Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

MINISTRY OF FORESTRY OF INDONESIA IN COOPERATION WITH INTERNATIONAL TROPICAL TIMBER ORGANIZATION ITTO

ITTO PD425/06 Rev. 1 (I)

Production and Utilization Technology for Sustainable Development of Eaglewood (Gaharu) in Indonesia

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

by : Atok Subiakto, Erdy Santoso, Pratiwi, Erry Purnomo, Ragil S.B. Irianto, Bambang Wiyono, Eka Novriyanti, Sri Suharti, Maman Turjaman

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

R & D CENTRE FOR FOREST CONSERVATION AND REHABILITATION FORESTRY RESEARCH AND DEVELOPMENT AGENCY (FORDA) MINISTRY OF FORESTRY INDONESIA ISBN 978-979-3145-84-6 2011

9 789793 145846 MINISTRY OF FORESTRY OF INDONESIA IN COOPERATION WITH INTERNATIONAL TROPICAL TIMBER ORGANIZATION ITTO

ITTO PD425/06 Rev. 1 (I)

Production and Utilization Technology for Sustainable Development of Eaglewood (Gaharu) in Indonesia

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

by : Atok Subiakto, Erdy Santoso, Pratiwi, Erry Purnomo, Ragil S.B. Irianto, Bambang Wiyono, Eka Novriyanti, Sri Suharti, Maman Turjaman

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

R & D CENTRE FOR FOREST CONSERVATION AND REHABILITATION FORESTRY RESEARCH AND DEVELOPMENT AGENCY (FORDA) MINISTRY OF FORESTRY INDONESIA 2011

MINISTRY OF FORESTRY OF INDONESIA IN COOPERATION WITH INTERNATIONAL TROPICAL TIMBER ORGANIZATION ITTO

ITTO PD425/06 Rev. 1 (I)

Production and Utilization Technology for Sustainable Development of Eaglewood (Gaharu) in Indonesia

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

by : Atok Subiakto, Erdy Santoso, Pratiwi, Erry Purnomo, Ragil S.B. Irianto, Bambang Wiyono, Eka Novriyanti, Sri Suharti, Maman Turjaman

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

R & D CENTRE FOR FOREST CONSERVATION AND REHABILITATION FORESTRY RESEARCH AND DEVELOPMENT AGENCY (FORDA) MINISTRY OF FORESTRY INDONESIA 2011 Authors : Atok Subiakto, Erdy Santoso, Pratiwi, Erry Purnomo, Ragil S.B. Irianto, Bambang Wiyono, Eka Novriyanti, Sri Suharti, Maman Turjaman Institution’s full name, address : R&D Centre for Forest Conservation and Rehabilitation; Jalan Gunung Batu No. 5 Bogor, Indonesia; e-mail : [email protected] The place and date the report : Bogor, July 1, 2011. was issued Disclaimer : Copyright @ 2011 This Proceeding is a part of Program ITTO PD425/06 Rev. 1 (I) : Production and Utilization Technology for Sustainable Development of Gaharu (Gaharu) in Indonesia Published by : Indonesia’s Work Programme for 2011 ITTO PD425/06 Rev.1 (I) R&D Centre for Forest Conservation and Rehabilitation Jalan Gunung Batu No. 5 Bogor, Indonesia Phone :62-251-8633234 Fax :62-251-8638111 E-mail : [email protected] ISBN : 978-979-3145-84-6 Cover by : Bintoro

Project number : PD425/06 Rev. 1 (I) Host Government : Indonesia Name of the Executing : Forestry Research and Development Agency (FORDA), Dr. Ir. Maman Agency and Project Turjaman, DEA Coordinator Starting date of the project : May 1, 2008 Duration of the project : 36 months

ii PREFACE

This technical report entitles “Establishing of Demonstration Plot for Eaglewood (gaharu) Plantation and Inoculation Technology” contained the output that pertains to three activities, comprising (1) Establishing Demonstration Plots; (2) Data Collection and Conducting Financial Analysis on Eaglewood Plantation; (3) Assessing Socialization Results on Eaglewood Production Technology.

These activities embody their implementation in the field in cooperation with several stakeholders, local authorities, and farmer groups in Banten and South Kalimantan. The cooperation approaches in the planting of eaglewood-yielding trees in the Banten province was done with the leader of farmer group abiding by the leader of Moslem worshipers there. Meanwhile, the approach with the forest-farmer group in Kandangan (South Kalimantan) was conducted by the Kandangan’s Regent and directly with the self-sufficiency community-group, who indeed have endeavored themselves since five years ago in the eaglewood planting and injection at that regency.

Expectedly, this report would be beneficial to the decision makers and stakeholders who have developed eaglewood in Indonesia.

Maman Turjaman Project Coordinator ITTO PD425/06 Rev.1 (I) R & D Centre for Forest Conservation and Rehabilitation FORDA, the Ministry of Forestry, Indonesia

iii

SUMMARY

Gaharu is one of the reliable and superior trees, particularly for development of people plantation forest. R & D Centre for Forest Conservation and Rehabilitation, with the support of Project of ITTO PD425/06 Rev.1 (I) prepared science and technology needed for the aspect of planting stocks production and fungi induction for gaharu stimulation.

One of the objectives to perform gaharu development is to introduce gaharu- inoculation technology to gaharu farmers who reside in the vicinity of forests, and also to other stakeholders. This project provided two demonstration-plots regarding the planting of gaharu-yielding tree seeds in cooperation with the forest-farmer group, which in areas each reached 72 hectares in both locations (Banten and South Kalimantan Provinces). These demonstration-plots offered benefits to the stakeholders to conduct the conservation of gaharu trees in each region. In addition, those demonstration plots for inoculation technology covered more than 2,000 gaharu-yielding trees growing in Banten, South Kalimantan, West Kalimantan Barat, Bali, Lombok, East Nusa Tenggara, South Sulawesi, Maluku Provinces, and others. Those plots provided data and information regarding effectiveness consistency in gaharu development that resulted from induction as implemented on different species of gaharu-yielding trees. Especially for the location in Lombok, it required modification methods due to high-humidity condition there at the eaglewood-tree site, which were densely planted side by side with cacao trees.

In the development of science and technology for gaharu planting stocks production, research had been conducted concerning the effect of storage duration on seed germination, which was related to the recalcitrant seed property. Research on gaharu cutting was also conducted to learn the ideal condition for gaharu propagation with cutting, in relation with program of gaharu clonal development. Duration and condition seed storage were influential on gaharu seed germination. Gaharu seed germination decreased from 82% in the initial germination to 42% after 8 weeks storage in room temperature condition. Storage of gaharu seed in refrigerator decreased germination percentage of seeds which had been stored for 8 weeks to 24%. Propagation by cutting on media comprising mixture of coconut rind powder and rice husk with ratio of 1:1, and twice a week watering, produced the best growth percentage of 69%.

The increasing popularity of planting gaharu occurs in many part of of Indonesia Archipelagos leads to growing business of other related sectors such as seedlings supply, growing variety gaharu products (perfume, cosmetic, aroma therapeutic product, etc.). Nowadays gaharu is considered as prospective and strategic commodity which will create variety of others business sectors as in palm oil on agriculture industry. The financial analysis of gaharu plantation is presented in two planting schemes namely mono-culture and mix planting. Planting cost per Hectare of gaharu in monoculture at 3 x 3 and 4 x 4 meter spacing is Rp 12.452.000,- and Rp 8.460.500,- respectively. Planting cost per Hectare of gaharu in mix planting with palm oil at planting density of 278 trees per Ha is Rp 9.303.000,-. Planting cost per hectare of gaharu in mix planting with rubber trees at planting density of 1.112 trees per ha is Rp 14.068.000,-.

Based on calculation and analysis, several recommendations can be presented as follow: (i) gaharu is one of main non timber forest product export commodities. Its cultivation development and its artificial production of gaharu are very prospective to be developed in Indonesia; (ii) several supporting factors on the success of its cultivation development and its artificial gaharu production mainly lie on the availability of potential

v land for extensive gaharu cultivation, appropriate agro climate condition, cultivation technique which is relatively easy and has been well adopted by farmers, availability of necessary pathogen for gaharu inoculation and its demand that tends to increase with relatively high price; (iii) factors determining the success of gaharu business are inoculation technology, appropriateness/suitability between pathogen and tree species which is going to be inoculated and resistance of inoculated tree species; (iv) development of gaharu agribusiness at different stem diameter, (Ø ≥15 – ≤ 25 cm, Ø > 25 – ≤ 35 cm and Ø > 35 cm - 40 cm) and period of inoculation, would produce positive NPV, IRR much higher than interest rate on national market and B/C ratio > 1, therefore it is very feasible to be carried out; (v) In order to retain Indonesia as prominent gaharu production country, to increase export of non timber forest product commodity and to improve income of forest surrounding people, several efforts to induce development of gaharu production tree species cultivation and gaharu production through artificial inoculation should be widely developed; (vi) as capital intensive agribusiness, only few people have the capability to afford it. Therefore, in order to develop gaharu agribusiness further, a partnership scheme between investor having enough capital with other parties having limited resources (farmers or other parties interested in gaharu development) should be initially introduced.

The assesing socialization results of gaharu production technology have been publicly informed via mass media nationally and locally, e.g. Jakarta Post, Kompas, and Bisnis Indonesia. In addition, PD425/06 Rev. 1(I) team was invited in April-May 2010 to hold socialization for NGO (non-governmental organization) and for public in Depok; to give a special lecture to student and lecturer of Technology and Science Faculty, Public Islamic University in Ciputat, Jakarta, and in the Forestry Faculty, Lambung Mangkurat University, Banjarbaru, South Kalimantan. From 19 to 24 of June 2010, PD425/06 Rev. 1 (I) team will participate in ATBC (Association for Tropical Biology and Conservation) International Symposium to be held in Bali, Indonesia. In August 2010, gaharu research team received the Most Prospective Innovation 102 Award, an award given to outstanding research findings by Indonesian researchers and is organized by the Ministry of Research and Technology, Indonesia. The title was “Bioinduction: Induction Technology for Gaharu Production by Fusarium spp.” LIST OF CONTENTS

PREFACE...... iii

SUMMARY...... v

LIST OF CONTENTS...... vii

LIST OF TABLE...... ix

LIST OF FIGURE...... xi

1. INTRODUCTION...... 1

2. APPLIED METHODOLOGY...... 3 2.1 Establishing demonstration plots...... 3 2.2 Data collection and conducting financial analysis gaharu plantation...... 6 2.3 Assessing socialization result of gaharu production technology...... 9

3. PRESENTATION OF THE DATA...... 11 3.1 Establishing Demonstration Plot...... 11 3.2 Data collection and conducting financial analysis gaharu plantation...... 20 3.3 Data collection and conducting financial analysis gaharu inoculation...... 23 3.4 Community Based Forest Management in gaharu plantation...... 26 3.5 Assessing socialization result of gaharu production technology...... 27 4. ANALYSIS AND INTERPRETATION OF THE DATA AND RESULTS...... 29 4.1 Establishing Demonstration Plot...... 29 4.2 Pest and Disease...... 30 4.3 conducting financial analysis gaharu plantation and Inoculation...... 32 4.4 Assessing socialization result of gaharu production technology...... 33

5. CONCLUSIONS...... 35

6. RECOMMENDATIONS...... 39

7. IMPLICATIONS FOR PRACTICE...... 41 ANNEX...... 43

BIBLIOGRAPHY...... 63

vii

LIST OF TABLE

Table 1. Productivity of gaharu at different stem diameter and age of tree...... 8

Table 2. Price of gaharu at different harvesting period...... 9

Table 3. Germination percentage from results of seed germination test...... 11

Table 4. Percentage of succesful planting stocks (6 weeks after sowing) from the results of seed storage test...... 11

Table 5. Growth percentage of uprooted seedlings from test of storage and planting condition of the uprooted seedlings...... 12

Table 6. Rooting percentage of cutting from a series of production test of cutting .....13

Table 7. Demonstration plot of gaharu tree inoculation by delibarate tree drilling and Fusarium spp. injection in several location across Indonesia...... 15

Table 8. Pests and Diseases of gaharu plants in several locations in Indonesia...... 20

Table 9. Planting cost of gaharu in monoculture with planting density 1.100 trees/Ha (3 x 3 m)...... 21

Table 10. Planting cost of gaharu in mono-culture with planting density 625 trees/Ha (4 x 4 m)...... 21

Table 11. Planting cost of gaharu in mix planting with palm oil at planting density of gaharu plants 139 trees/Ha...... 22

Table 12. Planting cost of gaharu in mix planting with palm oil at planting density of palm oil plants 139 trees/Ha...... 22

Table 13. Planting cost of gaharu in mix planting with rubber tree at planting density of gaharu plants 556 trees/Ha...... 22

Table 14. Planting cost of gaharu in mix planting with rubber tree at planting density of rubber trees plants 556 trees/Ha...... 23

Table 15. Investment, management and harvesting cost of gaharu (Rp)...... 24

Table 16. Result of Financial Analysis of inoculation of 100 gaharu producing trees if harvested five years after inoculation...... 25

Table 17. Kinds of insecticide used for controlling leaf pest larvae of gaharu (Aquillaria microcarpa tree) in KHDTK Carita, Banten...... 31

LIST OF FIGURE

Figure 1. Demonstration plot of gaharu plantation and inoculation technology in KHDTK Carita, Banten Province...... 5

Figure 2. Demonstration plot of gaharu plantation and inoculation technology in Kandangan Regency, South Kalimantan...... 6

Figure 3. One year and six months old of gaharu at Carita Banten (left) and planting activity at Kandangan South Kalimantan (right)...... 15

Figure 4. Demplot of inoculation technology in Kandangan Regency, South Kalimantan...... 16

Figure 5. Application of gaharu inoculation technology...... 17

Figure 6. Appearance of leaf pest larvae Heortia vitessoides which attack gaharu producing trees Aquillaria microcarpa in KHDTK Carita, Banten...... 19

Figure 7. Destruction of gaharu producing tree Aquilaria microcarpa by leaf-eater Heortia vitessoides in KHDTK Carita, Banten...... 19

Figure 8. Gaharu production technology research team received the most prospective innovation 102 award in 2010 organized by the Ministry of Research and Technology, Indonesia...... 33

1 INTRODUCTION

Gaharu plantation area is recently expanding throughout Indonesia, planted either by government project or by private sectors. The growing trend of gaharu planting is triggered by the promising commercial prospect of gaharu commodity. Prior planting era of gaharu trees, gaharu resin was extracted by cutting of natural gaharu trees. In natural tropical forest, gaharu trees (Aquilaria spp. dan Gyrinops spp.) are not a dominant species or in other words the population of gaharu trees in natural forest is relatively few. The important value index of gaharu (Aquilaria spp.) at Bukit Tiga Puluh National Park is 2.27 (Antoko and Kwatrina, 2006). The low important value index (1.03) of other gaharu species (Gyrinops spp.) is also recorded at Central Sulawesi (Sidiyasa, 1989.). Intensive exploitation of minor species or rare species from natural forest such as gaharu will speed up its disappearance from natural forest. Sharp declining of gaharu population has put the species onto Appendix II CITES (Siran, 2010). As a qonsequence, gaharu trading is limited by trade quota. However gaharu obtained from artificial cultivation is not include on trade quota.

The fragrant resin accumulation of gaharu has been reported to be stimulated by infection of particular fungi (Mucharromah and Surya, 2006; Santoso et al. 2006; Sumarna, 2002). The ability of inoculant fungi in stimulating resin production is also related to resin accumulation level which is netto product from synthesis process minus its degradation, and the resin type and purity (Agrios, 1988). The usage of particular inoculant and purity, assembling of aseptic technics in inoculant preparation and application, the accuracy of inoculation technics, and labors’ skills will greatly affect the production process and product quality. Therfore, in Bengkulu, gaharu development was started with effectivity test of several fungi isolates which are potential in inducing gaharu-forming and then followed by development of excellent inoculant which are still undergoing to upgrade the quality.

Unlike other NTFP such as pine resin and damar which can be extracted from the trees after a certain age, to get gaharu resin the tree must first be innoculated by a particular microbes that induce gaharu resin production. Therefore, 5 – 6 years after planting, the gaharu trees must be innoculated by suitable microbes. The spending components for calculating gaharu planting cost are similar to other commercial trees. However, the price of gaharu planting stocks is relatively higher than other tree species. Depending on its size, the range of gaharu seedling price is between Rp 5,000 to Rp 20,000 per seedling. Other additional cost for gaharu planting and production is cost for gaharu induction by microbe innoculation.

Bioinducement technology with solid media reveals the first generation technology the FORDA has ever developed using sawdust media added with nutrients and vitamins to enhance the growth of fungi Fusarium spp. (Santoso et al., 2010). Since the inoculum as used shapes as solid media, then the drill bit as employed to put the solid inoculum is 6-12 mm size (length), with the depth of holes reaching one third (1/3) inward of the stem diameter, and the resulting-drilling hole should be closed (sealed) with wax. This manner proves less effective, since the successful percentage rates only about 40-

1 60%. Through the activity of ITTO’s PD 425/06 Rev.1 (1), there have been conducted various modifications on bio-inducement technology. In this method, the media for fungi inoculation form as liquid, and consequently the diameter of holes becomes smaller. The volume of liquid put into the hole amounts to about 1 ml (wet origin). This method seems very effective, since the percentage of success reaches 100%. In addition, the drill bit enters into the holes also just as far inward as 1/3 of tree diameter. This intends to avoid the damage to the pit portion of stem. Another bio-inducement technology as used for the comparison is the so-called Taiwan technology. The technology used the injection needle that can enter inward the stem until 80% of the stem diameter. The injection needle contains 50-100 ml of liquid, and the inward movement of the liquid into the stem is assisted by the injection pressure. As a result, this Taiwan method causes the deterioration in the central portion of the stem, and consequently the amount of gaharu-sapwood as produced is still very limited.

The objective of this technical report was to establish demonstration plot of gaharu planting and gaharu inoculation tehnology. This technical report consists of (1) Establishing demonstration plots; (2) Data collection and conducting financial analysis on gaharu plantation; (3) Assessing socialization results on gaharu production technology.

2 2 APPLIED METHODOLOGY

2.1 Establishing demonstration plots

2.1.1 Generative Propagation Testing in generative propagation was conducted on seeds and uprooted natural seedlings (wildlings) of gaharu. Gaharu seeds which were used in the test of seed storage and germination were mixture of Aquilaria microcarpa and A. malaccensis originating from Sukabumi. Treatments in test of gaharu seed storage were storage durations (0, 2, 4, 6 and 8 weeks) and storage temperatures (25.4-26.1oC and 4.9-6.5oC). Testing was conducted by completely randomized design with five replications.

Uprooted seedlings which were used in the test of storage duration of uprooted seedlings, were mixture of Aquilaria microcarpa and A. malaccensis. Treatment in test of storage duration of uprooted seedlings were three storage durations (1, 2 and 3 days of storage) and conditon of transplanting (inside cover house and without cover house). Testing was conducted by using completely randomized experimental design with five replications.

2.1.2 Vegetative propagation Technique of vegetative propagation which was used in this study was the use of shoot cutting. The research was conducted in greenhouses which used mist cooling of KOFFCO system (Sakai and Subiakto, 2007; Subiakto and Sakai, 2007). Cutting materials used in this testing were A. malaccensis. Planting stocks production test using gaharu cutting was conducted in three stages. Treatment in the first step used routine procedure, namely the use of media in the form of mixture of coconut rind powder and rice husk with ratio of 2:1. Watering was conducted two times a week. In the second test, treatment of watering intensity was reduced to once a week with media of rice husk charcoal. In the third test, the media used mixture of coconut rind powder and rice husk with ratio of 1:1 and watering intensity of one time in the first month, two times in the second month and three times in third month.

2.1.3 Community Based Forest Management in gaharu plantation Process of establishing plot demonstration of gaharu trees in KHDTK Carita was initiated by intensive discussion and approach with candidates of participants in order to investigate prospect of community participation in plantation establishment. After having sufficient description about prospect of community participation in plot establishment, next process is formulation of technical plan and design through several in depth discussions. By owning this series of in depth discussions, it is expected that candidates of participants would really understand about the purpose of the research collaboration which eventually could increase their active participation in gaharu plantation.

3 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Method used in the research was field observation, interviews and discussion with related stakeholders (Perhutani state owned forest, Banten forestry service, personnel of KHDTK Carita and gaharu trader). Subsequently, it will be followed by Focus Group Discussion (FGD) by using Participatory Rural Appraisal (PRA) approach (Sulaeman, 1995). Main target of the research is all stakeholders involving in KHDTK Carita management and candidates of participants from local community (40 people). Focus of the discussions were to gain better understanding about main principles of research collaboration including right and obligation, reward and punishment and also profit sharing system which is going to be applied when gaharu tree already produce.

2.1.4 Pest and Disease Observation of level of attack by gaharu tree pest larvae was conducted with census manner. Level of attack was calculated on the basis of score of damage level, and dead gaharu trees were also observed. Number of gaharu trees existing in the KHDTK Carita was more than 300 trees. Observation of life cycle was conducted by collecting young larvae of the gaharu leaf pest insect. Larva were put in a jar measuring 30 cm by 20 cm. Each jar contained gaharu leaf to let the larvae develop properly and changed into pupa. Sawdust was put in the bottom of the jar to let the pupa developed properly. Further observation included the process of change from pupa to moth / butterfly. Afterwards, the butterfly was observed in terms of its egg producing process. The variables observed were chronology of change in eggs, larvae, pupa, moth, and egg producing process. At emergency stage, control of pest larvae was conducted by using systemic and contact insecticide. Beside that, there was also addition of leaf fertilizer and insecticide adhesives to make the process more effective because of the rainy season. The sprayed trees were those which had been attacked by leaf pest larvae. The spraying was conducted three times with interval of three weeks. The variables observed were percentage of young leaves / shoot which grew, and the leaf growth chronology.

Planting cost study of gaharu planting is based on data from field planting plot ITTO PD 251 at Carita, Banten province (Figure 1), and Kandangan-Barabai, South Kalimantan province (Figure 2). Calculation is presented on three planting schemes namely (1) mono- culture planting of Gaharu with two spacing variation i.e. 3 x 3 meter and 4 x 4 meter, (2) mix planting with palm oil at planting density of 278 trees per hectare, and (3) mix planting with rubber trees at planting density 1,112 trees per hectare. Cost components for calculating planting cost are (1) seedling purchase, (2) stake purchase, (3) labor cost for Line clearing & staking (per diem), (4) labor cost for planting pit digging and planting (per diem), (5) fertilizer purchase, (6) labor cost for fertilizer application, (7) labor cost for first tending, and (8) labor cost for second tending. The differences planting cost among planting schemes are due to the difference purchase price of seedlings (gaharu, palm oil and rubber trees), and planting density (number of planted trees per hectare). The following table present calculation of planting cost based their planting schemes.

4 APPLIED METHODOLOGY Establishing demonstration plots

Figure 1. Demonstration plot of gaharu plantation and inoculation technology in KHDTK Carita, Banten Province

5 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Figure 2. Demonstration plot of gaharu plantation and inoculation technology in Kandangan Regency, South Kalimantan.

2.2 Data collection and conducting financial analysis gaharu plantation

2.2.1 Data collection and conducting financial analysis gaharu plantation Planting cost study of gaharu planting is based on data from field planting plot ITTO PD425/06 Rev.1 (I) at Carita Banten and Kandangan-Barabai South Kalimantan. Calculation is presented on three planting schemes namely (1) mono-culture planting of Gaharu with two spacing variation i.e. 3 x 3 meter and 4 x 4 meter, (2) mix planting with palm oil at planting density of 278 trees per hectare, and (3) mix planting with rubber trees at planting density 1,112 trees per hectare.

Cost components for calculating planting cost are (1) seedling purchase, (2) stake purchase, (3) labor cost for Line clearing & staking (per diem), (4) labor cost for planting pit digging and planting (per diem), (5) fertilizer purchase, (6) labor cost for fertilizer application, (7) labor cost for first tending, and (8) labor cost for second tending. The differences planting cost among planting schemes are due to the difference purchase price of seedlings (gaharu, palm oil and rubber trees), and planting density (number

6 APPLIED METHODOLOGY Data collection and conducting financial analysis gaharu plantation of planted trees per hectare). The following table present calculation of planting cost based their planting schemes.

2.2.2 Data collection and conducting financial analysis gaharu inoculation Data presented in this paper were collected from field survey (primary data) and literature study (secondary data). Data collected including age, diameter, d price of trees prepared for inoculation, cost of labor, price of inoculation material and chemical compound, price and depreciation value for tools and equipments used for inoculation process and price of gaharu at different quality. Source of secondary data and information are Ministry of Forestry, CITES, Statistical Centre Bureau (BPS), and Indonesia Gaharu Exporter Association (Asgarin).

All collected data and information t was processed and analyzed by using financial analysis based on several feasibility criteria i.e. Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit Cost Ratio (B/C ratio) which is formulated as follow (Gray et.al., 1987):

n Bt −Ct a. = ...... (1) NPV ∑ t t=0 (1+i)

where: NPV = Net Present Value, Bt = benefit or revenue at year t, Ct = cost at year t, i = interest rate of Bank, n = period of project. One project is considered to be financially feasible if NPV is > 0.

NPV1 b. IRR =i1+ (i2−i1) ...... (2) NPV1− NPV2

where: IRR = Internal Rate of Raturn, i1 = interest rate to produce NPV1 positive close to zero, NPV1 = value of NPV close to zero positive, i2 = interest rate to produce NPV2 negative close to zero, NPV2 = value of NPV close to zero positive.

One project is considered to be financially feasible if IRR value is higher that interest rate from Bank.

7 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

n Bt ∑ t = (1+ i) c. B/C = t 0 ...... (3) n Ct ∑ t t=0 (1+ i) where: B/C = Benefit Cost Ratio, Bt = benefit or revenue at year t, Ct = cost at year t, i = interest rate, n = period of project. One Project is considered to be financially feasible if B/C ratio > 1.

2.2.2.1 Assumptions and Restrictions Several assumptions and restrictions used in this research are: 1. Trees producing gaharu used in this research are bought from farmers. It consists of three different stem diameter (≥15 - ≤ 25 cm, > 25 - ≤ 35 cm dan > 35 cm - 40 cm) with total number trees used is 300 (100 trees for each diameter). 2. Price of each tree is Rp 250,000, 300,000 and Rp 350,000 for diameter ≥15 - ≤ 25 cm; > 25 - ≤ 35 cm and > 35 cm - 40 cm respectively. 3. Number of trees assumed alive and successfully inoculated are 90% from total initial population (90 trees). Gaharu harvesting is done periodically (once a year) started from one year until five year after inoculation (20% per year). Hence every year there are 18 trees (20%) are harvested. 4. Productivity of gaharu is assumed as follow (Table. 1): a. For stem diamater ≥15 - ≤ 25 cm, gaharu production with high quality varies from 0.6-1.20 kg/tree whereas low quality production varies from 3-7 kg/tree. b. For stem diamater > 25 - ≤ 35 cm gaharu production with high quality varies from 0.75-1.35 kg/tree while low quality production varies from 4-8 kg/tree. c. For stem diamater > 35 cm - 40 cm gaharu production with high quality varies from 0.9-1.45 kg/tree and low quality production varies from 5-9 kg/tree.

Table 1. Productivity of gaharu at different stem diameter and age of tree

Diameter >25- Diameter ≥15-≤25Cm Diameter >35-40Cm Age of harvesting ga- ≤35Cm haru after inoculation Production (kg/tree) Production (kg/tree) Production(kg/tree) - Gaharu 1 year 0.60 3 0.75 4 0.90 5 - Gaharu 2 year 0.75 4 0.90 5 1.0 6 - Gaharu 3 year 0.90 5 1.05 6 1.15 7 - Gaharu 4 year 1.05 6 1.20 7 1.30 8 - Gaharu 5 year 1.20 7 1.35 8 1.45 9

5. Cost for harvesting is Rp 100,000,-/kg gaharu production (similar for both high and low quality production).

8 APPLIED METHODOLOGY Assessing socialization result of gaharu production technology

6. For 100 gaharu trees inoculation, it takes 10 days done by labours with different skill and wage level as follow: a. Wage for specialist technical labour doing inoculation is Rp 150,000,-/manday b. Wage for technical assistant for inoculation is Rp 100,000,-/manday c. Wage for labour carrying equipment and inoculation material is Rp 150,000,-/ manday 7. Price of gaharu at different harvesting period for high and low quality product are as follow (Table 2).

Table 2. Price of gaharu at different harvesting period

Price of gaharu Period of harvesting High/Super Guality Low quality Note after inoculation i $ Rp $ Rp - Gaharu 1 year 100 900,000 25 225,000 $ 1 = Rp 9,000,- - Gaharu 2 year 250 2,250,000 25 225,000 - Gaharu 3 year 800 7,200,000 25 225,000 - Gaharu 4 year 1500 12,000,000 25 225,000 - Gaharu 5 year 2000 18,000,000 25 225,000

8. Interest rate used in this financial analysis is 12.5%/year.

2.3 Assessing socialization result of gaharu production technology Assesing socialization result of gaharu production technology have been in some farmer groups and stakeholder in Indonesia. Positive response from farmers, policy makers, extension officers, gaharu traders towards this activity has been reported. Gaharu stakeholders have high expectancy to this induction technology that this technology would shift dependency and reduce current pressure towards natural gaharu in the forests.

3 PRESENTATION OF THE DATA

3.1 Establishing Demonstration Plot

3.1.1 Generative Propagation Gaharu seeds are categorized as recalcitrant, so they should be soon germinated. Seed storage test was conducted to learn on how long the gaharu seed can be stored. Results of seed germination test from the two storage conditions are presented in Table 3 and Table 4. Storage condition (room condition and in refrigerator condition) did not significantly affect seed germination (P Anova=0,0993). On the other hand, storage period, affected seed germination percentage (P Anova = <0,0001).

Technically, germination of gaharu seed is easy to be conducted, germination medium could be in the form of rice husk charcoal or zeolite. In this testing, the germination medium used was rice husk charcoal. In species of recalcitrant seeds such as meranti, seed sowing was conducted after the fruit ripened and fell down. In gaharu species, storage at room condition for 2 months could still produced seedlings with success rate of 48%.

Germination is usually started at second week and the percent of successful planting stocks was calculated at sixth week after sowing. In Table 4, it can be seen that there was decrease between germination percentage and planting stocks success percentage. The decrease tended to be greater if the seeds were stored for longer duration. Therefore, for obtaining high percentage of successful planting stocks, sowing (germination) should be conducted soon after fruit harvesting.

Table 3. Germination percentage from results of seed germination test

Storage duration (period) Room condition Refrigerator

Direct 82% - 2 weeks 69% 69% 4 weeks 77% 69% 6 weeks 56% 61% 8 weeks 48% 24%

Table 4. Percentage of succesful planting stocks (6 weeks after sowing) from the results of seed storage test

Storage duration (period) Room condition Refrigerator

Direct 74% -

11 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Storage duration (period) Room condition Refrigerator

2 weeks 50% 54% 4 weeks 64% 58% 6 weeks 37% 48% 8 weeks 29% 9%

Generative propagation could also be conducted by using planting stocks obtained as uprooted seedlings occuring under the mother plants. In the planting test of uprooted seedlings, gaharu seedlings with height of 7 cm, whose cotyledon have fallen down, were used. Results of planting test of the uprooted seedlings are presented in Table 5. The use of cover house increased signficantly the growth percentage of uprooted seedlings (P Anova = <0,0001).

Table 5. Growth percentage of uprooted seedlings from test of storage and planting condition of the uprooted seedlings

Storage duration (period) With cover house Without cover house

0 day 80 % 40 % 1 day 76 % 46 % 2 days 87 % 24 % 3 days 76 % 38 %

Generally, uprooted seedlings which still have cotyledon, could be directly planted in plastic pot without using cover house. However, if the cotyledons have fallen down, the planting of uprooted seedlings should pass through the stage of cover house usage. Cover house could be made from transparent PVC plastic. The cover house should be tight, to maintain humidity inside the cover house at level above 95%. Results of this test proved that high humidity inside the cover house affected the planting success of uprooted seedlings. Storage of uprooted seedlings for three days could still give sufficienty good results (76%) if the planting used cover house.

3.1.2 Vegetative Propagation Production test of gaharu cutting was conducted by using technology of KOFFCO system developed by Agency for Forestry Research and Development (Badan Litbang Kehutanan) and Komatsu (Sakai and Subiakto, 2007; Subiakto & Sakai, 2007). This technology regulates environmental condition, namely light, humidity, temperature and

12 PRESENTATION OF THE DATA Establishing Demonstration Plot media at optimum level for growth (Sakai et al. 2002). Results of production test of gaharu cutting are presented in Table 6.

Table 6. Rooting percentage of cutting from a series of production test of cutting

Research Species Treatment Rooting percentage stage

1 A. crassna Without pot-tray, watering 3 40% times a week, media of cocopeat : rice husk= 2:1 1 A. crassna With pot-tray, watering 3 times 42% a week, media of cocopeat : rice husk = 2:1 1 A. microcarpa Without pot-tray, watering 3 44% times a week, media of cocopeat : rice husk = 2:1 1 A. microcarpa With pot-tray, watering 3 times 47% a week, media of cocopeat : rice husk = 2:1 2 Mixture of A. Crassna Media of burnt rice husk, wa- 17% and A. microcarpa tering 1 time a week

2 Mixture of A. Crassna Media of sand, watering 1 time 31% and A. microcarpa a week. 2 Mixture of A. Crassna Media of zeolite, watering 1 55% and A. microcarpa time a week. 3 Mixture of A. Crassna Media of cocopeat : rice husk 53% and A. microcarpa = 1:1, watering 1 time a week 3 Mixture of A. Crassna Media of cocopeat : rice husk 69% and A. microcarpa = 1:1, watering 2 times a week. 3 Mixture of A. Crassna Media of cocopeat : rice husk 49% and A. microcarpa = 1:1, watering 3 times a week.

Production test of cutting was conducted in three stages of research. In the first stage, standard procedure was used for cutting production. The treatments were types (kinds) and container of cutting planting (sowing). Average percentage of success rate of cutting at first stage test ranged between 40%-47%. Cutting production is assessed as being able to be applied economically if the success rate reach 70% (Subiakto & Sakai, 2007). Treatment species did not show significant differences (P Anova=0.6600) in percent of cutting success rate. Also, the planting container did not show significant differences (P Anova=0.8276) in percent of cutting success rate. Considering that cutting success rate was still below 70%, then there was further test being performed.

13 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

In the second stage test, watering was reduced to one time a week, whereas the tested treatments were types (kinds) of media (rice husk charcoal, sand and zeolite). Test results showed that the media had significant effect (P Anova = 0,0083) on percent of succes of cutting. The best medium was zeolite, but the rooting percentage was still below 70%. Zeolite is a medium with good porosity and was not grown over with fungi or algae. Because zeolite is a medium which is heavy and relatively expensive, then there is a need to try other media which possess porosity level which is relatively similar with that of zeolite.

In the third test, the media being used was mixture between cocopeat and rice husk which had been sterilized. The tested treatments were level of watering (1 time a week, 2 times a week and 3 times a week). Test results showed that at confidence level of 5%, watering had significant effect on rooting percentage of cutting (P Anova = 0,0210). The best watering level was two times a week with rooting percentage of 69%. Effect of watering was making the media be saturated with water and increase the growth of fungi, including the rotting fungi.

3.1.3 Gaharu Planting Gaharu planting by local community can be observed in many parts of Indonesia Archipelagos. ITTO project PD 425/06 Rev.1 (I) has planted gaharu trees in Carita Banten and Kandangan-Barabai South Kalimantan. In the year of 2009 -2010 the project planted 15,000 gaharu seedlings in area of 24 Ha at Carita Banten. Planting was done under canopy of higher vegetation such as dipterocarps stand, clove trees, jackfruit trees, etc. Gaharu planting has also been done at Kandangan-Barabai South Kalimantan in area of 48 Ha with 30,000 gaharu seedlings.

Survival rate of gaharu planting in Carita Banten is 76%, mortality is mostly caused by leaf eater green caterpilar attack. Height of gaharu planted in Carita Banten at the end of 2010 (1,5 year old) is between 60 cm to 160 cm (Figure 3). Survival rate of gaharu at Kandangan South Kalimantan is above 80%.

3.1.4 Gaharu Inoculation Technology Gaharu inoculation technology by local community can be observed in many locations of Indonesia Archipelagos. ITTO project PD 425/06 Rev.1 (I) has inoculated more than 2000 gaharu trees in 12 locations (Table 7). Bangka island, Bahorok, West Sumatra, Jambi, and Lampung were representative of Sumatra island. West Kalimantan and South Kalimantan were representative of Kalimantan island. Lombok, Bali, Flores, and Seram were representative of Nusa Tenggara, Sulawesi, Mollucas and Papua islands (Figure 4 and Figure 5).

14 PRESENTATION OF THE DATA Establishing Demonstration Plot

Figure 3. One year and six months old of gaharu at Carita Banten (left) and planting activity at Kandangan South Kalimantan (right)

Table 7. Demonstration plot of gaharu tree inoculation by delibarate tree drilling and Fusarium spp. injection in several location across Indonesia

Number of No. Location Gaharu Tree Species trees induced 1. Bangka Island A. microcarpa 160 2. Bahorok (North Sumatra) A. malaccensis 50 3. West Sumatra A. malaccensis 200 4. KHDTK Carita (Banten) A. microcarpa 300 5. Bodok (West Kalimantan) A. microcarpa 200 6. Kandangan (South Kalimantan) A. malaccensis, A. microcarpa 800 7. Muaro Jambi (Jambi) A. microcarpa 50 8. Lampung Timur (Lampung) A. microcarpa 50 9. Nagakeo, Flores (East Nusa Tenggara) Gyrinops versteegii 100 10. Lombok Utara (West Nusa Tenggara) Gyrinops versteegii 200 11. Bali Gyrinops versteegeii 50 12. Seram island (Molluca) Aquilaria cummingiana 150

15 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Figure 4. Demplot of inoculation technology in Kandangan Regency, South Kalimantan.

16 PRESENTATION OF THE DATA Establishing Demonstration Plot

Figure 5. Application of gaharu inoculation technology.

3.1.5 Community Based Forest Management in gaharu plantation The research in Community Based Forest Management in gaharu plantation using profit sharing system was conducted at part of area plot No 21 at KHDTK Carita – Pandeglang, Banten. Total area of research plot is 24 ha. The research was done by involving local community (who formerly cultivate seasonal crops, multipurpose trees/ MPTS and fruit trees in the research area) to plant gaharu trees in their cultivated land. People who are going to participate in the research collaboration come from Sindang Laut Village (especially from Longok and Pasir angin sub village). Process of establishing plot demonstration of gaharu trees in KHDTK Carita was initiated by

17 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

intensive discussion and approach with candidates of participants in order to investigate prospect of community participation in plantation establishment. After having sufficient description about prospect of community participation in plot establishment, next process is formulation of technical plan and design through several in depth discussions. By owning this series of in depth discussions, it is expected that candidates of participants would really understand about the purpose of the research collaboration which eventually could increase their active participation in gaharu plantation. Method used in the research was field observation, interviews and discussion with related stakeholders (Perhutani state owned forest, Banten forestry service, personnel of KHDTK Carita and gaharu trader). Subsequently, it will be followed by Focus Group Discussion (FGD) by using Participatory Rural Appraisal (PRA) approach (Sulaeman, 1995). Main target of the research is all stakeholders involving in KHDTK Carita management and candidates of participants from local community (40 people). Focus of the discussions were to gain better understanding about main principles of research collaboration including right and obligation, reward and punishment and also profit sharing system which is going to be applied when gaharu tree already produce. Data obtained from the research would be analysed descriptively (Singarimbun and Sofian, 1982).

3.1.6 Pest and Disease Identification results showed that this pest which attacked the gaharu producing trees was Heortia vitessoides Moore. This pest had been reported to attack gaharu plants (Aquillaria malaccensis) in the year 1998 in India. Classification Kingdom : Animalia Phylum : Arthropoda Class : Insecta Order : Lepidoptera Family : Pyraloidea Genus : Heortia Species : Heortia Vitessoides – Moore 1885

egg – 10 days Moth (4 days)

↓ ↑ ↓

Larva – 23 days

Pupa (8 days) Egg (23 days)

↓

Pupa – 8 days

↑ ↓

↓

Moth – 4 days Larva ( 8 days)

18 PRESENTATION OF THE DATA Establishing Demonstration Plot

The shape of larvae and moth which was discovered by Santoso et.al (2008) was visually similar with that found by Kalita et al. (2008). Figure 6 and 7 showed leaf larva and moth which were found in KHDTK Carita, Banten.

Figure 6. Appearance of leaf pest larvae Heortia vitessoides which attack gaharu producing trees Aquillaria microcarpa in KHDTK Carita, Banten.

Figure 7. Destruction of gaharu producing tree Aquilaria microcarpa by leaf- eater Heortia vitessoides in KHDTK Carita, Banten.

19 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Gaharu plants cultivated in a large scale is prone to pest and disease attack. Some important pests and diseases have been found attacking several locations of gaharu plantations in Indonesia with various level of attack (Table 7).

Table 8. Pests and Diseases of gaharu plants in several locations in Indonesia

Damage No. Pests Host Location intensity Pest 1. Heortia vitessoides A. microcarpa, A. malaccen- Bogor, West Java + sis, A. crassna, Gyrinops sp. 2. Heortia vitessoides A. malaccensis Sukabumi, West Java + 3. Heortia vitessoides A. microcarpa Carita, Banten + + + 4. Heortia vitessoides A. microcarpa, Central Bangka + + 5. Heortia vitessoides A. malaccensis, Bodok, West Kalimantan + + 6. Heortia vitessoides A. beccariana West Kalimantan + + 7. Heortia vitessoides A. malaccensis, Kandangan and Barabai, + A. microcarpa South Kalimantan 8. Stem borer Gyrinops sp. North Sulawesi + 9. Heortia vitessoides Gyrinops sp. Bali + 10. Heortia vitessoides Gyrinops sp. Lombok, West Nusa Tenggara + 11. Stem borer Gyrinops sp. Lombok, West Nusa Tenggara + Disease 12. Mildew A. microcarpa Carita, Banten + 13. Mildew A. microcarpa Pulau Laut, South Kalimantan + 14. Heart rot Gyrinops sp. West Nusa Tenggara + Notes: Damage intensity: +: weak, ++: medium, +++: severe (Source: Santoso et al., unpublished data)

3.2 Data collection and conducting financial analysis gaharu plantation Planting cost of gaharu planting for mono-culture scheme at planting density of 1,100 plants/Ha is Rp 12.452.000,- (Table 8). Monoculture planting of gaharu should not be interpreted as 100% pure planting of gaharu. Gaharu is tolerant tree, therefore planting gaharu should be done under canopy of other plants such as banana, papaya, etc. Two years after planting, when the height of gaharu trees about 1.5 – 2.0 meter, canopy trees should be cut off. However in many forest farms, the farmers do not cut the canopy trees such as clove, cacao and rubber, instead they provide wider spacing for gaharu trees to get sufficient sunlight.

20 PRESENTATION OF THE DATA Data collection and conducting financial analysis gaharu plantation

Table 9. Planting cost of gaharu in monoculture with planting density 1.100 trees/Ha (3 x 3 m)

No Cost component No per Ha Unit (Rp) Total (Rp)

01 Gaharu seedlings 1.100 5.000,- 5.500.000,- 02 Stake 1.100 500,- 550.000,- 03 Line clearing & staking (per diem) 36 40.000,- 1.440.000,- 04 Planting pit & planting (per diem) 56 40.000,- 2.240.000,- 05 Fertilizer (Kg) 22 11.000,- 242.000,- 06 Fertilizer application (per diem) 36 40.000,- 1.440.000,- 07 First tending (per diem) 13 40.000,- 520.000,- 08 Second tending (per diem) 13 40.000,- 520.000,- Total cost 12.452.000,-

Planting cost of gaharu planting for mono-culture scheme at planting density of 625 plants/Ha is Rp 8.460.500,- (Table 9). Planting cost of this scheme is lower than at planting density 1,100 plants/ Ha. This cost discrepancy is mainly due to seedling purchase is less than with higher density.

Table 10. Planting cost of gaharu in mono-culture with planting density 625 trees/Ha (4 x 4 m)

No Cost component No per Ha Unit (Rp) Total (Rp)

01 Gaharu seedlings 625 5.000,- 3.125.000,- 02 Stake 625 500,- 312.500,- 03 Line clearing & staking (per diem) 36 40.000,- 1.200.000,- 04 Planting pit & planting (per diem) 56 40.000,- 1.680.000,- 05 Fertilizer (Kg) 22 11.000,- 143.000,- 06 Fertilizer application (per diem) 36 40.000,- 1.200.000,- 07 First tending (per diem) 13 40.000,- 400.000,- 08 Second tending (per diem) 13 40.000,- 400.000,- Total cost 8.460.500,-

Planting cost of gaharu on mix planting scheme is the sum of planting 139 gaharu seedlings (Table 10) and planting of 139 palm oil seedlings (Table 11). Total planting cost of planting gaharu in mix planting with palm oil at planting density of palm oil plants 278 trees/Ha is Rp 2.957.500,- + Rp 6.345.500,- = Rp 9.303.000,-.

In mix planting scheme of gaharu with palm oil, the planting of gaharu is done two years after planting the palm oil. This practice is done to allow palm tree grow at height level that suitable to provide shading for the gaharu trees. This scheme is implemented by forest farmer at Muara Jambi.

21 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

Table 11. Planting cost of gaharu in mix planting with palm oil at planting density of gaharu plants 139 trees/Ha.

No Cost component No per Ha Unit (Rp) Total (Rp)

01 gaharu seedlings 139 5.000,- 695.000,- 02 Stake 139 500,- 69.500,- 03 Line clearing & staking (per diem) 36 40.000,- 480.000,- 04 Planting pit & planting (per diem) 56 40.000,- 720.000,- 05 Fertilizer (Kg) 22 11.000,- 33.000,- 06 Fertilizer application (per diem) 36 40.000,- 480.000,- 07 First tending (per diem) 13 40.000,- 240.000,- 08 Second tending (per diem) 13 40.000,- 240.000,- Total cost 2.957.500,-

Table 12. Planting cost of gaharu in mix planting with palm oil at planting density of palm oil plants 139 trees/Ha

No Cost component No per Ha Unit (Rp) Total (Rp)

01 palm oil seedlings 139 21.000,- 2.919.000,- 02 Stake 139 500,- 69.500,- 03 Line clearing & staking (per diem) 36 40.000,- 720.000,- 04 Planting pit & planting (per diem) 56 40.000,- 1.200.000,- 05 Fertilizer (Kg) 22 11.000,- 77.000,- 06 Fertilizer application (per diem) 36 40.000,- 720.000,- 07 First tending (per diem) 13 40.000,- 320.000,- 08 Second tending (per diem) 13 40.000,- 320.000,- Total cost 6.345.500,-

Total planting cost of planting gaharu in mix planting with rubber trees at planting density of palm oil plants 1,112 trees/Ha is Rp 7,590,000,- + Rp 6,478,000.- = Rp 14,068,000.-. Mix-planting scheme of gaharu and rubber trees has been practiced by forest farmer in Sanggau, Kalimantan Barat dan Kandangan, Kalimantan Selatan (Table 12 and Table 13).

Table 13. Planting cost of gaharu in mix planting with rubber tree at planting density of gaharu plants 556 trees/Ha

No Cost component No per Ha Unit (Rp) Total (Rp)

01 Gaharu seedlings 556 5.000,- 2.780.000,- 02 Stake 556 500,- 278.500,- 03 Line clearing & staking (per diem) 26 40.000,- 1.040.000,-

22 PRESENTATION OF THE DATA Data collection and conducting financial analysis gaharu inoculation

No Cost component No per Ha Unit (Rp) Total (Rp)

04 Planting pit & planting (per diem) 38 40.000,- 1.520.000,- 05 Fertilizer (Kg) 12 11.000,- 132.000,- 06 Fertilizer application (per diem) 28 40.000,- 1.120.000,- 07 First tending (per diem) 9 40.000,- 360.000,- 08 Second tending (per diem) 9 40.000,- 360.000,- Total cost 7.590.000,-

Table 14. Planting cost of gaharu in mix planting with rubber tree at planting density of rubber trees plants 556 trees/Ha

No Cost component No per Ha Unit (Rp) Total (Rp)

01 Rubber tree seedlings 556 3.000,- 1.668.000,- 02 Stakes 556 500,- 278.500,- 03 Line clearing & staking (per diem) 26 40.000,- 1.040.000,- 04 Planting pit & planting (per diem) 38 40.000,- 1.520.000,- 05 Fertilizer (Kg) 12 11.000,- 132.000,- 06 Fertilizer application (per diem) 28 40.000,- 1.120.000,- 07 First tending (per diem) 9 40.000,- 360.000,- 08 Second tending (per diem) 9 40.000,- 360.000,- Total cost 6.478.000,-

Planting cost calculation presented on Table 8 to Table 13 does not include other cost component such as (1) landscaping, (2) management cost, (2) second year tending and (4) inoculation cost of gaharu induced microbes. Per diem labor cost is based on 2010 standard labor cost in Banten and South Kalimantan. Planting site condition before planting is shrub land with few trees. Line clearing for planting pit arrangement is without cutting off the trees. The trees is needed to provides shading for newly planted gaharu seedlings. In mix planting schemes with palm oil and rubber trees, gaharu seedlings were planted 2 to 3 years after planting palm oil or rubber trees, at which canopy of palmoil and rubber trees can provide sufficient shading for gaharu seedlings.

3.3 Data collection and conducting financial analysis gaharu inoculation

3.3.1 Investment Cost for Inoculation and Management To make a financial analysis of gaharu inoculation business, some investment and management costs are needed. Gaharu inoculation business is capital intensive, hence the amount needed to finance the activity is a lot. Description of the costs in detail including investment, management and harvesting cost for 100 gaharu producing tree species is as follow Table. 15:

23 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

1. Investment cost consists of cost for buying gaharu producing trees, inoculant material, chemical substance, depreciation of equipment used, fuel and cost of labor for inoculation process.

Table 15. Investment, management and harvesting cost of gaharu (Rp)

No. Type of Cost D = ≥15 - ≤25 D = >25 - ≤35 D = >.35 - 40

1 Trees buying 25, 000,000 30, 000,000 35, 000,000 2 Inoculant material 15, 000,000 30, 000,000 40, 000,000 3 Other chemical substance 5, 000,000 10, 000,000 15, 000,000 4 Equipment 1, 010,000 1, 010,000 1, 010,000 5 Fuel 450,000 450,000 450,000 Specialist technical labor 1, 500,000 1, 500,000 1, 500,000

6 Technical assistant 1, 000,000 1, 000,000 1, 000,000 Unskilled labor 1, 500,000 1, 500,000 1, 500,000 7 Transfer of inoculant 4, 650,000 9, 300,000 13, 950,000 Total cost of inoculation (2-7) 30, 110,000 54, 760,000 74, 410,000 8 Cost for security 36, 000,000 36, 000,000 36, 000,000 9 Harvesting cost 153, 900,000 190, 350,000 220, 320,000 Source: Primary data analysis

a. Cost for buying trees is Rp 250,000,-; Rp 300,000,- and Rp 350,000,- for stem diameter ≥ 15 – ≤ 25 cm; > 25 – ≤ 35 cm and > 35 cm - 40 cm respectively. b. Cost for buying inoculant material Rp 150,000,-;Rp 300,000,- and Rp 400,000,-. For stem diameter Ø ≥ 15 – ≤ 25 cm; Ø > 25 – ≤ 35 cm and Ø > 35 cm - 40 cm respectively. c. Cost for buying other chemical substance Rp 5,000,000,-, Rp 10,000,000,- and Rp 15,000,000,- for stem diameter Ø ≥ 15 – ≤ 25 cm; Ø > 25 – ≤ 35 cm and Ø > 35 cm - 40 cm respectively. d. Cost of equipment and cost of depreciation Rp 1,010,000 same for all three stem diameter class. e. Fuel needed during inoculation process Rp 450,000,- same for all three stem diameter class. f. Cost of labor for doing inoculation process (specialist, assistant and unskilled labor) Rp 4.000.000,- same for all three stem diameter class. Maintenance cost after gaharu producing trees have been inoculated consists of cost for security and harvesting: 1. Cost for security, begins from period when inoculation process was carried out until the end of harvesting period (1 – 5 year after inoculation) is Rp 36 million, same for all three stem diameter class. 2. Cost of harvesting is Rp 153.9 million, Rp 190.35 million and 220.32 million for each stem diameter ≥15 – ≤25 cm; > 25 – ≤ 35 cm and > 35 cm - 40 cm respectively.

24 PRESENTATION OF THE DATA Data collection and conducting financial analysis gaharu inoculation

3.3.2 Feasibility of Gaharu Inoculation Business Based on assumption and restrictions mentioned above for inoculation of 100 gaharu producing trees with average stem diameter 15-20 cm, total investment cost needed is Rp 55.11 million consisting of cost for buying gaharu producing trees Rp 25 million and cost for inoculation Rp 30.11 million. Besides this, other cost for security of tree stands during 6 year period is Rp 36 million and harvesting cost is Rp 153.9 million. Based on those investment, maintenance and harvesting cost mentioned before, at 12.5 % interest rate, NPV obtained is Rp 329.4 million, IRR= 80.45 and B/C= 2.97 (Annex 1).

Next, inoculation of gaharu producing trees with 25-30 cm stem diameter, total investment cost needed is Rp 84.76 million consisting of cost for buying gaharu producing trees that is Rp 30 million and cost for inoculation process that is Rp 54.76 million. Besides this, other cost for security of tree stands during 6 year period is Rp 36 million and harvesting cost is Rp 190.35 million. Based on those investment, maintenance and harvesting cost mentioned before, at 12.5 % interest rate, NPV obtained is Rp 376.65 million, IRR= 72.66 and B/C= 2.75 (Annex 2).

Last, inoculation of gaharu producing trees with > 40 cm stem diameter, total investment cost needed is Rp Rp 109.41 million consisting of cost for buying gaharu producing trees that is Rp 35 million and cost for inoculation process that is Rp 74.41 million. Besides this, other cost for security of tree stands during 6 year period is Rp 36 milion and harvesting cost is Rp 220.32 million. Based on those investment, maintenance and harvesting cost mentioned before, at 12.5 % interest rate, NPV obtained is Rp Rp 393.56 million, IRR= 66.02 and B/C= 2.53 (Annex 3).

Financial analysis elaborated above showed that inoculation of gaharu producing trees need large amount of investment. However future benefit which is going to be obtained is also big and therefore it is very feasible to be developed. Level of feasibility would be much higher if harvesting period is postpone until five year of inoculation period (gaharu producing trees are 10 years old) (Table 16).

Table 16. Result of Financial Analysis of inoculation of 100 gaharu producing trees if harvested five years after inoculation

No. Uraian D=15-20 Cm D=25-30 Cm D=40 Cm

1. NPV (DF 12.5%) (Rp) 859,63,865 934,500,351 987,837,607 2. IRR (%) 94.93% 84.71% 78.94% 3. B/C 6.0806 5.1683 4.7884 Source: Primary data analysis

From Table 16 it can be seen that postponing of harvesting until five year after inoculation would produce NPV, IRR and B/C much higher than that of former analysis (Annex 1, 2 and 3). Postponing until five year after inoculation would produce gaharu with better quality product. However time of postponing is less preferred by many people who invest a lot of money in the business. People prefer to gain quick benefit even though total amount obtained would be less.

25 From the analysis above, it can be seen that gaharu agribusiness needs big amount of investment. Consequently only very limited people have the capability to establish the business. For forest surrounding people who mostly have very limited resources would not be able to afford it. Hence, in order to promote development of gaharu agribusiness wider, a partnership scheme should be initially introduced. Partnership model which is expected to be mutually advantages for both sides (investor and farmers or other parties) could endorse limited resources owner to develop gaharu agribusiness. Through partnership model, all risk, responsibilities and later benefit could be shared together among all parties involved.

3.4 Community Based Forest Management in gaharu plantation Total forest area of Banten province is 206,852.44 Ha consisting of production forest, protection forest and conservation forest. In 2003, Ministry of Forestry through MoF Decree No 290 and 291 declared that limited production forest in Carita, Pandeglang regency, Banten province with 3000 ha total area has been decided to become forest area with special purpose (KHDTK). The area which was formerly managed by Perhutani state owned forest had been handed over to Forestry Research and Development Agency (FORDA). Administratively, KHDTK Carita with total area 3000 ha is located in RPH Carita and RPH Pasauran area.

Based on field observation and intensive discussion with related stakeholders in KHDTK Carita, it was found that majority of the area has been encroached by surrounding community (> 70%). Considering trend of development, it seems that the encroachment tends to increase and even more intense from time to time. Underlying factors behind this situation are increase of population, limited job opportunities and limited skill and knowledge of the people in the area. Actually, close location with Carita beach provides other sources of income for the people in Carita (selling local handicraft, being tourist guide, renting beach game tools for guests, etc). However, since tourists (both domestic and foreign tourists) only come on weekend or holidays, people still have plenty of unused time outside those days. The situation then in turn direct people to utilize KHDTK Carita forest area (which is located at the boundary of surrounding villages) as alternative place to gain additional income.

In Government regulation (PP) No. 6 (year 2007) concerning forest arrangement and forest management and use plan article 17 verse 1 it is mentioned that forest land use has the main objective to gain optimal, fair and sustainable benefits of forest product and service. Forest use based on verse 1 of the regulation could be done through (i) utilization of the area; (ii) utilization of environmental service; (iii) utilization of both timber and non timber product and (iv) collecting timber and non timber forest product. Subsequently, in article 18, it is also stated that forest utilization could be done at all forest area including (i) conservation forest, except natural reserve area, wilderness zone and core zone; (ii) protection forest and (iii) production forest. Considering the situation where forest land was already occupied by local community, it is necessary to have alternative solution to prevent from further forest degradation while accomodating community’s needs as well. One alternative to accommodate those two interests is by involving local community in forest management. Involving local community in forest management is intended to accommodate change of paradigm in forest management that has shifted towards community’s interest. Hence forest management with former paradigm “timber management” that only focussed on financial benefit for holding

26 company has to be left behind. New paradigm in forest management places environmental protection and ecosystem sustainability aspect at first priority and economic aspect at second priority. Therefore, since 2000 forest management in Indonesia has been using holistic/comprehensive approach that put forest as a unit of ecosystem and utilize all potential resources in it for the sake of community welfare.

Collaboration research with local community through development of gaharu tree plantation establishment in KHDTK Carita is application of new forest management paradigm. Research result shows that people’s involvement in forest management could be appropriate solution to preserve KHDTK Carita forest in one hand and empowering surrounding community on the other hand.

3.5 Assessing socialization result of gaharu production technology Generally, dissemination and socialization of gaharu induction technology has been succeed. These activities have taken place in 12 regencies across Indonesia: Kandangan, Barabai, Sanggau, West Lampung, East Lampung, Kota Baru (Laut Island), Nagekeo and Ende (Flores), Lombok, Bali, Maluku, North Sulawesi, and North Sumatera.

Based on the socialization of production technology of gaharu conducted in some areas, it was found that some farmer groups have had experienced in participating in trainings in some institutions, such as Agriculture Institute (Sekolah Tinggi Ilmu Pertanian, Yogyakarta) and Mataram University. The farmers stated that these institutions still apply sawdust as media for fungal growth and relatively wide injection hole, which was the first generation of gaharu induction technology. We used this technology 15 years ago and found ineffective. Subjects disseminated in the socialization activity included induction technology of gaharu, silviculture or gaharu-producing tree and pests that attack gaharu plantations.

In Lombok, gaharu farmers had used conventional induction technology by implanting nail to the tree stem and branches, the nails were previously coated with gum from certain tree species. Most farmers plant Gyrinops vergesteei and Aquilaria fillaria. They also apply different pattern of induction. According to the farmers, two-year old induction produces kemedangan class of gaharu with an estimation of price of USD 300. This technique, however, required exact harvest time, two years after induction, otherwise the tree will rot and it will affect the quality of gaharu.

4 ANALYSIS AND INTERPRETATION OF THE DATA AND RESULTS

4.1 Establishing Demonstration Plot Indonesia’s indigenous trees that produced valuable gaharu resin such as A. malaccensis, A. beccariana, A. crassna, A. microcarpa dan Gyrinops cumingiani, naturally grown in Sumatera, Java, Kalimantan, Sulawesi, Moluccas and Papua (Siran, 2010). The suitable environment for planting gaharu is elevation between 0 – 750 m above sea level, clay mineral soil, rainfall above 2,000 mm/year for Aquilaria and above 1,500 mm/ year for Gyrinops (Sitepu et al, 2010; Prosea, 1999). Other species of gaharu namely Gonystilus spp. (gaharu buaya) grow in peat land. Major pest of gaharu plantation is leaf eater green caterpilar Heortia vitessoides which attack gaharu plantation in Carita Banten, Sanggau West Kalimantan and Lombok NTB (Irianto et al. 2010).

Although gaharu has been known since ancient times, intensified research on a broader aspects of gaharu has just begun in the last ten years. One of these aspects is silviculture of gaharu. Research conducted by R&D Centre for Forest Conservation and Rehabilitation, FORDA of the Ministry of Forestry found that propagation of gaharu plants is not difficult. Gaharu can be propagated from seeds and cuttings. However, cultivation of gaharu plantation in a large scale has a high risk of pest and disease attack. This chapter provides silvicultural practice for gaharu plant.

Seeds of gaharu are collected while they are still hanging on their mother trees because gaharu fruits crack and throw their seeds before they fall to the ground. Seedlings, on the other hand can be collected from underneath their mother trees. To date, propagation from seeds is still much cheaper than cuttings because seeds stocks are still abundant in the field and can be harvested every year from mother trees in the field. Gaharu seeds, however, is recalcitrant and its germination is affected by storage periods and conditions. A study by Subiakto et al. (2009) revealed that germination percentage of non-stored seeds (direct seeding) was 82% and down to 42% after being stored for 8 weeks at room temperature. Germination was further declining to 24% if the seeds were stored in refrigerator at 4°C for 8 weeks.

Study on vegetative propagation by using cuttings was done by adopting by KOFFCO (Komatsu-Forda Fog Cooling) System. Using this system, Subiakto et al. (2009) found that the best growth media and watering interval for gaharu shoots cuttings were mixtures of coconut dust and paddy husk of 1 : 1 ratio, and twice a week of watering, respectively. These treatments showed the highest rooting percentage, i.e. 69%.

Tissue culture of A. crassna and A. malaccensis was studied by Tiengtum in 1995. Shoots of A. crassna grown on Woody Plant Medium with and without auxin, produced roots. But addition of 0.5 mg/l IBA stimulated the highest rooting percentage. The author found that survival rate of A. crassna plantlets was 90% after transplantation to the field. In vitro propagation of Aquilaria agalocha by He et al. (2005) on MS medium supplemented with 1.3 micromol/L BA (6-benzylaminopurine) generated many shoot

29 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

buds in the first 7 weeks, and 1.3 micromol/L BA+0.5 micromol/L NAA (naphthaleneacetic acid) elongated the buds in another 7 weeks, 2.3 shoots 2 cm in length per explant were obtained within 14 weeks. Plantlets were rooted on 1/2 MS medium after being immersed in 5 micromol/L NAA for 48 h, 96.7% of the roots grew up two weeks later. All plantlets that survived acclimatization grew well in the pots.

4.2 Pest and Disease Distribution of this leaf pest comprised the area of Fiji, Hongkong, Thailand, and North Queensland (Australia) (Don Herbison Evans, 2008). On the other hand, the distribution in Indonesia has been reported by Santoso et al. (2008). Distribution of leaf pest of gaharu producing trees includes the area of specific purpose forest territory (KHDTK) Carita, Banten; village of Parindu, Bodok, Sanggau, West Kalimantan; Kandangan, Barabai, South Kalimantan; Malino, East Kalimantan; NTB; and South Sumatera. Attack by leaf pest on gaharu producing trees was found in the year 2005 in the area of KHDTK Carita, Banten and village of Parindu, Sanggau, West Kalimantan. Pest attack in the year 2008 was considerably severe with attack intensity in KHDTK Carita, Banten could reach 100 % and could cause death of 13 years old gaharu producing trees as many as 20 trees. On the other hand, attack by leaf pest on gaharu producing trees in village of Parindu, Bodok, Sanggau, West Kalimantan killed approximately 50 trees.

Pest attack should be rapidly controlled, and for anticipating the attack, there is a need for appropriate control strategy. Times of attack were in transition period from dry season to rainy season (April – June 2009), transition period from rainy season to dry season (October – November 2008), based on observation results by Center for Research and Development for Forest and Nature Conservation in the year 2008.

Control of leaf pest larva of gaharu producing trees could be categorized into the following manners: (i) The short term control is conducted by using chemicals. Insecticide (chemicals) which had been tried consisted of mixture of 2 kinds of insecticide (contact and systemic insecticide) added with adhesive materials (for attack in rainy season) and leaf fertilizer. Result of combination of this chemicals (Table 19) was considerably satisfactory, where the leaf pests of gaharu in KHDTK Carita were killed, and within one week, the shoot of young leaves of gaharu producing trees appeared again. However, manual spray of chemicals was less efficient and less practical. Therefore, there is a need for trying the spray with several mechanical equipments in the form of high pressure

30 ANALYSIS AND INTERPRETATION OF THE DATA AND RESULTS Pest and Disease water mist sprayer; (ii)The long term control Practicing is mixed plantation (silvicultural technique), such as mixing of gaharu producing trees with mimba tree (Azadirachta indica). Conducting trial of using predator ants for controlling leaf pest larva which occur in KHDTK (Specific Purpose Forest Territory) Carita, the province of Banten. Seeking new plant or gaharu producing tree species which are resistant toward the pest.

Table 17. Kinds of insecticide used for controlling leaf pest larvae of gaharu (Aquillaria microcarpa tree) in KHDTK Carita, Banten.

No Kind of Insecticode Dosage Note 1 Ripcord (Basf) 1cc/1 L Contact

2 Caleb – Tsan 2 EC 1cc/1L Systemic

3 Bayfolan 1cc/1L Leaf Fertilizer

4 Pro – Sticcer 1cc/1L Adhesives

Beside that, for short term, there is a need for prevention and control attempts such as the following: (i) Clearing shrubs and bushes under gaharu producing trees, so that the pupa which were put on the ground could be controlled using bacteria (such as Bacillus thuringiensis) and fungi (such as Beauveria bassiana); (ii) Pruning treatment on twigs of gaharu producing trees, where it is supposed that probably the moths fly low so that if the twigs are pruned, the moths are not able to put their eggs in the leaves of gaharu producing trees. It is supposed that probably the flying ability of the moths is limited; (iii) Biological control. This biological control has not been conducted, but will be tried someday.

The most important pest found to date is identified asHeortia vitessoides Moore (Odontiinae, Crambidae). The pest (previously Tyspana vitessoides), has caused severe damage to many gaharu plantations in Indonesia in the past three years, i.e. in Forest Area with Specific Purposes (Kawasan Hutan dengan Tujuan Khusus, KHDTK) Carita, Banten Province; Bodok, Sanggau, West Kalimantan Province; Kandangan, Barabai, South Kalimantan Province; Malino, East Kalimantan Province; Bali Province; and Lombok, West Nusa Tenggara Province; and South Sumatra (Erdy Santoso, Pers. Comm.). In 2008, the percentage of pest attack in gaharu plantation in KHDTK, Carita, reached 100%, many of the trees defoliated, and about 20 trees died because of recurring attack on newly emerging leaves. This pest has also been reported to have distributed in Fiji, Hongkong, Thailand, and North Queensland (Austtralia) (Herbison-Evams and Crossley, WWW page).

The caterpillars of this species are pale green with a broad knobbly black line along each side. Their head is brown. The caterpillars live in a group in a shelter made by joining a number of leaves together with silk. The caterpillars drop on silk threads if disturbed. When mature, the caterpillars descend and pupate in the soil. The adults have a striking pattern on the forewings of black on pale yellow. The hindwings are white with a broad black margin. The moths have a yellow and black banded abdomen. The wingspan is about 3 cms. The eggs are yellowish-green, and are flattened. They are laid in an overlapping cluster, like tiles on a roof (Herbison-Evams and Crossley, WWW page).

31 A study by Irianto et al. (2010) investigated pest management strategy to control the population of H. vitessoides. This study found that application of a mixture of systemic and contact insecticides with addition of leaf fertilizer and plant sticker effectively controlled high population of the pest. A biological control approach was also studied by using ants, predator of the pest, that build a nest on gaharu trees and keep the plant protected from the pest. This experiment is still underway but seems encouraging.

Cultivators of gaharu plants need to be aware and familiarized themselves with pest and disease of gaharu plants, and take appropriate control action to prevent from severe loss. Socialization of pest and disease management has been done by PD 425/06 REV.1 (I) project in collaboration with Forest and Nature Conservation Research and Development Center, FORDA of the Ministry of Forestry, to local forestry offices at the provincial level, gaharu plant growers and general stakeholders.

4.3 conducting financial analysis gaharu plantation and Inoculation The increasing popularity of planting gaharu occurs in many part of of Indonesia Archipelagos leads to growing business of other related sectors such as seedlings supply, growing variety gaharu products (perfume, cosmetic, aroma therapeutic product, etc.). Nowadays Gaharu is considered as prospective and strategic commodity which will create variety of others business sectors as in palm oil on agriculture industry.

The financial analysis of gaharu plantation is presented in two planting schemes namely mono-culture and mix planting. Planting cost per hectare of gaharu in mono-culture at 3 x 3 and 4 x 4 meter spacing is Rp 12.452.000,- and Rp 8.460.500,- respectively. Planting cost per Hectare of gaharu in mix planting with palm oil at planting density of 278 trees per Ha is Rp 9.303.000,-. Planting cost per hectare of gaharu in mix planting with rubber trees at planting density of 1.112 trees per Ha is Rp 14.068.000,-.

Several supporting factors on the success of its cultivation development and its artificial gaharu production mainly lie on the availability ofpotential land for extensive gaharu cultivation, appropriate agro climate condition, cultivation technique which is relatively easy and has been well adopted by farmers, availability of necessary pathogen for gaharu inoculation and its demand that tends to increase with relatively high price.

Factors determining the success of gaharu business are inoculation technology, appropriateness/suitability between pathogen and tree species which is going to be inoculated and resistance of inoculated tree species. Development of gaharu agribusiness at different stem diameter, (Ø ≥15 – ≤ 25 cm, Ø > 25 – ≤ 35 cm and Ø > 35 cm - 40 cm) and period of inoculation, would produce positive NPV, IRR much higher than interest rate on national market and B/C ratio > 1, therefore it is very feasible to be carried out. In order to retain Indonesia as prominent gaharu production country, to increase export of non timber forest product commodity and to improve income of forest surrounding people, several efforts to induce development of gaharu production tree species cultivation and gaharu production through artificial inoculation should be widely developed. As capital intensive agribusiness, only few people have the capability to afford it. Therefore, in order to develop gaharu agribusiness further, a partnership scheme between investor having enough capital with other parties having limited resources (farmers or other parties interested in gaharu development) should be initially introduced.

32 Figure 8. Gaharu production technology research team received the most prospective innovation 102 award in 2010 organized by the Ministry of Research and Technology, Indonesia.

4.4 Assessing socialization result of gaharu production technology The assesing socialization results of gaharu production technology have been publicly informed via mass media nationally and locally, e.g. Jakarta Post, Kompas, and Bisnis Indonesia. In addition, PD425/06 Rev. 1(I) team was invited in April-May 2010 to hold socialization for NGO (non-governmental organization) and for public in Depok; to give a special lecture to student and lecturer of Technology and Science Faculty, Public Islamic University in Ciputat, Jakarta, and in the Forestry Faculty, Lambung Mangkurat University, Banjarbaru, South Kalimantan. From 19 to 24 of June 2010, PD425/06 Rev. 1 (I) team will participate in ATBC (Association for Tropical Biology and Conservation) International Symposium to be held in Bali, Indonesia. In August 2010, gaharu research team received the Most Prospective Innovation Award, an award given to outstanding research findings by Indonesian researchers and is organized by the Ministry of Research and Technology, Indonesia. The title was “Bioinduction : Induction Technology for Gaharu Production by Fusarium spp.” (Figure 8).

An article titled Gaharu Leaf Pest Attack was published by TRUBUS Magazine (Oktober 2010). TRUBUS is an Indonesian magazine with scopes in prodution features

33 of Agriculture, Hortilculture, Live Stock, Forestry, Ornamental Plant, Orchids, etc. Dr. Erdy Santoso was interviewed by TRUBUS reporter about leaf pest of gaharu. Dr. Santoso explained about life cycle of pest, how to attack gaharu tree, how to control lef pest attack of gaharu, etc. In addition, gaharu products were displayed in an exhibition celebrating World Food Day in Mataram, West Nusa Tenggara, on last October 22-24, 2010. The stand of Ministry of Forestry became the number one winner among government departments and institutions.

34 5 CONCLUSIONS

The best germination percentage was obtained from seeds which were directly sown after fruit harvesting. However, by anticipating decrease in germination capacity, the seeds could still be stored for two months. Gaharu seeds do not need to be stored in refrigerator. The seeds could be properly stored in room condition. Planting of uprooted seedlings using cover house, produced better growth percentage as compared to those which did not use cover house. The best medium for gaharu cutting was mixture between coconut rind powder (cocopeat) and rice husk with ratio of 1:1. The best watering was conducted twice a week. Propagation with gaharu cutting was conducted in greenhouse with KOFFCO system.

The study of pest and disease of leaf gaharu showed information on potency of attack by leaf pest larva of gaharu from year to year (2005 – 2008) which exhibited significant increase. The results of controlling leaf pest larva with insecticide showed significant results after three times of spray with three weeks interval. Observation and monitoring of the existence of leaf pest larvae in gaharu tree will remain to be conducted until the next dry season. Short term controlling strategy by using chemicals was considerably effective for being used to control leaf pest larva of gaharu. On the basis of this study, there is a need for anticipating attack by leaf pest larva of gaharu which usually starts from February through November each year. Agency for Forestry Research and Development needs to inform all other echelon 1 agencies within Ministry of Forestry, in order for them to follow up this finding to all provinces / regencies which have program of cultivation of gaharu producing trees. Technical information for pest control needs to be disseminated up to the level of forest farmer group which develop gaharu producing trees.

35 Technical Report No.4 Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

will create variety of others business sectors as in palm oil on agriculture industry. The financial analysis of gaharu plantation is presented in two planting schemes namely mono-culture and mix planting. Planting cost per Hectare of gaharu in monoculture at 3 x 3 and 4 x 4 meter spacing is Rp 12.452.000,- and Rp 8.460.500,- respectively. Planting cost per Hectare of gaharu in mix planting with palm oil at planting density of 278 trees per Ha is Rp 9.303.000,-. Planting cost per hectare of gaharu in mix planting with rubber trees at planting density of 1.112 trees per ha is Rp 14.068.000,-.

Leaf eater caterpillar H. vitessoides is now spreading in vast area of Java and Kalimantan, it is important therefore to keep highly alert for anticipating this problem. H. vitessoides attack can totally defoliate the trees of 30 cm in diameter and kill the trees. Planting cost calculation in this paper does not included eradication measures of caterpillar attacks.

Based on calculation and analysis described before, several conclusion remarks and recommendations can be presented as follow: (i) Gaharu is one of main non timber forest product export commodities. Its cultivation development and its artificial production of gaharu are very prospective to be developed in Indonesia; (ii) Several supporting factors on the success of its cultivation development and its artificial gaharu production mainly lie on the availability of potential land for extensive gaharu cultivation, appropriate agro climate condition, cultivation technique which is relatively easy and has been well adopted by farmers, availability of necessary pathogen for gaharu inoculation and its demand that tends to increase with relatively high price; (iii) Factors determining the success of gaharu business are inoculation technology, appropriateness/suitability between pathogen and tree species which is going to be inoculated and resistance of inoculated tree species; (iv)Development of gaharu agribusiness at different stem diameter, (Ø ≥15 – ≤ 25 cm, Ø > 25 – ≤ 35 cm and Ø > 35 cm - 40 cm) and period of inoculation, would produce positive NPV, IRR much higher than interest rate on national market and B/C ratio > 1, therefore it is very feasible to be carried out; (v) In order to retain Indonesia as prominent gaharu production country, to increase export of non timber forest product commodity and to improve income of forest surrounding people, several efforts to induce development of gaharu production tree species cultivation and gaharu production through artificial inoculation should be widely developed; (vi) As capital intensive agribusiness, only few people have the capability to afford it. Therefore, in order to develop gaharu agribusiness further, a partnership scheme between investor having enough capital with other parties having limited resources (farmers or other parties interested in gaharu development) should be initially introduced.

Based on evaluation of prospect of research collaboration (community participation and process of mutual agreement) in gaharu plantation establishment, it can be concluded that: (i) Collaboration research to promote gaharu trees in KHDTK Carita where majority of the area has been occupied by local people has become one alternative solution to preserve KHDTK forest, increase land productivity and community’s income; (ii) Response of local community towards gaharu plantation establishment is quite positive, this can be seen from their efforts in understanding each part of MOU; (iii) Main principles persist in the collaboration are sustainability and economic feasibility based on contribution of each stakeholder involved in the collaboration.

36 CONCLUSIONS Assessing socialization result of gaharu production technology hold socialization for NGO (non-governmental organization) and for public in Depok; to give a special lecture to student and lecturer of Technology and Science Faculty, Public Islamic University in Ciputat, Jakarta, and in the Forestry Faculty, Lambung Mangkurat University, Banjarbaru, South Kalimantan. From 19 to 24 of June 2010, PD425/06 Rev. 1 (I) team will participate in ATBC (Association for Tropical Biology and Conservation) International Symposium to be held in Bali, Indonesia. In August 2010, gaharu research team received the Most Prospective Innovation Award, an award given to outstanding research findings by Indonesian researchers and is organized by the Ministry of Research and Technology, Indonesia. The title was “Bioinduction: Induction Technology for Gaharu Production by Fusarium spp.”

6 RECOMMENDATIONS

Demonstration plot regarding the cultivation and inducement of gaharu which have been developed by the ITTO’s PD 425/06 Rev.1 (I) can be continued as the basic asset in the development of gaharu, whereby its Master plan will be arranged. The Master plan should be addressed in practical details by the research team, as articulated in the multi-years proposals supported by finance sources.

39 40 7 IMPLICATIONS FOR PRACTICE

Socialization and dissemination of gaharu cultivation and gaharu bio-inducement technologies as realized by the ITTO’s PD 425/06 Rev.1 (I) deserve a further dissemination as conducted by each of the stakeholders, in order that the gaharu development can proceed in the community around the forests in sustaining the gaharu-yielding trees and gaharu production.

ANNEX

43 Annex 1. Financial Analysis of inoculation on 100 gaharu producing tree species with stem diameter ≥ 15 - ≤ 25Cm

Year - No. Explanation 0 1 2 3 4 5

I. Cash Inflow (Rap) a. Output (Kg) Super quality gaharu 0 7.20 9.90 12.60 15.30 18.00 Low quality gaharu 0 54.00 72.00 90.00 108.00 126.00 b. Output value 0 18,630,000 34,020,000 76,950,000 127,575,000 190,350,000 Super quality gaharu 0 6,480,000 17,820,000 56,700,000 103,275,000 162,000,000 Low quality gaharu 0 12,150,000 16,200,000 20,250,000 24,300,000 28,350,000

II. Cash Outflow (Rp) Investment 1. Buying trees 10,000,000 0 0 0 0 0 2. Inoculation 26,110,000 0 0 0 0 0

Cost of Security 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Cost for harvesting 0 6,120,000 8,190,000 10,260,000 12,330,000 14,400,000

Total Cost 38,110,000 8,120,000 10,190,000 12,260,000 14,330,000 16,400,000

III. Cash Flow -38,110,000 10,510,000 23,830,000 64,690,000 113,245,000 173,950,000 Cumulative Cash Flow -38,110,000 -27,600,000 -3,770,000 60,920,000 174,165,000 348,115000 IV. a. NPV (DF 12, 5%) 180,198,139 b. IRR (%) 88.67% c. B/C 3.5329

44 Annex 2. Financial Analysis of inoculation on 100 gaharu producing tree species with stem diameter > 25 - ≤ 35Cm

Year - No. Explanation 0 1 2 3 4 5

I. Cash Inflow (Rp) a. Output (Kg) Super quality gaharu 0 9.00 11.70 14.40 17.10 19.80 Low quality gaharu 0 72.00 90.00 108.00 126.00 144.00 b. Output value 0 24,,300000 41,310,000 89,100,000 143,775,000 210,600,000 Super quality gaharu 0 8,100,000 21,060,000 64,800,000 115,425,000 178,200,000 Low quality gaharu 0 16,200,000 20,250,000 24,300,000 28,350,000 32,400,000

II. Cash Outflow (Rp) Investment 1.Buying trees 12,500,000 0 0 0 0 0 2. Inoculation 35,260,000 0 0 0 0 0

Cost of security 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Cost for harvesting 0 8,100,000 10,170,000 12,240,000 14,310,000 16,380,000

Total Cost 49,760,000 10,100,000 12,170,000 14,240,000 16,310,000 18,380,000

III. Cash Flow -49,760,000 14,200,000 29,140,000 74,860,000 127,465,000 192,220,000 Cumulative Cash Flow -49,760,000 -35,560,000 -6,420,000 68,440,000 195,905,000 388,125,000 IV. a. NPV (DF 12, 5%) 199,739,739 b. IRR (%) 82.58% c. B/C 3.2758

45 Annex 3. Financial Analysis of inoculation on 100 gaharu producing tree species with stem diameter > 35 cm – 40 cm

Year - No. Explanation 0 1 2 3 4 5

I. Cash Inflow (Rp) a. Output (Kg) Super quality gaharu 0 10.80 13.50 16.20 18.90 21.60 Low quality gaharu 0 90.00 108.00 126.00 144.00 162.00 b. Output value 0 29,970,000 48,600,000 101,250,000 159,975,000 230,850,000 Super quality gaharu 0 9720000 24,300,000 72,900,000 127,575,000 194,400,000 Low quality gaharu 0 20250000 24,300,000 28,350,000 32,400,000 36,450,000

II. Cash Outflow (Rp) Investment 1. Buying trees 15,000,000 0 0 0 0 0 2. Inoculation 44,410,000 0 0 0 0 0

Cost of security 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000

Cost for harvesting 0 10,080,000 12,150,000 14,220,000 16,290,000 18,360,000

Total Cost 61,410,000 12,080,000 14,150,000 16,220,000 18,290,000 20,360,000

III. Cash Flow -61,410,000 17,890,000 34,450,000 85,030,000 141,685,000 210,490,000 Cumulative Cash Flow -61,410,000 -43,520,000 -9,070,000 75,960,000 217,645,000 428,135,000 IV. a. NPV (DF 12, 5%) 219,281,339 b. IRR (%) 78.45% c. B/C 3.1006

46 Annex 4.

COOPERATION AGREEMENT CONTRACT MANAGEMENT OF FOREST RESOURCES IN COOPERATION WITH COM- MUNITY (PHBM) THROUGH PRODUCT SHARING SYSTEM IN GAHARU TREE CULTIVATION, IN COMPARTMENT 21 OF SPECIFIC PURPOSE FOR- EST TERRITORY (KHDTK) CARITA, PANDEGLANG, BANTEN

On this day, Wednesday, 28 May 2008, in the village of Sindang Laut, subdistrict of Carita, we, the undersigned herewith, namely: 1. Ir. Sulistyo A. Siran, MSc, Chief of Research Evaluation and Service Affairs in Center for Forest and Nature Conservation Research and Development, Agency for Forestry Re- search and Development, Ministry of Forestry, who in this case acts for and on behalf of Center for Forest and Nature Conservation Research and Development, and who henceforth in this agreement contract document is referred to as THE FIRST PARTY. 2. Ustad Djafar, Chairman of Farmer Group Hutan Giri Wisata Lestari, a resident of village of Sindang Laut, Carita Subdistrict, District of Pandeglang, who in this case acts and on behalf of Farmer Group Hutan Giri Wisata Lestari, and who henceforth in this agreement contract document is referred to as THE SECOND PARTY, for the purpose of research on Management of Forest Resources in Cooperation with Community, through Product Sharing System , in compartment 21, as large as approximately 40 ha, of specific purpose forest territory (KHDTK) Carita (Research Forest / HP), Pandeglang, Banten, as THE FIRST PARTY and THE SECOND PARTY agree to commit ourselves in a Cooperation Agreement Contract for Forest Management with terms and conditions as regulated and stipulated in the following articles and verses:

Article 1 THE BASIS OF COOPERATION AGREEMENT CONTRACT

1. Decree of Forestry Minister No.456/Menhut-VII/2005 concerning Five Priority Policies in the field of Forestry in National Development Program of Indonesia of theIndonesia Bersatu Cabinet. 2. Decree of Forestry Minister No.290/Kpts-II/2003 dated 26 August 2003, concerning the allocation and designation of KHDTK as large as ± 3000 (three thousand) hectares located in subdistrict of Labuan, district of Pandeglang, the province of Banten, as Research Forest Carita. 3. Decree of Forestry Minister No.291/Kpts-II/2003 dated 26 August 2003 concerning the utilization of Forest Territory. 4. Decree of Chief of Forestry Research and Development Agency No. 68 / Kpts / VIII / 2004 concerning the formation of team for compiling plan of management of Research Forest Carita. 5. Decree of Chief of Forestry Research and Development Agency No. SK 90 / Kpts / VIII/ 2007 concerning the appointment of Person in Charge of Management of KHDTK within the scope of Forestry Research and Development Agency.

47 Article 2 OBJECTIVES Optimizing the function and benefit of KHDTK Carita for ensuring forest sustainability and achievement of people’s welfare through application of science and technology in the field of forestry through: 1. Application of forest management concept on community basis for the purpose of creating sustainable forest management and community with appropriate welfare. 2. Providing opportunity for people community around the Research Forest Carita to participate and play active roles in forest management, while attempting to improve their welfare. Article 3 OBJECT OF THE AGREEMENT CONTRACT 1. Experimental plot as large as approximately 40 hectares in the comparment 21 in the Territory of Research Forest Carita. 2. Forest plants (trees) and other agricultural crops and trees planted in the location mentioned in article 3, verse 1 which constitute the objects of agreement contract and consensus of the parties involved in the agreement contract.

Article 4 RIGHTS AND OBLIGATION OF THE PARTIES IN THE AGREEMENT CONTRACT

THE FIRST PARTY has the obligation: 1. to involve the SECOND PARTY in the cooperation activity of research on “Forest Re- sources Management in Cooperation with the Community through Product Sharing System of Gaharu Cultivation” , and provide opportunity to the SECOND PARTY for taking benefits from undergrowth crops which are tolerant to shade , fruit crops, and /or multiple use crops in the forest territory as mentioned in article 3, verse 1. 2. to provide funding for the SECOND PARTY for conducting gaharu tree cultivation which comprises the cost for planting (cost for wages and planting stock of gaharu) in compartment 21, with number of planting stocks ± 15 000 (fifteen thousand planting stocks). 3. to provide technical guidance of gaharu cultivation for THE SECOND PARTY, minimally once in a year since year 2008, up to year 2011. 4. to provide and supply fungi for gaharu formation in the activity of inoculation / injection of gaharu plants in compartment 21, as many as 25 % of the total number of gaharu plants of the SECOND PARTY (for each cultivator / tenant farmer). 5. to help in seeking investors for cooperation in producing fungi for gaharu formation in the activity of inoculation / injection of gaharu plants for the other 75 % of gaharu plants. 6. to provide training of gaharu cultivation and harvesting (gaharu training package) which will be conducted at the latest in year 2010, for the SECOND PARTY. 7. together with the SECOND PARTY, to conduct activity of inoculation/ injection of gaharu plants in compartment 21, as many as 25 % of the total number of gaharu plants

48 of each cultivator (each tenant farmer) after the gaharu plants reach age of ≥ 5 years ( five years or older). 8. to provide information on all forms of activity and policies of forest management in the cooperation site, to the SECOND PARTY. 9. together with the SECOND PARTY, to maintain the security of forest territory and take care of the forest resources in the cooperation site as mentioned in article 3, verse 1, for the sustainability of forest function and benefits. 10. to report every act of law violation to the relevant authority.

THE FIRST PARTY has the rights of : 1. conducting observation and measurement of gaharu and other forest plants cultivated in the cooperation site, and conducting observation and measurement of biophysical and socioeconomic condition. 2. conducting maintenance of (weeding, fertilizer application, pest and disease control, replanting of failures, pruning, and thinning) gaharu plants in cooperation site, as long as these activities are necessary for research purpose. 3. conducting tree felling in the cooperation site, as long as necessary for research purpose. 4. obtaining report of activities conducted by the SECOND PARTY. 5. obtaining information from the SECOND PARTY concerning all things related with development condition of gaharu and other forest plants, and agricultural crops which constitute the cooperation objects. 6. obtaining reports from the SECOND PARTY concerning all forms of events and law violations which occur in the forest territory which constitutes the cooperation object.

THE SECOND PARTY has the obligation: 1. to maintain and safeguard the security of gaharu and other forest plants / trees (apply- ing organic manure / compost, eradicating weeds and pests / diseases which disturb the gaharu plant growth) until the harvesting time of the gaharu plants. 2. to maintain and safeguard forest resources in the forest territory of the cooperation site as mentioned in article 3, verse 1 for the sake of forest benefit and function sustainability. 3. together with the FIRST PARTY, to monitor and evaluate periodically the success of gaharu plants and other forest plants. 4. to follow technical regulations and conservation principles / norms which are enforced within the management of territory of research forest Carita, and maintain forest sustainability. 5. to report every occurring acts of law violation to the FIRST PARTY. 6. to report every events to the FIRST PARTY, such as attack by pests / diseases on plants, fires, or natural disasters which cause forest resources damage, either on gaharu plants or other plants in the cooperation area.

49 THE SECOND PARTY has the rights : 1. to obtain information from the FIRST PARTY concerning all forms of activities and policies of forest resource management in the cooperation site. 2. to obtain technical guidance and counseling from the FIRST PARTY on gaharu cultivation in compartment 21, in the territory of KHDTK Carita, minimally as many as 1 (one) time per year, since the year 2008, up to year 2011. 3. to obtain fungi from the FIRST PARTY for inoculation / injection of gaharu plants, in compartment 21, as many as 25 % of the total number of gaharu plants of each cultivator (tenant farmer). 4. to obtain aid from THE FIRST PARTY to seek investors for cooperating in production of fungal medication for activity of inoculation / injection of gaharu plants for the other 75 % of gaharu plants. 5. to obtain training of gaharu cultivation (package of gaharu training from) the FIRST PARTY, which is conducted at the latest in year 2010. 6. together with the FIRST PARTY, to conduct activity of inoculation/ injection of gaharu plants in compartment 21, as many as 25 % of the total number of gaharu plants of each cultivator (each tenant farmer) after the gaharu plants reach age of ≥ 5 years ( five years or older).

Article 5 PLANTING SYSTEM AND PLANT SPECIES

Planting arrangement and lay out in the cooperation site are based on conservation principles, which are among other things: - Planting system of gaharu which is related with pattern and planting density is determined and agreed upon by the TWO PARTIES, and follows the principles and norms of land conservation. - The planted species of gaharu is Aquilaria spp which is interplanted among / within the existing stand of plants, such as meranti, kapur, cengkeh (clove), melinjo, and others. - The TWO PARTIES are not allowed to add or subtract the species planted, except in the case that there had been agreement between the TWO PARTIES.

Article 6 RIGHTS OF UTILIZATION

1. Forest territory which constitutes the object of this cooperation agreement contract is state forest and can not be subjected to private / corporate / institutional right in the sense that the territory can not be owned, and can not be traded. 2. The SECOND PARTY is not allowed to transfer the control of cooperation land to other person / party. In the case that the tenant farmer dies or resign, the authority of control and management of the cultivated land will automatically return to the FIRST PARTY. 3. The FIRST PARTY and the SECOND PARTY are not allowed to use the cooperation land as mentioned in article 3, verse 1, as collateral in any transaction with any party.

50 Article 7 PRODUCT SHARING In the implementation of this cooperation, the contracting parties have agreed on the proportion and mechanism of output sharing from gaharu plant yield and other forest products, with the following terms: 1. The SECOND PARTY has the right of harvesting and utilizing products of undergrowth vegetation which are tolerant to shade, fruit crops and / or of multiple use crops occurring in their own respective tract of cultivated land. 2. The FIRST PARTY and the SECOND PARTY obtain the yield of gaharu plants which are planted and tended in the cooperation site with proportion of 35 % for the FIRST PARTY and 60 % for the SECOND PARTY. 3. Beside for the FIRST PARTY and the SECOND PARTY, some portion of the gaharu plant yield will be given to Village of Sindang Laut as much as 2.5 % and to LMDH (group) as much as 2.5 %. 4. If during the harvesting of gaharu plants, it turns out that there are plants which die / disappear / do not produce yield / have not produced yield , then this risk will be borne together, so that the calculation of product sharing during harvesting time is determined with the following formula:

P final = ∑ total plant - ∑ dead plant X P initial ∑ total plant

Note: P final = proportion of gaharu yield product sharing which is received by each party if there are plants which die / disappear / do not produce yield / have not produced yield. P initial = proportion of gaharu yield product sharing in accordance with agreement contract as stated in this agreement contract. 5. The harvesting of gaharu plant yield is conducted jointly by the FIRST PARTY and the SECOND PARTY and the income is distributed in nominal term of the sale value after being subtracted by the cost of production in accordance with the consensus as stated in this contract document.

Article 8 DURATION OF AGREEMENT CONTRACT

1. For ensuring the existence of benefit sustainability and legal certainty for the contracting parties, the duration of contract agreement of PHBM for this gaharu cultivation will be valid for 5 (five) years after the signing of this contract agreement, and the contract will end on 17 November 2013. This contract agreement will also be valid as long as the tenant farmers cultivate the forest land in the cooperation site, as shown by pres- ence of activities of plant cultivation in the cooperation site, comprising planting, plant maintenance / tending and benefit utilization. 2. This agreement contract of forest management will be evaluated every 1 (one) year. 3. After the duration of this cooperation contract agreement end, the contract agree-

51 ment could be prolonged by considering the condition and regulation existing during the prolongation of the contract agreement. 4. If after the end of the duration of this contract agreement, there is no prolongation of the contract, then all plants existing in the cooperation site as mentioned in article 3, verse 1, should be returned to the state.

Article 9 PENALTY AND REWARDS

1. If the SECOND PARTY did not fulfill the consensus in accordance with article 6, verse 2 and verse 3, the right of land cultivation as tenant farmer will be revoked. 2. If the SECOND PARTY did not fulfill the consensus in accordance with article 7; verse 2, 3, 4 and 5; and article 8, verse 4, the right of land cultivation as tenant farmer will be revoked. 3. If the FIRST PARTY can not fulfill the obligation as stated in article 4, then the the FIRST PARTY does not have the right to obtain the profit as described in article 7. 4. If the land cultivated by the tenant farmer is not managed properly, then the SECOND PARTY will get penalty in the form of: • Oral warning / reprimand. • Written warning / reprimand with maximum frequency of 3 (three) times. • Unilateral breaking or severing of the cooperation contract agreement.

Article 10 EMERGENCY CONDITION AND FORCE MAJEURE

Each party is exempted from responsibility and will not blame each other, and will not put legal claim to each other if there is delay or obstacle of work execution, either partially or wholly, due to the following things: 1. Occurrence of force majeure such as natural disaster, war and unintentional damage by the TWO PARTIES. 2. Condition as mentioned in verse 1 of this article should be able to be proved in accordance with existing regulation and can be agreed upon by the TWO PARTIES and known by the local authority.

Article 11 DISPUTE

1. Any arising dispute will be settled through deliberation and consensus seeking. 2. If consensus could not be reached, the dispute will be settled in District Legal Court of Pandeglang regency.

52 Article 12 OTHERS

1. Provision for changing this contract agreement could be created through joint consensus and is depicted in addendum of agreement contract. 2. This agreement contract is attached with list of names of tenant farmers of Carita Research Forest in compartment 21, together with area size of cultivated land, and sketch map as mentioned in article 3, verse 1, which constitute one entity and can not be separated from this agreement contract document. 3. This agreement contract document is made in five copies, with sufficient seal for each copy, and each copy has the same legal validity.

THE FIRST PARTY THE SECOND PARTY Chairman of Farmer Group Hutan Giri Chief of Research Evaluation and Service Wisata Lestari, Affairs, Center for Forest and Nature Con- servation Research and Development,

Ustad Djafar, Ir. Sulistyo A. Siran, MSc, NIP: 080 056 172

Witnesses:

Chief of Sindang Laut village, Chief of Research and Development for Forest and Nature Conservation

Leman Ir. Anwar, MSc NIP 080 057 955

53 Annex 5. Nursery of gaharu seedlings for establishing demonstration plot in South Kalimantan and Banten Province.

54 Annex 6. Mix plantation . (A) Gaharu tree was planted between coconut tree; (B) Gaharu tree was planted between jack-fruit tree in South Kalimantan.

55 Annex 7. Gaharu tree mixed with rubber tree and cassava crops.

56 Annex 8. Gaharu tree mixed with Palm-oil plantation.

57 Annex 9. Gaharu tree plantation mixed with rubber tree in South Kalimantan and West Kalimantan.

58 Annex 10. Establishment demonstration plot of gaharu inoculation tehnology in South Kalimatan and Flores (East Nusa Tenggara).

59 Annex 11. Some gaharu trees have been inoculated by fungi in South Kalimantan.

60 Annex 12. Application of gaharu inoculation technology in Sanggau, West Kalimantan.

61 62 BIBLIOGRAPHY

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64 65 MINISTRY OF FORESTRY OF INDONESIA IN COOPERATION WITH INTERNATIONAL TROPICAL TIMBER ORGANIZATION ITTO

ITTO PD425/06 Rev. 1 (I)

Production and Utilization Technology for Sustainable Development of Eaglewood (Gaharu) in Indonesia

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

by : Atok Subiakto, Erdy Santoso, Pratiwi, Erry Purnomo, Ragil S.B. Irianto, Bambang Wiyono, Eka Novriyanti, Sri Suharti, Maman Turjaman

TECHNICAL REPORT NO. 4

Establishing of Demonstration Plot of Eaglewood (Gaharu) Plantation and Inoculation Technology

R & D CENTRE FOR FOREST CONSERVATION AND REHABILITATION FORESTRY RESEARCH AND DEVELOPMENT AGENCY (FORDA) MINISTRY OF FORESTRY INDONESIA ISBN 978-979-3145-84-6 2011

9 789793 145846