total                                                 49,590
Source: BCU-PNP, Jakarta, 1972.
16.       Similarly, the estates pay the return trip for workers and their
family, if workers decide to leave at or after the end of the first contract
period of five years. While the average family size at recruitment is
slightly below four, the average family size of those returning is about five.
Transport costs are given on a per person basis and amounted in 1971 to
9,700 p.p. This corresponds to Rp 24,000 per worker, and assuming an average
stay of 10 years, the yearly costs are 1,400 Rp/year/worker (assuminzg a dis-
count rate of 12%).


ANNEX 3
Page 9
17.       On the basis of the above, the various cost items amount to 62,000
Rp/worker/year. 1/ Income for a family of four would be around 100,000 Rp/year
(wages in cash and kind, and housing), or US$ 60 per capita, i.e. well below
the estimated average for the country, but well above what an unskilled
laborer could hope to make in Central Java, where unemployment is high and
daily wage rates 70-100 Rp/day.
18.       Based on an exchange rate of M$ 3 = US$1, daily wages on Malaysian
estates range from US$ 1 (for unskilled labor) to US$ 1.50 (for tappers).
To this should be added about US$ 0.20 per day for housing, medical care, etc.
At the official exchange rate of US$1 = Rp 415, this is equivalent to
180,000-250,000 Rp/wo-zker/year, i.e. three-four times as high as the labor
cost in Sumatra.
19.       As for the assertion that labor productivity is low in comparison
with Malaysia, it should be remembered that the Indonesian estates have
been living on their capital for many years: this has resulted in decreased
yields and a decline in output per worker.
20.       Furthermore, even at the below-normal prices prevailing in early
1972 for rubber (the most important crop for the Sumatra estates), the cost
of labor is still less than half of the FOB price. Labor density on govern-
ment rubber estates varies from 0.50 - 0.55 man/ha; yields are about 800
kg/ha, so output per laborer is 1,500-1,600 kg/year, or (at a FOB price of
100 Rp/kg) 150,000-160,000 Rp/year. Out of these, labor costs are Rp 62,000,
i.e. 38-40%. For palm oil, the other important estate product in Sumatra,
the figure would be even substantially lower.   In Malaysia, where labor
density is lower (about 0.25 man/ha) and average yields for rubber somewhat
better (say, 900 kg/ha), the proportion of labor costs in the FOB price
would be higher--50-70%. Still, even at these higher relative labor costs,
the Malaysian estates have little or no mechanization.
21.       In summary, it appears that, in spite of higher labor densities and
somewhat lower yields, wages are so low that the labor cost component in
estate Zrops is lower in Indonesia than in Malaysia. It is not known how much
the estates can expand their cultivated area in the foreseeable future, and
how much of this can be done with the amount of labor available at present.
But if the squatter problem can be solved, and subsequent expansion would
lead to a choice between mechanization and additional labor, our analysis
suggests that the answer may lie in additional labor. Whether such ad-
ditional labor would be provided by the removed squatters or by new laborers
from Java is uncertain: one of the conditions in the procedure for squatter
removal is that they receive the same acreage outside the estate. Even under
the most optimistic assumptions, 2/ the number of additional laborers would
not exceed 100,000 i.e. 50,000 families, spread over a number of years in
the mid- or long-term.
1/   Excluding pensions. Also, because of lower cash wages and much lower
transport costs, labor costs on estates in Java would amount to 41,000
Rp/worker/year.
2/   Doubling of the cultivated area, and present labor densities.


ANNEX 3
Page 10
22.       Additional labor might also be needed in the eventuality that
foreign investors are willing and allowed to set up new estates, possibly
along the lines of the Mitsugoro estate in Lampung, that was set up a few
years ago as a mixed venture of the Japanese firm Mitsui and an Indonesian-
owned company.
23.       The rapid expansion in logging operations in Kalimantan and Suma-
tra has required a growing number of laborers. Data on this type of labor
are not available, but an estimate can be made on the basis of output fi-
gures. Assuming that one man produces about 400 m3/year, logging operations
may have attracted, between 1966 and 1972 an additional 36,000 men, mostly
from Java. To this must be added a considerable number of traders, artisans
and others to provide services to forestry laborers, who, incidentally,
mostly have come without their families.
Table 4: ESTIMATED EMPLOYMENT IN LOGGING OPERATIONS
Production         Number of
Year                   million m3          Laborers
1966                      2.0                 5,000
1967                      2.9                 7,300
1968                      5.5                13,800
1969                      7.5                18,800
1970                     11.4                28,500
1971                     14.6                36,500
1972                     16.4               41,000
1980 /1                  26.5                66,000
/1 Projection.
Source: Mission Estimates.
24.       Substantial growth in output is being projected after 1972, and
labor requirements for logging will increase correspondingly. In addition,
if the plans for processing in the Outer Islands were implemented, forest
related employment could increase considerably more. An estimated 25,000
Javanese could find employment in these processing industries, which would
be established in Kalimantan and Sumatra.
25.       Recruitment of Javanese labor by private enterprises in the Outer
Islands is at present hampered by regulations issued by the Ministry of
Labor. These regulations--which are rightly intended to protect workers
against bad working conditions--include several obstacles for employment;
for instance, employers are required to obtain written permission from the
Ministry for each worker recruited. It is easy to visualize the disincentive
this provision has on employment.


ANNEX 3
Page 11
C. Transmigration of Settlers
Background
26.       The establishment of Javanese peasant farmers on unoccupied land
in Southern Sumatra began in the early part of this century. The objective
was to alleviate the population pressure of some regions in Java. At the
outbreak of World War II, some 200,000 people (about 40,000 families) had been
settled.
27.       Settlement activities were resumed in 1950. The objectives changed
considerably, with emphasis on Indonesianization (assimilation of Javanese
with other ethnic groups) and, later, on defense considerations. However,
the approach in terms of recruiting policy, organization of the schemes and
benefits received by the settlers remained largely the same. Table 5 shows
the number of transmigrants handled by government agencies over the past
two decades. Considering that activities of private organizations and that
veteran settlers are not included, the actual figure for 1950-71 may be close
to 150,000 families (600,000 people), not including an unknown number of
spontaneous settlers.
28.       There are no data on the number of settlers that have returned
to Java. It is often said that returns have been substantial and that the-
net effect of settlement transmigration was negligible. This is unlikely for
several reasons:
-    The shipping data, referred to above, indicate a consistent
and considerable net outflow out of Java.
-    Even if settlers wanted to return to Java, they would, in
most cases, not be able to do so, because they would not
have the means to pay the return trip.
Further, they vould lose whatever small living base they
have in the scheme without finding a livelihood in their
village of origin.
-    According to a recent study 1/ of settlement schemes in
Lampung, few settlers would wish to return to Java in-
spite of the difficulties encountered.
-    about 60% of the population of Lampung Province, the major
target of transmigration, is Javanese. Population growth
ir Lampung between 1961-71 was 5% per year or more than
double the national rate.
1/   Dr. Heeren, Transmigratie in Indonesie, Doctor Thesis University of
Utrecht, Netherlands (1970).


ANNEX 3
Page 12
Table 5: NUMBER OF TRANSMIGRANTS SETTLED SINCE 1950
Number of                 Number of
Families                  People
1950/51              790                   2,954
1952           3,885                   17,605
1953          10,141                   40,009
1954           8,409                   29,638
1955           5,491                   21,389
1956           6,091                   25,549
1957           4,968                   23,201
1958           4,799                   20,603
1959          11,439                   46,096
Total 1950-59                      56,013                 227,044
1960           5,622                   22,075
1961           5,165                   20,548
1962           4,874                   22,003
1963           7,692                   32,159
1964           3,440                   14,361
1965          13,296                   53,362
1966           1,148                    4,648
1967           1,312                    6,166
1968           2,991                   13,742
1969           1,881                    7,934
Total 1960-69                      47,421                 196,998
1970           4,377                   19,696
1971 /1        4,727                   20,954
1972 /2       14,700
Total 1950-71                     112,508                 464,692
/1   Provisional.
/2   Planned.
Source: Ministry of TRANSKOP.
29.       The fact that relatively few settlers have returned to Java does not
mean that settlement transmigration has been an overall success. In many
cases, settlers have moved out of the scheme to places with better soil con-
ditions; in other cases the scheme did not allow them to raise their material
living standards much above those in Java, while their nonmaterial conditions
probably deteriorated. Yet most families have adjusted and most of the earlier
settlements show much greater signs of prosperity than the areas in Central
Java where most of the transmigrants originated.
Objectives
30.       The objectives of the Government's settlement policy, as stated
officially, have not always been reflected by the actual transmigration acti-
vities. For instance, assimilation betwe'en Javanese and other ethnic groups


ANNEX 3
Page 13
in the Outer Islands has long been an objective, but settlement schemes
were set up in such a way that there was little contact between the settlers
and the local people. Also, in quantitative terms, targets have been at
variance with realizations. The First Five Year Plan called for a program
of 100,000 families, but by the end of the plan perind less than 30,000
families will have been moved. The basic reason for this discrepancy is
that the Ministry of TRANSKOP has had to rely almost entirely on other
agencies for carrying out many aspects of its program and adequate funds
were not budgeted for a large program.
31.       The Ministry's policy is currently being rethought following the
appointment, in October 1971, of a new minister. The main objective now
seems to be for settlement transmigration to be instrumental in the develop-
ment of the Outer Islands. Other considerations, such as national defense,
alleviating Java's population pressure, and Indonesianization are still
mentioned, but rather as secondary objectives.
Recruitment
32.       The regulations of the Ministry of TRANSKOP limit recruitment of
prospective settlers to Java, Madura and Bali. There is a case to include
all of the Nusa Tenggara Islands: population density in these islands may
not be as high as in Java, but the natural conditions are such that the people
there are economically worse off than many in Java.
33.       Since 1950, most settlers have been recruited in Central Java
(46%) and East Java (27%). These are the provinces with the lowest rural
income levels, the highest underemployment, and the most unfavorable land/man
ratios. The recruitment agencies in these areas are flooded with requests
from applicants. The Dircztorate General of Transmigration estimates the
number of unfilled requests at least at 200,000 families, but there are
undoubtedly a great number of people interested in leaving who do not -
bother to apply, knowing their chances are slim. This situation enables
the TRANSKOP authorities to be quite selective in their recruitment.
34.       Main criteria for selection of applicants concern agricultural
skills. After having been proposed by the village chief, applicants must
pass some sort of examination in farming knowledge. Other criteria concern
the age, political background, family status, and health of the applicant.
Unlike the recruitment of estate labor, there is no limit on the number of
dependents a prospective settler may take along. From the figures, it
appears that the average family size has been only 4.1.
35.       Once the total number of families to be settled in a given year
has been decided (on the basis of the budget appropriation), provincial
allocations are made more or less in proportion to the number of applications.
This is probably the most satisfactory approach, because the allocation is
likely to coincide with the optimal - moving people from places where their
departure is most beneficial for themselves and for those who stay behind.
An exception may be A region like the Upper Solo River Basin, with its
severe erosion problems. Moving people from this area deserves priority as


ANNEX 3
Page 14
continued cultivation of the eroded land will adversely affect the farming
possibilities of farmers in other regions (increased flooding danger) in the
future. (See Annex 6 p. 41).
36.       At first sight, success of settlement might be assured by moving
entire villages, rather than people from different villages, regions or
islands. This was the prewar approach. However, this would make integration
of the settlers with the local population even more difficult. Furthermore,
problems were encountered in the distribution of the land left by the settlers
and an element of compulsion was necessary since not everyone in a village
wanted to leave. A compromise solution has been introduced recently whereby
settlement schemes will be composed of groups of at least 20 families of the
same village. In view of the successful performance of Balinese settlers
(reportedly due to their great sense of cooperation), it would be advisable
to include in each scheme a group of Balinese settlers.
37.       The above remarks only apply to wholly financed settlers.   As for
subsidized settlers, the system was only introduced in 1969 and recruiting
experience is limited. It has not in all cases been possible to reach the
target number of subsidized settlers, for the simple reason that many in-
terested persons could not pay the difference between the travel cost and
the subsidy (see below). Consequently, selection has been less severe.
Location-of Settlement Schemes
38.       The location of the schemes is obviously determined by the avail-
ability of suitable land. So far, "suitable" has meant irrigable, as the
schemes were destined to provide each family with 2-2 1/2 ha of sawah land. 1/
An equally important consideration is the accessibility of the land. In many
schemes, isolation increases the cost of marketing and limits the range of
crops which can be grown as well as increasing the costs of necessary
investment and input items.
39.       In most cases, the settlement schemes are located on government-
owned land. But much of this land is not sufficiently suitable for agricul-
tural purposes--and even less for irrigation.   Consequently, the authorities
have in several instances had to acquire land owned by margas (best trans-
lated by "clan") against payment.   Even so, the land thus retained has tended
to be poor and less accessible. The difficulties in obtaining land for
settlement are one of the reasons why development of the extensive and vacant
swamp areas of Sumatra and Kalimantan has received major attention in the
last few years.
40.       The less-than-ideal location and poor soil quality of many of the
settlement schemes are two of the principal causes for many of the problems
encountered. A change in policy from the past emphasis on irrigation to
development of rainfed agriculture in the settlement schemes could make
1/   This does not mean that irrigation was actually provided.    In many
cases, settlers have waited 10-15 years.


ANNEX 3
Page 15
government-owned land that hitherto was considered unsuitable because of
topography, highly suitable for future schemes. If there still would
not be sufficient land available, other solutions might be considered:
(a) The Government could, as it had done in some cases in the
past, continue to buy land from the local margas.
(b) A variant would be to make an arrangement with the marga
under which they would provide land in return for Government
services (infrastructure, participation in the settlement
scheme, guaranteed prices for their produce).
(c)  Another possibility would be to use land currently unaer
forest concessions where agricultural development is in-
dicated. Rather than have the concessionaire take
out only the de6irable species, he could be required to
clear the ',and entirely and perhaps even plant perennial
crops or pasture. This procedure would provide cleared
or planted land at little cost to the Government. However,
it would be difficult to synchronize the clearing of the
land and the settlement and cultivation.
(d) The provision of the Land Reform Law of 1960, which puts
maximum land ownership in the Outer Islands at 20 ha, has
so far not been implemented. In large parts of the Outer
Islands (Kalimantan, Sulawesi, also Sumatra), margas hold
acreages of land well-above 20 ha per family. We suggest
that the law be implemented; that land owned by the margas
be limited to 20 ha per family; and that the remainder be
turned over to the authorities for settlement purposes.
To make this solution more palatable to the margas, they
could receive some form of compensation along the lines
suggested above. 1/ Obviously, the implementation of the law
could be limited to regions where settlement is actually
planned.
(e)  It is reported that large tracts of well-located land
are controlled by local military authorities. Some of
this land is held in reserve for imminent settlement
of veterans, in other cases for reasons that are less
clear. It is suggested that this land be made available
to the central authorities for settlement.
41.       The regions that would raise the least problems in terms of land
availability, either because the present population density is lowest and/or
the authority of the provincial government and its interest in receiving
settlers is strongest (e.g. South Kalimantan, South and Southeast Sulawesi),
have potentially good soils. But from the point of view of accessibility
1/   Such compensation may be advisable, anyway, so as to avoid friction
between the margas and the new settlers.


ANNEX 3
Page 16
and available infrastructure, preference would go to Lampung and South
Sumatra. Settlement in these areas would greatly benefit from further infra-
structure currently envisaged (Trans,-Sumatra Highway or penetration roads
from major ports); conversely, the preparation of these constructions should
take into account the likely location of future settlement. It is also
suggested that the Government secure the land on either side of the planned
roads over some 5-10 km, prior to their construction.
42.       In the years ahead, the Ministry of TRANSKOP plans to concentrate
its settlement activities in three regions: Lampung, Luwu (South Sulawesi,
along the gulf of Bone), and South Kalimantan. This will represent a con-
siderable improvement over the present situation, where settlement schemes
are carried out in virtually all provinces of the Outer Islands (Tables 6
and 7 give the 1972/73 program).
Table 6: PLANNED TRANSMIGRATION IN 1972/73, BY PROVINCE
(number of families)
Lampung                                  5,850
Benkulu                                    800
South Sumatra                            3,150
Jambi                                      700
West Kalimantan                            300
Central Kalimantan                         600
South                                      300
East        "                              300
North Sulawasi                             500
Central Sulawasi                           600
South                                      800
South-East Sulawasi                        700
Maluku                                     100
West Irian                                 100
Total               14,700
Source: Ministry of TRANSKOP.


ANNEX 3
Page 17
Table 7: PLANNED TRANSMIGRATION IN 1972/73 BY TYPE OF
TRANSMIGRANT
(families)
Wholly Financed Settlers in Tidal Irrigation Schemes          2,300 /1
(Transmigrasi umum pasang surut)
Idem, in Traditional Irrigation Schemes                       4,000 /2
(Non pasang surut)
Laborers in Mining, Forestry, etc.                              500 /3
(Transmigrasi sektoral)
Subsidized Settlers                                           4,400 /4
(Transmigrasi spontan)
Settlers from Within a Region                                 3,500 /5
(Transmigrasi lokal)
Total                     14,700
/1   Of which 1,200 in Sumatra and 1,100 in Kalimantan.
/2   Of which 1,900 in Sumatra, 1,900 in Sulawesi, 100 in Maluku, and
100 in West Irian.
/3   Of which 100 in Sumatra, 200 in Kalimantan, and 200 in Sulawesi.
/4 Of which 3,800 in Sumatra, 200 in Kalimantan, and 400 in Sulawesi.
/5   All within Lampung.
Source: Ministry of TRANSKOP.
Type of Cultivation
43.       Since the beginning of organized settlement, the predominant type
of cultivation has been rice growing in sawah fields. The rationale was
twofold: (a) settlers were accustomed to this type of cultivation, and
(b) rice was considered a "safe" crop because most production was subsistence
ari what is left could easily be sold.
44.       There are several reasons to reconsider types of cultivation for
the settlement scheme :
-    Much of the area selected for settlement has adequate rain-
fall for a wide range of cropping systems. Settlers have
proven, mostly by necessity, that they are quite adaptable
to rainfed cultivation: in many cases doing without
irrigation water for 10-15 years after settlement.
-    Market prospects are good for a variety of other crops, that
do not require irrigation in areas with regular rainfall
(totalling over 2,000 mm/year). Such crops include maize,


ANNEX 3
Page 18
sorghum, soybeans, cassava, sugarcane, cotton, rubber, coconuts,
oilpalm and spices. The income generated per unit of develop-
ment cost is comparatively higher for the rainfed types
cultivation proposed here.
Irrigation development is expensive and can be justified
only in terms of very iatensive development.
45.       Indonesia's settlement activities have never been subjected to a
systematic economic analysis. Yet, such an analysis would not only permit
a choice between various types of settlement, but would also allow a comparison
between investments in settlement and other development projects. Tables 8
and 9 represent a rough attempt in this direction. They show a comparison
between six possible types of cultivation in settlement schemes indicating
the return to labor, labor iacome per hectare and per farm, and the economic
rate of return for each farm model. Three of the farm models are represent-
ative for ongoing or planned settlement schemes; the other three are proposed
alternatives.
46.       Several caveats are warranted:
(a)  The examples shown are only illustrative.   Also, the assumed
cropping patterns may not be the best under all conditions.
For instance, in Type F, oilpalm may be better than rubber
in some areas.
(b)  Tha assumptions underlying costs and benefits are believed
plausible, but no more than that.
(c)  The calculations are schematic and may be incomplete; but
further refinement is not warranted for the present purposes.
47.       In spite of the uncertainties, the results show some interesting
points. The net value added ranged from 23,000 Rp/ha/year in intensive annual
cropping to as low as minus 29,000 Rp/ha/year in the tidal irrigation schemes
and minus 47,000 Rp/ha in the case of gravity irrigation with reservoir (line
VII in Table 8). As part of the costs are not borne by the settlers, their
income per hectare is well above the net value added; the difference is par-
ticularly striking in the models based on irrigation (Line VIII).
48.       When labor income for the whole farm is considered, the mixed
farming type of cultivation comes out highest by far with 246,000 Rp/year,
versus only Rp 50,000 under tidal irrigation (Line IX), and the other types
in between.
49.       From a development point of view, the economic rate of return on
investments is, however, the most relevant criterion. Rainfed annual crops
and rainfed mixed farming would both yield very attractive returns, while
the various types of irrigated settlements do not appear to be justifiable.
(Table 9A). Even if a generous allowance is made for unskilled labor in-
vestments using a zero shadow price, irrigated settlement schemes would only


ANNEX 3
Page 19
be marginally justified (Table 9B)- Under the latter approach establishment
of rubber smallholders looks quite good; other tree crops such as palm oil,
might even be better, if they can be located.near existing processing faci-
lities.


Table 8: MAIN FEATURES OF SIX POSSIBLE TYPES OF CULTIVATION IN SETTLMENT SCHEMES
T.        Type                                    If properly executed, no major        Gravity irrigation with-       Tidal irrigation, mainly on       mixed crop/livestock farming.       Intensive crop production,      Tree crop mono culture, rainfed.
problems, except high investi         out reservoir.   All of        Sumatra's East Coast and          raiv%ed. Besides slaughter         ratied. mechanical power         This type has   largest area of
znt cost. Spi      gh are not a     the pre-war and moat of         Kalimantan's South Coast.        animals,cattla wouId provide        might be required, and           uitable soils   as It Is less
good as on Java,                      the post-1950 scttlentnts      Except for some schemes in        draft power, manure and             more fertilizer than under      demnding as to topography and
are - or are meant to be *     Djambi and one or two in          would conserve soil structure.       .          Soil structure might  bin       Imatire tree    would
of this type.                  Katn        these schemes        Could be applied   in lrge parts become a problem. Area            be Interplantec wth annual crops.
run into problems of             of Sumatra. Xalimantan and          suitable for this type of       Example chosen here concerns
unsuitable soils And              -notably Sulawesi.   There          faming more restricted         rubber trees;   other possibilities
topography,                       exists no experience with thi      than under   D. Limited         iie oil palm and cocut.
type of farming in Indonesia.       experience with this type
around Hitsugoro estate
in Lampung. Not certin
whether yields cam be
sustained.
.11.      Tan Size and Cropping                  2 ha. Two crop. of rice, and one     2 ha. One and    third crop      2 be. Two crops of rice per       8 ha. Five ha unde: pasture.        6 ha. One ha ladang rice        3 ha: Rubber trees5during first 3
Pattern                                 crop of maite or corghum per         of rice and 2/3 crop of          year/ha, under ideal conditios. 3 ha under crops:     1 he           ad soybeans. 2 ha aise          years intercropped with rice and
year/ha,                             partially irrigated ma  e     Most of present locations          ladang rie and soybeans. 1         and peanuts, one ha              mat or sorghum.
or sorghum per year/ba.          permit only one crop per year.   he maie or sorghum and pen.        cassva.
nuts, I be cassava.
11.       tonsetr-yt Costs in
1000 R/ha-
Land clearing and preparation                          25                                2530                                                                10       .                        T   *                                  15
Reservoir                                             350                                2
Irrigation canals                                    350                                400                             270
Planting                                             3                                    .                             2.0
BreedLng animals                                                                         1.1
Seeding, fenct?ag pasture                                                                                                                                    10.
Transmigration coit (see t*7)                         50                               50                               60                                  13                                25                                    33
Totalz                       775                              475                              360                                4                                  35                                    198
IV.       C7 in5
T.   current Costs to3 4n5                                                                                                                                                                                                                9
Seed d  /.                                            3.0                               2.0                             2
tertill.er                                              7.                                6,5                             4.5                                 3.1.                              6
Festici Wk/                                             3.0                              2.0                             2it                                  1.0                               3.0
PlowinO                                               3.0                               2.0                             2.0                                 0.7                                3.0
IPEDA -                                                 2.0                              1.0                              -2.0                                                0.8                                                      0
Interest on cavitals/                                   2.0                              1.*5                             --                                 1.0                                0.5              0-
0    rs   ond eW ttl                                    93.                              $7.0           *43.Z                                                 5.3                               4.2                                   31.01,
0 and   land                                            28.0                             16.0                            10.                                  -
Imputed land ront'                                      3.0                               3.0                                                                 2.0                                2.0                                    1.0
Total:                       142.8                             90.0                             48.1                                14.5   .                           22.5                                   32.6
V.        YIelds in t/ha/crop
Paddy (dry stalk)         *3.0                                                            3.0                             1.5                                 1.51.
aire                         .                          2.0                              1.7                                                                 1.5                                 1.2
Soybeans                                               *.0                                           *                     *                                  0.8                                 01
Feanits                                                                                                                                                      0.                                  0.8
Cassva                                                                                                                                                      10.0                                10.0
Slaugh)ar or draft animals     1trvelak)                 -                  .              -                                                                  0.2                               10.0
V         . Cross out  t Va lue
in vW.       /yer                                      96.0                       .     62.2                             39.0                                38.0                                44.8                                  40.0
Viz.      Net Value Added per he/year                                                                                              22
is *o 46                                                                               -27.8                           -29.2                                23.5                                22.3                                   7.4
VIIt.     Tnc-e Per ha/year
in '000 R                                              77.2                               48.2                           24.9                                30'8                                25.5.
Il.       Intome Per FrmLYsarV39
In 000 K                                             154.4                               96.4                           49.8                               246.4                                114.0                                118.2
a/ All types would kave s-ne tree crops 'and vegetables grown around.the homaestead.
/ Determined by availabl. labor of one family.
c/ Figure is higher than for other types of settlement because of more difficult terrain conditions.
g/  Seeding rates/harice X4q6, soybeans 20 kg. maitte20 kS, reanuts 120 kS.       Ssad prices/kg:    paddy 20R, soybeans 35R, watse 12R, peanuts 40,R. seeding of I he of pasture per year 4,000 R/ha. i.e. 500 1 per a"rage he of cropping pattern.
e/  Average/ha for cropping pattern.
f   From 7-30 year.    First 4 years as under 9,
RID/ 300 kg. at 26R/kS. average/ha.
h 750 kg. at 26Rt/kg, *verLge/he.
1/   120 kg. at 26it/kg, average/hs.
1/   250 kg, at 26R/ks, average/ha.
k/  Assumed t.ual to seed coast.
T/  Assumed 1,000 R/ha. Mechanised vlouing, as under D, 2,000 R/ha.
m/   Estimated on basis of effective present 7ates, And expected not income.
m/ Iterest over 30 years      distributed over 23 oroductive years.                                                                                                                                                                                 O   Z
%/  1 irrigation infrastructure.
Estimate
r/  Average between 7th and 30th year.
s1  Faragate prices:    paddy 13 &/As. maite 9 R/kg. soybeans 35 R./kg, peanuts 40 R/ks, cassava 5 R/kg, cattle 100 R/ks livrevaight, latex 50 R/kS.
I  Cross output value minus      as&.current expenditures.by farmer (seed, ferti-iser, pesticides, plowing, IPEDA).


Table 9A:    ECONOMIC COS'S, BENEFITS AND RATES OF RETURN OF 6 POSSIBLE
TYPES OF CULTIVATION IN STTLE    T SCHEMES
(NOT USING ADOW PRICE for labor component in investment costs)
--------------------------------------------in 'C0 Rp/ha------------------          -----------------------
D                   E
ear       s    hefits CECosts      ýenzfits   Cost     enefits    Costs   Benefits    COsts   Eensfits    Costs   enefits
I   25                  2 22 1)             05                   44 3i                5        -198-
2       20       -         250        -         210       -           8      18          18      h5          17      45
3      275       -          31       62          25      39           8      22          18      h5          17       5-
 08 96                      31      62          25      39           8      22          18      h5          17      45
31      62          25       39          8       38         18        51                  -
5      95           31       62         25       39          8       38         18       45          I!
7       48      96           31      62          25      39           8      38          18      45           1      40
7       18      9ó          31       62          25      39           8      38          18       15                   0
30       h8     9           31       32          25      39           8      38          18      45           1      h0
4;h; 2%                                                          77%                   4j'
.B. (1) Costs are derived from previous table, but excluding IPEDA and interest on capital.
(2) All farm labor (except plowing) supposed to be family labor, which is not considered a cost item.
(3) Transmigration costs sipposed- to occur in yar prior to first year of production.
(4) Eenefits are deried from previous table
Scurce:   Nission Estimates


Table 9B: COSTS, BENEFITS, AND RATES OF RETURN OF 6 POSSIBLE TYPES OF
CULTIVATION IN SETTLEMENT SCHEMES
(U3ING SADI' ?PGFIC  for  abcr in investm3,nt)
- - - - - - - - - - - - - - - - - - - - - in    000Rp/ha- - - - - - - - - - - - - - - - - - - - - -
BC                                 D                                F
Year         Costs    enefijs   Costs  Benefits  C-sts Eenefits Costs     Benefits Costs Cenefits   Costs  Benefits
1           125        -      100                60        -      19       -        6       -      83         -
2          112         -      112         -      90        -       8      18       18      45      17        45
3                      -       31        62      25       39              22                        17       45
4            48       96                 11        "       "       "       22                       17       45
5             "        "         "        "        "       "       "      38        ""                        -
7                      '."       t        "       "        "       T        "       "       "        "       40
It            TT       TTi                tT      IT       Tt      fT      tT      iT       1T Tt             Tt
30           1,8      96        31       62      25       39       8      38       18      45        1       h0
ERR                11,                133               85               79%            1005.              311
N.B.   (1)  Costs are derived from previous table, but exclude IPEDA and interest on capital.
(2) Unskilled labor is shadow priced at zero and assumed to represent 100% of land clearing preparation;
50% of irrigation construction, tree planting and pasture establishment; 25% of transmigration cost.
(3) All farm 2bor (excpt plcwing) suppesed to be farily labor, which is not considered a cost item.
(4) Transmigration co:.s suppsed to occur in year prior to first year of production.
(5)  Benefit 2re derived frc  provicus table.
Source: Dissien Esti=ates.


ANNEX 3
Page 23
50.       There thus appears to be a strong case for reorienting future
settlement schemes towards rainfed production of tree crops and annual crops,
where possible combined with livestock. Unfortunately, experience in
Indonesia with mixed crop/2attle farming is limited: the individual crops
are widely grown and livestock is widely held for draft purposes, and raised
for exports in East Java and Nusa Tenggara. But combining these into a mixed
farming unit still needs investigation.
51.       It should be stressed that investigations on desirable types of
cultivation should not be limited to the two or three above. Other possibi-
lities would be extensive cattle ranching on land not suitable for crop pro-
duction (like on the Nusa Tenggara Islands), and estate type of crop ptoduc-
tion either in isolation, or as a catalyst to surrounding smallholders (like
the Mitsugoro estate in Lampung). These possibilities might have the advan-
tage of yielding quicker results, but cculd be much more capital intensive
and therefore somewhat out of line with Indonesia's relative factor endow-
ments.
Village Layout
52.       This may seem a detail, but in practice village layout is causing
problems. A typical settlement village consists of 400-600 families, their
houses close together on 1/4 ha plots. Consequently, in schemes where each
family has 2 ha, the fields may be several kilometers from the house, even
under optimal planning; in practice, farmers often have to go as far as
5 km. With their low incomes, settlers usually cannot afford means of tran-
sport to carry inputs and harvest. And there are no roads. In villages
with tidal irrigation, transport can only be done by canoe, but canals are
dry at low tide which is half the time.
53.       It is unlikely that the "kampong" type of settlement can be
abandoned in favor of a type where farmers live on their land but isolated
from each other. On the other hand, the proposed rainfed type of cultivation
will mean that settlers will have larger plots than thus far,    Consequently
the average distance to the fields will be longer. For instance, in a 400
famil village, with each family having 2 ha, including a house plot of
1/4 ha, the shortest distance from the kampong to the outer limit of the
fields is 0.9 km; in the same village, but with each family having 4 ha,
this distance is 1.5 km; and with 8 ha plots it would be 2.3 km. 1/
54.       It would be more effective to have fewer families per village, for
instance 200 families. For an 8 ha per family scheme, with house plots of
1/4 ha the kampong-field distance would be 1.7 km, and with house plots of
1/2 ha 1/5 ha. This is still considerably more than under the present 2 ha
per family system; therefore, in future settlement schemes involving much
1/   This assumes a square form of the settlement, with the kampong in the
center; for various reasons such a shape may seldom be possible, and
the village-field distance will be longer.


ANNEX 3
Page 7
larger farms, costs of proper village roads will be 50-100% higher than they
would be 1/ in today's settlements.
Cost Considerations
55.       If organized settlement projects are to be competitive with devel-
opment projects that do not involve transmigration, the average cost of
moving and settling people needs to be lowered. In 1971/72, costs per family,
as reported and carried by the Ministry of TRANSKOP, are Rp 260,000. In tidal
irrigation schemes, costs are somewhat higher: Rp 310,000. Costs include
(mission breakdown):
- Recruitment Costs                                Rp 4,000
- Transport and subsistence during travel            58,000
- Construction of a house, prior to settlement       65,000
- Clearing of one ha, prior to settlement            20,000
- Food during 12 months   4                          38,000
- Some tools and farm inputs                         20,000
- A host of other items, in the nature of
"overhead"                                         55,000
TOTAL      260,000
56.       So far, transmigration c6sts are being paid out of the budget of
the Ministry of TRANSKOP without reimbursement by the settlers. 2/ In view
of the income levels they would be able to reach from the proposed types of
cultivation, consideration should be given to repayments, so as to make
organized settlement (at least partly) self-financing. Repayment should be
stretched over a reasonable length of time (10-20 years) with progressive
installments, including the same interest rates as for other investment pro-
jects.
Subsidized Settlers
57.       The above outlined approach should be applied to only a part
of organized settlers; most of the settlers would come at their own expense,
receiving only a subsidy. This is in line with the approach taken by TRANSKOP
since 1969, but would go further. The ratio of subsidized (spontan) to
wholly financed (umum) settlers, which was about 3:1 in the 1972/73 program,
should be further increased to 6:1 by the third year of the second plan.
58.       The wholly financed settlers would be considered as pioneers, in
the sense that their village would be the nucleus of a much greater settle-
ment. Once this nucleus operates successfully, and only if it does, would
it attract a second wave. This is also shown by some Balinese settlements in
1/   "Would be", because actual expenditure on village roads has so far
benn negligible.
2/   Settlers are, of course, subject to the general IPEDA tax, which they
start paying after five years when title to land is received and the
administration of the settlement is transferred to the Ministry of
Home Affairs.


ANNEX 3
Page -25
Sulawesi, whose size more than doubled after settlers sent word to relatives
about further opportunities. When nucleus settlements are established, the
authorities should ensure that sufficient land is available for the subsidized
settlers that will come later. In addition, land should be put aside for the
natural growth of the original settlement population and, where necessary,
for local people to join the scheme. In the most recent settlements, reserves
are being made: one-third of the land is settled, one-third is kept in re-
serve for population growth, and one-third is available for local settlers.
59.       Establishment of the second wave would rely fully on the co-
operative spirit of the settlers and would entail limited government cost,
only for building material, tools, roads, communal buildings. Transport
should also be paid for by the Governmenit.
60.       Until November 1972, the amount of the subsidy was 30,000 Rp/family,
of which settlers received 11,000 Rp prior to departure while the rest was
spent for them in the settlement area. This amount was increased in
November 1972 to Rp 100,000 per family..
Size of Program
61.       The future size of the settlement program depends on a number
of interrelated factors. The success of the nucleus settlements would, first
of all, determine the number of subsidized settlers.   The willingness of
governments to support the necessary programs is another factor.    Although
transmigration is much emphasized in official discussions, only 3-4% 1/ of
the Central Government's development budget is spent on it. Making settlement
economically more attractive, would influence budget appropriations positively.
62.       The logistical and organizational capacity of the settlement
authorities will clearly be a constraint. This is probably one of the
weakest points, and is further discussed below.
63.       Transport facilities are sometimes mentioned as a constraint in
expanding the transmigration program. The major problems of inter-island
shipping are its high cost and irregular schedules, rather than the lack of
shipping capacity. Steps to improve interisland shipping are being taken.
The pace of settlement in Southern Sumatra depends on the Java-Sumatra ferry
service, which is to be replaced by a roll-on-roll-off ferry service which
will reduce transit time from the present five to six hours to one hour.
64. -     Hospitability of the local population and cooperation by the
provincial government will continue to ,be a key factor. By giving the local
population a stake in the development of their region, this problem could be
solved. Settlement scAemes should preferably be part of an overall regional
development plan, on condition that such integration does not cause undue
delay in the execution of the settlement program.
1/   Development Budget Directorate General of Transmigration in 1971/72 was
1.7 billion Ro, that is, 1% of total government budget. Expenditures by
supporting agencies such as Public Works amount to about twice as much.


ANNEX 3
Page 26
65.       All things considered, it should be possible to reach, within
a few years, a settlement program of 50,000 families per year, of which
10,000 would be wholly financed and the rest subsidized. The transmigration
cost of such a program would be Rp 6.5 billion, that is four times as much
as Directorate General of Transmigration's 1971/72 budget, that financed trans-
migration of nearly 5,000 families. The cost of land development for the
10,000 nucleus settlers can be estimated at an additional Rp 3.5 billion 1/
which is about as much as is now spent on irrigation infrastructure in
the settlement areas. The land area developed through this size of program
would be around 250,000 ha per year (of which 50,000 ha through nucleus
settlements). Is there sufficient land available to sustain such a program
over a number of years? It has been estimated that in Sumatra, Kalimantan
and Sulawesi, alone some 10-15 m ha of potential farm land are accessible
and can be developed over the next several decades.
66.       A program of the size outlined above would only make a small
dent in the population problem. Java's annual population growth is about
2 million people, or :400-500,000 families. But it would certainly have an
impact on the development of the Outer Islands. The agricultural area outside
Java is now about 8-10 million ha, and an annual settlement program of
250,000 ha would raise this by 3% per year. In terms of output the effect
would even be greater because of above average yields and cropping intensities
in the new settlements.
Organization
67.       At present, the Ministry of TRANSKOP organizes recruitment and
transport of settlers and uses contractors for land clearing and house con-
struction. For other aspects related to the scheme, it has to rely on other
government agencies: on the Ministry of Public Works to provide the irrigation
infrastructure and access roads; on the Ministry of Agriculture for input
supply and extension services; on the Ministry of Public Health for medical
services; etc. As support to settlement activities are not necessarily a top
priority to these outside agencies, synchronization of the activities of all
parties involved has often been poor. For instance, the Ministry of Public
Works currently is constructing irrigation canals of schemes that were set-
tled before 1960.
68.       Having to rely on outside agencies also leads to situations
where TRANSKOP is providing settlers for schemes which they are convinced
will fail. Examples are the tidal irrigation schemes (pasang surut), which
seem to be of unending interest to the Ministry of Public Works. Although
some give reasonably good results, most others are turning into a failure.
Yet, TRANSKOP is expected to provide these schemes with settlers, to test
various technical approaches.
69.       It would obviously be much better to make one agency respon-
sible for all the aspects of settlement. Since the Directorate General for
1/   See Annex 1 (Natural Resource Base) for fuller description of natural
resources.


ANNEX 3
Page 27
Transmigration in the Ministry of TRANSKOP has accumulated considerable ex-
perience in several aspects of settlement, it is logical to enlarge the re-
sponsibility of that agency, rather than building an entirely new one.
70.       To make from the present Directorate General of Transmigration a
self-contained land development agency would require some important changes,
both in organization and personnel:
-    Rather than settling in areas that happen to be available,
but of uncertain suitability, the agency should (a) centralize
data on land capability and present land use, along the lines
suggested in Annex 1; (b) choose a contiguous area with good
potential and easy access; (c) take measures to make that
land available to the agency.
-    As for the technical preparation of projects, the Directorate
General's role has so far been limited to liaison with the
technical divisions of Ministry of Public Works and Ministry of
Agriculture. Specialized staff would be required to carry out
the preparation with the agency. As such specialists are scarce,
it might be necessary to rely, initially, on outside contractors
or on staff seconded by other agencies.
-    For reasons outlined above, the economic aspects of settlement
have so far been left aside. In the future, the agency will have
to ensure (a) that income levels obtained by settlers are suf-
ficient to attract others and (b) that this is done at the
lowest cost. Specialists in farm economics and project
analysis will be needed.
-    Construction of the project is now carried out by contractors
hired by TRANSKOP (land clearing and buildings) and by the
Ministry of Public Works (irrigation infrastructure and roads).
With the proposed types of rainfed cultivation, project
execution would be limited to land-clearing, buildings and
roads. However, TRANSKOP should not depend on the Ministry
of Public Works to obtain budgetary funds for infrastructure.
It should obtain funds of its own and could contract work
with the Ministry of Public Works or contractors.
-    The agency will also need its own agricultural expertise. In
the central office, for project preparation and liaison with
research institutes; in the field, for extension work. The
latter is particularly important, because of the settlers' relative
unfamiliarity with rainfed cultivation methods.
71.       It will not be necessary to expand the overall staffing of the
Directorate General. Present staff numbers about 3,000 and is largely under-
utilized. 1/ Retiring staff should be replaced by fulltime professionals
specialized in the required disciplines.
1/   Compare with 1971/72 transmigration program of nearly 5,000 families.


ANNEX 3
Page 28
72.       Each settlement should be ensured of an adequate supply of inputs
and of remunerative market outlets. For this, it is probably needed to
establish cooperativel/ and other facilities in each settlement.
73.       While on one hand the task of the Directorate General of Transmi-
gration should be widened, its task might be simplified turning over
transmigrasi Sektoral (recruiting of laborers for mining and forestry en-
tetprises) to the Directorate General of Manpower.
Proposed Immediate Action
74.       To build up a program of the form and size discussed above
will need a series of actions that should be taken or initiated forthwith.
75.       Land. An inventory should be made of government-owned land,
that prima facie looks suitable for settlement purposes, in view of its
rainfall, accessibility and available or planned infrastructure. Its soil
capability should be established on the basis of available data and/or re-
search in the field. At the same time steps should be taken to obtain ad-
ditional privately owned land.
76.       Rainfed farming. The major constraint in shifting from irri-
gated to rainfed settlements is the lack of systematic knowledge about the
crops to grow, their yields, fertilizer requirements, pest and disease suscep-
tibility. It is suggested that an effort be made to collect existing
information on this, both -in relevant areas outside Indonesia (Philippines,
tropical Australia, and Malaysia for instance) and within the country. Also,
specifically designed trials could be undertaken as part of the research
effort--say, involving a dozen or so 500 ha plots in the most likely settle-
ment areas, subdivided into 4-8 ha farms and progressively manned with
actual settlers under close supervision of the research authorities.
77.       Training. Preparations should be made in the Directorate
General of Transmigration to train or attract staff able to cope with the
enlarged responsibilities.
78.       Timing. The Ministry of Manpower, Cooperatives and Transmigration
is currently preparing a number of projects for implementation during the
second plan with help from UNDP, FAO and IDA. The first of these to be
financed by IDA will probably be in Southern S4amtra.
79.       Ongoing .chemes. In the meantime, TRANSKlO may want to complete
ongoing projects of the traditional type. An exception should be made for
the pasang surut schemes, many of which might best be stopped. Provisions
should be made to provide aid to settlers in these schemes, until they can be
resettled in better areas.
1/   This would be facilitated by the fact that the Ministry of TRANSKOP
has a Directorate General in charge of cooperatives.


ANNEX 3
Page 29
D. Summary and Conclusions
80.       Despite scepticism expressed by some observers, there exists
(and has existed for several decades) a considerable outflow of Javanese to
the Outer Islands. This has only been partially offset by an opposite flow
to Java, and the net outflow can currently be estimated at some 35,000-50,000
people per year; virtually all Javanese migrants originate and find employ-
ment in the agricultural sector.
81.       The composition of this flow has changed over time. Workers
for the North Sumatra estates used to be an important element, but in the
1960's this tapered off and currently there is even a small net backflow.
With the expansion of the logging industry, considerable numbers of workers
have been (and still are) migrating to Kalimantan since the mid-1960's, and
labor requirements are expected to rise further. Organized settlement
schemes attracted about 40,000 Javanese families in the 1930's and from
1950-1965 some 100,000-150,000 families settled in the Outer Islands through
government financed schemes; since 1965 departures have dropped drastically
to less than 5,000 families per year. The most important element in trans-
migration has been and still is represented by spontaneous, i.e. unassisted
settlers.
82.       Under the present circumstances, transmigration faces several
problems:
-    The government estates have difficulties in expanding
*    production because of squatter problems; even if these can
be solved, it is unlikely that they will bring in significant
numbers of labor from Java.
The organized transmigration of settlers has run into
problems--the Directorate General of Transmigration has to
rely on other agencies for the execution of its projects
and experiences lack of coordination and inadequate
preparation of the schemes, settlements are expensive
as they are based on gravity irrigation and on some
(often failing) tidal irrigation, accessible and suitable
land exists-but in not made available to the settlement
agency, and the available budget is small.
-    Spontaneous settlers have increasing difficulties in
obtaining suitable land from the Outer Islands' autochthonous
population; also, for many the expenses involved in migrating
are beyond their means, while others hesitate to take the
big, irreversible step, because of the improved situation on
Java.
83.       All this does not mean that there is little need or potential
for further transmigration and that the matter should be forgotten. On
the contrary, the authorities should make every effort to promote and


ANNEX 3
Page 30
facilitate an increased outflow of people, not for the sake of transmigra-
tion, but in order to accelerate economic development. This will require
changes in existing policies and adoption of new ones.
84.       A sharp contrast exists between the factor endowments of Java and
of the Outer Islands. Java has a large industrious farm population for too
little land, while the Outer Islands possess vast areas of unused potentially
good farm land, but lack sufficient people to bring it into exploitation.
There is a growing realization that transmigration should and can play an
important role to diminish this imbalance, that it could make a modest con-
tribution in solving Java's unemployment while making a major one toward a
better resource use of the Outer Islands. As there are many claims on
Indonesia's limited capital availability, this resource development should be
able to compete with other investment opportunities in Java and the Outer
Islands.
85.       With this criteria in mind, an enlarged settlement program is
proposed of which several features wou.d part from the traditional pattern.
Many of the elements are already included in the government's plans for the
second plan.
cultivation, such as intensive annual crops, mixed crop/
cattle farms, smallholder treecrops 1/) which would
require relatively small investments per settler family,
but yield quite attractive returns to the economy and to
the settler.
-    only a minority of settlers would be fully financed by the
Government (on a repayment basis): these would be followed
by a much larger wave of spontaneous settlers, that would
receive an incentive in the form of a cash subsidy and
access to land.
-    settlements would initially be in suitable and accessible
areas, on government-owned land or land to be ocquired by
the authorities, and would preferably be concentrated in
areas where infrastructure exists.
-    the Directorate General of Transmigration would be built
into a self-contained land development agency, arranging
financing and coordination of tasks for which it hitherto
relied on outside agencies.
86.       It should be possible to build in a few years time a program
of at least 50,000 settler families per year, at an estimated cost of Rp 710
billion, which is substantially more than the total of present Government
expenditure for transmigration activities by all agencies. Further
expansion should be ehvisaged, depending on the organizational capacity
1/ Possibly around nuclear estates.


ANNEX 3
Page 31
of the development agency. To reach such a program, immediate action
is needed to inventory and acquire land, to collect information in and
outside Indonesia about the proposed types of rainfed farming and to adapt
the Directorate General's staffing to the enlarged task.
87.       In the purely agricultural field, an enlarged settlement pro-
gram would be the most promising approach to speed up development of unused
labor and land resources. Other possibilities would lay in expansion of
existing private estates, or in attracting new ones. A policy that would
encourage this type of development, could lead to additional employment of
estate labor and/or could attract new settlers around the estates.
88.       Increased agricultural activity in the Outer Islands would
undoubtedly lead to additional employment possibilities, both in enterprises
catering for the consumption and input needs of the farmers, in construction
of infrastructure, and in processing and marketing of the additional products.
Policies should be introduced encouraging such processing industries, for
instance, in the forestry sector.
89.       So far, transmigration has almost solely been confined to the
rural sector, both in origin and destination of the migrants. This is likely
to remain so. Apart from the activities related to agriculture referred to
in the previous paragraph, it seems likely that most new nonagricultural
enterprises (with the obvious exception of the oil and mining industry) will
be located on Java, because of nearness of the market and the availability
of cheap labor. This would contribute to a process of economic integration
of the various parts of the country, whereby Java would gradually become less
self-sufficient in food, and tely more on supplies from the Outer Islands.


ANNEX 4
Page 1
INDONESIA
AGRICULTURAL SECTOR SURVEY
LIVESTOCK
A. Production and Marketing Systems
1.        Cattle and buffalo are by far the most important farm animals in
Indonesia. However, except in some of the Eastern Islands, where cattle ire
kept as a source of capital, the raising of cattle for slaughter is not an
important industry. They are kept mainly for draught with beef as a
by-product of the work function. There is some specialized production of
milk for urban markets. Small ruminants (goats and sheep) are kept to
utilize the marginal roughage, and poultry are kept as scavengers. Practically
all livestock are maintained on smallholdings.
Numbers and Distribution
2.        The only sources of' information on livestock numbers are sample
censuses made in 1957 and 1967. However, this data does not provide enough
accuracy for projections to the present. As a general impression, the data
on cattle, buffalo and horses seem more reliable than for sheep and goats.
The results of the 1967 sample survey, with aggregate comparisons, are
listed in Table 1 .1/
3.        The apparent trend is said to be, toward increasing cattle and
decreasing buffalo numbers. Smallholder communities are showing an increas-
ing interest in cattle, from buffalo to cattle whenever land cultivation can
be effected by the latter. Cattle and buffalo densities are greatest on Java
and Madura, which have the largest number of agricultural holdings. However,
the ratio of animals to human population is highest in Nusa Tenggara (one head
per 5-6 people) and Bali (one head per 7-8 people), followed by Sulawesi (one
head for about 10 people). This indicates that in Nusa Tenggara, and to a
lesser degree in Sulawesi, cattle are kept in addition to farm draught
requirements, to utilize existing natural grasslands. The high cattle
density on Bali is required for the high cropping intensity there. The 1967
survey also gave estimates of the number of livestock holdings:  3.3 million
for cattle and 1.2 million for buffalo. Average herd size is probably two or
three cattle or buffalo per farm.
1/   Subsequent estimates of the D.C. Atiimal Husbandry for later years through
1971 based largely on 1970/71 reports from Provincial Inspectors of Live-
stock show a sharp decline from these numbers for livestock in all
categories on Java with increases in the Outer Islands. They also show
a declining trend for cattle, sheep, goats and pigs with slight increases
for buffaloes and horses. Since the methods of estimation are not
comparable and have a fairly heavy subjective element, these new estimates
have not been used in this analysis.


ANNEX 4
Page 2
Table 1: INDONESIA LIVESTOCK POPULATION, 1967
('000 head)
Region                Cattle    B;ffalo      Goats   pSe                   Horses
Java                  4,583.7    1,464.2    5,428.7   3,522.3     800.2    167.4
Sumatra                 780.0      602.8      831.1      67.4     568.4     32.5
Kalimantan                76.5       9,2       53.0        .4     232.3      1.5
Sulawesi                571.8      277.9      327.3       6.7     492.5    134.1
Bali                    310.0       11.5       17.7        .6     527.0      8.3
Nusa Tenggara           494.2     366.1       434.9     106.8     673.3    288.3
All Indonesia 1967:   6,816.2   2,731.7     7,092.7   3,704.2   3,293.7    632.1
1964:   6,537     2,836             10,960        2,940      653
1961    6,348     2,893             11,507        2,687      720
Source:   Directorate General of Livestock Services.
Draught and Beef Cattle
4.        Land preparation on smallholdings is traditionally performed by
cattle or buffalo, or by hand (farmers use wooden moldboard ploughs with
an iron share and wooden harrows). For economic reasons, cows are used for
ploughing while most bulls are sold when they reach slaughter weight or when
farmers need cash; also, some bulls are used for farm and road transport.
Cows start light work when they reach two years of age, and are fully used
at the age of 3-1/2 - 4 years. They are spared work for about 10 days after
parturition, and are normally sold for slaughter when well over 10 years of
age.
5.        There are three distinct breeds of indigenous and imported cattle
in Indonesia. They belong to Bos indicus or Bos sundaicus and crosses between
them and are designated as Ongole, Bali, and Madura cattle.
6.        Ongole cattle were originally imported from India. This breed has
been kept pure on Sumba and its cross-breeding there is still prohibited by
Government regulations. The breed has been used widely for the upgrading of
indigenous cattle on Java, and the high-grade Ongole cattle on Java today
are much heavier and have better body conformation than the pure-bred Ongole
kept on the unimproved natural grasslands of Sumba. Pure-bred and high-grade
Ongole cattle now probably account for more than 80% of the total cattle
population of Indonesia. They are large-framed, hardy, disease-resistant,
and well adapted to the existing environment. Because of their numbers they


ANNEX 4
Page 3
would probably have to be used on a base population for any program of beef
production development, although their growth rate at early age and their
muscular growth potential in relation to skeletal size need considerable
improvement. Ongole cattle are shy breeders, and heat detection is difficult.
Their average fertility is about 60%.
7.        Bali cattle originated from Bali and have spread to Sulawesi and
some islands in Nusa Tenggara. They are remarkably uniform in type, medium-
framed, slow-growing, but well-muscled animals. They are admirably suited
for draught in small fields and for keeping on smallholdings, where they
are handfed fresh or conserved coarse roughages. On Bali, their calving
rate is about 80%. The suitability of Bali cattle as a grazing animal has
still not been proved, nor is it known what growth rate would be attained
with improved nutrition. Under the prevailing feeding systems, Bali cattle
have high dressing-out percentages and produce lean carcasses even at high
final weights. Their beef is stated to be similar to venison in that there
is no marbling or intermuscular fat. The cross-breeding of Bali cattle on
Bali and the export of females is prohibited by Government regulations.
8.        Madura cattle are descendants of crosses between Bos sundaicus
and Bos indicus cattle. They are restricted to the islands of Madura and
Flores. This is a small, extremely hardy breed with a high degree of
endurance and harmony with the existing poor environmental conditions.
Fertility level among mature females is about 80%.
9.        In addition to the three main types, there are a few groups of
small-sized indigenous cattle in,some provinces of Sumatra. Upgrading with
Ongole bulls is being carried out.
10.       For the three main types, the average liveweight (in kg) of mature
cattle would be approximately as follows:
Ongole            Bali     Madura
Java      Sumba
Bulls                  550        400        400       300
Cows                   400        300        300       180
Females produce their first calf at 3-1/2 - 4 years of age.  Normally, bulls
reach sexual maturity at the age of about three years, when they are trained
for work. Since most bulls are sold at a relatively young age for slaughter,
only about 30% of the total cattle population older than two years are males.
As mechanization of road transport progresses,  this proportion is likely to
decline still further. On Madura, for instance, where many farmers need the
additional income from the sale of cattle, only about 10% of the cattle
population over two years of age are bulls. 1/
1/   Government regulations prohibit the slaughter of productive cows.  There-
fore, bulls are sold for consumption in East Java at the age of about
two years, weighing about 150 kg.


ANNEX 4
Page 4
11.       Management Systems for Cattle.   All smallholders take extremely
good care of the cattle they own. The feeding of cattle can best be outlined
under three types as determined by an interaction between ecological and
land use conditions.
12,       First, the irrigated heavily populated areas such as Java and Bali.
Fodder production on arable land is quite unknown, as all land is needed for
the production of food or cash crops. All large ruminants are kept in sheds
and fed on roughage, which is collected along the irrigation ditches or
roadsides. On average, it may take one man five-six hours to collect the
roughage consumed by one cow per day. A mature Ongole cow consumes about
30-35 kg (buffalo about 50 kg) of fresh roughage per day. Rice straw is
normally not used as roughage for cattle, but the straw of leguminous crops
(soybeans, groundnuts, green beans) is harvested carefully and used to feed
animals durng the dry season. On average, about 0.6 head of cattle are
kept per hectare of arable land in Indonesia. One head per hectare is
found in some isolated areas with complete water control and high cropping
intensity.
13.       Second, areas with a lower irrigation intensity aud high population
pressure, such as Madura, and Lombok. During the wet seasons, cattle are
fed on fresh roughage cut daily along roadsides or field boundaries. 1/ Rice
and legume straw and maize stalks are harvested for the feeding of cattle
during the dry seasons, when the animals are tethered or herded in the fields
to feed on weeds. The average cattle density on Madura is two animals per
hectare of the island's total surface.
14.       Third, areas with natural grassland and low population density,
such as Eastern Islands of Nusa Tenggara, Sulawesi, Kalimantan, and Sumatra.
Under the influence of burning, large tracts of land which were originally
under forest have converted to grass cover.  Imperata cylindrica is the
predominant grass up to 800 m elevation in most areas with high rainfall of
little seasonality, whereas Heteropogon and Themeda spp. dominate in dryer
regions. Many of these grasslands are too far away from farming communities
to be used by village cattle or buffalo owners. In these areas, the main
pattern is for animals to graze during the crop-growing seasons on the
natural grasslands near villages or under plantation tree crops, and during
the nongrowing season cattle are herded on the farmers' own fields. In
some cases, graziers associations have been formed by villagers, in order
to organize the regular use of grassland areas belonging to the villages on
a communal basis.
15.       The beginnings of a beef industry exist in this third type of cattle
management condition. Some individual farmers have built up considerable
cattle (and buffalo) herds which vary in size between 50 and 800 in South
Sulawesi, North Sumatra and South Kalimantan, and may be as large as 2,000
on Sumba. Frequently these herds are grazed on abundantly available
1/   On Madura, during the wet season,  a cosiderable number of cattle are
also moved to areas where soils.are so shallow that they can support
only some seasonal growth of grasses and shrubs.


ANNEX 4
Page 5
Government grasslands, for which no land title or grazing entitlement is
obtained. Applications for lease of Government grassland have been filed only
during the last few years, and many of these are made by nonagriculturists
and partly for speculative reasons. A limited liability company has been
formed recently for the development of cattle finishing on the island of Batam,
opposite Singapore. Altogether, the cattle ranching sector at present
contains about 40,000-50,000 cattle and is characterized by low cattle
performance. The fertility rate among mature cows is approximately 50% and
calf mortality is about 15-20%. Animals reach mature weights (approximately
350 kg in Ongole steers) at about six-seven years of age. No investments
are made in grassland improvement, stock management facilities or water
supplies and the inputs in fencing are minimal. Management principles
are, however, being applied on two joint venture, beef cattle ranching
operations which are under development in South Sulawesi (11,000 ha) and
Timor (40,000 ha). An IDA livestock project financed in 1973 provides
for establishment of a number of government ranches in South Sulawesi and
Sumba to develop improved techniques for pasture development and herd
management.
16.       In some parts of Indonesia, particularly on Bali, the contract
finishing of cattle for export has long tradition. Cattle of about
250-350 kg liveweight are purchased by merchants and given to farmers in
groups of two to three. Such farmers are paid Rp 100 (US425) per head
daily for the t,.,me the animals remain in their care. Others are paid 50% of
the difference between the original purchase price and the final price, less
agents' fees. This system of contract finishing is of considerable value
for the assembly of large numbers of animals ready for export.
Milk
17.       There are about 55,000 head of dairy cattle in Indonesia, nearly
all of which are in Java and the few large cities in Sumatra and Kalimantan.
Less than 40% are cows in milk. Practically all dairy cattle have some
highgrade Friesian blood based on original importations from the Netherlands.
The number of dairy cattle has not increased during recent years. Present
retail prices for fresh milk are still so high, and qualiy so variable,
that the market is severely limited.
18.       Milk production mostly comes from commercial dairies which usually
keep 10-20 lactating cows each, but sometimes up to 100 cows in the "flying
herd" system. All feed requirements are met from external sources, either
bought, or often from unauthorized grazing in nearby plantations. Purchased
roughage costs about Rp s 70-100 (US15-25) per cow per day. Concentrate
consisting of coconut cake and rice bran at the ratio of about 1:3 cost about
Rp 12 (US03) per kg and are fed at a level of 1 kg for 3 kg of milk. Cows
yield 2,000-2,500 kg per lactation.
19.       About 10 years ago, the Government tried to introduce dairying on
smallholdings, but without much attention to integration into the farming
systems. At that time, the farm gate price for 1 kg of milk was about equal
to the market value of about 2 kg of rice. In rural areas today, the farm
gate price for I kg of milk corresponds to the market value of only about
1 kg of rice.


ANNEX 4
Page 6
20.       Milk production on smallholdings in rural areas has been declining
steadily, in spite of Government efforts to assist this sector by the esta-
blishment of cooperative milk ciollection and marketing.  Only a small number
of farmers, who for instance require cow manure for intensive vegetable
production, continue to milk their cows. Direct production costs in these
circumstances are low. Cows produce about 1,500 kg of milk per lactation.
Female calves are reared using about 400-500 kg of fresh milk, whereas male
calves are normally sold as soon after birth as possible.
21.       Many small farmers, involved in dairying, have switched to either
raising female calves up to first parturition or are feeding dry cows up to
their next parturition. Both groups of animals are obtained from the com-
mercial dairies. The payment basis is the output of milk from the freshened
cow as measured by test milkings during a 48-hour period. For each kilogram
of milk produced, the smallholder is paid Rp 6,000 (US$15). If no dry cow
is returned, farmers ,obtain an additional Rp 35,000 (US$85) to purchase
a cow weighing about 350 kg, or the value of the milk yielA is raised to
Rp 8,000 (US$20) per kilogram. Assuming an average yield of 10 kg per day
and an inter-calving period of 18-20 months, the gross return from feeding
dry cows up to the next parturition would be about Rp 6,000 (US$15) per
month per cow kept. However, farmers without the necessary capital to finance
the transaction must work with animals owned by middlemen; they receive
either 50% of the gross return, or in effect receive the income of an agri-
cultural laborer, i.e. Rp 75-100 per day.
Buffalo
22.       The vast majority of water buffalo are kept as working animals for
rice cultivation in areas where the mud is too deep for cattle. Thus buffalo
concentrations occur in East Java, Sumatra and some alluvial plains of
Sumatra, Kalimantan and Sulawesi. Only a few farming communities prefer
buffalo for traditional reasons.
23.       The management and use of buffalo are similar to that of cattle,
and generally farmers take very good care of their stock. By five-six years
of age, bulls usually reach their final weight of about 600-650 kg and cows
about 500-550 kg. The fertility rate among mature females is approximately
50-55%.
24.       One reason buffalo are apparently declining in numbers is that
farmers are not satisfied with the low fertility level, compared to that
of cattle. Also, the price of a buffalo - Rp 50,000-70,000 (US$125-175) is
a large capital investment for the average Indonesian smallholder.
25.       A traditional system of beef production from buffalo in South
Kalimantan province is of particular interest. Each year during the main
rainy season, from November to April, the Barito river and its tributaries
flood an alluvial plain of some 500,000-600,000 ha to a depth of 1-1/2 -
2-1/2 meters. Large parts of this area are then covered by water hyacinths
and a variety of grasses, of which Leersia hexandra provides a nutritious
food for ruminants. On the western edges of the flat plain, farmers have


ANNEX 4
Page 7
initiated a low-cost beef production system, Presently, a total of about
10,000 buffalo are involved, kept in average herds of about 150 animals,
varying between 50 and 500 head per herd. Cooperative ownership or profit-
sharing arrangements are quite common in these operations.
26.       During dry seasons, buffalo are herded on the natural herbage
covering the dry ground. In wet seasons, they are kept on platforms at night;
during the daytime they graze the natural grasses in the shallow water.
27.       Shortage of buffalo and capital are limiting the expansion of
this low-cost beef production system. Also, the control of contagious
diseases is extzemely difficult in an area which is accessible only by boat
and where livestock are widely dispersed. In 1971, for instance, a serious
outbreak of haemorrhagic septicaemia is reported to have killed approximately
5% of the total buffalo population.  Furthermore, overgraz*ng in some areas
has led to a serious spreading of water hyacinth and to bush encroachment.
Small Ruminants, Pigs, and Poultry
28.       Goats. Goats are kept for meat production in association with
smallholder farming, in order to raise cash income. They are found in areas
where roughage sources in cultivated areas are not completely used by cattle
or buffalo. For this reason, the sheep and goat population of Bali, for
instance, is very small. They may at times be herded on natural grassland
close to villages, but in sparsely populated areas they are rarely kept with
the sole intention of utilizing natural grazing resources.
29.       Two goat breeds are economically and numerically important; the
Kambing Katjan and the Jamna Pari (called locally Etawah) and its cross-
breeds with the former. The Kambing Katjan is a small and apparently hardy
breed. Mature bucks weight about 30 kg and does about 20-25 kg. Animals
of this breed are widely distributed and found on all islands. -The Jamna
Pari were imported from India about 40-50 years ago and, after initial
multiplication on Government farms, were released for cross-breeding with
the indigenous Katjan goat. The majority of goats on Java today show signs
of this cross-breeding with the Jamna Pari which is pheno-typically different
and much lrger and heavier--mature bucks weigh 40-45 kg and does 30-35 kg.
30.       First kids are dropped when does are about 12-13 months of age and
thereafter about twice in 18 months. Mating is not seasonal and no-,mally
twins are born. The fertility rate among mature females is estimated at
about 180%. Females are not milked. Birth weights of kids are about 1.5 kg
rising at weaning time after about four months to 8-10 kg. Mature weights
are attained at 1-1/2 - 2 years of age. Males are normally castrated, as
meat from bucks fetches lower prices. Many goats are slaughtered at
relatively low liveweights, because their owners are in need of money.
31.       Goats are kept in herds of 2-10 animals. Many cultivators keep
their goats continuously penned in separate houses with raised floors. They
hand-feed various roughages which can be collected from the tree crops
around the homestead or from roadsides and irrigation bunds in the neighbor-
hood. When sheep and goats are kept simultaneously, the coarser material is


ANNEX 4
Page 8
sorted out for the goats. In areas with limited or no irrigation, goats
roam free or are herded on uncultivated arable fields during dry seasons.
32.       Sheep. Sheep are of much less importance than goats and are
mostly to be found in West Java and in some islands of Nusa Tenggara. They
are all of a hair-wool type with a regular subcutaneous distribution of fat.
However, fat-tail sheep are kept on Lombok. All sheep are kept for meat
production and only a little additional income accrues from the sale of
coarse wool which is processed in a carpet wool factory at Bogor.
33.       Sheep are reported to lamb twice annually and to have a lambing
rate of about 200-220 rams from 100 mature ewes per year. Mature rams
weigh about 20-25 kg and grown-up females about 15-20 kg. The yield of coarse
wool is about half a kilogram per animal per year, but sheep are rarely shorn,
wool being harvested at slaughter.
34.       Pigs. Pigs are kept only by the non-Mohammedan sectors of the
population, which are comcentrated mostly in North Sumatra, Bali, the
northern parts of Sulawesi, and in the eastern parts of Nusa Tenggara. The
local pigs are in general small, black and unimproved of the Sus vittaius
type. They are capable of surviving as scavengers on low energy and protein
diets, grow very slow!ly, and have a tendency to become overfat. As they are
particularly deficient in muscular growth potential, their response to
improved methods of feeding would be inadequate. Some attempts at breed
improvement are being made in North Sumatra using Landrace and in Bali and
North Sulawesi using Saddleback.
35.       In some areas with relatively low wages for agricultural labor and
relatively low prices for feed ingredients--around Malang and Jogjakarta--
a number of commercial pig production units have developed to supply Java's
bigger cities with fresh pork. Yorkshire and Landrace pigs and their
crosses are kept under an efficient low-cost housing system, showing good
fertility performancewith about 16 piglets weaned per sow per year. However,
the growth performance of pigs is poor, probably as a result of unbalanced
rations; pigs are sold at a liveweight of about 50 kg when they are
approximately 250 days old, which corresponds to a daily gain after weaning
of about 250 grams.
36.       Poultry. Poultry production in Indonesia has traditionally been
a village-based industry (kampung production) with individually-owned small
flocks of chickens, and sometimes larger flocks of ducks. Commercial poultry
meat production is still in an embryonic stage but that of eggs is at present
undergoing vigorous development around big cities. The demand for kampung-
produced eggs in bigger cities will probably decrease considerably during the
next few years in consequence. It is estimated that, in early 1972, about
half of all eggs consumed in Jakarta originated from commercial poultry farms
around the city.
37.       The 1967 liv6stock survey estimated the number of kampung birds
at between 60 and 70 million, about two-thirds of which were in Java. Kampung
production is an important source of cash income for many smallholders who
keep flocks of 5-10 birds as scavengers; the only food they receive, and


ANNEX 4
Page 9
that irregularly, is household scraps. Production is about 40 small eggs of
35 grams per hen per year, about half of which are sold. Hens of indigenous
origin weigh about 750 grams and cockerels about 1 kg. The live birds are
sold at about 12-18 months in local markets for resale in bigger cities.
38.       Kampung ducks are kept either in small flocks like poultry, or in
larger groups of between 40 and 200 birds which are herded along roadsides
or on suitable fields, or are kept in low-cost commercial units in swampy
areas. Ducks are kept mainly for egg production. They are claimed to be
hardy and well adapted to the environment, with low mortality rates. On
the feed they scavenge, ducks produce about 150-160 eggs during the first
year, about 240-250 eggs in their second, and about 200 in their third year.
They are then sold for slaughter at a final weight of about 1.5 kg. The
local duck industry shows production specialization in that some farmers
produce brooder eggs, other raise day-old birds to five months, and others
fatten surplus males or keep mature females for egg production.
39.       In early 1972 only one commercial broiler production unit was
working near Jakarta; it supplied the city's limited demand for high-quality
poultry meat. Other intensive broiler units were under consideration.
Commercial egg production has been spreading very rapidly during recent
years around many big cities. In early 1972, an estimated 2.5-3 million
layers were kept in these enterprises, which range in size from 200 to
5,000 birds. The Government Bimas scheme fosters the establishment of the
smaller units. There is at present sufficient incentive in commercial egg
production for private businesses to be interested in expanding their own
operations in line with the growing demand for higher quality and larger
eggs. This section is actually self-financing most of its capital investment.
Parent stock is obtained from reputable breeding companies in the U.S.A.,
Japan, the Philippines, or Singapore.
Volume of Present Production
40.       According to Ministry statistics, slaughterings for local con-
sumption declined between 1967 and 1970, from about 1 million head of cattle
to 780,000, and from 275,000 buffalo to 160,000. The indicated extraction
rates are about 15% for cattle and 11% for buffalo in 1967, and about 11%
versus 6% in 1970. (Relatively high extraction rates in cattle reflect the high
proportion of mature females in the cattle population.) Ruminant meat
production in 1970 was estimated at 256,000 tons, of which about 70%
(180,000 tons) were derived from cattle and buffalo. At average carcass
weights of 120-130 kg for cattle, and 180-190 kg for buffalo, the 1967 level
of slaughtering is in rough equivalence with the 1970 volume of production.
From this, one can infer that the Ministry estimates are subject to con-
siderable doubts. The decreases in slaughter are incompatible with Government
estimates that total meat available for local consumption have remained more
or less constant.
41.       The export of cattle and buffalo has increased continuously from
about 19,000 head in 1965 to 89,000 head in 1970, but it decreased in 1971
to about 76,000 head. The number of exported cattle increased at a faster
rate than that of buffalo up to 1970, and the decline of total exports in


ANNEX 4
Page 10
1971 was due to a reduction in cattle numbers whereas the number of buffalo
exported was higher in 1971 than in 1970.
42.       Government statistics also show a very strong decline in the
slaughtering of goats, from about 1 million head in 1967 to about 490,000
in 1970; whereas the slaughter of sheep allegedly increased from 270,000
to 490,000 over the same years. As the proportion of unregistered slaughter
is greater in this category than in cattle and buffalo, these figures must
be considered with even greater caution. The total volume of carcass meat
and goats is estimated at 80,000 tons per year.
43.       Government estimates of poultry production indicate about 1,500
million eggs and 50,000 tons of poultry meat per annum.
The Disease Situation
44.       The livestock diseases diagnosed in 1970-71 are listed in Table 2.
Many livestock diseases of economic importance were diagnosed in the various
provinces and the Department of Livestock Services pointed out that nondiag-
nosis of a disease does not necessarily mean that it does not exist. Many
of the diseases are a serious threat to the development of the livestock
industry.
45.       It now appears that the "Djembrana plague" on Bali in 1964 was
actually an outbreak of rinderpest, but no cases have been diagnosed in
Indonesia since mass vaccination with Japanese vaccine.  Foot-and-mouth            4
disease is endemic in Java, Madura and some provinces of Sumatra. It is
claimed that few indigenous cattle and buffalo die from this disease, but
its control and eradication are of utmost importance in view of the
Government's endeavor to promote the export of live cattle and beef.
Haemorrhagic septicaemia and anthrax occur sporadically and losses due to
the former can be quite severe during wet seasons. Rabies is encountered
mainly in Sumatra, whereas the eastern parts of Indonesia are allegedly
free from this disease. Many cattle and buffalo are carriers of surra.
Normally only individual animals are affected but occasionally numerous
losses are experienced particularly in young stock. A large variety of
ecto- and endoparasites are found. Indigenous cattle normally have a high
degree of resistance, and few deaths occur, but reduction in fertility,
growth, and work performance must be considerable.
46.       Newcastle disease is of great importance.  Virtually all domestic
poultry not vaccinated against this disease will either become infected or
will have survived attacks. The birds generally become infected between
one and six months of age and, as the virus strain present in Indonesia is
particularly virulent, mortality is 40-50%. Newcastle disease is a very
real threat to the commercial poultry industry and also of considerable
danger to any endeavors to upgrade kampung chicken with more productive
breeds.


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ANNEX 4
Page 12
Livestock Marketing for Local Consumption
47.       Ruminant Meat. Some provinces--Java, Bali, an' some parts of
Sumatra--have weekly livestock markets where draught animals change ownership
and where slaughter stock is purchased by butchers or agents of cattle
merchants. In other provinces, stock has to be purchased individually from
owners. Most larger cities have adequate slaughter facilities and meat
inspection; however, the hygienic conditions of the innumerable and generally
very small outlets of the retail trade of meat leave much to be desired.
48.       As the costs for marketing, transnort, holding, quarantine and
slaughter are charged on a fixed rate per head, most sheep and goats-and
the ligher cattle are normally consumed locally. Cattle between 300 and
400 kg liveweight are frequently destined for interisland shipment, e_g.,
from East Java to Central Java or West Java. Only animals weighing more than
400 kg are selected for export.
49.       Prices paid to farmers for their livestock and animal products vary
with season, the distance from urban communities or holding grounds, and the
availability of shipping. Typical farm prices in May '1971 in Rest Java and
Bali would be about Rp 100 (US 25) per kg liveweight for exportable cattle
and buffalo and about Rp 60-80 (US415-20) per kg liveweight for lighter
animals intended for domestic consumption. The price difference between
animals for local consumption and animals for export is decreasing. In
Eastern Nusa Tenggara, prices for all animals are considerably lower, and vary
between Rp 40 and 50 (US410-12) per kg liveweight, whereas iu Stmatra and
Kalimantan prices for all cattle and buffalo are always higher and similar
to those fetched by export cattle from East Java, Bali or Lombok. Farm gate
prices for sheep and goats are about Rp 80 (US420) per kg liveweight.
50.       Retail prices have risen conslderably during the last few years.
(Jakarta price for beef increased about 60% from December 1968 to December
1971). In large cities, 1 kg of mutton or beef now costs between Rp 300 and
400 (US$0.75-1.00). High class markets in Jakarta offer 1 kg of filet for
Rp 700-750 (US$1.75-1.85), 1 kg of steak for Rp 400-500 (US$1.00-1.25) and
other cuts Rp 250-350 (US$0.60-0.85) per kg.
51.       Pork. Farm prices for pigs of about 50 kg liveweight vary between
RP 90 (US 22) per kg liveweight in Bali and Rp 120 (US430) per kg in Java
and North Sulawesi. Retail prices are abo,;it Rp 180 (US445) per kg of pork
(meat, bones and fat),'and Rp 250-300 (US460-75) per kg of lean meat.
52.       Fresh Milk. The marketing and distribution of fresh milk is
handled by middlemen who collect from farmers or cooperatives and two municipal
dairy centers in Jakarta and Bandung provide milk directly to consumers.
Transport of milk is generally by bicycle or other- light'vehicles. Only some
cooperatives and municipal centers, and total milk cooling capacity is about
8,000 kg per day. Some of this equipment has been provided by UNICEF.
53.       Farm gate prices for peri-urban dairies selling through middlemen
are between Rp 35 and 50 (US48-12) per kg. Farmers in rural areas'selling
to cooperatives obtain between Rp 20 and 30 (US45-7) per kg, whereas those


ANNEX 4
Page 13
selling through middlemen may get as little as Rp 10-15 (US12.5 - 4).  Retail
prices vary between Rp 65 and 85 (US416-21) per kg.  Consumers in Jakarta and
Surabaya have to pay the highest prices.
54.       Milk Products.  Imports in recent years have consisted mostly
(over 90%) of condensed whole milk and milk powder. In 1969, a joint
Australian-Indonesian enterprise started to reconstitute largely condensed
milks from imported skimmed milk powder and butter oil.  In 1971, a joint
Dutch/Indonesian factory started similar operations, also near Jakarta,
and a third enterprise of this nature is presently under construction near
Surabaya. These firms consider that the prospects for selling large quantities
of condensed milk and baby food are quite promising and it seems likely that
the present price of Rp 80-100 (US/20-25) for a 397-gram can of reconstituted
products will be lowered due to internal competition, in spite of recent
rises in milk product prices on the world market. Imports of dairy products
in terms of milk equivalents increased eight fold from 1967 to 1970 largely
as a result of the lower price of recombined products.
55.       Poultry eat. Slaughter chickens produced by smallholders are
marketed through intermediaries. Kampung birds sometimes travel long
distances, for instance from the Metro area in Lampung to Palembang (about
500 km) or from South Kalimantan province to Balikpapan (about 250 km) in
East Kalimantan province or from North Sulawesi to Maluku by air. Farm gate
prices vary drastically with season and the distance from major markets,
ranging from Rp 100 (USJ25) to Rp 250 (USd62) for a bird of about 750 grams.
Retail prices are remarkably uniform throughout the country's cities, about
Rp 250-300 (US/62 75) per bird. Prices of commercially produced broilers,
which are available only in Jakarta, are about Rp 650 (US$1.60) per bird of
about 1-1/2 kg liveweight.
56.       Eggs. Kampung eggs are either sold to middlemen, who take care of
their transport to towns, or exchanged for other goods in village markets.
Farm gate prices are estimated to be between Rp 8 and 14 (US42-3.5) per
egg, while the retail prices vary between Rp 12 and 18 (USO3-4.5). This
corresponds to a variation in the retail price per kg of eggs of Rp 350-500
(US$0.85-1.25). Prices are highest in November and December.
57.       Commercially produced eggs are often sold directly to retailers.
Some commercial egg producers near Djakarta founded a marketing association
(Egg Marketing Board) in 1970 in order to stabilize egg prices. The retail
price per egg is higher for commercially produced eggs, due mainly to size
differences, and varies between Rp 20 and 28 (US45.7). Normally, commercially
produced eggs are also fresher when they are purchased.
Live Animal Export
58.       Of total exports, about 40% originated from Bali and East Java,
40% from East Nusa Tenggara, and 20% from West Nusa Tenggara. The origin
of animals is determined by the distance from the major Indonesia consumption
centers and by the freedom from foot-and-mouth disease of the regions con-
cerned. About 10-15% of the exported animals were sold in Singapore; the
bulk went to Hongkong. Butchers in Hongkong and Singapore provide beef for


ANNEX 4
Page 14
Chinese customers. They demand heavy animals with a high yield of lean meat.
Overfat cattle are discounted by up to 10%. Tenderness of beef and therefore
age of animals purchased is of little relevance.   There is only a limited
market for frozen beef.
59.       Shipments from Indonesia to Hongkong occur between February and
September, and have increased in recent years and reached a high of about
81,000 head in 1970 (of total imports of about 200,000). Singapore received
approximately 7,500 cattle and buffalo from Indonesia in 1969. Animal
disease regulations in Singapore are stricter and permit the import of
live animals only from those areas which are free from foot-and-mouth
disease and rinderpest, so that the eastern islands of Nusa Tenggara are
the only source of Indonesian supplies. Furthermore, Indonesian exporters
have in recent years preferred Hongkong to Singapore taking advantage of
higher prices, i.e., US$1.10 per kg carcass wholesale in Hongkong versus
US$0.90 in Singapore. 1/
60.       Other markets have been difficult to penetrate. Exports to
Malaysia have been virtually prohibited on account of veterinary regulations
since 1963; in April 1971, however, some provinces in Northern Sumatra were
declared free of foot-and-mouth disease by a visiting Malaysian veterinary
mission. Since then, trial shipments have been made from Medan to Penang.
Trial shipments of store cattle to the Philippines were made in 1971, but
the trial was not successful on account of high transport costs per unit
liveweight and because of difficulties in receiving payment. Beef exports
to most other Southeast Asian markets would probably require frozen beef,
for which at present no processing facilities exist. Also, livestock
disease conditions would have to be brought under control and the availability
of stock would have to be increased before a serious marketing effort could
be made.
61.       Shipping services are very irregular and offer only general cargo
services. No central authority exists to organize the flow of ships or of
cattle. The present freight charges for cattle and buffalo to Hongkong
are US$30 and US$31, rebpectively, and to Singapore US$17 and US$18.
Indonesian shipping companies demand full freight payments in advance. The
freight rates for interisland shipment vary between Rp 3,000 and Rp 5,000
(US$7.50-12.50) per head irrespective of size. Losses in transit to Hongkong
are estimated at 3-5% but may reach 10% during typhoon seasons. In addition,
cattle and buffalo can lose up to 15% of their liveweight during their 7-10
shipment. Other costs, such as for feed and taxes, add to a total of about
Rp 5,300 (US$13) per animal, Exporters also carry the costs for cattle
attendants and disembarkation at the receiving point, which are estimated at
US$8-10 per animal.
1/   Wholesale prices per kg carcass weight in Hongkong:
1968      US$0.65
1969      US$0.74
1970      US$0.88
1971      US$1. 10


ANNEX 4
Page 15
62.       Only castrated males can be exported. All other animals must be
slaughtered locally. A system of annual quotas restricts animl exports to
about 4-5% of total numbers on the island concerned. These targets were
previously announced by the central government by the beginning of each year,
but are now handled on a regional basis by provincial governments. Sometimas
quotas cause considerable confusion since progress towards the allowable number
is not announced regularly.
63.       Indonesian disease regulations require that all animals be held for
observation and inspection in a Government quarancine area for a minimum of
10 days before export. During this time they should be vaccinated against
haemorrhagic septicaemia and anthrax. On Bali a 14-day quarantine period
is required.
64.       Quarantine requirements also add considerably to the costs of the
livestock export trade. Exporters have to pay for feeding as well as for
cost of space in holding grounds and veterinary expenses. Costs per animal
in quarantine in Indonesia were reported to be Rp 900-1,000 (US$2.10-2.50).
The cumpulsory 10 days quarantine period in Singapore and Malaysia costs on
average US$4.25 per head.
Feed Industry and Ingredient Prices
65.       The Indonesian feed industry is still in its infancy. At present,
only the peri-urban commercial poultry egg producers have a significant
demand for compounded feeds, and all the larger entrepreneurs buy themselves
the ingredients they require and process these in their own mills. In
addition, a few small mills exist near the large cities, where feed is
compounded for poultry feed retailers or directly for the smaller egg pro-
ducers on a contract basis. The feed demand of the poultry egg production
sector is likely to continue to increase substantially during the next years;
feed demand of the comercial broiler sector may grow to a significant level
too, but the other livestock sectors are not expected to build up major feed
demands during the foreseeable future. A few joint venture feed mixing
plants are presently under consideration for the Jakarta area, to serve
the commercial poultry industry.
66.       Significant changes have taken place during recent years in the
price ratios between different agricultural commodities. During the last
three years, prices for pulses, fish, eggs and meat have increased 50% or
more against 15% or less for rice, maize, and cassava. 1/ Thus, the
attraction to use staple food crops and their by-products for animal feeding
is increasing.
1/   Bureau of Statistics data for rural markets in Java and Madura.


ANNEX 4
Page 16
B. Infrastructure and Markets
Government Livestock Services
67.       The Directorate General of Livestock Services, one of five major
departments in the Ministry of Agriculture, has recently undergone various
organizational changes at the headquarters level. A Directorate of Planning
was created in 1971 to prepare and evaluate the various livestock development
programs for the Five-Year Plan and to combine all planning and statistical
services of the Department; the staff of this section has as yet little
specialized experience. A Directorate of Production Promotion was created
in 1970, and now combines the responsibilities of the discontinued Directorate
of Marketing and some others which were formerly vested in the continuing
Directorate of Extension. A clear delegation of responsibilities between
these two directorates has still to be worked out. There is also a fourth
directorate, dealing with animal health. The Department is responsible for the
technical performance of the veterinary inspectors in each province. The
Directorate General is also responsible for four institutes engaged in vaccine
production, research, and training.
68.       The professional staff consist mainly of veterinarians, with
varying amounts of training and experience. In general, they are required to
spend too much of their time on administrative matters of little professional
relevance and on the compilation of statistical data of questionable origin
from the country's provinces and districts.
69.       Veterinary inspectors in the provinces are responsible both to
the Directorate General, as far as national policy, enforcement of regula-
tions and census arrangements are concerned, and to the Governri-r, as far
as livestock development in the province is concerned. Veterinary inspectors
work through veterinarians and field staff who are stationed at the district,
subdistrict, and village levels. Many provinces have fully trained veterina-
rians only at the inspectors' offices and field staff only down to the sub-
district levels. Activities include vaccination campaigns, investigation
of disease outbreaks, and treatment of diseased animals, castration, managing
the Sumba Contract Scheme (described below), control of abattoirs and meat
inspection, control of animals sent for slaughter and of the livestock trade,
supervision of holding grounds and quarantine stations. Few or no facilities
are available to field staff, who are grouped according to the training
received, into Pengamat (elementary school plus three years technical training
at the animal husbandry training institutes in Bogor or Malang) and Mantri
(elementary school plus one year technical training). One or two vehicles
are normally available only at the inspector's office; there are no refrige-
rators at the district or subdistrict levels in which to keep vaccines; and
there are no facilities for the diagnosis or the treatment of diseased animals.
70.       Low salaries force most staff to seek additional sources of
income. As one consequence, the enforcement of Government regulations is rxot
as rigorous as it might otherwise be.


ANNEX 4
Page 17
71.       The Sumba Contract Scheme, mentioned above, is an important instru-
ment of Government policy to encourage more smallholders to become cattle
owners. The system is in use in nany provinces and administered by the
Department of Livestock Services field staff. Under this system, mature
cattle owned by the Government are distributed among successful applicants
who receive a number of cattle, mainly female, which they use for draught
and breeding. After five years, they,must return for redistribution the
number originally received plus a proportion of any increase obtained by
successful breeding. The animals returned must be at least two years old.
The administration of the Sumba Contract is at present rather inefficient.
Vaccine Production and Veterinary Diagnostic Services
72.       The Institute of Virology in Surabaya is a producer of vaccines
for Newcastle disease (some 15 million doses per year), foot-and--mouth
disease, rabies and fowlfox. The Institute of Animal Disease Research in
Bogor produces vaccines for Haemorrhagic Septicaemia and anthrax. In all
cases, the quantity of production is too small and the quality too unreliable
for animal disease control or eradication on a national level. Vaccines are
shipped to the provincial capitals at the request of veterinary inspectors,
and then relayed to districts and subdistricts for final use at the village
level. During vaccination campaigns, the veterinary inspectors hire
additional staff who have received a short course in vaccination. However,
there are no refrigeration facilities in the distribution chain: sometimes
biologicals are up to three months old before they are used, and quite useless.
73.       Both these institutes also maintain diagnostic laboratories, for
virus diseases in Surabaya and for bacteriological diseases in Bogor. Field
staff from the provinces send specimens to these two laboratories. Their
facilities for diagnostic work are limited, but the actual throughput is
also small. The Surabaya Institute, for instance, receives only about 150
samples per year for diagnosis and 70% of these specimens are from commercial
poultry units in peri-urban areas.
Artificial Insemination
74.       As a service to dairy farming, the Directorate General has
established a number of A.I. centers. Friesian bulls for these centers are
procured from commercial dairies in peri-urban areas. With the exception of
one center near Medan, all the stations are on Java, where more than 95%
of the dairy cattle population are found. Only a few hundred inseminations
are performed annually. Low conception rates (about 60% with two insemina-
tions) and communication difficulties are the main constraints to an expansion
of this service. The Department now plans the establishment of-facilities
for the utilization of deep frozen imported semen including beef breeds
for the improvements of growth and carcass qualities in local draught cattle.
Education
75.       The Bogor and Jogjakarti 'niversities produce graduates in
veterinary medicine. New undergraduate facilities at Atjeh (Sah Kuala) and
in Bali (Udajana), will supply students for final training at Bogor, which


ANNEX 4
Page 18
is the leading Indonesian training institute in this fiejd.  Since 1948, the
Bogor faculty hAs supplied about 400 veterinarians, about half of whom are
employed by the Directorate General of Livestock Services. Current employ-
ment opportunities for graduates are limited, as the Government (the main
employer) has few vacancies.
76.       There are at least 14 faculties of animal husbandry at various
universities. These offer four to five year courses before graduation. The
teaching is often carried out on a part-time basis by local veterinarians
and the standard of education leaves much to be desired. Employment opportu-
nities for graduates are precarious, as (a) the Government and universities
tend to employ veterinarians for work in the livestock sector; (b) there are
very few employment opportunities in the commercial livestock or ranching
sectors; and (c) Indonesia has as yet very few livestock-allied industries.
77.       Two animal husbandry training institutes at Bogor and Malang train
staff of the Department of Veterinary Services at the intermediate level. A
third such institute is being established at Atjeh. All three are financially
and technically under the supervision of the Department. They provide one
or three years' training programs, and enrollment is geared to meet the anti-
cipated manpower requirtments of the Department. The training program
emphasizes veterinary aspects.
78.       A common feature of most educational establishments in 1adonesia
is a chronic shortage  of funds, equipment and library facilities. Curricula
of the animal husbandry schools are deficient in the field of livestock
production, management and feeding. Greater emphasis on these aspects is
particularly essential at the staff training institutes, as (a) these
graduates are the final and most important extension links with practical
farmers, (b) many of ths students originate from cities and have no previous
experience with livestock and (c) the Government is trying to increase the
efficiency of animal production, which necessarily means working with
smallholders.
79.       An important step to implement an agricultural training strategy
has been the recent creation (February, 1972) of a single agency responsible
for all ministry training. It is called the Agency for Agricultural Education
and Training, and has been established by Presidential decree. It has been
given broad powers to rationalize training programs and to correct the current
misallocation of resources in establishing and operating training facilities.
It will identify and rank training priorities consistent with national
objectives, and in liaison with the Directorate General of the Ministry
and other appropriate agencies, it will develop and implement short and long
term training plans.
Research
80.       The two veterinary research institutes at Bogor and Surabaya are
mainly engaged in vaccine production and in disease diagnostic routine work
(para 72). Due to shortages of staff, facilities and funds, what little
research that is undertaken is mainly concerned with the production and


ANNEX 4
Page 19
quality of biologicals. The research carried out by university staff and
students is insignificant and often irrelevant to the needs of the industry.
81.       Research in animal production is the responsibility of the Animal
Husbandry Research Institute at Bogor, which was established in 1952. This
institute has a serious shortage of facilities and at present only seven
professionals on its staff. Because of financial restrictions, it has no
links with the farming communities of its area but works with two small
experimental centers--Grati in East Java and Ungaran in Central Java. The
research undertaken deals with the physiology of reproduction, milk, beef,
and poultry production; but itL is of little significance to the country's
major livestock sectors, since improvements of livestock production efficiency
on small farms is not covered.
82.       A number of veterinary inspectors carry out some applied research
in the provinces, with poultry or milk production units. Some inspectors
(North Sumatra and South Kalimantan) have established grass and legume plots
on presently unused land in an effort to initiate forage production.
Livestock in the Five-Year Development Plan
83.       Livestock development has been neglected for a long time.   The
current five-year plan is about four-fifths over. Plan targets aimed at
roughly doubling output of meat, a 350% increase for eggs, and 250% for milk,
were based on nutritional objectives rather than on technically feasible
production increases. However, the Plan has focused attention on a number
of important issues, such as meaningful planning at the national and regional
levels; improved marketing and processing facilities; production of larger
quantities of vaccine and its more efficient end use in the field; and
strengthening veterinary and animal production research. A breakdown of
expenditures is given in Table 4. 1/ Allocations have so far remained below
the Plan's original proposals. This appears to be partly due to a slow rate
of fund disbursement. It is also difficult to assess to what extent funds
of the development budget are being used for maintenance or operating costs.
84.       The 1972/73 livestock development budget indicates that 47% is to
be disbursed through headquarters; another 33% goes to the institutions
and provinces in Java. While this concentration in itself does not mean
national objectives are being neglected, it is noteworthy that only 20% of
the total development budget ia at the direct disposal of the other provinces.
Provincial governments augment the development budget according to their
own priority assessment. In some cases, the contribution from the pro-
vincial government is 10 times higher than that from the central government.
1/   The Office of the President has recently allocated an additional Rp 30
million (US$72,000) for improving the marketing of eggs in the Jakarta
area.


ANNEX 4
Page 20
Table 3: SUPPORT FOR    IVESTOCK DEVELOPMENT
IN THE FIVE-YEAR DEVELOPMENT PLAN
('000 Rupees)
Activity                 1969/70    1970/71    1971/72   1972/73
Development of Breeds,
Marketing and Processing        20,000    19,829     30,000    200,000
Production of Biologicals         17,500    40,000     80,000       -
Disease Control                  40,000     73,000     85,399    190,000
Production Promotion on
Small Farms                      -        12,600       -          -
Private Enterprise
Development                    35,600      6,640       -
Extension                          -        12,600    110,113    150,000
Veterinary Research              17,500     40,000     40,000    135,000
Animal Production Research       25,000     37,000     36,000     75,000
Surveys and Planning               -        17,843     27,658     50,000
Education and Training           45,000     43,918     41,190     50,000
Equipment and Office
Facilities                     40,000    90,000      70,000    150,000
240.000   390,430    520,360  1,000,000
C. Scope for Development
Outlook for Demand of Livestock Products
85.       The consumption of protein from farm animals is very low.   Fish,
the major source of animal protein, is discussed in Annex 5.   Official
estimates indicate an annual consumption of about 2 kg of ruminant meat,
0.5 kg of poultry meat, and 12 eggs per person.   Per capita consumption of
fresh milk is insignificant and static whereas consumption of imported milk
products, although increasing sharply, stands presently at a low of about
0.2 kg of fresh milk equivalent per capita per year.


ANNEX 4
Page 21
86.       A 1971 meat consumption survey of 95 Jakarta families indicates
that meat consumption is highly elastic with respect to income. It can
thus be anticipated that demand in the years ahead will increase appreciably
more than population, within a likely range of 4-6% annually depending on
the extent and distribution of per capita income growth. Field observations
indicate that similar increases should be forthcoming in demands for eggs
and, to a lesser extent, milk.
87.       The domestic market situation is further characterized by rising
beef prices - reflecting stagnant or even decreasing supply despite the
decline in 1971 in the number of exported animals. Several factors seem
to be at work:
- increasing cropping intensity has raised the demand for
draught animals, thus influencing farmers to withhold
animals from slaughter;
- increased cropping intensity without fodder production on
arable land has worsened the feeding conditions particularly
for large ruminants, thus leading to reduced fertility rates
and lower slaughter weights; and
-  the 1971 decline in exports may have been partially due to
international monetary disturbances, as government officials
claim, but increased prices for locally consumed beef
probably have reduced the profit margin in, and thus the
incentive for, the export trade.


ANINEX 4
Page 22
Table 4: MEAT CONSUMPTION SURVEY IN JAKARTA (APRIL 1971)---
Monthly Income per Family (Rp)
Less than  5,000  10,000  20,000  30,000  40,000 More than
Kind of Meat            5,000   10,000  20,000  30,000  40,000  50,000   50 000
(gm per Family per Day)
Ruminant Meat                 27       28      61      163     181    268      313
Pork                           -        2       3       10      14     36       41
Poultry Meat                  25       29      60      100     255    282      350
Total Meat               52       59     124      273     450    586      704
Average Meat Consumption/2
per Person per Day (gm)-      9        9      21       51      80     90      101
/1 Number of Families
in Sample                 10       30      28       10       8      5        4
/2  Based on:
Average Number of Per-
sons per Family            5.6      6.4     6.0      5.3     5.6    6.5      7.0
Source: Tataniaga daging dan telur diwilajah DCI Jakarta;
Permerintah DCI Djakarta, Fakultas Peternakan Bogor, 1971.
88.       In sum, demand factors argue unequivocally for large increases in the
supply of large ruminants -- to satisfy the increasing demands for draft animals
and for meat, to check local beef prices and, if possible, to continue taking
advantage of existing export opportunities.
Draft Power Requirements
89.       Draft animals are used principally in the preparation of seed
beds. All other work in the cultivation and harvesting of crops is
traditionally performed by human labor. Because of thp crucial nature of
land preparation, the Indonesian farmer prefers to be self-sufficient in
draft animals but with only about 9.5 million cattle and buffalo available
for 20 million agricultural holdings, many farmers have to rely on contract
ploughing by neighboring farmers or villagers or on hand labor.
90.       The two operations performed by draft animals are ploughing
and harrowing. About 0.3 ha of land can be ploughed by a pair of draught
animals in a six to seven hour working day. Frequently, however, animals
are worked only for four hours in the morning and the area ploughed is thus
reduced to about 0.2 ha per day. Each harrowing consists of a cross-wise
operation and 0.5-0.6 ha can be prepared in a full working day. In con-
trast, land preparation by hand hoe requires 30-40 mandays/ha.


ANNEX 4
Page 23
91.       Preparing paddy fields for the transplanting of rice requires the
most time in all land preparations. This work is of a pronounced seasonal
nature, as the planting time of rice is determined by the onset of the wet
season. Farmers usually apply two ploughings and two harrowings and, on
the basis of the estimates above, this requires between 10 and 15 working
days for a pair of draft animals. The preparation of fields for other crops
is less laborious. A legume crop planted after the wet season paddy may
receive one ploughing, but in some regions the legumes are planted after
the rice harvest with no prior ploughing. Maize is normally planted after
one or two ploughings.
92.       As a very rough approximation, some 14 million ha of smallholder
annual crops have to be worked by 3 million pairs of working animals. At
this ratio - 4 ha per pair of animals - preparation for the wet season rice
crop requires about six to eight weeks. Where only one rice crop a year is
grown, the pressure on time for land preparation is not unduly serious.
However, where multiple cropping associated with the expansion of irrigation
programs is undertaken, the timing of land cultivation becomes critical.
This is particularly so if only limited irrigation is available during the
dry season.
93.       Multiple cropping patterns vary from area to area, depending on
soil, climatic, irrigation and drainage conditions. Typical rotations
for large smallholder sections in Java are set out in Table 6, and are
labeled Types A and B for convenience.
Table 5: TYPICAL ROTATIONS
Type A. Limited Dry Season Irrigation, No Drainage Problems
Land preparation
Crop           Planting time                 time
Rice           December                 10-15 days/ha
Soybean        May                      3 days/ha
Maize          August/September         5-8 days/ha
Type B. Limited Dry Season Irrigation, Drainage Problems
Land preparation
Crop           Planting time                 time
Rice           December                 10-15 days/ha
Rice           May                      10-15 days/ha
Beans          October                  3-5 days/ha
94.       Assuming that supplementary feeding would be introduced during peak
land preparation times, so that each working animal could be used for six to


ANNEX 4
Page 24
seven hours daily, one pair of working animals would be required for every
2-3 ha of arable land if land preparation were to be accomplished in three
to four weeks. This means a requirement of 1 - 1-1/2 head of cattle or
buffalo per hectare of arable land, compared with an average cattle/
buffalo density of 0.6 animals per hectare of arable land at present.
95.       In some isolated areas with complete water control and high crop-
ping intensity, i.e. Type A rotations, one animal is presently kept per
hectare without the use of rice straw and without the need for forage produc-
tion on arable land (however it may be that some roughage is brought into
these areas from surrounding land where less cattle are kept). For example,
some villages in East Java with limited irrigation and Type A rotations have
already achieved this cattle density; the additional fodder produced from the
legume crop is sufficient to support the increased cattle numbers. The Type B
crop rotation, however, yields only smaller amounts of additional fodder and
an increase in cattle/buffalo density may be more difficult to sustain.
96.       The alternative to increasing the supply of draft animals is
mechanized tillage. Diesel powered tillers costing about Rp 600,000
(US$1,500) are being introduced for the preparation of paddy fields. They
are capable of cultivating small plots with a work output of about 0.7 ha in
one day. Hire charges are Rp 2,000-3,000, for 1 ha, against Rs 200-400 per
day for a pair of rented work animals. Mechanized tillage is thus roughly
equal, or even lower in cost per hectare. I/ It has the additional advantage
of reducing the time nece6sary for land preparation to 1-1/2 days per hectare,
compared with minimum of 10 days when using draft animals. However, mechani-
zation obviously should be carried out selectively in view of the avail-
ability of surplus labor in Java where multiple cropping requires rapid
land preparation.
97.       In conclusion, the increased land preparation requirements
associated with multiple cropping should wherever possible be met by an
increase in the availability of draft animals. In some cases, where only a
limited supply of good quality roughages is available, a combination of
mechanized and draft animal land preparation might be the answer. But in
most cases sufficient amounts of fodder can be expected to support a
cattle/buffalo density necessary to complete the most laborious preparation
of paddy fields in a village community in three to four weeks. An increase
in the density of large ruminants in smallholder areas is furthermore
desirable to:
- Increase the availability of cattle manure (using rice
straw for bedding, 1.5 t of manure could be produced
per mature ruminant per year, corresponding to an in-
crease in crops produced per hectare of about Rp 5,000).
1/   The question of the appropriate shadow rate of exchange is obviously
crucial in these cost comparisons.


ANNEX 4
Page 25
- Increase the supply of average quality meat from culled
animals and of better quality meat from young bulls not
required for work.
- bake fullest possible use of all the existing fodder
sources for ruminant feeding.
-  Increase the utilization of the rural labor reserves.
- And, by all this, increase the gross revenue of a village
community.
98.       The establishment of small 10-15 ha mixed farms in presently
unused dryland (see following Section D) areas in the Outer Islands would
require a somewhat different approach. As farm sizes are geared to family
labor supply and hired labor is unavailable or costly, labor-intensive land
preparation is an uneffective way of increasing farmers' income. Mechani-
zation of some critical land preparation would in these cases be required to
increase the overall productivity of a family's given labor resource.
D. Development Strategy
99.       It is suggested that livestock development be looked at primarily
as a tool for raising the aggregate income of existing smallholder communi-
ties. Specific objectives, such as increasing the availability of animal
protein at reduced prices, would be realized as an integral part of the
gains from agricultural intensification and diversification. A large propor-
tion of increased meat supplies should ultimately come as a by product of
an urgently required increase in the number of draft animals. Quickly
realizable improvements in poultry and small ruminant production could
assist in checking meat prices, thus leading to a more rapid increase in
the number of work animals by 'encouraging owners to keep their large ruminants
for draft rather than selling them for slaughter. At the same time, export
opportunities could be met.
100.      Underutilized land resource development offers a complementary
opportunity to take advantage of "packageable" project possibilities. The
aim would be to develop mixed farming or improved ranching systems in order
to establish new, or support existing nuclei of economic growth in areas
with low population pressure. These activities would lead to increased
availability of draft cattle in the Outer Islands and to the production of
beef suitable for local consumption or for export within the Southeast Asian
region. The major considerations in resource development would be:
(a)  to develop land use pattern which can be sustained
over a long period of time; and
(b)  to create income conditions which are adequate to
attract new farmers to areas with relatively poor
infrastructure and living conditions.


ANNEX 4
Page 26
Government Service and Infrastructure
101.      The essential starting point to a coherent livestock development
is an effective system to prevent or control the most important contagious
diseases of farm animals. In the veterinary sector, of highest priority are
the increased supplies of high-quality vaccines, a better vaccine distribu-
tion system, and the strengthening of field vaccination services. The
establishment of new-laboratory facilities and disease diagnostic services
does not have priority, however. The existing livestock population is too
widely dispersed for the treatment of diseased animals by the few qualified
veterinarians to become effective on a national level, and the existing
diagnostic laboratories, although located well, are grossly underutilized.
Concentration on disease prevention should have priority in the Department,
and foreign assistance should be sought for the supply of equipment neces-
sary for increased production of quality vaccines and their efficient
distribution.
102.      For the extension services in the animal husbandry sector, highest
priority should go to improving livestock production on smallholdings. Owing
to the shortage of skilled manpower, finance and facilities, concentration
of effort is essential. The supply of field staff for projects--specific
projects such as proposed for the Outer Islands, or the livestock component
of broader based rural development projects--needs a concentratlon of effort.
The best approach would be to establish at the Department's headquarters a
cadre of specialists who would travel to appropriate locations for the in-
service training of provincial field staff. Considerable funds for the in-
service training of existing field staff have already been earmarked by
the central and many provincial administrations so that this proposal
could be financed at once. However, foreign technical assistance is
urgently needed for the training of a central team of teachers.
103.      The present facilities for manpower training and research are
inadequate at all levels. It is essential to establish, under the chairman-
ship of the Director General of Animal Husbandry, a high level committee to
consider: (a) upgrading the technical training at the Department's three
institutes which now train technical staff; (b) developing a master plan for
the future development of research in the animal production sector, which
needs to be coordinated with the development of all agricultural research;
and (c) establishing the essential links between research and extension.
This committee would be an appropriate means for considering recommendations
of the IDA-financed survey of organizational and administrative require-
ments for agricultural research and extension.
104.      Livestock marketing also needs to be improved.  This applies to
all types of animals and all areas. A bright spot is that competition among
traders appears strong enough to keep profit margins at reasonable levels:
the missing element in livestock trading is the objectivity that can be
provided by organized market places. There should be regular village live-
stock markets in all provinces, with scales for weighing animals at the
larger markets. The Department is capable of undertaking this reform with
existing staff, although foreign assistance would be needed for the supply
of equipment.


ANNEX 4
Page 27
105.      There is a growing demand for better quality meat particularly
from the rapidly expanding tourist sector. Efforts should be made to
encourage better finishing of animals before slaughter. The Kobe beef
industry began in Japan in response to the need for making the beef by-
products of draft animals more palatable.
106.      Other priorities in marketing relate to the movement of stock,
slaughter facilities, and veterinary regulation. Improvements in the move-
ment of stock will depend upon an overall rehabilitation and expansion of
the road and transport systems, perhaps in conjunction with integrated
agricultural development projects. Better knowledge of marketing routes is
essential, so that holding, loading, and transport facilities for the major
routes can be improved. Abattoirs must be improved in some large cities
and in most rural areas. On the other hand, new meat processing facilities
can be considered also in the light of possible export markets.  A critical
appraisal is required of the veterinary regulations which at present govern
export, internal marketing, and slaughter of ruminants. Analysis of these
problems should be assigned to the Department's new Directorate of Planning,
so as to obtain full coordination of Government efforts and much-needed
foreign assistance.
The Smallholder Sector
107.      There is an urgent need study for a clearer view of the economic
role that livestock development should have in systems of farming suitable
for Indonesian conditions. A study should be made of sample villages in
selected ecological regions under varying conditions of land use with the
objective of determining production capacity, input requirements, and costs
benefits. This analysis would also deal with the long-term role of livestock
and poultry to maximize the productivity of smallholder farming communities,
recognizing that livestock, particularly draught animals, are of increasing
importance if higher cropping intensity is to be achieved and if the fullest
possible use is to be made of the labor and feed reserves in rural communities.
108.      Ruminants. Additional draught animals for smallholdings on the
densely populated islands will have to be generated from within these areas.
Considerable possibilities exist for this purpose. Assuming no fodder
production on arable land, the basic problem is availability of feed. At low
cropping intensity, when rice straw is not used as feed, the bulk of roughage
stems from irrigation bunds, road sides and fallows, and allows about 0.6
animals to be kept per hectare of arable land. High cropping intensity not
only creates the demand for more animal power--about one animal per hectare
of arable land--but provides the means for their support through harvests of
legume straws.
109.      A general policy should be to encourage farmers to retain only
females and sell all males, surplus to draught requirements, as early and
at as heavy a weight as possible. Under this system, the males should be
given the best quality roughage. Additional feed reserves for females would
be rice straw in conjunction with urea and small quantities of a low-cost
carbohydrate, possibly cassava chips. Other additional fodder could be
obtained by planting leguminous foddertrees (Leucana glauca), as is done in


ANNEX 4
Page 28
many villages. To increase cow fertility and reduce calf mortality rates
would be important side objectives. The overall approach would be the same
throughout the country; however, the implementation techniques would differ
with ecological regions and the cropping intensities attained.
110.      Similar improvements can also be envisaged in the small ruminant
sector. Increased off-take would step up the availability of mutton for
local consumption and could thus free larger quantities of beef for export.
111.      Poultry.  The potential exists for increasing bird numbers and
individual performance simultaneously. Existing feed resources are not
fully used by scavenging poultry and considerable reserves also exist of
offal-grain and other agricultural byproducts for use in small amounts for
supplementary feeding. From the point of view of market demand, the prospects
for kampung-produced table birds appear promising. However, larger cities
will probably receive rapidly increasing proportions of their egg requirements
from peri-urban commercial poultry units; these units expand at present
rapidly without special public support, so that kampung egg production will
have to be geared to the remaining market outlets.
112.      Government support services should pay much attention to the
smallholder poultry sector. The programs of upgrading village birds with
more productive strains are worthy of support if the use of improved strains
does not seriously affect the cost of village poultry production and if low-
cost supplementary feeding becomes a routine. However, of first importance
is the control of Newcastle disease, which will not be eQsy, and the improve-
ment of poultry marketing and transport.
Resource Development
113.      For ecological and economic reasons livestock development in the
Outer Islands has to be grouped.under two long-term land use patterns:
(a) the introduction of mixed farming with a grass/legume phase for cattle
production, in rotation with dryland cash crops; and (b) the establishment of
improved ranching systems--immany cases, as a first phase of development
preceding establishment of mixed farming.
114.      As a broad policy issue, an appraisal should be made of the Govern-
ment's transmigration philosophy which, in fact, transplants Javanese small-
holder wet rice farming to less populated areas. With the provision of
irrigation in new areas, it costs at least US$1,250 to settle one family on
about 2 ha of land; and the scope for diversifying production or raising
income levels remains limited. In contrast, with the settlement of transmi-
grated families on mixed dryland farms, the total cost per family would be
much less-probably between US$80 and US$120 per hectare--and opportunities
for diversification and higher income would be much greater.
115.      Development costs for improved ranching systems would probably be
only US$30-50 per ha, but there is only a limited potential for small enter-
prises exclusively geared to beef production. The main reason is that
present Government legislation limits the size of individually owned dryland
in areas with low population pressure to 20 ha, and thus cash income is not


ANNEX 4
Page 29
sufficient to attract settlers. Public sector support of cattle ranching
is called for, under ecological conditions which can only support pastoral
farming, but in most instances it should only be a first phase to initiate
more intensive developments.
116.      A considerable number of development projects can be implemented
on existing grasslands. Cheap and simple methods of establishing pasture
legumes among the native grasses, through oversowing after burning, are a
prerequisite for the development of cattle ranching. The methods of
establishing grass/legume pasture leys for mixed farming also need to be
low-cost and simple, but it is likely that land cultivation after burning
can be afforded. The present type of grass cover is therefore less important
for the development of mixed farming than it is for monoculture pasture
development.
117.      Many soil types of the Outer Islands require agriculture to be
incorporated within a ley farming system which combines arable cropping with
livestock/pasture production on farm units scaled to local social and
economic conditions. One illustrative type of rotation is given below.
Starting with the conversion of existing grasslands, on-farm development
costs would be about Rp 40,000 (US$100) per ha. With 3 ha under cash
crops in any one year and the provision of draft animals and mechanization
for some farming operations, the family labor would be adequate to care for
the additional work generated by the pastures and livestock on 5 ha to 10 ha--
making for 8 ha or 13 ha farms. 1/ This would mean total on-farm investment
costs in the range of Rp 320,000-520,000 (US$800-1,300) per family. A pos-
sible cropping pattern is given in Table 7.
/1
Table 6: MIXED FARM CROPPING PATTERN-
Area              2R                 Production at Full Development
Yield              Gross Value
1 ha          Dryland rice        2 t at Rp 13/kg          Rp   26,000
Soybeans            800 kg at Rp 35/kg        Rp  28,000
1 ha          Maize               2.5 t at Rp 12/kg         Rp  30,000
Groundnuts          800 kg at Rp 40/kg        Rp  32,000
1 ha          Cassava             10 t at Rp 5/kg           Rp  50,000.
5 ha          Grass/legume         4 cattle of 400 kg
or             pasture              at Rp 100/kg           Rp 160,000
10 ha /2       Grass/legume        8 cattle of 400 kg
pasture             at Rp 100/kg            Rp 320,000
/1   All figures indicative at this stage.
/2   To be replanted after five years.
1/   Mechanized land preparation would be used by groups of farmers for
some operations which cannot be performed satisfactorily by animal
power, e.g. the initial plowing of natural grasslands of the nonversion
of the pasture ley phase into the arable phase.


ANNEX 4
Page 30
118.      At full development, the gross value of production would be about
Rp 350,000 (US$575) for the 8-ha farm and Rp 490,000 (US$1,225) for the
13-ha farm. Operating costs would be about Rp 30,000 (US$75) or Rp 40,000
(US$100) per year for the 8 or 13 ha farms, respectively, leaving net income
per family of approximately Rp 320,000 (US$800) or Rp 450,000 (US$1,225).
119.      The farming system proposed is new to Indonesia and there is no
local experience to call on. Soil erosion is a danger in many areas and
the adequacy of conservation bunds and ditches needs to be confirmed by
experience; analyses of probabilities and variability of rainfall as well
as suitability of soils to support a variety of crops, need to be checked in
practice.
120.      Endeavors should be made now to show how mixed farming might be
established and operated. Initial pioneering projects would need flexibility
in their approach to the ultimate form that such farming may take. This
flexibility implies considerable trial and error and leads to higher costs
than those expected for the establishment on a larger scale of the farming
pattern to be finally adopted.
121.      A number of farming communities exist in Sumatra or at higher
altitudes in Java, where only a portion of individual farm areas is culti-
vated at any given time. The remaining part of the holding is under weed-
fallow. If land tenure, farm sizes and ecological conditions permit, a
grass/legume pasture phase rotating with cash crops could be developed in
such areas for the purpose of sustaining soil fertility and of increasing
cattle production.
122.      Monoculture Pasture Development. Extensive grassland areas are
found under such conditions of soil, topography or climate, or so far away
from rural communities that only pastoral development can be envisaged now.
The establishment of cattle ranching -- at development costs of about US$30
per hectare -- for the multiplication of draft animals and production of
grass-fed beef is indicated in such instances. Beef ranching development
is an expensive way of creating new empltyment opportunities, e.g., it would
cost US$8,000-10,000 to provide work for the head of one family in the
Sulawesi and Nusa Tenggara beef development projects as prepared by Asian
New Zealand Development Consultants Ltd. However, initial Government-
supported development of cattle ranching will be in many instances an indis-
pensable first step to wider development, and under certain ecological con-
ditions, such as in Sumba, it is the only possibility of resource utiliza-
tion. The establishment of cattle ranching through private investment should
be encouraged as a continuing means of resource development. However, during
second-phase wider developments, costs per family employed, expected family
income and ultimate productivity of land will be important criteria in
defining the most appropriate forms of Government-supported resource utiliza-
tion.
123.      Other widespread grassland areas are found in the vicinity of
rural communities and presently used in a haphazard way for the grazing
of village cattle during crop-growing seasons. The purpose and method
of grassland improvement here will probably be similar to those adopted


ANNEX 4
Page 31
for ranch development, but pasture use will have to be communal. As no
experience and no Government directives are available to support such
developments, this complex problem needs urgent attention.
124.      Several projects to initiate beef cattle ranching in Sulawesi
and Nusa Tenggara are under way,.,and others envisaged. Most of these
initial developments are on Heteropogon-type grasslands, and practicable
methods of converting such vegetation into more productive pastures and
of developing ranches at different rates or of different sizes should
become known within a few years. Many f ,are pastoral developments,
particularly on Sumatra and Kalimantan, will have to be based on the con-
version of predominantly Imperata cylindrica grasslands. Such natural
vegetation has been transformed successfully into productive pasture in
the Philippines by careful use of burning, controlled grazing and over-
seeding with legumes but applied research has to be carried out in Indonesia
to collect data concerning the practicability and effects of alternative
methods of development.
125.      It would be desirable if all beef ranching development projects
carried out with public support would provide preinvestment studies for
second phase dryland mixed farming developments.
Other Development Possibilities
126.      Milk Production. The production of milk for fresh consumption
will continue, but little can be done to increase the efficiency of fresh.
milk production in peri-urban enterprises which operate dairy cattle as
flying herds without access to land for fodder production. The most desirable
assistance would be in marketing and processing, with a view to improving
the quality and hygienic standards of the retailed products. However,
investments in fresh milk processing and marketing do not appear to be
financially viable at this time, because the dairy herds are too dispersed,
and the volume of the present and near term fresh ilk market too limited.
127.      Considerable increases are expected in the demand for condensed
milks, which are reconstituted locally, milk powder, and recombined milk.
Local production of the milk ingredients for these commodities offers an
excellent opportunity for import substitution'in the long term. However,
there are possibilities in the medium term to develop greater use of locally
produced milk for blending with the imported recombined ingredients.
128.      Milk production with its high labor requirement would make a
valuable contribution towards using more fully the existing labor reserves
in some areas of highly populated regions. The dairy cattle owned in some
communities at higher elevations (Bogor, Bandung, Jogjakarta and Surabaya
areas) could serve as base populations in the development of milk production
for supplying recombining plants manufacturing condensed milk recoMbined
milk and ice cream. The prevailing farming systems impede the production of
good quality roughage on a year round basis, so that cattle would have to
be stall-fed with a large proportion of concentrates. The establishment of
milk collection and colling facilities would be necessary to assure delivery
of good quality milk to the plants.


ANNEX 4
Page 32
129.      A further possibility for expanding the demand for fluid milk
would be to produce sterilized milk rather than pasteurized milk which is
now being produced by Indomilk. The louger shelf-life and the fact that
refrigeration is not required could greatly broaden the market. The
establishment of low-cost milk production for the manufacture of skimmed
milk powder and butter oil might be feasible in a later phase of mixed
farming in South Kalimantan and Sumatra (Lake Toba area), following a
transition period with draft cattle/beef production.
130.      Buffalo Development.  Considerable scope exists for the expansion
of low cost beef production from buffalo in seasonally flooded areas of
Kalimantan. Similar land*may be available on the eastern coast of Sumatra.
The Government should introduce effective disease prevention services in
these areas. Financial assistance would be required to let such production
spread into similar but presently unused parts.
131.      Livestock on Plantations.  Due to interrupted operations during
the last two decades, Indonesia's rubber and oil palm plantations have at
present heavy replanting schedules. This is important for livestock
development, as considerable fodder from cover crops is produced in
rejuvenation programs until a full canopy develops after six-eight years.
Utilization of such cover crops for grazing has never been tried on a large
scale, due to ingrained attitudes of plantation management.
132.      Traditionally, plantation managements have favored dealing with
single commodities, establishing efficient, vertically integrated operations
from production to export arrangements or even commodity end-use. Only
recently has livestock been introduced into coconut plantations elsewhere
(not in Indonesia) but strong objections still persist to allowing ruminants
to utilize the fodder which is grown at regular times in the cycle of
rubber or oil palm plantations. The technical arguments against such
practices center around yield depressions and reductions in the useful
lifespan of trees, but more complicated management practices and inability
to organize the marketing of livestock are equally important. In tobacco
estates, the technical argument is concerned with the transmission, by
cattle, of diseases so that a six-year fallow between crops is still adhered
to. It appears that many of the technical arguments are based on inconclusive
research conducted 10 to 20 years ago.
133.      Changes in the input-output ratio of plantation farming in general,
and of the world market 'rice for rubber in particular, are calling for a
reassessment of attitudes. Some private estates on Sumatra are considering
the introduction of cattle, starting with old rubber estates. A large
crop or fodder production potential also exists in the Sumatra tobacco
plantations, which are on good soils, with a favorable climate, but still
continue with fallow periods of at least six years between tobacco crops.
134.      Government attention to the livestock potential of plantations
is warranted. Its assistance in the procurement of foundation stock and the
efficient marketing of finished stock would be required. If damage by
cattle to the surface roots of tree crops really proved to be a problem,


ANNEX 4
Page 33
the use of hair sheep with high fertility and growth rates should be considered.
Such breeds are at present not available in Indonesia, but suitable foundation
stock could be imported from the Caribbean.
135.      Livestock with Smallholder Tree Crops. Indonesia has about 1.8
million ha under coconuts, practically all of it in smallholdings. Most
trees are seriously overaged. Interplanting old coconuts with clove or
nutmeg trees is a possibility, but a package program for the coconut/cattle
sector is of particular relevance. Additional income could be generated
by combining the labor intensive production of copra with the labor extensive
production of beef from grass/legume pastures in the coconut groves. Post-
ponement of such a development is unwise for a simple and good reason: the
transport involved in the production of copra, which is at present carried
out by cattle, is likely to become mechanized at an increasing rate during
the next five to ten years, and the present cattle base population may
therefore be seriously reduced if it is not given a new production function.
E. Suggested Livestock Development Projects
136.      While many activities identified for priority attention can be
organized as projects, the outline below is confined to land resource
development possibilities in the Outer Islands. It is only here that projects
with a large and direct livestock component can be identified. The Eastern
Islands of Nusa Tenggara and South Sulawesi province have been excluded, as
a beef development project has been prepared for this region by the Asian
New Zealand Development Consultants Ltd.
137.      Ten potential projects are outlined. Provisional priority rankings
are given, but not in order of the listings (which are organized by category).
The provisional rankings take into account the physical resource base, as
far as it is known and the difficulties likely to be encountered in project
implementation. A tabulation is provided at the end of this section.
New Drylan-d Mixed-Farming Development
138.      There are three general project areas that appear suitable for
dryland mixed farm development. A first phase mixed farming development
covering about 6,000 ha, would be possible in all three. However, an initial
pasture development project on about 50,000 ha, with a preinvestment component
devoted to solving the problems of phase-two mixed farming development, might
be more practical. The choice of approach requires mote study. The rate
of pastoral development would have to be geared to the local availability of
female foundation cattle. Seasonal production of milk from pastures for
processing into milk powder and butter oil may, at a later stage, .be a
possibility for Project No. 1 (the South Kalimantan area).
(1) MenEgala Area, Lampung.   The project would be in an area
about 400-450,000 ha of Imperata dominant grasslands on
podzolic soils. Climatic conditions are good and there
is easy access to groundwater between Menggala and


ANNEX 4
Page 34
Kotabumi. The area is very sparsely populated; the land
is owned by Government, although parts of it are claimed
by family clans. Information on climate and soils, and
recent aerial photography are available. This proposal
has priority ranking one. The major purpose would be to
supply draft animals for the rapidly expanding agricultural
development in the transmigration and other land develop-
ment schemes in the area.
(2)  Pelaihari Area, South Kalimantan. The project area would
be in an area about 150-200,000 ha of lMperata dominant
grasslands, on predominantly latosol-type soils, in the
area south of Pelaihari. Climatic conditions and avail-
ability of surface water appear good. The area is very
sparsely populated; the land is owned by Government.
Limited climatic data are AvaiYdle, but no information
on soil fertility or aerial photography. This proposal
has priority ranking one.
(3)  Central District, South Sumatra. The project would be
in an area about 500-600,000 ha of podzolic soils covered
with Imperata or low-growth secondary forest in the
central parts of South Sumatra Province4 The area has
good climatic conditions and easy access to groundwater.
The area is very sparsely populated; the land is owned
by Government, although some parts may be claimed by
clans. Recent aerial photography and data on climate
and soils are available. Service roads of oil exploitation
firms are available in the northern parts of the area.
This proposal has priority ranking two.
Improving Existing Dryland Mixed Farming
139.      Two possible projects below would work initially on about
3,000-4,000 ha (in each region) and develop dryland mixed farming techniques
in selected village communities. The land tenure conditions of potential
project sites would need careful attention.
4.   Lake Toba, No.nh Sumatra. About 200,000 ha of podzolic
soils north of Lake Toba in North Sumatra Province are
used in holdings of about 5 ha to produce cash crops
twice annually from 1-2 ha, leaving 3-4 under weed
fallow. The development of a ley farming system, in
which cash crops would rotate with a grass/legume phase
for draft/beef cattle (possibly dairy cattle at a
later stage) would build-up and sustain soil fertility
and establish a more productive land use pattern. This
area lies between 800 and 1,000 meter altitude and has
an even distribution of rain. Limited data on climate
and soils are available. This proposal has priority
ranking two.


ANNEX 4
Page 35
5.   SekaJu Area, South Sumatra. About 50,000 ha of abandoned
rubber and oil palm estates northeast of Sekaju in South
Sumatra Province are used by former estate laborers in a
similar, but more extensive way than in (4).   The development
objectives would be similar. The area receives between
2,000 and 2,500 mm of rain and has podzolic soils. Recent
data concerning climate and soils are not available. This
proposal has priority ranking three.
Monoculture Pasture Developments.
140.      Two possible projects are suggested which would initially cover
about 50,000 ha in each area.
6.   Padang Lawas, North Sumatra.   About 250,000 ha of podzolic,
partly eroded soils, with erratic rainfall and predominantly
Heteropogon and Themeda grass cover, would be suitable for
the initiation of beef cattle ranching. Mixed farming does
not appear feasible for climatic reasons. The.area is the
so-called Padang Lawas in the southern districts of North
ISumatra, particularly, the eastern and southern parts of
this area are completely unused, though grazing rights are
claimed in some areas by clans. Limited data on soils and
climate are available. This proposal has priority ranking
one, mainly in view of its possible effect on cattle
production in plantations.
7.   Tandjung Area, South Kalimantan. About 50,000 ha of poor
podzolic soils, under Imperata grass cover would be
suitable for the initiation of beef production. The intro-
duction of mixed farming seens premature in view of poor
soil and road conditions. Limited data on climate,
but none on soil fertility are available. The area is
uninhabited and the land belongs to the Government. This
proposal has priority ranking three.
Improving Communal Grazing
141.      Two possible projects are suggested, initially to cover about
40-50,000 ha each. The community approach to livestock development requires
careful analysis of land use rights and of group administration and tredit
for farmers.
8.   Central Districts, West Sumatra.   About 200,000 ha of
different soil types on the mountain slopes near to densely
populated and intensely utilized valley lands in the
central districts of West Sumatra Province would be suitable
for the development of communal draught cattle cum beef
production from grass/legume pastures. The areas are now
covered with Imperata cylindrica. They are owned by clans
and only rarely used for the grazing of village cattle or
for shifting cultivation. The areas concerned lie at


ANNEX 4
Page 36
800-1,100 m above sea level and have generally good
climatic conditions. Limited data on climate and soils
are available. This proposal has priority ranking three.
9.   Pasaman District, West Sumatra. About 40,000 ha of
Imperata grasslands in the vicinity of intensively utilized
valley lands of Pasaman district in West Sumatra Province
would be suitable for similar developments as described
under (8). These grasslands are on good latosol-type
soils with favorable topographical and climatic conditions.
Data on climate and soils are available. This proposal
has priority ranking two. It could be treated as a
subproject of (8).
Cattle in Coconut Smallholdings
142.      An initial project would work in selected villages on about
20,000 ha.
10.   North Sulawesi. There are about 150,000 ha of smallholder
coconut groves in North Sulawesi Province, on fertile soils
and with favorable climatic conditions, with a dense ground
cover of Imperata cylindrica. The establishment of grass/
legume pastures for beef production would be technically
feasible and economically desirable as a means of combining
labor-intensive tree crop farming with labor-intensive cattle
farming. Problems of group pastoral farming need to be
solved. Most coconut groves are owned in holdings of
about 3 ha, whereas much larger pasture units would be
required to attain low labor intensity beef production and
to scale down the investment costs for fencing, stock water
supply, and handling facilities. No data on soil fertility
are available and there is only limited information concerning
climate. This proposal has priority ranking two.
Financial Requirements;
143.      Finance would be required in all 10 cases for the supply of
fertilizers, pasture grass and legume seeds, basic farm equipment, material
for fencing, stock handling and stock water supply, for local purchase of
female foundation cattle, and for some imported breeding bulls. Preliminary
indications are that total investments per hectare for pasture development
would be in the range of US$30-50, and for mixed farm development, US$80-120.
144.      World Bank Group financing would require special institutional
arrangements similar to'those proposed for the Eastern Islands Livestock
Development Project, i.e. a National Livestock Development Board and Regional
Livestock Development Corporations(s). Extensive foreign technical assistance
with executive powers would be essential.


ANNEX 4
Page 37
145.      It is difficult to estimate the phasing of projects or gross
investment requirements over the next few years. A preliminary estimate
can be made for the Priority I areas of Sumatra and Kalimantan, based on
data from the Eastern Islands project preparation. Assuming that a total
of 2,500-3,000 mature female cattle from Java, Bali, and Madura could be
made available annually for the initial five-year development period, a
total of about 120,000 ha could be developed over approximately 10 years.
AT US$30-50 per hectare for pasture development, the total cost would be
US$5-6 million during the initial five years.
December 28, 1973


ANNEX 5
Page 1
INDONESIA
AGRICULTURAL SECTC.R SURVEY
FISHERIES
1.        Because a key objective of Government is to improve the nation's
diet, particularly protein foods, fisheries are of special interest at this
time. Consumption of fish is very low in the heavily populated regions,
such as Java, because of short supplies and high prices. The fundamental
cause is the inefficiency of methods used to catch fish.
2.        A strategy for fisheries development is proposed which aims at
utilizing the export potential for products like shrimp and tuna to permit
a sizeable increase in domestic fish supplies at much reduced prices. In
line with this overall strategy, four projects are suggested.  Three of
them, centered on Java and formulated as complementary projects, consist
of increasing the marine catch by the use of trawlers and motorized small
boats, and of increasing the yield of inland fisheries by upgrading existing
exploitations and opening ttw areas.  The value of shrimp exports would by
itself make the proposed investments attractive. The addition to domestic
fish supply is estimated at nearly 200,000 tons annually. The fourth invest-
ment project would be centered in the Outer Islands particularly around
Maluku and Nusa Tenggara. It consists of the development of skipjack pole
fishing with an eventual production target of some 70,000-80,000 tons an-
nually, most of which would be destined for export.
A. Present Situation
Resources, Production, and Trade
3.        Marine Resources. The evidence suggests that the seas surrounding
Indonesia, while not as rich in marine resources as the North Pacific and
North Atlantic Oceans, are better off than most other tropical areas. The
total area of the seas around Indonesia is about 5.0 million sq km, with
estimated resources of about 5.8 million tons of fish. The so-called Upwell-
ing Area--the prime fishery--covers roughly 750,000 sq km and includes an
estimated 4.2 million tons, or a substantial majority of the total resources.
The overall estimate is taken from the FAO's 1968 symposium; the Upwelling
estimate is from the 1971 Survey of Indian Ocean Resources carried out under
UNDP/FAO auspices. The potential of various areas, detailed in Table 1,
gives resource honors to the Java and East Arafuru Sea.


ANNEX 5
Page 2
Table 1: ESTIMATED POTENTIAL FROM UPWELLING AREA
Area        Potential     Net Tonnage
(kmz x 103)   (ton/sq kin) (16/season)
Indonesia
Java Sea                   300            6.6            2.00
East Arafuru Sea           250            5.1            1.28
Flores Sea                 100            0.7            0.07
Banda Sea                   100           8.5            0.85
Subtotal                750            5.6            4.20
Vietnam                       200          16.6            3.32
Gulf of Thailand              75           20.7            1.56
Andaman Sea,                  100           2.2            0.22
N W Australia                 300           4.9            1.48
Total            1j425            7.5           10.78
Source:  FAO Survey of Resources in the Indian Ocean and
Indonesia Area, Dec. 1971.
4.        As one would expect in a tropical fishery, as many as 200 varieties
of fish are found in Indonesia's waters. The principal varieties being
fished at present are sardine spp., mackerel, tuna, jack mackerel, coral
fish, sea bream, sharkland ray (among the pelagic fish) and crustacea.   Many
tuna species are migrating in the Maluku and Banda Sea in Indonesian waters,
especially the wide upwelling areas; the Indian Ocean near Java Island is
becoming famous worldwide as a spawning ground for south blue fin tuna.
5.        Shrimp resource surveys conducted by the Directorate-General of
Fisheries in 1958 (April-May) and in 1965 (June-July), with,research vessels
of 35 Gr and 80 GT, indicate that substantial stocks of shrimp and fish
exist off the east coast of Sumatra--between latitude 0*30N and latitude
15S. And there are other areas of known high potential, some of which are
being exploited.
6.        Inland Resources.  The total area of brackish and fresh waters,
with which inland fisheries are concerned, is 9.4 million ha. The fish
production potential is estimated to be around 1.4 million tons, whereas
present production is only about 430,000 tons. The main reason for the
pronounced difference between potential and production lies in the relatively
low yields obtained withl current practices.


ANNEX 5
Page   3
Table 2:  AREA AND PRODUCTION O INLAND FISHERIES
Potential    Production    Present
Area         Yield     Potential     Production
('000 ha)    (kg/ha)     ('000 ton)    ('000 ton)
Brackish Water Ponds            177           600          106          52
Rice Fields                   3,000           200         600           20
Fresh Water Ponds                36         2,000          72           42
Fresh Water Areas               140           300          42 )315
Swamps                        6,000           100         600 )
Total                    9,353                     1,420          429
Source:   DGF and mission estimates.
7.        Present Production.   The total annual fish catch and harvest for
1969 and 1970 was estimated at 1.2 million tons (FAO revised report for
1969). For these two years, about two-thirds was marine fish and one-third
fresh water fish. The catch of marine fish has nearly doubled since 1960,
while the increase in fresh water fish was only 27%. Relative shares thus
changed in favor of the marine fisheries (Table 3).
Table 3: FISHERIES PRODUCTION IN INDONESIA
('000 ton)
1960  1961  1962   1963  1964  1965   1966  1967  1968   1969  1970
Production
Marine          412   525   538   546    590   661   721    790   722   785   802
Inland          347   385   375   386    410   370   400    465   450   429   447
Total       759   910   913   932 1,000 1,031 1,121 1,255 1,172 1,214 1,249
Index (1960=100)
Marine          100   127   130    132   143   160   17!    182   175   190    195
Inland          100   111   108    111   118   107   115    134   130   127    129
Total      100    120   120   122    131   136   148    165   154   159    163
Composition (%)
Marine           54    58    57     57    59    64     65    63    62    68     66
Inland           46    42    43    43     41    36    35     37    38    32     34
Source: FAO.


ANNEX 5
Page 4
8.        Foreign Trade.   For 1968, exports of fish products amounted to
only 14,200 tons--10,260 tons of edible products plus 3,840 tons of unedible
commodities--worth US$1.74 million.   For 1970, there was a sharp increase
in exports to 18,605 tons, worth US$5.90 million. In 1972 exports had
risen to almost US$40 million. The main commodity responsible for this
increase was frozen shrimp, which now accounts for over 90% of the value of
total fish exports. This trend is expected to continue. Moreover, exports
of skipjack and tuna are expected to grow from Maluku, Nusa Tenggara, and
the West Irian regions.
9.        Total imports of marine products in 1969, about 2,130 tons, had a
value of US$0.4 million; for 1970, tonnage dropped to 1,375 tos and value
to US$0.3 million. Imports consist mostly of canned and dried fish from
Singapore.
Structure of the Industry
10.       Marine.  Fishermen number about 880,500.   There are about 280,600
fishing boats, mostly.small canoes or sailing boats; there are only about
5,300 motorized boats.
11.       The main producing areas are Sumatra, with 43%; Java, with about
20%; and Kalimantan with slightly over 12%.   In number of boats, Sulawesi
leads with 40%, followed by Sumatra and Java with about 14% each. The
Maluku produce only about 4% of the total catch, but have 12% of the boats--
indicating a small scale of operations. In number of fishermen, Sulawesi
leads with 31%, followed by Java with 30%, and Sumatra t7ith 18%. These
figures suggest that fishing methods peculiar to each region are employed.
The most advanced is Sumatra, followed by Kalimantan.
12.       Productivity figures reinforce the regional differences.    The
average catch per fisherman in 1969 was low, an estimated 0.89 tons. In
the Riau district of Sumatra, the annual catch was about 10 tons per man, or
about 11 times the national average. Other high producing areas were
Lampung of Sumatra and West Kalimantan, with 2.65 tons per man; Central
Kalimantan, with 3.56 tons; and South Kalimantan, with 2.01 tons. Other
areas averaging over 1 ton per man were North Sumatra, Djambi, South
Sumatra, East Sulawesi, and West Nusa Tenggara (Table 4). In contrast, the
catch in Java is only .57 tons per man, and in Bali only .21 tons.


ANNEX 5
Page 5
Table 4: MARINE FISHERIES PRODUCTION, BY PROVINCE, 1969
Produc-   Produc-
tion per tion per
Production     Fi8hing Boats      Fishermen       Boat      Man
('000 t)  (%)    ('000)   (%)     ('000)   (%)       (t)      (t)
Sumatra   336.9    43.0     38.8    13.8   159.0    17.9      8.7       2.13
Kalimantan 97.2    12.4     22.2     7.9    43.2     4.9      4.4       2.25
Sula",si  123.3    15.7    121.2    43.5   260.4    30.5      1.0       0.46
Java      154.4   .19.6     39.3    14.0   265.4    30.0       3.9      0.58
Bali        3.5     0.4      8.8     3.1    16.7     1.9       0.4      0.21
West Nusa
Tenggara  20.5     2.6      4.3     1.5    15.9     1.7       4.8      1.28
East Nusa
Tenggara  10.7      1.4     7.2     2.6    22.9     2.6       1.5      0.46
Maluku     33.0     4.2     33.0    11.8    65.0     7.3       1.0      0.51
West Irian  5.8     0.7      6.0     2.0    22.0     2.5       1.0      0.26
Total  785.3    100.0   280.0   100.0   880.5   100.0       2.8      0.89
Source:   Central Bureau of Statistics.
13.       As for traditional fishing methods, both passive (fixed) and
positive types (with hooks and nets) are employed.   The most popular is said
to be the trapnet (bagan in Java or kelong in Sumatra), with an annual
production of 10-20 tons. Among the others are fishing stakes with net
(selo), with annual production of 10 tons; and the trapnet (tl tji in
Sumatra), also with 10 tons.
14.       In the Aertembagar area off North Sulawesi, relatively large
skipjack fishing boats--5 to 15 tons--make daily trips from port, and are
reported to achieve catches ranging from 600 kg to 1 ton per day.
15.       There are 41 large and 30 small shrimp trawlers operating in West
Irian and East Kalimantan. About 1,000 fishermen are engaged, of which 400
are Indonesian. Most of the trawlers have been operating only two years.
As experience is gained, a transition to Indonesian crews is expected to
take place. Cold storage facilities with a 1,200 ton capacity will begin
full operation in the near future. The trawler catch is a combination of fish
and shrimp, the latter accounting for about 10% of the catch.


ANNEX 5
Page 6
16.       Inland.  Including fish farming, inland fisheries account for an
estimated production of around 450,000 tons per year. There has not been
much growth in recent years. About 73% of the total is caught in natural
open waters such as rivers and lakes; 12% is produced in brackish waters;
10% in farming ponds; and 5% in paddy fields.
17.       While inland fisheries are found almost everywhere in, Indonesia,
the principal producing areas are in Kalimantan, South Sumatra, and South
Sulawesi (Lake Temp). As these areas are far removed from large cities,
the fish has to be salted or dried. Principal varieties caught are carp,
catfish, gramee, snake head and telapia.
18.       Fish cultivation is carried out in brackish waters, rice fields,
and ponds. The principal areas are Java and South Sulawesi. The main
medium is brackish water, and the principal product is milk fish. The total
area involved is 177,000 ha, of which 117,000 ha are in Java. The annual
production per hectare is 200-400 kg, which is very low; for comparison,
average produttion per hectare in the Philippines is 560 kg, and in the main
production areas it is 700 kg.
19.       Paddy-cum-fish cultivation is,being encouraged by the government
as a source of increased protein supply for the rural, population. The
principal fish produced are carp, gramee and telapia. In recent years,
reported cases of fish being killed by agricultural insecticides have
increased, and this problem is likely to become more serious as insecticide
applications become more widespread.


Table 5: INLAND FISHERIES, AREA AND PRODUCTION, 1969
Cultured         Rice Field          Brackish                Open              Total
Ponds             Culture            Waters               Waters              Prod.
Area    Prod.-    Area   Prod.      Area    Prod,         Area      Prod.-
(ha)   (tons)     (ha)  (tons)      (ha)   (tons)         (ha)     (tons)       (tons)
Sumatra                  8,723   4,111     10,702   2,788     16,710   5,699     4,053,867   62,292    '78,897
17.9
Djawa                   22,288  36,369     39,596  14,510    117,994  33,353        95,465   28,843    113,075
28,6
Kalimantan                  30        -         -       -          -       -     9,028,900  194,859    194,859
45.2
Sulawesi                 3,451   1,261     12,457   2,292     38,276  12,354       492,416   20,231     36,138
8.4
Bali                        62      96      8,524     405        203      61         2,903      770      1,332
0.3
West Nusa Tenggara         413      276     3,340     224      3,781     380        13,333    2,042      2,922
0.7
East Nusa Tenggara         112       30       578       5         63       8         1,242      157        200
4
Maluku                       11       5         -       -         34      16        12,617    1,861      1,882
0.4
West Irian                   78      25         -       -          -       -        50,600      725        750
Total                 35,168  42,180     75,197  20,224    177,061  51,871    13,751,343  314,780    429,055
9.8               4.7               120                    73.5        100
Source: Central Bureau of Statistics.                                                                             j


ANNEX 5
Page  8
20.       Distribution and Processing. Primary sales are usually made
through local fishery ecoperatives, or through government markets where
such exist; elsewhere, collecting agencies and agents are a major marketing
medium. A 5% handling fee is charged by the market administrator. The fish
are bought mostly by wholesale merchants, but some by retailers. There are
some shipments to distant consuming areas, and some sales to processors.
There are said to be 7 to 10 distribution steps separating the producer and
the ultimate consumer. Well-funded wholesalers exert very strong control
over some markets, such as Jakarta, where transactions are governed by
long established traditions (their influence is strengthened by the practice
of extending loans for nets and other fishing supplies to fishermen).
21.       Long distance shipments of fresh fish are virtually nonexistent.
Only in Java are trucks being used for shipment of fresh fish to market.
In most cases, dried or salted fish are shipped to consuming areas by means
of sailboat, and shipments usually take two or three weeks from Sulawesi
and Kalimantan to Java, and as long as a month from North Sumatra.
22.       The "Perapin" organization has been established to serve as a
focal point for improving distribution of dried and salted fish. This
organization, made up of 30 shippers and fishery interests located in various
parts of the coutry, has the functions of exchanging information, conducting
business on consignment, and providing financial services. A 5% fee
(additional) is charged by the organization. Such a service appears
desirable, though it is too early to make a definitive statement.
23.       Preservation methods are of crucial importance under Indonesian
conditions. Fish prices are high in relation to income levels, and in-
expensive methods of preservation are essential. At present, salted and
dried fish probably account for more than half of total fish consumption in
Java. One problem is that this process encounters serious difficulties in
areas of heavy rainfall during the rainy season when fishing conditions
are generally best.
24.       In addition to salting and drying, there are small scale canning
operations (in Jakarta, Bandung, Ambon, Banjuwangi, Muncer and Denpassar)
which process tuna, milk fish and sardines. Canning costs and prices are
high, however, and effective demand is very limited. Shrimp are also
processed into shrimp crackers (kempuk) and paste for domestic consumption;
shrimps are frozen for export,
25.       Very little investigation has been done as to possibilities for
increasing the use of ice at various stages, the use of insulated trucks,
improving conservation at the household level, etc.
26.       Cooperatives.  Fishing cooperatives exist for marine fisheries
and for inland,fisheries. In 1971, total membership was 61,600. There
are 352 primary cooperatives:   93 in Sumatra, 85 in Java, 40 in Kalimantan,
92 in Sulawesi, and 42 in other provinces. Three quarters of the membership
(about 46,000 members) is concentrated in Java, especially Central Java.


ANNEX 5
Page 9
In addition, there are cooperative associations, provincial federations,
and a national federation. The cooperative associations are mostly engaged
in fish auctions. In some cases, they have their own boatyards where
fishing boats are constructed and repaired.
27.       Fisheries cooperatives have not had broad success, however,
because of political complications, management problems, and a weak econo-
mic base. At present, the main office of the fisheries cooperative asso-
ciation in Djakarta is making plans to improve marketing by means of an
ice making plant, a cool room, and insulated trucks. Eventually, fisheries
cooperatives will require additional resources, particularly in the form
of credit, in order to function more effectively.
28.       Foreign Investment and Aid.  Joint ventures for fisheries have
been mostly undertaken with Japanese partners. Nine enterprises are
registered by the government: one pearl culturing business, seven shrimp
trawling businesses, and one cold storage business. Two other companies
are operating experimental shrimp trawling in West Irian without registra-
tion (one in partnership with a Japanese company and the other in cooperation
with a Japanese company). Total registered investment in shrimp trawlers
is US$4.13 million. Actual investments are estimated at US$9.4 million,
including storage facilities under construction. Another five companies
are planning to establish joint ventures based on skipjack pole fishing.
29.       The Indonesian government recently signed agreements with IBRD,
ADB, UNDP/FAO and the Japanese government for fisheries projects. The
total amount of investment envisaged is US$17.7 million, the foreign cur-
rency component being US$13 million (Table 6).


ANNEX 5
Page 10
Table 6: EXTERNALLY-ASSISTED FISHERIES PROJECT
Total         Local         Foreign
Investment    Component     Component
-----------(US$ '000)------------
ADB
Riau (gill net and
trawler fishing)          4,500        2,100          2,400
IBRD
Aertembagar (skipjack)      4,307.6        807.6        3,500
UNDP
Training Center             1,071           147           924
Shrimp Culture              1,117          485            632
JAPAN
Tuna longline               6,635         1,135         5,500
Total                 17,630.6      4,674.6       12,965
Source:   BAPPENAS.
Government Services and Development Policy
30.       Administration.   The Directorate General of Fisheries (DGF),
within the Ministry of Agriculture, is responsible for carrying out the
fisheries development program and the administration of current activities.
The functions of DGF cover a wide range of activities, including general
adiinistration, research, education and training, extension works, planning
of fisheries development, and supervision of State fishing enterprises.
The DGF's provincial offices are responsible for carrying out fisheries
progr,m and collecting statistical data., There are about 1,730 officers:
280 w6rking under the Directorate-General in Jakarta, 400 in fisheries
research and training, 50 in extension work, and about 1,000 with the State
fisheries corporations. About 250 have received scientific and technical
training. However, there is a recognized shortage of personnel with
experience in commercial and economic aspects of the fishing industry.
31.       State fisheries enterprises (Perusahaan negara perikani) are
autonomous bodies which engage in public utilities, services, and other
commercial undertakings. Six such enterprises operate in the western
region and three in the eastern region. In 1969, the enterprises were
centralized and reorganized into State Fishing Enterprises, Western Division,'
and State Fishing Enterprises, Eastern Division. This was to integrate
the management of the enterprises into two divisions, with a view to
correcting inefficiency. The State Fishery Enterprise, Eastern Division has
subsequently been regrouped into 3 autonomous State Fishing Enterprises.


ANEX 5
Page 11
32.       Training. The DGF's responsibilities for training are exclusive
of the university, which is under the jurisdiction of the Ministry of
Education. An academy of fisheries, established in Jakarta, admits senior
secondary school grad-iates for a three-year training course. The annual
intake is about 50. About half of the students study fishing techniques
and the other half fish processing technology. In 1970, there were 168
students and a graduating class of 41. The academy hopes to revise. its
curriculum and modernize its equipment, with UNDP assistance, to better
relate training to the industry's needs.
33.       One of the three fisheries senior schools provide training in
inland fisheries at the secondary level. In 1970 it had an enrollment of
48. Until recently, all graduates of this school became associated with
the government services at district level. As most of the positions have
now been filled, the government is attempting to relate the curriculum of
the school to private industry's needs.
34.       The other two fisheries senior secondary schools offer marine
fisheries training and enroll 200 students. Their graduates, mostly mates,
are employed by the state and private ventures. With UNDP assistance, one
of the schools will initiate short fishermen's training courses -- two
to three months in duration -- for about 150 local fishermen per year. The
purpose is to provide fishermen for the joint ventures. Three fisheries
junior high schools have been converted into fishermen training centers
where short courses are being offered, including fishing techniques aimed
at increasing the productivity of local fishermen. The present training
capacity is sufficient to meet the projected demand for mates, master fisher-
ment, and boatswains, but the training program needs to concern itself more
with the general employment needs of the industry.
35.       Research. At present, Indonesia has the following institutes:
Research Institute for Marine Fisheries (DGF)      Tegal
Ujung Pandang
Jakarta
Surabaya
Research Institute for Oceanology
(D. G. of Science)                               Jakarta
Arbon
Research Institute for Fisheries
Technology (DGF)                                 Jakarta
Bogor
Surabaya
Ujung Pandang
Palembang
Research Institute for Fishing Boats (DGF)         Jakarta


ANNEX 5
Page 12
36.       The mission was not able to assess the work of these centers
in detail. However, some general conclusions and recommendations are
put forward in the discussion of development strategy.
37.       Development Policy.   The aim of the Government's present development
plan (1970-74) is to increase production from about 1.2 million -tons per
annum to about 2.0 million tons. The planned budget allocation for fisheries
development was Rp 22 billion (US$67.7 million), 1/ or about 14% of the
total budget for agriculture. However, funds allocated for 1970 and 1971
amounted to only US$4 million.   According to the plan, marine fisheries
development would be encouraged by the introduction of modern fishing
gear. Inland fish hatcheries would be rehabilitated, and swamp waters, in
the first stage limited to East Java, would also be exploited. Inland
fish culture would be increased by introducing better fishing techniques
and improving market outlets. Fishery schools would be improved to include
instruction in trawling and purse seining. It is sufficient to conclude
that the plan is very general in outline and quite flexible.
B. The Scope for Fisheries Development
38.       Indonesians are, in general, fond of fish, and receive about 65%
of their total animal protein from this source. However, the impression
one gets is that substantial regional differences exist in the consumption
of fish, i.e., some regions have relatively high per capita consumption of
fish and others very low consumption.   The nature of these regional
imbalances, and the magnitudes involved, are of double interest at this
time: because of the opportunity to improve the protein-poor diets in low
fish consumption regions, and at the same time the opportunity to develop a
valuable and underutilized resource. Furthermore, the excellent prospects
for export of shrimp and tuna provide a basis for expanded operation of
modern commercial vessels, which can provide foreign exchange and employment
in processing plants, and also contribute significantly in increasing fish
supplies for domestic consumption.
Domestic Supply and Demand
39.       At the current state of the data gethering effort, a useful
approach for estimating the market potential is to take the observed
national per capita consumption as a starting point, then to relate this
to production in the various regions in terms of "surplus" (above average)
or "deficit" (below average).   Some general indications of the supply and
demand sitaution can thus be obtained from catch and population data,
imprecise though these may be. On the basis og 1969 data, the availability
of fish was on the order of 10.1 kg per capita.
1/   At the then current exchange rate of Rp 325 -1 US$.


ANNEX 5
Page 13
40.       As given in Table 7, the results indicate there are three major
"surplus" regions: Sumatra, Kalimantan, and Sulawesi. There is one very
substantial "deficit" area, Java, and a minor one, Bali. As a first
approximatipn, it appears that, to bring fish consumption in Java up to the
national average, an additional 550,000 tons per year would need to be
supplied.
Table 7: ADEQUACY OF CURRENT PRODUCTION BY REGION
(As Measured Against Average Per Capita Availability)
(tons)
Hypothetical
Consumption           Current
(10.1 kg/person)   Production   "Deficit"     "Surplus"
Sumatra          190,000          414,000                    220,000
Kalimantan         51,000         242,000                    240,000
Sulawesi          88,000          159,000                     70,000
Java              776,000         267,000     550,000
Bali               22,000           4,832      17,000
Elsewhere          65,000          75,680                     13,000
Source: DGF and mission estimates.
41.       The consumption data can be refined to some extent by allowing
for interinsular shipments. According to available statistics, 31,500
tons of fish (processed basis) are currently being shipped to Java in
the form of dried and salted fish (Table 8): 18,400 tons from Sumatra,
8,900 tons from Kalimantan, and 4,200 tons from Sulawesi. On the assumption
that the remaining fish are consumed in each production area, the people
of Sumatra are eating 15.9 kg per capita., and the people in Sulawesi 16.7
kg per capita. These figures are reasonable considering that fish are
relatively plentiful in these areas. However, the statistics also indicate
that extremely large amounts are consumed in Kalimantan, some 43.4 kg per
capita, and in Maluku, 34.0 kg. These data are not realistic, and a study
of the situation would be useful for planning purposes. Other consumption
figures are 10.7 kg in West Nusa Tenggara, and 7.4 kg in West Irian.
Consumption in Java is 4.69 kg; in Bali, 2.19 kg; and East Nusa Tenggara,
4.5 kg (Table 9). To reach Zhe average amount of about 10 kg, the shortage
is 412,000 tons in Java, 17,000 tons in Bali, and 13,600 tons in East Nusa
Tenggara.


ANNEX 5
Page 14
Table 8:  INTERINSULAR SHIPMENTS OF PROCESSED FISH TO JAVA, 1969
(tons)
Total     West      Center     East
Java      Java       Java      Java
Sumatra                             18,381    15,128    3,138       115
of which:  Riau                   10,512     7,263    3,138       111
South Sumatra           6,685     6,685       -        -
Kalimantan                           8,855     1,664      213     6 975
of which!  South Kalimantan        7,688       823      209     6,845
Sulawesi                             4,191       178       75     3,938
of which:  South Sulawesi          2,841       108       -     2,733
Total                31,429    16,972   34,426   11,031
Source: Transportation Bureau of Indonesia.
42.       These figures are, of course, indicative of the market potential
based on simple dietary considerations, in line with the apparent average
consumption in Indonesia. How the markets in the so-called "deficit" areas
will actually develop depends on how much fish the 80 million or so people
will be willing to buy.   This effective demand will depend on how much more
fish can be supplied -- implying lower prices -- and what kind they are.
Table 9: FISH PRODUCTION, SUPPLY AND PER CAPITA CONSUMPTION
BY PROVINCE, 1969
Imports or (Exports)
Total       Processed   Liveweight Available Per Capita
Population Production   Weight     Equivalent Supply    Consumption
(million)   (ton)       (ton)       (ton)     (ton)   (kg/year)
Sumatra           19.38t   414,829     (68,381)   (105,143)   309,686      15.9
Kalimantan          5.05   242,110     ( 8,855)   ( 26,565)   215,545      42.3
Sulawesi           8.87    159,486     ( 4,191)   ( 12,573)  1462913       16.7
Java               77.66   267,463      32,332      96,543    364,495       4.69
Bali               2.2       4,832        -           -         4,832       2.19
West Nusa
Tenggara         2.2      23,388        -           -        23,388      10.7
East Nusa
Tenggara         2.4      10,855        -           -        10,855       4.5
Maluku              1.0     34,882        -           -        34,882      34.0
West Irian          0.9      6,554        -           -         6,554       7.4
Total       119.5   1,214,399                          1,114,405      10.1
Source: Central Bureau of Statistics.


ANNEX 5
Page 15
43.       Some interesting price data were obtained in -March, 1970, by the
Directorate of Fisheries on fish prices in the retail markets of Jakarta,
Bandung, Bogor, and Sukabumi, covering 17 varieties of marine fish and six
fresh water fish. The price of high value fish, such as Spanish mackerel,
ponfret, tuna, and grouper, was Rp 200-225 per kilo. Cost of other varieties
were in the range of Rp 100-175 per kilo. Those costing around Rp 60 were
confined to very low quality ponny fish. For brackish water varieties, milk
fish and shrimp cost Rp 200, and mullet cost Rp 150. Among hte six varieties
of fresh water fish, carp and gramee cost Rp 300-350, while other varieties
such as carp, catfish and snake head were sold in the Rp 150-175 range.
44.       There was little difference in the price of marine fish in Bogor,
Bangung and Sukabumi; the price of fresh water fish, however, was slightly
higher in Jakarta.
45.       Interviews by the mission (in March 1972) confirmed that, in
general, fish is a relatively expensive commodity. In West Kalimantan, high
value fish was around Rp 250 per kilo, and the rest were in the Rp 50-200 range;
only the very small low quality fish were priced at Rp 50-75. At Telukbetung,
which is the center of the fishing industry in Lampung province of southern
Sumatra, piactically all varieties were priced around Rp 100-200; an
exception was Spanish mackerel, priced at Rp 300.
46.       With reference to Java, which is of particular interest, the
Jakarta price for high quality fish was Rp 400-500; for middle value fish,
it was Rp 150-200; and fish in the Rp 100 class was hard to find. In East
Java, high quality fish was priced around Rp 200-300, the smaller varieties
around Rp 50-75, and very small low quality fish were as low as Rp 20-30.
In Central Java, most varieties sold at the Rp 200-250 level; the plentiful
horse mackerel was around Rp 125. Virtually the same prices prevailed in
Surakarta, which is far removed from the sea. At Cirebon and Serang in
West Java, the price of middle value fish was Rp 200-250, and small fish
around Rp 60. At Sukabumi, between Bogor and Bandung, fish prices were
considerably higher, Spanish mackerel being Rp 350, carp Rp 300-400, and
telapia Rp 130. Dried and salted fish prices in Java were around Rp 100-175,
in Kalimantan Rp 150-200, and in Sulawesi Rp 80-200.
47.       Recalling that average daily wages range from Rp 100 in Central
Java to about Rp 250 in Kalimantan, the relatively high level of fish prices
in Indonesia is clearly noticeable. A day's wages will buy 1-2 kg of fish;
by comparison, the daily wage in Thailand, for example, can buy 5-6 kg of
fish. Furthermore, the small fish which bring the lowest prices in
Indonesia would be considered industrial-grade fish in most countries (and
someday no doubt will be so used in Indonesia).
48.       It may be concluded that price relationships -- the daily wage,
the retail price of fish, and family incomes -- do not now favor the consump-
tion of fish in Indonesia. Expansion of market demand will be as crucia,l
as expanding the supply. And it must be assumed that lower prices, resulting
from increased supplies, will be an essential ingredient of success.


ANEX 5
Page 16
Export Markets
49.       Shrimp. According to FAO statistics, world production of shrimp --
excluding deepwater shrimp and common shrimp -- increased some 30% over
the five years, 1966-70, from 643,000 tons to 843,000 tons. These statistics
understate the total supply increase somewhat, since they do not include
Indonesian production or Japanese trial operations in South America and
other areas. The two main production areas are: (a) the western Atlantic
and east central Pacific, which accounted for 27% of the recorded world
total in 1970; and (b) the western Indian and west central Pacific, which
accounted for 40%. In,these areas, U. S. production alone increased from
80,200 tons to 101,700 tons, and Malaysia and the Republic of Vietnam also
made remarkable increases in their catch.
50.       The strong market for shrimp has depended primarily on demand in
the U.S.A., Japan, and the EEC countries. In 1970, total U.S. consumption
was 332,300 tons (liveweight) absorbing about 40% of total world
production; Japan consumed 149,000 tons, or 18% of world output. The rise
of the Japanese market for shrimp has been little short of sensational.
Standards of living have been increasing very rapidly in Japan, and consumption
of shrimp has followed in train. Consumption per capita was 0.585 kg in
1965, rising to 0.741 in 1966, and 0.886 kg in 1970.
51.       Shrimp imports were liberalized by the Japanese Government in
October 19(>1. From about 3,500 tons in 1962, imports of shrimp rose to
79,000 tons -- valued at US$204 million -- in 1971. Among exporting
countries to Japan, India ranked No. 1, with 9,700 tons in 1971, in
contrast to 15 tons supplied in 1967. Other significant suppliers were
Thailand, Mexico, and China, accounting in the aggregate for around 5,000-6,000
tons annually in recent years. Malaysia supplied 5,167 tons in 1971, against
475 tons in 1967. Australia and Pakistan supplied around 4,000 tons,
representing a threefold increase.
52.       Total consumption in Japan in 1975 and 1980 has been projected
at 122,000 tons for 1975, and 156,000 tons for 1980. With domestic
production estimated to be 38,000 tons at both dates, import requirements
would be some 89,400 tons in 1975 and 120,000 tons in 1980. However, 1971
imports already were close to the projected level for 1975. Although the
recent rate of growth for shrimp consumption may not be sustained, the
demand of shrimp in Japan will remain very strong, and increased imports
will continue from a higher base than had been expected.
53.       In the U.S. case, domestic production increased from 108,400
tons in 1966 to 167,000 tons in 1970, or 65%. Total consumption was 242,400
tons in 1966, or 37% of the total world catch, and 332,300 tons, or 40% of
the world catch, in 1970. The outlook is for continued strong demand in
the U.S. Market.
54.       In sum, the export market for high quality shrimp is, in effect,
open ended.


ANNEX 5
Page 17
55.       Tuna. Total world production of tuns (excluding marlin sailfiah
and mackerel) increased from 1.36 million tons in 1966 to 1.5 million tons in
1970. The main species are yellow fin tuna (23% of 1970 output), ocean
skipjack (22%), albacore (14%), and big-eye tuna (8%); together, these
five species accounted for over two-thirds of total rpoduction.
56.       The main producing countries were Japan (44% of 1970 output), the
U.S.S. (16%), Taiwan (9%), the Republic of Korea (7%), and Spain, France
and Puerto Rico (3-4% each). Production in Korea and Taiwan has increased
remarkably over the past two or three years.
57.       The demand of tuna comes mainly from the U. S. for canned tuna,
and from Japan for fresh fish (Sashimi and Sushi) and canned. World total
production of canned tuna increased from 258,000 tons in 1958 to 394,000 tons
in 1969, a 50% expansion in 10 years. Half of world production was consumed
in the U.S.A., where the volume per capita has doubled in one decade.
Slightly over half of the raw tuna consumed in the U.S. was caught by domestic
fisheries, the rest was imported. About two-thirds of the U.S. canned tuna
consists of light meat, which comes from the skipjack and yellow fin tuna.
58.       For the future, the production of albacore and yellow fin tuna
will be difficult to expand on a large scale; hence, skipjack and bonito
will be in heavier demand from the canning factories.
59.       In Japan, about 3 million cases (four dozen 1/2-lb cans) of
canned tuna was produced in 1971; about 70% was light meat. Japanese production
of processed tuna is rising owing partly to strong price signals from the U.S.
market: the price per ton was averaging US$430 per ton in early 1972.
60.       Projections by the U.S. Bureau of Commercial Fisheries put U.S.
consumption of tuna in 1980 at about 845,300 tons (liveweight), an increase
of 65% over 1970. Total world consumption in 1980 is put at 2.8 million
to7as. Such large quantities of tuna could be supplied only by skipjack,
which can be expected to become a more important human food.
61.'      Skipjack resources in Pacific waters are still underexploited: one
Japanese authority 1/ suggests that the skipjack catch could reach about
0.8-1 million ton. In particular, increased supplies are expected to come
from the semicircular area surrounding Nusa Tenggara and the west coast
of Australia. Rough sea conditions in this area, however, call for highly
skilled fishing techniques. The Republic of Korea and Taiwan are
increasing their catches by using long lines. On the other hand, the Japanese
fleet, based on long lines, is feeling a profits pinch as the result of a
deteriorating balance between labor expanse and the fish catch rate. Japan
is expected to fall into a deficit condition regarding tuna. Indonesia should
have no trouble disposing of its foreseeable skipjack production.
1/   Dr. A. Suda of the High Sea Fisheries Research Institute of the
Japanese Government.


ANNEX 5
Page 18
C. Strategy for Development
62.       The strategy for fisheries development being proposed, outlined
briefly in the opening paragraph, would utilize the considerable and profitable
export potential for products like shrimp and tuna to permit a sizeable
increase in domestic fish supplies at much reduced prices. Four projects
are suggested, Three of them are centered on Java and are formulated as
complementary projects. They consi,k of increasing the catch from marine
fisheries by the use of trawlers and motorized small boats, and of increasing
the yield of inland fisheries by upgrading existing exploitations and opening
up new areas.
63.       The key element in all three projects would be provided by the
foreseen catch of exportable shrimp which is estimated would by itself make
attractive the proposed investments. Exportable shrimp catch would coasti-
tute only about 5% of the total catch, The remaining 95% would be made up
of 90% fish and 5% shrimp for domestic consumption. These additions to
domestic fish supply, which would amount in the tentative projects proposed
to nearly 200,000 tons annually, would permit a considerable reduction in
domestic prices, and hence increase in consumption, without any serious
deterioration of the prbfitability of fishing enterprises.
64.       The fourth investment project would be centered in the Outer
Islands particularly around Maluku and Nusa Tenggara. It consists of the
development of skipjackipole fishing with an eventual production target of
some 70,000-80,000 tons annually, most of which would be destined for export.
65.       There are two possible approaches to increasing supplies to the low
consumption regions, especially Java. One would be to catch more fish where
they are in rich supply and transport them to consumer markets. This would
mean, for example, increasing the fishery effort in the marine waters of the
Riau area of Sumatra, in the Sulawesi area, and in the fresh waters of
Kalimantan (wherc- increasing the catch would probably be easy), and sending
them to Java. But there would be many problems, including transportation--
sailboat transport would certainly not be feasible--storage, and processing.
The alternative would be to promote fisheries in and near Java, where
considerable scope exists for increased production of marine and fresh water
fish. The two approaches are not mutually exclusive, of course, but it
would be advantageous to regard the more distant sources as residual suppliers
for Java.
Development of Java Fisheries
66.       The fisheries subsector under consideration is now in what can
be thought of as a sailboat phase of development. The present Japanese
industry evolved from a similar state, and the Japanese experience offers a
reasonably clear parallel to the development task facing Indonesia. Going
back in time 60 or 70 years, one finds that Japan's fishing fleet consisted
of some 425,000 sailing boats without engines, and total production amounted


ANNEX 5
Page 19
to only about 0.5 million tons. By 1920 an "intermediate modern" stage had
set in: the number of fishing boats had decreased to 385,000, including
5,800 motorized vessels, and total catch had increased to about 2 million
tons. Then gradually, over the years, fisheries developed into an integrated
complex of related industries. In 1971, Japan had 390,000 fishing boats
(245,000 gross tons), total production of 9.3 million tons; and there are
close to 2,800 fishing ports which offer commercial facilities for marketing
catches and repairing boats and engines, as well as providing social amenities.
67.       At present, the Java fishery is composed of about 39,000 sailboats
and 600 motorized vessels. The number of fishermen is 265,500. The catch
per boat for marine fish is 4 tons; the catch per fisherman per year is very
low, even by Indonesian standards, at 0.57 tons. If the level of catch could
be raised to, say, 1 ton per fisherman, it would be enough to supply 260,000
tons of fish for the Java area. For purposes of planning, however, it is
assumed here, somewhat arbitrarily, that a total production increase, from
inland and marine resources, of at least 200,000 tons per year would be a
legitimate goal. Assuming that the present ratio of marine to inland supplies
continues, the marine supply would be 80%, or 160,000 tons. The remaining
20%, or 40,000 tons, would come from inland fisheries. Although the fishing
grounds have not been adequately surveyed, the resource is apparently adequate
to support such an effort.
68.       The crucial factor is whether sufficient incentives for the
fishermen can be maintained. More basically, the problem for Indonesia is
how to increase supplies without precipitous damage to the livelihoods of
the traditional smallscale fishermen. Lower prices must be anticipated.
For the small fisherman to increase or maintain his income, he will have to
raise the productivity of his fishing effort. The best means of doing this
will be through partial motorization of small crafts and use of improved
techniques. Assuming a successful program of small fishermen productivity
improvement, it should be possible for trawler operations to expand. There
would inevitably be some attrition among the traditional fishermen, but
this loss would be more than made up by employment opportunities in related
industries.
69.       Trawl Fisheries Development. Trawler catches are mixtures of fish,
shrimp, and various other marketable products. Shrimp account for an
estimated 10% of the catch, and about half the shrimp are usually of export-
able quality. Shrimp resource surveys have recorded considerable stock of
shrimp and fish resources off the east coast of Sumatra. 1/   At the present
time, it is difficult for the traditional fishermen to participate in this
lucrative enterprise; using simple nylon gill nets from sailboats or spoon
nets along the beaches at low tide, they do not catch much shrimp. However,
small trawlers of the 15-20 tonnage class are able to catch much more shrimp
and fish than with the traditional methods; also, small trawlers are easier
1/   The composition of shrimp was as high as 20% in some hauls, but this
is higher than is usially found in Southeast Asian shrimping waters.


ANNEX 5
Page 20
to handle than gill netters.   Furthermore, small trawlers have already proved
themelves under Indonesian conditions--in North Sumatra, Kalimantan, and
the Java Sea as well.,
70.       The addition of, say 500-600 small trawlers (15-20 net tons) to
the fleet might be able to catch 150,000-160,000 tons of fish per annum,
of which about 16,000 tons would be shrimp. Half of the shrimp catch, or
about 8,000 tons, probably would be of exportable quality, worth some US$20
million. Because the trawler business is estimated to more or less break
even on the value of shrimp production alone, the large haul of fish should
be able to provide reasonable profits at reasonable prices.
71.       To handle the expected volume of fish and shrimp catch, it would
be necessary to provide cold storage capacity for about 2,000 tons and ice
making capability of about 500 tons/day. Estimated investment would be on
the order of US$20 million for boats and US$7 million for cold storage and
ice making plants, for a total of about US$27 million.
72.       No major investment in ports appears necessary to accommodate the
proposed trawler fleet. Jakarta and Surabaya already have adequate com-
mercial ports, part of which could be converted into fishing ports. Given
their present population and consequent large market potential (nearly 6
million people in Jakarta and 2.5 million in lSurabaya), these two ports
should serve as base of operation for the bulk of the trawler fleet. Smaller
scale bases could be the ports of Cirebon and Semarang.
73.       Small Boat Motorization. Motorization of small boats would
provide benefits mainly as a result of reduced travel time to and from the
fishing grounds, plus greater assurance of getting to destinations and the
possibility of going further. Catch per boat should be expected to double
present levels and reach about 1 ton/year. Motorization of some 2,000 boats
can reasonably be envisaged. Boats would have a capacity of 1-3 net tons,
and total investment cost is estimated at US$4 million.
74.       A selection of six or seven suitable ports should be made along the
coast of the Java sea to serve as bases for the motorized boats. Main bases
could again be Jakarta and Surabaya, where motorized boats and trawler
operation requirements might be coordinated. Other bases would have to be
decided by a feasibility study and would probably require investments in
improvement of the ports and port facilities, including loading and unloading
space, ice making plants and other related industries.
Inland Fisheries
75.       There are many inland waters, such as unused swamps or marshs,
in Indonesia. It would be relatively easy to bring them under cultiva ion,
through embankment or the use of fixed nets. Since Java provides the mhin
marketing opportunity at the present time, however, the problems of transport
and processing would be formidable, The more immediate concern should be
to increase the productivity of the inland brackish water fisheries in Java.


ANNEX 5
Page 21
This means the use of more effective farming techniques in the brackish water
ponds, and the adoption of new farming methods such as running water or cage
systems for fresh water fish. Yields could increase from about 300 kg to
600 kg/ha. As with marine fisheries, there must be a parallel development
of the marketing distribution network. Construction of new ponds may also
be considered, where better initial design will permit achievement of higher
yields.
76.       A program intended to increase fish production by some 40,000 tons
per year is tentatively suggested, consisting of improvement of 40,000 ha
of existing ponds and construction of 40,000 ha of new ponds.
77.       There are 40,000-50,000 additional ha suitable for fish cultivation
along the Java Sea coast, where with appropriate design, yields of up to
800 kg/ha could be achieved. Construction plans for these new ponds,
including gates, water movement, natural food for fish, and management must
be carefully developed.
78.       Total production from brackish water ponds can be expected to be
about 70,000-80,000 tons, including 5,000-6,000 tons of exportable shrimp,
The shrimp enterprise can provide an incentive to the expanded cultivation
of fish.
79.       Investment requirements are estimated at about US$12.0 million for
construction of new ponds over 40,000 ha, and about US$4.0 million for im-
provement of a similar area, for a total investment of US$16.0 million.
Skipjack
80.       A skipjack fishery has already started at Aertembaga in North
Sulawesi, and further development is under consideration. A long-line project,
proposed jointly by Indonesian and Japanese Governments, would be based at
Benoa, near Denpasar (Bali) and Sabang, near Banda Acjeh (Sumatra). The
scale of operations would be large. Serious doubts must be raised with
regard to it,
81.       First of all, Benoa and Sabang lack the infrastructure needed by a
fishing fleet. The base for a large-scale fishing industry must be supported
by related industries such as small machine shops, docking facilities,
ice making factories, restaurants, and other amenities--the availability of
amenities is not a minor consideration, because long-line tuna fishing in-
volves many days away from home under strenuous conditions. Second, some
of the catch would need to be disposed of on domestic markets, and the
proposed locations are not well suited for this purpose. Third, the scale
of operations appears to underestimate the time needed to build up a long-*
line industry, in terms of training and experience.
82.       It must be recognized that Indonesia does not have a seafaring
tradition. There is a general reluctance to go out to the sea for many days,
and the planning for large scale fisheries in Indonesia should take this into


ANNEX 5
Page 22
account. Under the circumstances, it seems appropriate to consider small
boats of 20-30 tonnage, with trips limited to four or five fishing days.
If a cautious approach is followed, a production target of 70,000-80,000 tons
appears feasible, including around 50,000-60,000 tons of exportable fish.
Around 200 pole fishing boats would be required, assuming boats of about
20 m length, and 30-40 net tons. Freezing plants would also be required,
with total capacity around 3,000 tons, and carriers with refrigeration.
Total investment is estimated at US$23 million. The number of skippers,
engineers and pole fishermen required would be about 4,000-5,000. The
training of fishermen for pole fishing and bait fishing is the key to success
for this business.
83.       Development of skipjack pole fisheries should be predominantly
directed toward the Outer Islands. Since fishing bait supplies introduce
a constraint on overall scale of operations from a single location, a number
of bases should be identified and selected. Port facilities now exist at
Ambon (Ceram) and Sorong (West Irian) and, to a limited extent, at Kendari
(S.E. Sulawesi). Other potential base sites undoubtedly exist in Maluku
and Nusa Tenggara. A detailed preinvestment study should be undertaken to
determine suitable locations and infrastructural investments required.
Investment, Employment and Other Implications
84.       The estimated direct investment requirements for the four projects
suggested are on the order of US$71 million, as shown in Table 10.
Table 10: SUMMARY OF INVESTMENT PROJECT
Estimated Investment
(million $)
Java Sea Projects
Trawl Fisheries                   28.0
Small Boat Motorization            4.0
Inland Fisheries                  16.0
Outer Island Projects
Skipjack Pole Fisheries           23.0
Total              71.0
85.       The Java Sea projects are expected to result in additional fish
catch for the Java market of approximately 200,000 tons annually, plus some
14,000 tons of shrimp of exportable quality, with an estimated value of
US$35 million. The skipjack project is expected to yield an annual catch of
some 75,000 tons of fish, thee-fourths, of which should be of exportable
quality worth some US$20 million. Briefly, the projects should make zn
important contribution toward improving protein supplied in an area where


ANNEX 5
Page 23
population density is extremely high and protein intake relatively low, as
well as to develop significant new sources of exports.
86.       Considerable new employment opportunities would be generated by
expansion of fleet operations. Projects in skipjack pole fishing would
need 4,000-5,000 skilled fishermen, while domestic trawl fisheries projects
would employ an additional 7,000-8,000 fishermen. Total skilled labor
requirements would thus be on the order of 11,000-13,000 fishermen. Further-
more, the motorization program for small boats would create a new class of
fishermen, involving higher skill levels and capital investment.
87.       At the same time, with higher productivity methods being used,
some attrition of fishermen numbers can be foreseen. The total number of
fishermen involved in the industry may gradually drop to a level of around
220,000-230,000, a decrease of 30,000-40,000 from the present. But this
attrition would be more than made up by increased employment in related
industries--cold storage, shrimp and fish processing, ice making, packaging
and transporting, retail selling, dockyards, machine shops, etc. Processing
alone could add 25,000 jobs. It is roughly estimated that at least 100,000
ancillary jobs would be created. Thus, there would be a net increase in
employment.
88.       To realize an expansion on the scale envisaged, training is clearly
a prime consideration. However, improvement of the entire infrastructure--
markets, harbors, harbor equipment, public transportation, and retail market
.,.uipment--will be necessary. Increased support for cooperatives will be
89.       Research and survey work is of high priority. As the investigation
of the marine resources has barely begun, it will be an important and
difficult task for a long time to come. It would be desirable to combine
research and training to the extent possible--in the operation of research
vessels, for instance. The research centers for inland waters should study
means of increasing the harvest per unit of area of the milk fish enterprise.
Research should also be expanded to establish effective methods for developing
swamps and various mediums for cultivating fresh water fish. Improved fish
processing methods must be investigated. And more data on consumption
patterns and economic relationships are necessary for planning purposes.
90.       It is suggested tlat preinvestment studies be promptly undertaken,
dealing in depth with the feasibility and requirements of the proposed
projects.


ANNEX 5
Appendix 1
Page 1
INDONESIA
AGRICULTURAL SECTOR SURVEY
SITUATION OF FISHERIES BY PROVINCE
1.        Sumatra. In 1969, Sumatra accounted for 43% or 336,900 tons of
marine fisheries production, and about 18% or 77,800 tons of inland fisheries
production; the total for this region is 38%, or 414,800 tons. Of the
fishing boats, Sumatra had about 14%; 3,840 were motor-driven, of a total
of 5,300. In terms of total fishermen numbers, 18% or 159,000 were in
Sumatra. Catch per fisherman was 2.12 tons, a figure that greatly exceeds
the national average (0.87 tons). tn Riau province, production per fisher-
man was as high as 10 tons, based on motorized trawl fishing and export to
Singapore. Sumatra's 19.4 million people comprise 16% of Indonesia's total
population.
2.        Particularly good progress has been achieved in the provinces of
Riau and North Sumatra, the principal centers being Bagansi, Api-Api and
Tanjung Penang, from which trawling is carried out in Malacca Strait. From
these areas, 40,000-50,000 tons of fish are exported annually to Malaysia
and Singapore.
3.        In Atjeh province on the west coast, about 8,100 tons of milk
fish were produced from 17,150 ha of inland cultivation areas.
4.        Kalimantan. Production from marine fisheries in this region
was 97,200 tons, about 12% of the national total. Production from inland
fisheries was 195,000 tons, or 45% of the national total. The total pro-
duction of 242,200 tons accounted for 20% of national output. Kalimantan's
inland fisheries have been important since ancient times, with the salted
fish shipped out of Samarinda in East Kalimantan finding a ready market in
Java. Fishing boats numbered about 22,200, or 8%; while the number ,f
fishermen was 43,150, or 5%. Average catch per fisherman was 2.24 tons, or
slightly higher than for Sumatra. The population is 5.1 million, or 4.5%
of the national total.
5.        Sulawesi. Production from marine fisheries is 123,250 tons or 16%;
and from inland fisheries, 36,140 tons or about 8%; the total of 159,500 tons
accounted for 13% of national output. The number of fishing boats was
121,130, or 43%; while the number of fishermen was 270,400, or 1%. Catch
per fisherman was 0.45 tons, about half the national average. Population
is 8.8 million, or 7.3% of the national total. These figures reflect the
very small scale of fishery operations in this region.


ANNEX 5
Appendix 1
Page 2
6.        Around Aertembaga in North Sulawesi, however, skipjack fishing
with poles has become quite active; and, in connection with a World Bank
project, exports to Japan are beginning to take place.
7.        Bali. Production is very low, both in marine fisheries and
inland fisheries; 3,500 tons for the marine and 1,330 tons for the inland.
Bali's population of 2.2 million is very densely packed. The fishing boats
number 8,800, the fishermen 16,700. Average catch per fisherman is 0.21 tons,
the lowest in all of Indonesia. Bali's fishing grounds are connected with
the Indian Ocean to the soth and with the Java Sea to the north; both
these waters are rich in large pelagic fish and many varieties of smaller
fish. But people in Bali have long regarded such fishing as overly risky.
8.        Nusa Tenggara. This area is divided into two regions, East and
West. In West Nusa Tenggara, production from marine fisheries and inland
fisheries is 20,500 tons and 2,300 tons, respectively.    Of the population
of 2.2 million, 15,900 are engaged in fisheries. Average catch per
fisherman is 1.28 tons. In East Nusa Tenggara, production is 10,650 tons
for marine fisheries and 200 tons for inland fisheries. Population is 2.2
million; the average catch per fisherman is 0.46 tons.
9.        Maluku. Production from marine fisheries and inland fisheries is
33,000 tons and 1,880 tons, respectively. Of the population of 1.0 million,
over 6% are engaged in fisheries. Average catch per fisherman is only 0.5
tons. However, since Maluku is surrounded with waters which provide ex-
cellent skipjack iishing, prospects for future growth of the skipjack
fisheries are very good.
10.       West Irian. With a population of 0.9 million, this region remains
largely undeveloped. Marine fisheries production is 5,800 tons, and for
inland fisheries is 750 tons, for a total of 6,550 tons. Average catch per
fisherman is low at 0.26 tons. However, in the waters south of Irian, in
which Aru Island is included, shrimp trawling has been started as a joint
venture with Japanese interests; rapid growth is anticipated.
11.       Java.  Production for marine fisheries was 154,500 tons, or 20%;
for inland fisheries, it was 113,100 tons or 21%. The total of 267,500 tons
accounted for 22% of national output. Including 607 motor propelled boats,
fishing boats numbered over 29,000, or 14%. Fishermen numbered 265,400, or
30%. Average catch per fisherman is only 0.57 tons. Inland fisheries
mainly consist of fish cultivation, with fairly effective methods being
employed. Further growth of fish cultivation as well as development of marine
fisheries is of high priority for this region.