D N OF N T ON FILE COPY DOCUMENT OF INTERNATIO EJ,TION AND DEVELOPMENT INTERNAT LATON

Public Disclosure Authorized Not For Public Use

Report No. 705-IND Public Disclosure Authorized INDONES IA

IRRIGATION PROGRAM SURVEY

Public Disclosure Authorized April 15, 1975 Public Disclosure Authorized Irrigation and Area Development Division East Asia and Pacific Pacific Projects Department

This report was prepared for official use only. by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report. CURRENCY EQUIVALENTS

US$1.00 Rupiah (Rp) 415 Rp 100 US$0.24 US$1 million Rp 415 million Rp I million US$2,410

WEIGHTS AND 1MEASURES (METRIC SYSTEM)

1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles 1 hectare (ha) 2.47 acres 1 ton = 1,000 kilogram (kg) = 2,205 pounds

FISCAL YEAR

April 1 - March 31 GLOSSARY desa - village dharma tirta - water user group gogorancah - technique for direct seeding of rice golongan - system of rotational irrigation gotong royong - cooperative effort kabupaten - district kecamaten - sub-district juru - irrigation sub-foreman padi gabah - unhusked rice 1/ pengamat - irrigation foreman sawah - bunded rice field ulu-ulu - village water master

1/ The unit of yield used throughout this report ABBREVIATIONS

BAPPENAS - Badan Perancanan Pembangunan Nasional - National Planning Agency BIMAS - Bimingan Massal Swa Sembada Bahan Makanan - "Mass Guidance for Self-Sufficiency in Foodstuffs" - a farm input-credit package program BRI - Bank Rakyat Indonesia - People's Bank of Indonesia BULOG - Badan Urusan Logistik - "National Logistics Body" - rice procurement agency BUUD - Badan Usaha Unit Desa - Village Unit Cooperative CBS - Biro Pusat Statistik - Central Bureau of Statistics CRIA - Central Research Institute for Agriculture DAP - Diammonium phosphate DGWRD - Director(ate)-General of Water Resources Development DOLOG - Depo Logistik - provincial branch of BULOG GDP - Gross Domestic Product GOI - Government of Indonesia HYV - High-yielding Variety INMAS - Intensifikasi Massal - "Massive Intensification" - a farm input program INPRES - Instruksi Presiden - "Presidential Instruction" - a rural public works program IPB - Institut Pertanian Bogor - Bogor Institute of Agriculture IPEDA - Iuran Penbangunan Dearah - Land Tax IRRI - International Rice Research Institute ITB - Institut Teknologi, Bandung - Bandung Institute of Technology MOA - Ministry of Agriculture MPWEP - Ministry of Public Works and Electric Power NSC - National Seeds Corporation Pelita - Five-Year Development Plan PPL - Field Extension Worker PROSIDA - Proyek Irigasi IDA - Agency of DGWRD, created to execute IDA-assisted projects RMS - Rice Marketing and Storage Study (USAID) RPIPI - Rice Production and Intensification Programs in Indonesia Study SAE - Survey Agro Ekonomi Institut - Agro-Economic Survey Institute TSP - Triple Superphosphate INDONESIA

IRRIGATION PROGRAM SURVEY

TABLE OF CONTENTS

Page No.

SUMMARY ...... i-iii

I. BACKGROUND ...... 1

Mission's Objectives and Methods ...... 1 The Economy ., ...... 2 Agriculture ...... 3 Paddy Production ...... 3 The Need for Rice Irrigation ...... 5 Population and Social Structure ...... 5 Administration of Irrigated Agriculture ...... 5 Irrigation under the First Five Year Plan ...... 6 Irrigation Program under the Second Five Year Plan. 6

II. BANK GROUP PROJECTS REVIEWED ...... 6

Objectives ...... 6 Physical Progress ...... 7 Operation and Maintenance ...... 7 Other Technical Problems ...... 8 Agricultural Development ...... 8 Farm Income ...... 9 Reassessment of the Jatiluhur Rehabilitation Project (Credit 195-IND) ...... 9 Organization and Management ...... 9

III. PROPOSALS TO INCREASE PRODUCTION: INFRASTRUCTURE ...... 10

Pelita II Irrigation Projects ...... 10 On-Farm Development ...... 10 Other Infrastructural Development ...... 12

This report is based on the findings of a mission, comprising Messrs. H.J. Tennent, M.G. Saddington, and C. Koch-Weser (Bank), P.F. van der Goot and C. Pineau (FAO), and P. Judd and R. Fagerberg (Consultants). The mission was assisted by Prof. S. Tjondronegoro in the field and by Mr. P.W. Whitford in compiling this report. -2-

Page No.

IV. PROPOSALS TO INCREASE PRODUCTION: AGRICULTURE ...... 12

Agricultural Techniques ...... 13 Recommended Improvements ...... 13 Agricultural Supporting Services ...... 14 Crop Insurance ...... 17 Training ...... 18

V. CONCLUSIONS AND RECOMMENDATIONS ...... 18

ANNEXES

1. Terms of Reference: Summary 2. Rural Socio-Economic Survey 3. Agricultural Related Services and Organizations 4. On-going Irrigation Rehabilitation Projects 5. Operation and Maintenance 6. Agriculture 7. Processing and Marketing of Paddy and Rice 8. Rehabilitation of Jatiluhur Irrigation System: Reassessment of Economic Internal Rate of Return 9. Proposed Irrigation Projects in the Second Five-Year Plan 10. Rural Social Structure and Farm Income 11. Seed Production 12. Credit 13. Crop Insurance 14. Training 15. Bibliography

CHARTS

8722(R) Assessment of Yield Potential 8723(R2) Actual and,Proposed Organization of Services for Irrigated Agriculture 8814 Typical Operation and Maintenance Organization - Pemali-Comal

MAPS

10032 Indonesia - Administration and Population 3627R1 Indonesia - Irrigation Rehabilitation Projects 10036 Indonesia - Land Use: Western Area 10072 Indonesia - Land Use: Central Area 10073 Indonesia - Land Use: Eastern Area 10034R Indonesia - Rainfall 10035 Indonesia - Soils INDONESIA

IRRIGATION PROGRAM SURVEY

SUMMARY

(i) The purpose of the survey was to examine the success or otherwise of the on-going irrigation projects and to recommend ways of increasing paddy production mainly in Java. The mission's field work was confined mainly to the Bank group assisted irrigation rehabilitation projects in Java. The mission recommends action in the fields of (i) agricultural techniques and reduction of losses; (ii) irrigation rehabilitation and on-farm development; and (iii) new irrigation schemes and improved infra-structure.

(ii) Indonesia's economy has grown rapidly since 1968, but agriculture's share in the economy has declined. It accounted for 50% of GDP in 1968 and about 43% in 1973. Agricultural output grew at about 4% over that period, but the rest of the economy grew more rapidly. From 1968 to 1973 paddy pro- duction increased more rapidly than total agricultural output, increasing by about 4.2% per annum. Rice imports, however, are still substantial, varying between 0.5 and 1.5 million tons in recent years due in part to adverse weather conditions and stock building.

(iii) Three broad strategies are available to meet this deficit: (i) al- lowing imports to increase, which may be feasible from a balance of payments point of view but may be unacceptable because of a lack of secure sources of supply; (ii) stimulating domestic supply by making further improvements and developments to physical infrastructure, mainly in irrigation, and expanding improved agricultural technology, through strengthened agricultural support- ing services; and (iii) expanding paddy hectarage in the Outer Islands. Crop insurance is not considered a feasible alternative for expanding paddy output. This report deals mainly with the second strategy.

(iv) Some 56% of the area harvested for paddy is on Java and Bali and about 60% of this area is irrigated. The standard of irrigation, however, varies considerably and only 1.2 million ha (out of a total paddy area of 4.7 million ha on Java and Bali) has fully-controlled and permanent irrigation systems, and about 1.0 million of this area is now undergoing rehabilitation. For the whole country about 1.5 million ha (with a total of 8.3 ha harvested for paddy) has fully-controlled irrigation. In the wet season, supplementary irrigation is necessary if high yields are to be obtained. In the dry season, no cropping is possible without irrigation.

(v) Despite delays, physical progress in implementing the five Bank group assisted projects is fairl-y-sitisfactory, exept_for=tertiry and - quaternary development. Operatioff 1-if hance is beginning to be put o-Fasound-organizational and financial footing but further efforts are needed in providing adequate funds, equipment and staff training. Other technical problems include insufficient drainage, soil conservation and rural roads. It is difficult to evaluate the agricultural progress-ofShe projects due toaolawever, aedaa Ht ons are that - ii - yields are increasing roughly in line with appraisal estimates. The number -of extension workers is still inadequate. There is a pressing need for - regular farm income surveys byani-impartial body. A reassessment of the economic rate of return of one of the projects, the Jatiluhur Rehabilitation Project, showed that project justification has not been seriously impaired by cost increases and delays, since the price of rice has also increased enormously since appraisal.

(vi) Irrigation investment under the Second Five Year Plan (Pelita II) will include the completion of on-going projects, some further rehabilitation, a program of small-scale irrigation schemes and some storage dam construction and development of new areas. Though the mission was not able to examine these proposals in detail, the overall approach appears to be valid and a project list for Bank Group assistance is proposed. Additional infra- structural development will, however, be required and the mission recommends that priority be given to a program of on-farm development, to include tertiary and quaternary irrigation facilities, improved supporting services and village roads. The Government supports this proposal in principle and arrangements are being worked out for sharing the costs between the Govern- ment and the farmers. The mission particularly advocates implementation of its recommendations for improved agricultural techniques and prevention of losses, which can produce quick results.

(vii) Limited opportunities exist for increasing yields of swamp and upland paddy in Java. For rainfed wet paddy, direct seeding offers substan- tial promise. In irrigated areas, efforts should be directed towards: new varieties; high quality of seed; improved availability of inputs such as ferti- lizer and insecticides; rat control; better water control; weeding; harvest- ing with sickles; prevention of grain losses; and selective mechanisation of land preparation and threshing.

(viii) Research and extension efforts suffer mainly from lack of coordina- tion and central guidance and inadequately trained staff. The Bank has appraised a project to strengthen both research and extension with particular emphasis on paddy, secondary crops, highland vegetables and rubber. The project will finance four National Research Centers on these crops with a network of regional sub-stations, as well as provide training. A Bank mis- sion will review national agricultural extension services with GOI in May 1975 with a view to agreeing on basic principles and establishing priorities for future Bank assistance in this field.

(ix) Two types of farmers' organizations exist at present, water user groups and cooperatives. The cooperatives are dominated by the richer landowners and are generally distrusted by the smaller farmers. They are however, playing a useful role in distributing inputs. The mission proposes that water user groups should be-expanded to form the basis for a system of farmers' organizations at each level of g6vernimeit, allowing a two-way flow of information between the Government and the farmers. There is also a need for strengthening the existing coordinating committees of government officials concerned with agricultural development at all levels of govern- ment. The national Coordinating Committee for Rice should assess priorities and ensure that all the concerned agencies fulfil their assigned roles. - iii -

(x) The BIMAS package program, covering credit, subsidised inputs, better seeds and extension, is one of the success storie's of Indonesian agriculture. The subsidised inputs available on a voucher system stimulate the adoption of improved technology and the use of yield increasing inputs. The BIMAS program should be expanded and needs more support from the Extension Serviceand-better-provision for the timely distribution of inputs.

(xi) Grain losses could be reduced very considerably from the present 25% to about 15% with coordinated efforts in improved harvesting and threshing techniques, rat control and better storage. By comparison losses in the United States are only about 5%, which indicates an improvement should be possible in Indonesia.

(xii) The training available at the few first-class institutions in Indonesia is of a high standard. To overcome the acute shortages of well- trained agriculturalists, engineers and managers, the second tier of insti- tutions will need to be upgraded, which will in turn require improvements at the secondary level. There is also a need for more in-service staff training, particularly in agronomic techniques, catchment and water manage- ment, and operation and maintenance.

(xiii) Important areas in which the mission did not have sufficient infor- mation to make detailed recommendations include: tenancy conditions and income distribution; paddy, fertilizer and rice pricing policies; the optimum geographical distribution of agricultural investments; and Outer Island development. These questions should be examined by future missions.

(xiv) Circulation of this report was delayed to accomodate the findings of the Bank's Basic Economic Mission, which visited Indonesia in October 1974. Technical annexes have, however, been issued to and discussed with GOI during 1974.

INDONESIA

IRRIGATION PROGRAM SURVEY

I. BACKGROUND

Mission's Objectives and Methods

1.01 The Irrigation Program Survey mission originated from a concern in the Bank that, before further investments were made in irrigation develop- ment in Indonesia, the success or otherwise of the on-going irrigation re- habilitation projects should be evaluated and an assessment made of alternative approaches to increasing Indonesia's paddy supply. A summary of the mission's Terms of Reference is given in Annex 1. The mission's main objectives were to:

(a) Assess the supply and demand for rice in Indonesia; 1/

(b) evaluate the institutions and programs related to agriculture and irrigation and to identify cons- traints and recommend solutions;

(c) evaluate the success of the on-going Bank group assisted irrigation rehabilitation projects, identify cons- traints and recommend solutions;

(d) make recommendations on the scope and direction-of Indonesia's future investments for paddy production and possible Bank involvement.

1.02 The mission's field work was carried out within the on-going Bank group assisted irrigation rehabilitation projects, mainly in Java, and con- sisted of meetings with local officials and village heads and numerous interviews with farmers. The project works, agricultural institutions, storage and processing facilities were inspected and general rural conditions assessed. The mission visited all rehabilitation sub-projects under Irri- gation Rehabilitation Projects I, II and III (Credits 127, 195 and 220-IND). The Fourth Project (Credit 289-IND) was not visited, as it was not sufficiently advanced for changes to be measured. Map 3627R1 shows the location of the Bank group projects.

1.03 In Jakarta, further meetings were held with various Government of Indonesia (GOI) agencies and the Bank Resident Staff. Information was

1/ The mission's assessments were used as background information, but these evaluations, together with price policies, will be discussed in the Basic Economic Report. obtained on such matters as rice production, rice demand, rural taxes (IPEDA), the BDIAS 1/ program, the Second Five-Year Plan, rice storage and rural credit.

1.04 The mission was in Indonesia from March 3 to March 30, 1974 and consisted of Messrs. H. J. Tennent, M. G. Saddington, and C. Koch-Weser (Bank); P. F. van der Goot and C. Pineau (FAO); P. Judd and R. Fagerberg (con- sultants). The mission was also assisted part-time in Indonesia by Profes- sor Tjondronegoro, a rural sociologist. Mr. A. Golan joined the mission for its final meetings. Both Mr. Tennent and Mr. Fagerberg had visited the irri- gation rehabilitation projects in 1968 and 1970, before work commenced, and were able to compare the past and present physical situation. As part of the mission, a quick rural agro-economic survey was organized under Professor S. Tjondronegoro in the Cisedane and Pemali-Comal sub-projects. The survey is described and evaluated in Annex 2.

The Economy

1.05 March 31, 1974 marked the end of Pelita I, the Indonesian First Five-Year Plan. During the period 1968-1973, real annual economic growth was above 7%. Domestic savings and investments increased considerably, thus providing the basis for continued future economic growth. This occurred despite a drought in the second half of 1972 which led to a setback in food production and a steep increase in prices. At the beginning of 1974, inflation, which had previously been under control, reached a rate of 40% per annum. Steep increases in export prices, a rapid physical expansion of production in the oil and forestry sectors, a quick growth in direct foreign investment and a large inflow of short-term credit, all contributed to this. Most noteworthy for future development prospects has been the rapid increase in oil prices. With a daily production of 1.5 million barrels, Indonesia is the eighth largest oil exporting nation in the world. The price of Indonesian oil, which was US$3.73 per barrel in September 1973, reached US$12.60 per barrel by July 1974. Gross production is expected to exceed US$5 billion in 1974/75, of which US$3 billion will be the net contribution to the balance of payments and the Government's revenues. The important prob- lems facing the economy during the Second Five-Year Plan (Pelita II), 1974/75 to 1978/79, are the equitable distribution of the benefits from oil and other developments among the people, the expansion of food production, and the control of inflation. The Provincial Administration and Population distribu- tion in Indonesia is shown on Map 10032.

1/ BIMAS - Bmingan Massal Swa Sembada Bahan Makanan, literally, "Mass guidance for self-sufficiency in foodstuffs" a farm input package program. See Annexes 3 and 12. -3-

Agriculture

1.06 Agriculture, which grew at about 4% per annum over the period 1968-73, accounts for about 43% of GDP, about 60% of employment and almost all non-petroleum exports. The six major food crops: rice, maize, cassava, sweet potatoes, soybeans and groundnuts, provide 85% of the total calorie and 80% of the total protein intake of the population. Rice, the staple food, amounts to nearly one-third of total agricultural production by value and 12% of GDP. The Government's foremost objective in food crop production is self-sufficiency in rice as soon as possible. Under Pelita I, priority was given to increasing paddy production, which had stagnated for more than a decade. Measures taken included rehabilitation of existing irrigation systems, price support programs, the provision of improved seed, fertilizer, pesticides and credit, and substantial allocations of funds to extension and research. These policies contributed to the increase in production from 10.8 million tons of milled rice in 1968 to 13.4 million tons in 1973, a total increase of 2.6 million tons, or an average annual increase in domes- tic rice supply of 2% per capita over the First Plan period. Despite these gains, Indonesia must still import between 0.5 to 1.5 million tons of rice a year. Much of these gains, of course, were consumed by the farm families and increased population and never reached the market. The 1972 drought had a severe impact on rice output, highlighting the vulnerability of the Indonesian rice economy to weather fluctuations.

1.07 Production of foodcrops other than paddy either increased only marginally or even decreased over the period 1968-73. This offset to some extent the increase in total domestic food production resulting from the increased paddy supply and caused the average annual per capita availability of these six food crops to decline in terms of calories and remain constant in terms of protein.

Paddy Production

1.08 The Indonesian climate is monsoonal with rainfall in the range of 1,500-2,000 mm in the main paddy-growing zones. While this amount is usually sufficient to grow a wet-season crop, its distribution is variable and irrigation is, therefore, required. Rainfed crops are often subject to drought or damaging flooding. Irrigation is essential for dry season paddy production. Land use is shown in Maps 10036, 10072 and 10073. Paddy cultivation is concentrated on the fertile volcanic and alluvial soils of Java and Bali, which account for about 60% of cropped area. The other major paddy area is Sumatra, while Kalimantan and South Sulawesi are of some importance. Rainfall is shown in Map 10034R and Soils in Map 10035.

1.09 The main categories of paddy production are: irrigated, rainfed, upland and swamp. The term "sawah" or wet paddy land is used to describe all paddy fields, irrigated or rainfed, which have low banks or bunds built around them to retain water. Irrigated paddy is broadly divided in Indonesia into technical, semi-technical and village irrigation. Technical irrigation means systems with permanent structures operated and maintained by Government. - 4 -

Semi-technical systems have fewer permanent structures and minimum Government maintenance. Village schemes are systems, largely constructed and operated by the village community, with few permanent structures. Average irrigated paddy 1/ yields at present vary considerably - from 1.5 ton/ha in poorly developed areas with minimum water control to 3.0 ton/ha or slightly better in systems with good water delivery and a reasonable standard of operation and maintenance (Chart 8722). Rainfed production has an estimated average yield of 1.5 ton/ha. Upland paddy is grown on a shifting or permanent cultivation basis on elevated land without bunds to retain water. Present yields are about 1.0 ton/ha. Swamp paddy (with a tidal control system) is grown in poorly drained coastal swamp areas, which are subject to regular flooding. Average yields are less than 1.5 ton/ha.

1.10 Paddy is currently produced on an estimated net 7.1 million ha, divided as shown below:

Cropping Harvested Category Area Intensity Area (M ha) (%) (M ha)

Irrigated paddy Technical 1.5 ... .. Semi-technical 1.2 Village 1.3

Sub-total 4.0 130 5.2

Rainfed paddy 1.4 100 1.4

Upland paddy Java 0.3 100 0.3 Outer Islands 1.0 100 1.0

Sub-total 1.3 100 1.3

Swamp paddy 0.4 100 0.4

Grand total 7.1 117 8.3

1.11 Total estimated production in 1973 was some 13.4 million tons of rice. Java, Madura and Bali have traditionally been the most important paddy producing areas with highly labor-intensive cultivation on very small producing units. The average farm size is 0.6 ha, with 60% of farms 0.5 ha or less. Farm size in the Outer Islands is larger, less labor is used and yields are lower. From a total of 12.3 million smallholdings, 8.2 million are in Java, Madura and Bali.

1/ "Paddy" throughout this report refers to "padi gabah' or unhusked grain. - 5-

The Need for Paddy Irrigation

1.12 Irrigation is required for efficient paddy production in Indonesia. In the wet season, supplementary irrigation provides a more even distribution of water and allows the economic use of modern inputs, thus improving crop yields. Drainage is necessary to remove excess water. For dry season crop- ping of paddy, irrigation is essential. About 56% of the net paddy production area (or 60% of the annually cropped area) is irrigated. About two-thirds of this area is in Java and Madura. Irrigated paddy accounts for 80% of current production. Paddy and secondary crops compete for dry-season water supply but most is used for paddy, because of its generally higher monetary returns and dietary preferences.

Population and Social Structure

1.13 In 1974, Indonesia had a population of about 130 million, with a growth rate of about 2.4%. Population is heavily concentrated on Java and Bali, where density in some provinces is as high as 650 persons/km2. (Map 10032). Rural-urban drift has not yet become serious, except in the case of Jakarta. Agricultural employment has grown at only 0.5% per year over the last decade and consequently agriculture's share in total employment has fallen from 72% to 63%. According to the quick agro-economic survey, 30% to 70% of farmers have some off-farm income, mostly from trade or construction work.

1.14 The agro-economic survey also showed that, in the areas sampled, 70% of the farmers were owner-cultivators. The remainder are mostly share- croppers, who commonly receive 50% of the crop. There is also a high proportion of landless laborers throughout the rural areas. Status in the village community is closely linked to land ownership. Village leaders tend to be owners of relatively large farms and village leadership confers access to still more lands provided by the village. A variety of customs regulate how and by whom tasks such as harvesting may be performed. These customs tend to redress inequalities of income.

Administration of Irrlgated Agriculture

1.15 The many agencies servicing irrigated agriculture are shown in diagramatic form in Chart 8723 and discussed in Annex 3. The Ministry of Agriculture (MOA), through its various Directorates, is responsible for research, extension, farmer training and supervision of seed production. About 80% of fertilizer and agro-chemicals reaching the farmers are supplied by the Directorate of Supply and Services through P. N. Pertani and a system of village kiosks. The other 20% are supplied by private firms. The Bank Rakjat Indonesia (BRI) provides production credit through village unit offices. The Ministry of Public Works and Electric Power (MPWEP), through the provincial irrigation services, operates and maintains the major irri- gation and drainage systems down to the tertiary outlet. The Ministry of Interior is responsible for local governments. The provincial, district (kabupatpn), sub-district (kecamaten) and village unit (desa) administrations coordinate the efforts of the various Government agencies and encourage the formation of farmer groups for the construction, operation and maintenance - 6 - of the tertiary and quaternary canals. The Directorate of Transmigration and Cooperatives promotes the formation of farmer cooperatives at the village unit level. The Badan Urusan Logistik (BULOG) is a Government agency responsible for the stabilization of rice prices and has officials and stores down to the sub-district level (para 5.23).

1.16 The execution of IDA Credits 127, 220 and 289-IND is the responsi- bility of a special agency, PROSIDA (Proyek Irigasi IDA), within the Directo- rate-General of Water Resources Development (DGWRD) of the MPWEP. Credits 195-IND and 514-IND are the responsibility of the Jatiluhur Authority, a multipurpose, semi-autonomous agency within the Ministry of Economics, Finance and Industry.

Irrigation under the First Five Year Plan

1.17 Due to long years of neglect, the 1.5 million ha of government maintained irrigation systems were in need of rehabilitation by the mid- 1960's. Rehabilitation works were given priority under Pelita I and some 1.0 million ha were started under the Plan, with about 800,000 ha being carried out with Bank group assistance. Most of these works will be completed during 1976; the full impact of the rehabilitation will not, therefore, be fully felt until halfway through Pelita II.

Irrigation Program under the Second Five Year Plan

1.18 As well as completing rehabilitation works, GOI has plans for new irrigation projects covering about 240,000 ha made up of 80,000 ha of new land for dry season cropping due to storage dams, 80,000 ha of conversion of upland crop areas to irrigation and 80,000 ha of upgrading of village schemes to increase cropping intensity. In addition, the "Simple Irrigation Scheme" program has a target of 550,000 ha. This program consists of projects averaging 600 ha and is mainly in the Outer Islands. It will also include conversion of existing upland crop lands and upgrading village systems, so that only about 150,000 ha is expected to be new land.

1.19 Since irrigation systems take time to plan and construct, it is unlikely that more than about 400,000 ha of the target of 790,000 ha will be completed in Pelita II, the benefits from the balance will not be felt until Pelita III (after 1979).

II. BANK GROUP PROJECTS REVIEWED

Objectives

2.01 The four Bank group assisted irrigation rehabilitation projects (Credits 127, 195, 220 and 289-IND) now in progress were appraised between 1968 and 1971 and cover an area of 793,000 ha of rehabilitation plus 25,000 ha of new construction (Map 3627R1). All the projects are similar in scope. They include: replacement of collapsed headworks, weirs and other structures; desilting and reconstruction of primary and secondary canals and drains; repair and replacement of control structures; establishment of operation and maintenance (O&M) organizations; and strengthening of agricultural supporting services. The projects also provide for rehabilitation of the tertiary and quaternary canal and drainage systems, but it was assumed that this work would be carried out by the farmers themselves, with minimal help from the Government agencies. The Jatiluhur Rehabilitation Project (Credit 195-IND) is part of a multi-purpose water resource development and is managed by the semi-autonomous Jatiluhur Authority. This Authority is also responsible for the Jatiluhur Extension Project (Credit 514-IND) covering 53,000 ha of pre- sently rainfed paddy commencing in 1975. The other projects are the respons- ibility of PROSIDA, an agency of the MPWEP.

Physical Progress

2.02 Before rehabilitation, the irrigation systems were in a very poor state of repair and were serving only about 20% of their nominal command areas. Delays in equipment procurement, the lack of experienced contractors and the need to build up the capacity of the executing agencies have all delayed project implementation but fairly satisfactory progress is now being made. For example, by March 1974, over 5,000 km of canals and drains and 4,400 structures had been rehabilitated. Details are given in Annex 4. Pro- curement delays, due to unwieldy Government procedures, were the subject of a special Bank mission in early 1974. If the recommendations of that mission are adopted, delays should be reduced by 15 to 20 weeks.

2.03 Progress in tertiary and quaternary (on-farm) development is not satisfactory. Farmers do not have the knowledge to set out canals and drains to correct levels, nor the experience to build proper control structures. Furthermore, no one farmer can cut through the land of another, and the owner near the head of a tertiary or quaternary canal can refuse permission to cross his land, thereby stopping the work. Absence of water user groups and insufficient help from government agencies, in the past, have contributed to the slow progress of this work. Recommendations for overcoming these problems are given in Chapter IV.

Operation and Maintenance

2.04 O&M of the irrigation system down to the tertiary outlet has tradi- tionally been the responsibility of the provincial administrations. Neglect of this function over a long period created the need for rehabilitation and the Bank group assisted projects provide for the establishment and equipping of O&M organizations. Progress in this area has been uneven. In some cases, the organization is functioning. In others, it exists only on paper. Budge- tary provisions for O&M are improving and now vary between Rp 900 and Rp 1,600/ha (US$2.50-4.00/ha). The mission estimates that the cost of ade- quate O&M will vary between Rp 3,000-4,000/ha in 1975, depending on local conditions. Financing of O&M has been aided by a decision of GOI to subsidize the provinces in an amount of Rp 1,600/ha for 1974/75. The subsidy will taper to zero by 1978, by which time the provinces should have raised their collections of land tax (IPEDA). One province, South Sulawesi, has enacted a special water tax of 1% of crop production. - 8 -

2.05 Other O&M problems include insufficiently trained staff, delays in the handing over of equipment from construction to O&M, the reluctance to use radio communications, and the lack of inspection roads. Further details on the above problems, a brief evaluation of O&M in each sub-project, and detailed recommendations for the improvement of O&M, including staffing levels, training and financing, are given in Annex 5 and Chart 8814.

Other Technical Problems

2.06 Drainage - Several of the sub-projects require more investment in drainage than was recognized at appraisal. This is particularly so in low-lying coastal areas where tidal levels and siltation impede drainage. Farm drains are needed to remove storm runoff in most areas.

2.07 Soil Conservation - The rivers of Java have always carried heavy silt loads but this problem is being exacerbated by human encroachment on the forested uplands. Removal of silt from the irrigation systems is difficult and expensive. The Directorate of Reafforestation and Rehabilitation is responsible for watershed management and soil conservation and is implement- ing several small projects and one large one, of 100,000 km2, near Solo, with UNDP assistance of US$1.1 million. The mission recolimerids that soil conser- vation be included as an integral part of all future Bank irrigation projects, initially on a limited basis. This assistance should include training, tech- nical assistance and appropriate organizational changes.

2.08 Roads - Although the projects provide for the rehabilitation of inspection roads and bridges, this has not been a major thrust of the program. Further improvements in farm to village and village to market roads is re- quired and would decrease the cost of inputs, increase farmgate prices for produce and permit selective mechanization (para 2.10).

Agricultural Development

2.09 Information on the effects of rehabilitation on agricultural production is not always reliable and sometimes conflicting. Four sources of information on yields are available, namely, crop cutting data from the executing agencies (MOA and PROSIDA) and field observations and interviews by the mission, and the quick rural socio-economic survey (para 1.04). The reliability of these sources is discussed in Annex 4. The crop cutting data gives yields which are generally in line with appraisal estimates. However, these results are probably biased upwards. Mission interviews may have been biased to above-average farmers. On the other hand, the-quick survey results are very low, showing little or no improvement resulting from rehabilitation. These low results may reflect farmer reluctance to disclose their full in- comes to semi-official enumerators and the poor crop conditions of 1972/73. The mission's best estimate of the average yield for HYV paddy, with the BIMAS input and credit package and after the completion of the present projects, is 3.8 ton/ha (Chart 8722). This is slightly above the average of the Appraisal Report projections. Under present conditions of unsatis- factory tertiary development (para 2.03), wide variations in yield are observed, according to the distance of the plot from the head of the tertiary canal. 2.10 There has been a 30-40% increase in the number of extension workers in the project areas since the start of rehabilitation. The present number, however, should be at least doubled to provide adequate services. Recommenda- tions for extension and other supporting services are discussed in Chapter IV. The intensification of production in the rehabilitation areas is creating a need for mechanical threshing, selective mechanized land preparation, paddy drying areas and farm storage. These problems are described more fully in Chapter IV, with additional information in Annexes 6 and 7.

Farm Income

2.11 Annex 12 contains some generalized farm budgets for the project areas after the completion of the present projects and after on-farm deve- lopment (Chapter IV). An average farm of 0.5 ha has been used. Estimated farm income, including the value of family labor, at completion of the ongoing projects would be about Rp 70,000 (US$170), assuming 140% cropping intensity. Household expenditure in one of the sub-project areas has been estimated at between Rp 90,000 and Rp 140,000. Thus a farm size of between 0.65 ha and 1.0 ha would be needed to support a family, if there were no off-farm income. In fact, the agro-economic survey showed that off-farm income may be more than half total income for farmers with less than 0.5 ha. The mission recommends that a program of annual farm income surveys, to include the rehabilitation project areas, should be initiated by an impartial body, such as the Agro-Economic Survey Institute. Detailed proposals are given in Annex 3.

Reassessment of the Jatiluhur Rehabilitation Project (Credit 195-IND)

2.12 A reassessment was made of the costs and benefits of the Jatiluhur Rehabilitation Project, which covers 186,000 ha. Full details are reported in Annex 8. Due to delays in implementation and unexpectedly high rates of inflation, the present project cost estimate of US$62 million is almost double that made at appraisal in 1969. The present cropping intensity is about 158% and the potential intensity is estimated at 190%. A figure of 200% was used at appraisal. Yields in line with the mission's overall estimates (Chart 8722) were assumed and 1974 costs of inputs and crop prices used. Labor requirements have been shadow priced by evaluating their oppor- tunity cost on a monthly basis, giving an average for the year of about Rp 55/man-day, due to high unemployment.

2.13 Using a 30-year evaluation period and including all sunk costs and benefits since appraisal, a rate of return of 32% for the present project was obtained. This compares with an estimate of 45% at appraisal. The rate of return is fairly sensitive to projected yield levels and moderately sensi- tive to the shadow price of labor.

Organization and Management

2.14 Considerable progress has been made by PROSIDA (but less by the Jatiluhur Authority) in developing the capability to undertake large-scale engineering works. Extensive consultant input has aided this process. Coordination between irrigation personnel and the agricultural services, - 10 - however, has been lacking, due partly to the lack of major involvement of the MOA in the Bank group projects. This should be avoided in future projects. The lack of water-user groups has already been mentioned (para 2.03) as a factok hindering tertiary and quaternary development. Recommendations for the use of water-user groups as the fundamental blocks in a system of irri- gation and agricultural development committees are described in para 4.15.

III. PROPOSALS TO INCREASE PRODUCTION: INFRASTRUCTURE

Pelita II Irrigation Projects

3.01 Over the next five years, priority will be given to the completion of the Bank group rehabilitation projects and other projects begun under Pelita I. About 25 new projects, included in Pelita II, are listed in Annex 9. Sources of funding are firm for 11 of these projects. The project list contains some rehabilitation projects but most involve storage reservoirs to increase cropping intensities in existing areas or the construction of irri- gation systems to serve new areas. Groundwater development is also included. Most of these projects do not include opening up new lands. New irrigation projects to be completed by 1980 will cover 240,000 ha, made up of 80,000 ha of new land for dry season cropping due to storage dams, 80,000 ha of conversion of upland crop areas to irrigated paddy and 80,000 ha of upgrading of village systems to increase cropping intensity.

3.02 The mission recommends that the Bank should continue its role in assisting GOI in irrigation and agricultural development, which is essentially rural development, benefitting the poorest section of the community and help- ing increase vital food production. A tentative list of projects for Bank assistance is presented in Annex 9, Table 4 and Map 3627R1. The project pipeline continues from 1975 through 1979. The mission recommends project identification in the Outer Islands start in 1975.

3.03 The "simple" irrigation program will involve the upgrading and extension of village irrigation systems and new small systems. Individual projects will average about 600 ha. Over 75% of the works will be located in the Outer Islands (mainly in Suimatera and Kalimantan) and USAID assistance in planning, designing and financing is expected. An ambitious goal of 550,000 ha for Pelita II has been set. However, the mission considers that the institutional problems of dealing with a multitude of small projects, many of them in remote areas, will delay the achievement of this goal and probably only 250,000 will be completed during Pelita II.

3.04 Eighteen technical assistance projects are also proposed under Pelita II. These include several regional and basin studies, and are much more oriented to the Outer Islands. The results of these studies are un- likely to affect paddy production until the 1980's. The Resources Mapping Project, proposed for Bank Group financing, will be useful in evaluat- ing development strategies over the longer term. - 11 -

3.05 The mission is not able to comment on the present and proposed geographical distribution of irrigation investment. A future mission should be asked to examine the economic and social implications of alternative dis- tributions, within the context of the Government's transmigration policies.

On-Farm Development

3.06 The mission tecommends that the Pelita II irrigation program just described be expanded to include a large element of on-farm development, mainly in areas where the irrigation and drainage systems have already been rehabilitated. Such development would include the upgrading and extension of tertiary and quaternary canals and drains and their structures, together with the expansion of viable water user groups to ensure satisfactory O&M of the on-farm works. A tertiary canal would serve an average of 100-150 ha and a quaternary 10-15 ha. This implies a quaternary canal spacing of about 200 m. The inclusion of farm roads is not considered essential at this stage of Indonesia's development, but might be tried on an experimental basis. Land leveling would not be required in most cases, because the land has been used for transplanted paddy cultivation for many years. To maximize the benefits of such investment, complementary improvements in agricultural supporting services would be required (Chapter IV).

3.07 Experience has shown (para 2.03) that it is unreasonable to expect the farmers to undertake on-farm development entirely by themselves. Therefore, PROSIDA has recently undertaken a number of pilot projects, total- ling about 3,000 ha, to find feasible and economic methods of development and to demonstrate the benefits of such development to the farmers. Based on the results of these pilot projects, a cost of between US$60 and US$100/ha, in mid-1974 prices, would be expected, depending on the proportion which the farmers would contribute through cooperative effort (gotong royong).

3.08 The Government has agreed in principle (June 1974) that it, through PROSIDA and the Jatiluhur Authority, would be responsible for the on-farm development program and would subsidize its costs. The executing agencies would undertake the surveys, planning and design, provide materials and supervise construction. The agencies would, in coordination with the local administration, possibly under the INPRES program, encourage the formation of water user groups, and organize the farmers to provide construction labor. GOI would provide farmers with subsidies or token payments for their labor. Within a tertiary block, development would be compulsory and farmers would be expected to give up the small amount of right of way needed for the canals and drains. Blocks where the farmers were unwilling to form a water user group or to provide labor would be completed by the agency concerned.

3.09 The mission recommends that new irrigation projects proposed for Bank Group financing, should provide for on-farm development, along the lines just described, as an integral part of the project. - 12 -

3.10 The benefits of on-farm development together with additional rural roads and strengthened supporting services, have been worked out in some detail for the Jatiluhur Project (Annex 8). In general, this development is expected to raise yields by 1.0 ton/ha, that is, to 5.2 ton/ha for HYV's. The rate of return for rehabilitation plus on-farm development for this project has been estimated at 40%. The incremental return for on-farm deve- lopment alone is much higher.

3.11 Farm income for a typical 0.5 ha farm in the Jatiluhur Project Area would rise from Rp 80,000 with rehabilitation alone to Rp 120,000 (US$290) after additional investment in on-farm development. Thus a family could support itself at a typical rural standard of living from a holding of 0.4 ha to 0.6 ha with double cropping, without any off-farm income (Annex 10). The position of a sharecropper would be considerably worse than this. As share- croppers account for 30% of farmers in Java, the mission recommends that special attention be given by the Government and future Bank missions to tenurial conditions and the possibilities of improving income distribution in the rural areas.

3.12 The effect of the above program on paddy supplies by the end of the decade will depend on the willingness of the Government to commit resources to it. Assuming, conservatively, that 500,000 ha could be completed by 1981 and that a paddy yield increase of 1 ton/ha at a cropping intensity of 140% could be achieved, the increase in milled rice production would be approximately 440,000 ton/year. The capital cost, in 1974 prices, of such a program would total about US$50 million.

Other Infrastructural Development

3.13 The need for further investment in village to market roads has already been mentioned (para 2.08). This need will be especially great in intensification areas, where longer volumes of inputs and produce will need to be transported. Therefore, upgrading of rural roads should be an inte- gral part of all on-farm development projects. Inclusion of other complemen- tary facilities, such as village electrification and water supplies, clinics, rural industries, and agricultural processing and marketing facilities, should also be considered and appropriate organizational and training arrangements made to ensure coordinated rural development.

3.14 There is a special need to coordinate irrigation planning with that for urban and rural domestic water supply, especially where storage dams are to be built in future projects.

IV. PROPOSALS TO INCREASE PRODUCTION: AGRICULTURE

4.01 We now examine some of the improvements in agricultural techniques that will be needed to increase production. Recommendations are presented on the improvements needed in agricultural supporting services in order to bring about such changes. Many of these recommendations can be implemented without delay and provide rapid benefits. - 13 -

Agricultural Techniques

4.02 Paddy-growing technology was briefly described in Chapter I and full details are given in Annex 6. In general, paddy cultivation in Indonesia is more intensive than in the surrounding countries, due to the small average farm size, an abundance of labor, and a moderate level of Government assistance. High-yielding varieties (HYV's) account for about 30% of harvested area and a reasonable varietal base is available for further expansion. The bulk of the crop is transplanted, great care being taken with land preparation for the wet-season crop but less are being used for the second crop, due to limitations of time and water. There is almost no mechanization and land is cultivated by buffalo-drawn plow or by hand.

4.03 Fertilizer and pesticides are in fairly widespread use (about 40% of the irrigated areas) and their cost is subsidized (para 4.17). Ferti- lizer use is not, however, very efficient due to logistic problems and in- adequate water control. Weeding is done mainly by hand and is usually quite effective. Chemical controls are sold for most of the major insect pests. Insecticides are, however, often unavailable when needed. Rats are a serious problem in many areas and control methods are generally inadequate, due to a lack of organized action by the farmers.

4.04 The traditional method of harvesting is to cut each stalk separately with a knife held between the fingers. The "wet stalk paddy" is carried home and sun dried. It may be sold in this form or threshed to paddy, by treading or beating on a threshing floor. Rice for home consumption is milled by hand pounding in a hollowed-out log or taken to a small rice mill. The milling percentage and grain quality from these mills is low. Grain losses from start of harvest to the retail level have been estimated by BULOG at about 25%.

Recommended Improvements

4.05 Little opportunity exists to increase swamp paddy yields and produc- tion, without considerable investments in flood control, water supply and drainage. Fish farming may be an attractive alternative for such areas.

4.06 Upland paddy also has limited opportunities and its area on Java and Bali is expected to decline by 25% by 1981 1/ as irrigation is extended and land terracing is carried out. Little is available in the way of new techniques for upland paddy but yields could be improved with better seed, greater rat control, insecticides and a moderate use of fertilizer. The improved variety C4-63 could be introduced in lower altitude areas.

1/ The area planted to upland paddy on the Outer Islands, however, may expand particularly, if rapid development of transmigration occurs. - 14 -

4.07 In rainfed paddy, direct seeding offers promise (Annex 6). Despite the heavy labor requirements for weeding, this technique has been shown to be feasible under Indonesian conditions. Direct seeding allows early planting and uses less water than transplanting and significant yield increases (about 1.5 ton/ha) have been recorded.

4.08 Techniques for improving irrigated paddy yields or for reducing production costs are well known and include new varieties; high quality seed; improving the availability of inputs, such as fertilizer and insectici- des;,rat control; better water control; weeding; harvesting with sickles; pre- vention of grain losses; and selective mechanization of land preparation and threshing. Introducing these techniques to the farmers will require strengthen- ing of the existing agricultural supporting services, as described below.

Agricultural Supporting Services

4.09 Research. Research for food crops has been the responsibility of the Director-General of Agriculture with a number of agencies operating in Bogor and Pasir Minggu (Jakarta) with substations throughout Indonesia. MOA is in the process of reorganization and a new agency--the Agency for Research and Development (ARD)-is being formed to take care of all such activities in the country. Four national research centers are being formed, with Bank assistance, as follows:

Paddy at Sukamandi Secondary Crops at Sukamandi Highland Vegetables at Bandung Rubber in North Sumatra

Each center will have regional substations in the appropriate areas where the crops are grown. The reorganization is expected to be completed in 1975 and the Bank assisted Centers, including the necessary training of staff, are scheduled over the period 1975/80.

4.10 Extension. Extension in Indonesia used to come under the various directorates-general, but has recently been reorganized centrally under the Agency for Education, Training and Extension (AETE) in the MOA (Chart 8723R2). The AETE will establish (with Bank assistance under the Research and Exten- sion project, para 4.09) Regional Agricultural Information Centers, which will disseminate to Provincial agricultural staff, and thence to farmers, the latest information on extension, research and development, and improved agronomic techniques.

4.11 At present, agricultural staff at Provincial level are insufficient in numbers and training. They report administratively to the Province, but receive technical guidance from MOA staff. Staff at the lower levels are only minimally trained and spend much of their time on administrative work. Low salaries and lack of professional contact are additional problems. The Government aims to establish a Rural Agricultural Extension Center for each 10,000-50,000 farmers, mainly for demonstration and farmer training. Village- level extension workers would be attached to the centers and would train "key farmers" (one farmer in 20) in a few basic techniques. - 15 -

4.12 The mission's recommendations on extension relate mainly to organi- zation and training. While the basic structure works reasonably well, there is need for much greater technical guidance from the Central Government. This will be achieved through the AETE and the Information Centers just mentioned (para 4.10). The mission proposes that the Rural Agricultural Extension Centers should be somewhat expanded in scope and located in every district. Detailed recommendations on the functions, staffing and training needs of the district, sub-district and village unit extension offices are given in Annex 3. The "key farmer" approach should be modified and coordinated with the other organizational needs of the farmers (para 4.15). A Bank mission will visit Indonesia in May 1975 to discuss the organization of extension at national level, agree basic principles and establish priorities with GOI for future Bank group assisted extension projects.

4.13 Farmers' Organizations - Due to the relatively strong communal spirit in Indonesia, opportunities for forming effective farmer groups and organizations are favorable. At present two types of organizations exist, the water user groups and the cooperatives, or BUUD's. Water user groups, headed by an "ulu-ulu" or water manager, are supposed to exist for each tertiary unit (100-300 ha). With the deterioration of the irrigation systems, the water user groups also declined but are now being revived, as part of the rehabilitation effort. However, except in a few cases, these groups still do not have enough power and influence to enforce proper O&M procedures or to carry out on-farm development.

4.14 Cooperatives have had a checkered history in Indonesia and had declined to a low level of importance by 1973, when existing cooperatives were merged into BUUD's. Their functions include: extension, credit, dis- tribution of inputs, and processing and marketing. These functions tend to overlap with the extension service, BRI (para 4.17) and BULOG (para 4.23). The number of BUUD's is relatively small and their membership small, consisting mainly of the established richer farmers. The BUUD's are distrusted by many of the smaller farmers, who see them as a Government instrument to collect a rice quota. Despite a lack of trained management personnel, BUUD's appear to be playing a useful role in fertilizer distribution.

4.15 The mission proposes that the Irrigation Committee should be expanded to include farmers at all levels (Chart 8723) and farmers committees should be established based on quaternary water user groups, of 30 to 40 farmers, who would elect a water manager, to organize O&M within the quaternary unit, and a farm leader, to act as a spokesman on agricultural, irrigation and local Government matters. Officials from four to six quaternary units would form a Tertiary Irrigation and Agricultural Development Committee. These units would be report to the Village Unit, Sub-District and District Irrigation Committees. At each level, the Committees would liaise with the local Government officials and facilitate a two-way flow of information. This should ensure that policies and programs are more closely related to the farmers' requirements and, on the other hand, lead to a better understanding by the farmers of the development plans and policies of the Government. In tertiary demonstration plots, such farmer groups are being established. Farmer's representatives, however, are still not members of the Irrigation Committees. - 16 -

Seeds - The traditional system of seed multiplication, based on provincial or district seed farms and private growers, is not very satisfac- tory, due to low purity and germination quality. The Government has begun, with Bank group assistance, a Seeds Project, which will centralize seed breed- ing, production and processing at Sukamandi, together with a system of private outgrowers, and will introduce national quality control. The project has however been considerably delayed. Improved methods (to be worked out between the Seeds Corporation, the dealers and the BRI (para 4.17), as the major credit agency) are needed to ensure the availability of quality seed, especially in rehabilitated irrigation areas, where a high demand would be expected. Detailed recommendations are given in Annex 11.

4.17 Inputs and Credit - Government assistance in the supply of inputs to farmers is the BIMAS program. Credit package programs have been used in Indonesia since 1958 but the present program dates from 1970 (Annex 3). The main thrust of the program is to increase paddy production but certain other crops are also included. The BRI, whose operations are described in detail in Annex 12, is the sole source of credit and it aims to set up an office in every village unit. At present, BRI has 2,100 village unit offices and 500 mobile units. Credit is extended to farmers on an individual basis and vouchers for fertilizers and insecticides are honored by village kiosks maintained by Government agencies, BUUD's and private dealers. The BIMAS package is nationally standardized and consists of seed, fertilizer, insecti- cides, rodenticide, and a cash subsistence allowance (Annex 12, Table 7). There are different packages for irrigated and rainfed rice and for HYV's and native varieties. Participating farmers are free not to draw the entire package, within certain limits, and frequently do not.

4.18 While a land mortgage is technically required to obtain BIMAS credit, this is largely a formality and a sharecropper can obtain credit, with a certificate that he is a bona fide cultivator from the village head. The interest rate is 1% per month. The BIMAS program in the 1973/74 wet season covered 2.3 million ha of irrigated rice and about 130,000 ha of other crops.

4.19 The BRI also operates the INMAS program, a scheme for the distribu- tion of subsidized inputs to farmers who are either ineligible for BIMAS (either through lack of creditworthiness or by having more than 5 ha of land). Credit is available at 1.5% per month for INMAS participants and there is complete freedom of choice regarding the types and quantities of inputs. In order to control profiteering, tighter controls were imposed on the INMAS program in 1973 and targets have been reduced.

4.20 The BIMAS program is one of the success stories of Indonesian agriculture and does much to explain the rapid increase in paddy production since 1968. The full potential of BIMAS, however, is not being realized because of the lack of parallel effort in extension and in ensuring that supplies of inputs are available when needed. Some districts have surpluses and others shortages and there is not enough flexibility to move inputs between districts. The composition of the credit package, particularly - 17 -

for upland paddy, needs to be reviewed and further work is needed in adapting the basic package to local conditions. The program should be expanded as staff and fertilizer become available.

4.21 Harvesting, Processing and Storage - Double-cropping requires a more streamlined approach to harvesting and threshing, which may require the use of sickles and threshing in the field with small, pedal-operated machines (Annex 7). Village drying slabs are recommended to improve paddy quality and storability. Increasing paddy production will also require more farm and village storage. To bring about these improvements, the farmers will need extension advice and, in most cases, medium-term credit. Rice milling appears to be adequate in most areas. The BUUD's or private mills will expand to fill the need. If grain losses from harvest to retail could be reduced from 25% to 15%, the effect on national paddy supply would be enormous. By comparison they are only 5% in the U.S., so improvements should be possible in Indonesia. The use of sickles, quick threshing, modern transport and rat control could all contribute to this goal.

4.22 Rat Control - Rat control requires community effort and should be organized by the local Government officials on a regular and compulsory basis. The mission recommends that modern pesticide techniques should be investigated by MOA, as well as introducing regular rat extermination bri8ades. Farmers could be organized from quaternary blocks to use modern central technology. Irrigation O&M and Agricultural Service staff should be actively involved in such a program.

4.23 Marketing and Pricing Policy - The import and initial distribution of rice is the responsibility of BULOG, which also procures rice on the domestic market to maintain price stability (Annex 5). The April 1974 purchase price for paddy was about Rp 40/kg (US$97/ton), which is well below the world market price, but is set so that the average industrial worker does not have to spend more than half his wages on food. There is no price premium for better quality rice. As of April 1974, a farmer cultivating 1.0 ha of paddy land and applying 165 kg of urea and 40 kg TSP per crop would pay Rp 40/kg for his fertilizer, against a world market price of Rp 142/kg, a total subsidy of Rp 20,910 per ha per crop. On the other hand, if he harvested 4 ton/ha of paddy and received Rp 42/kg from Bulog agencies, against a world market price of Rp 90/kg, he would be losing Rp 192,000/ha on his crop. Even if the market price of paddy was Rp 62/kg, he would lose Rp 80,000/ha. The farmer is thus heavily subsidizing the urban dweller and does not receive-an over-generous subsidy on fertilizer. A somewhat similar situation exists in Thailand and the Philippines. The question of pricing and subsidies will be discussed by the Bank's Economic Mission. With a heavy reliance on imports and a consumer subsidy of up to 80%, BULOG has been able to maintain relatively stable prices.

Crop Insurance

4.24 The mission was asked to evaluate the potential of crop insurance as an alternative for increasing rice production. Data from Sri Lanka, the United States and'Japan was examined for possible relevance to Indonesia - 18 -

(Annex 13). Experience shows that such schemes are unlikely to work without large subsidies, a long time is needed to train staff, and little or no evi- dence of an increase in production is seen. The mission concludes, therefore, that crop insurance may be worthy of further study as a social welfare measure but should not be considered as an alternative to the measures des- cribed in this report to increase rice production.

Training

4.25 Training of a high standard is available at a few -first-class institutions in Indonesia but the output is well below national needs. Shortages of well-trained agriculturalists, engineers and managers remains a serious constraint on development, as noted at several points in this report. The mediocre standard of secondary level education, particularly outside Jakarta is reflected in the low completion rate of students and, the mission recommends that this question be studied by the Bank's Educa- tion Division. Detailed recommendations on training are presented in Annex 14 and include: postgraduate training for university faculty members; study tour fellowships for Government personnel; developmenit of courses in catchment management; and expansion of technician training for irrigation O&M staff. Larger provisions for training should be included in future Bank Group irrigation and agricultural projects than previously.

V. CONCLUSIONS AND RECOMMENDATIONS

5.01 This chapter summarizes the conclusions and recommendations of the mission contained in the text and annexes in detail.

Engineering and Management

5.02 Progress on the on-going irrigation rehabilitation projects, although behind schedule, is now generally satisfactory. Benefits anticipated at appraisal will be achieved, and, with greater efforts, can be exceeded. Irri- gation, improved agricultural support, and better water management are essential to increasing paddy and secondary crop production. The mission recommends the following:

(a) the Bank group should continue to assist in financing irrigation projects in Indonesia because they benefit the lowest income groups in the country and increase essential food production (Para 3.02);

(b) GOI should provide adequate budgets and staff for O&M The Bank should provide large elements of O&M training in future projects (para 2.05); - 19 -

(c) the Bank should assist GOI in financing on-farm development (tertiary and quaternary irrigation and drainage canals) on future projects and completion of this work on systems currently under rehabilitation (paras 2.03 and 3.06);

(d) future irrigation projects should include upgrading of rural roads, soil conservation programs and adequate drainage (paras 2.06 - 2.08);

(e) management and other related training should be included in all Bank projects (para 3.13);

(f) comprehensive agro-economic studies should be carried out over the rehabilitated projects to establish facts on benefits, social conditions, land tenure and employment situation (para 2.11);

(g) future surface water storage projects should include rural water supply systems (para 3.14); and

(h) the Bank group should expedite identification and preparation of irrigated agriculture and rural development projects in the Outer Islands (para 3.02).

Agriculture

5.03 Numerous improvements in agricultural techniques are possible, most requiring additional effort from the various supporting services and yielding relatively fast results. The mission's major recommendations are as follows:

(a) the BIMAS credit and input package program should receive more support from the extension service and better provision for the timely distribution of inputs. BIMAS should be expanded or staff and fertilizer become available (para 4.20);

(b) farmers' organizations should be expanded and farmer's representatives join Irrigation Committees to enable a two-way flow of information between the Government and the farmers (para 4.15);

(c) improved techniques in water control, and of fertilizer and pesticides, and weeding should be rapidly disseminated and used (para 4.08);

(d) a significant reduction in grain losses is possible, and coordinated efforts in improved harvesting, threshing and storage techniques and in rat control should be made (paras 4.21 and 4.22);

(e) direct seeding should be expanded in rainfed paddy areas (para 4.07); - 20 -

(f) training should be expanded, both in Indonesia and overseas (para 4.25); and

(g) rural industries and other facilities should be developed to improve conditions and provide opportunities for the landless laborers and under-employed (para 3.13).

5.04 The following matters which are of considerable importance in the development of paddy production in Indonesia, could not be considered in detail by the mission:

(a) tenancy conditions and income distribution (para 3.11);

(b) the optimum pattern of food production, rainfed as well as irrigation development, particularly the distribution of projects between Java and the Outer Islands (para 3.05); and

(c) alternatives to the present pricing policy for paddy, fertilizer and rice (para 4.23).

These questions should be examined by future Bank missions to Indonesia. ANNEX 1 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Terms of Reference: Summarv

1. The major objective of the mission will be to evaluate the success of GOI's paddy production development programs to date, particularly as they relate to irrigation and drainage policies, and to help formulate recommenda- tions about the scope and direction of GOI's irrigation and drainage invest- ments for paddy production and possible Bank involvement in irrigation and paddy production programs. In order to give a specific focus to the work of your mission you should give particular attention to the progress being made by GOI in implementing the four Bank group-assisted irrigation rehabilitation projects, the success of these projects in obtaining the benefits projected at the time of appraisal and constraints on obtaining increased production in these areas. Your main emphasis should be on the project areas located in Java.

2. After preliminary discussions with GOI officials in Jakarta you should make, as required, field visits to review selected on-going irrigation rehabilitation projects. In particular the mission will:

(a) review the status and prospects of the paddy technology packages adapted to Indonesian conditions and available for dissemination to farmers;

(b) identify major constraints on paddy production and recommend measures to increase production and improve the income of paddy farmers. The analysis should go beyond the immediate plan period and relate to the problems of paddy production for the decade as a whole;

(c) evaluate the role which irrigation has played and its future potential in increasing paddy output. You should pay particu- lar attention to the degree of water control assurance avail- able at farm level given current irrigation and drainage construction, maintenance and operation standards;

(d) evaluate the present situation and likely prospects for inputs other than water, such as quality seeds, fertilizers, plant protection, credit, research, extension and other institutional and infrastructure needs;

(e) determine suitable levels of on-farm development, taking into account technical, economic and social constraints in the project areas and make recommendations to accelerate progress on construction and maintenance of such works; ANNEX 1 Page 2

(f) review the status of land ownership in irrigated areas, the contribution of irrigation to rural development and the dis- tribution of benefits of irrigation projects between the different groups of farmers;

(g) estimate the supply and demand for rice 1/ in Indonesia and recommend a reasonable program for irrigation development during the balance of the decade taking into account GOI's stated objective of attaining self-sufficiency in rice pro- duction, the impact of non-irrigation activities, the capacity of the relevant Government agencies to design, construct and maintain irrigation projects and overall budgetary constraints; and

(h) recommend specific measures which would enable continuous evaluation of paddy production, farm income, employment, income distribution and water management practices on Bank group-assisted irrigation projects.

Following discussions with the Resident Mission, Jakarta, and vithin the Bank, it was decided to omit these forecasts in this report. This question will be discussed on the Bank's Basic Economic Report in 1975. ANNEX 2 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Rural Socio-Economic Survey

1. In view of the very limited availability and poor reliability of, secondary data, the Mission organized a quick rural socio-economic survey to assess rehabilitation benefits in the areas of the advanced and nearly com- pleted rehabilitation projects of Cisedane (West Java) and Pemali-Comal (Central Java). The survey was conducted by Professor Tjondronegoro, a rural sociologist of the IPB Bogor.

2. This Annex first stmmarizes the methodology. Secondly, some of the results on yield increases will be presented and discussed, showing certain shortcomings of the survey. Other survey results for example, on inputs, labor use, employment and tenure, health and education, are given or referred to in Annex 10. Thirdly, lessons learned for the future mDnitor- ing of rehabilitation benefits are summarized.

Methodologv

3. The questionnaire was developed by adapting existing questionna'ires for the purpose of assessing the benefits of rice irrigation rehabilitation projects. In discussions with the Bogor survey team, the questionnaire: was revised and further improved for Indonesian conditions. The questionnaire consists of two parts, one containing 23 sets of questions with about 300 questions directed to cultivators (farm level) and the other containing 19 sets with about 160 questions directed to village officials (village level).

4. The survey covered the area of PROSIDA sub-projects Cisedane and Pemali-Comal. Ten villages were selected in each of the two sub-project areas, four villages with technical irrigation, four with simple or semi-technical irrigation, and two villages located in rainfed areas. 1/ Due to the fact that composite maps, showing the entire irrigation network as well as the administrative borders, were unavailable, a combination of random and pur- posive sampling had to be designed. The random sampling method was applied to select the areas with technical and simple irrigation. A purposive (strati- fied) sampling method was adopted to select villages based on the following criteria: distance from the major canal, area rehabilitated before the wet season 1972/73, and type of irrigation. As a second step, 15 farmers were randomly selected in each sample village from lists supplied by the village heads so that a total of 300 farmers and 20 village officials or 160 respon- dents per sub-project were interviewed.

1/ These definitions were given by farmers and refer to the standard of irrigation available as seen by them. The Survey was undertaken within fully technical irrigation systems. ANNEX 2 Page 2

5. Two survey teams were formed by the IPB, consisting of six enumera- tors and one coordinator. One week was spent on questionnaire translation and survey preparation, about eight days were spent in the field (some three interviews per enumerator per day), and two weeks on data processing and tabulating. Due to the time constraint, the questionnaire was not pre- tested.

Results

6.~j Unfortunately, the results produced by the survey teams did not live up to expectations and revealed shortcomings in survey preparation, interviewing techniques and data processing. One of the main reasons was that these quick surveys were conducted under extremely tight time constraints, due to the fact that the resulting data were intended to be available for report writing. The mission expected to be able to rely on the IPB's con- siderable experience in the field. However, the IPB results indicate a correlation between the amount of time spent on the survey and the quality of the data provided.

7. In Tables 1 and 2, data on yields before and after rehabilitation are presented. Apart from indicating yield levels which are much lower than given by other sources (Annex 4) the results do not show a consistent pattern of yield trends over time or of yieLd differentials between rice varieties and types of irrigation, and theriefore their reliabillity is questionable, in the absence of otther explanatory variables. According to the survey, yield levels in general were only slightly affected by rehabili- tation and stayed at low levels, in particular in Cisedane. In many cases, increases seem to be due to the introduction of BIMAS rather than rehabili- tation. In view of data inconsistency, however, general conclusions would be inappropriate.

8. Most of these inconsistencies can probably be explained by the high degree of data aggregation which makes it impossible to allow for different additional influencing factors, like e.g. disease and rat problems, flood damage and limited fertilizer availability. An attempt to disaggregate yield data failed because the enumerators turned out not to have been care- ful enough in noting such factors. However, 1972/73, which was selected because it was the first and only available year "with rehabilitation", witnessed calamities which certainly affected yields: rats in Cisedane, and floods in Pemali-Comal, affecting mainly the fully irrigated area. Moreover, the survey was premature in the sense that the full benefits of rehabilitation can be expected to accrue only over the next few years. Under- reporting of yields, due to the farmers' suspicion of "official" enumerators may also be involved.

9. A particularly serious problem was the definition of various types of irrigation, with confusion being created by different classifications being followed by irrigation and by extension authorities. The former classi- fy by primary and secondary canal structure and water measurement criteria whereas the latter place emphasis on actual water supply, construction, maintenance and management at the tertiary and quaternary levels. The fact ANNEX 2 Page 3 that the survey teams did not adopt a clear-cut classification makes their distinction between types of irrigation almost useless.

10. Table 3 gives the average increase in areas planted to rice and secondary crops and the resulting increase in cropping intensity for an average holding in Pemali-Comal. It can be seen that cropping intensity shows the highest increase in technically irrigated areas, mainly due to the expansion of wet season rice and secondary crops following rehabilita- tion.

Survey Shortcomings

11. The main shortcomings of the pilot sorvey are listed below as a basis for improving the future monitoring of rehabilitation benefits:

(a) The survey attempted to collect time series data (before and after rehabilitation and with and without BIMAS), particu- larly with regard to yield, labor and cash inputs. However, farm records for more than one year are non-existent. Most of the farmers were unable to recall what their yields were, or they pretended not to know. Previous experience shows that in areas close to urban centers (Cisedane), underreporting of yields by farmers is common, mainly due to tax reasons. Probably such a quick survey could only be expected to provide a "snapshot";

(b) In order to explain trend patterns of yields over time, addi- tional influencing factors must be known. In view of the time constraint, expectations were too high concerning the possibility of disclosing many of the "why's" and finding reasons for observed phenomena. This may have derived from a pre-supposition that rehabilitation means almost automati- cally the increase of yield;

(c) More attention has to be paid to problems of definition and classification. This relates in particular to the classifi- cation of various types of irrigation schemes where different criteria are applied by Public Works personnel and by the Extension Service;

(d) The use of nationally accepted average conversion factors may lead to computation errors. For example, there are regional differences in measures for area, production, and for convert- ing wet paddy into dry paddy; and

(e) Much more time has to be spent on enumerator training, pre- testing of questionnaires, cross-checking results in the field, and data processing and analysis. Surveyors did not have enough time to become familiarized with the essential problems ANNEX 2 Page 4

of the survey and the specific local conditions of the survey areas. The team was less experienced than expected, particu- larly in data processing and tabulating.

Proposals

12. In light of the experience with the quick pilot survey, some preliminary proposals for future surveys on the benefits of rehabilitation can be formulated. They will be worked out in greater detail and included in Irrigation Project VI, recently approved by the Bank (April 1, 1975).

(1) The evaluation of the effects of rehabilitation should be a long-term built-in activity over about 10 years. Sampling should start before implementation, being part of the consul- tants' feasibility studies, and should end about five years after project completion. Surveys should be conducted every year, preferably after the wet season. Because of marked socio-economic and cultural differences between Javanese villages, cross-sectional data are of only limited use;

(2) Because of marked regional differences, sample surveys should cover rehabilitation areas in West, Central and East Java. In a first phase, due to the different stages of implementation of the on-going projects, cross-sectional data could be used for evaluation of rehabilitation. Later, time series results would provide a much better data base. Representative villages should be sampled and farmers selected at random in each village;

(3) The survey activities should probably be carried out by the SAE, an inter-ministerial research organization under the chairmanship of the Minister of Agriculture which was established in 1965 with the objectives of obtaining basic data for policy analysis and submitting policy recommendations. In the first years, the SAE concentrated on the technology and economics of new rice varieties, later including other crops, and tenure and off-farm income. Extensive time series data were collected for a sample of 37 villages and 1,100 farmers. Lately, the SAE is paying increasing attention to smallholder and rural development problems. A long-term rural dynamics project for 24 Javanese villages has been formulated, focussing on income distribution, employment and land tenure and distribution;

(4) Obviously, the proposed long-term monitoring of rehabilitation projects would be relatively costly. Therefore if possible, the Bank should aim at joining efforts with other international ANNEX 2 Page 5

agencies involved in that field. At present, the Ford Foundation is funding about 30% of the SAE activities and will probably fund the rural dynamics project. The ADB is planning SAE surveys in its rice irrigation projects. The Dutch government (as well as ECAFE) has expressed interest in the rural dynamics approach if enough emphasis is placed on smallholder problems and rural poverty. According to the SAE, the Bank's monitoring of rehabilitation projects could well fit into the rural dynamics approach, expanding the survey into irrigation rehabilitation areas. In that case, only some questionnaire adaptation and no enumerator training would be needed for the Bank projects. Survey costs could therefore be substantially reduced; and

(5) Technical assistance should be provided to assist in preparing for such surveys. This has been included in Irrigation Project VI.

Note: Further data collected from this survey is used in Annex 10. ANNEX 2 INDONESIA Table 1 IRRIGATION PROGRAM SURVEY

Rice Yields in Cisedane, West Java, before and with Rehabilitation by Types of Irrigation Varieties, and BIM&S and Non-BIfAS

(Paddy) Before Rehabilitation With Rehabilitation Non-BIMAS ftMAS Non-BIMAS BIMAS BIMAS and 1970-72 1970-72 1972/73 1972/73 Non-BIMAS 1972/73 ------tor/ha ------Wet Season

Technical Irrigation 1.2 165 1.9 _

Local var. 1.4 1.5 1.6 -

National var. 0.7 1.2 2.1 -

HYV 1.7 _ 1.7 2.0 -

Semi-Technical Irrigation 1/ 1.3 2.3 - - 2.2

Local var. 1.3 3.1 - 1.4

National var. 1 .3 - - 16

HYV 1.4 2.2 - - 2.4

Rainfed 1/ 0.8

Local var, o.8

Dry Season

Technical Irrigation 101 - 1.2 1.8

Local var. 1.4 1.1o 1.2

National var. 0.6 - 1.1 2.0

HYV 0.5 - 1.4 2.1

Semi-Technical Irrigation 1/ 1.3 1.8 - - 2.1

Local var. 1.2 - - 1 .8

National var, 1.1o- - 1.5

HYV 1.4 1.8 - - 2.1

1/ This whole area is supposed to be technical irrigation; there is some doubt as to where the enumerators found these farmers. ANNEX 2 Table 2

INDONESIA

IRRIGATION PROGRAM SURVEY

Rice Yields before and with Rehabilitation in Pemali-Comal, Central Java, by Types of Irrigati9n Varieties, and BIMAS and on-BIMAS

(Paddy) Before Rehabilitation With Rehabilitation Non-BIMAS BIKAS Non-BIKAS BIMAS 1970-72 1970-72 19/73 1972/73 ------lor aa ------Wet Season

Technical Irrigation 1.9 3.5 1.0 2.3

Local var. 1.4 - 1.1 1.9

National var. 1.6 4.0 0.9 1.7

HYV 2.7 3.0 - 3.4

Semi-Technical Irrigation 1/ 2.3 4.1 2.8 3.0

Local var. 1.9 - 2.0 -

National var. 1.9 - 2.2 1.8

H!V 3.1 4.1 4.1 4.1

Rainfed 1/ - 0.7 -

Local var. 0.7 -

Dry Season

Technical Irrigation 2.1 - 1.6 4.7

Local var. 1.9 - - 3.4

National var. 2.3 _

HIV - - 1.6 5.9

Semi-Technical Irrigation 1/ 2.1 2.3 3.1 2.8

Local var. 2.0 - - 2.2

National var. 1.7 1.2 3.0 2.8

HYV 2.5 3.4 3.2 3.4

1/ These may refer to areas outside the Pemali-Comal system, or to areas far from any canal. ANNEX 2 Table 3

INDONESIA

IlGIGATION PROGRAM SURVEY

Increases in Cropping Intensities Due to Rehabilitation in Pemali-Comal, Central Java (%)

Increase in Increase in Increase in Increases in Rice Area Secondary Crops Total Culti- Average of Average Holding Area of Average vated Area of Cropping Wet Season Dry Season Holding Average Holding Intensity

Technical Irrigation 21 50 6 18 16

Semi-Technical Irrigation 19 -11 0 3 3

Village Irrigation 16 5 - 10 9 ANNEX 3 Page 1

INDONES IA

IRRIGATION PROGRAM SURVEY

Agriculture Related Services and Organizations

A. The Current Situation

General

1. Many agencies are involved in servicing irrigated agriculture. The MOA through its various Directorates is responsible for research, extension, farmer training and supervision of seed production. About 80% of fertilizer and agrochemicals reaching the farmers are supplied by the Directorate of Supply and Services, through P. N. Pertani and a system of village kiosks. The BRI provides credit facilities through village unit offices (Annex 12).

2. The MPWEP through the provincial irrigation services operates and maintains the major irrigation and drainage systems down to tertiary outlet and the Ministry of Home Affairs, through the district administrations, provides for the formation of farmer groups for the construction, operation and maintenance of the tertiary units. The Directorate of Transmigration and Cooperatives promotes the formation of farmer cooperatives at the village unit level. BULOG and DOLOG, the national and provincial branches of a government organization to collect, distribute and stabilize paddy and rice prices, have officials and stores down to the sub-district level. The Ministry of Home Affairs, through the provincial governor, district and sub-district officers and village heads, coordinates the efforts of the various agencies in each local government area. In fact, most staff assigned to work at the province, district, sub-district or village level are administratively responsible to local government but are supervised on technical matters by their agency of origin. This Annex addresses problems associated with extension, farmer training and farmers' organizations and the general problem of organization in the agricultural sector.

3. This annex was written in April 1974. Much of this annex, there- fore, is of historic interest; however, a great deal of the statements contained herein are still valid. Since April 1974, MOA has been reor- ganized. Two new agencies have been formed-the Agency for Education, Training and Extension (AETE) and the Agency for Research and Development (ARD). These agencies will receive assistance from the Bank group to develop research centers and agricultural extension information centers, as well as training. A Bank mission will visit Indonesia in May 1975 to ANNEX 3 Page 2 discuss national agricultural extension services with GOI, agree on basic principles and establish priorities, on a Province by Province basis, for future Bank assistance in this field.

Research

4. The Central Research Institute for Agriculture (CRIA), situated at Bogor, is the largest and most important research institute. The main emphasis is on rice breeding and research. Until recently, other food crops were largely neglected, due to lack of staff and budget. CRIA has four major departments: Breeding, Agronomy, Pest and Diseases, and Physiology, each of which has basic laboratory facilities. Field experimentation is carried out on a 40 ha farm at Muara near Bogor and at regional research units in East Java, West Sumatra, South Kalimantan and South Sulawesi. A new experiment farm for West Java is being established at Sukamandi. There are 20 or more substations operated in association with the regional units. Where these stations do not provide appropriate experimental conditions, farm lAnd is rented or provincial seed and demonstration gardens are used.

5. CRIA's work has been hampered by lack of adequately trained staff, equipment and budget. The situation has improved in recent years through assistance provided by foreign donors for staff training, supply of equipment and expatriate research workers. Japan, the Netherlands, USAID, IRRI/Ford and the Bank group are currently supporting various aspects of rice and food crop research. The USAID program in conjunction with IRRI/Ford is currently working with Government on the development of a National Rice Research Pro- gram. This program would coordinate and strengthen research on all aspects of rice production. A plan to establish five specialized Crop Research Insti- tutes with IDA financing is also being considered by the GOI.

6. The Soils Institute is also situated at Bogor. Although there is cooperation with CRIA on certain programs, it is run as a separate entity. It is a large institute with three main divisions: Pedology, Soil Fertility and Soil Conservation. Soil surveys are a major activity of the Institute. About 35 million ha have been surveyed and mapped on a scale of 1 : 250,000 in Java, South Sumatra and South Sulawesi, and the survey unit has a capacity to carry out reconnaissance surveys on 3-4 million ha per year. There is a concurrent program to follow up with semi-detailed soil and land classifica- tion surveys on selected watersheds. Agricultural areas are mapped on a scale of 1 : 50,000 and less promising areas on a scale of 1 : 100,000. These surveys include basic chemical and physical analyses of key samples. About 100,000 ha can be surveyed per year. Currently the survey unit is con- centrating on areas earmarked for intensification in Java and has a full pro- gram for the next two or three years.

7. The Soil Fertility Division is concerned with assessing the level of soil fertility and crop response to nitrogen, phosphate and potash on representative soil types using basic soil maps. A preliminary assessment of crop response to phosphate application has been completed for Java. An ANNEX 3 Page 3 expanded soil fertility evaluation program is being prepared with the assis- tance of USAID. This will provide for increases to laboratory capacity for chemical analysis, and to mapping and to a service organization to provide analytical facilities to other agencies, for example the Agronomy Department of CRIA, which currently has no laboratory facilities for soil and plant ana- lysis. The University of North Carolina is planning to run orientation courses for project staff and will provide technical staff to assist the program. Assistance has been provided for surveys and mapping under the FAO/ UNDP program. The Netherlands government has assisted with the upgrading of the present soil chemistry laboratory and with cartography. The Belgian government is assisting with the development of a soil physics laboratory and is providing experts.

8. The Institute has also commenced basic work on soil conservation techniques for badly eroded areas and catchments but is not playing a prominent role in current catchment management projects, which are under the control of the Forestry Department.

9. The Agro-Economic Survey Institute (SAE) is located at Bogor and Jakarta. Its general function is to provide farm income, product prices and cost of production data for the formulation and evaluation of Government policy in the rural sector. The organization has been in operation since 1968. It carries out its program in two ways:

(i) A fixed sample of 1,500 rice farmers throughout all Indonesia (the bulk of them in Java) are surveyed on a continuous, yearly basis for agricultural prices, input use and cost of production data; and

(ii) Ad hoc surveys are made on limited areas for specific crops.

10. Information obtained from the fixed sample of paddy farmers is used by the Government in maintaining its rice price stabilization policy (Annex 7), for example, to determine at what level it will support farm paddy prices and to what extent it should subsidize fertilizer prices. The ad hoc surveys also provide specific information on particular problems at the farm level or in agricultural processing. These surveys are often delegated out to the Institut Pertanian Bogor, that is, the Faculty of Agriculture at the Univer- sity of Bogor. The University uses students to collect data and works closely with SAE on these surveys.

11. Surveys carried out by SAE can be criticized on three general points:

(i) The sample of 1,500 farmers is highly biased towards BIMAS participants. This was necessary at the inception of BIMAS to generate information regarding the program. There is a need to obtain information regarding non-BIMAS users; ANNEX 3 Page 4

(ii) Data from surveys is usually published on a village or district basis and is not aggregated to a national level. This makes it of limited use for policy planners; and

(iii) Many farmers carry on other enterprises or work in other jobs. Off-farm income and its importance to the farmer has not been shown in the survey results.

12. BIMAS AND INMAS -/. BIMAS and INMAS are programs to raise paddy production and farm income by supplying credit and cash inputs at subsidized prices. The agronomic aspects of the programs are discussed in Annex 6 and the credit aspects in Annex 12. This Annex focusses on organizational issues. The first credit package program, the Padi Centra Program, was introduced from 1958/59 to 1961/62. Although this program raised rice yields, it had problems with funding inputs and the collection of farmer debts. The next program was the "Action Research Program," initiated by CRIA. Pairs of stu- dents were assigned to live with farmers and promote the five principles of improved paddy production methods (para 24). This was successful and was expanded and called DEMAS. The logistics of input supply became a problem as expansion occurred.

13. The first BIMAS program was initiated in the wet season of 1965/66 and continued through with many variations to the end of 1969. The program had an impact in lifting yields and production in the early years but this impact declined as the area covered expanded. The key feature of the pro- gram was a group credit approach through the village cooperative. Farmers were given release orders for the supply of credit in kind from village kiosks, The loan package consisted of farm supplies and a cost of living allocation. No collateral was required for loans and the cooperative or village chief supervised allocation of credit and collection of repayment. The main problems encountered were the fact that inputs could not always be delivered in sufficient quantities at the right time. The repayment of loans declined, and there was no guarantee that all payments to the village chief and cooperatives found their way to the financing agency. There were no proper criteria for selecting recipients for credit and the local agri- cultural officers could not provide adequate technical supervision. To over- come deficiencies of the old system, an improved BIMAS program was initiated in 1970.

14. A special BIMAS Secretariat was established within the Ministry of Agriculture to coordinate activities at the central government level with regard to targets, credit and supplies. Initially, paddy areas with good water

1/ The different programs to channel cash inputs to rice farmers, in parti- cular the BIMAS programs, have been studied and evaluated in "Study and Evaluation of Rice Production Intensification Programs in Indonesia," Agrar- und Hydrotechnik, GMBH, November 1971. ANNEX 3 Page 5

supply were selected but the program is now being expanded to include upland paddy areas and certain secondary crops, for example, corn, sorghum, peanut and cassava. BIMAS committees, comprising the appropriate local government offi- cial as chairman and representatives of the Agricultural Service, Irrigation Service, BRI and BULOG have been set up at the provincial, district and sub- district levels to plan targets, estimate requirements for credit and sup- plies and to coordinate the efforts of contributing agencies.

15. The village unit (unit desa), based on a central village and serv- ing 600 to 1,000 ha, has been selected as the basic unit for credit supplies and extension. The BRI is now the sole credit agency and is attempting to set up an office to process loan applications in each village (Annex 12). Village units without a BRI officer are covered by mobile unilts. Farmers now apply for and receive loans as individuals, although the loan applica- tion is corroborated by the village chief. Release slips are issued and the farmer draws supplies from a village kiosk operated by P. N. Pertani or other distributor, or from a village unit cooperative (BUUD). It is government policy to promote the formation of village unit cooperatives as the main source of supply for BIMAS inputs.

16. In an effort to increase the efficiency of input usuage, the BIMAS office has hired over 1,500 agricultural high school graduates and 90 subject matter specialists to help them with extension work.

17. The INMAS program was initiated in 1967/68 in the belief that after a few years of BIMAS, farmers would have increased income and gained expe- rience to a level where the need for credit and technical advice would be much less. The BIMAS program would then be replaced by INMAS. Farmers in the INMAS program could obtain fertilizer supplies at the subsidized BIMAS prices, but without credit. INMAS was based on the willingness and ability of farmers to pay for inputs. Recently farmers in INMAS have been able to obtain credit from BRI for fertilizer supplies but at a higher interest rate than BIMAS participants. The present policy is that any farmer can apply to Join zMtMA, providing his land area is 5 ha or less, and he is not more than two years overdue for any BIMAS repayment. Farmers outside this criteria can apply for INMAS.

18. In planning targets for BIMAS, the districts prepare targets, the Central Government prepares targets and the provinces resolve the differences. Provincial targets do not usually match sub-district or district capacity to meet them. For example, the BIMAS program has been pushed too far into marginal areas due to a lack of precise data on land classes and crops, and too much planning control from the provinces. Other BIMAS problems are the supply of inputs at the right time in an area and their distribution to farmers. The compiling of input supplies required in each area is long and drawn out, as is the dispatching of them. Bad roads at the village level hinder distribution to villages off the main roads. Buffer stocks are not usually maintained close to areas of use, and when they are, local government officials often prevent their movement to areas of current need. Storage at the village kiosk is often of poor quality and badly managed with resulting wastage. There are still insufficient BRI village units and a shortage of ANNEX 3 Pagr 6

trained BRI personnel to work at the village level but this is being overcome (Annex 12).

Directorate of Agricultural Techniques

19. This Directorate is responsible for the evaluation of research results produced by CRIA, the Soils Institute and the Universities, who also engage in some field research work. The Directorate stations staff at the provincial, district and sometimes sub-district levels. Small replicated seed variety, fertilizer, insect and pest control trials are carried out on the Directorate's own experimental fields, on seed farms belonging to the provinces or on rented land. Efforts are made to check out new technology under a wide range of district coziditions. The Directorate also carries out insect, rat and disease incidence surveys and is working toward develop- ing an insect attack prediction service for paddy.

Directorate of Agricultural Production

20. One of the functions of this Directorate is to bridge the gap between the Directorate of Agricultural Techniques, the extension service and the farmer. Pilot projects of 10-50 ha are established at representative sites on farmers' fields to evaluate new technology, under typical farming conditions. The Directorate currently does little work on lowland rice areas in Java, since demonstration farms are included in the BIMAS program. Current work is largely directed toward direct seeded paddy, upland paddy, tidal swamp paddy and upland or polowijo crops. The Directorate also has a respon- sibility to promote the production and marketing of quality seed (Annex 11). Currently this involves the supervision of provincial seed farms and private seed growers. Seed production officers from the Directorate stationed in strategic locations provide advice and check the seed farms with regard to varietal purity.

Extension Services and Farmer Training

21. There was no integrated extension service in Indonesia at the time of writing this annex. The Directorates of Extension, Agricultural Production, Agricultural Techniques and Agricultural Economics assign staff to work with local governments at the province, district and sub-district level. The groups at each level of local government are known collectively as the Agricul- tural Service. They are administratively part of the local government struc- ture but are supervised and backed up on technical matters by their Directorates of origin. The Provincial Agricultural Officer has overall supervision of the Agricultural Service and reports to the Governor. As Inspector of Agriculture, he also reports to the Director General of Agriculture. In effect, the Provincial Agricultural Service is semi-autonomous and the Director of Agriculture and the Director of Extension have little administrative control over Provincial agricultural officers and staff. As a result there is some variation in the structure and mode of operation of the Agricultural Service from one province or district to another. ANNEX 3 Page 7

22. A typical arrangement for West Java is as follows: The Provincial Agricultural Officer or Inspector of Agriculture, who is usually a graduate, has four to six subprovincial officers (most of whom are graduates), each supervising the Agricultural Service in three districts. A typical district office comprises a senior officer and six divisions, each with two to eight staff members. The Extension and Education Division prepares extension material, supervises farmer training and demonstration plots. The Production Division comprises crop specialists who assist with the formulation of dis- trict recommendations and assist the BIMAS program. The Soil Fertility Divi- sion runs test plots in conjunction with the Directorate of Agriculture Tech- niques and other research bodies. The Statistics Division collects statis- tics on planted and harvested area, yields, production, marketing, price and population. The Planning Division is concerned with planning special local projects and the Administrative Division looks after administration. The senior district officer should be a graduate and most of the other staff should be agricultural high school graduates. In practice, they are often staff of lower educational qualifications.

23. There are currently no technically trained extension officers at the sub-district level or below. The Sub-District Agricultural Officer has usually had little agricultural training and is primarily an administrator. Each sub-district is divided into village units, each comprising several villages, 600 to 1,000 ha of paddyland and 1,200 to 2,000 farm families. One field extension officer (PPL) is appointed to each village unit to super- vise demonstration plots, liaise with the farmers and collect statistical data. He is administratively responsible to the Education and Extension Sub-District Agricultural Officer, but for extension and demonstration work reports to the Extension and Education Division of the district service.

Rural Agricultural Extension Centers

24. There are about 375 Rural Agricultural Extension Centers in Indone- sia, 60% of which are no longer operational. Efforts are being made to reha- bilitate 150 of these centers, with the objective of having one center to service 40,000 to 50,000 farm families on Java and 10,000 farm families on the Outer Islands. These centers are primarily concerned with training the rural population and running demonstrations. The Government proposes that each center would have at least three subject matter specialists to run short term training courses for farmers, rural youth and housewives in im- proved agricultural techniques and home economics. About ten PPL's would be attached to the Center to run demonstrations and maintain contact with the farmers. These would provide the basis for expanding the "key farmer" training program which is now in operation. Under this program groups of 30 farmers are given one week training in improved cultivation, improved irrigation techniques, improved paddy varieties and seed, correct fertilizer use and plant protection (the "Five principles"). The target is one "key farmer" per 20 farmers. This program, coupled with one 1,000 m2 demonstra- tion plot per village unit and at least one 6 to 10 ha demonstration farm per sub-district, supervised by the field extension worker, is currently ANNEX 3 Page 8 the basis for "grass roots" extension. While this program will do much to improve extension services throughout Indonesia, it has some deficiencies. Extension work would not be coordinated with research, the BIMAS programs or with the local administration. The gap between extension worker and the farmer would remain. Some proposals to overcome these problems are presented at the end of this Annex.

25. In addition to the above programs, quite extensive use is made of radio to put new ideas across to the rural population. In some provinces, there are about three special agricultural broadcasts per week. Village listener groups are encouraged and the programs are arranged to provide group discussion and feedback from the groups to the radio station or agricultural office. Under a program currently being considered for financing by the Bank group, the extension service proposes to establish 10 to 15 Agricultural Information Centers on Java, Sumatra, Sulawesi and Kalimantan. These would provide current agricultural information and audio-visual aids to assist extension workers in making broader contact with the farming community. Plans are also underway to attach extension workers to Research Institutes, to act as liaison officers and subject matter specialists for the Extension Service.

Organization of Farmers

26. Relative to many other countries, there is quite a strong coopera- tive spirit between farmers at the village level in Indonesia. The opportuni- ties for forming effective farmer groups and organizations are favorable, given the proper approach. In irrigation areas there are currently two major types of farmer organization - the "water users group", based on the tertiary irrigation system, and the farmers' cooperative or BUUD based on the village unit. Traditionally, the farmer water users group has been formed around an "Ulu Ulu", an elected member of the farming community in a tertiary unit (100 - 300 ha), who was responsible for equitable water distribution between farmers, and responsible for organizing group maintenance of the minor distri- bution system. He received payment for his services in the form of paddy, based on the area of paddy grown by each member. This system has broken down in many areas as the main irrigation system deteriorated through lack of maintenance.

27. A modified form of the "Ulu Ulu" system is now being revived as rehabilitation of the main systems proceeds and promises to be reasonably effective in allocating water in an operational system. There are few signs that it will be effective in encouraging farmers to improve the quaternary system or to maintain it in good condition without government assistance and pressure. In some instances, progress in developing improved quaternary systems is held up by the farmers who own well watered land close to the irrigation turnout. Under these circumstances, it is difficult for farmers' groups to obtain right of way for these canals. ANNEX 3 Page 9

BUUD

28. Farmer cooperatives have had a checkered history. During the 1960's, they suffered from mismanagement and became involved in politics. The GOI revised cooperative laws in 1967 with the result that some cooperatives were closed down, some were merged and some new ones were started.

29. In 1973, after a small pilot project in Jogjakarta Special District, it became Government Policy under Presidential Instruction No. 4/1973 to promote the formation of cooperatives at the village unit level. These are called BUUD, which stands for Badan Usaha Unit Desa, or "village unit effort programs," and they are based on an amalgamation of existing village coopera- tives. By December 1973, some 1,560 had been established. BUUD's have four main functions:

(a) provision of agricultural extension services;

(b) extension of credit;

(c) distribution of farm inputs; and

(d) processing and marketing of farm outputs.

30. The first three functions are concerned with the BIMAS program inputs and represent an attempt to give the farmer "one-stop shopping," while giving the Government tighter control over the running of BIMAS and the supply and distribution of inputs. These functions duplicate those of existing local extension services, BRI village units and local retail outlets of fer- tilizer and pesticide distributors. The fourth function is tied in with the activities of BULOG and is discussed in Annex 12.

31. A minimum group of 25 farmers is required to form a BUUD. A chair- man and committee are elected for a two-year term. They are given one-month management and technical training courses by the Directorate of Transmigra- tion and Cooperatives. The BRI provides special credit facilities for the cooperative to purchase small rice mills, stores, drying floors and farm equip- ment. BUUD's are encouraged to become agents for the distribution of fertilizer and agrochemicals under the BIMAS program.

32. Potential sources of income are rice milling and the sale of by- products; handling charges on fertilizer and agrochemicals; profits on hold- ing rice in storage, and the hiring out of farm equipment. To date, BUUD's have met with only limited success, and those interviewed in the field had memberships of only 25 to 30 families. There is a great lack of trained personnel to organize and operate them, and the existing administrators and members appear to come predominantly from the richer farmers in the village. Little evidence could be found of activity in extension and the advancing of credit is handled mainly by the BRI village units. BUUD's have been more successful in channeling fertilizer to the farmers - according to BIMAS ANNEX 3 Page 10

officials, some 75% of supplies in the 1973/74 wet season were moved through them. The Government guarantees payments from the BUIWD's for fertilizer supplies, and this has met with a good response from the distributors.

33. There is likely to be little cash benefit to members in the early years, due to bad debts and the need to build up operating capital. The smaller farmers are not likely to see an advantage in joining. This high- lights the underlying problem of establishing a viable cooperative before the economic standard of the smaller farmers (who represent the highest percentage of the community) has been raised through improved irrigation and agricultural technology.

Engineering Institutions - Irrigation

34. All central government planning and design for major irrigation works are under the MPWEP (Chart 8723) with the DGWRD being the chief exe- cutive concerned with irrigation.

35. All the rehabilitation projects, except Jatiluhur, come under the General Manager, PROSIDA. Jatiluhur, because of its power and dam operations, is the responsibility of the semi-autonomous Jatiluhur Authority, under the Minister of State for Economy, Finance and Industry.

36. Irrigation staff in the provinces, however, all report to the pro- vincial governors and, except in East Java, these engineers cover roads and public buildings as well as irrigation. Thus in each rehabilitation sub-project, the Project Manager is a provincial engineer, as is the 0 & M engineer, and PROSIDA supplies the sub-project deputy manager, as well as administrative and financial services and technical (consultant) advice.

37. Successful coordination between Administration, the Agricultural Service, and the Irrigation Service depends on the efficiency and interest of the District Officer. Irrigation Committees have been re-established at district, sub-district and village level, which has been a necessary improve- ment, but farmers do not yet have participation in these committees.

B. Constraints to Effective Agricultural Services

Trained Personnel

38. A key constraint to the development of effective agricultural services is the lack of well trained, experienced personnel to man the services. In research, there are few properly trained graduates outside CRIA, a few key research units and the headquarters of other agencies con- cerned with research. Heavy reliance is placed on agricultural high school graduates or personnel with even less training to run field programs and ANNEX 3 Page 11

take care of day to day management. While senior staff in charge of the work pay occasional visits to check on progress, contact is too infrequent and too remote to form a basis for effective on-job training or to ensure that maximum benefits are obtained from the experiments.

39. In the Extension Service, there are virtually no skilled graduate staff below the district level and too few at that level to provide real support to lower grade extension workers. There is no effective extension service at the subdistrict level and no day-to-day technical support for the field extension workers at the village unit level, many of whom have only received primary education. Viable Rural Extension Centers are still few and far between, although the key farmer programs at the operational centers appear quite successful. Nevertheless key farmers, while playing a useful role, are no substitute for a village extension agent, backed by competent subject matter specialists.

Low Salary Structure and Lack of Mobility

40. The low government salary structure is another serious constraint to effective agricultural services. Many officers are forced to take a second job or to run a business, which results in less than full-time dedica- tion to agriculture. All services suffer to some extent from a lack of budge- tary funds, equipment and facilities, and a lack of mobility through shortages of field vehicles and motorcycles. The latter are being supplied under Credits 220 and 289-IND. The lack of mobility is compounded by the very poor state of village roads, many of which are impassable during the rainy sea- son. The provincial governments meet a portion of the cost of agricultural services. As a result, the standard of services from one district to another vary depending on local revenue and the competence and dedication of personnel in charge.

Organization of Services 41 e The organization of services on a provincial basis in association with local government has merit. The local head of government can act as coordinator and supervisor to ensure that agencies work together as a team and fulfill their commitments. However, there is inadequate professional con- tact between agricultural officers at district, subdistrict and village levels and their peers in the Directorate of Extension and Research. Furthermore, the latter do not have sufficient opportunities to participate in program planning at the district and sub-district level. In many cases, District and Sub-District Officers have insufficient experience in development pro- gram planning and management to use personnel and resources to the best advan- tage. Major planning decisions are taken at the provincial level with little or no participation of farmers and lower level field officials, and programs do not always match district and sub-district requirements or available re- sources. ANNEX 3 Page 12

42. Although the above remarks are critical, it should be stressed that there are many highly dedicated personnel within the ranks of the Minis- try of Agriculture and its various service units. Furthermore, they are carrying out much good work under difficult circumstances. Despite the defi- ciencies mentioned, the performance of the agricultural service compares favorably with that of several of the other developing countries in the region. The above-mentioned deficiencies are recognized in Indonesia and measures are being taken to correct them.

Farmers Organizations

43. Farmers' organizations are usually successful if they meet the immediate needs of the farmers and the basic groups are kept small. Members then recognize the benefits and support the local group. Small groups faci- litate personal contact, foster team spirit, and management is relatively simple. Equitable distribution of water at the farm level is the basic requirement in irrigated areas and is a logical base for organization. Cur- rent proposals for a revised minor water distribution system envisage that a tertiary canal will supply an area of 80 to 120 ha. The tertiary unit will be sub-divided into quaternary units of 15 to 20 ha, each with its own turn- out.

44. The quaternary unit comprising 30 to 40 farmers would make an ideal farmers' group for construction, operation and maintenance of the minor distribution and drainage system. It could also be used as the basic unit for extension and credit purposes and thus bring agricultural and irri- gation services together at the "grass roots" level. Each quaternary farmers' group would elect a water manager to supervise the operation and main- tenance of the irrigation and drainage system. One farm leader would be elected to speak for the group on agricultural, irrigation and local govern- ment matters. The two appointees would hold office for two years and would receive reasonable payment to cover their services and expenses in terms of paddy donated by members on the basis of the area of paddy harvested.

45. Four to six quaternary units would form a tertiary irrigation unit of 60 to 120 ha. The water managers and farm leaders would form a Tertiary Irrigation Committee. One water manager would be elected to become Senior Common Irrigator (equivalent to the ulu ulu) to take overall responsibility for the maintenance and operation of the tertiary unit canals and drains and to liaise with the Irrigation Service's gatekeeper. One farm leader would be elected as chairman of the Tertiary Irrigation and Agricultural Development Committee. Both appointees would hold office for two years and would receive an additional rice allowance from all farmers to renumerate them for added responsibilities. Provision should be made for tertiary or quaternary farmer groups to obtain credit through the BRI for the purchase of sprayers, threshers, winnowers, 8-10 hp puddling machines and pumps, or the construction of communal drying floors and storages. Farmers should continue to take production credit as individuals. ANNEX 4 Page 1

INDONES LA

IRRIGATION PROGRAM SURVEY

On-going Irrigation Rehabilitation Projects

1. Although all of the four on-going irrigation rehabilitation projects are in different stages of development, and none is complete sufficient information is available to reach certain conclusions:

(a) Despite delays and increased costs, the projects are still expected to show favorable rates of return;

(b) The benefits anticipated at appraisal are being or are expected to be met;

(c) The agricultural supporting services need to be further improved and expanded;

(d) The Government should place more emphasis on tertiary development; and

(e) The organization and staffing of system operation and maintenance still requires improvement.

2. Even though project costs and farm production costs have risen sharply since appraisal, the projects are still expected to show favorable rates of return because of much higher present and projected rice prices. Experience in other countries shows that additional investment on tertiary systems would also show a favorable rate of return due to the increased yields possible under conditions of greater water control.

3. An impressive amount of work has been completed to date (Table 1). Table 2 gives the revised cost estimatesl/ for the first four projects (Credits 127-IND, 195-IND, 220-IND, and 289-IND). In general design standards are satis- factory, though further attention is needed to the freeboard of the canal baniks. The vast amount of civil works construction in progress in Indonesia has made the lack of experienced contractors an increasing constraint. Under these conditions, supervision quality tends to drop and progress is delayed. Improved training (Annex 14) and increased output from educational institutes should provide the long-term solution.

1/ Updated to March 1975. ANNEX 4 Page 2

kriculture

4. There are covenants in all the Credit Agreements calling for improved agricultural supporting services in the project areas and requiring ample supplies of fertilizer, pesticides, agricultural exten- sion advice and credit. Since the beginning of the projects, there has been a substantial increase in these services.

5. There has been a 30 - 40% increase in the number of extension workers. However, the targets of one worker per 1,000 ha (about 2,000 families) in BIMAS areas and one per 2,000 ha elsewhere are still not being met. At present, there is one extension worker for about 5,000 families. Training programs to expand and upgrade staff within the MOA are in progress and the Agricultural Education Project, (Credit 288-IND) should have a significant impact, when construction of training facilities are completed in 1976.

6. A number of agencies described in detail in Annex 3, have been created to help farmers improve their production and the following services are being introduced or expanded:

(a) BIMAS - includes extension workers, subject matter specialists, and supply of inputs;

(b) BUUD (Farmers' Cooperative Association) - new organizations which buy paddy; process and sell rice for groups of farmers; sell seed, fertilizer, and pesticides; rent sprayers; and also own some rice mills;

(c) Bank Rakyat Indonesia (BRI) - more branches are being set up in the village areas to make credit facilities easier to obtain;

(d) Dharma Tirta (Farmers' Local Water Management Units) - new organizations in tertiary canal areas to be responsible for water management;

(e) More "key" farmers have been trained at Rural Agricultural Centers to act as demonstrators of the best practices with new varieties of seeds, and in water management and agri- culture;

(f) More demonstration and trial areas are being set up by the MOA; and

(g) PROSIDA has constructed more than 20 tertiary demonstration plots spread over all projects. ANNEX 4 Page 3

7. Farmers' groups should be built up from the quaternary irriga- tion units as a basic unit to permit a close relationship between the irrigation and agricultural services at the farm level. These units could be combined under BUUD's (Annex 3 and Chart 8723). The new Director General of Agriculture recognizes the need for more agriculture inputs as required under the Credit Agreements.

Yields

8. The Mission collected yield data from three different sources:

(a) PROSIDA and the Jatiluhur Authority provided yields based on crop cuttings before rehabilitation in 1968/69 and after rehabilitation for wet and dry seasons 1971-73, with and without BIMAS.

(b) The Mission interviewed about 100 farmers in the 8 project areas to find out yields before and after rehabilitation, with and without BIMAS.

(c) The pilot rural socio-economic survey (Annex 2) provided yields for Cisedane and Pemali-Comal, again before and after rehabilitation, with and without BIMAS.

Table 4 shows the results. For comparison, yield estimates and projections from the appraisal reports have been included. Comments on the different results are:

(a) the PROSIDA yields are probably biased upwards because of crop cuttings being made on above average plots;

(b) the mission's interview results are perhaps biased upwards because they met both selected and random farmers. The farmers interviewed belonged to relatively rich villages, had better than average water supply, showed above average skills and education, were key farmers and/or were members of BUUD's. Findings should therefore be taken as indicating the potential rather than showing average achievements; and

(c) the survey results, on the other hand, are probably biased downwards, mainly because 1972/73 was a particularly bad year and because a certain degree of underreporting may be involved. In addition some enumerators may have been outside the irrigated areas. ANNEX 4 Page 4

None of the sources can be expected to give full "after rehabilitation" yields, as none of the rehabilitation schemes had been completed by the time of data collection and the yield build-up will take several years after completion.

9. The appraisal missions projected paddy yields after rehabilitation to reach levels of 3.2 to 4.0 ton/ha with BIMAS and 2.0 to 2.8 ton/ha without BIMAS. According to PROSIDA/Jatiluhur Authority data, these levels have in general been attained, notable exceptions being Jatiluhur, Ciujung and Pemali-Comal. Yield increases due to rehabilitation, without BIMAS before and after, range from 0.4 ton/ha up to 1.3 ton/ha, with an average of 0.9 ton/ha.

10. Using the figures obtained by the Mission's interviews, appraisal projections would appear to have been exceeded, Rentang being the exception. Yield increases due to rehabilitation, with BIMAS before and after, range from 0.2 to 2.4 ton/ha, 1.4 being the average.

11. The rural sample survey results for Cisedane show very low yield levels and only slight increases due to rehabilitation. There is a marked decrease in wet season yields with BIMAS. For Pemali-Comal, the survey yields nearly reach appraisal projected levels. Dry season yields increased by 1.6 ton/ha, both with and without BIMAS. In the wet season, however, no improvement is shown. Because of methodological problems, the survey results are of only limited reliability.

12. Based on these different sources, Chart 8722 gives the Mission's best estimates: an average yield of 3 ton/ha for the present state of rehabilitation, which fits PROSIDA results and sample survey Pemali-Comal results; an average yield of 3.8 ton/ha after completion of the present projects, which is somewhat lower than the Mission's findings for the best farmers at present; and a yield of 5.0 ton/ha after completion of the present projects and after quaternary development and introduction of improved extension services.

On-Farm Development

13. It is the tradition in Indonesia for the farmers to construct and maintain all tertiary and quaternary canals and structures through cooperative effort. The government, through its agencies, operates and maintains only the major barrages and weirs, the primary and secondary canals, and their structures. In the Bank group projects, the government is financing and constructing the first 50 m of the tertiary canals and is giving technical advice on the layout and design levels of all tertiaries and quaternaries. Lack of maps is still a constraint in plan- ning tertiaries but progress is being made. The cost of on-farm develop- ment, including tertiary and quaternary ditches and drains and their ANNEX 4 Page 5 structures is estimated at US$50-75/ha at early 1974 prices. Details are given in Table 3. The cost will depend on the amounts the farmers are willing to contribute through cooperative effort (gotong royong).

14. In order to achieve the maximum benefits from the projects, it is essential that tertiary and quaternary canals are completed throughout the rehabilitated areas. The inclusion of farm roads is not considered essential at this stage of Indonesia's development but might be tried on an experimental basis. Land leveling would not be required in most cases because the land has been used for transplanted rice cultivation for many years. GOI should be asked to make PROSIDA and the Jatiluhur Authority responsible for on-farm development and to take measures to make construction of these systems compulsory, with suitable provisions for farmer participation in the planning and construction of the works. The question of to what extent the cost of such work shall be recovered from the farmers also needs to be discussed.

15. The status of each of the Bank group-financed irrigation rehabil- itation projects is given below.

The First Irrigation Rehabilitation Project - Credit 127-IND (US$5.0 million)

16. This project, appraised in March 1968, consists of the re- habilitation of three separate irrigation sub-projects in Java and the completion of a fourth new system in South Sumatra. As little Information was available at the time of appraisal, the scope of the project was only broadly outlined at appraisal and Bank assistance was limited to equipment and technical assistance. Subsequently, the scope of the project has been widened to drainage. The total estimated cost of the project is now US$45.3 million, and the IDA Credit mainly finances the earth-moving equipment and machinery to augment hand labor for the civil works constructiop, which is financed by GOI. The Credit also finances consultant services for this project and feasibility studies for future projects (later included in Credit 220-IND). The four sub-projects are as follows:

Way Seputih (South Sumatra) 1/ 25,000 ha

Cisedane (West Java) 42,000 ha

Rentang (West Java) 92,000 ha

Glapan-Sedadi (Central Java) 42.000 ha

Total area 201,000 ha

1/ Since Way Seputih is a new project, it has not been considered in this review. ANNEX 4 Page 6

17. The project is administered by PROSIDA, a special government agency established under the DGWRD to execute Bank group irrigation rehabili- tation projects.

18. Work commenced in 1969 and the main and secondary canals were completed by mid-1974. Final completion of the four sub-projects is not expected until 1976, due to the need for a new barrage and a comprehensive drainage system in Rentang, which had not been anticipated at appraisal.

19. The physical progress on each sub-project at March 1974 was as follows:

Construction item Cisedane Rentang Glapan-Sedadi ------% completion

Main canals 99 100 95 Secondary canals 100 100 98 Tertiary canals 25 - 60 Drainage 70 50 94 Weirs 90 70 100 Structures - primary canals 99 95 86 - secondary canals 100 93 94 - tertiary canals 100 - 94 - drainage canals 70 50 _ Inspection roads 90 85 75 River works 100 60 50

Cisedane

20. The present development indicates that the wet season irrigated area is about 40,700 ha - 20% increase over 1968. The dry season cropped area has increased from 11,000 to 15,000 ha (36%). This improvement was brought about by rehabilitation of the weir at Pasar Baru and the primary and secondary canals. Eight of the ten main gates on the weir have been repaired, and work is in progress on the last two. Silt is being by-passed through the weir and silt sluices, so that very little is being carried into the system.

Rentang

21. The major problems are the main Rentang barrage on the Cimanak River and the drainage outlets to the sea near Indramayu. The operation of the Rentang barrage for flood control purposes is virtually impossible without a major rehabilitation program. In addition, the silt intake to the right bank canal is so great that a dredger operating 21 hr/day can only maintain a minimal balance between the intake and discharge of silt from the silt basin. The dredger is operating 180-200 days/yr at an average cost of Rp 6,000/hr (without taking into account depreciation). Without the dredger, the canal system would function only to a limited ANNEX 4 Page 7

degree. GOI has requested Bank group financing for a new barrage about 600 m above the existing one at a cost of approximately US$13 million. If a new barrage is not constructed, it would be necessary to operate a second dredger in the silting basin of the right bank canal. This may be a temporary necessity during construction of the new weir. This project was appraised in June 1974 and negotiated in February 1975. Irrigation VI was approved by the Board on April 1, 1975. The new barrage should be in service by 1980.

22. The second major problem is drainage in the vicinity of Indramayu, near the sea. At times, 10,000 ha are covered with water to a depth of 40 cm for about three months of the rainy season. There is a dredger working now to help alleviate the problem, but the tidal variation is only 1 m and this creates a great problem for any natural flow of water out to sea. A further complication is the establishment of fish farms, requiring 30% salt water, adjacent to the sea. Therefore, dis- turbance of the existing drainage conditions is resented by the fish farm owners. Consultants are designing a comprehensive drainage rehabili- tation program which will divide the area into five sectors with main and collector drains, and will include at least 225 km of drain rehabilitation. Work will be completed under Irrigation VI.

23. A program for tertiary development is being planned but there are few rectified maps available at this time. This work has been included in Irrivation VI.

Glapan-Sedadi

24. Project irrigation works are now 95% complete and drainage works will be completed by 1976. The tertiary program has been carried out in the Glapan-Barat Extension area, a new area of 6,230 ha developed under the project. There are 90 tertiary systems in the extension area of which work has been completed on almost half, with a total length of 54 km of canals. PROSIDA has paid farmers Rp 70/m 3 for earth work which they carried out. Mapping, including survey and design, has been com- pleted by PROSIDA. On the tertiary development within the project area, it has been proposed to survey in detail 5,000 ha in addition to the 3,000 ha already completed.

Production

25. Paddy yields in the sub-projects at appraisal time were estimated to average 2.0 ton/ha, and were anticipated to rise to 3.2 ton/ha after rehabilitation and with agricultural inputs. The build-up over each area has been slow due to the delays in progress of drainage, lack of tertiary development and lack of full coverage by BIMAS. ANNEX 4 Page 8

The Second Irrigation Rehabilitation Project - Credit 195-IND (US$18.5 million)

26. This project, appraised in July 1969, consists of the rehabilita- tion and completion of the Jatiluhur irrigation system, including improve- ment of drainage and flood protection works, to provide year-round irrigation to about 186,000 ha, at a total cost presently estimated at US$61.8 million. The project includes consulting services for design and implementation of this project, and the preparation of feasibility studies for a future extension. The project is administered by Jatiluhur Authority. The President Director of the Authority, however, was under house arrest for political reasons from February 1973 until September 1974. His absence caused lack of leadership in the Authority and a reduction in efficiency. Improvements are expected after his return to duty.

27. Due to delays in effectiveness of the Credit, work did not start until 1971. The work is being carried out under 12 major contracts. It had originally been intended that all contracts would be on the basis of international competitive bidding. Due to problems with contract documents and difficulties in obtaining acceptable bids, however, the first eight contracts were subject only to local bidding. Contracts 9-12, the largest contracts, were subject to international competitive bidding but only one was awarded to a foreign firm (in joint venture with an Indonesian company). The other contracts were won by local companies. Contracts 9-12 and their estimated completion dates are as follows:

Contract No. Work Item Estimated Completion

9 East Tarum system (49,000 ha) March 1975

10 Rehabilitation of east and west main canals September 1976

11 Rehabilitation of Cipunegara irrigation system (37,000 ha) July 1976

12 Rehabilitation of North Tarum irri- gation system (80,000 ha) April 1977

28. Despite higher costs and construction delays, the project is still expected to show a favorable economic rate of return (details are given in Annex 8).

The Third Irrigation Rehabilitation Project - Credit 220-IND (US$14.5 million)

29. This project, appraised in March 1970, consists of the rehabili- tation and reintroduction of an operation and maintenance (0 & M) organi- zation into three irrigation systems, covering over 200,000 ha at a cost ANNEX 4 Page 9 presently estimated at US$42.7 million at March 1975. The project also provides maintenance equipment, facilities snd housing for provincial staff (who will take over 0 & M after rehabilitation is complete), consultants, management assistance, and a small amount of construction equipment for PROSIDA, the executing agency. The three sub-projects are as follows:

Ciujung (West Java) 24,300 ha

Pemall-Comal (Central Java) 123,000 ha

Sadang (South Sulawesi) 54,600 ha 201,900 ha

30. Work started on the project in mid 1971. Major work in Ciujung is expected to be completed by the end of 1974, while the bulk of the irrigation works in Pemali-Comal and Sadang will be finished at the end of 1975. Drainage works and tertiary canals in both of these areas will extend to the end of 1976, about three years beyond the original schedule. Physical progress on each sub-project at March 1974 was follows:

Construction item Ciulung Pemali-Comal Sadang % completiop

Main Canals 60 77 15 Secondary Canals 50 58 49 Tertiary Canals - - 15 Drainage 0 20 25 Weirs 40 60 25 Structures - primary canals 80 40 15 - secondary canals 23 60 58 - tertiary canals 0 0 10 - drainage canals 20 0 25 River excavation 30 - - River training 0 - - Inspection roads 20 30 20

Ciuj Una

31. The Pemarajan Barrage, located on the Ciujung River, diverts water to the left bank and right bank canals, which divide the command area. For regulation of river flows and canal diversion, the Pemarajan Barrage has ten gates, all of which needed repairs. To date, four have been repaired, two are in process, and four have had no work done on them. Major reconstruction has been carried out to the floor of the weir. The right bank canal embankment does not have sufficient freeboard because inadequate allowance for settlement was made in the rehabilitation work. The same condition exists on the upper reaches of the left bank canal. ANNEX 4 Page 1u

32. PROSIDA is designing the tertiary and quaternary canals and constructing the division boxes, and the farmers are supposed to carry out the earthworks, except for the first 50 m, which is being constructed by PROSIDA. PROSIDA has completed design on two tertiary development pilot areas, which will cover over 200 ha and are working on plans for an addi- tional pilot area. It is estimated that the design package on 10,000 ha could be accomplished by mid-1976. With the technical aspect of tertiary development solved, the constraints are now funds and maps. Until the tertiary systems are fully developedi illegal turnouts cannot be effectively closed. It is proposed that Irrigation Project VII will include on-farm development.

Pemali-Comal

33. Before rehabilitation, 90,000 ha of this sub-project were receiving mediocre irrigation services and about 28,000 ha were rain fed. At full development, cropping intensity is expected to be 100% during the wet season and 40% during the dry season. Repairs to the four weirs which had been washed out at the time of appraisal are well in hand.

34. The tertiary development is being promoted by pilot areas. This year, two pilot units of 120-150 ha, out of 16 proposed, will be completed. A photo mosaic for all areas on a scale of 1:5000 is required. At the pre- sent time, 40,000 ha have photomaps completed, and a survey team is obtain- ing contours. The tertiary pilot program is costing Rp 10,000 - 15,000/ha for structures, with farmers carrying out the earthworks.

35. PROSIDA reported in March 1974 that 75% of the total area had been rehabilitated. This estimate may be over-optimistic. The programs will probably have to be extended at least until 1976 before completion, about two years beyond the original schedule.

Sadang

36. Tertiary development in the Sadang project has been completed on about 14,000 ha.

Production and Benefits

37. Yields at appraisal were estimated to average 1.7 ton/ha paddy and were expected to rise to 3.6 ton/ha at full development. Buildup of improved yields has been gradual due to delays in construction pro- gress, lack of tertiary development and lack of full coverage by BIMAS.

The Fourth Rehabilitation Project - Credit 289-IND (US$12.5 million)

38. This project, appraised in August 1970, consists of rehabilitation of 229,100 ha, groundwater investigations and feasibility studies. Con- sultants were appointed in late 1972. The project is divided into three parts, which are being executed by separate agencies of the DGWRD: ANNEX 4 Page

Part A - Rehabilitation and improvement of the Pekalen- Sampean Irrigation system (229,100 ha) and the provision of agricultural and 0 & M services to ensure that the efficiency of the systems is maintained. PROSIDA is executing this work.

Part B - Investigation of the groundwater resources and alternative sources of supplemental water in the Upper Solo and Medium Valleys (Central and East Java). This work is being executed by the Groundwater Directorate of DGWRD.

Part C - Feasibility studies for (a) a new irrigation system (15,000 ha) at Sampean Baru in East Java, (b) an irrigation rehabilitation project (85,000 ha) in the Cirebon area, and (c) surface water storage, hydropower and flood control on the Cimanuk River. The Cimanuk storage would provide dry season irrigation in the Rentang irrigation area (92,000 ha). These studies are being administered by the Director of Irrigation in DGWRD.

39. The major work is in Part A of the project, involving the re- habilitation of many small systems in five non-contiguous areas of East Java. Due to the recent very high inflationary rates, costs have escalated rapidly and the rehabilitation of Pekalen-Sampean is estimated to cost about US$41.3 million at March 1975. Work is not expected to be completed until late 1978, about two years behind schedule, and could be further delayed by budgetary problems due to increased costs. As the first contracts were let only in early - 1973, it is too early to predict yields and benefits.

40. Work under Part B has been delayed due to difficulties in obtaining satisfactory bids for the drilling equipment and is unlikely to be complete before 1976, about two years behind the original schedule. The feasibility studies under Part C have all been completed on schedule.

INDONESIA

IRRIGATION PROGRAM SURVEY

The Irrigation Rehabilitation Projects

Number of Structures & Length of Canals Rehabilitated up to March 1974

C R E D I T 1 2 7 - I N D C R E D I T 2 2 0 -I N D CREDIT 195-IND

T A L I T E M WAY CISEDANE RENTANG CLAPAN CIUJUNG PEMALI- SADANG JATILUHUR T SEPUTIH SEDADI COMAL I

MAJOR STRUCTURES ------Number ------30 Weir I1/ 12/ 13/ 3 4/ 15/ 226/ 17/ _ 2,971 Division Structure 189 113 456 283 84 516 94 1,236

MINOR STRUCTURES 253 Culvert 79 50 17 15 8 173 11 - 67 Syphon 1 3 22 10 6 259 2 - 71 Aqueduct/Flume 4 8 7 8 - 43 1 - 237 Drop Structure 5 8 4 - 2 214 4 - 31 Sluice Structure - 2 7 6 1 15 - - 629 Bridge 38 242 101 40 32 145 31 -

TERTIARY STRUCTURES 713 - _ - - - 91 - 804

CANALS ------Kilometers ------

589 Main Canal 57 88 98 90 94 75 13 74 Secondary Canal 122 106 502 305 78 569 76 1,347 3,105 250 509 Drainage Canal 2 55 25 152 30 - 61 844 Tertiary Canal 141 73 - 150 - - 480 -

563 INSPECTION ROADS 15 47 85 130 57 53 16 160

LEGEND!

(New bridge, modification) 1/ Way Seputih Weir (Wing wall, small rehabilitation) 6/ Notok (under sluice, sand trap) Sungapan 2/ Pasar Baru Weir (New gates and wing wall) Cibendung Gembiro/ Gates Construction 3/ Rentang Weir (Under sluice, desilting basin,new stop logs) Nambo Padakaton Cipero VSand trap) Under 4/ Clapan Weir (Intake, Glapan Barat, desilting basin Glapan Timur) Cisadap Gangsa Sedadi Weir (Intake, desilting basin, gates) Danawarih Reconstruction Lumingser 5/ Pamarayan Weir (New gates, upstream & downstream apron, desilting basin) Kaliwadas Sidapurna Cawitali J Pasayangan Completed Dandang Gondang (Gates) (repair & painting) Wadas , Pesantren Kletak (Levees) Parakankidang . Nambo Randudongkal (Sky jump) Raja Bawah - x 71 Benteng Weir (Electricity, gates, downstream Pager Ayu - apron, right wing wall. Pager Wangi ANNEX 4 Table 2

INDONESIA

IRRIGATION PROGRAM SURVEY

First Irrigation Rehabilitation Project (Credit 127-IND): March 1974 Cost Estimate

Item Indonesian Financial Year 1969/70 1970/1 1971/2 1972/3 1973/ 1274/5 1975/6 Total ----_--_------US$ Million ------

Consultant Services 0.35 0.39 0.48 0.27 0.07 -- -- 1.56

Equipnent 0.04 0.13 0.12 0.13 0.13 0.09 0.09 0.73

Civil Works 2.82 4.o4 4.8 1 5.30 4.66 3.01 3.36 28.00

Administration 1.93 1.61 1.18 1.54 1.26 0.90 0.96 9.38 Operation & Maintenance During Construction -- 0.38 0.66 0.88 1.02 0.97 1.45 5.36

Design & Survey ------0.11 0.10 0.21

Total 5.14 6.55 7.25 8.12 7.14 5.08 5.96 45.24 ANNEX 4 Table 3

INDONESIA

IRRIGATION PROGRAM STRVEY

Second Irrigation Rehabilitation Project (Credit 195-IND): April 1975 Cost Estimate

Indonesian Financial Year Item 1971/2 1972/3 1973/4 1974/5 1975/6 1976/7 1977/8 Total ------US$ Million--

Land Acquisition 0.1 0.2 0.4 0.8 - - - 1.5

Consultant Services 1.0 1.2 o.6 0.4 0.1 - - 3.3

Equipment - 0.3 0.3 2.2 - - - 2.8

Civil Wbrks 2.9 1.5 4.0 9.6 9.3 6.9 4.8 39.0

Fuel and Materials - 0.1 0.1 0.2 0.2 0.2 0.1 0.9

Administration 0.9 1.2 1.2 1.2 1.2 1.1 1.1 7.9

Operation and Maintenance Dbring Construction 0.4 0.4 0.4 1.0 1.0 1.0 1.0 5.2

Subtotal 5.3 4.9 7.0 15.4 11.8 9.2 7.0 60.6

Contingencies Physical - - - - 0.5 0.3 0.2 1.0 Price Increases 1/ - - - - 0.9 2.0 2.5 5.4

Total 5.3 4.9 7.0 15.4 132 11.5 9.7 67.0

1/ Inflation rates used are: 14% for 75/76, and 12% thereafter. INDONESI '

IRRIGATION PROGRAM SURVEY

Fourth Irrigation Rehabilitation Project (Credit 289-IND): March 1975 Cost Estimate

Appraisal Revised Items Estimate ------Indonesian Fiscal Year------Estimate March 1970 71/72 72/73 73/74 74/75 75/76 76/77 March 1975 ______------____ _ ------T--(USUS$ '005T------Annual Expenditures------

Civil Works Barrages, weirs & canal 5,790 1,470 2,500 4,240 4,200 3,850 - 16,260 structures Canal & drainage 6,530 1,300 1,700 2,400 2,770 2,750 700 11,620 earthworks Roads 1,890 70 250 900 940 840 50 3,050 Offices, buildings, 70 200 130 80 60 - - 470 & camps

Subtotal 14,280 3,o40 4,580 7,620 7,970 7,440 750 31,400

Land acquisition - 105 40 150 160 100 - 555 Construction & 0 & M 1,315 50 590 880 320 - - 1,840 equipment Consulting services 2,200 310 300 630 470 50 50 1,810 Training 120 - 70 80 - - - 150 0 & M during construction 1,410 35 130 250 520 460 100 1,495 Management assistance 330 10 150 150 50 10 - 370 Admin. & overhead 2,870 360 570 650 830 600 200 3,210 Subtotal 22,525 3,910 6,430 10,410 10,320 8,660 1,100 40,830

Contingencies - Physical 4,380 - - - - 740 70 810 Contingencies - Price 2,250_ - _ - - 750 330 1,080 Increases

Total Project Cost 29,155 3,910 6,43o 10,410 10,320 10,150 500 42,720

1/ Apr6s'sal estimate based on 5% per year; revised estimates based on 16% in 1975/76 and 14% in ANNEX 4 Table 5 INDONESIA

IRRIGATION PROGRAM SURVEY

Third Irrigation Rehabilitation Project (Credit 220-IND): Maren 1975 Cost Estimate

Appraisal Indonesian Fiscal Year Revised Estimate Estimate Item Nov 1971 72/73 73/74 74/75 75/76 76/77 77/78 78/79 Mar 1975 ------(US 000) ------______--____Annual Expenditures------A. PEKALEN-SAMPEAN

Civil Works He-adworks& weirs 1,500 20 200 550 560 580 490 50 2,450 Canals & structures 4,500 - 1,500 2,100 3,600 3,500 3,100 500 14,300 Tertiary works (50m) 1,200 - 100 200 500 500 400 50 1,750 Roads, buildings & levees 1,400 200 270 320 400 360 320 100 1,970

Subtotal 8,600 220 2,070 3,170 5,o60 4,940 4,310 700 20,470 PROSIDA O&M during construction 925 - - 80 160 600 360 - 1,200 Adviser & training 250 - 20 70 140 120 - - 350 Admin. & overhead 1,680 90 350 860 860 520 310 50 3,040 Equipment & vehicles 2,355 - 500 1,800 800 30 - - 3,130 Consulting services 1,980 360 480 560 520 380 - - 2,300

Subtotal 15,790 670 3,420 6,540 7,540 6,590 4,980 750 30,490 B. GROUNDWATER

Equipment & vehicles 260 - 20 280 260 - - 560 Consulting services 670 20 70 170 220 250 20 - 750 Mapping & drilling 750 30 30 120 520 500 _ - 1,200 Training & overhead 40 - 20 30 10 - - - 60 Subtotal 1,720 50 140 600 1,010 750 20 - 2,570 C. FEASIBILITY STUDIES

Sampean-Baru 60 30 50 - _ - - - 80 Cirebon-Cimanuk 800 270 480 - -- - 750 Subtotal 860 300 530 - - _ _ - 830 BASE COST TOTAL 860 1,020 4,090 7,140 8,550 7,40 5,000 750 33,890 Continencies Physical 2,410 - - - 760 660 500 80 2,000 Price increases 2,570Q/ - _ 750 1,930 2,210 470 5,360 PROJECT TOTAL 23,350 1,020 4,090 7,140 10,060 9,930 7,710 1,300 41,250

1/ Appraisal estimate was based on 5% for foreign price escalation and 6% for local; revised estimates were based on 16% in 1975/76 and 14% thereafter. Calculated in accordance with Bank guidelines. ANNEX 4 Table 6

INDONESIA

IRRIGATION PROGRAM SURVEY Cost of On-Farm Development

Average Costs of Tertiary Pilot Units are: 1. Preparation of maps or mosaics (rectified) 1:5,000 scale )

2. Preparation of contour map, 1:5,000 ) 1,600 - 3,000 3. Field surveys (for contours) ) 4. Construction cost (range)

Structures (tertiary, quaternary and major) 9,000 - 10,000 Excavation for canals 4,500 - 7,000 Excavation for drains 4,400 - 6,ooo Supervision 2,000 - 2,500

Total field cost - by contract 21,500 - 28,500 - by gotong royong 17,000 - 22,000

Estimate of average structures and excavation requirements for 100 ha. 1. Tertiary and sub-tertiary boxes 4 - 5 2. Quaternary boxes 4- 5

3. Tertiary canals 2.5 km - 3.0 km 4. Quaternary canals 4.0 km - 6.0 bm 5. Tertiary drains 3.0 km - 3.5 km 6. Quaternary drains 3.0 km - 4.0 km 7. Other structures 1- 2

Unit cost estimates Rp

Tertiary boxes, each 120,000 - 150,000 Quaternary boxes, each 40,000 - 50,000 Culvert or drop s ructure, each 10,000 - 20,000 Excavation, per m 150 - 200

The total cost of a tertiary package (in March 1974 prices) would range from Rp 20,000-30,000/ha (US$50-75), depending on the amount of the farmera' contribution. Estimated cost in March 1975, based on actual experience, is Rp 50,000-100,000/ha, depending on farmers' contribution. INDONESIA

IRRIGATION PROGRAM SURVEY

Paddy Yields Before end After Rehabilitation (Ton/ha)

Before Rehabilitation After Rehabilitation Appraisal PROSIDA Mission Rural Sufve 1 Appraisal Reports PROStfA/Jatiluhur Auth. Mission Rural Surveyl/ Source: Report W BIMAS Interviews W BIMAS i T BIMAs W BIMAS W BIMAS w BIMAS W BIMAS Interview 1W BIMAS g RIMAS W3 DS W BIMAS W BIMAS WS DS WS D S W S WS DS WS PS W BIMASJWS WS DS WS DS

Jatiluhur 2.4 1.6 .. 3.1 1.4 .4.0 3.2 2.8 2.0 2.7 .. ,, .. 5,1 Cisedane 2.2 2,2 1.5 ,, 1.5 2.6 1.8 1.1 1.0 3.2 3.2 2.4 2.4 4.6 4.2 2.9 2.5 3.9 1.9 1.8 1.5 1.2 Rentang 2.2 2,2 1.1 2.7 1.6 3.2 3.2 2.4 2.4 6.0 3.4 1.8 3,0 2,5 Glapan-Sedadi 2.2 2.2 1,2 3.3 1.5 3.2 3.2 2.4 2.4 3.4 3.5 2.5 2.2 4.2 Ciujung 1.6 1,6 1.0 3,3 1.7 3.2 3.2 2.0 2.0 2.6 2.0 1.6 2.5 5.1 Pemali-Comal 2.0 1.6 1.5 3.3 1.7 2.6 1.8 2.1 1.0 3.8 3.8 2.4 2.4 3.6 3,7 .. .. 4,7 2.6 3.5 2.1 2.6 Sadang 2,0 1.6 1.4 2.3 1.4 .3.8 3.8 2.4 2.4 3.8 3.7 .. 1.8 4.7

Way Seputih 1.6 1.6 0.8 I. 3.2 3.2 2.4 2.4 3.5 ., 1.2 .. ..

J/ Including local, national, and high-yielding varieties, WS a Wet Season WV With excluding rainfed DS a Dry Season =- Without NOTE: The yield unit is paddy grain. ANNEX 5 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

OPeration and Maintenance

1. This annex focusses on the operation and maintenance (O & M) of the Bank group assisted rehabilitation projects. 0 & M of the system down to the tertiary outlet has traditionally been the responsibility of the provincial administrations but had dropped almost to zero by the time the rehabilita- tion projects were appraised. The 0 & M organizations of the several proj- ects are in various stages of development. In some cases, the 0 & H orga- nization is functioning while rehabilitation is still being carried out. In others, the 0 & M organization exists largely on paper. The exact sta- tus is difficult to determine because rehabilitation is not being carried out by canal system or area. The result is often a conflict as to where rehabilitation ends and 0 & M begins. For example, in the Jatiluhur Proj- ect, many construction and 0 & M posts are held jointly by the same man. At this time, there are no 0 & M organizations which are capable of assum- ing full responsibility. Generally there has been too long a time lag between completion of rehabilitation work and follow-up by the maintenance forces. Where 0 & M staff have been appointed, the head office element is usually too large and the field staff are deficient in foremen and workers.

Budget

2. In order to safeguard the investment in rehabilitation and to ensure efficient water distribution, the projects must have sufficient funds to maintain the required operating efficiency and lack of funds is still a problem on most projects. At present, Rp 900 - 1,600/ha (US$2.50 - 4.00/ha) is being spent on 0 & M, although some increases have been made. While PROSIDA does furnish 0 & M funds (in part) during rehabilitation, they plan to phase out their funding within two years of completion of rehabilitation. The provincial contribution has generally been a smaller amount, normally salary and benefits for employees. GOI plans to subsidize the provinces with Rp 1,600/ha for 0 & M from April 1, 1974. This amount will be progressively reduced throughout the Second Five-Year Plan, as the provinces become more able to raise additional finances. The subsidy will cease in 1978 and the provincial authorities, who at present only contribute part of the salary and benefits component, will have to raise IPEDA and collect and allocate the necessary funds. Thus far, there has been no assurance from any of the provincial governments that their contribution will be in addition to the GOI allocation and, with the exception of South Sulawesi (Sadang sub-project), none of the provinces has taken legislative steps to ensure a revenue source for 0 & H funds. ANNEX 5 Page 2

3. The mission estimates that, when rehabilitation is completed, 0 & M costs should average between Rp 2,000 - 3,500/hal/ depending on local conditions. A typical budget for 0 & M might be broken down as follows:

Budget Item % of Total Budget

Wages 40 - 60 Materials 20 - 25 Operating Supplies 10 - 13 Equipment (82%) Vehicles (16%) Buildings (2%) Maintenance 10 - 12 Equipment (65%) Vehicles (17%) Buildings (8%) Depreciation 12 - 15 Equipment (70%) Vehicles (24%) Buildings (6%)

Equipment

4. A balance between the use of mechanical equipment and hand labor has to be reached. While the large under-employed rural labor force should be used as much as possible, mechanical equipment must be used in the large irrigation canals which are kept open for domestic purposes and in the large drains. There is a lack of communication between the reha- bilitation personnel and the provincial operating personnel, especially with regard to equipment transfer. The transfer of equipment should be carefully considered by both groups to avoid unsuitable equipment being assigned to the projects and also to allow time to prepare personnel for the use and care of heavy equipment. Rehabilitation personnel and the provincial 0 & M personnel should jointly determine for each sub-project the numbers and types of equipment and buildings to be transferred and the details of the shop equipment and tools required for its maintenance. Un- less the transfer includes operating and maintenance personnel, shops, tools and vehicles, at least two years will be needed to re-establish a well-functioning 0 & M organization.

Communication Svstems

5. Communication systems are being installed, mainly using telephones instead of radios, as originally planned, because the telephone system is understood and can be readily maintained by 0 & M personnel whereas radios

1/ In 1975 the 0 & M costs are estimated to be Rp 3,000 - 4,000/ha. ANNEX 5 Page 3 cannot. Twenty-nine radio units, single side band with a range of 1000 km, have been purchased, 20 of which are presently in the field. To give a proper test to the use of radio communication, it is recommended that the Brebes unit of the Pemali-Comal sub-project be set up for radio communi- cation using the nine unassigned sets.

Other Problems

6. Inspection roads in all the systems are still a long way from completion and those on the primary canals need upgrading. Every secondary canal should have at least a good motorcycle path. Although much progress has been made on the collection of hydrological data on actual flows in rivers, canals and drains, these activities require further upgrading.

Staff

7. The mission has made the following estimate of recommended staff- ing levels and salaries:

Individual Total Position Number Annual Annual Salaries Salaries -R Rp' 000

Supervisory and Administrative Personnel

District Level (100,000 ha) Deputy 0 & M 1 400 400 Chief of Operations 1 360 360 Chief of Maintenance 1 360 360 Chief of Administration 1 300 300 Chief of Hydrology 1 300 300 Clerk-typists 4 144 576 Draftsmen 2 180 360 Storekeepers 4 180 720 Drivers 5 80 400 Communication Operators 4 100 400 Calculators 3 180 540 Finance Clerks 4 180 720 5,436

Sub-district Level (30,000 ha) Chief of Irrigation 1 280 280 Watermaster 1 225 225 Clerk-typist 1 144 144 Calculator 1 180 180 Communication Operators 2 100 200 Messenger 1 80 80 1,109 ANNEX 5 Page 4

Operating Personnel

Large Weirs/Barrages Chief Operator 1 180 180 Gate Operators 1 per 3 gates 120 120 Mechanic 1 180 180 Electrician (dependent on 1 180 180 size of barrage) 660

Pumping Stations Chief Operator 1 180 180 Mechanic 1 180 180 Electrician 1 180 180 Pump Operators 3 120 360 Laborers 6 80 480 1,380

Distribution System (30,000 ha) Pengamats (1 per 7,500 ha) 4 180 720 Jurus (1 per 1,500 ha) 20 144 2,880 Gatekeepers (1 per 300 ha) 100 120 12,000 Hydrographer 1 200 200 Assistant Hydrographer 1 180 180 Chief, Water Operation 1 180 180 Calculator 1 180 180 16,340

Maintenance Personnel

Canals and drains (per 100 km) Laborers for canals - less than 1 m3 /s 40 80 3,200 - between 1 - 10 m3 /s 60 80 4,800 - greater than 10 m3 /s 100 80 8,000 Laborers for drains 30 80 2,400

Structures (One crew/100 structures - repairing 25 structures per year) Foreman 1 180 180 Mason 2 144 288 Carpenter 1 144 144 Mechanic 1 180 180 Blacksmith 1 144 144 Welder 1 144 144 Laborer 5 80 400 1,480 ANNEX 5 Page 5

Equipment Repair Shop (100,000 ha) Shop Supervisor 1 300 300 Electrician 2 180 360 Lathe Operator 3 180 540 Automotive Mechanic 3 180 540 Heavy Equipment Mechanic 2 180 360 Blacksmith 3 144 432 Storekeeper 2 180 360 Clerk 3 144 432 3,324

No provision has been made in the above estimate for on-farm development (for which 0 & M will be the responsibility of the farmers) or for exten- sion services. The quality of 0 & M staff varies considerably. PROSIDA have set up training schemes in Bandung and Surabuya for middle and lower level personnel. The general upgrading of staff and full re-establishment of 0 & M groups of high morale will enable many of the illegal turnouts to be closed and the illegal use of canal banks for planting to be stopped.

8. The following paragraphs give a brief evaluation of the status of 0 & M in each of the first three Bank group assisted projects. As the fourth rehabilitation project is only just getting underway it is too early to comment on its 0 & M performance.

First Irrigation Rehabilitation Project - Credit 127-IND

Cisedane Sub-project

9. Currently funds for 0 & M are furnished mainly by PROSIDA, with salaries and benefits provided partly by the provincial government of West Java. PROSIDA plans to phase out its contribution to 0 & M funds two years after rehabilitation is completed and to transfer full responsibility for 0 & M to the provincial government. The budget for FY73/74 was as follows:

Source Amount (R-p -'0-00) PROSIDA

Preparation and planning 2,000 Salaries and allowances 25,925 Materials 8,925 Tools and equipment 1,750 38,600

Provincial Government

Contribution at Rp 500/ha 20,332 Total: 58,932 ANNEX 5 Page 6

10. Based on 40,663 ha, this allows an average of Rp 1460/ha fir 0 & M. The FY74/5 PROSIDA program is being reduced to Rp 32 million in anticipation of the Rp 1600/ha which GOI is allocating through the p-ovin- cial government.

11. The communication system planned to commence in FY73/4 has not been started. The plan is to establish telephone communication fror proj- ect headquarters to the residence of every pengamat. The estimated -~ost is Rp 60 million. Bitumen 0 & M roads have not been included in the re- habilitation program. The mission recommends that upgrading of road; be included on at least primary canals.

12. No 0 & M equipment has been transferred to the province yet. The government proposes that an equipment repair shop be set up at C-.sedane. Consideration should be given, however, to modifying the existing ship at the Pasar Baru weir (project headquarters).

Rentang Sub-project

13. The existing 0 & M organization appears to be well organiz..d and is staffed with 670 people to operate and maintain the project prima-y and secondary system. The main concern is lack of 0 & M equipment and s iffi- cient funds.

14. The breakdown of the FY73/4 budget is as follows:

Source Amount (Rp '000)

PROSIDA

Salaries 34,640 Materials 9,000 Equipment 9,565 Project Planning 9,500 Miscellaneous 4,545 67,250

Provincial Government 26,300

Total: 93,550

Based on 91,000 ha, this would allow Rp 1,040/ha. As with all other proj- ects on Java, there are no 0 & M assessments. The trend in PROSIDA con- tributions to 0 & M is shown below: ANNEX 5 Page 7

FY Amount (Rp roO0)

70-71 20,000 71-71 38,700 72-73 62,000 73-74 67,250 74-75 70,000 75-76 116,000

15. There has been no transfer of 0 & M equipment to the province. Much of the mobile equipment and heavy equipment is being used for reha- bilitation before transfer to 0 & M. It would be appropriate to review closely the needs of the organization and the condition of the equipment before the transfer is made. The project has an excellent workshop, capa- ble of major overhaul of equipment, building gates and turning shafts.

16. The telephone communication system was expected to be completed by mid-1974, at a total cost of Rp 39.9 millions or an average cost of Rp 435,000/km.

17. Water users' organizations, when formed, should devise a more flexible approach to canal use than at present. The broken canal banks indicate that attempting to exclude water buffaloes from the canals is neither enforceable nor realistic. Suitable areas should be allocated for livestock use.

Glapan-Sedadi Sub-project

18. The 0 & M organization has been established and almost two-thirds of the positions have been filled. With 1,187 people from administrative staff down to the field level (1 employee/39 ha), it appears that the or- ganization may be overstaffed.

19. The trend in budgetary allocations is shown below:

FY Amount

70-71 6,268 71-72 23,500 72-73 36,900 73-74 42,000 74-75 69,000

The 1974-75 budget amounts to Rp 1500/ha. ANNEX 5 Page 8

Way Seputih Sub-project

20. No visit was made to this sub-project. However, the miss--on understands that the 0 & H supervisor is well qualified and capable of setting up a functional organization.

Second Irrigation Rehabilitation Project - Credit 195-IND

Jatiluhur

21. The ultimate organization for 0 & M, as conceived at appr.isal, was to consist of three irrigation divisions or districts, one each for North Tarum (80,000 ha), East Tarum - including Cipunegara System - (86,000 ha), and West Tarum (87,000 ha). In addition to the three irri- gation divisions, there would be a fourth division for maintenance -nd operation of Curug Barrage and pumping plants and for overall coordti nation, regulation and distribution of water supply to the irrigation divis: ons. There was to be a sub-project Director in charge of each unit who w4 uld be responsible for implementing the rehabilitation program as well as ror maintenance and operation of the existing irrigation works. Full 0 & M activities would commence upon complete rehabilitation of each systim.

22. Much decision-making on this project was suspended pending the return of the President-Director which finally took place in September. The Authority has been lax about setting up a separate organization for O&M, and the same crews working on rehabilitation re also carrying out the maintenance of the project. Rehabilitation h.4s been completed on a considerable portion of the project, and full O&M ac;1ivities should have already commended on these areas. In addition, it is important that an OM organization be set up and functioning indepeudently and efficiently before the Provincial government accepts responsibi- ity for O0M. The consultants are preparing an O&M manual, which should be completed by July 1974. The Authority appears to be waiting on the manual before setting up an organization, which is not entirely adz sable in view of the immediate need for an operating organization.

23. Funds for OM are included in the Jatiluhur Authority Prog,ram and were reported to be Rp 700 million in FY74-75. Based on 300.00(0 ha (the Authority is responsible for an additional 120,000 ha outside x,he project), this would allow an average of Rp 2,300/ha for O&M activiLies. As the provincial government will eventually assume responsibility -or the OEM, GOI plans to taper off their participation as follows: ANNEX 5 Page 9

Source of Funds

FY GOI Provincial Government

74-75 80 20 75-76 60 40 76-77 40 60 77-78 20 80

24. At the present time there are no 0 & M assessments made on the farmers and no immediate plans to develop such a program are proposed. The present plan is to transfer the equipment used in rehabilitation to 0 & M after construction is completed.

Third Irrigation Rehabilitation Project - Credit 220-IND

Cuijung Sub-project

25. The actual and proposed budgets for FY73/4 and FY74/5 respec- tively are shown below:

FY73/4 FY74/5 Source Amount Amount (Rp '000) (Rp '000)

PROSIDA

Salaries 15,554 12,300 Materials 3,956 1,000 Equipment 2,300 2,300 Miscellaneous 989 1,400 22,799 17,000

GOI Contribution - 38,800

Provincial Government

Contribution for salaries and benefits for employees 13,000 -

TOTAL 35,799 55,800

These allocations amount to Rp 1,470/ha and Rp 2,300/ha respectively. At least Rp 2,500/ha will be required for satisfactory 0 & M. ANNEX 5 Page 10

26. The 0 & M organization is staffed with 221 persons at preient. The full complement will be about 750. No equipment has been hande over to the 0 & M organization. The roads on the primary system are onlv fair. They do not meet the needs for heavy equipment movement. The interiial project roads are in poor condition.

Sadang Sub-project

27. An 0 & M organization is functioning on approximately 14,(.00 ha, the area on which rehabilitation has been completed. Pengamats and jurus have been selected for some of the areas scheduled to be completed :'ater. The 0 & M budget for FY74/5 has been set at Rp 80 million for the e] tire area. The distribution of funds is estimated as follows:

(Rp '000) Finished area (13,903 ha at Rp 2,000/ha) 27,806 Pinrang area (37,172 ha at Rp 850/ha) 31,796 Bentang weir 11,000 Staff and training 10.000 80,602 (Rp 1,1'30/ha)

28. The mission estimated in March 1974 that Rp 3,000/ha woult be required for proper O&M when the entire project area has been rehab-litated. This is the only province which has taken steps to raise funds for (&M by crop revenues. The Governor of South Sulawesi has passed a water tiK law amounting to 1% of the production of each crop, which would be used for O&M. On the average paddy yield of 3 ton/ha selling for Rp 40/kg,1I this would amount to Rp 1,200/ha per crop.

29. Previous 0 & M budgets are shown below:

1970-71 1971-72 1972-73 1973->4 Tertiary program II & M _ _ ------Rp '000- ~-- Surveys - 1,500 1,500 - 400 Materials 400 2,000 2,000 3,100 1,200 Tools 500 1,400 1,000 1,900 650 Transport - 800 - 460 - Salaries 1,600 8,300 9,500 4,740 22,720 Other - - 1.000 7,500

Total 2.500 14.000 15.000 17.700 24 970

Total number of personnel so 220 295 800

1/ March 1974 price, revised up Rp 58/kg in October 1974. ANNEX 5 Page 11

Pemali-Comal

30. The budget provided by PROSIDA in past years is shown below:

FY Amount (Rp '000)

70-71 20,000 71-72 34,500 72-73 54,000 73-74 65,000 74-75 52,825

31. The breakdown of the budget for FY73/4 and FY74/5 is as follows:

PROSIDA FY73-74 FY74-75

Salaries 40,700 32,759 Planning, survey, design 2,500 6,600 0 & M materials 15,200 8,451 Misc. equipment 4,025 3,390 Misc. emergency fund 2,575 1,625 65,000 52,825

Provincial Government

Contribution for salaries and benefits for employees 51,505 ..

TOTAL 116,505 (Rp 936/ha)

32. Because the 0 & M personnel do not understand radios and cannot readily maintain or repair them, the project uses a telephone communica- tion system. It is recommended, however, that the nine available radio sets (para 5) be set up for trial in the Brebes unit of the project. Sta- tionary sets would be assigned to headquarters and each of the five pengamats, with the two supervisors each using mobile sets. One set would be left over for a spare. This plan should allow an adequate evaluation of radio communication.

33. The general attitude of both consultants and project officials is that most of the maintenance work should be carried out by manual labor, of which there is more than adequate supply. It will be necessary, however, to carry out cleaning of the primary canals by mechanical means rather than by hand because it would be impractical to keep the canals dry for an extended period of time. Secondary canals could be hand cleaned according to an agreed schedule. ANNEX 5 Page 12

34. While the organization is largely complete on paper, only t-e operational people are available at the moment and very few maintenanc e people are working on the project. The organization does not appear o be ready to assume responsibility for 0 & M.

Recomndations

35. Generally the highest priority should be given to re-establ shing efficient 0 & H organizations that are fully staffed and trained to einsure that rehabilitation projects do not retrogress to their previous dila4i- dated condition. Adequate budgetary provision, which according to mi sion estimates will vary from Rp 2,000 - 3,500/ha in 1974 prices,1/ depend ng on local conditions, must be made. This, in turn, implies the raising o additional provincial tax revenue, either through IPEDA or by special levies. Estimated farm incomes after rehabilitation (Annex 10) show hat such taxes would impose little hardship on the project beneficiaries.

Specific recommendations are:

(i) Senior provincial 0 & M staff should be given in-service training of three to six months actually working on a project in an adjacent country, such as Malaysia;

(ii) Middle-level training should be increased and training overseas from three to six months should be included in appropriate cases;

(iii) The 0 & M organizations should be fully staffed as soon as possible and the emphasis should be shifted from the head offices to the pengamats and jurus at the working level in the field;

(iv) Salaries and conditions should be improved, so as to draw better quality people to 0 & M and raise the morale of these organizations. Their importance in agricultural production and overall rural life should be emphasized;

(v) A fully mobile radio communications system should be established in the Brebes section of Pemali-Comal Sub- project to test this equipment under Indonesian conditions;

(vi) An in-service training unit for all levels of personnel should be established at Brebes or Cisedane, fully sup- ported with funds and equipment, so that the staff may learn how a system should be correctly operated;

1/ Rp 3,000 - 4,000/ha in 1975 prices. ANNEX 5 Page 13

(vii) Decisions should be made on which canals and drains will be maintained by equipment and which by manual labor. Construction equipment should be handed over for 0 & M together with the trained operators and workshops;

(viii) The collection of 0 & M charges through IPEDA should be formalized as soon as possible so that farmers are not presented with a sudden unexpected increase;

(ix) The 0 & M funds collected as part of IPEDA should be allocated by Provincial governments to 0 & M and not absorbed for other purposes;

(x) For the Jatiluhur Project, the establishment of a viable 0 & M organization is most urgent. It is expected that an 0 & M advisor will be available for this large project in 1975 under Credit 514-IND;

(xi) 0 & M manuals, which are in varying stages of preparation, should be completed as soon as pos- sible for all projects and put into operation;

(xii) The regular collection of hydrological data should be organized as one part of the 0 & M function; and

(xiii) Upgrading of the inspection roads to the correct standard should be given more priority. ANNEX 6 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Agriculture

A. Resource Base

Climate

1. The Indonesian climate is monsoonal and there are marked differ- ences in rainfall and temperature regimes due to topography, the size and location of the islands, and the dominant wind direction in a particular locality. There is a progressive reduction in rainfall from the northwest to the southern and eastern parts of the archipelago. Annual rainfall in the lowland areas where most of the paddy is produced varies from 4,800 mm in West Sumatra down to 1,500 mm in Timor. In the lowlands of Java, where the bulk of the paddy is grown, total annual rainfall varies from about 1,500 mm (Surabaya) up to about 2,000 mm (Semarang). Over 60% of the annual rainfall occurs in the December-April wet season. While the total rainfall is adequate to grow a wet season paddy crop, its distribution is variable. The onset of rains is sometimes delayed and much of the rain falls as high intensity storms. Consequently, substantial and sustained increases in yield can only be achieved by providing supplementary irrigation. Rainfall during the May-October dry season is totally inadequate to support a paddy crop without irrigation. Rainfall is shown in Map 10034R.

2. Temperature in the lowlands fluctuates between a mean minimum of about 24C and a mean maximum of about 31C. Mean relative humidity varies between 70 and 98%. Day length varies less than one hour over the year and limited radiation data indicate a mean daily value of from 300 to 400 cal/cm2 . With the exception of rainfall, key climatic parameters are fairly constant throughout the year and are not constraints to paddy growth in the lowlands. However, high rainfall and humidity result in increased insect and disease attack in the wet season. Low temperatures in the restricted areas of paddy land at high altitude preclude the use of improved lowland varieties.

Soils

3. In general, soils are not a constraint in the major paddy growing areas. Lowland areas in Java range from coastal fringe swamp soils which are slightly saline through a broad band of alluvial soils, up to fertile volcanic soils at higher elevations. The alluvial and volcanic soils are quite suitable for paddy, although at higher elevations the volcanic soils are rather permeable, and where water is a limiting factor, would be better ANNEX 6 Page 2

utilized for other crops, such as soyabean, peanut and cassava. The producti- vity of the swamp soils could be substantially improved with better drainage and water control. Soils in Indonesia are shown in Map 10035.

4. Java has small areas of paddy soils where excessive reduction condi- tions lead to physiological disorders in the paddy plant. There are also quite extensive areas of acid-sulphate swamp soils in Sumatra and Kalimantan, where some development for paddy production has taken place which is likely to lead to serious problems. Drainage without adequate water table control could result in excessively acid conditions and uneconomic yields.

5. Most Indonesian soils appear to have an adequate supply of potash but all have a relatively low total nitrogen content and substantial yield responses are obtained with nitrogenous fertilizer. The Soils Institute has made a reconnaisance survey of major soil types in Java and has estab- lished that 40-60% of the paddy lands show a response to phosphate application.

Production

6. Area, yield and production estimates for 1973, based on Central Bureau of Statistics and Ministry of Agriculture data, are presented in Table 1. The statistics are of doubtful accuracy, due to the methods of collection, the various conversion factors used to convert wet stalk paddy to dry stalk paddy and dry stalk paddy to unhusked grain (padi gabah), and the moisture content and stalk length at the time of harvest on the sampling areas. The quoted figures for yields and production are quite possibly higher than those actually realized. Paddy production in 1973 amounted to about 20.7 million tons paddy. Using a milling factor of 63%, this is equivalent to 13 million tons of milled rice. Unless otherwise stated, paddy yields and production data in this report refer to unhusked grain (padi gabah). About 58% of the harvested area and 56% of the present production occur in Java and Madura.

7. Categories of Paddy Land. There are several categories of paddy land that are sometimes confused and a clear definition of terms is desirable. The term "sawah" or wet paddy land is used to describe all paddy lands, irri- gated or rainfed, which have low banks or bunds around the field to retain water. About 56% of the paddy land receives supplementary wet-season irrigation, mostly based on run of the river flow. In a few favored locations, double cropping of paddy is possible. Irrigated paddy land is divided into three broad categories: technical, semi-technical and village irrigation. Technical irrigation refers to fully developed government schemes with primary, secondary and tertiary canals and a government operation and management system. Semi-technical irrigation is less well developed with fewer structures and less maintenance. Village schemes are simple systems, largely constructed and operated by the village community, with very few structures. Swamp paddy refers to paddy grown on poorly drained coastal swamp land which is subject to poor drainage and regular flooding. Upland ANNEX 6 Page 3 paddy is grown on a "shifting cultivation" basis or a permanent basis on elevated land. It is seeded and grown without bunds to retain water.

8. The various types of paddy area and average cropping intensities are summarized below:

Area Cropping Harvested Class of Paddy Land (million ha) intensity area (million ha)

Irrigated

Technical 1.5 ...... Semi-technical 1.2 ...... Village 1.3 ......

Sub-total 4.0 1.3 5.2

Rainfed paddy 1.4 1.0 1.4 Swamp paddy 0.4 1.0 0.4 Upland paddy 1.3 /1 1.0 1.3

Sub-total 3.1 1.0 3.1

Grand total 7.1 1.2 8.3

/1 Java 300,000 ha; Outer Islands 1 million ha.

B. Cultural and Technical Aspects

Paddy varieties

9. The bulk of the native Indonesian varieties are medium grain length Indica types. The exception is a group of awned paddy varieties (Bulu varie- ties), intermediate in characteristics between the Indicas and Japonicas. A breeding program was carried out by CRIA to improve the native varieties. This resulted in the release of the "Syntha," Dewi Ratjna" and "Bengawan" varieties which are still quite popular in some districts. These are photo- sensitive 140 to 160 day varieties which have better quality, disease and insect resistance than the traditional lines. However, they do not have a yield advantage since they are tall and prone to lodging with heavy applica- tions of nitrogen. Average paddy yields of 2.5 to 3 ton/ha are obtained with 40 kg N/ha.

10. Two IRRI varieties, IR5 (Peta x Tangkai Rotan) and IR8 (Peta x Taichung Native 1), have been introduced in an attempt to raise yields. These were released as PB5 and PB8 (Peta Baru or New Peta - Peta being a ANNEX 6 Page 4 native Indonesian Indica variety). Although nitrogen responsive and capable of producing average farm yields of 4-5 ton/ha, they were not widely accepted by the Javanese paddy farmers. They had poor cooking quality and flavor and their short straw and upright leaves posed problems in harvesting with the small knife used to cut off the paddy heads. A subsequent introduc- tion C4 -63 (known locally as C4 ), bred at the University of the Philippines, was accepted and is now,grown quite extensively. C4 -63 is a short strawed, non-photosentitive, nitrogen responsive variety capable of producing average farm yields of 4-5 ton/ha with 80-90 kg N/ha. Its acceptance was related to its yield potential, short duration and acceptable cooking quality and flavor. It can be planted year round and matures in 125 days. Although susceptible to bacterial leaf blight, it has good resistance to tungro or the yellow orange virus transmitted by the green leaf hopper (Nephotettix sp.). Although this disease is not serious on Java, it has caused extensive losses in yield on Sulawesi and can be expected to spread to the other islands.

11. Since IR5 had good plant type and yield potential, it was crossed with the local improved variety "Syntha" to improve quality. As a result of this program, CRIA was able to release two new varieties, Pelita I/1 and Pelita I/2. These varieties have the plant type and yield potential of IR5 and the cooking quality of "Syntha" and reasonable resistance to bacterial leaf blight. They mature in 140-145 days and are capable of producing average farm yields of 4-5 ton/ha with an application of 80-90 kg N/ha. These varieties have proved popular with the farmers but need stronger resis- tance bred into them for blast, leaf spot, bacterial diseases and virus.

12. The most recent introduction is the IRRI variety IR20, which is currently being multiplied at the Sukamandi Seed Center in West Java. This has similar yield potential to C4-63 and the Pelitas and matures in 120 to 125 days. However, it has poorer cooking quality and is subject to shattering. Further it is susceptible to an unidentified condition known as "Brown Panicle" which results in panicles with no grain. Nevertheless, it has a broad spectrum of resistance to insect and disease attack and has been introduced as an insurance against disease and pest epidemics.

13. No marked progress has been made in developing improved varieties for high altitude paddy areas and upland paddy areas on the Outer Islands. Most growers are using local varieties of 110-160 day duration with little cash input, and average yields are of the order of 1.0 to 1.2 ton/ha. However, yields of up to 1.5 tons have been obtained using C4-63 as an upland variety.

14. In summary, Indonesia has a reasonable varietal base in Pelita I and II and C4-63. Although these varieties leave something to be desired in terms of disease and insect resistance, they are capable of pushing average yields up to 4-5 ton/ha in irrigated areas with good management and adequate fertilizer. Current priorities in the paddy breeding program at Bogor are to breed into the Pelitas improved resistance to tungro, grassy ANNEX 6 Page 5 stunt, brown plant hopper, blast and bacterial blight. Considerable progress should be possible within two years. In the meantime, IR20 and IR26 are on hand should unforeseen epidemics occur. It is hoped to improve the resist- ance of C4-63 to bacterial leaf blight and blast fairly rapidly and this variety could then be introduced to the more favored upland paddy areas, with prospects of adding at least 0.5 ton/ha to current yields. There are no immediate prospects of producing improved "cold resistant" varieties for high altitude rice areas.

15. Longer term prospects are for a new generation of high yielding, early to medium maturing varieties with good resistance to the full range of more common insects and diseases, and with marked improvements in gall- midge (Pachydiplosis oryzae) resistance. Gallmidge resistance and the deve- lopment of early maturing varieties should receive high priority. Improved early maturing varieties are needed for upland paddy areas. Early maturing varieties with a range of straw lengths could play an important role in increasing cropping intensity in the run of the river irrigation systems.

16. The paddy breeding program already has the assistance of an IRRI Breeder and Agronomist, USAID and the Ford Foundation, with technical assis- tance from IRRI, is ready to support GOI with the establishment of a National Rice Research Program. If this can be implemented, paddy breeding and research will be adequately covered.

Cropping Patterns

17. The amount and distribution of rainfall and the availability of irrigation water largely determines cropping patterns. In upland paddy areas, the crop is seeded with the first good rain in the October-December period and harvested in the period February-March using local varieties of 110 to 160 days duration. Choice of variety and level of inputs are closely linked with the duration and reliability of rainfall. Except in favored areas, very little fertilizer or agro-chemicals are used.

18. The cropping pattern in irrigated areas varies quite widely from one area to another but is basically related to water supply. The following is a generalized summary of practices. In the larger, better organized irrigation systems, the area is subdivided into irrigation divisions, and a method of water rotation known as the "Golongan" system is used. In the wet season, the system operator attempts to deliver water in early November to those low-lying areas where farmers need to get the crop established before there is risk of fooding. Other sub-divisions receive water pro- gressively through to early January but the order of delivery may be rotated from one year to the next. In the dry season, when water is limited, certain divisions receive dry season supply one year and the other divisions the next year. In some flood-prone areas, farmers do not plant paddy until the flood waters recede. Planting of the wet season crop is thus staggered from early November through to late January. These practices, coupled with a mix of varieties that range in maturity from 125 to 160 days, lead to a ANNEX 6 Page 6

marked variation in harvest date and the time that a second crop is planted. In well-watered areas, paddy may be seen at various stages of development in almost every month of the year. This situation favors the build-up and carry- over of rats, pests and diseases. It also poses problems in arranging water delivery schedules to obtain the best use of limited water supplies.

19. Since most schemes are dependent upon run of the river water supply, only 25-30% of the irrigated area is double cropped with paddy. Rehabilita- tion and improved system operation will increase cropping intensity in most projects, but where there is no water storage, the amunt of dry season paddy that can be grown is limited. There are substantial areas where the first paddy crop is followed by an upland crop such as soybean, using residual soil moisture plus limited irrigation. There are undoubtedly opportunities to expand this activity on the better drained soils. However, available areas are not well defined, varieties and technology for secondary crops leave a lot to be desired and there is no reliable marketing system.

Cultivation and Planting Techniques

20. The bulk of the irrigated and rainfed sawah is transplanted. Cultivation and seedbed preparation for the wet season crop commence with the first rains or the delivery of the first irrigation water in late October-November. There is no mechanization and land is cultivated by buffalo-drawn plow or by hand. Great care is taken with land preparation and transplanting for the wet season crop. Land is often cultivated twice, flooded and harrowed two or three times to level and puddle the soil and kill weeds. From 25 to 40 kg of seed per hectare are used. Fertilizer is applied to the seedbed and insect control is practiced, when agrochemicals are available. Twenty to forty day old seedlings are carefully trans- planted in parallel rows to facilitate weeding.

21. Much less care is taken with the second crop, due to time restric- tions. Since the volume and duration of dry season water deliveries are not assured, there is a scramble to get the wet season crop off and the second crop in. Seedbeds are established prior to harvest, the first crop is har- vested, the land is roughly prepared and the seedlings are transplanted within two to three weeks. Under the best conditions, land cultivation con- sists of one rough cultivation and incorporation of straw with the mud. As a consequence of the rushed shoddy work and increased problems of water sup- ply, dry season yields are usually lower.

22. In rainfed paddy land or where there is a risk of early flooding, a direct seeding/planting technique is being introduced, known locally as "gogorancah". After clearing the land of weeds, seed mixed with a little fertilizer and pesticide to give protection against seedling fly (Atherigona sp), is planted in holes with the first rains. About 15 days after seeding, the ANNEX 6 Page 7 crop is weeded and fertilizer is applied at the side of each group of seed- lings. Additional fertilizer is broadcast about 30 days later and at pri- mordia initiation.

23. The gogorancah system has several advantages. Less water is required and there is a lower risk of losing seedlings under dry conditions than with the transplanting technique. The seedlings can survive for up to 40 days on sporadic rainfall without submergence. This method facilitates early planting and reduces the risk of crop inundation in flood-prone areas and increases the possibilities for a second crop. It also ensures that the crop is well advanced before the gallmidge attack in late December- January. It has also been found that there is less stem borer attack. In the Indramayu district of West Java, wet season yields have increased from 1.5 ton to over 3 tons per hectare where farmers have changed from transplant- ing to gogorancah in flood-prone areas. The main disadvantages of gogorancah are that the planting technique is very labor intensive and weed control is a problem, if there is insufficient rain to submerge the paddy and suppress weed seed germination during the first few weeks. Pre-emergence granular herbicides, which would assist the latter problem, are considered too expen- sive.

Fertilizer Use

24. Nitrogen and phosphorus are the key nutrient requirements for rice in Indonesia. While potash may be required in some upland areas, there is no evidence of paddy response to potash in lowland areas. Nitrogen is large- ly supplied as Urea (46% N) and phosphorus as Triple Superphosphate (TSP) (46% P205). Supplies to paddy farmers through the BIMAS program currently carry over a 50% subsidy and actual cost to the farmer is Rp 40 (US$0.10)/kg for each fertilizer. The cost of elemental N and P2 05 is about Rp 88 to Rp 93 (US$0.22)/kg. The April 1974 farm-gate price of paddy was about Rp 401/ (US$0.10)/kg and potential response to nitrogen under farm conditions is of the order of 10:1, given reasonable management conditions. This represents a gross return of Rp 4.4 for each Rp 1 invested in urea.

25. As a result of the favorable paddy price: nitrogen price ratio and the BIMAS program, a high percentage of farmers use fertilizer. Since the BIMAS program is the main source of supply and the program now covers 40% of the irrigated cropped area, this is the best estimate of the extent of fertilizer use. The recommendations for lowland rice under the BIMAS pro- gram in 1974 are as follows:

1/ Since October 1974 fertilizer prices were increased to Rp 60/kg, and the Farmgate price for paddy was raised to about Rp 58/kg. ANNEX 6 Page 8

Alternative I Alternative II HYV Local HYV Local

Urea (kg/ha) 200 100 180 66

TSP 1/ (kg/ha) 50 35 - -

DAP 2/ (kg/ha) - - 50 35

The two packages recommended for upland paddy are 150 kg Urea and 200 kg Compound (15:15:15) per hectare or 200 kg Urea and 65 kg TSP. Since farmers have a choice between packages and some flexibility in the amount of nitro- gen and phosphate they take, application rates vary. The range for Urea is from 75 to 200 kg/ha, and for TSP 0 to 50 kg/ha.

26. Farmers are advised to apply phosphate at transplanting and to apply nitrogen in three applications, 50% at transplanting, 20% three weeks later and 30% seven - eight weeks after transplanting or at primordia initia- tion. This allegedly reduces nitrogen loss and ensures that adequate nitro- gen is available for grain formation. In fact, it could lead to higher losses. Most research results under similar conditions in the region indicate that splitting nitrogen between transplanting and the primordia initiation stage usually gives the best results and that incorporation of nitrogen in the soil reduces losses. Two broadcast applications of Urea are probably unnecessary and may result in higher losses if Urea is broadcast into warm water with a pH close to neutral or slightly alkaline.

27. Under present circumstances, fertilizer is not being used effi- ciently. Due to supply problems fertilizer frequently arrives too late to be applied at transplanting. The areas requiring phosphate are only broadly defined and no data are available on the maintenance application rates for phosphate. Water supply and control which is critical to achieving maximum yield response and minimizing nitrogen losses is inadequate in many tertiary units. Once farmers have accepted the use of fertilizer as part of their cultural practice, greater attention must be given to factors affecting effi- ciency of fertilizer use so that subsidies can gradually be withdrawn.

Weed Control

28. Weed control is not a serious problem in transplanted paddy areas if reasonable care is taken with land preparation and there is reasonable water control. Most farmers weed their crops twice by hand or with rotary weeders and the majority of crops are quite clean. In some areas it is com- mon practice to drain the paddy prior to weeding. Except in areas where

1/ Triple Superphosphate (0:46:0).

2/ Diammonium Phosphate (18:46:0). ANNEX 6 Page 9

there are soil problems and aeration will increase yields, this practice wastes water and could increase nitrogen loss. The benefits or disadvantages of this practice need closer examination. Weed control can be a problem in the upland paddy areas, since there is no standing water to suppress weed seed germination. While useful chemicals are available it is doubtful if their use would be economic until yield potentials have been raised through the development of improved varieties.,

Pests and Diseases

29. Most of the more common paddy pests and diseases are present in Indonesia and have undoubtedly increased in incidence in those areas where double cropping and fertilizer application have been introduced. The most serious insect pests are the white stem borer (Tryporyza innotata), yellow stemborer (Tryporyza incertulas), green leaf hopper (Nephotettix sp.), brown plant hopper (Nilaparvata lugens) and gallmidge (Pachydiplosis oryzae). Three species of paddy bugs (Leptocorisa sp, Scotinophara coarctata and Nezara viri- dula) and army worm (Spodoptera sp.) also occasionally cause serious damage in localized lowland areas. The paddy seedling fly (Atherigona sp.) is a serious pest on upland paddy. The provinces of East and West Java are the most seriously affected areas, largely because of widespread double cropping. In one field experiment conducted by CRIA, almost complete control of leaf hoppers, gallmidge and stem borer raised yield from 3.5 ton to 6.0 ton/ha. This indicates the magnitude of yield losses in a bad year if effective control measures are not applied.

30. Economic chemical controls are available for most major insect pests, and insecticides are supplied on credit through the BIMAS program. Regular spraying is carried out by individual farmers using knapsack sprayers or power sprayers, or by "Brigades" - groups of village youths organized into a spraying team. In serious outbreaks, the MOA may use aerial spraying to get quick control. Recently, supplies of chemicals nly a fraction of requirements in many districts. Knapsack and power sprayers are in short supply and the agricultural service is not effective in advising farmers when to spray. Production losses to insect attack are currently quite significant.

31. The most important diseases of paddy are blast (Pyricularia oryzae), bacterial leaf blight (Xanthomonas oryzae) and Brown Spot (Relminthosporium oryzae). The most effective control measure is the breeding of resistant varieties which is a strong component of the CRIA breeding program. Seed dressing, which can reduce the incidence of blast, is not currently practiced in Indonesia. Chemical sprays are available but they are usually expensive and not fully effective unless their use is closely supervised. Fortunately, the above diseases do not appear to cause serious crop loss in most years. Two virus diseases are a constant threat to Java: "Tungro" or yellow orange virus transmitted by the green leaf hopper and "Grassy Stunt" transmitted by the brown plant hopper. "Tungro" has already caused serious crop losses in ANNEX 6 Page 10

Sulawesi and "Grassy Stunt" occurs sporadically in isolated areas in Java. Once again, varietal resistance is the basis of control and it is hoped that the CRIA breeding program can keep ahead of the disease.

32. Rats cause serious field damage to paddy crops in many districts and occasionally reach plague proportions. Zinc phosphide is supplied on credit through the BIMAS program at the rate of 100 g/ha. The program has had only a limited effect, due to the lack of group action at the district level, and currently supplies of zinc phosphide are inadequate to meet demands. Losses to rats of up to 30% of the crop are reported in some districts and urgent action is required to introduce effective control measures. Rat exter- mination often depends on the district officer organizing the people for hunts.

Water Supply and Control

33. Quite extensive areas of the lower-lying portions of land near the coast in some of the existing irrigation areas are subject to regular flooding and have no effective drainage systems. Risks of crop damage are high in some areas and there is little incentive or scope for farmers to use high-yielding varieties or cash inputs. A combined program to rehabilitate catchment areas, dredge river outlets, provide flood protection and install drainage systems could raise productivity considerably over the longer term.

34. In irrigation areas on higher land, there has been considerable improvement in water supply and control resulting from the rehabilitation of headworks, primary and secondary canals, and the installation or replace- ment of control structures. The full benefits of these works have yet to be realized. There has been only limited activity by the farmers and local government agencies to rehabilitate the tertiary irrigation systems. Water distribution within a tertiary unit is too frequently poor and inequitable, and furthermore, some of the tertiary units are too large. With the present distribution system, large areas cannot be commanded in the dry season, and villages or farmers at the distant end of the tertiary canal cannot get suf- ficient water. In extreme cases, farmers close to the water source with ade- quate water supply and control are achieving paddy yields in excess of 6 ton/ ha. Farmers using similar varieties and inputs located at the extremity of the system can only obtain 1.5 to 2.5 ton/ha. In most instances, all that is required is a program to design and install a workable minor distribution system which provides a separate outlet for every 15 to 30 ha. In most cases there is no need for land levelling and the above program, coupled with a farmers' organization to construct, operate and maintain the system, could give a 20% to 30% increase in paddy production.

35. At present, apart from the BIMAS committees and District Irrigation Advisory Committees, there is lack of coordination between the irrigation service, the agricultural service and the farmers. Further effort is needed at all levels of local government to develop sound equitable systems of allocating limited water supplies and methods of tightening up operation and maintenance procedures. To ensure fair play and good understanding, ANNEX 6 Page 11

farmers should be represented on all committees right up to the district or provincial level (Annex 3).

Harvesting and Handling the Crop

36. These topics are discussed in Annex 7.

C. Recommendations

Statistics

37. A constraint to planning for improvement in existing paddy growing areas is the lack of adequate statistical data. There is an urgent need to take action to improve the collection and collation of statistics relevant to paddy production and agricultural development programs.

National Research

38. The level of paddy breeding and research is reasonable when the circumstances under which the work has been carried out are recognized. But there is much scope for improvement and the implementation of a National Rice Research Program is a matter of urgency. However, before the Rice Pro- gram or any other program can be fully effective in producing more paddy in the fields, or more money in the farmer's pocket, an effective research/ex- tension structure and organization must be developed. The rice research program should lay emphasis on the following aspects of its work:

(a) Breeding disease and insect resistance into existing varieties.

(b) Developing an improved variety for upland paddy areas.

(c) Developing a new generation of early to medium maturing high yielding varieties with a reasonable range of tolerance to water depth, to allow fuller exploitation of double cropping opportunities in the irrigated areas.

(d) Paddy seeds released for multiplication for farmers' use should be fixed lines and true to type.

(e) A clearer definition of the conditions under which responses to phosphate are obtained, and an assessment of requirements for maintenance dressings of phosphate.

(f) A more detailed examination of factors affecting the response to nitrogen and the efficiency of nitrogen use in the farmers' fields. ANNEX 6 Page 12

(g) An examination of the possibilities for row seeding or broad- casting, and improved methods of fertilizer application and weed control in areas being converted to the gogorancah tech- nique.

(h) Implementation of a district insect incidence prediction system.

(i) Applied agro-economic research to determine potential benefits from variety, insect control, weed control, and rat control, in upland and lowland areas to provide a better basis for credit packages.

39. Extension. Strengthening of extension service along lines proposed above is essential if full benefits are to be obtained from BIMAS. BIMAS should be expanded, particularly into upland crops. However, emphasis should be placed on increasing the efficiency of production.

40. Inputs. An improved supply of inputs will be critical to the future success of the BIMAS program. The shortage of agro-chemicals is a serious constraint at present and must be remedied as a matter of urgency. The BUWD's will require considerable strengthening before they can become efficient suppliers. In the meantime, greater reliance will be needed on other suppliers, such as P.N. Pertani, Pusri, and private dealers, who should be encouraged to open more branches at the village level. Packaging of fer- tilizer in sealed, plastic-lined bags of suitable size to prevent physical deterioration should be considered and would save time in rationing out sup- plies. There is also a need to improve storage and handling facilities at village kiosks and of course rural roads. The recommended rates of urea in the standard BIMAS package for upland rice are considered too high. A range of 80-100 kg/ha should be adequate in a relatively high-risk situation. Ex- pensive NPK compounds should not be used until there is good evidence of a response to P and K. The cash amount for seed should be increased to include an appropriate amount of chemical to be used at sowing to protect seedlings from rice stem fly or seed should be centrally treated before sale. Seed plus chemicals should be an integral part of the package. The basic package should consist of fertilizer, seed, cost of living allowance and sufficient insecticide to treat seed bed only.

Direct Seeding

41. There is clearly scope for further expansion of the gogorancah or direct seeding method in rainfed and flood-prone areas, and the system should be fully exploited. One constraint to early planting on the heavy alluvial soils is that it is difficult, if not impossible, to cultivate the soil before the first good rains. In these areas, the value of custom oper- ated 60-75 hp tractors for plowing should be investigated. It would be pos- sible to start plowing immediately after the dry-season crop, thus reducing populations of stemborers which pupate in the rice stubble. This technique would also reduce the population of host plants on which insects and disease carry through the dry season and would make a less favorable habitat for the ANNEX 6 Page 13

field rat. It might also facilitate dry broadcast seeding or drill seeded rice. Extension of the early planted paddy area would reduce losses to gall- midge and possibly stemborer, and might open up possibilities of a second crop in some areas. The 4-wheeled tractors equipped with trailers would be a valuable means of transport on the poorly kept village roads during the wet season.

Rat and Insect Control

42. To be effective, general rat and insect control requires community effort. Control by a few BIMAS participants is not enough. In areas where rats and insects consistently reduce production, the following are proposed:

(i) Rat Control - should be organized by local government on a regular basis with technical assistance from the Agricultural Service. It should be compulsory for all landholders and householders to participate. The programs would be organized by the Village Unit Farmers Committee, with advice from the Agricultural Service and credit would be supplied through BRI and landholders charged according to their farm size. The Committee would organize "rat brigades", that is, groups of rural youth or farmers to be trained in basic principles and to supervise control in each quaternary. Irrigation O&M should eliminate the rats in supply channel banks. Performance in each quaternary could be judged by the number of tails handed in to the village chief, with prizes for the brigades getting best count per hectare. In addition, modern chemical techniques for rat control should be introduced by the Extension service.

(ii) Insect Control - There Is an urgent need for Agricultural Service to set up light traps and a monitoring system to determine where and when to spray. When insects in the traps reach a certain level, all farmers in the affected area should be compelled to sprayCredit should be available via BRI for this purpose. Alternatively, spraying could be car- ried out by well equipped brigades, with sufficient sprayers and protective clothing, in each village unit. Stocks of suitable insecticide should be kept at the provincial or district level. Stocks should be rotated to ensure use within reasonable time limit and regular checks should be made on the effectiveness of the sprays.

Mechanization

43. In view of the difficulties associated with the changeover from the wet season to dry season paddy crop and the introduction of short-strawed rice varieties, the introduction of the following measures should be inves- tigated: The use of sickles and small pedal or motorized threshers to speed ANNEX 6 Page 14 up harvest and to reduce grain losses between the field and the homestead; the use of 8 to 10 hp puddling machines, which are designed to work in flooded fields and can effectively incorporate crop residues and prepare land for planting in two to three passes; and the introduction of communal concrete drying floors and storage at the tertiary or quaternary unit level, to speed up and improve the effectiveness of drying procedures.

Tertiary and Quaternary Development

44. Steps should be taken as soon as possible to implement a program to develop tertiary and quaternary distribution systems. The program should include the strengthening of provincial and district farmers' organizations based on the quaternary units, and the development of strong irrigation committees with farmer representation at all levels of local government. The committees should place emphasis on developing sound and equitable methods of water allocation, improved operation and maintenance procedures and a rationalization of planting times and paddy varieties in each irrigation division. The latter would render operation and water use more efficient and play an important role in reducing the build up and carry-over of pests and diseases. IND0NESIA

IRRIGATION PROGRAM SURVIEY

Estimates of Paddy Production 1973

Irrigated and Rainfed Paddy-1 Upland Paddy Total Harvested Paddy Harvested Paddy Harvested Area Yield Production area Yield Production area Production '000 ha ton/ha 2/ '000 ton '000 ha ton/ha 2/ '000 ton '000 ha '000 ton

West Java 1,667 2.65 4,418 156 1.37 214 1,823 4,632 Jakarta District 12 2.00 24 -- 1.14 -- 12 24 Central Java 1,149 2.72 3,125 49 1.28 63 1,198 3,188 Jogjakarta District 93 2.90 271 39 1.06 42 132 313 East Jave 7/ 1,209 2.80 3,386 60 1.54 91 1,269 3.477

Jave and Madura * 4,130 2.72 11,224 304 1.35 410 4,434 11,634 Outer Islands ** 2,940 2.67 7,851 1,013 1.16 1,175 3,953 9,026

Indonesia 7,070 2.69 19,075 1,317 1.20 1,585 8,387 20,660

1/ All paddyland or "sawah" where water is held on the field with bunds.

2/ Yield expressed as metric tons of paddy. A factor of 0.8 was used to convert dry stalk paddy to paddy.

3/ East Jave includes Madura.

Sources: *Central Bareau of Statistics Date. **Directorate of Agriculture Data. CD ANNEX 7 Page 1

INDONESIA

IRRIGATICN PROGRAM SURVEY

Harvesting, Processing and Marketing of Paddy and Rice

1. Several large, detailed studies have recently been made of production, processing and marketing of rice in Indonesia. 1/ The Bank Agricultural Sec- tor Survey 2/ also discusses these subjects. As these studies cover most as- pects in depth, the main problems to be encountered in harvesting, processing and marketing over the next five years are summarized in this annex, with particular reference to the Bank's irrigation rehabilitation programs.

Harvesting

2. The introduction and production of high yielding varieties (HYV) under irrigated conditions has and will necessitate changes in Indonesian harvesting procedures. The main reasons for this are:

(i) The shorter growing period of HYV's has meant that wet season crops are harvested before the finish of the rainy season in some areas *thus increasing drying problems. A later sowing is not effective, because of greater insect and disease attack.

(ii) In areas with available dry-season water, the shorter growing periods of HYV's has increased the possibility of-double cropping and intensified the need for a-quick, early wet season crop harvest.

(iii) The shorter stalk, greater proneness to shattering, and in some cases overhanging head of the HYV's relative to traditional varieties have reduced the effectiveness of the paddy knife. Its use is more difficult and causes more grain loss than sickles.

1/ Two of the most recent are: "Economic & Engineering Study; Rice Storage, Handling and Marketing, Republic of Indonesia," Weitz- Hettelsater Engineers, Oct. 1972, USAID (afterwards referred to as RNS), and "Study and Evaluation of Rice Production Intensification Programs in Indonesia." Agrar-und Hydrotechnik, CMBH, Nov. 1971, (afterwards referred to as RPIPI).

2/ "Agricultural Sector Survey, Indonesia;" IBRD, April 10, 1974. ANNEX 7 Page 2

(iv) The greater production of HYV's has increased the volume of grain to be handled.

3. The paddy crop is harvested with a small paddy knife held between the fingers. Each panicle plus-a short length of stalk is harvested separately and at harvest is known as wet stalk paddy. It is bundled, carried home and sun dried on mats laid on the roadside or on racks in the house storage area. It may be sold or stored as dry stalk paddy but an increasing number of farm- ers thresh the dried stalk paddy and store or sell the unhusked_grain (padi gabah). Tnreshin-gis accomplis-hed by treading the panicles or beating them on a hard threshing floor. Coarse straw is picked out by hand and other trash removed by hand winnowing. The paddy is again laid out on mats to sun dry. Rice for home consumption is milled by hand pounding in a hollowed-out log or taken to a small rice mill. The standard of milling is rather poor, either due to variations in grain moisture, mixed varieties or sometimes poor milling equipment.

4. There are several problems associated with the traditional methods of harvesting and handling of the crop, especially now that new varieties, new technology and double cropping is on the increase. Some of the new HYV are short strawed or are prone to shattering, and/or are not suitable for the old methods. The traditional system of threshing is too slow for the wet season crop in double cropped areas when labor is needed to cultivate the land and plant the next crop. The harvest ot the dry-season crop occurs during the rainy season, and it is difficult to get the crop dry. Ex- panded and improved drying facilities are required.

5. The sickle has been introduced to speed up the harvest and counter- act the short stalk and shattering of the HYV's. It usually is used only on HYV's, 1/ and when used, the crop is threshed immediately in the field and the paddy carried in sacks to the farmer's house to be dried in paddy form. It is then stored in sacks to be used as required. Threshing in the field has in- creased the work load at the time of peak labor demand during harvest, as the crop has to be completely threshed before it is dried.

6. The water management of the irrigation systems has further increased this peak labor demand. For example, in the Jatiluhur Irrigation System water is delivered on an area basis with a 15-day break between wet season and dry i season water deliveries and about a 30-day break between the dry season and the following wet season water deliveries. There is the possibility of a labor shortage developing in some irrigated areas in the period between the wet and dry seasons.

7. To reduce harvesting losses and speed up operations the following should be investigated:

1/ "Rice Harvesting and Selling Changes in Central Java Which Have Serious Social Implications;" W.L. Collier, Soentore, and Cyunawan Wiraldi; Agro-Economic Survey; January 1973. ANNEX 7 Page 3

(i) a more widespread introduction of the sickle; (ii) the use of small, pedal threshing machines; (iii) the use of 8 to 10 hp puddling machines which can work in flooded fields to prepare the land for the dry season crop.

Farm Drying

8. The earlier harvesting of the wet season crop, the switch to HYV's and threshing in the £ield, plus the additional production from HYV's, have all coflbuLto L Lae.ed drying-problems -Sta-ik-pa-ddy- can be dri e on - ras or in stacks. However, paddy has to be spread on mats or concrete floors and shortage of drying space is a problem. The construction of village communal drying space lb recommended. itU Luuld be a concrere slab properly shaped for draining, and equipped with some form of quickly installed, tem- porary roofing for protection against storms. The costs and returns of using mechanical dryers on a village basis should be investigated.

Farm Storage

9. All farms have some storage space ranging from about one to four tons of paddy. The increase in production from better irrigation and the use of cash inputs has and will create a need for more on-farm storage. Recently, the GOI began to experiment with cooperative villag`ewarehouses where farmers could store their marketable surplus and obtain the benefits of higher prices later in the season. If this is unsuccessful, because of farmer reluctance to allow his paddy to pass from his direct physical control, farmer should be advised through the extension services on the best ways to store and safeguard his paddy, and credit made available, if necessary, for the construction of on-farm storage.

Milling

10. It has not been possible to obtain accurate statistics for the composition and total number of rice processing facilities in Indonesia at present. Detailed figures for this, which were compiled in February 1971, are shown in the Rice Marketing and Storage Study (RMS). Total potential installed milling capacity was estimated at 6.9 million tons per year. However, it was estimated that only 32% to 40% of this installed annual capacity is utilized for commercially marketed rice. As there have been recent large developments in rice milling in Indonesia, these figures are unlikely to be still relevant.

11. Prior to 1968, and perhaps to 1970, informed estimates assumed that 80% of rice milled in Indonesia was handpounded. 1/ The' remainder was mainly

1/ "Agricultural Sector Survey Indonesia," IBRD, Annex 9, page 3; and C.P. Timmer, "Choice of Technique in Rice Milling on Java," Bulletin of Indonesian Economic Studies, Vol. IX, No. 2, July 1973. ANNEX 7 Page 4

milled in conventional multi-stage rice mills. Since then, there has been a major swing away from handpounding and large conventional mills, these being replaced by small single-stage rice mills and rice hullers. The following table referring to Java and Madura shows these changes:

Changes in Rice Milling Methods in Java and Madura 1/

Percent of crop milled Milling Method 1968 1972

Conventional mill 13 3 Small milling units 5 30 Rubber roll hullers - 31 Handpounding (residual) 82 36 2/ 100 100o

12. These changes have been brought about by a Government policy of encouraging small mills, the lower production costs of small mills versus large conventional mills, and the lower production costs and better quality of rice produced by rice hullers versus handpounding. The Gvrnment can manitulL-e-the milling in-dustry by its licensing system (licenses are issued by district officers on the recommendation of the Extension Service), through the supply and terms of credit made available, and by the price spread between paddy and milled rice set under the Government's rice price stabilization policies. The size and location of the small mills permit them to offer more convenient buying services to the farmers and small traders, their overheads are minimal, and as a consequence, they can offer higher prices to the producers, thereby narrowing the competitive position of the large conventional mill. Under the BUUD program, it wants each BUUD to have its own mill, and the mills to be located close to the farmers and the local markets.

13. Milling charges of small rice mills in March 1974 in the rehabil- itation areas varied from Rp2 to Rp6 per kg of paddy, plus retention by the miller of the bran and husks. The position of an area's milling charges in the quoted range appears to be determined by the milling capacity in that area.

14. The rice quality of the small mills in terms of percentage of brokens, moisture content and uniformity is generally inferior to that of the large mills, and it is ill-suited to be stored or transported over extended periods or distances, and thus, generally unfit for delivery to the national

1/ Source: "Analysis of Developments in Rice Milling, 1968-72," FAO Planning Team, Jakarta, February 1974, mimeo.

2/ Collier estimated handpounding 40% in a SAE survey report, "Choice of Technique in Rice Milling on Java: A Comment," February, 1974. ANNEX 7 Page 5

The Government's policy is to limit the number of big mills to that necessary Lu sulyr1ceforextended storage and/or transptation.

15. The actual milling recovery efficiency of the different size mills and handpounding are shown in the following table:

Size Classification Percentage Recovery by Weight from Paddy Milled rice (ton/hr) Rice Shorts Bran Total

Small (below 0.5) 62 5.5 14.0 81.5 Medium (0.5 to 0.9) 61 2.3 13.5 76.8 Large (above 0.9) 63 2.3 9.3 74.5 Handpounding 59 - - -

16. These percentage recoveries rice are comparable to milling stand- ards in Thailand and the Philippines (where rice recovery is about 61%o-62%). However the high proportion of shorts and bran recovered indicates that rice mills are converting more rice to shorts and bran than should be expected. The amount of brokens varies from 25% for the large mills to 40% for the small W .w, mils-.-- e po-ssibility of investment in large-,-moeefftcte-t machinery de- ; pnL5 on Government policy and the interaction of the market forces of low wages, high interest rates and low rice prices as shown in the investment model developed by Timmer.

17. The employment effects resulting from the replacement of labor intensive handpounding of rice with rice hullers have been investigated by Collier and Timmer. Collier suggests that there has been a large loss of jobs (some 1,200,000); Timmer's estimate is much smaller (upwards of 100,000). More information is required on the employment and income effects of using rice hullers throughout the rice industry instead of concentrating solely on the immediate employment effects.

18. Overall, there is sufficient rice milling capacity to meet present Indonesian requirements, and as the need for additional capacity arises in the future, sufficient private investment should be forthcoming. There is a problem of mill location in West Java, where there may be too many or too few in particular areas. This could be resolved by use of the licensing sys- tem. As well, there is the possibility that some existing milling capacity will be made redundant by the Government over-emphasizing its BUUD milling program, with a resulting wastage of resources.

Grain Losses

/ 19. There are no official statistics on rice losses in Indonesia. Total losses from the start of harvest to retail sale have been estimated by-B=JUG experts at 25% of total production, near the average for losses in most Asian a contries. The sources of estimated losses are shown in following 1_._-1____ ANNEX 7 Page 6

Source of Loss Grain Loss (%)

Shattering at harvest 8 Transportation in field 2 Drying 2 Transportation from drying to storage 1.5 Storage on farm 4 Storage in warehouse 1 Milling 4.5 Use of hooks to move bags 1 Transport warehouse to market 1 Total 25

It is suggested in RMS that losses could be reduced to 15% of total production as shown below:

Present Reduced Item Losses Losses

Harvest 8 6 Drying 2 0.5 All storage 5 3 Milling 4.5 2 All transportation 5.5 3.5 25 15

Losses in the United States for paddy are about 3% in harvesting and 1-2% transport and storage losses, making a total of on-ly5.

20. In the irrigation rehabilitation areas, farmers report harvesting losses at 10% of total production, and farm storage losses at an average of 5%, with some reports as high as 10%. Possible ways of reducing harvesting losses have been discussed in para 6, namely, the harvesting of HYV's with the sickle instead of the rice knife and the use of mechanical threshers. The threshing of all grain soon after harvest and storing it in sacks would also reduce losses.

21. Farm storage losses could be reduced by a rat eradication program (Annex 6), the construction of well-ventilated, dry, vermin-proof storages, and assistance to the farmer from the extension service on the best ways to store and safeguard his paddy, including measures against insect attack. To- e4uee-off-farm storage losses, considerable rehabilitation of the existing warehouses would be required, as well as efficient fumigation of the stored rice. ANNEX 7 Page 7

Marketing

t22. Indonesia has been a traditional rice importer and is expected to remain so over the next five years. The importation and initial distribution of rice is an exclusive Government function, handled by its agency BULOG. The responsibilities of BULOG include the importation of rice, the holding of buffer stocks, the supplying of rice to the army and civil service, and the procurement and injection of rice supplies into the domestic market to maintain a floor price for the producer and to defend a price ceiling for the consumer. Other duties include "regulating" the imports of wheat grain and flour, sugar, raw cotton and cotton yarn.

23. BULOG headquarters are in Jakarta. It has 27 provincial branches known as DOLOG's (Depot Logistics) which in turn have sub-DOLOG's in areas where there are considerable inflows or outflows of rice. BULOG has good communications with all DOLOG's and some sub-DOLOG's. Daily reports are received on rice stocks held in each province, and prices for dry stalk paddy, paddy and milled rice.

24. Floor and ceiling prices for paddy andirice are set by the Govern- ment on information supplied by the Departments of Agriculture, Finance, Statistics, BAPPENAS and BULOG. The floor price is set taking account of the farmers' costs of production and future price trends, and its level is set to encourage rice production. Ceiling price determination depends on necessary processing and marketing spreads, the cost of running BULOG, the retention of a stable price structure, and the wage level of unskilled industrial workers. The Government does not want the industrial worker to spend more than half his wages on food. The present floor and ceiling prices, within which BULOG attempts to keep prices for the average grade of Indonesian rice, are Rp60 1/ and RplOO per kg of milled rice. A more detailed list of BULOG's prices are set out in Table 1.

25. BULOG procures domestic supplies through the two channels: rice 2/ mills and BUUD's. Milled rice only is purchased from rice mills at Rp68/kg delivered to the nearest DOLOG warehouses. Both milled rice and paddy are acquired from BWUUD's at Rp68.50/kg and Rp4l.80/kg respectively, delivered to the nearest DOLOG warehouse. The BUUD's in turn will buy all the paddy of- fered to them at Rp38.5/kg from BUUD members and Rp38/kg from non-members. The B UWD's thus act as procurement agents for the DOLOG's.

1/ Actual floor-price for paddy of acceptable quality in March 1974 was Rp 40.60/kg at the DOLOG warehouse, with the following quality limits: moisture content 14%, total husks 2%, total dirt 1%, total small heads 3%, acceptable color and smell. This price corresponds to Rp 38/kg offered by BUUD's for paddy in the villages. 2/ Prices are at March 1974. ANNEX 7 Page 8

26. Price stabilization through a reduction of supply variations is one of BULOG's foremost objectives. Until 1972, BULOG relied heavily on domestic procurement for its national stock, and such purchases have been very effective in maintaining a price floor for the producers. The detailed procurement targets which were subsequently set for 1973, however, proved to be impractical, and as a result, no national procurement target has been set for 1974. The increased reliance on imports rather than on domestic supplies to maintain national stocks would seem to diminish BULOG's capacity to main- tain the farm price floor, although this is not a problem at present.

27. The amount to be procured to contain seasonal prices is related to the marketable surplus rather than to total production. If total production grows at an average rate of 3.1% per annum in the period 1974-81 the increase in marketable surplus would be 60% over the same period, bringing marketable surplus from 25% of national production in 1974, to 30% in 1981. A substantial part of the increment in production between now and 1981 can be expected to come from increased cropping intensities in Java and from net area expansion in the Outer Islands. Both these sources are expected to flatten the monthly distribution of paddy harvested. Thus a 60% increase represents an estimated upper limit on volumes BULOG will require by 1981 to contain seasonal price variations.

28. The high proportion of imports in BULOG's operating stocks had led to financial liquidity becoming an additional objective in Government rice marketing policies. The consumer's subsidy on imported rice has recently been as high as 80%. The interference of BULOG with the market price has thus tended to become a trade-off between consumer interests and consideration of the liquidity of the organization. BULOG will not sell rice in the retail market until the price is in excess of Rp9O per kg, and will not attempt to depress price too far below RplOO per kg.

29. The present heavy reliance on imports to stabilize prices is not only because of a shortage of national supplies. The major shift in the rice milling industry from large conventional mills to small mills and hullers is compounding BULOG's difficulties in securing sufficient domestic supplies for stockpiling purposes. The poorer storage qualities of the small mills' and hullers' product relative to the large mills could make it imperative to ensure that a proportion of large mills remain in production. Besides quality reasons, it would also appear beneficial for BULOG to rely on the large mills for delivery to the national stock because full use could be made of their existing storage capacity. The present price structure does not allow a premium for a superior storable product. The introduction of diff.erential prices would restore the competitive position of large mills, and t e could assume part of the storage function which presently has to be undert-aken by BULOG. ANNEX 7 Page 9

30. Associated with seasonal supply stabilization is the problem of regional surpluses and deficits. If transportation is to be organized effectively, it is mandatory that sufficient storage capacity exists in both local surplus and deficit areas to maintain an adequate geographic dis- tribution of buffer stocks and storage capacity over the harvest and non- harvest seasons.

31. Difficulties are being experienced in the management of the Indonesian economy because of the maintaining of internal rice prices below world market values. The low consumer price ceiling compared to world prices (US$240/ton versus US$430) means the GOI is heavily subsidizing the imported rice it injects into the local market and this subsidy has become a major item in the budget (1.5% of GNP) during 1973/74 (Table 2). To encourage production at the present price offered farmers, US$90/ton 1/ of paddy, the price of fertilizers, which are mainly imported, are also highly subsidized (e.g., around US$245 per ton of urea or TSP). The total amount of this subsidy in cash terms will, however, fall in the future, as Indo- nesia becomes more self-sufficient in the production of nitrogenous ferti- lizers.

Storage

32. Actual rice storage capacity owned and rented by BULOG plus that operated by millers and the retail trade is reported by province in the RMS. BULOG's present storage capacity is 730,000 tons of paddy, of which about 100,000 tons are owned. It is BULOG's lan to have 1 million tons of paddy/ storage, fully owned, by the end of Pelita II. ere s also a need to re- habilitate much of the existing souagse >rce.

Transport

33. The general cost of transporting paddy and rice at the village level is greatly increased by the bad condition of the road system. Roads referred to are district or village roads, and run from village to village, village to fields or village to towns. There are very few roads from village to fields, most paddy being carried along the canal banks. Existing and disused roads require rehabilitation and effective policing of vehicle weights. The INPRES Program is largely concerned with this work.

34. The comments made in the IBRD Agricultural Sector Survey of Indonc- sia on the inter-island shipping industry are reiterated. A major constraint to internal marketing, regional specilization and integration of the country and the economy is the absence of an efficient and inexpensive inter-island shipping industry which would transport both goods and people promptly,

1/ March 1974 price. ANNLEX 7 Page 10

regularly and at. low cost. The shipping industry is dominated by the Government shipping firm, P.N. Pertani, with little scope for the private sector, and the cost of moving goods is made excessive by unlawful charges. An efficient shipping system is essential to promote rapid growth in rice production in the Outer Islands and necessary to integrate rice marketing in Indonesia.

BUUD's

35. The establishment and functions of BUUD's are discussed in Annex 3. Their marketing functions include assisting the farmer to share in the re- turns from the processing of his rice, by selling it in milled form instead of as paddy, and to give BULOG a rice purchasing and assembling arm at the village level. BUUD's are empowered by BULOG to purchase all the dry stalk paddy or paddy necessary to hold market prices at or above official floor price, and to purchase all the paddy production of their members, subject to quality standards (Table 1). BRI advances cheap credit to the BUWD's for paddy purchases, namely, 100% of required credit at 9% per annum. Rice millers who are engaged in rice purchases for BULOG are only advanced 50% of required purchase credit at 6% per annum. BUUD's have also been supplied with credit, by BRI for the purchase and setting up of small rice mills.

36. During 1973, the BUUD's were set a procurement target of 400,000 tons of rice by BULOG but they failed to raise more than 196,000 tons, be- cause the price they offered was well below the then ruling market prices. No procurement targets have been set for 1974. In their milling role, BUWD's are in some areas competing with or replacing existing millers and it is yet to be shown they are more efficient or will be able to pass any profits from processing to their members.

37. BUWD's have experienced an excess moisture problem with their purchase of paddy when buying to keep piTce sb6ve the floor level. P-s production increases, this problem is expected to become larger and reinforce the need for drying facilities at the farm or village level.

38. In summary, BUUD's have yet to demonstrate they are able to supply new services to farmers, or that they have the support of the smaller farmers who represent a high proportion of the rural community. hNNEX 7 Table 1

INDONESIA

IRRIGATION PROGRAM SURV&Y

Paddy and Rice Prices - March 1974 Controlled Prices

Price Level Product Quality Buyer Seller Rp/kg

At village Dry stalk paddy - BUUID Farmer 3a.O0 BUUD Member 38.50

At village Paddy (moisture 14% ) BUUD Non-member 38.00 (husks 2% ) (dirt 1% ) (small heads 3%)

At DOLOG warehouse Paddy As above BULOG BUIWD 41.8o

At DOLOG warehouse Milled rice Ia BULOG BUUD 70.50 Ib 68.5o Ic 66.50 II 64.00

At DOLOG warehouse Milled rice Ia BULDG Rice miller 70.00 Ib 68.oo Ic 66.00 II 63.50

Market Prices

Price Level Product Grade Rp/kg

At village Padcy .. 42 Wholesale Milled rice Ia 83 Wholesale Milled rice Ib 8o Wholesale Milled rice Ic 78 Wholesale Milled rice II 75

Grades

Maximum Rice Milling moisture Maximum grade grade content brokens

Ia 90 14 25 Ib 90 14 35 Ic 90 14 40 II 75 14 40

Source: BULOG, Jakarta, March 1974 ANNEX 7 Table 2

INDDNESIA

IRRIGATION PROGRAM SURVEY

Annual BULOG Rice Imports and Domestic Procurement and Distribution 1969-1973

Commencing-/ Domestic Total Value of Average Cost-/ Year Stocks Procurement Imports 9hpply Distribution Imports of Imports ------'----000 tons ------US$'000 US$/ton

1969 496 220 604 1,320 1,005 105.3 174

1970 261 4--487 -1 951 1,699 - 1,135 147.8 155

1971 532 4- 632 t 494 1,658 1,094 60.9 120

1972 530 i;-- 191 ';- 737 1,458 1,265 115.4 157

1973 161 260 1,534 1,955 1,295 341.9 223 1974

Source: Department of Agriculture and BULOG 1/ Net of wastage.

2/ Based on realization of contracts concluded in the respective years. Data from BULOG. ANNEX 8 Page 1

INDCNESIA

IRRIGATION PROGRAM SURVEY

Rehabilitation of Jatiluhur Irrigation System: Reassessment of Economic Internal Rate of Return

Introduction

1. To investigate the effectiveness of the rehabilitation of irrigation areas in Indonesia under the IDA Credits, it was decided to recalculate an economic internal rate of return for the rehabilitation of the Jatiluhur Irrigation System. This exercise proved less success- ful than was originally hoped because of data limitations. The available data were generally inadequate, while the time available for field work in the project area was short, thus limiting field data collection by the mission. Detailed annual or biennial agro-economic surveys in the project area appear necessary to generate sufficient precise information on rehabilitation benefits and their distribution.

2. The mission's recommendations concerning tertiary and quaternary development, improved extension services and farmer organizations, rat eradication and village road rehabilitation were costed, added as a second stage to the present Jatiluhur rehabilitation, and evaluated. This additional work is referred to as "improved rehabilitation" throughout the annex.

Background

3. Rehabilitation of the Jatiluhur Irrigation System comprises the major part of the project assisted by IDA Credit 195-IND. This project was appraised in July 1969, and the cost of rehabilitation and completion of the Jatiluhur system, including drainage improvement and flood protection works, to provide wet and dry season irrigation to some 186,000 ha, was estimated at US$26.88 million at appraisal, plus US$9.4 million contingencies, giving a total cost of US$36.28 million 1/. Con- struction was to commence in 1970 and be completed by the end of 1975. No increase in the irrigated wet season area of 186,000 ha was projected. Better water supply and control plus BIMAS inputs were estimated to increase average wet season paddy yields from 2.8 to 4.0 ton/ha. The irrigated dry season area was estimated to increase from 108,000 ha to 186,000 ha, while paddy yields increased from 2.0 to 3.2 ton/ha.

1/ Second Irrigation Rehabilitation Project, Indonesia, IDA Report No. PA 37a, May 26, 1970, Annex 7. ANNEX 8 Page 2

4. Work did not commence on the project until 1971. The estimated completion date is now March 1978. Actual expenditure to March 31, 1974 was Rp 7,129 million (US$17.18 million), and total project cost is now estimated at Rp 25,619 million (US$61.73 million).

5. An attempt was made to trace the actual area receiving better water supply and control during the wet season, the areas receiving water supply in the dry season, and yields on a consecutive seasonal basis since construction commenced in 1971. However, it was impossible to match the existing district production data on areas and yields to the project area with much certainty, since the project area covers portions of five districts. In addition, there was conflict between different data sources. Production data trends based on available statistics, coupled with field observations and interviews have been used to revise projections and develop realistic assumptions.

Reassessment Assumptions: Irrigated Areas and Cropping Intensities

6. At appraisal, it was reported that irrigable areas were 186,000 ha and 108,000 ha for the wet and dry season. These areas have been accepted for the "present" and "without project" estimates, and give a cropping intensity of about 158% in both cases. Under the current project it is estimated that the area under dry season irrigation would increase to about 140,000 ha giving a cropping intensity of 175%. This is in contrast to the 200% cropping intensity projected at appraisal. Cropping intensity has been reduced since experience has shown that without proper tertiary and quaternary design and development and a high standard of operation, 10-15% of the area may be above dry season command and a similar percentage may not receive adequate supplies of water. The latter problem occurs on long tertiaries serving several villages, where during periods of limited water supply, villages at the nead of the tertiaries use excessive water at the expense of communities further down the channel. A cropping intensity of 190% nias been projected for the future if recommendations regarding quaternary development, improved operation and improved organization of farmer groups suggested by this mission are implemented. This is based on a two crop rice system, and the assumption that even at full development, small areas will still be above command, or under fallow in the dry season because farmers were late planting the first crop. Overall cropping intensity could exceed 200% if farmers in favored areas cropped two short duration rice crops followed by a polowijo crop.

Yields

7. Yield projections are based on the assumption that the use of HYV, and improved cultural methods are closely correlated with the increases in the areas receiving benefits from imported water supply and control and the BIMAS program. Without the project, paddy yields would rise by some 0.5 ton/ha due mainly to the expansion of BIMAS to 50% of the area and the ANNEX d Page 3 wider use of HYV's. With the project, future average yields are expected to be about 1.0 ton/ha above the "without project" case because of an expansion of BIMAS to 75% of the area, with a corresponding increase in the use of HYV's, and some improvement in the operation and maintenance of tile system, giving more reliable supply at the farm level. Average paddy yields could be lifted by a further 1.0 ton/ha if mission recommendations concerning quaternary development, improved organization of agriculture and irrigation services were implemented. Key factors would be an increase of the BIMAS program to 90% of the area, more effective input use, particularly of water, fertilizer, and agro-chemicals, due to improved extension and better water control down to the quaternary units. A more timely supply of inputs and services because of improved communications and transport under a village road rehabilitation program would also contribute to improved yields.

8. From a technical viewpoint, dry-season yields should be higher than those in the wet season, due to higher levels of radiation and reduced insect and disease attack. At present, the opposite is true. While it is anticipated that the yield difference between the two crops will decrease, it is projected that average wet-season yields will remain higher, as there is little rain during the dry season to counteract the effects of inefficiencies or occasional breakdowns in the operation of the water distribution system. Under the present operating system farmers have only 2 to 3 weeks to harvest the first crop, establish seed beds, and prepare land for the second crop. This leads to poor land preparation and planting which limits the yield of the second crop. Average dry-season crop yields will exceed wet-season yields if early maturing varieties can be introduced or the irrigation season can be extended, if small field threshers and winnowers are used to speed up harvesting, and small 8-10 hp puddling machines can be introduced to speed up and improve the quality of land preparation.

9. The areas and average yields of the different rice varieties in the wet and dry seasons are detailed in Table 1. In the field, actual paddy yields are expected, under the existing rehabilitation programme, to vary according to the distance a crop is from the irrigation turnout. Yields range from around 6 ton/ha near the irrigation turnout to 2 ton/ha or less at the furthermost distance from the turnout. This is especially true if farmers do not complete their portions of the tertiary and quaternary canals. If tertiary and quaternary canals are properly constructed, a more even spread of yields can be expected. Chart 8722 shows this general situation in diagramatic form for the Bank irrigation rehabilitation areas.

Project Phasing

10. Past records and current projections of the Jatiluhur Authority were used to determine the rate at which areas were and will be rehabil- itated under the current project. It was assumed that the expansion of ANNEX 8 Page 4 dry season cropping would follow this pattern with some time lag allowed for farmers to adjust to a two crop system. Increases in average project area yields were based on the past and projected rates of expansion of BIIAS, the expansion of the area receiving improved water supply, and current and historic yield records.

Marketing and Prices 1/

11. Farmers mainly sell their marketable surplus as dry stalk paddy or as paddy to the BUlWD's, middlemen or rice mills. The spread of small hullers has enabled farmers increasingly to market their own rice. Most sales are made immediately after harvest to pay debts. For this analysis, it has been assumed farmers sell paddy. The estimated future farm-gate price has been drived from the Bank's Economic Analysis and Projections Department's forecast for the world market price of milled rice in 1985 in 1974 constant terms. In converting to a farm-gate price, the assumption was made that rice from the area would mill 10% into high grade (i.e. 5% brokens), 60% into medium grade (25% brokens) and 30Z into low grade (40% brokens). This gives a weighted average world price of $205 per ton fob Bangkok, or Rp 54 ($0.13) per kg of paddy at the farm-gate in the project area, as shown below and in Table 2. This price is Rp 16/kg above the GOI support price of Rp 38/kg offered by BUUD's and used in farms budgets for the farm income analysis (Annex 12).

Projected 1985 Rice Price Structure Rp/ton $US/ton

Export Price, fob Bangkok 84,870 205 2 Freight: Bangkok - Jakarta 6,230 15 Port handling, Jakarta 2,500 6 Freight: Jakarta - project area 2,500 6 Price milled rice project area 96,100 232 Paddy equivalent (62% milling) 59,600 144 .Milling costs (less by-product value) 3,500 9 Transport: farm to mill 2,100 5 Farm-gate paddy price 54,000 130

Crop Budgets

12. Crop yields, gross returns, production costs, labor requirements and net returns per ha for the economic analysis are shown in Table 2.

1/ Prices in Indonesia in April 1974 for paddy and fertilizer.

2/ Weighted average price in 1974 constant terms assuming 10% (5% brokens) at $270 per ton, 60% (25% brokens) at $210 per ton, 30% (40% brokens) at $175 per ton. ANNEX 8 Page 5

13. Land Preparation. Land is usually plowed twice and harrowed once with buffalo power. However, in parts of the project area, manual labor is used for all land preparation. It was assumed 80% of the area was plowed with buffaloes and 20% hoed by hand. An average cost of Rp 250/day per buffalo pair was used. Considerably less land preparation is done for the dry season crop, because of time limitations.

14. Seed, Fertilizer and Chemicals. The seeding rate used for traditional and nationally improved rice varieties was 40 kg/ha and for HYV's, 25 kg/ha. Traditional and nationally improved seed was shadow- priced at Rp 54/kg, and HYV at Rp 70/kg. Fertilizer and chemical usage was determined from BIMAS recommendations, with allowances made for farmers not using the total suggested package quantities. In situations where no BIMAS recommendations were available for nutrient use on local and nationally improved varieties, fertilizer use was estimated from collected field data and reported survey results. For the future situation with improved services, farmer organizations and quaternary development, new BIMAS packages were specified. Subsidies were removed from fertilizer prices and the actual cost to the economy of using them calculated using projected 1985 world prices in 1974 constant terms, which are equivalent to farm-gate price for urea of Rp 88/kg, and for triple superphosphate (TSP) Rp 93/kg. Import taxes were removed from insecticide and rodenti- cide prices. The increased costs of rat eradication campaigns were in- cluded in the immproved rehabilitation situation.

15. Farm Maintenance. A charge was made for the farmers' share of tertiary operation and maintenance for the "without" and "with" project situations. This was increased in the improved rehabilitation situation to cover the additional quaternary operation and maintenance costs.

Labor

16. No comprehensive, reliable statistics on agricultural population and labor force in the project area are available. 1/ In calculating shadow wage rates it was necessary to work from data collected in the field and figures which were available for some individual districts. The lack of good data on labor usage in rice production also con- tributes to the confused picture on labor supply and demand. The available supply of labor for rice cultivation has been estimated under the following conservative assumptions:

(a) an average farm size throughout the project area of 0.5 ha, giving a total of 372,000 (owner or tenant) families;

1/ The Central Bureau of Statistics carried out an agricultural census in 1973. Results are still being calculated with the possibility of some preliminary publication by the end of 1974. ANNEX 8 Page 6

(b) another 70,800 landless laborer families who depend on rice farming for their main employment, giving a total of 442,800 families in the area; 1/

(c) two workers are available from each family giving a total labor supply of 885,600 in 1974. If each worker is available 22 days per month, the total monthly labor supply is 19.5 million man-days; and

(d) the agricultural labor force is growing at 1.8% per annum.

The shadow wage rates have been calculated for 1981 when, with the project, full development will have been reached. Total labor supply then available will be 970,000 workers or 21.3 million man-days per month, or an annual total of 256.0 million man-days.

17. Paying off-farm activities for those engaged in rice production are limited. Communal activities (gotong royong) are unpaid, and village development works are usually carried out by small contractors who have their own labor supply. Most rural workers engage in trading activities (mainly selling small amounts of consumer goods) in the slack periods but returns obtained are small.

18. Estimates for the man-days per ha involved in each operation of rice growing are shown in Table 3, the monthly labor requirements per ha are shown in Table 4, and the total monthly project labor requirements are shown in Table 5. At the commencement of rehabilitation in 1971, the total estimated yearly labor supply was 233.8 million man-days, and the total estimated annual rice production labor requirements were 64.8 million man-days. Estimates for labor demand in 1979 are 68.0 million man-days without the project, 80.0 million man-days with the project, and 92.2 million man-days with improved rehabilitation, compared with an estimated labor supply of 256 million man-days. While rehabilitation increases the number of farm jobs by up to 42% in the improved project situation, it does not solve the total unemployment problem. Rehabilitation considerably increases monthly labor demand in the dry season, raises the total labor demand in the major harvest months of April and May by 30%, and increases demand by 4% in December, 2/ the month with the present highest employment rate, although the actual total percentage of workers employed in this month falls.

1/ This is in contrast to the Appraisal Report, which did not include landless laborers in the rural population.

2/ Employment rate in December 1971 is 71%; in December 1979, without project, it is 66%; with the project, 67%; and with the improved project, 68%. ANNEX 8 Page 7

19. To /obtain a clearer and more accurate picture of the effects of rehabilitation on employment, more detail is required on the overall employment effects of the project, that is, on construction employment, milling, transport and services employment. More data are also needed on the size of the agricultural population, and the dependence of landless labor on agriculture for employment, and on actual monthly farm labor requirements.

20. In assessing the economic cost of farm labor, a number of value judgments have been made. Detailed information on wages actually paid in the project area is scarce. Payments vary seasonally and geographically, and payment is often in kind, making comparison between areas difficult. Information on off-farm employment is limited. The assessment made here deals mainly with the opportunity cost of employment foregone in other activities in the project area, with little attention to the value of leisure, the problems of income distribution between various segments of the economy, and the relative importance of savings and consumption. Interviews with farmers and other local sources indicate that the farm wage rate for adult males varies between Rp 100 and Rp 250 per day, and similar wide variations in the female wage rate exist, with no fixed ratio between it and the male wage. The weighted average market wage rate for all types of labor is estimated at Rp 175/man-day (US$0.42/man-day).

21. It is postulated that the marginal opportunity cost of labor for farm work can be represented by an "S-shaped" curve. The marginal opportunity cost of farm labor is positive at all levels of demand and increases as more labor is drawn into farm work. The lower limit of the economic wage rate is based on two components: the minimum opportunity cost of alternative non-farm employment in activities such as fishing, trading and cottage industries, which is estimated at Rp 30/day; and the increased nutritional requirement to shift from light activity to more demanding farm work, which is estimated at Rp 20/day. The increase in opportunity cost is slow initially but increases more rapidly as the full labor supply is utilized. This analysis is only concerned with the first segment of the curve where the slope is estimated to be 1.25. At 50% of full employment, the point elasticity of demand for wages would be 0.2, that is, a 2% increase in wages is needed for a 10% increase in labor demand. This is in contrast to the slope of the curve estimated for the Jatiluhur Irrigation Extension Project 1/, which is 2.5. At 50% of full employment, this would give a point elasticity of demand for wages of 0.35, that is a 3.5% increase in wage rates for a 10% increase in demand for labor, which is considered too large in this analysis. The average annual economic wage rates calculated were Rp 54.5/man-day without the project, Rp 55/man-day with the project, and Rp 56/man-day with the improved project. As a sensitivity test, the slope of the first segment of the marginal opportunity cost curve for labor was changed to 2.5, but the average annual economic wage rates changed little. These wage rates were, however, very sensitive to their calculated lower limit or starting point, taken here as Rp 50/man-day.

1/ Appraisal Report, Annex 15, Figure 1. ANNEX 8 Page 8

22. These calculations are applicable only at one point in time - at full rehabilitation and development in 1981. Similar calculations should be done for other times to take account of changing supply and demand conditions, but the quality of the available data does not at present warrant such a refinement. Therefore, in this economic analysis, the above wage rates were used throughout the life of the project.

Investment Cost

23. All investment costs used in the analysis exclude price con- tingencies. All costs have been expressed in March 1974 prices, those incurred prior to March 1974 having been increased by an inflation factor. Total project cost as it is now being constructed is estimated to be Rp 27,223 million (US$65.6 million).

24. The estimated total project cost under the suggested rehabilita- tion improvements is Rp 37,644 million (US$90.71 million), i.e. an additional Rp. 10,421 ($25.11 million). These additional costs consist of Rp 31,100 (US$75)/ha for improved tertiary and quaternary design and development; Rp 16,600 (US$40)/ha for improved agricultural and extension services; and Rp 8,300 (US$20)/ha for rehabilitation of village roads.

Development Period

25. Project construction is estimated to be completed in FY77/78. Farm yields and production, which have been building up since a year after the commencement of project construction are expected to reach a maximum in 1981. If exrenditure on the improved irrigation rehabilitation can be started in FY75/76, it is estimated to take 3 years and be completed in FY77/78, the same year in which the project is currently expected to be completed. Farm production would still be estimated to peak in 1981. These assumptions have been adopted in calculating the internal economic return for the improved rehabilitation.

Internal Economic Return

26. Using the foregoing assumptions, and discounting project benefits and costs over a 30 year evaluation period, the economic rate of return for the present project is estimated at 32%, and for the project with improved rehabilitation 40%.

27. The sensitivity of these rates of return to changes in the assumed wage rates and paddy yields have been examined and the results presented in the following table. The wage rates have been increased to the estimated market wage of Rp 175/day, while the net value of farm production with the project has been reduced by 10%. This benefit reduction is equivalent to an annual reduction of some 300 kg/ha in average annual yield of paddy from 3.7 tons to 3.4 tons in the future with the ANNEX 8 Page 9 present project, and an annual reduction of some 390 kg/ha in average annual yield from 4.6 tons to 4.2 tons in the future with project and improved rehabilitation.

Economic Rates of Return

Assumptions Present Project Improved Project

1. Standard 32 40

- 10% decline in benefits 18 29

2. Market wage rates 30 38

- 10% decline in benefits 19 29 INDONESIA

IRRIGATION PROGRAM SURVEY

Yields and Production of Paddy

1/ I// At Project Start Future Without Project/ Future with Project/ Future with Improved Project-/

Area Yield Prod. Area Yield Prod. Area Yield Prod. Area Yield Prod. ha ton/ha '000 ton ha ton/ha '000 ton ha ton/ha '000 ton ha ton/ha '000 ton

Wet Season

Mixed Varieties 168,000 2.3 386.4 93,000 2.4 223.2 46,500 3.4 158.1 18,000 3.5 63.0

hYV 18.000 3.5 63.0 93.000 3.6 334.8 139.500 4.2 585.9 168.000 5.2 873.6

Total or Average 186,000 2.4 449.4 186,000 3.0 558.0 186,000 4.0 744.0 186,000 5.0 936.6

Dry Season

Mixed Varieties 98,000 1.7 166.6 54,000 1.8 97.2 ------

HYV 10.000 2.5 25.0 54.000 2.6 140.4 139,500 3.2 446.4 168.000 4.2 705.6

Total or Average 108,000 1.8 191.6 108,000 2.2 237.6 139,500 3.2 446.4 168,000 4.2 705.6

Annual Total or Average 294,000 2.2 641.0 294,000 2.7 795.6 325,500 3.7 1,190.4 354,000 4.6 1,642.2

1/ Area, yields and production are presented at their maximum, i.e., at full development. ANNEX 8 Table 2

INDONESIA

IRRIGATION PROGRAM SURVEY

Crop Budgets for Economic Analysis

Mixed Local Var. Paddy--Wet Season Mixed Local Var.Paddy--Dry Season s- W 3 W+ 4/ S W W+

Yield (ton/ha) 2.3 2.4 3.4 3.5 1.7 1.8 2.45 2.51

Farm-gate Price (Rp/ton) 54,000 54,000 54,000 54,000 54,000 54,000 54,000 54,000

Gross Value of Production (Rp/ha) 124,200 129,600 183,600 189,000 91,800 97,200 132,300 135,540

Production Costs Excluding Labor (Rp/ha 12,860 14,260 18,960 19,160 9,260 10,460 14,360 14,560

Net Value of Production (Rp/ha) (not accounting for labor) 111,340 115,340 164,640 169,840 82,540 86,740 117,940 120,980

Labor Requirements (man-clays/ha) 230 230 238 240 194 194 201 202

HIV Paddy - Wet Season HYV Paddy - Dry Season S W W W+ S W W W+

Yield (ton/ha) 3.5 3.6 4.2 5.2 2.5 2.6 3.2 4.2

Farm-gate Price (RpAha) 54,000 54,000 54,000 54,000 54,000 54,000 54,000 54,000

Gross Value of Production (Rp/ha) 189,000 194,400 226,800 280,800 135,000 140,400 172,800 226,800

Production Costs Excluding Labor (Rp/ha) 21,030 21,030 25,770 29,540 17,630 17,630 22,370 26,140

Net Value of Production (Rp/ha) (not accounting for labor) 167,970 173,370 201,030 251,260 117,370 122,770 150,430 200,660

Labor Requirements (man-days/ha) 260 260 268 285 218 218 226 238

1/ S = at the comencement of rehabilitation 3/ W = in future with rehabilitation 7/ W = in future without rehabilitation 11/ W+= in future with improved rehabilitation ANNEX 8 Tab! o 3 INDONESIA

IRRIGATION PROGRAM SURVEY

Labor Inputs in Paddy Cultivation

Mixed Varieties Wet Season Mixed Varieties Dry Season sy/ R2/ i/ w+/ s w w w ------mandays per ha.------

Nursery 6 6 6 6 6 6 6 6

Land Preparation 62 62 62 62 30 30 30 30

Transplanting 52 52 52 52 52 52 52 52

Weeding 37 37 37 37 37 37 37 37

Management 25 25 28 28 25 25 28 28

Harvest 48 48 53 55 44 44 48 49

Total 230 230 238 240 194 194 201 202

HVY Paddy Wet Season HVY Paddy Dry Season

S W W W+ S W_ W W+

Nursery 6 6 6 6 6 6 6 6

Land Preparation 62 62 62 62 30 30 30 30

Transplanting 56 56 56 56 56 56 56 56

Weeding 45 45 45 45 45 45 45 45

Management 36 36 36 39 36 36 36 39

Harvest 55 55 63 77 45 45 53 62

Total 260 260 268 285 218 218 226 238

I! S = at start of rehabilitation 2/ W = future without rehabilitation 3/ W = future with rehabilitation 4/ W+ - future with improved rehabilitation INDONESIA

IRRIGATION PROGRAM SURVEY

Monthly Labor Requirements for Various Paddy Crops

Crop Jan Feb Mar Apr May June July A Sept Oct Nov Dec Total sl-1 17 17 15 48 146 74 230 Mixed Variety Paddy i / 15 17 17 15 48 46 74 230

Wet Season w_/ 16 17 17 15 53 238 W+!/16 17 17 15 55 24'0

s 6 30 54 20 20 20 44 194 Dry Season W 6 30 54 20 20 20 44 194 w 6 30 54 21 21 21 46 199 W+ 6 30 54 21 21 21 46 199

S 27 27 27 55 46 78 260 HYV Paddy w 27 27 27 55 46 78 260

Wet Season W 27 27 27 63 46 78 268 W+ 28 28 28 77 46 78 285

S 6 30 56 27 27 27 45 218. Dry Season R 6 30 56 27 27 27 45 218 W 6 30 56 27 27 27 53 226 W+ 6 30 56 28 28 28 62 238-

1/ S = at commencement of project. = future without project. ,/ W = future with project. W/W+ = future with improved project. INDONESIA

IRRICArION PROGRAM SURVEY

Total Monthly Labor Requirements of Farm Labor

Area Jan Feb Mar ADr May June July Aug Sept Oct Nov Dec ha ------Total 00mandays------Mixed Varieties

Wet Season ; 2520 2856 2856 2520 8064 7728 12432 1395 1581 1581 1395 4464 4278 6882 W3/ 744 791 791 698 2465 2139 3441 W44/ 288 306 306 270 990 828 1332

Dry Season S 588 2940 5292 1960 1960 1960 4312 W 324 1620 2916 1080 1080 1080 2376 W W+

HYV Wet Season S 486 486 486 990 828 1404 W 2511 2511 2511 5115 4278 7254 W 3766 3766 3766 8788 6417 10881 w+ 4704 4704 4704 12936 7728 13104 Dry Season S 60 300 560 270 270 270 450 W 324 1620 3024 1458 1458 1458 2430 w 837 4185 7812 3766 3766 3766 7393 W+ 1008 5040 9408 4704 4704 4704 10416

Total S 3006 3342 3342 4158 11304 5852 2230 2230 2230 4762 8556 13836 64848 W 3906 4092 4092 7159 7704 5940 2538 2538 2538 4806 8556 14136 68005 W 4510 4557 4557 10323 6650 7812 3766 3766 3766 7393 8556 14322 79978 W+ 4992 5010 5010 14214 6030 9408 4704 4704 4704 10416 8556 14436 92184

aXx 1/ S = at the commencement of rehabilitation CO 2/ W = in future without rehabilitation 3/ W = in future with rehabilitation 4/ W+ = in future with imoroved rehabilitation ANNEX 9 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Proposed Irrigation Projects in the Second Five-Year Development Plan

1. The attached list of projects (Tables 1, 2 and 3) was obtained from the Planning Division of the DGWRD. Funding for projects 1 through 11 is reasonably firm. In Table 2, tentative sources of funding are shown, based on the Bank's lending program and on GOI's requests to a variety of interna- tional agencies. Table 3 shows the large number of planning and feasibility studies proposed for the next few years. Firm commitments have been received for items 1 through 11. Other project preparation activities will be com- bined with the funding of projects.

2. These projects may be classified as follows: Irrigation rehabilita- tion, work on which has nearly been completed; new irrigation systems, mostly on a small scale; storage dams, the main purpose of which would be to provide dry season irrigation water to existing irrigated areas; groundwater develop- ment, little of which has taken place previously; and some flood control and hydroelectric power development. Project 14 in Table 1, Way Seputih Area Development, is intended to include catchment development, additional irrigation, rural roads and settlement in this transmigration area, to augment the existing irrigation development.

3. The projects proposed for Bank Group assistance over the next five years are listed in Table 4. The first two projects have been appraised and feasibility studies have been initiated or are to begin soon for the re- maining projects. As a result of Indonesia's improved revenue position, following the recent oil price increases, the MPWEP plans to increase the pace of new ivestment in irrigation. As there have been indications that USAID assistance to this sector may be reduced, the Ministry has requested the Bank to step up its assistance from one project per year to two projects, beginning in 1977. The mission recommends that the Bank should accede to this request, in view of the need for technical assistance in Indonesia, the continuing importance of this sector in food production and national economy, and the fact that these projects benefit the poorest people in the country.

4. The project list also contains the ambitious Small Scale Irrigation Program, which would eventually cover 1 million ha, and for which assistance from USAID is available. The mission strongly recommends high priority for the intensive development through construction of tertiary and quaternary networks, of existing rehabilitated irrigation systems. This program would ANNEX 9 Page 2 rely to a large degree on self-help by the farmers. Other costs would be funded partly by the Government's own resources and partly in conjunction with proposed new rehabilitation or storage dam projects. Details on the recommended type of development are given in Annex 4 and the economic implications, for one particular project, are discussed in Annex 8.

5. In the attached project list, about 60% of the projects, covering about 70% of the area, are located in Java. These proportions are similar to the existing division of paddy-growing areas between Java and the Outer Islands. The technical assistance list, from which the projects for the 1980's may evolve, is oriented more towards the Outer Islands, which is appropriate in view of the probable scope and need for developing new food producing areas outside Java. As the mission was not able to visit the Outer Islands and planning for projects outside Java is mostly rather pre- liminary, the mission was not able to form a judgement on the appropriate emphasis to be given to the Outer Islands in future planning and investment. The mission recommends that a separate mission be mounted, within the next year, to look at this question and identify promising areas for development, in the context of the Government's transmigration policies, and study the economic and social implications of alternative geographical distributions of investment.

6. The Resources Mapping Project (already appraised), proposed for parallel financing by Canada and the Bank Group, will be a useful tool in evaluating development strategies over the longer term. However, shorter term planning, including the preparation of individual projects, will have to proceed on the basis of existing information. INDONESIA

IRRIGATION PROGRAMSURVEY

Proposed Project Aid List in the Second Five Year Development Plan March 1974

1974-75

Location Name of Project Size in Ha Loan From Remarks

1. West Java Province, Teluk Lada Irrigation 20,000 Asian Development Committed Java Project Bank

2. East Java Province, Groundwater Exploration 3,600 United Kingdom Committed Java for Irrigation Kedirt- Nganjuk Phase 1I

3. West Java Province, Jatiluhur Extension 53,000 IDA Credit 514-IND Java

4. West Java Province, Citanduy River Improvement 14,000 USAID Coumitted Java Irrigation and Flood Control Project

5. Irrigation Project VI

East Java Province (1) Sampean Baru Irrigation) 10,000) Project (New Scheme) ) ) West Java Province (2) Cirebon Irrigation ) 88,500) Bank Negotiated Feb 1975 and Rehabilitation Project ) ) approved by the Board Apr 1975 West Java Province (3) New Rentang Barrage ) 92,000)

6. West Java Province Jatigede Dam 103,000 Bank Irrigation for dry season crop; power as later phase

7. Centcal Java Province, Jragung or Glapan Dam- 14,000 Bank Java Irrigation and Flood -25,000 Control Project

8. Central Java Province, Ngrambat Dam-/ and Flood 35,000 Bank Feasibility study in Java Control on Serang River, progress by NEDECO including Drainage

9. East Java Province, Wlingi Multipurpose Project 13,600 Japan Excludes power cost at this Java stage

10. Jakarta Metropolitan Jakarta Flood Control Study Netherlands Area

11. Sumatra, Java, Sulawesi Small Scale Irrigation/ 1,096,000 USAID US will provide planning, and Kalimantan Islands Reclamation (Simple (550,000 identification and design Irrigation Schemes) in this aid teams, as well as (Sedarhana) Five Year finance for projects Plan)

12. South Sulawesi North Sadang Irrigation 7,000 Bank Province, Sulawesi Project

13. East Java Province, Madiun Valley Irrigation 130,000 Bank Feasibility study included Java Rehabilitation & Catchment under Irrigation VI Development

14. Lampung Province, Way Seputih Area Development 25,000 Bank Feasibility study in program n. Sumatra

I/ Will help Glapan-Sedadi Irrigation Project rehabilitated under Credit 127-IND. INDONESIA

IRRIGATION PROGRAM SURVEY

Proposed Project Aid List in the Second Five Year Development Plan March 1974

1975-76

Location Name of Project Size in Ha Loan From Remarks

15. East Java Province, Madura Irrigation Develop- 21,000 1. Bank Feasibility study needed Java ment (Groundwater) 2. USAID ? 3. ADB

16. East Java Province, Groundwater Exploration for 46,000 United Kingdom Feasibility study will be Irrigation Kediri-Nganjuk completed in 1975 (Macdonald) Phase III

17. Bali Province, Bali Bali Pilot Scheme Ground- 1. United Feasibility study still Island water Development Kingdom ? necessary 2. ADB

18. Central Java Province, Glapan Da -/ on Sg Tuntang 40,000 Bank Feasibility study completed Java in 1975 by NEDECO

19. West Nusa Tenggara Lombok Irrigation Develop- Canada Feasibility study in program Province ment by Crippan

20. Central Java Province, Pemali-Comal Dams 103,000 Bank Feasibility study in pro- Java Storage for Dry Season gress by Sanyu

21. East Nusa Tenggers Timor Water Resources Canada Feasibility study still Province, Timor Island Development needed

22. East Java Province, Brantas Delta Drainage & 40,000 Japan Java Reclamation

23. East Java Province, Warujayeng and Turitunggorono 14,000 1. Bank ? Java Irrigation Rehabilitation 2. Japan Project 3. United Kingdom

24. Sulawesi Luwu Regional Development 100,000 USAID Studies commencing, Project USAID of $5 million

25. Outer Islands Tidal Irrigation Projects 400,000 ---- Bank may finance pilot project \ 0 1/ Will affect Glapan-Sedadi Irrigation Project.

Source: Directorate General of Water Resources Development, Ministry of Public Works & Electric Power. ANNEX 9 Table 3 INDONESIA

IRRIGATION PROGRAM SURVEY

Proposed Technical Assistance List in the Second Five-Year Development Plan

1974 - 1975

Location Name of Project Size in Ha Proposed

1. South Kalimantan Feasibility Studies and Planning 30,000 Asian Development Bank Province, Kali- of Riam Kanan Irrigation Project mantan on Barito River

2. Lampung Province, Lampung: Sumatra a. Regional Land and Water Resources 300,000 United Kingdom Development b. Way Abung - Rarem Irrigation 83,000 Japan Project

3. Bali Province, Bali Water Resources Development 355,190 United Kingdom Bali Island (Feasibility Study of Priority Project)

4. South Sulawesi Studies and Planning of Central 36,000 Japan Province, Sulawesi South Sulawesi Water Resources Development

5. North Sumatra Tapanuli Irrigation Development 41,000 United Kingdom Province, Sumatra Study

6. East Nusa Tenggara Timor Island Water Resources 60,000 Canada Province, Timor Development Program - Island

7. Central Java South Kedu River Basin Study 85,700 Italy Province, Java

8. West Java Province, Cisadane-Jakarta-Cibeet Water 66,700 United Kingdom Java Resources Development Study

9. Central Java Wonogiri Dam Feasibility Study on 24,000 Japan Province, Java Solo River

10. Special Territory Jakarta Drainage and Flood Control Netherlands of Jakarta, Java Project

11. Central Java Feasibility Study in Serang River 20,500 Netherlands Province, Java Flood Diversion and Juana Drainage

1975 - 1976 and the Follcwing Years

12. East Java Province, Widas Irrigation Project (from 4,000 ? Java Brantas River)

13. West Sumatra Batahan-Air Runding River Basin 11,000 ? Province, Sumatra Study

14. West Sumatra Panti Rao River Basin Study 11,500 ? Province, Sumatra

15. West Sumatra Batang Tongar River Study 7,500 ? Province, Sumatra

16. Lampung Province, Jambu Aye River Study 13,500 ? Sumatra

17. North Sumatra Batang Gadis River Study 7,029 ? Province, Sumatra

18. South Sulawesi Pamukulu River Study 10,000 ? Province, Sulawesi

Source: Directorate General of Water Resources Development. ANNE; Tablel

INDONESIA

IRRIGATION PROGRAM SURVEY

Bank Group Tentative Project Pipeline 1975-1980

Project Appraisal Start (Calendar Year)

Irrigation VI' 1974 1975

On-farm development phase I, Pemali-Comal storage dams preliminary works and Jragung or Glapan dam 1975 1976

Jatigede dam, Madiun rehabilitation and Sadang extension 1976 1977

Way-Seputih area development, Pemali-Comal dams, Ngrambut or Jragung dam preliminary works and on-farm development phase II 1977 1978

Cirebon feeder canals, groundwater project - Madiun/Solo and possible tidal irrigation project I 1978 1979

Ngrambut dam, Citanduyi storage dam and tidal irrigation project II 1979 1980

Outer Island projects To be identified and prepared

1/ Project approved by the Board - April 1, 1975. ANNEX 10 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Rural Social Structure and Farm Income

A. Introduction

1. The Bank has become increasingly aware of the specific problems which the rural social structure in the project areas poses for its effort to increase the benefits of the irrigation rehabilitation program. These include a rapidly growing population and an exceptionally high population density on Java (and therefore a very small average farm size), high levels of rural unemployment, inequitable tenure arrangements, and the special conditions which prevail in the closely-knit village structure and economy. Despite the lack of reliable statistics on the rural social structure in Java and in the project areas, some of these issues will be discussed, based on 1961 and 1971 census data, survey findings of the Agro-Economic Survey (SAE), and on the results of a quick rural socio-economic survey which has recently been conducted--at the Mission's request--by the IPB in the Cisedane (West Java) and Pemali-Comal (Central Java) rehabilitation project areas.

B. Rural Population

Population Growth and Migration

2. In 1971, Indonesia had a population of 119 million. Two-thirds of the population are concentrated on the isla2ds of Java and Madura where population densities approach 570 per km , considerably greater than those of industrialized countries of Western Eur2pe. In Central Java and Jogjakarta, population density is 650 per km . After 1945, mortality declined, reaching a level of about 19 per 1,000 in 1971, as a result of the control of malaria, yaws, smallpox, and other diseases. The birth rate appears to have remained almost constant and was about 47 per 1,000 in 1971. The result was a population growth rate of about 2% from 1961 to 1971.

3. The population of West Java increased from 17.7 million in 1961 to 21.6 million in 1971, or by 2% per year, while the population of Central Java rose from 18.5 to 21.9 million or by 1.7% per year. For these two pro- vinces and the period 1971-78, annual population growth rates of 2.5 ANNEX 10 Page 2

and 2.1%, respectively, have been projected 1/. The findings of the Mission's rural socio-economic survey in Cisedane and Pemali-Comal suggest a smaller average family size in the irrigated rice areas (6.3) than in the rainfed ones (7.4) 2/ and high infant mortality levels--more-than two infant deaths per family in Cisedane. The age structure of the population in Pemali- Comal reveals that about 50% of the population in the irrigated areas was in the non-productive age groups under 15 and over 65, which implies a high dependency burden. Again, the percentage of population in the non-productive age group appears to be higher in rainfed areas.

4. Unfortunately there is little information about the movement of population and manpower. A rough estimate of migrations between regions in the period 1961/71 indicates a net movement of population out of Java of 450,000 3/, out of West Java and Central Java of 270,000 and 790,000, respectively, and into Jakarta of 1 million 4/. The general impression remains that Indonesia has not yet as yet been confronted with an accelerating movement of population from the countryside into the larger urban centers of the magnitude experienced by other countries. ilowever, it may be expected that a more rapid rate of urbanization is also likely in Indonesia.

Education

5. About 55% of the rural population over ten years of age are literate 5/. According to survey results for Pemali-Comal, literacy attainment was higher than the Java/Madura average in the irrigated areas and lower in the rainfed areas. The general impression was that the majority of respondents have not completed their primary school education. It is known from other studies in Java that most children leave elementary schools after the third grade. The primary completion rate is only 20. of initial entrants in Indonesia (versus 60% in Pakistan for example).

6. As regards education facilities, the Survey sample villages in Cisedane showed a population/school ratio (including religious schools) of 736 per school and a pupils/school ratio of 181 per school for the irrigated areas, and very high ratios of 2,036 and 345, respectively, for the rainfed areas.

1/ IBRD, "Development Issues for Indonesia," 1972, Vol. I, Table 1.2.

2/ Average family size figures given by the Agro-Economic Survey (SAE) for West and Central Java are substantially lower (.45 and 4.2).

3/ The Bank Agricultural Sector Mission has estimated the net outflow of population from Java between 1961 and 1971 at 500-600,000.

4/ IBRD, "Development Issues for Indonesia," 1972, Vol. I, Table 1.3.

5/ IBRD, "Education Sector Survey Report," 1974, Vol. I, Annex 2. ANNEX 10 Page 3

Health

7. According to the Survey in Cisedane, public health facilities are more available in rehabilitated areas than in rainfed areas, and there is also a higher frequency of visits to medical clinics. In many sub- districts, planned health centers have not yet been built. Most of the physicians are still living in the urban centers, and it is difficult to find physicians at the sub-district level. "Barefoot doctors" (mantri Kesehatan), who usually have a three-year education beyond junior high school level, are providing health care in many sub-districts and villages. Medical fees are fairly high for the average farmer.

C. Rural Employment and Income

8. Census data tell us little about the extent of unemployment and underemployment in the rural areas of Indonesia (for example, rural unemployment is said to be less than 2%). Indonesia's labor force is rural, a proportion which has declined only slightly over the last decade.

9. The slow rate (as yet) of urbanization and the extremely uneven distribution of population between Java/Madura and the Outer Islands are produced by what is perhaps the sociologically most critical feature of wet-paddy agriculture: its marked tendency (and ability) to respond to a rising population through intensification. This process of adaption in Javanese agriculture to acute population pressures, which has been labeled "agricultural involution" 1/, has been favored by very low wage levels and the closely-knit village structure. However, evidence is mounting that this process may have entered a new phase in which the "involution" increasingly involves non-agricultural activities as well.

10. The growing importance of non-agricultural activities in rural areas can be discerned in the pattern of sectoral employment changes from 1961 to 1971. The major shift in the sectoral shares of employment has been a decline from 72% to 63% in agriculture, with corresponding increases in the shares of trade, transport and services. Employment in agriculture grew at a rate of only 0.5% per year compared to increases in manufacturing employment in rural areas averaging 6.8% per year. This pattern of relative employment shifts is even more marked in the case of Java/Madura where employment in rural manufacturing grew at an annual rate of 7%.

11. Furthermore, there are certain unique features of the relation- ship between the urban and rural labor markets, particularly on Java,

1/ Clifford Geertz, "Agricultural Involution: The Process of Ecological Change in Indonesia," University of California Press, 1968. ANNEX 10 Page 4 which make census labor force and employment figures inadequate indicators of the extent to which large numbers of the population have become involved in the urban economy. Data from the Agro-Economic Survey indicate that almost one-third of the farmers had off-farm employment and that this proportion ranged up to over 70% in some districts. According to another Agro-Economic Survey sample of eight villages in Central Java, non-farm labor was the most important source of income for 6.5% of families. The mission was repeatedly told of substantial movements of farmers to urban areas in pursuit of other work during slack periods in the agricultural cycle. The Pemali-Comal Survey indicates that, on average, nearly one person per family had off-farm employment, about 45% of them in trade, 40% as construction workers and the rest as government employees.

Farm Size

12. The 1963 Census of Agriculture indicated that 70% of all farms in Indonesia were less than 1 ha, while 71% of the land belonged to the 30% of the farmers with 1 ha or more. The smallest average size farms were found on Java, ranging from 0.6 to 0.8 ha. Preliminary results of the 1973 census will be available only at the end of 1974.

13. An Agro-Economic Survey sample indicated that the average farm size was 0.54 ha in West Java in 1970/71 ha and 0.58 ha in Central Java. In each province, about 38% of farmers had less than 0.25 ha, and only 4.5%, more than 2 ha. There are, however, marked variations between villages (Table 1). The Serang, Suberng, Pemalang and Kendal Districts of Pemali-Comal cover parts of the Bank's rehabilitation project areas or are comparable to them. There is also considerable fragmentation of holdings, resulting from Moslem inheritance laws, which require that each parcel of land be divided amongst all the heirs. A Agro-Economic Survey of 11,000 farms found that the average the average number of land parcels was 2.3, and that the smaller the size of the farmer's irrigated land, the greater the fragmentation. 1/

14. It is obvious that landholdings are unequally distributed and that a great proportion of the farms are too small to be efficient economic units and to sustain a family. The distribution of land ownership produces a similar inequality in the distribution of rural income. Land reform, including the consolidation of fragmented holdings and the regulation of tenurial conditions, nias not been given serious consideration in Pelita I and II.

Laid Tenure

15. rhe rural socio-economic survey in Cisedane and Pemali-Comal showed that nore than 70% of the sample farmers in both rehabilitation areas were owner-cultivators. The proportion of owner-cultivators was highest in the rainfed areas. There were only two cases of absentee landlords

1/ Collier and Sajogyo, "Preliminary Analysis of Rice Farms in 37 Villages," SAE, 1970. ANNEX 10 Page 5

in the entire survey area. It is quite possible that those farmers who are in fact "stand ins" for the actual owner responded as if they were owners. It is a matter of status to be considered as an owner rather than as a sharecropper or "stand in."

16. About 30% of the farming population are sharecroppers or owner-sharecroppers. Contract rent on agricultural land is very rare. Usually the rent is paid in kind ranging between 0.6 to 1 ton/ha of half-dried stalk paddy annually. The proportion of landless laborers is also high. For example, in Indramayu District, about 20% of the active population are owner- cultivators, 27% sharecroppers/tenants, and more than 50% landless laborers. According to the rural socio-economic survey (Annex 2) the proportion of land- less laborers seems to be high in all rehabilitation areas.

17. Exact percentages for owner-cultivators and tenant/sharecrop- pers are hard to find, as no records are kept by the village headmen. One of the main reasons is the fact that tenurial relationships are customary and verbal. According to the Law on Sharecropping Arrangements (No. 2 of 1960), all contracts should be made in writing in front of the village chief. This almost never occurs. According to the law, the District Officer is sup- posed to set limits to the proportion of the crop to be retained by the owner.

18. The sharecropping system is usually based on a 50-50 sharing of the crop after deduction of harvesting fees, with expenses for inputs shared on a variable basis. In some Cisedane villages, the owner's share was 50% and the sharecropper's 30%, 20% being for the harvesters' fee. Usually input costs are shared equally and the IPEDA tax is paid by the landowner. Relations between landowner and sharecropper have over time become stabilized and have taken the form of a patron-client relationship.

Farm Income

19. Few data are available on farm income by size of farm and or type of rice production. Budgets (Tables 2 and 3) are, however, presented to show estimated income changes as farmers intensify and upgrade pro- duction methods by the use of cash inputs and irrigation. The majority of Javanese paddy farms are from 0.1 to 0.5 ha in size, and little of their production is marketed. Only an estimated 25% of the total Indonesian paddy crop enters the market place. Off-farm income is very important and survey data from Cisedane and Pemali-Comal rehabilitation irrigation areas indicates that, on the average, it is more than half of total farm income.

20. Crop budgets are presented in Table 2. Yields are quoted in terms of paddy, and represent total harvest production before any payment in kind to the harvesters. Paddy has been valued at Rp 38/kg 1/to the farmer, the price offered by BUUWD's to non-members. In Table 3, the estimated increases in the value of production or potential income on a 0.5 ha farm from the use of fertilizer, insecticide and improved seed on upland rice; the use of direct seeding and cash inputs on rainfed rice; and from the rehabilitation

1/ Increased in October 1974 to about Rp 58/kg. ANNEX 10 Page 6 of an existing irrigation area, are shown. No data is available to estimates any decrease in off-farm income as farm production is intensified. The irrigation budgets have been constructed with data from that part of the Jatiluhur irrigation area included in the Second Irrigation Rehabilitation Project. Further details are given in Annex 2. The major assumptions made in estimating the farm budgets are described below. The calculation in Table 2 are supported by survey results for Pemali-Comal, which show gross value of production (minus harvester's fees) of about Rp 84,000/ha after rehabili- tation and production costs of Rp 57,000/ha.

21. Labor. Estimated labor requirements for each crop are shown in Table 2. SAE survey results indicate that even small farmers (i.e. 0.2 to 0.5 ha) hire labor for irrigated rice production. 1/ Without further data, this analysis would consider that small farmers (i.e. 0.5 ha and less) have sufficient family labor for all cultivation needs except harvesting, (and plowing, where done by hand hoe in an irrigation area with time constraints). Small farmers normally assist each other in their rice production. What appears to be hiring of labor could be repayment in kind for assistance given neighbors. However, in villages with sizeable landless laborer populations, rice growers may feel socially obliged to hire labor. Wage rates and payment terms vary considerably from village to village. For the present analysis, labor has been valued at an average weighted wage of R 175 per day in all Cses. This may overprice labor inisome rainfed areas. Harvest wages for local paddy varieties are usually paid in kind (for example, one-sixth of production), while harvest wages for HYV's are assumed to be paid in money.

22. Seed. Different budgets have been constructed for irrigated local varieties and for HYV's. Assumed seeding rates are 35-50 kg/ha for mixed varieties and 25 kg/ha for HYV's. Assumed prices are Rp 40/kg and Rp 70/kg respectively.

23. Land Preparation. A bullock pair has been charged at Rp 250/day. For irrigated areas, plowing has been assumed to be done 80% with bullocks and 20% with hand labor.

24. Fertilizers and Pesticides. Fertilizer and pesticide applica- tions have been adapted from BIMAS and mission recommendations. Actual prices paid bv farmers are used, that is, Rp 40/kg 2/ for both urea and triple superphoshate.

25. Taxes. Allowances have been made for the main official land tax (Ii'EDA) and for local and illegal taxes. These latter are assumed to be 10% of gross production. A contribution from the farmer for operation and maintenance of the quaternary system is also deducted.

1/ "Comparison of Input Use and Yields of Various Rice Varieties by Large Farmers and Representative Farmers", William L. Collier and Ahmad T. Birowo, AGro-Economic Survey, July, 1973. 2/ Revised in October 1974. ANNEX 10 Page 7

25. Taxes. Allowances have been made for the main official land tax (IPEDA) and for local and illegal taxes. These latter are assumed to be 10% of gross production. A contribution from the farmer for operation and maintenance of the quaternary system is also deducted.

26. Interest. BIMAS interest is 1% per month with repayments after seven months. Interest has been charged at 2% per month for cash inputs and a BIMAS living allowance over the rice growing period in the budgets. Payments may be overestimated where a BIMAS loan is defaulted and repaid over a period longer than seven months, or underestimated for money borrowed from moneylenders at high interest rates.

27. Household Expenditure. Data collected by the mission from farmers in the IDA rehabilitation area in Indramayu District give an annual expenditure of Rp 150,000 to 200,000 per household. The following table gives the average annual family expenditures figures from a study 1/ in the Cisedane area of three sub-districts.

Sub-District Expenditure Item Sepatan Teluknaga Tigaraksa ------Rp------

Food 120,600 95,600 83,600 Education 3,600 1,500 1,200 Clothing 12,800 9,900 7,200 Maintenance of housing 2,400 1,000 1,300

TOTAL 139,400 108,000 93,300

28. Results. The figures presented in Table 3 show that total annual crop income from a 0.5 ha farm under 190% cropping intensity is nearly Rp 120,000, provided hired labor is used only for harvesting. If farm size is doubled to 1.0 ha and all additional labor required is assumed to be hired, annual crop income would be nearly Rp 210,000. From this it would appear that a farm family needs nearly 1 ha under conditions of a wet and dry season water supply if annual family expenditure is to be met from crop income. How- ever, in deciding on the actual areas of land required to support a family under the different classes of rice production, off-farm income must be taken into account. More data is needed on the effects on off-farm income of in- creasing farm size, either by providing dry season irrigation or expanding the area of holdings. In Java and other areas of population density, where it is not possible to expand present farm sizes by either means, off-farm income will remain critical to the livelihoods of farm families, unless real farm incomes in these areas can be raised through transmigration or increasing product prices.

1/ Igusti B. Tekem et al. "Kemungkinan Penerapan Pola Pergiliran Tanaman- didaerai Rehabilitaw3i Irigasi Cisc dane" (Crop Rotation Alternatives in Rehabilitated Cisedane Irrigation Area), Bogor, IPB-IDA, 1973. ANNEX 10 Page 8

D. Village Structure

29. Status in the village communities is closely linked to land ownership. Village leaders tend to be owners of relatively large farms and village leadership confers access to still more land provided by the village. For example, in two districts in Central Java, the average size of the land allotments associated with the village headman position was 6 ha and 17 ha. Although the position is elective, most hold the position for life or for more than a decade, and those elected are from a selective list.

30. Another traditional position is the one of an elected caretaker for water distribution in the irrigation scheme (ulu-ulu). The ulu-ulu derives his income mainly from the farmers in his block. The water charge is usually paid in kind and amounts to 20 kg paddy/ha in the Cisedane area.

31. Among the fairly recent village organizations are the village unit cooperatives (BUUD's). However, these tend to be dominated by the larger farmers and there appears to be a feeling that the very small farmers are so poor that there is little prospect of their deriving significant benefits from the BUUD. Since the failure of the previous agricultural cooperatives imposed upon the villages in 1964, suspicion towards government-initiated cooperatives remains.

32. Middlemen, money lenders and rice millers play an important role in the village community. According to the survey, pre-harvest selling at low prices to the rice mills and middlemen is a recurrent phenom- enon, because of severe cash shortages among smallholders and sharecroppers. Money lenders operate on two levels. Big money lenders operate networks of smaller lenders, who are familiar with the individual villages. Interest rates run as high as 10-15% per month (Annex 12).

33. Indonesian villages are said to incorporate many elements of equity. For instance, a variety of customs and practices regulate how and by whom harvesting and other activities are done. This may alter the relation- ship of farm size and income, making it more equitable. In traditional Indonesian society, much stress is placed on the spontaneous cooperative labor effort of "gotong royong" in road construction, mosque building and tertiary canal construction. As a consequence however, of the growing influence of the money economy and off-farm employment, "gotong royong" activities are no longer undertaken spontaneously by the villagers. The lack of tertiary development in the rehabilitation areas is partly a result of these changing attitudes in village society. ANNEX 10 Page 9

E. Recommendations

34. In order to maximize the social benefits of rehabilitation, special emphasis should be placed on program components which favor smallholders and the rural poor. Specifically, these should include the following:

(a) based on the experience from the quick rural socio- economic survey (Annex 2), a more comprehensive survey 1/ should be conducted in order to assess rehabilitation benfits, indicate crucial constraints and provide criteria conducive to the design of a built-in assessment mechanism, to be carried out by an independent entity every year;

(b) studies should be done on tenurial relationships and farm size problems, including land reform, in order to indicate possible improvements of the sharecroppers' and small- holders' position;

(c) in tertiary and quaternary development, labor intensive ways involving the local people should be stressed. "Gotong royong" should be strengthened by giving suf- ficient incentive to farmers and by organizing work during slack periods. In order to minimize farmer resistance, the network design should economize on scarce land;

(d) In order to strengthen the bargaining position of smallholders, farmers' organizations favoring the small farmer should be stressed. The membership of BUUD's and of the proposed farmer committees and tertiary/quaternary groups should be regulated in such a way that they will provide special support to smallholders;

(e) the government should not only provide credit under reasonable conditions to smallholders but should also exert effective control on the use of such credit; e.g. ensure that the cost of living allowance of the BIMAS package is being passed on to the sharecropper by the landowner.

(f) education facilities and low-cost rural health services for the poorest segments of the rural population should be improved and the family planning program should be expanded;

1/ This has been included in Irrigation project IV. ANNEX 10 Page 10

(g) since, in densely populated areas, efforts to improve benefits for the rural poor cannot be confined to the agricultural sector, labor-intensive rural industrial- ization should be promoted. In order to make an impact on industrial location, infrastructure in rural areas should be improved; and

(h) In view of population pressure and farm size distribu- tion on Java, comprehensive transmigration and land reform schemes should be given more urgent consideration. INDONESIA

IRRIGATION PROGRAM SURVEY

Average Size and Percentage Size Distribution of Cultivated Farmland in West and Central Java Sample Villages, 1970/71

Size Distribution of Holdings Village Average Size (%) (District) (ha) -0.24 o.25-0.49 0.50-0.74 0.75-0.99 1.00-1.49 1.50-1.99 2.00- ha ha ha ha ha ha ha

Warungjaud (Serang) 0.59 31.9 10.1 23.5 11.8 12.6 5.9 4.2 Sentul (Serang) 0.52 10.4 40.9 20.9 13.0 11.3 1.7 1.7 Mariuk (9hbang) 0.77 40.4 13.0 14.3 1.9 13.0 1.2 16.1 Cidahn (32bang) 0.52 43.9 26.6 12.9 6.5 7.2 2.2 0.7 Gekbrong (Cianjur) 0.40 44.1 27.0 11.2 4.6 10.5 2.0 0.7 Jati (Cianjur) o.44 55.6 14.6 6.6 7.3 11.3 2.6 2.0

Province West Java o.54 39.1 21.5 14.3 7.0 11.1 2.6 4.5

Serang (Pemalang) 0.38 59.1 15.6 11.0 1.3 7.8 1.9 3.2 Wanarata (Pemalang) 1.13 19.0 19.6 24.6 - 13.4 4.5 19.0 Rowosari (Kendal) 0.34 56.9 27.1 10.5 3.3 1.1 - 1.1 Banyutowo (Kendal) 0.99 1.2 12.2 30.6 19.4 24.4 6.7 5.6 Pateman (Kebumen) 0.33 51.4 23.2 15.5 4.4 3.3 2.2 _ Bulus Pesantren (Kebumen) 0.48 35.4 23.1 21.9 7.9 8.6 1.8 1.2 Sukorejo (Banyumas) 0.51 43.0 21.0 15.4 7.7 7.1 2.6 3.2 Kebanggan (Banyumas) 0.49 43.4 26.9 9.3 6.o 8.8 2.2 3.3 Province Central Java o.58 38.2 21.2 17.4 6.4 9.4 2.8 4.7

Source: Agro-Economic Survey, "Agricultural Census in 33 Villages Located in the Major Rice Producing Areas of Indonesia," 1972. H HX

,-0 INDONESLA

IRRICATION PROGRAMSURVRY

Paddy Crop 8odgeta

7placd Rice 1y?ld Rice Rainfad Rice Rainied Rice j Irrigated Rice - Fu,ture u Rehabilitation Irrigated Rice - Fnture W Rhabiliteti- tRted RIce-- Future W lIPTOved Rehabilitatloo Ite. Unit U-Cash inputs W- ash inputn Tran-planted Direct Seeded Local VVariachYV Wet Loclo Varciett YoV Local Vaieti-o OHyV aft Seagn Rr atee ie-ao Dry Seesen Wet Seaso DrY Reaon Wee Sesn Py Snar Wee S.ano. Dry Seance Wet Sooco,, Dry Res-

Total Production - Paddy ton/he 1.0 I.S 1.5 2.5 2.4 1.0 3.6 2.6 3.4 2.5 4.2 3.2 3.5 2.5 5.2 4.2 Cre Predortlee Valuze Rp/ho 38,000 57,000 57,000 95,000 1,200 68,400 136,hO0 90,800 129,200 93,100 159,600 121,600 133,000 95.380 197,600 159,600

P-od-ri-n Coato ocher than Labor - nollonhe 6,220 ~~~~~~ ~~~~~~5,005000 ~~~~~~~~6,250 5,000 1,0 200.600 5,1110 1,600 5.000 1 600 5,000 1.6000 5,000 1,600 -Seed o 16,400o 1,750 1,0600 1,750O 1,600 1 600 17°00 1.750 1i600 1,6°00 15°750 1 755 1 600 1,600 15750 I 750 - Partil-cer- " 4,00 5 400 2,160 1,360 5,400 5,400 4,200 3,760 7,480 7,480 4,080 3,600 0,160 - Chen,icula 0 _ 2.320 - 2,320 , 1,920 - 1,920 1,920 1,020 1,920 1,920 1,920 2,320 2.320 4,040 4,040 - Oarest,g1 6,460 7,350 9 500 8,580 i5,200 11 ,400 9,630 7,880 21,470 15,500 11,030 9,280 22,040 15,890 13,460 10,850 - 'Coxe & tar 06M " 4,050 6,00 ,2 00 1000 12,120 9,840 16,680 12,880 i6,720 13,110 19,760 15,960 17,900 14,140 24,360 20,560 - Interest cE SO O50390 6 LJ00 42 1,210 I 1,1001,1600 600 1, 370 950 1,7000 1,420 1,440 1,130 1,920 1.650

$nh-Tetal 18,660 29,060 22.700 34,260 39,100 26,400 41,750 35,530 52,170 30,440 48,640 39,410 54,380 40,280 58,710 48,610

Croeo Value neinunProd Couto ether chan Labhor 19,340 27,940 34.300 60,740 52,100 42,000 95,050 66,270 77.030 54,660 110,960 82.190 78,620 55,100 138,890 110,990

Total Labor Value 16,100 17.500 23,630 20,350 33,600 27,650 35,870 30,270 35,000 28,700 35,880 30.280 35,180 28,700 36,400 30,800

GO-s Value oinue Prod Costa 6 Laher " 3,240 10,440 10,670 32,390 18,500 14,350 59,180 36,000 42,030 25,960 75,080 51,910 43,440 26,400 102,490 800190

Labor R ..oire-nt

Nuoeryy 6 . 6 6 6 6 6 6 6 6 6 6 6 6 L.and Preparation 37 37 42 42 62 30 62 30 62 30 62 30 62 30 62 30 Tran-plent/Soe 3 3 30 30 52 52 56 06 52 52 56 56 52 52 56 56 Weed 35 35 35 70 37 37 45 45 37 37 45 45 37 37 45 45 Manageorne 12 18 15 20 25 25 36 36 28 28 36 36 20 28 39 39 Ha-vest 38 42 42 49 40 44 15 45 51 48 65 55 49 77 6

TOTAL 125 135 170 211 230 194 260 218 238 201 268 226 240 202 285 230

2/1/ Id,ith..W a vithout 2/ W S ith 1 3/ Total 1ehor .serpe that .a.d Ln harYeetlNe. tAo INDONESIA

IRRIGATION PROGRAM SURVEY

Farm Budgets -0,5 ha Farm

Enterprise Season Area Yield Gross Returns Prod. Costs!' Returns Less Total Returns Increment Labor Value2/ Additional Prod. Costs Less Prod Costs Labor Value Required ha ton/ha ------Rp/ha--______

1. Intensification of Upland Paddy

Upland Rice W Cash Inputs Wet 0.5 1.0 19,000 9,330 9,670 9,670 8,050 Upland Rice W Cash Inputs Wet 0.5 1.5 28,500 14,530 13,970 13,970 4,300 8,750 700

2. Intensification of Rainfed Paddy

Rainfed Rice Transplanted Wet 0.5 1.5 28,500 11,350 17,150 17,150 11,815 Rainfed Rice Direct Seeded Wet 0.5 2.5 47,500 17,130 30,370 30,370 13,220 14,175 2,360

3. Rainfed Local Rice to Irrigated HYV 190% Cropping Intensity

Rainfed Rice Transplanted Wet 0.5 1.5 28,500 11,350 17,150 17,150 8,050

Irrigated HYV Wet 0.5 5.2 98,800 29,355 69,445 18,200 Irrigated HYV Dry 0.45 4.2 71,820 21,875 49,945 119,390 102,240 13,860 24,010

4. Rehabilitation of Jatiluhur Irrigation System

Present Situation

Local Variety Wet 0.375 2.3 32,780 14,360 18,420 12,600 Local Variety Dry 0.22 1.7 14,210 5,690 8,520 6,080 HYV Wet 0.125 3.5 16,620 5,220 11,400 4,480 HYV Dry 0.07 2.5 6,650 2,490 4,160 42,500 2,120

Future Without Rehabilitation (1979)

Local Variety Wet 0.25 2.4 22,800 9,780 13,020 8,400 Local Variety Dry 0.145 1.8 9.918 3,828 6,090 4,010 HYV Wet 0.25 3.6 34,200 10,440 23,760 8,970 HYV Dry 0.145 2.6 14,326 5,156 9,600 52,470 9,970 4,390 490

Future With Rehabilitation Completed (1979)

Local Variety Wet 0.125 3.4 16,150 6,520 9,630 4,380 HYV Wet 0.375 4.2 59,850 18,240 41,610 13,450 HYV Dry 0.375 3.2 45,600 14,780 30,820 82,060 29,590 11,360 3,420

Future With Improved Rehabilitation Completed (1979)

Local Variety Wet 0.05 3.5 6,650 2,720 3,930 1,760 HYV Wet 0.45 5.2 88,920 26,420 62,500 16,380 HYV Dry 0.45 4.2 71,820 21,880 49,940 116,370 34,310 13,860 2,810

1/ Production costs do not include labor, except for that used in harvesting. T/ Labor value is the cost of all labor required, except that used in harvesting. ANNEX 11 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Seed Production

Present Situation

1. The Directorate of Agricultural Production is responsible for the supervision of seed production and marketing. Foundation seed from CRIA is supplied to the Provinces, where it is multiplied in provincial or district seed farms for release to private growers as stock seed. The growers multi- ply the seed and sell it directly to the farmers. In some cases, growers obtain foundation seed direct from CRIA. Staff of the Directorate of Agri- cultural Production at the district level are responsible for checking the purity and quality of seed produced in the district seed farms and by seed growers. Seed growers are required to register the area of seed being grown and the varieties with the regency (division) and district office.

2. No reliable statistics are available on the total area and pro- duction of government and private seed growers. Currently about half the farmers in the irrigated areas use high yielding varieties and the bulk of seed comes from local growers. Current prices 1/ for good seed are in the range Rp 70-80/kg.

3. The traditional system of seed multiplication and distribution is not very satisfactory. Foundation seed supplied from CRIA and experimental farms is often mixed with many different types. The system of checking purity and quality in government and seed growers' fields is unsatisfactory. As a result, many farmers' fields contain different types or a mixture of varieties. Since there is variation in time to maturity this may cause harvesting problems, and certainly causes milling problems. To get good results, mills have to be adjusted to particular variety being milled. Mixed varieties and variable moisture content lead to poor milling and a high percentage of brokens.

4. In an effort to improve the quality of seed and to develop a sys- tem of getting new varieties out to the farmers as quickly as possible, GOI recently introduced a Seeds Project, with assistance from IDA Credit 246-IND. The main components of the project are as follows:

(a) a rice research and breeding station at Sukamandi, West Java;

1/ April 1974, since raised in October 1974 to the range Rp 80-120/kg. ANNEX 11 Page 2

(b) the establishment of a Seeds Control and Certification Service;

(c) the establishment of a National Seeds Corporation (NSC) to process and market certified seed;

(d) the development of an NSC mechanized seed farm (4,300 ha) and processing plant at Sukamandi; and

(e) the establishment of seed production based on private seed growers in Central Java with seed processing facilities at Klaten.

It is proposed that CRIA and the Sukamandi Rice Station would produce breeder seed, maintain pure lines of foundation seed and produce stock seed for sup- ply to the NSC farm at Sukamandi and private growers who would produce seed for sale to farmers. The Seeds Control and Certification Service will con- trol standards of purity and quality at all stages of production. The sys- tem is to concentrate initially on improving supply and quality in Java. Pure clean seed will be packed in plastic bags and will be sold through district and village unit agents, for example, P.T. Pusri (through BUiWD's) and P.N. Pertani. The NSC sells seed at Rp 77 and the agent will sell at Rp 85 per kg (April 1974 price).

Problems

5. The development of the project is proceeding very slowly (see Supervision Report dated August 21, 1973). The delivery of processing equipment has been delayed, development of land for irrigated seed produc- tion at Sukamandi is behind schedule and no satisfactory method has been found to mechanize seed farm operations. Projected NSC production for 1974 is only 3,000 tons against a projected demand of 11,000 tons.

6. Successful marketing of seed is highly dependent upon the farmers' appreciation of the value of quality seed. Since marketing is not being directed through BIMAS and the extension service is presently weak, farmers are likely to continue to buy lower quality seed at Rp 70/kg from private growers. With highly centralized production and processing and poor rural roads, distribution of NSC seed could be a problem.

Projected HYV Seed Requirements

7. If it is assumed that 70% of the irrigated area is developed for HYV's by 1980, the seeding rate is 25 kg/ha and farmers change seed every three years, total estimated requirements will be 32,000 tons per year. Assuming an average yield of 3 ton/ha, 11,000 ha for seed production will be needed.

Recommendations

8. In view of the slow development of the Seeds Project and the in- creasing demand for HYV's, the following recommendations are made: ANNEX 11 Page 3

(a) The seed certification and testing portion of the program should be implemented as quickly as possible and selected groups of growers in all provinces be upgraded to meet requirements for the immediate future. A lower grade of seed, "government approved", should be accepted as a temporary measure or the standards for certified seed should be lowered until all aspects of the on-going project are fully operational;

(b) A reasonable proportion of Sukamandi production should be directed to the rehabilitated irrigation areas so that optimum benefits are obtained from fertilizer inputs and the improved water supply. This will require improvements in the seed distribution system to ensure that NSC seed is freely available at the village level and close coordination between NSC, distributors, BIMAS and the extension service; and

(c) In view of high unemployment and difficult of mechanizing production at Sukamandi, labor-intensive methods should be considered. ANNEX 12 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Credit

Background

1. Farmers' credit requirements have in the past mainly been met by local moneylenders or by landlords. Little institutional credit was avail- able for farmers until the commencement of the BIMAS programs in 1965. This annex focuses on the main institutional source of credit, the BRI (Bank Rakjat Indonesia), which has undergone numerous changes since its estab- lishment in 1896. The last major reorganization was in 1965, when the Central Bank and all state-owned commercial banks and savings banks were merged into the Bank Negara Indonesia and the BRI was integrated into Bank Negara Indonesia Unit II. This experiment in conglomerate banking lasted only three years, however, and in 1968 Bank Negara Indonesia was divided into the Central Bank (Bank Indonesia) and seven state banks: five com- mercial banks, a savings bank and a development bank. Bank Negara Indonesia Unit II was split into the BRI, with concentration on credit for agriculture, fisheries, cooperatives, and rural development, and the Export-Import Bank, specializing in loans for the production, processing and marketing of export products. The three other commercial banks formed were Bank Bumi Daya, spe- cializing in estate agriculture and forestry credits, Bank Negara Indonesia 1946, specializing in industrial credits, and Bank Dagang Negara, specializ- ing in mining credits. Although the state-owned commercial banks specialize in different fields, a certain degree of competition between them is allowed. The BRI in its present form was created by Republic of Indonesia Law NR-21 on 18 December, 1968.

2. The main functions of the BRI are:

(a) to perform commercial banking operations, including short and medium-term lending, primarily for the benefit of farmers, fishermen and small scale industrial, trading and other entrepreneurs;

(b) to assist GOI in implementing its agricultural policies and conducting rural development programs, primarily by administering credit and subsidy funds provided by Government for designated rural development purposes; and

(c) to supervise secondary rural banks in accordance with Bank Indonesia directives. ANNEX 12 Page 2

BRI Organization, Management and Staff

3. The BRI, whose Head Office is in Jakarta, is composed of 13 re- gional offices, 221 branches and sub-branches, and a network of auxiliary offices, mobile units and village units. The following table shows the evolution in the number of BRI branches and subordinate units during the past four years.

Sub- Auxiliary Mobile Village Date Branches branches offices units units

Dec 1969 203 15 87 531 - Dec 1970 218 - 77 509 537 Dec 1971 219 - 77 509 1,066 Dec 1972 219 - 86 516 1,066 Sept 1973 220 1 77 492 1,425

Village units were established to carry out the improved BIMAS program in the rural communities. Mobile units bringing cashier services to remote areas had been in use previously but, as far as the BIMAS program is con- cerned, they are essentially temporary units providing services in areas not yet covered by village units.

4. Regional offices are composed of four departments: (a) the Loan Department, which supervises loans authorized in the branches, approves loans within the authorization limits set for the Regional Office, and com- ments on loans being forwarded to Head Office for decision; (b) the Finan- cial Department, which compiles and checks financial reports; (c) the Control and Unification Department which audits all branches in the region and con- trols their budget; and (d) the Service Department which takes care of per- sonnel and material affairs. With the setting up of District Audit Offices responsible to the Supervision Bureau of Head Office, the audit activities of the Regional Offices should gradually disappear.

5. Branch offices, engaged in conducting a wide variety of banking activities under Regional Office supervision, are being reorganized under the ongoing modernization program. The two main features of the reorga- nization would be, first, to emphasize the credit function through the appointment of a Credit Officer at the same Deputy Manager level as the Operations Officer and, secondly, to amalgamate the Financial, Savings and Commercial Departments and apportion most of their functions to a Documents and Validating Section, responsible for carrying out all transactions, and a Bookkeeping Section, responsible for recording them.

6. Auxiliary units are essentially branch tellers performing cashier functions at a fixed geographical location, different from that of the branch itself. Entries are made on customers' cards and transactions are recorded in a cash book, all other recordings being made at the branch office. ANNEX 12 Page 3

7. Mobile units are composed of a cashier and a bookkeeper from a branch office, who visit widely-scattered villages in rotation, for one day at a time, to provide simple banking services, and who return to the branch the same day. They have no power of decision. Approximately 210 such units are engaged exclusively in providing BIMAS loan services in rice areas where the establishment of village units is not yet possible, while another 280 units, not necessarily located in rice areas, provide some commercial banking services and accept deposits in addition to servicing the BIMAS program. Mobile units have a poor BIMAS loan collection record and the BRI's efforts and resources are being concentrated on the development of village units, rather than mobile units, for the BIMAS program. Nevertheless, there are plans to organize 100 new mobile units in 1974 as a temporary measure, aimed primarily at serving the needs of the rapidly expanding BIMAS program.

8. BRI village units are one of the three main institutional partici- pants in the BIMAS program. The other two are the input distributors, which may be either local agencies of private or Government concerns or BUUD's, and the local extension service of the Ministry of Agriculture. BRI village units are headed by a credit examiner and composed of at least two other members, a cashier and a bookkeeper. All live in the villages and know the farmers and their activities, a decided advantage for the processing and collection of loans. The credit examiner, who is responsible to a Branch Manager, has the power of decision in respect of BIMAS and other small loans. BRI village units owe much of their loan collection performance (Table 4) to the limited but important role which the improved BIMAS program assigns to village heads: that of giving a character reference on, and corroborating the information provided by loan applicants and of taking an active part in the collection of loans. Village heads receive a nominal fee for each BIMAS loan made, plus 0.125% of the amounts collected. There were some 2,100 vil- lage units in operation in March 1974, and it was expected that 500 more units would be formed in 1974. As of April 1974, the activities of BRI vil- lage units are being expanded to include small short-term non--BIMAS agricul- tural production and commercial loans, medium-term loans of up to US$250 for such items as agricultural equipment and draft animals, and the acceptance of savings deposits. Village units are rapidly evolving into village banks, providing an increasingly wide range of banking services to the rural com- munities and giving the BUUD's the support without which they could not be expected to develop satisfactorily. Village units will soon have to employ more staff, train them better and increase their salaries. The BRI has recently asked the Asian Development Bank, which has been associated with the establishment of village units from the beginning, to provide a con- sultant to study and advise the BRI on how the expanded village units sys- tem should be organized and operated for optimum results.

9. As at December 1972, BRI's employees numbered 12,500 including approximately 3,200 engaged in carrying out the BIMAS rice production in- tensification program through village units. The head office had 1,500 employees. Over 60% of the staff had senior high school education and 3% had a university degree. In 19/2, the average monthly gross salary and ANNEX 12 Page 4 benefits of the staff was Rp 27,000 which is believed to be higher than the average income of civil servants. By September 1973, the number of BRI employees had reached 13,200 due largely to an increase of some 1,300 in village unit personnel, offset partly by reductions elsewhere, including reductions of over 200 in head office. Personnel at head office were still felt to be 100 to 200 in excess of requirements and were continuing to be reduced as quickly as employees could be absorbed in the field.,

10. In addition to sending some of its more promising officers to the Banking Institute, a school of banking in Jakarta owned by the state banks and formed and operated with IMF assistance, the BRI has a banking school of its own and operates a number of training programs. Its branch management training program consists of a year of on-the-job training, followed by a 3-month practical banking course at the BRI school and a further 9 months of on-the-job training. The credit analysis program for university graduates consists of one year's training on-the-job, followed by a 3-month credit analysis course at the BRI school. There is also a two-week course for machine operators, a three-month training program for village unit personnel and a correspondence course on credit management.

Lending Operations and Sources of Funds

11. Tables 1 and 2 illustrate the recent growth in BRI lending activity. Since 1970, short-term loans to industry, trade and services (primarily agro- industries and dealers and traders in farm products) have accounted for 70% or more of the BRI's total volume, while agricultural production loans and related lending, including loans for fertilizer distribution, cattle breed- ing and fisheries, have accounted only for about 25%. Within the latter group, the improved BIMAS credit program has grown steadily since it was launched in 1969, and credit to cooperatives, which had been minimal since 1970, made an important comeback in 1973. The balance of the BRI's activi- ties is made up of investment credit, which has been stagnant, and personal and other loans.

Short-term Credit

12. Working capital loans, which are extended for a maximum of 12 months (some working capital loans are renewed, on due date, for a further period), form the bulk of BRI lending. In 1972, 10% of these loans were to industry, trade and services; since their average size was US$1,385, these loans accounted for 70% of the Bank's disbursements. At the other end of the scale, 81% of the number of loans made were BIMAS crop production in- tensification loans; since these loans averaged only US$19.26 in amount, they accounted for only 8% of total disbursements. The average sizes of the various types of loans disbursed in 1972 are given in Table 3.

13. The authority of the various BRI levels to approve working capital loans, and the time required for such approvals, are as follows: ANNEX 12 Page 5

Time Required to Process Authorizing Limit Applications (Rp million)

Village units up to .025 1 week Branches up to 2 1-2 weeks Regional offices 2 to 5 2-3 weeks Head office 5 and over 3-4 weeks

The authorizing limits of branches and regional offices are expected to be increased to Rp 5 million and Rp 10 million, respectively, in 1974.

14. The interest rates currently applied on working capital loans vary between 1% and 2% per month, as follows:

Loan Purpose Monthly Rate (%)

BIIIAS - rice and other food crops 1 Import and distribution of fertilizers and insecticides 1 BIMAS - poultry 1-1/4 Production and collection of export commodities 1-1/4 Production and distribution of other foodstuffs 1-1/2 INNAS 1-1/2 Other agriculture, animal husbandry and fisheries 1-1/2 Working capital loans for business and industry 1-1/2-2

Credit insurance obtained from P.T. Askrindo at a cost of 1/4% per month and payable by borrowers is compulsory for all non-BIMAS short-term loans of Rp 2 million (US$4,800) or less and can be required by the BRI as part of the security for larger loans.

15. The BRI has full responsibility for financing the improved BIMAS program. Since the program started on a pilot basis, with fully irrigated paddy, in 1969/70, secondary crops and rainfed paddy have been added as eligible activities for BIMAS financing and a pilot poultry project has been financed. The growth of the BIMAS program is documented in Tables 4 and 5 and the coverage of the BIMAS and INMAS programs is illustrated in Table 6. The ambitious BIMAS credit target set by the GOI for the 1973/74 wet season is US$104 million, of which about 95% would be for some 2.3 million ha of irrigated and 20,000 ha of rainfed rice and 5% for second any crops. This is a measure of the emphasis which the Government is currently placing on this program and of the considerable resources which it is pre- pared to make available for its implementation. New crops are being added: commencing in the 1974 dry season, the program will cover green peas and sorghum. The future rate of growth of the BIMAS program will depend on the availability of fertilizers, pesticides and insecticides, the availability ANNEX 12 Page 6

of extension personnel and the speed with which BRI succeeds in forming new village units. The Central Bank refinances 100% of the BIMAS advances. BIMAS loans are not insured, the risk of BIMAS loans being borne 50% by the Government, 25% by the Central Bank and only 25% by the BRI.

16. Under the improved BIMAS program, credit is provided for about seven months by the BRI through its village and mobile units. In 1972, each of these units made an average of 1,083 loans covering 866 ha. Loans are made directly to farmers and not through cooperatives (as was the case of the less successful original BIMAS program) nor to villages as a whole (as was the case of the BIMAS gotong royong program). Loans are authorized by the head of the BRI village unit and disbursed in the form of vouchers to obtain fertilizers and insecticides in kind, and cash for spraying costs, seeds and living expenses. The amount of credit available (up to US$50 + 25% per ha) 1/ covers the estimated cost of all the inputs needed to achieve optimum production, but participating farmers are free not to draw the entire recommended package and frequently do not. They must take 75% of the urea, but are free to take or not to take TSP and pesticides. This option is the main reason why BIMAS credit disbursement targets are not reached. Table 7 gives the recommended credit packages for various types of crops and situations in the 1974 dry season. Despite the rising cost of fertilizers and insecticides, prices to farmers have not been increased since August 1973 and will remain unchanged at least through the 1974 dry season, the cost increase having been met by a corresponding increase in the subsidy. Security generally consists of a simple "credit for bonds" type of land mortgage but in practice all that is required is that property titles or even certificates of ownership issued by the village head be placed in the custody of the BRI during the life of the loans. Security for BIMAS loans is largely a formality and tenants and sharecroppers who get a character reference from the village head and who can provide some collateral can obtain BIMAS credit as easily as landowners. Wherever possible, outputs are marketed through the BUUD's which act as loan collectors for the BRI. Some 10% of the applicants for BIMAS credit are refused, mostly because of unpaid BIMAS balances but also, in some cases, because the village heads do not consider them to be credit- worthy. However, so as not to compel tarmers to sell their rice at the seasonally lowest prices, the GOI has recently ruled that henceforth they would be eligible for a second BIMAS loan before the one for the preceding season has been repaid.

17. In addition to the BINAS program, the BRI is responsible for the INIAS program for food crops, which is a scheme for the distribution of subsidized inputs to farmers who either cannot, or do not wish to, borrow under the BIMAS Program. Data in Table 6 show that there has been a sharp reduction in the size of the INMAS program in wet season 1973/74 and that the target for the 1974 dry season is only two-thirds of the previous dry season. The total volume of loans made to INMAS participants in 1973 did

1/ Raised to US$60 in October 1974. ANNEX 12 Page 7

not exceed Rp 2 billion. This is because strict controls have been imposed on this program since October 1973 to stop the black marketing which had been going on. Farmers must go to the BRI village and mobile units to ob- tain the vouchers with which to acquire subsidized inputs from distributors; most farmers pay cash for their vouchers while some borrow from the BRI at 1.5% per month for this purpose. Under the INI4AS program, subsidized inputs can be obtained for a greater variety of uses than under the BIMAS program and there is complete Lreedom of choice regarding the type and quantities (up to the maximum permitted) of inputs to be purchased. Most of the INMAS participants are the better-off farmers, who do not need to borrow for the purchase of inputs, and rejected BIMAS applicants. There is no specific provision for the refinancing by the Central Bank of BRI loans to INMAS participants.

18. In addition to refinancing 100% of the BIMAS production loans, the Central Bank makes special refinancing arrangements with the BRI to encourage the production of certain other agricultural commodities and the extension of credit to cooperatives (BUUD's), mainly for the purchase of paddy from farmers. Except for loans to cooperatives, loans extended under these provisions are made directly to farmers and secured by a "credit for bonds" registered with the sub-district officer. They are called Special Project loans and Table 8 gives the Central Bank approved ceilings for each type for 1972, 1973 and 1974 and the actual disbursements effected in 1972 and 1973. This table shows that there was a substantial increase in the ceiling of loans to cooperatives in 1973. Most of the current loans to cooperatives finance paddy purchasing, processing and marketing activities and these loans bear interest at 0.75% per month and are 100% refinanced by the Central Bank. With regard to agri- cultural production loans, the extent of Central Bank refinancing varies from one crop to another. In 1974, for instance, 100% refinancing will be available for sugar loans and only 50% refinancing for cotton loans. In addition to the Special Project loans, the Central Bank makes another Rp 3 billion (to be decreased to Rp 2 billion by the end of 1974) available for the refinancing of loans for miscellaneous rural activities such as non- BIMAS agriculture and small rural trade and industry.

19. The BRI's involvement in financing fertilizers goes far beyond the financing of farmers' purchases of fertilizers. In the first place, all im- ports of fertilizers for the BIMAS and INIAS programs must be financed by the BRI. There are eight fertilizer importers in Indonesia of which P.N. Pertani, the state-owned fertilizer importing and distributing agency, and P.T. Pusri are the largest. The importers must make a 10% down payment and then can obtain BRI financing for 90% of the amount of the Letter of Credit. The BRI, in turn, obtains 87% refinancing of its advances from the Central Bank. Then, when the fertilizers are received, most of the BRI import loan is transformed into a fertilizer inventory support loan. However, the fertilizer distri- butors must then increase their equity to 30% as the maximum credit available from BRI is 70% of the value of fertilizer stocks. The BRI obtains 86% re- financing of these advances from the Central Bank. At December 10, 1973, current loans outstanding to P.N. Pertani totalled Rp 6.7 billion, divided ANNEX 12 Page 8

almost equally between import and inventory loans. In addition, there was an old outstanding account of Rp 10.8 billion representing largely Bank Negara Indonesia advances to P.N. Pertani which were transferred to the BRI when it was formed in 1968. This amount is totally refinanced by the Central Bank and fully guaranteed by the Government. It is not included in loans in arrears. For 1974, the ceilings set by the BRI are Rp 29.4 billion for fertilizer imports and Rp 22.6 billion for fertilizer distri- bution.

Investment Credit

20. The BRI has been authorizing medium-term investment loans since 1969. These loans are for a maximum term of 5 years, including a grace period of up to 3 years. Small investment loans (up to Rp 10 million) account for about 20% of the value of the investment loans portfolio; they are reported to be mainly agricultural loans to small agricultural busi- nesses and small farmers. However, agricultural loans accounted for only one-third of the value of the larger investment loans authorized by the BRI from 1969 to 1972, while two-thirds were accounted for by non-agricul- tural loans, mainly to the tourist industry. Investment loans disbursement statistics appear in Tables 1 and 2. The sluggish performance of 1972 and 1973 is the result of restrictions imposed by the Central Bank on the fields of activity eligible for investment loan financing. The temporarily ineli- gible activities include: hotels on Java, nightclubs and other recreational establishments, transportation on Java, new rice mills on Java and Sulawesi, rubber factories, coconut oil factories, ice plants, textile plants and printing plants. This leaves agriculture and fisheries as the main eligible fields. However, many agricultural and fishing activities, such as perennial crop farming, are ruled out by the maximum term of 5 years allowed for in- vestment loans.

21. The equity requirements vary: in priority sectors, borrowers need provide only 25% of project cost as equity, while in non-priority sectors, the equity requirement is 50% of project cost. The Cooperative Insurance Corporation, in the case of cooperatives, and P.T. Bahana in the case of small incorporated businesses, can provide under certain conditions, up to half of the 25% equity participation required for projects in priority sectors. All investment loans must be adequately secured. In the case of the larger investment loans, the primary security requirement is a mortgage on land and buildings, but for small loans to farmers, this is often re- placed by a simple assignment of the property title. Usually there is also a charge on moveable assets. In addition, all investment and permanent working capital loans up to Rp 5 million have to be insured: loans to co- operatives are insured through the Cooperative Insurance Corporation and loans to private borrowers through P.T. Askrindo. Credit insurance of 75% of the face value of medium-term loans, which costs 3% of the loan amount and is payable by the borrower, is compulsory for all loans of up to Rp 5 million and left at the discretion of the BRI in the case of larger loans. On the other hand, the requirements for financial statements do not seem ANNEX 12 Page 9

sufficiently stringent. Audited financial statements are required by Central Bank regulations only for investment loans of Rp 60 million (US$145,000) or more; for smaller loans, an approximate balance sheet and income statement are prepared by Branch Managers on the basis of information provided by the borrower, but such statements usually do not provide a good overall picture of the borrower's financial position and of his repayment ability. The in- terest rate on investment loans is 1% per month.

22. Until now, applications for investment credit have had to be submitted to branch offices which, since they had no authority to approve investment loans, have been sending them to their regional office, which approved the smaller loans and forwarded the applications for larger loans to the Head Office of the BRI with their comments. All applications ap- proved by the Head Office of the BRI were submitted to the Head Office of Bank Indonesia which made a summary evaluation of the proposals and occa- sionally suggested changes in the credit before approving the refinancing of the loans. Authority to approve small investment loans has recently been given not only to branches but also to village units. Bank Indonesia refinances 80% of all investment loans at an interest rate of 4% per annum. Investment loans authorization limits are as follows:

Authorizing Limit (Rp million)

Village units 0.1

Branches 2.5

Regional offices 10.0

llead Office 100.0

Bank Indonesia over 100.0 (exceptional)

23. The overall BRI ceiling for investment credit in 1973 was Rp 14 billion including Rp 4.25 billion for small investment loans. Investment loans outstanding were expected to stand at Rp 10.5 billion at the end of 1973, including about Rp 2.25 billion of small investment loans. A new Government policy was announced on December 4, 1973, to make available through State Banks to "indigenous" entrepreneurs, without insisting on the 25% equity contribution, small (up to Rp 5 million) investment loans (at an interest rate of 1% per month, with repayment over up to 5 years) and term loans for permanent working capital (at an interest rate of 1-1/4% per month with repayment over three years). Under this policy, BRI's ceiling for small investment loans will be raised to Rp 6.75 billion in 1974 and per- manent working capital loans of up to Rp 4 billion will be permitted. Alto- gether, the overall ceiling for investment credit will be raised to Rp 21 billion in 1974, excluding IDA projects. BRI's investment loans portfolio is expected to reach Rp 18 billion (US$43 million) by the end of 1974. ANNEX 12 Page 10

Overdue Loans

24. Table 9 contains recent years' statistics on loans outstanding and loans overdue, and Table 10 breaks down loans overdue as at August 31, 1973 into loans in arrears and dubious loans. In BRI's terminology, loans overdue by up to three months are classified as "in arrears" thereafter, they become "dubious" loans. When loans become dubious, the branch manager must decide whether to keep responsibility for their collection or to entrust them to a lawyer for collection. Dubious loans judged to be uncollectable are classi- fied as "expected losses".

25. Statistics show that as at August 31, 1973, out of outstanding loans of Rp 94 billion, loans overdue totalled Rp 24 billion (25.6%), of which Rp 14.4 billion had been overdue for less than three months and Rp 9.6 billion for more than three months. As could be expected in view of the drought which occurred in the second half of 1972, the situation had deteriorated since the end of September 1972, when dubious loans stood at only 6 billion. Furthermore, not only had dubious loans increased in volume but their status had degenerated. This is indicated by the fact that the proportion of loans given to lawyers for collection (only a small fraction of which are ever collected) and loans classified as "expected losses" increased from 8% to 51% of dubious loans from September 1972 to August 1973.

26. Available statistics on loans overdue are difficult to reconcile with other statistics and information which have been supplied to the mission. For instance, Table 4 shows that, for the improved BIMAS rice program, loans relating to all seasons up to and including wet season 1972/73 overdue by more than three months totalled Rp 4.2 billion as at March 7, 1974 (and therefore must have been higher at the end of August 1973) while Table 10 shows that dubious loans relating to the BI.IAS paddy program totalled only Rp 403 million at the end of August 1973. And, furthermore, there is stated to be still a considerable volume of overdue loans in BRI's portfolio re- sulting from the two discontinued BIMAS programs: the original BIMAS and the BIiA3 gotong rojong. The mission was also informed that a substantial volume of loans to cooperatives was several years overdue; these do not appear to be included in the dubious loans column of Table 10.

Other Operations

27. As mentioned, one of the functions of the BRI is to administer subsidy funds provided by Government for designated rural development pur- poses. The volume of such funds administered by the BRI has been increasing and reached an estimated Rp 15 billion in 1973. The subsidies are for APPENAS-approved economic and social projects in rural areas, including schools, mosques, etc. The Goverment deposits funds in the BRI to cover the estimated subsidy payments for the following six months, and these are disbursed by the BRI in accordance with instructions received from Bappenas. ANNEX 12 Page 11

28. Another function of the BRI is to supervise secondary rural banks, that is, village banks (Bank Desa) and paddy banks (Lumbung Desa). There are currently some 3,500 village banks in Indonesia, extending about Rp 3 billion of short-term credit per year to small village traders, and, to a much smaller extent, to faruers, at annual interest rates of up to 100%. Loans outstanding stand at about Rp 1 billion. These banks are usually operated by a commission of three, with the village head as ex-officio chairman. The number of active village banks has been diminishing slightly since 1970, and the rate of growth in the volume of business has been fall- ing. Paddy banks deal in stalk paddy and are depositories from which mem- bers may borrow seed, or rice for consumption, pending the crop harvest. Their importance has declined considerably, and although there are still some 2,200 of them, their combined stock of paddy reaches only about 70,000 tons. The importance of secondary banks is expected to decline as more BRI village units are formed and become operational.

Recommendations

29. BIMAS' Village Units. The extension of credit for paddy produc- tion under BIMAS should be continued and the expansion of credit to polowijo crops should be intensified. The expansion of village units should be con- tinued vigorously, so that all farmers have the opportunity to use the bank- ing and credit services made available by the BRI. Sufficient staff to man the new units should be recruited (or excess staff moved from head office), and trained. Care should be taken to ensure that the present efforts to collect all BIMAS repayments continue and intensify, particularly as the scheme expands and covers some of the less suitable paddy growing areas.

30. Medium and Long-Term Credit. The lending of medium-term investment credit to agriculture should be vitalized and increased. Long-term invest- ment credit should be instituted. Loans should be made to either individuals or groups, for example, quaternary farmer groups (Annex 2) or a group of qua- ternary groups, or BUUD's. Medium-term credit could cover items such as draft animals, threshers, sprayers, mist blowers and tractors. If necessary some farm mechanization items could be included under longer-term lending, which should cover new paddy land development, farm storage, group drying facili- ties, and quaternary development in existing or new rehabilitation areas. The present long, complicated investigation process carried out on farmers' applications for medium-term credit should be streamlined and made more effi- cient.

31. A detailed analysis of the loans portfolio should be conducted during preparation of the Rural Credit Project by the FAO/IBRD Cooperative Program, so that a sound judgment can be made on the adequacy of the reserve for bad debts (wnich stood at only Rp 1.4 billion at December 31, 1973, while loans unlikely to be collected could be estimated at Rp 4.8 billion or more) and therefore on the true equity position of the BRI. In addition, loans which are known to be uncollectable, which, according to one estimate, far exceed Rp 1 billion, should be written off without further delay. DNDONESIA

IRRIGATION PROGRAM SURVEY

Bank Rakjat Indonesia Loans Disbursed and Outstanding, 1969-1973 (Rp billion)

Loans disbursed 1969 1970 1971 1972J 1973'

BI14AS paddy production 2.70 6.93 10.25 12.59 32.23 Other agriculture / 35.16 19.88 20.65 21.74 48.86 Cattle breeding 1.24 0.97 1.13 1.45 2.99 Fisheries 0.04 1.40 2.32 3.95 5.23 Industry 9.59 19.79 21.73 23.66 47.12 Trade 24.94 52.67 59.52 77.09 206.98 Services 3.22 7.34 8.71 10.78 33.90 Investment - 2.78 5.39 2.64 4.34 Other 3.15 1.32 1.39 2.27 4.49 Total 80.04 113.08 131.09 156.17 386.14 Loans outstanding 37.80 49,48 59.87 71.04 126.24

1'S Based on monthly statistics.

2/ Includes fertilizer distribution credit to P.N. Pertani of Rp 12.4 billion in 1969, 16 billion in 1970 and 11.4 billion in 1971. The figures for 1972 and 1973 are not available.

Source: Bank Rakjat Indonesia. _I. £lo

IRRIGATION PROGRAM SURVh'Y

Bank Rakjat Indonesia: Loan Disbursements in 1972 and 1973

1973 _ 1972 Total Govt.Sector p rivate Agriciilture: ...... *Rp million ...... O..... Lgriculture: BIBUS paddy and secondary crops 12,587 32,225 66 85 32,074 Other paddy 2,566 2,973 1 608 2,364 Other secondary crops 1,323 1,371 2 19 1,350 Export crops 1,830 2,420 - 35 2,385 Irrigation 340 368 36 2 330 Village improvements 1,639 2,642 - 5 2,637 Other (including P.N. Pertani) 14,038 39,082 21,540 12,936 4,606 Cattle breeding 1 448 2,994 66 39 2,o69 Fisheries 3,951 5,231 7 69 5,155 Industry: Food and clothing 13,447 20,509 110 1t509 18,890 Handicrafts 5,641 10,461 - 143 10,318 Other 4,574 16,149 - 374 15,775 Trade: Food and clothing 13,461 26,019 287 z115 25,317 Nine main commoditles 10,511 32,421 167308 225 15,888 Exports (wood, rubber, etc.) C .?5 16,235 - 29 16,206 Imports (fertilizers, etc.) 18,5)2 65,845 58,254 _ 7,591 Other 26,2S3 66,463 648 41 65,774 Services: Transportation and storage 4,983 13,186 - 37 13,149 Other 5,802 20,711 15`4 3,614 16,943 Investment loans~ 2,63) 4,343 30 6 4,307 Personal and other loans 2,272 zl,486 201 45 2,24 0 Motal 156,162 386,134 97,730 20,236 268,168

Source: BRI Statistik Perkreditan. ANNEX 12 Table 3

INDONES IA

IRRIGATION PROGRAM SURVEY

Banz Rakjat Indonosia

Average Sizes of Loans Disbursed in 1572

Number Amount Average loan size of' disbursed in in loans (RD- billion) Rupiahs us

BirtAS paddy production 1,574,976 12,59 7,992 19.26 Other paddy 25,461 2,57 100,900 243.13 Secondary crops 6,734 1,32 196,000 472 29 DifJort crops 3,191 1,83 573,400 1,38168 j Irri-iation 786 ,34 432,600 1,042.41 Village improvements 46,058 1,64 35,610 8J.80 Other (incl. P.N. 32,517 14,04 4319800 1,040.48 Pertani) Ca-.tle bre^ding 4,314 1,45 3359652 308 30 Fisheries 89228 -995 4809190 1,157.08

Industry 42,911 2',66 5519420 1,328.72 Trade 108,061 77,09 713,319 1,718.84 Services 42,897 10,78 251,416 605.82

Investmnent 1,748 2,64 1,509,725 3,637.89 Other _ 42,176 2,27 53,869 123.80

0 T AL 1,9409060 156417 80,493 193.96 INDONESIA

IRRIGATION PROGRAM SURVEY

BIMAS - Eaddy(Irrigated and Rainfed) Credit Advanced, Repaid and Outstanding as at 7 March 1974

_ Target Disbursements Repaynents OutstaLding No. of Av.loan % of '000 ha Rp million '000 ha loans Rp million (Rp) Rp million Disb. Rp millioon ~laly or Parti-ally TRRIGATED wet 1970/71 1,125 15,398 1,009 1,326,714 8,460 6,375 7,904 93.4 5564 Dry 1971 462 5,651 296 356,607 2,508 7,025 2,186 87.2 322 ! ret 1971/72 1,311 16,642 891 1,101,770 7,303 6,627 6,731 92.2 572 - Dry 1972 525 6,447 308 356,283 2,559 7,188 2,198 85.9 36124, '4t 1972/73 1,425 16,269 1,378 1,713,609 12,771 7,452 10,352 81.1 2,41k Dry t973 555 6,660 487 548,684 4,937 8 &9934/ 2,956 59.9 1,98j '.Wet-'1973/74 - 2,237 40,865 1,991 2,401,781 29,641 12,340 623 2.1 29,012 Dry 1974 936 17,54zr2 - - - Total 8t576 125,474 6,360 7,805,448 68,179 ?2 ,950 3% 229 RAIN FED Wet 1973/74 20 392 5 7,462 60 0,010 2 3-5 58 Dry 1974 13 j Regarded as loans in arrears. 2/ Recoveries in progress. 3/ Loans still being disbursed. 4 There was a 50% increase in fertilizer prices to farmers from wet season 1972/73 to wet season 1973/74. Results for two of the four regions covered by this initial phase of the rainfed paddy programne have been = grouped with those of the irrigatedpaddy programme; thus the results shown here for rainfed paddy are understated. Source: BRI. INDONESIA

IRRIGATION PROGRAM SURVE

BIMAS - Secondary Crops and Poultry Credit Advanced, Repaid and Outstanding

Target Disbursements Repayment Outstanding 1/ No. of TOof ha Rp million ha loans Rp million Rp million disb. Rp million

SECONDARY CROPS Wet 1972/73 & Dry 1973Z' Groundnuts 3,175 41 4,830 4,307 45 29 64.4 16 Soya beans 1,700 14 1,896 2,821 9 6 66.6 3 Maize 5,625 57 12,399 19t522 90 55 61.1 35 Total 10,500 112 19,125 26,65o 144 90 62.5 54

Wet 1973/743/ Groundnuts 8,800 167 7,072 6,388 99 4 4.0 95 Soya beans 11,300 158 9,096 10,999 77 8 10.4 69 Maize 112,600 1,689 74,161 92,862 828 182 22.0 646 Total 132,700 2,014 90,329 110,249 1,004 194 19.4 810

POULTRy-/

Pilot Project n.a. 55 n.a. 253 54 4 7.4 50 1974 n.a. 68 j Recoveries in progress. 2/ As at 23 February 1974. j As at 7 March 1974. g4/ As at 30 November 1973.

Source: BRI. INDONESIA

IRRIGATION PROGRAM SURVEY

Area under Cultivation, Programme Targets and Actual Coverage of the qddy Intensification Programmes (in '000 hectares)

Area under Cultivation Programme Targets _ c-tual Coverage of of Non- Culti- Culti- Irri- irri- vated vated INMAS Total area _ated _ated Total BII1AS INMAS Total area BIMAS

1'73 dry season 1,513 462 1,975 555 766 1,321 67 491 379 1,370 69

1'373/74 wet season 3,,60 2,058 5,618 2,2571/ 1,042 3,299 59 1,596 430 21 r 4

1974 dry season 1,677 416 2,093 94S02 499 1,448 69 n.a. nOa. n.a. n.a.

j Including 20,000 ha of dry paddy fields.

2/ Includiuig about 13,000 ha of dry paddy fields.

3 As at 7 March 1974.

Source: Badan Pengendali Bimnas - 1973. ANNEX 12 Table 7 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Size and Composition of BIMAS Credit Packages-/ for 1974 Dry Season

I. FULLY OR PARTIA LL IRRIGATED PADDY

Package A - Improved Seed Varieties Rp

Fertilizers: Urea 200 kg 8,000 T.S.P. 50 kg 2,000

Insecticides: Diazinon 2 lt 1,800 Zinc phosphide 100 gr 115 Spraying 800

Improved seeds 2,000 Consumption expenses 5,000

Total cost per hectare 19,715

Package B - Local Seed Varieties

Fertilizers: Urea 100 kg 4,000 T.S.P. 35 kg 1,400

Insecticides: Diazinon 2 lt 1,800 Zinc phosphide 100 gr 115 Spraying 800

Consumption expenses 3,000

Total cost per hectare 11,115

II. RAINFED PADDY

Fertilizers: NPK 15-15-15 200 kg 7,800 Urea 150 kg 6,ooo

Pesticides 1,800 Zinc phosphide 115 Spraying 800 Consumption expenses 3,000

Total cost per hectare 19,515

1/ These are national norms; actual packages differ by up to +25%, depending on the regions. ANNEX 12 Table 7 Page 2

III. PADDY IN DELTA AREAS X

Insecticides: Diazinon 2 lt 1,800 Zinc phosphide 100 gr 115 Phosphorous paste 800 Spraying 800

Consumption expenses 2,000

Total cost per hectare 5,515

IV. SECONDARY CROPS

Maize

Fertilizers: Urea 200 kg 8,000 T.S.P. 100 kg 4,000

Pesticides 0.5 it 450 Seed 25 kg 1,250 Consumption expenses 2,000

Total cost per hectare 15,700

Groundnuts

Fertilizers: Urea 50 kg 2,000 T.S.P. 100 kg 4,000

Pesticides 1lit 900 Seed 120 kg 12,000 Consumption expenses 2,000

Total cost per hectare 20,900

Soya beans

Fertilizers: Urea 25 kg 1,000 T.S.P. 50 kg 2,000

Pesticides 2 lt 1,800 Seed 6,000 Spraying 1,000 Consumption expenses 2,000

Total cost per hectare 13,800 ANNEX 12 Table 7 Page 3

Green poas Rp

Fertilizers: Urea 25 kg 1,000 T.S.P. 50 kg 2,000

Pesticides 2 lt 1,800 Seed 6,o00 Spraying 1, 000 Consumption expenses 2,000

Total cost per hectare 13,800

Sorghum

Fertilizers: Urea 150 kg 6,ooo T.S.P. 75 kg 3,000

Pesticides 1lit 900 Seed 450 Consumption expenses 2,000

Total cost per hectare 12,350

V. POULTRY (Pilot Project)

Chicks 120 units 30,000 Feed 1,410 kg 82,000 Sheds and insecticides 23,000

Total cost per 100 hens 135,000 ANNEX 1 2 Table 8

INDONESIA

IRRIGATION PROGRAM SURVS

Special Project Loans to Agriculture Fisheries and Cooperatives as at 13 December 1973 (Rp million)

Ceilings approved by Central Ban': Disbursements 1972 197, 1574 1972 1973 1974

Kapok 300 4100 400 224 155 -

Cloves 100 47, 600 75 207 - Paddy 3t,00 4,000 4,000 2,233 3,373 -

Jaggery sugax 300 600 2,000 345 372 -

Short-staple cotton 114 175 1,300 50 76 -

Chicken raising (non-BIM4AS) - 100 100 - 36 - Fisheries 1,700 1,900 2,100 1,300 3,960 -

Cooperatives 2,000 12,000 13,000 1,500 13,OOG -

Total 7,514 19,05C 25,500 57297 21,259 - INDONESIA

IRRIGATION PROGRAM SURVE1Y

Bank Raelct Indonesia Loans (utstandina and Loans Overdue (including dubious loaz) Classified by Econo :ic SOctor. -Tin Rp bil l o-n )

31 August 1273 31 December, 1970 31 December 1971 31 December 1272 overdueE as o/s overdues overdues oLsverdues o/s overduev 2 of

7.24 BITAS - paddy 8.75 2.63 9.96 4.70 13.25 5. ,!C 15.44 Othcr a;riculturc 17.66 2.34 19,42 2.97 17.73 3.17 19.50 3.35 17.1 Cattle breeding 0.30 0.10 0.42 0.16 o.56 0.18 o.86 0.23 26.1 Fishel icz 0.70 0.24 0.91 0.37 1.26 0.47 1.46 0.52 35.6 Industry 4.73 2.11 6.10 2.84 7.01 3.55 10.10 3 6' 36.0 Trado ii.8C 3.60 12.11 4.37 16.42 5.01 27.08 5.15 19.0 Services 2.41 o.68 3.17 1.42 4.31 1.64 7.72 1.71 22.1 Investment 2.51 0.08 6.94 0.64 8.16 1.40 9.49 1.82 19.2 Other 0.57 0.16 0,84 0.20 1.34 0.28 2.11 0.36 17.1

Total 49.48 11.94 59.87 17.67 71.04 21.38 93476 24.02 25.6

Loans overdue as a % of loans outstanding 24.1% 29.5% 30.0%0 25.6%

. . _ _ . ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~c ANNEX 12 Table 10

IND01Ni3 IA

IRRIGATION PROGRAM SURVEY

BnLk Ra,;at Indonesia Loans Outstandin, Loawis . Arrars and Dubious Loans as at 31 Angust 1973

Locans up to 3 Loans Outstanding rmos. in arrears Dubious Loais L ______nuinber _.p number Rp K nrumber_ Rp 1

! i£culture BII'AS paddy 1,620,4-82 15L,i36 635,295 C,8U40 11,072 40r3 Otlher paddy 24,689 2,043 7,2W2 379 76,43 866z Secondary crops 10,523 "74' 2,158 132 578 154 Export crops 3,019 j17 415 45 750 230 Irrigation 906 400 343 65 9S 22 Village improvements 71,20b 1 14,4z55 233 6,896 305 Other (incl. E.N. Perta ni) 22,701 13,8)'7 1,980 650 1,393 2I1 Cattl Breeding 2,215 86G 5 i 14( 342 89 Fisheries 6,576 1,460 2,356 241 1,353 276 Industry Food c. Clothing 3,824 5,122 962 797 517 942 Handicrafts 4,242 2,772 1,107 334 11177 1,127 Other 1,522 2,202 350 178 26. 265 I Trade

Food| Clothing 26,682 5,3641 6,361 616 5,228 1,484 I,ain coramoditic-s 5,730 1,916 1,370 162 622 226 Excorto 301 2l,11 5- 92 105 474 I IrTorts 144 8, oO, 1 1 4 21 Other 23,838 38861 5,818 950 2,180 1t125 Services Trrlansportation & I storage . 5218 3,840 11945 4-r53 845 549 Other 7,847 3,874 3,037 41r55 603 253 Investment Loans 900 9,495 467 1,388 89 428 Personal & other loas 47,407 2,1102 2S0 2,079 110

Total 1,889,972 93,7I63 69;5,463 14,448 .44,817 9,570

Source: BRI - Statistik Perkreditan. ANNEX 13 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

Crop Insurance

1. An obstacle to the introduction of cash inputs to paddy farming in a developing country is the farmer's attitude to the risk involved in using them. Farmers may consider the risk of losing their investment in cash inputs (e.g., from disease, pest attack, flood or drought) to be unacceptable. The use of crop insurance to counteract this attitude has been suggested, and the mission was asked to consider the use of crop insurance to increase paddy production as an alternative to the introduc- tion of more irrigation. It was concluded that, in the Indonesian context, and from the experience of other Asian countries which have introduced it, i.e., Sri Lanka and Japan, crop insurance is not a viable alternative to the introduction of more irrigation and, at the most, it can only be con- sidered as part of an "input package" designed to increase paddy production.

2. Crop insurance must have a sound actuarial basis for the calcu- lation of rates of premiums and indemities. This requires reliable and comparable statistical data of average yields, and losses caused by the elements, diseases and pests, as distinguished from those due to negligence or poor farming over a cconsiderable number of consecutive years for each homogeneous area to be insured 1/. Past Indonesian agricultural statistics are unreliable with regard to accuracy and comparability between areas and over time. A paddy production time series more rigorously collected would be required.

3. Adequate land surveys and records of land ownership are neces- sary. These are available for some areas but not all of Indonesia. The existing surveys are old and records of land ownership often not up-to- date, particularly near large towns where land often changes hands. The large number of landlord/tenant arrangements, which are practically all on a verbal basis, would present difficulties in determining insurable interests.

1/ "Report of the Working Party on Crop and Livestock Insurance, Bangkok, 27 August - 7 September 1956." FAO, Rome, 1957. ANNEX 13 Page 2

4. Experience, trained administrators, actuaries and assessors are essential for the success of crop insurance 1/. Such people are not at present available in Indonesia and their training would contribute to a time lag in introducing any such scheme. The time lag would be further increased by the necessary introduction of a pilot scheme for three to five years before any large scale operations, and precludes the use of crop insurance as a method of increasing rice production before 1980.

5. The experience of the United States and Japan in introducing crop insurance shows that governments are likely to be involved in paying subsidies at the following points:

(a) premium payments;

(b) cost of administration; and

(c) reserve funds.

This was also amply demonstrated in Sri Lanka where the government has only been able to collect some 30 to 40% of premiums due, as well as having to meet the costs of administration and reserve funds.

6. If crop insurance is to be considered as an alternative method to increasing the paddy supply, the additional production resulting from investing government funds in these subsidies must be compared to the additional production resulting from investing the same funds in irriga- tion, other inputs such as fertilizer, insecticides or rat destruction, or in extension services. The actual subsidies required and the resulting additional production from introducing a scheme into Indonesia could not be calculated without detailed studies and more comprehensive and accurate crop production data than is presently available. Even so, guidance can be taken from Sri Lanka's recent experience with a pilot crop insurance scheme. This was set up in 1958/59 to cover some 10,000 ha and expanded in 1963/64 to 80,000 ha. The pilot scheme was not a success and suggest- ions were made in 1971 that it be terminated and be replaced with a more comprehensive scheme which would allow the insurance of livestock, other crops, households, personal possessions and even life insurance. It was recommended that premiums for paddy insurance in the more risky areas be substantially lifted, and the premiums for other areas be also raised. The pilot scheme was terminated in 1973 and a widened scheme introduced. This provides for the compulsory insurance of all paddy, the voluntary insurance of livestock and other crops. The failure of the pilot scheme was mainly due to: the inability of the government to collect a premium

1/ Source: "Review of Paddy Crop Insurance in Ceylon," P.K. Ray, January 1971, Government Printer, Colombo. ANNEX 13 Page 3

of Rs 15/ha (US$2.30/ha) from the farmers 1/; the insurance coverage offered was insufficient to meet farmers' variable crop costs following a crop fail- ure; and insufficient trained staff were assigned to the scheme. Little or no evidence of any production increase resulting from the scheme has been found.

7. In summary, to introduce crop insurance into Indonesia on a sound footing would take at least six to ten years. The main benefits would be social with little possibility of production increases unless the coverage offered was high. The cost of running the scheme would appear to be high, particularly if a large or high-risk area is insured, or if a high coverage is offered. Although the social benefits of crop insurance are worthy of further study, it is not an alternative to irri- gation to increase paddy production 2/.

1/ Over the period 1958/59 to 1969/70 total premiums due would have cov- ered total indemnities paid. Only 39% of premiums were collected, leaving additional costs to the government.

2/ See "Crop Insurance: A possible mechanism for stabilizing smallholder returns," IBRD Report, V.R. MacDonald, January 7, 1974, for a proposal for an International Crop and Livestock Insurance Reinsurance Agency. ANNEX 14 Page 1

INDONES IA

IRRIGATION PROGRAM SURVEY

Training

Engineering Training

1. The most important engineering training institution in Indonesia is the Institut Teknologi, Bandung (ITB). It has three major faculties:

(a) Mathematics and Science;

(b) Industrial Technology;

(c) Civil Engineering.

The total number of students is 6,500 and the largest single group, 650, is in the Faculty of Civil Engineering, with which the mission was concerned.

2. The ITB has a strict entrance examination and only 15% of the applicants are accepted. The annual intake of Civil Engineering students is 100, and the output in March and October averages 70, giving a 70% success record (compared with 50% for ITB as a whole). The degree course is now four years. Eighty percent of the students are from Java and most graduates tend to go to Jakarta, where the best paid and most amenable jobs are available.

3. USAID has undertaken teacher training and between 1956 and 1966 sent 250 faculty members to the United States for training for Masters and PhD degrees. This program has now dwindled to about five persons per year and, as the total ITB faculty is about 450, there is a need for more training of this kind. Several bilaterally aided training schemes are in progress but these do not fully meet the needs, particularly in the Water Resources field.

4. The other major engineering training facility is the Institut Teknologi, Surabaya, which has a total of 3,200 students. The mission did not visit this institute and therefore has no detailed date. However, it is believed to have similar problems to ITB.

5. There are three polytechnics training Bachelors of Irrigation Engineering, and the ITB has special technician training facilities for the MPWEP, with an intake of about 200 students. There is an output of around 100 annually from all these institutions. ANNEX 14 Page 2

6. Hydraulic Research facilities are attached to ITB and MPWEP has its own research laboratories in Bandung.

7. The Deputy Director of ITB indicated that the students from nigh schools in Jakarta and Bandung have a big advantage over those from tne country and Outer Islands where scholastic standards are low. Tne need to upgrade nigh schools has been noted uy the recent Education Sector Survey. Tais would seem particularly vital for the development of the Outer Islands.

Agricultural Training d. University graduate training is the responsibility of tne Ministry of Education and there are 22 Faculties of Agriculture througn- out Indonesia. With the exception of old established faculties such as Institut Pertanian, Bogor (IPB) and Gadjan Mada University, Jogjakarta, tne standard of teaching and courses is rather poor in many disciplines, due partly to over rapid expansion in recent years. The IPB is assisting the other universities by selecting 50-60 students per year and bringing them to Bogor for the final two years of training. However, this program is now restricted to bright students who intend to return to their university of origin, as lecturers. Originally, students were offered a three-year Bachelor's course or five-year Engineer (Ir) course based on thie Dutch system and there was little opportunity for local MSc or PhD train- ing. As from 1976, a 4-year Ir course, a 2-year MSc course and a 4-year PhD course will be offered. Masters' courses will be run in Soil Science, Crop Science, Statistics, Extension, Rural Sociology and Agricultural Economics. It will be possible for some government workers, for example graduate extension workers, to take an MSc on a part-time basis with only 6 months' attendance at the university. The IPB hopes to build up to an output of 50 Masters graduates per year. In addition to the above program, the IPB will offer two-month refresher courses in various disciplines for 60-80 students during the long vacation. Currently, USAID and other bilateral agencies provide overseas training for university teaching staff but the future of this pro- gram is doubtful beyond 1975.

9. Tne university system enrolls about 5,000 students per year in agriculture but the wastage rate is excessively high. This is partly related to the low standard of teaching in the minor universities, but at IPB the key problem is the low standard of high school or secondary education. Although the IPB has an intake of 400 students per year, it can only hope to obtain 100 to 120 students with sufficient basic education to survive the first-year course. Most of the successful students come from high schools in the Jakarta, Bogor or Bandung and consequently, prefer positions iln populated areas or with the private sector. The Director of Graduate Studies at Biogor firmly believes there is a large source of latent talent inlthe Outer Islands and remoter parts of Indonesia that would perform well at University and would be prepared to work in in the rural communities. IPre- sently there is no satisfactory nigh school system in thiese areas and often ANNEX 14 Page 3 students' families are too poor to support children beyond primary school. There is thus a strong case for establishing high caliber high schools at strategic points coupled with a scholarship system to provide opportunities for talented rural youth.

10. The MOA is responsible for all other agricultural education and in-service training down to the Junior Secondary School level. The agri- cultural Junior Secondary High Schools, originally set up in the provinces to give 13-15 year old students vocational training in agriculture are being phased out, since students preferred to continue with general education at that age. There were 96 Senior Agricultural High Schools in 1970. These were designed to train middle level technicians primarily for service in the MOA. Most suffer from lack of trained teachers and educational equipment and graduates are poorly trained and ill equipped to work effectively in the technical or extension services. With Bank group assistance (Credit 288-IND), GOI is expanding and equiping 14 new Senior Agricultural High Schools. The project aims to increase student output to about 900 per annum by 1977.

Training Recommendations

11. The recent Education Sector Survey Report has reviewed this sector in detail and identified many education needs. The recommendations which follow should be further investigated by Education Projects, where they involve higher education or the general education field. In-service training, such as recommended for irrigation, operation and maintenance and agriculture, should be included in future irrigation projects. Specific recommendations for training are:

(a) five Water Resource faculty members should be given one-year overseas post-graduate training, covering hydrology, irrigation, hydraulics, coastal engineering and project analysis at suitable institutions. The program should continue for five years, thus providing 25 teachers in Water Resources with higher training. This would improve the output of water resources oriented students from ITB and the Surabaya Institute;

(b) the High or Secondary Schools outside Jakarta and in the Outer Islands should be upgraded and incentives provided for successful students to return to their home islands;

(c) study tour fellowships should be arranged for senior MOA personnel in the following fields: extension services, research, project planning and analysis, farmer organization and cooperatives, marketing systems at district level and management of irrigated agriculture. These study tours should be arranged ANNEX 14 Page 4

to adjacent countries with similar problems for periods of about three months and could be financed from future irrigation projects;

(d) training is required in catchment management and conservation. This could also be included in future projects involving catchment management;

(e) USAID was asked and has agreed to expand its intensive rice production multiple cropping training course at IRRI for suitable candidates, with the aim of eventually sending one officer per district, where rice is widely grown;

(f) study tours lasting about six weeks should be provided for district-level agricultural officers to suitable schemes in adjacent countries, the cost being financed by future irrigation and agricultural projects;

(g) development of courses in the local institutions on catchment management subjects such as: soils engineering, soil conservation, rural sociology and economic tree crops;

(h) operation and maintenance training at Bandung and Surabaya for middle and lower level irrigation staff should be expanded and should include audio-visual training; and

(i) in-service training for senior operation and maintenance personnel in Malaysia or other adjacent countries for three to six months would be useful. ANNEX 15 Page 1

INDONESIA

IRRIGATION PROGRAM SURVEY

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Teken, I.B., et al., Kemungkinan Penerapan Pola Pergiliran Tanaman Didaetah Rahabilitasi Irigasi Cisedane (Crop Rotation Alternatives in the Rehabilitated Cisedane Irrigation Area), IPB/IDA, Bogor, 1973.

Timmer, C.P., "Estimating Rice Consumption," Bulletin of Indonesian Economic Studies, Vol. VII, No. 2 (1971), pp. 70-88.

Timmer, C.P. "Choice of Technique in Rice Milling on Java," Bulletin of Indonesian Economic Studies, Vol. IX, No. 2 (1973), pp. 57-76.

Utami, W. and Ihalaw, J., "Some Consequences of Small Farm Size," Bulletin of Indonesian Economic Studies, Vol. IX, No. 2 (1973), pp. 46-56.

Utecht, E., "Land Reform in Indonesia," Bulletin of Indonesian Economic Studies. Vol. V, No. 3 (1969), pp. 71-88. ANNEX 15 Page 4

Weitz-Hettelsater Engineers, Rice Storage, Handling and Marketing, 1972.

Agrar und Hydrotechnik GmbH, Study and Evaluation of Rice Production Intensification Programs in Indonesia, 1971.

INDONESIA IRRIGATION PROGRAM SURVEY Assessment of Yield Potential for Different Classes of Rice and Levels of Input Average Yield of Paddy (ton/ha)

1.0 2.0 3.0 4.0 5.0 6.0

maximum 1.5 UPLAND RIC:E Yield increse attainable through good seed, improved insect and rat control and moderate use of fertilizer.

1.0 minimum

maximum 2.5 RAINFED RICE Yield increase attainable through further change from ti-ansplant to direct seeded rice, rat control and wider adoption of BIMAS inputs. 1.5 minimum

average 3.0 IRRIGATED REHABILITATION PROJECT AREAS - PR -SENT 2 , 3//,/ 5 | Yield increase attained through improved water supply End hence wider adoption of ___ l______///////////// cash inputs through the BIMAS program. 2.5

average 3.8 IRRIGATED 1REHABILITATION PROJECT yield AREAS - COMPLETED 6 | distribution Further improvement in water supply and wider adoption of cash inputs through the BIMAS program. Distance from Irrigation Turnout 3I

average IRRIGATED REHABILITATION PROJECT 5.0 AREAS-FUTURE Quaternary development (improved farm 456 water supply) coupled with improved O & M, better roads and an improved extension service will lead to maximum 3.8 expansion of E;IMAS and more efficient _ use of cash inputs.

1.0 2.0 3.0 4.0 5.0 6.0 World Bank-8722(R)

INDONESIA IRRIGATION PROGRAMSURVEY ORGANIZATION OF SERVICESFOR IRRIGATED AGRICULTURE

IRRIGATION SERVICES ADMINISTRATION ARIClUITURAL SERVICES

MINISTRYOR ECONOMICS OFPUBLIC WORKSU A TMINISTRY FINANCE& INDUSTRY &ELECTRIC POWER

k I------r------

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DIRECTORATES Irrigation Ricert Sweet; I Tainin & I s dccrc

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Roads Provincial boundaries - . Int aional boundaries

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IRRIGATION PROJECTS VI AND VIII - Mc 0 LOCATION MAP M akassar

.. IRRIGATION REHABILITATIONPROJECT F 'V - Exncutedby Jetiluhur Authority .ta .'.'.. IRRIGATION REHABILITATIONPROJECT I " S r 0 SULAWE S I -3 IRRIGATIONREHABILITATION PROJECTIm ore.ted by PresidE IRRIGATION REHABILITATIONPROJECT IV 9 (CELEBES BANGKA BELITU IRRIGATION REHABILITATIONPROJECT VI

OPalembang C, JATIGEDEDAM PROJECTVII - E-ecal-dandr,Diw-.oat o RCoo- GROUNDWATEREXPLORATION PROJECT SUM ATERAPFUTURE MADIUN IRRIGATION REHABILITATION S U M A T E R A V FRAILWAYS s e K A L I M A N TA N ff CKSADA NG

45WAY SEPUJTIl546 SUB-PROJECT SUB-PROJECT 4S 25,000 ho PerepreO

> 4,~>arPL>SZ^R. J a v a S e a Wy SWepaihR bando r f)

GLmTh kii G,h CIUJUNG UjungP..dtg.,i SUB-PROJECT Telubetungl 4,300 ho CISEDANE JATILUHUR,PROJECT SUB-PROJECT 253,000 he 42,000 hE _3% o , /J0kortrJ / ~~~~~~~SUB'P'ROJ ECT GLAPAN-SEDADI g Sea _ ~~~~~~~~~92,000ho SU-RJC UB-PROJECT

Labohen? ,cIndremju 1223,000 he GROUNDWATER STUDY AREA 2,500 km'

Teluk Peleboha Bandutig T= C- - rit Indian Oceaon 3 t t SAMPEANBARU a IP~~~~~~RJGATIONSCHEME b-3eda (A-or eh p doy PoIeuk "' 'hIhLLI PEKALEN-SAMPEAN PROJECT iBpSy ah Sec eId r neme y ogo t / A 3 F 1 229,000hP 8-S8 W.rldB.rk..dfrl-1fdl- 108-E J Ag k H

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