indonesia nucleus estates and smailholders i project file...

Report No. 1465c-IND

Indonesia Nucleus Estates and Smailholders IProject FILE COPY(In Four Volumes)

Volume 11: Planning and ImplementationOctober 31, 1977

General Agriculture DivisionRegional Projects DepartmentEast Asia and Pacific Regional Office

FOR OFFICIAL USE ONLY

Document of the World Bank

1-his document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit - Rupiah (Rp)

US$1 = RP 415Rp 1 = US$0.002Rp 1,000,000 US$2,410

WEIGHTS AND MEASURES

1 kilogram (kg) = 1,000 grams (gm) = 2.205 pounds1 metric ton = 1,000 kg = 2,205 pounds = 0.98 long ton1 hectare (ha) = 10,000 square meters (m2) = 2.47 acres

GLOSSARY OF INDONESIAN TERMS

Adat - Body of traditional lawAgraria - Directorate General of Agrarian AffairsAlangalang - A coarse grass, establishing itself after the

slash and burn cycleBina Marga - Directorate General of HighwaysBupati - District Chief ExecutiveDepartment Kesehatan - Department of HealthDesa - VillageDokabu - District Health OfficerDukuh - Hamlet of 25-30 housesDukun - Traditional midwifeGabah - Unhusked riceGotong-royong - Community self-help projectHak Pakai - Individual's right of use or exploitation of

assigned landHak Milik - Right to full ownership of land'Kabupaten - DistrictKecamatan - SubdistrictMarga - Community grouping under Adat LawMushalla - Small prayer houseMantri - Male nursePuskesmas - Community Health Center, subdistrict levelPromokesa - Village Health Promoter

GOVERNMENT OF INDONESIAFISCAL YEAR

April 1 - March 31

FOR OFFICIAL USE ONLY

INDONESIA

NUCLEUS ESTATES AND SMALLHOLDERS I PROJECT

PLANNING AND IMPLEMENTATION

List of Enclosed Documents

Al Project AreaA2 Settlement Planning, Layout, Infrastructure, and RoadsA3 Rubber Development:

1. Terms of Reference for Rubber Contractor forDevelopment and Provision of Services.

2. Draft Contracts

A4 Guidelines for Selection and Recruitment of Settlers.A5 Field Technology Rubber, Coconuts, Oil Palms.A6 Processing Technology and Estate EngineeringA7 World Production and Exports of Oil Palm.A8 Technical Assistance to Director General of Estates in

Project Planning, Implementation, Monitoring and Evaluation.

A9 Technical Assistance to Ministry of AgricultureSupport Staff for Agricultural Enterprises.

A10 Technical Assistance to Ministry of Agriculture forthe Estates Training Institute.

All Project Implementation Schedules.

| This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disebued witbout World Bank authorization.

ANNEX ISection AlPage 1

INDONESIA

NUCLEUS ESTATES AND SMALLHOLDERS I PROJECT

PLANNING AND IMPLEMENTATION

Project Area

Subprojects Description

1. New Settlement - Alue Iemerah, Aceh. A gross area of about 21,000 ha,mainly belonging to the Provincial Government, about 89 km from the town ofLangsa, located in the region of East Aceh, within the province of Aceh (Map1). The project area is linked to the main regional road by an unsurfacedbut well maintained road also utilized by the PNP I Julo Rayeu Estate. Socialfacilities in the area are at low level. Primary jungle covers about 40% ofthe land surface; the remaining vegetation consists of lalang grass /1 (30%),secondary jungle (20%) and smallholdings (10%). Soil and land capabilitystudies conducted by consultants over 30,000 ha revealed sandstone and shalederived soils of low to moderate quality, suitable only for tree crops on acontinuous cropping basis. A net plantable area of 17,500 ha well drainedland, of slope less than 12 , has been derived by reducing the gross area byabout 15% to allow for inferior land, water courses, villages and roads. Meanannual rainfall varies between 2,000-2,500 mm with the driest part of the yearduring February-April. According to the available data, only 2,000 familieslive within an area encompassing the subproject area and 3 km around itsperiphery. It will therefore be necessary to recruit project participantsfrom outside the immediate project area. The population of Aceh is predomin-antly rural and amounts to 2 million people. In view of the poverty of thepopulation and the lack of other opportunity, there should be no difficultyin recruiting potential settlers. The provincial authorities also intendthat about 10% of the settlers would be transmigrants from Java. The localfarmers in the subproject area are largely involved in wet rice production,the average rice area per family being 0.6 ha. Only 500 smallholders in thearea grow rubber with average holdings of 1.3 ha. Available data show thatsmallholder agriculture in the area is at a low level, the estimated grossvalue of production from the average rice farm being US$250 per year. Thesubproject area is adjacent to the PNP I Julo Rayeu Estate on which there are1,300 ha rubber. At an appropriate time following its rehabilitation, it isGOI's intention that PNP I supply necessary services, such as processing andmarketing facilities, to the smallholder project.

2. New Settlement - Tebenan, South Sumatera. A gross area of about13,500 ha belonging mainly to three communities (Marga) Rimbaasam, TelokKijing and Ipil /2, located about 75 km from Palembang, the capital city of

/1 Imperata cylindrica, a coarse grass which constitutes a serious weedproblem in cultivated areas.

/2 A marga is a traditional community grouping of the indigenous population.


the province of South Sumatera (Map 2). The road to Palembang is surfacedand able to cope with present traffic. Unsurfaced roads in poor conditionlead into the subproject areas. Basic social services exist in the surroundingareas. The subproject area is covered by secondary jungle and lalang grass.Soil and land capability studies were carried out by consultants over 20,000 ha.Soils are derived from shales and are of moderate fertility, very suitable fortree crop agriculture. Topography is gently undulating, facilitating land dev-elopment. A net plantable area of 11,250 ha has been achieved by reducingthe gross area by about 15% to allow for inferior land, water courses,villages and roads. Mean annual rainfall varies from 2,500-3,000 mm. Thedriest part of the year is from June to September but mean monthly rainfallseldom falls below 100 mm during the driest month. Some 10,000 families or59,000 people (6 members per family) live in an area within 5-10 km from thesubproject area (which is itself uninhabited). These include about 8,000rubber smallholder families with between 1.4 and 2.5 ha of rubber in anaverage total farm area of 3 ha. About 40% of farmers have total holdings ofless than 2 ha and 54% have rubber areas less than 2 ha. The non-rubber farmareas are cultivated with rice and other annual food crops. Average grossfarm annual income is estimated at US$500. Data are incomplete, but it isestimated that 40% of smallholders have a gross farm income of only US$350.This would be a target group for recruitment and resettlement. Another wouldbe impoverished smalllholders from further afield within the province. Theprovincial authorities propose that about 10% of the settlers would betransmigrants from Java. An ample supply of settler recruits is foreseen byGovernment. The subproject area is adjacent to the PNP X Tebenan Estatewhich is planted with 1,500 ha of high yielding rubber. GOI intends that PNPX would be the nucleus estate responsible for development of the smallholderrubber during the first 3 years of the immature period and for extension,marketing and processing services after this time.

3. Completion of the PNP X Phase I program and Development of Oil.in South Sumatera. The proposed project area for new oil palm development,Betung Oil Palm Estate, lies adjacent to the proosed Tebenan Settlement areaand to Tebenan Estate and enjoys similar environmental conditions (para. 2).The vegetation is secondary jungle and lalang. The area suitable for oilpalm development amounts to 10,000 ha. About 2,300 ha of this land is alreadyowned by PNP X. Under the project PNP X would acquire 7,300 ha of new land

and 1,000 ha of Oud Wassenar Estate (an adjacent Government owned abandonedestate). The subproject area is linked to Palembang by an asphalt road witha maximum weight limit of two tons. The consultants who prepared thisproject identified the need for improvement in this road in view of theproposed development in the area. There are no facilities for bulk shipmentof palm oil at the port of Palembang. There is insufficient water in the

area to supply the proposed palm oil mill. The nearest major source of wateris the Musi River some 16 km from the proposed mill site.

4. Rehabilitation of PTP XI. The subproject area is located in the

province of West Java where PTP XI operates 15 small estates with a plantedarea of 23,198 ha consisting of 19,806 ha rubber, 1,304 ha gutta percha, and


the remainder in Albizzia, tea, and coconuts. Some 18,000 ha of additionalland consists of jungle, abandoned land and squatter occupied areas. Theterrain varies from undulating to hilly, the elevation from near sea level to1,000 m (most of the planted area is in the 500-600 m zone) and the annualestate rainfall from 1,700 mm in dry years to 6,000 mm in wet years. There isconsequently a considerable range of environmental conditions and a signifi-cant proportion of the rubber area is growing in suboptimum conditionsin terms of high elevation and rainfall. Due to past political, managerialand financial difficulties, the rubber areas are relatively low yielding andin unsatisfactory condition and estate facilities are very run down. Theproject area is densely populated and there is a substantial level of unemploy-ment. Roads between estates and the main centres, Jakarta, Bogor and Sukabumiare satisfactory. Estates and their subsidiary divisions are very scattered,however.

ANNEX ISection A2Page 1

Settlement Planning, Layout, Infrastructure and Roads

Introduction

The Alue Iemerah and Tebenan areas for settlement have been describedin Annex I, Section Al. During project preparation comprehensive resourceapparaisal was carried out in terms of soil, topographical, land use and landsuitability surveys. Data are included in the consultants' reports (Annex 2,Section 7).

Basic Settlement Plan

The settlement areas would be divided into blocks of 3,000 ha gross.These blocks would again be subdivided into net areas for rubber (1,000 ha) andfood crops (2,500 ha). The remaining area would be occupied by inferior land,water courses, villages and roads. Land would be allocated between rubber andfood crops so that rubber areas were contiguous and food crops restricted to theflatter lands with a higher level of fertility (Figure 2). Villages would belocated in the food crop areas in a nucleated layout so that the distance torubber areas from the settler's house was no more than 3 km.

Villages

One central (250 families) and two satellite (125 families each)villages would be located in each block. The 500 families would eventually eachhave five ha of land - 2,500 ha - within the block. In Alue Iemerah there wouldbe seven central and 14 satellite villages; in Tebenan the respective figures arefour and ten. Details of village buildings and settler houses are in Annex I,Section BI, Tables 6.1 and 6.3. The number and size of buildings and housesare in accordance with Government regulations.

Health

Health provisions would consist of water supply, latrines and basichealth services including malaria control campaigns. Details are provided inAnnex I, Section BI, Tables 7.1 and 7.3. Again these provisions are in linewith Government regulations. In addition to the above, a physical contingencyhas been included for stand-by water arrangements in the event additionalwater supplies are required.

Roads

Under the project, the settlement areas would be linked with theprovincial road network by (i) construction of all weather main access roads.Within the settlement areas would be established (ii) a system of all weathervillage roads between village centers and linking these with the main accessroads. Systems of (iii) primary and secondary estate type roads would servethe rubber areas and (iv) farm tracks would facilitate access to food cropareas. The specifications, length and costs of these roads are in Annex 1,Section Cl, Tables 4.1 and 4.2. In Alue Iemerah the base for the main access


road would be from the existing road to Julo Rayeu Estate. In Tebenana completely new access road would be constructed.

Farm Development

Settler families would arrive on the project in the April-June periodafter completion of the rice harvest in their particular area ready to partici-pate in clearing of future rubber land. In this first year they would alsoestablish their garden/orchard area (0.2 ha) around their house lot. In thesecond to fourth years it is assumed that settlers would clear and plant eachyear another 0.2 ha with food crops. During this period one worker per familywould work full time as a trainee laborer in the rubber area being developed bythe nucleus estate contractor. In year 5 the family would be able to clear andplant 0.3 ha with food crops and in year 7 and onwards the area planted withfood crops annually would increase to 0.4 ha. (Annex I, Section B1, Table 1.)The labor analysis in Annex I, Section BI, Table 1.2 shows that these arethe maximum areas of food crops likely to be handled by settler families withinthis initial 7-8 year period. After this time the farmer should be able toincrease his tree crop area to three ha. Food crop assumptions are in Annex I,Section A4.


Rubber Development

The terms of reference for the nucleus estate and a draft specimencontract between the Nucleus Estate and the DGE are outlined below. Theform of contract has been used in the Transmigration and Rural DevelopmentProject.

1. Terms of Reference for Nucleus Estate for RubberEstablishment, Development and Provision of Services

Scope of ActivitiesFor the period up to three years after planting

(a) In relation to the programs in para. 3.05 of the Main Report Table I(PTP V) and Table 2 (PNP X) the nucleus estates would operate rubbernurseries; clear the future rubber land; construct settler housesand install water supplies; plant and maintain rubber; and constructrubber area roads; all in accordance with specifications laid downby the DGE.

(b) The nucleus estates would procure and apply rubber area inputs.Goods financed by the World Bank would be procured using Bankguidelines. Tender specifications would be drawn up by the DGE.

(c) The nucleus estates would train settlers in rubber planting andmaintenance in accordance with a syllabus drawn up in conjunctionwith the DGE.

(d) In year 1 of each rubber area the nucleus estates would provide foodcrop inputs to new settlers according to DGE instructions for theperiod from three years after planting to production.

For the period from three years after planting up to production

(e) The nucleus estates would maintain rubber roads, procure and applyrubber area inputs.

(f) The nucleus estates would provide specific training in rubbertapping on the adjacent nucleus estate and extension services asrequired by the DGE and the Provincial Government.

During the production period

(g) The nucleus estates would provide extension, processing and market-ing services as required by the DGE and the Provincial Government.

(h) Management. During the first three years after field planting, thenucleus estates would operate settlers in the rubber areas inaccordance with usual estate procedures. Where settlers wereunavailable, the nucleus estates would be authorized to recruitcasual labor, to be accommodated in temporary housing if necessary.


(i) The nucleus estates would employ staff as detailed in Annex I,Section Bl, Table 8.1 (PTPV) and Table 8.2 (PNP X).

(j) The nucleus estates would keep complete project accounts of allexpenditures.

(k) Inspection. The nucleus estates would facilitate inspection of allcontract works by the officials and advisors of the DGE. Theseinspection services would:

(i) scrutinize annual budgets for rubber development;

(ii) advise on land development with rubber, particularly on landsuitability and planting techniques and approve each year'sprogram;

(iii) evaluate field growth according to a grading system agreedbetween the DGE and the nucleus estates and in accordance withthe system successfully used under Credit 319-IND.

(iv) provide regular reports to the Director General of Estateson all aspects of the nucleus estates performance in carryingout the contract.

2. Draft Specimen Contract Between DGE and Nucleus Estate

This ........ day, dated ..... 1977, we, the undersigned:

I. in this respect acts for and on behalf of DirectorGeneral of Estates hereinafter called the FirstParty.

II. in this respect acts for and on behalf of GovernmentEstate Enterprise, hereinafter called the SecondParty.

based on Joint Decrees of Director General of Estates and ................................................. .......................

concerning the development of estate undertakings in relation to smallholderdevelopment activities in the settlement area,

- whereas the First Party want to develop the smallholder rubber estate forproject farmers to be settled in Southern Sumatera Region, i.e.:

(1) In the Tebenan area, located 75 km from Palembang, Province of SouthSumatera, an area c.a. 4,500 ha on a total area of 11,250 ha, as shownon the attached situation map;


- Whereas the development of the above mentioned rubber estate needsparticular cultural and technical skill, so that the First Party considersto entrust the Second Party as a Government Enterprise with the perform-ance, which is accustomed and skilled in the field of the Rubber commodityplantations, pursuant to provisions as stated in the undermentionedarticles, for which the Second Party has stated its willingness.

- Whereas an official agreement should be issued as a basic for delegationof duties and willingness to carry out such duties.

- Stated herewith having agreed with the conformity regarding to SmallholderRubber Estate Development in the settlement area, pursuant to articles asmentioned hereunder:

Article 1Assignment

The First Party assigns the work as stated above to the Second Party andthe Second Party accepts the assignment with terms as stipulated in thefollowing articles.

Article 2Scope of work

(1) The work to be carried out by the Second Party on behalf of the FirstParty includes the following principal works which can be divided into3 phases:

1. Phase I, between year 0 up to three years after planting, namelyup to the time of delivering of the rubber blocks to the respec-tive settlers, which include the following works:

1.1. Identification of part of the settlement area where thelocal conditions are favorable for developing rubber planta-tions.

1.2. Land clearing and preparation of it into blocks suitablefor rubber planting.

1.3. Land cultivation.

1.4. Supply of GT 1 budded stumps or other improved clone andplant in polybags.

1.5. Planting of (3 whorl) budded stumps in the blocks alreadyprepared.

1.6. Maintenance of rubber plantations (manuring, weeding,replacing the dead and the dwarf plants, pest and diseasecontrol etc.)


1.7. Education and training for settlers to be paid at similarwage as estate laborers in this rubber business, i.e.Rp 422/day.

1.8. Training project staffs in managing rubber estates.

1.9. Construction of primary estate, secondary estate, and farmroads.

1.10. Construction of settler housing to be arranged prior tosettler arrival in conformity with present GOI standardsfor settler housing, i.e. about Rp 207,500 per familyunit.

1.11. Construction of all necessary estate garages, workshops,and other estate related buildings necessary for developmentof block planted rubber.

2. Phase II, from three years after planting up to the time whenrubber trees are ready to be tapped for the first time, whichcovers the following works:

2.1. Supervision of settlers' rubber blocks and procurement ofthe necessary production means such as fertilizer.

2.2. Training of settlers in rubber tapping practices.

3. Phase III, the time between rubber trees coming into productionup to the end of this agreement, which covers the followingworks:

3.1. Preparing frame work and organizational set up for postharvest treatment such as tapping, collection and coagulationof latex, transport, processing, grading and marketing ofprocessed rubber.

3.2. Providing necessary equipment which supports those abovementioned post harvest activities.

3.3. Collecting smallholder latex for debt service on behalf ofBRI as handling bank for the GOI at agreed level to bedecided in the sixth year of the project, equal to about25% of smallholder production during year 7 to 21.

3.4. Agreeing to assign a value to smallholder latex collectedfor debt service, to be agreed by both undersigned partiesin year 6, estimated now at about 70% of the fob price ofrubber based on the direct cost of processing, collection,and marketing equalling 30% of the FOB price incurred bythe nucleus estate processor, or as agreed from time totime by the Provincial Coordinating Committee in coopera-tion with the DGE.


Article 3

Period of Agreement

(1) The term of agreement under this contract shall be 27 years, commencingfrom 1977/78 up to and including 2004, being the time when debt-serviceby project settlers would be complete.

(2) The mentioned period can be extended with term of mutual agreement.

Article 4

Organization and Management

(1) For the project site at Tebenan the Second Party will appoint a projectofficer for the rubber unit, with necessary staff.

(2) The project officer is responsible to the Second Party, but day today he has to perform a close contact and coordination with the ProjectManager appointed by the First Party.

(3) In the nucleus estates Headquarters a particular section shall beformed for implementation of all administrative work concerningthis rubber project.

(4) The First Party will appoint a counterpart team with the duty to manageand supervise all kinds of communication with the Second Party, with anauthority to propose decisions upon every problem that may arise.

(5) The nucleus estate is responsible for the best possible preparation ofthe rubber plantation, and would be paid for its head office overheadsand field overheads at the rate of 15% per annum as calculated on thedirect expenditures made for rubber development, machinery and equipment,or as agreed by the DGE based on satisfactory performance.

Article 5

Finance

(1) Finance required for implementing the work as mentioned in Article 2,Phase I would be passed on to the Second Party from the Bank RakyatIndonesia by a Subfinancing Agreement.

(2) The period of this Subfinancing Agreement would be through the end ofPhase I for each area of rubber planted by the Second Party.


(3) The GOI would bear the risk on loan funds during the period of developmentdescribed in Article 2, Phase 1.

(4) The Second Party would agree, as in Article 2, Phase II, to procurenecessary inputs for rubber development in Phase II, the finance forwhich would be made available directly to farmers from the BRI.

Article 6

Budget

(1) The Second Party agrees to provide an indicative budget for the workas mentioned in Article 2 at least 6 months before the implementation ofa certain budget year, to include both physical plans and expectedfinancial requirements from the BRI loan account.

(2) Budget plans which can be formulated by the Second Party cover:

(i) Direct costs for implementing the work as mentioned in Article 2;

(ii) Indirect costs as mentioned in Article 4 (5).

Article 7

Financial Responsibility

(1) The Second Party agrees to undertake an accounting system as separatefrom the Second Party's own financial reports, to include itemizedexpenditure accounts of all work carried out in Article 2.

(2) The Second Party agrees to provide quarterly financial statements to theDGE with copies to the BRI, Ministryof Finance and the World Bank.

(3) The First Party reserves the right to require any additional periodicaccounting statements.

Article 8

Progress Reports

(1) An annual Progress Report regarding the Project development would besubmitted by the Second Party to the First Party.

(2) The First Party reserves the right to inspect the Project at any timeto assess the Project development.


Article 9

Settlement of Disputes, Arbitration

(1) Terms not yet enclosed in this Agreement, shall be settled by negotiation.Correspondence and/or minutes of the meeting concerned form an additionaland integral part of this Agreement.

(2) Any disputes or differences arising out of this Agreement, shall besettled by negotiation. If these differences cannot be amicablysettled between the parties they shall be finally settled by arbitration.

(3) Each Party reserves the right to appoint an Arbiter and the two Arbitorsto choose a third member as their Chairman.

(4) If in connection therewith no agreement with respect to the appointmentof Arbiter can be reached, the formation of Arbiters shall be leftto the Minister of Agriculture and the Minister of Manpower, Transmi-gration and Cooperation.

(5) The Arbiters' decision is final for both parties without appeal.

Article 10

For this Agreement both Parties choose as their irrevocable legal domicilethe Centre Court of Justice in Jakarta.

Signed in Jakarta on the day and date abovementioned.

FIRST PARTY SECOND PARTY

Approved by,

DIRECTOR GEN. OF ESTATES MANAGING DIRECTOR, PNP


Guidelines for Selection and Recruitment of Settlers

The project is designed to provide for landless participants orthose who have very small, uneconomic, lands which they are prepared tosurrender in exchange for land holdings within the project. (Those practic-ing shifting cultivation would particularly be encouraged to abandon thispractice and settle in the project). Priority would be given firstly tosuitably qualified rural families within the project area; secondly to resi-dents of the Province in which the project is located and, when these demandshave been met, to landless applicants fromother areas recruited throughthe Directorate General of Transmigration in coordination with the DGE orotherwise as appropriate in the special circumstances of each project.

Generally all participants would be required to reside in thenew villages to be established by the project. There is no intention toprovide additional lands to established farmers resident close to the projectarea who would continue to farm existing holdings. Such farmers are pro-vided for by other projects such as the conventional ARP programs. Theonly exception would be that applicants prepared to settle in the new villagesand surrender existing dry land holdings could be permitted to retain smallareas of sawah land provided that family labor was sufficient to developproject holdings while cultivating the existing rice land. Each such casewould be considered individually by the Project Manager in consultationwith the village authority concerned.

Detailed selection criteria would be developed by each ProjectManager according to the availability of potential participants and specialcircumstances in each area, after discussion with the Provincial CoordinatingCommittee, the Project Manager devising a points system applied to thefollowing framework.

Settler Qualifications

1. Location

Priority 1. Those cultivating land within the area tobe developed by the project.

Priority 2. Those obtaining income from land to bedeveloped by the project. For example,those using grazing land, cutting grass orcollecting wood or jungle produce on aregular basis.

Priority 3. Those residents:

(i) within the project area;(ii) within the Kacamatan of the project;(iii) within the Kabupaten of the project;(iv) within the province of the project; and(v) others.

ANNk,A -

Section A4Page 2

2. Land Ownership

Priority 1. Those entirely without cultivated land.

Priority 2. Those without entitled land (i.e., withoutHak M4ilik, Hak Pakai or customary rightsto Marga land) but practicing shifting cultiva-tion and prepared to cease this practice.

Priority 3. Those with not more than 1.0 ha bearing oldrubber trees (and without other land) preparedto surrender this land to the Marga forreallocation.

Priority 4. Those with not more than 1.0 ha Marga landunder crop and prepared to surrender the land(including any sawah).

Priority 5. Those with more than 1.0 ha but not more than2.0 ha cultivated land and prepared to surrenderthis land.

Residence and Family Status

3. Applicants would be married men, aged 20 to 40 years at entry to theproject./1 Given this qualification account would be taken of family laborpotential, consideration being given to unmarried sons 15-20 years of age,normally resident with and dependent upon the head of the family.

Income Sources and Level

4. Preference would be given to the lowest income groups, without regularpaid employment. An upper limit would then be fixed, the amount being of theorder of Rp 120,000 per year but determined by local conditions in each project.

Experience

5. In the circumstances that settlers would receive minimum guidance indevelopment of their foodcrop areas, a rural background and some experience tofarm operations would be essential. Preference would be given to those able todemonstrate (on present land holdings or employment) a basic capacity to culti-vate short-term crops satisfactorily.

Health

6. Selected settlers and their wives would be physically fit for fieldwork. All provisionally accepted settlers would be healthy, free from contagiousdiseases and able to maintain the necessary income from allocated food lots whileproviding 25 man-days paid labor on the nucleus estate each month.

/1 The age limit for existing farmers within the project area would beconsidered by the Project Manager on a case by case basis.


Understanding of Obligations

7. Applicants should clearly understand their obligations as settlers,particularly that they would:

(i) move to a project village;(ii) accept paid labor on the Nucleus Estate for one adult per

family; and(iii) use other family labor in development of allocated house

and food cropping areas.

8. Intended participants should understand the benefits and other condi-tions of the project. Special efforts would be made to avoid misunderstand-ings by explanation of the project to community leaders in the areas fromwhich settlers are to be drawn and then to potential settlers. Obligationsand benefits would be clearly set out in application forms.

Recruitment

9. In all recruitment of settlers, reliance would be placed upon villageauthorities for confirmation of applicant's qualifications. Equally, theapplicant's candidature would be acceptable to the authorities, particularlywhere surrender of land is involved. Close collaboration between the ProjectManager and the local authorities would be essential and following discussionwith the Provincial Coordinating Committee the detailed points system preparedby the Project Manager would be cleared with the local authority which would berepresented on the Provincial Coordinating Committee.

10. Given this consultation and participation, recruitment would be atthe discretion of the Project Manager according to procedures and a timetableprepared by him within DGE guidelines.


FIELD TECHNOLOGY - RUBBER

PTP XI - Present Situation

1. Area Statement

2. Mature Rubber

2.1 Physical conditions2.2 Weeding2.3 Manuring2.4 Disease2.5 Tapping2.6 Stimulation2.7 Production and yields

3. Mature untapped area

3.1 Physical conditions3.2 Weeding3.3 Manuring

4. Immature area

4.1 Physical conditions4.2 Weeding4.3 Manuring4.4 Planting material4.5 Density


1. Area Statement. PTP XI comprises 15 estates covering a total of46,920 ha of which 24,037 ha are planted with the following crop distribution.

Rubber mature 15,942 haRubber mature untapped 3,314 ha - abandoned untapped - 1,279 ha

- untapped over 6 years - 2,841 haRubber immature 1,221 haCoconuts mature 54 haCoconuts immature 325 haTea 416 haCloves 289 haAlbizzia 1,172 haGutta Percha 1,304 ha

Total Planted Area 24,037 ha

The remaining areas are composed of 13,364 ha of vacant land and abandonedplanted areas (rubber and tea), 6,260 ha which are occupied by squatters and3,259 ha of other land including centers, villages, roads, nurseries, budwoodgardens, etc.

2. Mature Rubber Area - 15,942 ha

2.1 Physical Conditions

In general, the present field conditions range from poor to very poor.

2.2 Weeding

A lack of maintenance, mainly due to a shortage of funds, was foundon all estates visited. About 80 % of the fields were covered with lalang,Mikania and Eupatorium. Lalang eradication was started in 1974, but in somecases the results were very poor and in fact the areas selected for treatmentwere not well chosen.

2.3 Manuring

Neither manuring soil, nor foliar analysis were done in 1975 due toshortage of funds. During the last three years manuring was carried outusing a compound fertilizer (15-15-15) at a rate of 200 gram per tree. Nitro-gen deficiencies were noted in most fields.

2.4 Diseases

A very heavy attack of Oidium and Gloesporiun was noted particularlyin clone GTl covering about 2,000 ha. Tapping intensity was reduced and insome cases completely stopped for several months resulting in a loss ofproduction of nearly 1,500 tons. Mouldy rot was generally under control.


2.5 Tapping

Tapping standards were a major problem and generally the tappingquality ranged from average to poor. This was mainly the result of inadequatelong term policy, control and discipline. Mature rubber was classified into twocategories: (a) planting year 1959 and older; (b) planting year 1960 andyounger. In the first category, the two high panels had already been tapped.In 1974, the upward tapping system used in the North Sumtera PNP's was introducedto PTP XI by the RRC Tanjung Morawa, North Sumatera. The application of thisupward tapping system with insufficient knowledge and control resulted in veryhigh bark consumption. On one estate, a bark consumption of 170 cm in one yearwas noted, representing more than four times the normal consumption. Thetapping cuts reached a height of over 3 m. The low panels were generally in badcondition with very poor renewed bark. Bark thickness averaged only 6-7 mmresulting in many wounds to the tapping panel. In all these fields a total lackof tapping discipline was noted. Panels were opened at different high levels.In some cases additional cuts were tapped creating much island bark. In thesecond category, the 1960 year of planting and younger areas both high panelswere still virgin. Here again a lack of discipline in tapping was noted. Inmany cases a change over of panel was made without any instruction, the decisionbeing made by the tapper himself when the present cut became too low or whentapping became too difficult on the very thin renewed bark panel. By makingsuch change over panels, many bark islands are created resulting in very lowyields. The tapping systems generally used are S/2-D2 and S/2-D3 or D4. Asfar as equipment is concerned, it has been noted that because of danger oftheft, all aluminum cups are carried back after tapping. Consequently, thetappers have to carry 500 cups representing an additional weight of 20 kgtwice a day resulting in loss of yield, time and waste of energy.

2.6 Stimulation

About 300 ha were under stimulation. Ethrel at 2.5% a.i. concen-tration was used and applications were made by scraping with the upward tappingsystem and on the panel above the cut, in the downward tapping system.

2.7 Production and Yields

Yields expressed in kg/ha, kg/tapper/day and gm/tree/tapping day arevery low compared with North Sumatera PNP's. These results are due to the verypoor condition of trees, lack of upkeep and manuring and insufficient control intapping.

3. Mature Untapped Areas

3.1 Physical Condition

This area concerns the trees over five years which are stilluntapped. Tree age ranged from six to fifteen years. Most of these areas


were in very poor condition mainly due to a lack of upkeep during recentyears. Growth was backward. Due to lack of funds, these areas were aban-doned during the last three years.

3.2 Weeding

About 70% of the fields were covered with lalang or Mikania andEupatorium. In some estates a rehabilitation program was started in 1974,covering a total area of 1,279 ha. Lalang eradication commenced but due tothe absence of cover crop, fields were invaded by Mikania and Eupatorium.

3.3 Manuring

No manuring was carried out in these areas during recent years,except in 1,279 ha where rehabilitation was started in 1974.

4. Immature Areas - 1,221 ha

4.1 Physical Conditions

The physical condition of the immature areas ranged from averageto good. The latest plantings were in better condition but have not yetreached a high standard. Where growth was backward it was in most cases mainlydue to poor planting material, lack of cover crop and fertilizer.

4.2 Weeding

Sporadic lalang was still in existence and Mikania and Eupatoriumcovered 40% of the area. Legume cover crops were very poor.

4.3 Manuring

Manuring programs were carried out during the last three yearsusing very small doses of compound NPK fertilizers (15-15-15).

4.4 Planting Materials - Clones

In recent years, high stumps were used for planting. The mainclone was GT.I. High stumps were in general in poor condition and derivedfrom old nurseries. In 1975 short budded stumps were used, but here againthe quality of these stumps was poor.

4.5 Density

The present density used by PTP XI is 550 trees/ha with a spacingof 7 x 2.6 m. Due to the very poor quality of planting material, the actualdensity range was from 450 to 500 trees/ha.


PTP XI - Rehabilitation

1. Area Statement

2. Mature Areas

2.1 Tapping2.2 Opening2.3 Tapping System2.4 Task Size2.5 Tree Equipment2.6 Stimulation2.7 Field Maintenance

3. Mature Untapped Areas

4. Immature Areas

5. New Establishment

5.1 Nursery(a) Choice of Emplacement(b) Soil Preparation(c) Density(d) Clones

5.2 Field Establishment5.3 Field Maintenance year 1 to 55.4 Control and Inspection


1. Area Statement

The Appraisal Mission revised the project prepared by CDC consul-tants. Having taken into consideration the distribution of the estates, landsuitability, elevation and rainfall, it was decided to retain only eightestates in rubber in the long term and to start conversion into coconuts onthe other estates. The program up to 1981 would cover 3,713 ha of rubberreplanting and 4,233 ha of conversion into coconuts. The total program up to2000 would cover replanting of 11,089 ha in rubber and 12,179 ha of coconutplanting. Tables 1.1(a) and 1.1(b), Annex I, Section B3, provide details of theprogram. In addition to this planting program, there would be rehabilitation of9,637 ha of mature rubber, 2,060 ha of untapped mature rubber and 1,039 haof immature area. Rehabilitation would be carried out over a three yearperiod for the mature areas and one year for the immature. Tables 1.3 and1.3(c) Annex I, Section B3, give details of rubber and coconut area age composi-tion from year 1976 up to 2000. Starting with 19,398 ha of rubber in 1975,the final rubber area would be reduced to 14,218 ha distributed over eightestates in the year 2000. At the same time, the coconut area would be extendedfrom the present 379 ha to 12,412 ha in year 2000. Estates to be maintained inrubber are: Pasir Waringin, Bojong Datar, Sanghyang Damar, Menteng, Hambalang,Pasir Maung, Sukamaju, Cibungur. The conversion program into coconut should becarried out on: Cisalak Baru, Bantar Jaya, Cimulang, Pondek Gedeh, Cikasungka,Cisalak, Cipetir, Pasir Badak, Ganessa, Ciemas. There is no conversion norrehabilitation program planned for the remaining estates. Due to their situation,unsatisfactory topography, or elevation, certain estates or part of theseestates would be released to Government. Serpong Estate being close to Jakarta,and very fragmented, could be partly sold for new industrial development andreal estate.

2. Mature Areas

The rehabilitation program would be carried out on 9,637 ha involvingthe 1959 and younger areas. The program would start in 1977 on 4,000 hafollowed by 5,637 ha in 1978. Rehabilitation includes complete lalang, mikaniaand eupatorium eradication and an additional manuring program based on foliaranalysis. Cost of rehabilitation is given in Table 5.3(c), Annex I, SectionB3. The 9,637 ha concern the fields where exploitation of high panels hasnot yet started and subsequently where it would be possible to apply a longterm tapping system. On the remaining 6,305 ha minimum upkeep only should becarried out. Monthly or bimonthly slashing should be sufficient in order toensure access for tapping. No manuring program is provided as there were nobark reserves in these fields.

2.1 Tapping

Complete reorganization should start as soon as possible. It ismost important to improve tapping discipline in terms of:

(a) the girth of tappable trees;(b) the height of opening;


(c) the correct change over panel;(d) the most suitable tapping system; and(e) correct stimulation technique.

2.2 Tree Opening

(a) Opening would be carried out on trees having a girth of 50 cmat 1 m above ground. A field is tappable when at least 50% ofthe trees have reached this girth. In the present heterogeneousfields, tapping could be started with a lower percentage oftappable trees (35 to 40%).

(b) Opening would be at a height of 130 cm above ground and theangle of slope would be 350.

(c) Change over panel. In the present situation the change overof panel depends on the bark situation and the yield. In mostcases, bark islands are created resulting in a waste of barkand very poor yields. Training should be given to tappers toprevent such opening. There should be stronger disciplineconcerning tapping standards with much more systematic controland evaluation of performance.

2.3 Tapping Systems

The present S/2 D2 system is unsatisfactory for exploitation. Moremodern systems should be applied. A lower tapping frequency is recommended.Conservation of bark and labor should be the objective of such systems. Byusing stimulants it is possible to decrease tapping frequency.

A general guideline for tapping systems using stimulants follows.In all present areas tapped S/2 D2 without stimulation, it would be possibleto change the frequency to D3 and to use stimulant as Ethrel 2% or 2-1/2%.With this frequency the PTP should be able to reduce bark consumption. In1958 and older areas where no rehabilitation program has been planned, thepresent tapping system could be improved by adopting a S/2 tapping systemwith D4 frequency and a monthly application of Ethrel at 2-1/2%. Upwardtapping should not be used for too long a period and never for more than oneyear on the same panel. When trees have been tapped for two consecutive yearsor more with an upward tapping system, it is necessary to return to lowpanels. A periodic alternate change over panel could be applied after oneyear of rest on the high panels. On older trees, where the present cut onhigh panel is situated at a height of more than 3 m, it should be possible,if the low panels are untappable, to apply S/2 D4 or S/4 D3 systems. Inboth cases, guide strings should be used in order to facilitate the flow oflatex into the cup. In all cases, whether trees are young or old, it isabsolutely necessary to stop the application of the present super hightapping system, "SHT" in a downward direction. By using the SHT system barkislands are created and in most cases, panels become dry after one or twoyears of exploitation.


Years of Tapping SystemsTapping and Panels Stimulation Frequency

1- 2 S/2 D4 Panel A Groove stim. ET 2% - 1 x 20 days

3-11 S/2 D3 Alternate Groove stim. ET 2-1/2% - 1 x 15 daysA and B

12-26 Alternate S/2 D3 Groove stim. ET 2-1/2% - 1 x 15 daysC and D

S/2 D4 I - II Scraping stim. ET 2-1/2% - 1 x 15 days

27-30 Alternate S/2 D2 - Groove stim. ET 2-1/2% - 1 x 15 daysE and F

S/2 D3 I - II Scraping stim. ET 2-1/2% - 1 x 30 days

2.4 Task Size

A guideline for the task size to be given according to the corres-ponding tapping system is given below:

Tapping System Task Size

S/2 on virgin bark 500 to 550 treesS/2l on renewed bark 450 to 500 treesS/2_ 1st to 4th year 380 to 420 trees

5th to 8th year 350 to 380 treesS/4 more than 3 m height 450 treesAlternate system 500 trees for periodsAlternate system 400 trees for - periods2 S/2_ and _ on old trees 250 to 300 trees

2.5 Tree Equipment

Steps should be taken to replace aluminum cups with earthen cups.Earthen cups could be left in place allowing late afternoon collection.Without cup transportation, tapping could start earlier and subsequentlyincrease production. On young trees (virgin low panels A and B) cup hangerswith string should be used instead of a nail in the bark as presently prac-ticed.

2.6 Stimulation

Product: Ethrel should be used at 2-1/2%. Dilution of Ethrelshould be made in palm oil mixed with Otina C grease for scraping application,and in the case of panel and groove application, Ethrel should be mixed withwater. In both cases Ethrel should not be kept more than one month afterdilution.


Application: In all downward tapping systems groove stimulationshould be applied. It has been already proved that groove stimulation givesbetter results when compared to scraping and panel application. In general,groove stimulation is done two weekly. Although this system gives betterresults, it, however, requires better control and very good organization. Thequantity of product to be applied should not exceed 0.3 gm/tree/applicationon the young trees (panels A and B) and 1.5 gm for old trees (panels C andD). In upward tapping stimulants are applied after scraping. The width ofscraping should not be more than the normal bark consumption for one month,i.e. 15 mm. The normal quality of product used for stimulation by scrapingis 0.9 gm/tree/application.

2.7 Field Maintenance - Manuring

Tables 5.3(a) and 5.3(c), Annex I, Section B3, give details of laborand material requirements for field maintenance for: normal mature areas;mature areas with and without rehabilitation; and untapped mature areas withrehabilitation. Except in the nonrehabilitated areas, chemical weeding shouldbe carried out. It would be possible to combine path weeding with premanuringweeding. Fertilizers should be broadcast in the inter-row at 1.5 m from thetrees. Fertilizer requirements are provided in Table 6.1, Section B3. A highnumber of very small untappable trees is still present. Thintling out should bedone before broadcasting fertilizer.

3. Mature Untapped Areas - 3,314 ha

A rehabilitation program has been planned for approximately 2,060 ha,i.e. 62% of these areas. Rehabilitation includes complete eradication oflalang and other noxious weeds and an additional manuring program in order tobring these areas into production in the next three years. A field card wasprepared during the mission for execution of more accurate surveys of thesefields. Data such as girth, type of cover, tree density, level of supplyingof vacancies necessary should be recorded and assessed before startingrehabilitation. The remaining 1,254 ha should be replanted or converted intococonuts.

4. Immature Areas - 1,221 ha

A rehabilitation program should be carried out on 1,039 ha of theseareas. Lalang and other noxious weeds such as Mikania and Eupatorium are wide-spread and must be eradicated by chemical weeding. Furthermore, PTP XI shouldintroduce Pueraria triloba which has the advantage of rapid spread. PTP XIshould establish a Pueraria tribola nursery on each estate where rubber is tobe the main crop. At the same time a new weeding policy should be applied.The present strip weeding, in addition to high cost, has the disadvantage ofdisturbing feeding root systems and soil. In fields where legume covers havebeen established, it is recommended that weeding of circles stop after thesecond year and that mulching is done to provide organic matter. Mulchingwould also assist in white root disease detection.


5. New Establishment

5.1 Nursery

PTP XI must pay more attention to nursery establishment. The

nursery should be established:

(a) on a flat area;(b) near a water supply;(c) with easy road access; and(d) in a central position.

Ploughing and harrowing should be to a depth of 60 cm. All roots and weedsshould be removed. To facilitate budding, a triangular planting systemshould be used with a spacing of 50 x 50 cm. Omitting rows for control, thetotal points per ha of nursery would be about 45,000. Due to the heavy rain-fall in West Java the clones to be utilized should be as follows:

Percent ofClones Replantings

RRIM 600 40GT 1 15PB 5/51 15AV 2037 10PR 107 10PR 255 5PB 28/59 5

5.2 Field Establishment

Poisoning of remaining trees should be done one month beforefelling, using Sodium Arsenite. Lalang eradication should be done withchemicals such as Dalapon at a rate of 30 kg/ha in three to four sprayings.500 trees/ha should be planted with a spacing of 7 x 2.85 m to obtain 400trees/ha in Year 6 at opening. Planting material should be budded stumps of16 months old. At the time of planting, 10%, i.e. 50 trees, should beplanted in polybags (60 cm x 30 cm) in order to provide for supplying.Supplying should be done only in Year 1 using polybags in order to obtainhomogeneous plantings. No supplying should be done in the following year.200 gm of rock phosphate should be added in the hole at planting. Legumecover crop should be established at the time of planting and just afterlalang eradication. Pueraria javanica, Centrosema and Calopogonium aregenerally used as covers. In addition, Pueraria triloba should be intro-duced as soon as possible. Fertilizer should be applied to legumes at thetime of sowing.

5.3 Field Maintenance - Year 1 to 5

Table 6.1(a), Annex I, Section B3, gives details of fertilizerschedules from Year 1 up to Year 5.


A general guideline to weeding policy is attached.

Pruning should commence one month after planting with a three weekrotation. In Years 1 and 2 the rotation should be monthly. Pruning has to bedone to a maximum height of 2.5 m. White root disease should be controlledmonthly. Detection should be visual through inspection of leaf color and bythe mulching test but not by systematic digging around the collar. Suchdigging has the disadvantage of causing wounds on roots which then becomemore sensitive to white root disease infection. Fertilizers should be broadcastover the legume cover crop without any premanuring weeding. In the case ofnatural cover crops such as soft grasses, premanuring chemical weeding shouldbe done three weeks before broadcast of fertilizers.

5.4 Control and Inspection

A Basis for Inspection and Assessment of Work Standards

The system used successfully in the Fourth Agricultural EstatesProject (Credit 319-IND) for quantitative assessment of work standards innew plantings would be extended to all major field operations. The inspectorswould make recommendations to the MOA Support Staff (for consultation with theBank) on a suitable system. This should lead to both improvement in workstandards and to systematization and standardization of inspection reports.

WEEDING SYSTEM

Legume Cover Crop Pueraria Triloba Cover CropYear Weeding System Rotation Weeding System Rotation

0 Strip weeding 1 x 15 days Strip weeding 1 x 15 dayswidth = 1.5 width = 1.5

1 Circle weeding 1 x 21 days Circle weeding 1 x 15 days1 m diameter 1.5 m diameter

2 Mulching - cutting 1 x 30 days Strip slashing 1 x 20 daysback climbing width 1.5 mlegumes

3 As Year 2 1 x 30 days Mulching - cutting 1 x 30 daysback climbingcreepers

4 As Year 2 1 x 40 days As Year 3 1 x 30 days

5 As Year 2 1 x 45 days As Year 3 1 x 30 days

* In all cases, lalang, Mikania and other noxious weeds should be controlledmonthly.


FIELD TECHNOLOGY - COCONUTS

PTP XI

1. The Nursery

1.1 Planting Material1.2 Seed Gardens

2. The Field

2.1 Clearing2.2 Establishment and Maintenance of Cover Crops2.3 Field Planting2.4 Field Operations in Immature and Mature Phases2.5 Production and Yields2.6 Research and Development

3. Control and Inspection

3.1 A Basis for Inspection and Assessment of Work Standards


1. The Nursery

Tall X dwarf hybrid material from the PNP X seed garden would beused for field planting. This material is of West African tall and Nias/Malaysian dwarf parentage.

Planting material requirements are calculated in the followingmanner:

Per ha of Field x

Planting

Seed nuts from tree 250 100Seed nuts after germination in prenursery 200 80Seed nuts planted in polybags 180 72Seed nuts available for field planting 143 57

2. The Field

2.1 Clearing

Coconuts would be planted after felling, burning and clearing oldrubber or abandoned rubber. Clearing would be straightforward and if possiblethe old rubber timber should be sold.

2.2 Establishment and Maintenance of Cover Crops

Leguminous cover crops including Pueraria triloba would be sown andclean weeded for 6 months, after which light grasses would be allowed toremain in the cover crop. In level/undulating areas with little risk of soilerosion, a range of intercrops would be gown on a commercial scale withdetailed recording of operating costs and yields. At least 200 ha/year shouldbe under intercropping.

2.3 Field Planting

Palms should be field planted-as polybag-palms, at a density of about143/ha. Small scale trials on size/age of polybagged palms at planting wouldbe carried out.

2.4 Field Operations in Immature and Mature Phases

The estimated fertilizer schedule is in Table 6.2, Section B3. Fertil-izer recommendations would be based on leaf and soil analyses. Leaf samplingand analysis would be carried out by Marihat Research Station and interpretationof the results and their translation into fertilizer recommendations by theconsultant in coconut agronomy. PTP XI advised by this consultant would setup a series of fertilizer and other agronomic trials on their estates, which


they would maintain and record and which would provide a basis for agronomicand nutritional advisory work in the West Java environment. The eventual PTPXI area of coconuts will comprise at least 12,000 ha and it is esential thatthe technical bases for this program are developed.


Estimated yields are detailed in Table 3.4, Section B3. Peak yieldsof hybrids are estimated at 5.0 tons copra although they may reach 5.5 tons onthe volcanic soils. At 65% oil content, this is equivalent to 3.5 tons coconutoil/ha. (Historically lauric acid oils have enjoyed a price advantage of 27%over palm oil). Early hybrid yields in the Southeast Asian environment arevery promising, with yields of 2 tons copra/ha in Years 4-5 after planting onChersonese Estate, Malaysia.

2.6 Research and Development

The LPT1, the official institute for Coconut Research, is fullyoccupied with the problems of coconut smallholdings over 1.8 million ha ofsmall farms found in every province in the country. They are unable to devotetheir attention to the needs of PTP XI in the West Java habitat. For thisreason it is proposed that the consultant in coconut agronomy advise PTP XIin setting up an appropriate applied research program. There are very fewresearch data available and this program should be set up as soon as possible.It would cover about 1,000 ha and would include:

- agronomic and fertilizer trials- trials at different altitudes and in different micro-climates- intercropping trials

- trials with coconuts and livestock

Trial results would be forwarded annually to the Bank.



The system used successfully in the Fourth Agricultural EstatesProject (Credit 319-IND) for quantitative assessment of work standards innew plantings would be extended to all major field operations. The inspectorswould make recommendations to MOA Support Staff (for consultation with theBank) on a suitable system. This should lead to both improvement in workstandards and to systematization and standardization of inspection reports.


Field Technology - Oil Palms

PNP X

1. The Nursery

1.1 Planting Material1.2 Nursery Organization

2. The Field

2.1 Timing of Clearing and Establishment Operations2.2 Land Clearing2.3 Establishment and Maintenance of Cover Crops2.4 Field Planting2.5 Field Operations in Immature and Mature Phases2.6 Harvesting2.7 Production and Yields




1. The Nursery

1.1 Planting Material

The planting material used would be of high yielding dura pisifera(DXP) germinated seed, produced by the PNP owned Marihat Research Station(MRS) North Sumatera. In view of the considerable difference in ecologicalconditions compared with North Sumatera, MRS would lay down at differentdensities, and record, trials of a suitable range of DXP crosses and ofE. guineensis X C. oleifera crosses ("Melanococca hybrids") in an area ofabout 75 ha which would be maintained by PNP X. Planting material require-ments would be calculated as follows:

Per ha ofField Planting %

No. of ungerminated seed 240 100No. of germinated seed 190 80No. of plantable seedlings 150 65No. of palms field planted 143 60

Because of difficulty in selecting a satisfactory nursery site, theconsultants recommended that the first nursery be established at Teluk on thebanks of the Musi River. Seed for the first nursery should be ordered inJanuary 1976 and nursery site clearing commence in August 1976 to allow fieldplanting in October-December 1977. Early investigations into a suitable sitefor a pemanent central sprinkler irrigated nursery should be made. All nur-series would be of polybags spaced at 1 m triangular requiring (including anallowance for paths and roads) 1 ha of land for 13,000 polybags. For 5,000 hafield planting the total nursery areas required would be 75 ha.

2. The Field

2.1 Timing of Clearing and Establishment Operations

The land to be cleared and planted consists largely of secondaryjungle and lalang grass. The clearing season extends for about 5 months andclearing operations should commence about 5-6 months before field plantingwhich is centered in the October-February period.

2.2 Land Clearing

The secondary jungle would be cleared by bulldozer and cutter blade,the lalang by plowing and harrowing. One bulldozer can clear 150 ha permonth. The first plowing operation would be performed by two wheel drivetractors (75 HP), the second by four wheel drive (140 HP). The two harrowing


operations would be by either two wheel or four wheel drive tractors. In a300 hour operating month (1 driver for 6 hours/day @ 25 days/month), over a5 month clearing season, 1 two wheel drive tractor is required per 100 ha tobe cleared, whereas 1 four wheel drive tractor is required per 400 ha.

2.3 Field Planting and Cover Crops

Land is gently undulating with slopes varying between 5-15O.Allowance should be made in the estimates for about 200 m/ha of soil conser-vation bunds or terraces. Leguminous cover including Pueraria triloba wouldbe sown and clean weeded for 6 months, after which light grasses would beallowed to remain in the cover mixture. Density of palm planting would be inthe range of 140-150 trees/ha.

2.4 Field Operations in Immature and Mature Phases

Fertilizer Schedule

The estimated fertilizer schedule is in Table 6.1, Annex I, SectionB2. Fertilizer recommendations would originally be based on leaf and soilanalyses using North Sumatera and Malaysian data as a guide. Leaf sampling andanalysis would be carried out by Marihat Research Station who would forwardtheir fertilizer recommendations to the PNP and also to the inspection servicesfor comment. The PNP would then forward their fertilizer requirement proposalsto the Bank for approval prior to fertilizer application. Marihat ResearchStation would set up and record a series of fertilizers and other agronomictrials as appropriate in the PNP X plantings. These trials would be maintainedby PNP X and would provide a basis for agronomic advisory work in the area.Trial results would be forwarded to the Bank at the end of each year.

2.5 Assisted Pollination

It is anticipated that assisted pollination will be necessary duringthe first 4-5 years of production. The PNP would take measures to ensurethat staff and labor are fully trained in this frequently critical operation,some 6 mohths prior to initial harvesting.

2.6 Harvesting

The inspectors would make detailed recommendations for bunchcutting, collection and harvesting systems including demarcation of harvestingblocks, development of daily working programs, organization of labor, require-ments of implements and equipment, organization of fruit reception at thefactory and training of harvesters in correct harvesting and quality standards.


Estimated yields are detailed in Table 3.1, Annex I, Section B2. Forthe purposes of planning mill capacity, the peak yield month crop is taken as12-1/2% of the annual yield.




The system used successfully in the Fourth Agricultural EstatesProject (Credit 319-IND) for quantitative assessment of work standards innew plantings would be extended to all major field operations. The inspectorswould make recommendations to MOA Support Staff (for consultation with theBank) on a suitable system. This should lead to both improvement in workstandards and to systematization and standardization of inspection reports.


Processing Technology and Estate Engineering

PTP - XI

Table of Contents

1. Rolling Stock, Agricultural and Civil Works Equipment

1.1 Inventory and Physical Condition1.2 Exploitation1.3 Five-Year Rehabilitation and Investment Program1.4 Investment Program

2. Roads and Bridges Facilities

2.1 Inventory and Physical Condition2.2 Five Year Rehabilitation Program2.3 Investment Program

3. Rubber Processing Factories

3.1 Inventory and Physical Conditions

3.11 Factories3.12 Power Plants3.13 Water Plants

3.2 Processing - Technical Methods and Results3.3 Factory Production Costs3.4 1976 to 2000 Estimated Production3.5 Five Year Rehabilitation Program (1976-1980)3.6 Project Rehabilitation Program (1976-1980)3.7 Processing Cost Assumptions

4. Coconut Processing Facilities

5. Housing


1. Rolling Stock - Agricultural and Civil Works Equipment

1.1 Inventory and Physical Condition

1.11 Rolling Stock

(a) Tables 1.1 to 1.5/1 summarize PTP XI's existing rollingstock per estate, type and age. All equipment isgenerally old and under average condition.

(b) Light Vehicles

All jeeps are of the gasoline type. There are too manytypes. "Nissens" represent 54% of the total but are theoldest (10 years old). Only 5% of the total are lessthan 5 years old. All vehicles, except the two 1974Land Rovers are under average condition.

(c) Trucks

All trucks are gasoline powered. "Nissens" and "Dodge"represent 80% of the total units. 75% of the wholeequipment is over 6 years old and 40% over 10 years(i.e. 300,000 km). There is premature decay from lackof preventitive maintenance.

(d) Wheel Tractors

IH International represents 65% of the total and MasseyFergusson 19%. 58% of all equipment is over 10 yearsold. No preventive maintenance is given.

(e) Trailers

70% of the existing equipment is over 10 years old.No maintenance is given..

1.12 Agricultural and Civil Works Equipment

(a) Crawler Tractors

Two units over 12 years old are in very poor condition.

(b) Agricultural and Civil Works Implements

All equipment is over 7 years old and totally out of order.No maintenance at all was performed. Essential spareparts have never been bought.

/1 All table references in Section A6 are to be found in Annex II,Additional Basic Data.


1.2 Exploitation

(a) Tables 1.6 to 1.8 show inter-estates comparative figuresrelating to the 1976 (up to September) results and theTable 1.9 records the 1976 cost price breakdown percategory of vehicles.

(b) Light Vehicles

On several estates the monthly mileage is very high. PTPaverage cost price is 46 Rp/km with a maximum of 70Rp/km on CISALAK BARU Estate. Cost price breakdown showsa percentage of 32% for fuel and 33% for maintenance.These high figures are directly linked with the type andthe age of vehicles.

(c) Trucks

The very low monthly mileage per vehicle (i.e. 68 km/day)probably linked with poor truck utilization (too manyunits). Average cost price (80 Rp/km) is connected tothe type and the age of trucks. Cost price breakdownindicates a percentage of 32% for fuel and 26% for main-tenance.

(d) Wheel Tractors

Too low monthly working hours (i.e. 3 hr/20 day average).The average cost price (Rp/hr) is too high and thebreakdown cost price shows a very expensive figure forthe maintenance.

(e) Tires

For all rolling stock, tire expenses are above normal.

(f) Civil Works Equipment

No figures available.

1.3 Five Year Rehabilitation Program

1.31 Rolling Stock

(a) Light Vehicles

Replacement of all units over 10 years old by purchasingnew diesel or gasoline equipment--40 units. With dieselequipment the yearly savings would be about Rp 22 million.


Actual Forecast Savings

Fuel 14 Rp/km 3 Rp/km 11 Rp/kmMaintenance 15 Rp/km 8 Rp /km 7 Rp/km

i.e. a total saving of 18 Rp/km on 1,250,000 km per year.Estimated running cost = 25 to 28 Rp/km.

(b) Trucks

Replacement of all units over 10 years old by purchasingnew diesel equipment of 5 ton capacity = 50 units. Withdiesel trucks the yearly savings will be about Rp 34 million.

Actual Forecast Savings

Fuel 25.3 Rp/km 6.5 Rp/km 19 Rp/kmMaintenance 21.0 Rp/km 12._ Rp/km 9 Rp/km

i.e. a total saving of 28 Rp/km on 1,200,000 km per year (each 50 units).Estimated running cost = 50 Rp/km for 5 ton load (10 Rp/ton/km).

(c) Trailers and Latex Tanks

5 ton trailers are required for rubber transportationpurposes from estates to central factories. 3.5 tontrailers will be utilized for crop collection insideestates. 4,500 litre and 1,500 litre capacity tanks willequip trucks as well as trainers.

1.3 Civil Works Equipment

With regard to the existing road conditions, PTP XI's needs are twokinds:

(a) Equipment for Road Rehabilitation

4 crawler tractors (type Cat. D6), 2 motor graders (70 HP) and2 pneumatic pull type rollers are compulsory to rehabilitate roadsfor good working conditions. Provision is made for two stonebreakers. Then PTP could utilize its own stone for making gravel.Road materials are very expensive in Java and important savingswill be realized with this equipment.


The two additional crawler tractors are estimated for agricul-tural purposes and their purchase will be directly linked to thereplanting program. A tire compactor is a very suitable attachmentfor rehabilitation of roads. It is pulled with a motor-grader andprevents undesirable ridge rolling.

(b) Equipment for Road Maintenance

The following simple implement is designed to work with 75 hpwheel tractors. Very good maintenance of roads can be executedwith an appropriate number of: rear grader blades for road sur-facing and front loader attachments for earthmoving. A total of10 and 5 units are estimated respectively.

1.33 Agricultural Implements

(a) Equipment for Field Upkeep

A total of 6 ploughs (3 discs) and 4 harrows (8 discs)are necessary. This equipment should be attached to the75 hp tractors. It will be required for the fieldrehabilitation program.

(b) Equipment for Field Preparation

1.4 Investment Program

The Table 1.10 shows the proposed five year investment program. Theproposed program reaches a total of Rp 766 million (US$1,827,000). Thisamount represents about US$78/ha. Some 80% of these expenses are forecastwithin year 2 and 20% within year 4.

This breakdown is justified by the PTP XI need for a decrease ofrolling stock cost per km (or hour) as soon as possible and rehabilitation ofestates and access roads within the early years of the loan.

2. Road and Bridge Facilities


Table 2.1 shows the distances between PTP XI Estates. All estateroads are in very poor condition and without any maintenance. Most of theaccess roads have an embankment of 4 m, and are already ballasted but withoutasphalt. Frequently, drainage is non-existent. Hereunder are a few typicalexamples of this road problem:

Bojong Datar Estate: Cikareo Division: 20 km roads - 3 bridges:transportation time: 2-1/2 hours.Inter-Estate roads: 12 km - unpassable


Bantar Jaya Estate: 1 large bridge destroyed (the river is crossed withsky lift): factory access road: 5 km: transpor-tation time: 1/2 hour.

Hambalang Estate: Access road from government road: 7 km - very bad.

Menteng Estate: Access road from government road: 22 km - transpor-tation time: 314 hours.

Cikasunka Estate: Roads are so poor that the four divisions ofCikasunka have their own manual RSS factory.

Regarding bridges the problem is just as serious. Most have notenough load capacity and are not maintained. Under these conditions, withoutan appropriate rehabilitation program, it seems unrealistic to proposefactory centralization, and improvement of transportation facilities.

2.2 Rehabilitation Program

Table 2.2 summarizes estate per estate, the suggested rehabilitationprogram for roads and bridges. This program reaches a total of:

250 km of "production roads" - rehabilitation at 60%100 km of "access roads" - rehabilitation at 60%16 bridges "small size" 3.5 ton - rehabilitation at 50%12 bridges "large size" 6 ton - rehabilitation at 50%5 bridges "large size" 10 ton -

Bantar Jaya Estate - 1 x 180 sq m - new bridge- 2 x 120 sq m - rehabilitation at 50%

Bojong Datar Estate - 1 x 54 sq m - rehabilitation at 30%

Hambalang Estate - 1 x 120 sq m - rehabilitation at 50%

2.3 Investment Program

Table 2.3 shows the breakdown of the investment program. Totalexpenditure shows an amount of Rp 208 million, i.e. US$501,000 and representsan expense of US$20/ha. Calculation of investment cost was made on thefollowing assumptions:

Roads

Production roads as well as estate access roads must be consideredas primary estate roads of 4 m width.

Cost price per km for a new road is Rp 475,000. If we consider thePTP roads have to be rehabilitated at 60% of the estimated average new roadcost, the cost per km will be Rp 300,000.


Bridges

An average cost price per sq m was calculated for baton bridge andsteel frames with wooden decking type. The amount of Rp 130,000/cu m wasobtained. The Rp 25 million estimated cost for the large Bantar Jaya bridge(180 sq m) originated from a 1975 contract bid.

3. Rubber Processing Facilities


3.11 Factories

Table 3.1 shows the technical data relating to the PTP XI Sheetlatex factories.

Bulking tanks. Made either in brick with concrete or in aluminium,their volume is generally too small to obtain satisfactory mixing of latexnecessary for homogenous rubber.

Coagulating tanks. The common size in use (600 liters) is rathersmall. They are generally old, partly made of fiber or wood linedwith aluminium, and designed to produce non-continuous sheets. A greatnumber of plates are not in good condition and they give a non-uniformcoagulum.

Sheet batteries. These are generally old fashioned and below averagecondition.

Buildings. Most of them have steel frames and a sheet iron roof.Except for some recent factories, all need repair.

Smoke-houses. Except for a few units, smokehouses are old and belowaverage condition. The common type is a semi-permanent construction withwooden frames and "bamboo" walls. Sheets are directly hung on bamboo sticks,without lorries. The 1975 cost for 1 smokehouse, 5 room capacity, 1.5 ton/day, was Rp 5.5 million (US$13,200).

Packing sheds and equipment. Buildings are generally too small andbelow average condition. Equipment is very old (hand press) and the operatingprocedure is not arranged to achieve efficient throughput.

3.112 Brown Crepe Factories

The existing equipment is generally set up in sheet factories(Table 3.1, pg. 3). All the equipment is in very poor condition, nearly obso-lete and does not fit the requirements of efficiency. Raw material storagefacilities are practically non-existent. Drying and sorting facilities aregenerally very old. With few exceptions, PTP use these factories for making


blankets, which are then sent to the block-rubber factory for crumbling.Because of their physical condition, it would be inefficient to include thesefacilities in a rehabilitation program.

3.113 Block-Rubber Factory

At the present time two block factories have been erected atSukamaju, capacity 10 tons/day (SIR 5L and SIR 20) and at Tandjoresmi,capacity 4 tons/day, closed since 1974 (SIR 5L and SIR 20). PTP XI alsopossesses in stock (P. Waringin) the basic equipment to erect a factory of 8tons/day. All equipment was supplied by Guthrie Pullen, set up in 1970/71 anddesigned to produce SIR 5L from field latex and SIR 20 from cup lump. Thefirst problem is the very small market for SIR 5L quality. Best returns arecurrently obtained from RSS production and in these conditions the Tandjoresmifactory is not well situated (not enough raw material). The second probleminvolves the process flow line and the equipment. There is no precleaningstage in Sukamaju and the very high drying expenses (auto-dryer L and M: 140liters of diesel/ton dry rubber). In addition, through lack of organization,the Sukamaju factory works only at 50% of its nominal capacity. Regarding thephysical condition of machinery the main question is the lack of preventivemaintenence.

3.114 Concentrated Latex Factories

Table 3.3 summmarizes the main characteristics of the basic equip-ment of the two concentrated latex plants in Pasir Waringin and Serpong.Factory layout is not up to date and international standards of quality willnever be reached. Centrifuge machines are of 1977 Alfa-Laval type. Theirphysical condition is below average except the 2 "new" second hand machinesfor P. Waringin. Normal maintenance is not performed and balancing has neverbeen done. Concentrated latex is sold on the local market contained in drums.

3.115 Pale-Crepe Latex Factory

One pale crepe latex factory is running at Serpong. Equipment isbelow average condition and will need rehabiltation.

3.116 1976 Existing Factory Capacity

Table 3.4 summarizes the factory capacity and Tables 3.5 and 3.6their geographical location.

General Comments

There are too many factories of very small capacity. On thefactory side, PTP XI resembles a smallholder operation. P. Waringin latexconcentrate plant was erected in 1973, to centralize the latex of this area.However, P. Waringin is not central, and the projected final capacity is toosmall to be really economic. Neither is the Sukamaju block rubber factory


geographically central, but this factory is in operation. Furthermore, thetotal production of lower grades never exceeds 12 tons/day for the whole PTP,and the most efficient arrangement would be to centralize all lower grades atthis place. With transport facilities well organized and strong discipline,transportation costs can be kept at a reasonable level.

3.12 Power Plants

Inventories for each estate of the existing power plant facilitiesare shown in Table 3.7. To assess general physical conditions, the best wayis normally to record the date of the last complete overhaul, and the cumula-tive running hours since this major overhaul. All engines are classifiedper make, power and age.

Comments

Equipment is really dissimilar: 89 units; three principal suppliers;MWM - 14%; Deutz 19%; Lister 18%. Some 58% of the engines are more than 10years old. A major part of the equipment needs repair. But the most importantpoint remains the setting up of a spare parts policy in relation to theequipment. To improve the situation, some engines would have to be replacedby up to date machines; but to maintain the technical efficiency of this newequipment, the implementaion of a routine program of preventive maintenance isnecessary. The very old but inexpensive water turbine system is noted.

3.13 Water Plants

The different possibilities of each estate and their equipment arelisted in Table 3.8. The most common water system supply is the very simple"gravity system".

3.2 Factory Technical Methods and Results

3.21 Sheet Factories

3.211 Method in Use

Latex is bulked, strained and diluted in bulking tanks to reachthe drc of 11-14% required for coagulation. Diiluted latex is sent intocoagulating tanks (75-100 partitions). Formic acid diluted with water isused as a coagulant at the rate of 4-6 cc/kg drc. Coagulum maturation is notstandardized: some etates practice coagulation/milling on the same daysystem; some others practice ovenight coagulation. After milling on sheetbatteries (thickness of sheets 2-3 mm), sheets are hung on bamboos and driedin smokehouses. Some estates practice overturn after the first drying day.After drying, sheets are sorted according to the Indonesian classificationstandards.


3.212 1975 General Data

% of RSS.1 - varied fom 66-93%--good results.% of cuttings - varied from 0.8-3.6%--normal.manpower day/ton - variable from 18-29 day/ton--too high (normal

average 14 day/ton) (1 day = 7 hours).drying time - 4-5 days--normal.wood consumption - 3-5 cu m/ton--normal.

3.213 Comments

Results in terms of quality are generally good regarding RSS. Per-centage labor in man/day/ton is high. Better organization and a factorycentralization program will bring improvement.

3.22 Brown Crepe Factories

Factories are very small and results unsatisfactory. Output ofequipment in kg/ton and manpower utilization in tons/day are low.

3.23 Sukamaju Block Rubber Factory

Raw material origin:

(a) Cup lump from estates - These are processed into thickblankets through 5 creping machines. The throughput ofmachines is very low as there is no precleaning stage(hammermill + washing pump).

(b) Blankets - All blankets are granulated through Guthriegranulation. Drying is performed through two Guthrie"Auto Dryers" and then the rubber is pressed into blocksof 45 kg and paletized. Technical results are average andlinked to the type of equipment.

3.24 Concentrated Latex Factories

3.241 Method

Latex is preserved in the field with ammonia at a level of 5-7 gm/kgdrc. At the factory latex is bulked and prior to transfer to the sedimenttanks, ammonia gas is added at the level of about 4 gm/kg drc. After sedimen-tation, (2-4 hr) field latex is transferred to centrifuges and concentratedup to 60% drc. Centrifuged latex is retained in storage tanks where ammoniagas is added for stabilization.

3.242 1976 Technical Data

Average efficiency is rather low: concentrate - 89/85%; serum -9-12%; losses - 2-3%.


Regarding the labor efficiency, the figures obtained are probablyinaccurate--7 mandays/ton for P. Waringin and 2 mandays/ton for Serpong.

3.3 Factory Production Costs

Table 3.10 shows the breakdown in cost price per factory for theperiod January-September 1975. Figures were not always easily available, andsometimes appear erroneous. Regarding sheet factories, considerable variationsoccurred between estates. The lowest cost, recorded at Menteng is Rp 6.44/kgand the highest at Cisalak Baru which records a cost of Rp 23.10/kg. Thelargest factory (Bojong Datar) records a cost of Rp 13.19/kg. For SIR 20block rubber, initial processing is carried out at other factories, and thetransport costs should be considered. The figure quoted for Sukamaju isRp 16.58/kg, for crumbling, drying and packing phases. Additional costs ofRp 7.13/kg for SIR 20 and Rp 1.55/kg for SIR 5L must be considered. Totalcosts are Rp 23.71/kg for SIR 20 and Rp 18.13/kg for SIR 5L. In considera-tion of the crumbling cost breakdown, it appears that 46% and 33% of thetotal cost are represented by packing (pallettes) and drying (fuel consump-tion). These figures could be reduced by an improvement (or replacement) ofthe drying equipment, and by an increase in production within the capacity ofthe plant. Besides, the PTP should look for a SIR 5L local market, withoutpaletization. Therefore the estimated cost price could be: SIR 5L -Rp 15.50/kg with packing and Rp 8.00/kg without palette (local sale); SIR 20 -Rp 19.50/kg (export). Production costs of latex concentrate are quoted as beingRp 20.95 at P. Waringin and Rp 26.50 at Serpong. One must be cautious in con-sidering these figures: Rp 10/kg (?) at P. Waringin. Compared with sheet,concentrate involves less labor but more chemicals and power. A realistic1975 production cost would be Rp 18.0/kg.

3.4 1976 to 2000 Estimated Production

3.41 Rubber Production Assumptions

3.411 PTP XI Total Production

Table 3.11 records the latest PTP XI total estimated production.Calculation has been made on the basis of 340 working days/year.

3.412 Estate Production Breakdown

Based on the first production estimates (Table 3.11), the estateproduction breakdown (Tables 3.12 and 3.14) for the 1976-80 period, includinga projection for 1986 and 1995 is given.

The basis of calculation was the following:

Working days - 312 per yearLatex production - 82% of the totalLower grades production - 18% of the totalPeak production - 11% of the monthly average production.

This assumption is based on peak monthlyproduction over the 1970-74 period.


Owing to the fact that the figure of 312 days was utilized for calculation,final production results in tons/day are very similar to those obtained fromthe new assumption (para. 3.411) based on 340 days per year.

3.413 Production Breakdown per Region

Tables 3.15 and 3.16 show the production breakdown for latex andlower-grade qualities over the 1976-80 period.

3.414 Production Breakdown Assumptions per Quality Produced

In connection with marketing estimates, it is proposed to adopt forthe future a well balanced distribution between the three main products, RSS,SIR and concentrated latex. The table hereunder shows the suggested distribu-tion from 1975 until 1995 through: (a) decreasing the RSS production; (b)increasing the concentrated latex production directly linked to the localdemand; and (c) increasing the SIR 5L and SIR 20 production.


Production Breakdown as a Percentage of Total Latex

Concentrate Total TotalYears RSS Latex SIR 5L Latex SIR 20 Total SIR

1975 76 16 8 /a 100- - - 85 15 lb 100 -

1976 79 17 4 10065 14 3 82 18 100 21

1977 79 18 3 10065 15 2 82 18 100 20

1978 69 28. 3 10057 23 2 82 18 100 20

1979 69 28 3 10057 23 2 82 18 100 20

1980 46 43 11 10038 35 9 82 18 100 27

1986 46 43 11 10038 35 9 82 18 100 27

1995 46 43 11 10038 35 9 82 18 100 27

/a SIR 5L + CR Latex + Latex compound.

/b SIR 20 + Brown Crepe.

Earth rubber and skim production, which should be examined later, is notmentioned.


3.5 Five Year Rehabilitation Program

3.51 Proposed Basic Guidelines

(a) to orientate the PTP processing facilities to West Java indus-trial manufacturing requirements;

(b) to process three main products (RSS, Concentrated latex andSIR) with a well balanced distribution (39%:35%:26%);

(c) to keep enough RSS factory spare capacity to allow a quickadjustment to the market requirements; and

(d) to centralize factories per area and per type of product.

3.52 Five Year Proposal - Final Objectives

Area 1 - remains in rubber.

Estates: Pasir Waringin (WARI), Bojong Datar (BODA),Sanghyang Damar (SHDR)

Product: RSSProposal: extension of BODA factory up to 10 tons/day

(loan fund)Consequence: WARI and SHDR factories should be closed.

Area 2 - will be converted into coconuts.

Estates: Cisalak Baru (ALAK), Bantar Jaya (BANT)Product: RSSProposal: centralization of production on BANT (PTP

funds)Consequence: ALAK factory should be closed.

Area 3 - isolated area (very close to Jakarta city).

Estate: SerpongProduct: concentrated latex (below international stan-

dards)Proposal: slight capacity extension by using the WARI

equipment (PTP funds)

Area 4 - remains in rubber.

Estates: Menteng (MENT), Hambalang (HAMA), Pasir Maung(MAUN), Klapanunggal (KLAP)

Product: concentrated latex - (international standards)Proposal: erection of a new concentrated latex factory of

10 tons/day at Klapanunggal (loan funds)Consequences: MENT, HAMA, KLAP factories should be closed


Area 5 - will be converted into coconuts.

Estates: Cimulang/Bojong Gedeh (TJAN/BOGE), Cikasungka(TJKS), Pondok Gedeh/Ciemas (PODE/TJAS)

Product: concentrated latexProposal: extension of the new Klapanunggal concentrate

plant up to 16 tons/day drc (loan funds)Consequences: TJAN, BOGE and TJKS factories should be closed.

Area 6 - remains partly in rubber (SUKA-TJIB).

Estates: Parakan Salak/Cisalak (PSKH/TSKH), CipetirTJIR), Sukamaju (SUKA), Cibungur (RJIB), PasirBadak (PABA/GASA), Ciemas (TMAS), Artana (ARTA)

Product: RSS - TJIB, PABA, TMAS, PSKHSIR 5L - SUKASIR 20 - SUKA

Proposal: extension of the Sukamaju crumb rubber factoryup to 18 tons/day (loan funds)SIR 5L - 6 tons/day (SUKA, TJIR, ARTA latex

origins)SIR 20 - 12 tons/day (11 PTP lower grades)

Consequences: SUKA (RSS), TJIR and ARTA factories should beclosed.All PTP small brown crepe factories should beclosed.

3.53 Factory Capacity - Yearly Distribution

Table 3.17 records factory capaciity per product over the 1976-80period. Table 3.18 shows the factory capacity distribution up to 2000 comparedto the PTP production.

3.54 Detailed Investment Program

Tables 3.19, 3.20 and 3.21 give the detailed investments forecastfor each factory rehabilitation or erection. The total expenditures representan amount of US$1,445,000 (US$875,000 foreign exchange). The breakdown is asfollows:

- erection of new concentrated plant 16 tons/day - US$878,000(US$54,000/ton)

- extension of RSS factory (from 4-10 tons/day) - US$308,000(US$51,000/ton)

- extension of SIR facilities (from 10-18 tons/day) - US$258,000(US$32,000/ton

3.55 Total Investment Program

Table 3.22 summarizes the total investment program and the yearlycost breakdown.


3.6 Projected Rehabilitation Program for the 1980-2000 Period

At this moment the estimated yearly production of the PTP would be:latex 62 tons/ day; lower grades 12 tons/day. The projected distribution ofproduction could be: RSS 22%; concentrated latex 36%; SIR 5L + SIR 20 42%.

Additional Processing Requirements

1984: Expansion of factory capacity:- 10 tons SIR/day in Sukamaju- 4 tons concentrated latex/day in Klapanunggal

Total 14 tons/day

Notes: Cisalak Baru factory, Pasir Badak factory and Ciemasfactory will be closed.

Cost: 14 tons x US$46,300/ton = US$650,000

1992: Expansion of factory capacity:- 2.5 tons RSS/day in Bojong Datar- 3.0 tons concentrated latex/day in Klapanunggal- 4.0 tons SIR/day in Sukamaju

Total 9.5 tons/day

Notes: Bantar Jaya and Cisalak will be closed.

Cost: 2.5 tons RSS/day in Bojong Datar @ US$60,000/ton= US$150,000 (I)

7.0 tons concentrated latex/SIR @ US$46,300/tonUS$324,100 (II)

Total (I) + (II) US$474,100

3.7 Processing Cost Assuumptions

Tables 3.23 and 3.26 show the processing cost assumptions per productover the 1976-2000 period.

4. Coconut Processing Facilities

According to the planting program schedule, no investment is fore-cast for the 1976-80 period. For the time being a provision of US$500,000should be made to cover the 1980-96 period investments.


5. Housing

5.1 Numerical breakdown of PTP XI staff and labor

As an indication, Tables 5.1, 5.2 and 5.3 provide the existingnumber of staff and workers on the PTP. The hierarchal distribution is asfollows:

Directors, Managers, MonthlySenior Staff Staff Workers Workers Total

Number 44 200 1,167 11,334 12,745Percent 0.34 1.57 9.16 88.93 100.0

Manpower/l,000 ha 1.8 8.0 47.0 453.0 510.0

5.2 Estate Housing


Table 5.4 indicates roughly the existing housing facilities forstaff and workers. Accommodation for most staff and labor is still very farbelow acceptable standards.

5.22 Proposed Rehabilitation Program

Assumptions are based on the minimum number of laborers requiredper ha.

5.221 Rubber Project

(a) Workers

- minimum labor - 0.3 laborers per ha

- labor distribution 0.2/ha for tapping (should be resident) and0.1/ha for upkeep

- 0.2 laborer/ha represents 1 labor house per 5 ha

With the assumption of 1.5 laborers/house the requirement will be 1 singleunit house per 7.5 ha or 1 double unit house per 15.0 ha. For the projected10,000 ha of rubber the total double unit houses would be 666.

(b) Mandors

The basic figure is 1 mandor per 25 workers. In this condition therequirement of mandor double unit houses is 40.


5.222 Coconut Project

(a) Workers

- minimum labor : 0.2 laborers per ha- labor distribution: 0.1/ha for harvesting (should be resident)

and 0.1/ha for upkeep- 0.1 laborer/ha represents 1 labor house per 10 ha- 1 labor/house can provide 1.5 laborers or 1 double unit per 30 ha.- The coconut project is a total of 4,200 ha, i.e. 140 double unithouses and 14 mandor double unit houses.

5.3 Bogor Project

For efficiency, headquarters should be transferred from Jakarta toBogor. This problem is very complex and should be examined in detail. A veryrough calculation of the expense involved has been made. Table 5.5 shows theyearly investment, breakdown and the total investment.


WORLD PRODUCTION AND EXPORTS OF PALM OIL

1. During the sixties, palm oil production grew at roughly the samerate (3.1%) as the production of all fats and oils. Since 1970, the growthrate of palm oil production accelerated more than 11% a year, compared with anannual growth rate of 4.2% for all fats and oils. This steep increase in thegrowth of the palm oil industry reflects the rapid expansion of oil palmplantings in Malaysia and Indonesia. During the late fifties, about two-thirdsof the world's palm oil output was produced in Africa: two countries, Nigeriaand Zaire, then supplied more than half of the world's palm oil. Althoughstill major producers, the combined share of these countries in the output ofpalm oil dropped by 1974 to about 30%, slightly less than Malaysia's share./lFrom 1965-69 to 1970-74, Malaysia's production of palm oil grew at an averageannual rate of 25%. Though Malaysia is now the world's leading producer ofpalm oil, the decline in West African palm oil production has recently beenreversed, as rising per capita demand for fats and oils has led to largeinvestments in oil palm in several West African countries.

2. World output of palm oil is expected to grow at an average rate ofabout 7% a year during the period 1977-85. Most of this expansion is theresult of plantings during the sixties which are now reaching maturity. Thereal price of palm oil is expected to decline from its current high level.Although the projected price will be well above the production costs of effi-cient producers, it will not cover the production costs of marginal producers(independent smallholders and producers from wild groves). A decline in palmoil prices, and a strengthening of the markets for natural rubber which competesfor land with oil palms in Southeast Asian producing countries, could slow thepace at which Malaysia and Indonesia expand their oil palm acreage in thelatter part of the forecasting period. Overall, palm oil production is likelyto expand at a slower rate (5.1% a year) between 1980 and 1985. Malaysia willaccount for a major part of the projected increase in output because of itsextensive recent plantings of high-yielding varieties. A smaller yet signifi-cant increase in output is expected to come from Indonesia. In West Africa,the Ivory Coast will be the leading producer.

3. World exports of palm oil followed roughly the expansion patternof palm oil production; they grew at an average rate of 2.8% a year between 1960and 1970, slightly below the 3.2% growth rate estimated for palm oil production.Towards the end of the sixties exports began to pick up, reaching an averageannual growth rate of 18.5% between 1970 and 1975. Malaysia, Indonesia and theIvory Coast accounted for most of the rapid expansion of palm oil exports.

4. An increasing share of the palm oil produced in West African countriesis consumed domestically. Between 1955 and 1974, palm oil exports from WestAfrican countries dropped by 60%. The drop was particularly evident in thecase of Nigeria, whose market share fell from over 30% during the late fifties

/1 Civil disorders were a major factor behind the decline in palm oil productionin these two countries. Production was disrupted in 1964-67 in Zaire and in1967-69 in Nigeria.


to less than 1% in 1974. The decline in exports largely reflects the shortfallin Nigerian palm oil production during the civil war years and its slow recovery,paired with steadily rising domestic demand for edible oils.

5. Increasing consumption of palm oil in producing countries, mainlyin Indonesia and West African countries, is expected to slow down the expansionof palm oil exports. We project that palm oil exports will grow at an averagerate of 11% between 1975 and 1980; the growth rate will decline to 9% between1980 and 1985. The share of palm oil in world trade of fats and oils willincrease from 6.0% during 1967-69 to a size closely approaching that of soybeanoil - 17.5% in 1980 and 23% in 1985.

PALM OIL IN THE FATS AND OILS MARKET /1

6. Per capita consumption of fats and oils depends largely on incomes.In several developing countries annual per capita consumption is less than5 kilograms. In most developed countries it ranges from 25 to 30 kilograms.Statistical analysis of the fats and oils consumption pattern shows that demandincreases rapidly with incomes at low income levels. At high income levels -roughly those now reached in the United States and some European countries -the demand responsiveness of fats and oils to increases in income levels off atabout 30 kilograms per capita.

7. Regional consumption patterns of fats and oils generally reflectregional production patterns and natural storage conditions. Economic protec-tion and lower transport costs play an important role in the preference forlocally produced fats and oils. In temperate zones, soybeans, cottonseeds andsunflowerseeds supply most of the oils needed in the manufacture of margarine,shortening, and other fat products. In tropical and semitropical zones,coconut oil and palm oil dominate vegetable oil consumption.

8. Between 1960 and 1975 more than half of palm oil output has beenconsumed in producing countries. About 90% of palm oil exports go to developedcountries. Germany, the Netherlands and the United Kingdom account for almost60% of world palm oil imports. While the shares of the three EuroDean countriesdeclined slightly during the past two decades (1955-75), that of the US hastripled over the last ten years.

9. The growing demand for palm oil in the United States largely reflectsmovements in relative prices. The use of vegetable oils in consumer productshas increased at the expense of animal fats, as the latter's relative prices

/1 The term "fats and oils" is used in this annex for all fats and oilsgenerally classified as "edible/soap fats and oils"; these include soybeanoil, sunflower seed oil, groundnut oil, cottonseed oil, rapeseed oil, oliveoil, coconut oil, palm kernel oil, palm oil, fish oil, butter, lard andtallow. In recent years, their combined production accounted for about 95%of the total production of all major fats and oils.


rose, and the price of palm oil declined, relative to those of other vegetableoils. About 85% of the palm oil the US uses for edible purposes is utilized inthe manufacture of shortening, and only a small proportion is used for margarine.(In the United States, shortening production exceeds margarine production.) Inrecent years, the trend has been towards increased consumption of shorteningat the expense of lard. In addition, shortening made only from vegetableoils has gained at the expense of shortening containing both animal fats andvegetable oils, a shift which is likely to continue, mainly because of theincreasing awareness of the health risk associated with consumption of fats andoils containing a high percentage of saturated fatty acids.

10. An important distinguishing feature of fats and oils is the degreeto which their fatty acids are saturated. Oils with a high percentage ofunsaturated fatty acids - soybean oil, for example - are generally liquid atroom temperature in temperate climates, and are thus called "soft" oils. Oilsor fats with a large proportion of saturated fatty acids, such as palm oil, areusually solid or semisolid. In general unsaturated fats and oils are used forthe manufacture of liquid fat products (salad and cooking oils). Saturatedfats and oils are the main ingredients in the manufacture of hard fat products,such as margarine, shortening and soaps. Though previously palm oil was onlyused for industrial purposes, improved fractionation techniques now allow it tocompete with other fats and oils in the manufacture of margarines, shortenings,cooking fats, salad oils, confectionary and ice cream. However, soft oilscan be hardened through hydrogenation, and this has expanded the range of fatsand oils that can substitute for palm oil and other hard (saturated) oils inthese end uses. Dehydrogenation, the transformation of saturated fatty acidsinto their unsaturated form, has not proven economic.

11. Though technically most fats and oils are interchangeable, costsof refining and specific end-use requirements limit the range within whichindividual fats and oils are actually interchanged. The need for certainchemical components (e.g. fatty acids) or certain physical properties (e.g.flavor, color, smell, melting point) in a specific end-use gives the oil or fatwhich has these components or properties a competitive adantage over otherfats and oils in that end-use ("specific demand")./l Thus each oil or fatfaces two distinct markets: first, the market in which it has a qualitativeadvantage over other fats and oils; and second, the market in which it competesdirectly with other fats and oils. The size of the first market of a fator oil varies with the demand for the end products which need its specialproperties. The demand for this oil or fat in the first market is less priceelastic than the demand in the second market. In the first market, pricesreflect the relative strength of demand and supply for the individual oilrather than the market situation for all fats and oils.

/1 Substitution between individual fats and oils is impossible if the endproduct requires a certain fatty acid. Interchangeability is also limitedby consumer tastes and preferences; examples are olive oil and groundnutoil which are marketed predominantly in their pure form because consumersprefer their flavor.


12. Unlike other hard oils, such as coconut oil and palm kernel oilwhich have a large distinct market because of their lauric acid content, palmoil has no physical or chemical properties which give it a qualitative advantageover other fats and oils in current end-uses. Because there is no specificdemand for palm oil, its price depends on the overall situation for all fatsand oils. Palm oil prices are most highly correlated with those of otherlow-priced fats and oils - fish oil, tallow and lard - and the medium-pricedoils, mainly soybean oil and sunflower oil, which are widely used in themanufacture of margarines and shortening. Palm oil's only effective competitorin the "inedible" market, tallow, is traditionally cheaper than palm oil, whichgives tallow a competitive advantage in three major markets: the soap industry,the chemical industry and the animal feed industry.

13. The past decade saw a significant shift in the consumption of fatsand oils away from animal fats and oils to vegetable oils. Among the vegetableoils, the demand for soft oils (soybean oil, cottonseed oil, sunflower oil,etc.) has expanded more rapidly than the demand for hard oils (palm oil,coconut oil, palm kernel oil). This trend is expected to continue. By 1985the share of vegetable oils in total fats and oils consumption will reach morethan 70%. Continued strong demand for soft oils combined with growing suppliesof hard oils will exert increasing pressure on prices for palm oil and otherhard oils. According to Bank projections, world demand for all fats and oilswill rise to 51.7 million tons in 1980 and 57.4 million in 1985. Demand forvegetable oils, which has grown at an average rate of 4.2% between 1960 and1975, is expected to reach about 37 million tons in 1980 and 41 million tons in1985. In spite of the advantage of the soft oils, palm oil enjoys a competitiveedge over them because of its low production costs. This is a strong economicforce which will continue to attract investments in this crop.

14. During the past decade world production of animal fats and marineoils has expanded more slowly than the production of vegetable oils. Within thegroup of vegetable oils, soybean oil and palm oil showed the steepest increase.On the basis of past production trends, world supply of all fats and oils in1985 is expected to reach 58.3 million tons. Almost one-fourth of the totalsupply will come from soybean oil, about 10% from palm oil. The total share ofvegetable oils (hard oils and soft oils combined) will be 70%, that of animalfats and marine oils, 30%.

15. In many of the developed countries, at present the main market forexports of palm oil, per capita consumption of fats and oils is graduallyapproaching a saturation level, and no large increase in overall demand islikely unless new products and end-uses are developed. However, since itsprice is expected to remain lower than those of its main competitors in shorten-ing, and will continue to fall relative to that of soybean oil in particular,demand for palm oil is likely to benefit from the growth in shortening consump-tion.

16. As the potential for expanding consumption declines in developedcountries, an increasing share of the world production of fats and oils willhave to be marketed in developing countries. Demand for vegetable oils in


these countries is expected to rise steadily over the next ten years. Parti-cularly marked increases in the demand for palm oil are expected in Nigeriaand Indonesia, both exporters at present. Palm oil has a major advantage overmost other fats and oils - it is comparatively inexpensive /1 - and to someextent it will replace coconut oil both for edible purposes and in the manufac-ture of soaps. The greatest scope for substituting palm oil for coconut oil indeveloping countries is in cooking oil. To obtain a product likely to beacceptable to consumers (who traditionally prefer coconut oil for cooking),palm oil has to be fractionated, and the crude liquid fraction (palm olein) hasto be refined (de-oderized, de-colorized, and the fatty acids removed) and theneither blended with coconut oil or flavored with coconut oil taste. In therefining process many of the nutritional advantages of palm oil, such as itshigh content of vitamin A, are lost.

PRICES /2

17. Although prices for fats and oils fluctuated widely during thepast two decades (1955-75), they displayed no clear trend. Price fluctuationsreflect simultaneous increases or shortfalls in production and exports of majorfats and oils. They are usually related to changes in the normal weatherpattern (typhoons that affect coconut harvesting in the Philippines, a droughtthat reduces soybean yields in the United States, etc.). The sudden increaseof fats and oils prices during 1973-74 was mainly the result of simultaneousproduction shortfalls in coconut oil and groundnut oil.

18. We project a decline in real prices of fats and oils during 1977-80.The major assumptions underlying this projection are:

(a) An oversupply of fats and oils caused by:

(i) the rapid acreage expansion of oil-bearing tree cropsin recent years; and

(ii) the growing demand for oilseed meals.

(b) A weakening of the markets for fats and oils in developed countries,where per capita consumption approaches the saturation level. Demandfor fats and oils in these countries is likely to come mainly fromthe development of new products or end-uses and from populationgrowth.

/1 Food aid from developed countries, such as that from the United Statesunder P.L. 480, could make this price advantage ineffective. Subsidizedsoybean oil exports severely limit the market potential of palm oil (eitherdomestically produced or imported) in receiving developing countries.

/2 The "price" of fats and oils refers to the weighted average prices forfats and oils.


(c) Conservative assumptions of overall real income growth in consumingcountries.

19. For the 1980-85 period, a slight rise in real fats and oils pricesis projected, on the assumption that producers will reduce plantings in responseto declining prices during the first half of the decade and that developingcountries will absorb an increasing share of the total output of fats and oils.

20. The level of palm oil prices relative to those of other fats andoils depends on the share of palm oil in total fats and oils exports. Theeffect of increased supply on palm oil prices is aggravated by the fact thatthe market for soft oils expands faster than the market for hard oils (coconutoil, palm kernel oil, palm oil). Although it is physically possible to substi-tute hard oils for soft oils, the costs of dehydrogenation are high, and therapidly growing output of hard oils can be marketed only at lower prices thanthose of soft oils. We project, therefore, a price differential of about 20%by 1985 between palm oil and its main competitor, soybean oil. Soybean oilprices (in 1975 constant US dollars) are projected at US$478 per ton (c.i.f.European ports) in 1985, whereas palm oil prices are projected at US$386 forthat year. The declining trend of relative prices for palm oil (and otherhard oils) could be reversed through: (a) a reduction in refining costs(easing the interchangeability of these oils with the soft oils in knownend-uses); and (b) the development of new end-uses.

PRODUCTION CHARACTERISTICS AND REFINING OF PALM OIL

20. Palm oil is extracted from the fresh fruit bunches (ffb) of theElaeis Guineensis palm tree. The economic exploitation of oil palm is limitedto a belt within 10 degrees latitude around the equator. The highest yieldsare obtained when the oil palm is planted on alluvial clay soil wi.th a well-distributed rainfall of not less than 70 inches per year combined with 2,000-2,200 hours of sunshine per year. These conditions are generally found inSumatra, East and West Malaysia, and Papua New Guinea; and consequently oilpalm acreage expanded more rapidly in these countries than anywhere else in theworld.

21. A major factor for the expansion of oil palm acreage in SoutheastAsia was the weakening of the market for natural rubber caused by increasedsupplies of synthetic rubber. Where soil and climatic conditions were suitable,rubber was replaced by oil palms.

22. Oil palms produce more oil per unit of land than any other oilseedcrop. Their fruit contains two oils: palm oil and palm kernel oil (thelatter is extracted from the seed). The trees' economic life lasts about 30years. They produce their first crop during the third year after planting andreach peak yields (2.0 tons per acre) between the eighth and tenth year; fromthen on yields decline gradually (at about 2% per year). Plant breeders arecurrently developing a new selection by crossing the Elaeis Guineensis (Africanoil palm) with the South American Elaeis Oleifera (Melanococca). This newselection produces more oil with a larger share of polyunsaturated fatty acidsthan the traditional Dura x Pisifera varieties.


23. The harvesting of the ffb is the most important factor for the qualityof the extracted palm oil. The ripeness of the harvested bunches affects theoil yield as well as its level of free fatty acids (FFA). The objective isto achieve the highest possible oil yield at the lowest possible FFA content.In practice, these aims are conflicting because the riper the fruitlets areon a palm bunch, the more easily they become bruised, and this in turn causesan increase in the FFA content.

24. The formation of FFA in the fruit starts with the destruction of thecells which contain, in addition to oil, lipolytic enzymes. The acidificationis limited to the cells destroyed and it is most active during the few minutesimmediately following the harvesting of the ffb. The near-maximum fatty acidcontent is reached within 40 minutes. It is therefore of utmost importanceto avoid bruising of the ffb.

25. The supply of palm oil is highly inelastic / because harvesting willcontinue even if palm oil prices should fall below variable costs./2 There aretwo main reasons: (a) producers have few alternative production possibilitiesshort of uprooting the palms;/3 and (b) they would have to collect the ripe ffbanyway, to prevent the occurrence of pests and diseases in oil palms caused byoverripe and rotting fruit. The decision to extract the oil will dependlargely on the direct operating costs of the mill and the marketing costs forthe end products (palm oil, palm kernel oil, and the palm kernel cake).

26. Palm oil is marketed as crude palm oil, Special Prime Bleach (SPB)palm oil, crude liquid and solid fractions, neutralized, neutralized bleached,neutralized liquid and solid fractions, as fully refined palm oil, and in theform of packed products such as vanaspati or cooking oil. These products arethe final products of the various stages of the palm oil refining and fraction-ation process. The refining process can be interrupted at any stage. This hasdiverted an increasing share of crude palm oil exports into domestic oil marketsand the exports of semi-refined products.

27. The objective of palm oil fractionation is to separate its liquidand solid components. Physical or chemical methods are used. Physical methodsachieve a separation through cooling of the palm oil. The temperature of the

/1 This statement refers mainly to palm oil produced on estates. The supplyfrom independent smallholders working at the fringe of oil palm estates orcollecting fruit in wild groves is more price-elastic; these producersusually have a wider range of employment opportunities than producers onsmallholder estates, and they are also less concerned about the danger ofplant diseases caused by rotting fruits.

/2 Variable costs include the cost of picking the ffb, the cost of transportingthem to the processing plant, and the cost of palm oil extraction.

/3 Intercropping is only possible during the first two years before the canopyof the oil palm closes. Lack of sunlight makes intercropping after thatimpossible.


oil is reduced until the solid component (stearin) crystallizes in perfectsuspension in the liquid component (olein). The crystallized oil is thenpumped in a continuous vacuum filter equipped with a stainless steel perforatedbelt. The crystallized stearin is scraped from the belt which is heated andthen conditioned to filtration temperature; the olein drips thorugh theperforations in the belt./1 Physical methods yield between 60 and 75% of palmolein with a melting point below 18 degrees centigrade, and between 40 and 25%of palm stearin with a melting point between 40 and 50 degrees centigrade.Chemical fractionation uses a solvent (hexane) that dissolves and combineswith the more unsaturated (liquid) palm oil components. The solution is thencooled and crystallized. The solid phase floats on top of the combination ofsolvent and liquid phase. The two layers are separated by pouring the liquidphase into a separate container. The solvent is recovered from the liquidphase through evaporation. Chemical fractionation yields a larger share ofpalm stearin compared to physical fractionation./2

28. The liquid fraction (palm olein) contains more unsaturated fatty acidsthan the solid fraction (palm stearin). Palm olein is therefore mainly used as acooking oil, frequently blended with other oils (coconut oil, groundnut oil, etc.).The solid palm oil fraction can be further processed into shortening, baking fat,vegetable ghee (vanaspati), or soaps./3

THE INDONESIAN FATS AND OILS ECONOMY

Coconut

29. Coconut has traditionally been the major source of vegetable oilin Indonesia. In rural areas, coconut oil is extracted through boiling of thefresh coconut meat. The oil is usually referred to as klentek oil. It isestimated that slightly more than half of Indonesia's coconut production isconsumed directly, either as fresh nuts or processed into klentek oil./4 Theremainder is processed into copra for export or domestic oil extraction.

/1 To improve the stability of the fractions, the crude oil is usually neutral-ized and pre-bleached before fractionation.

/2 Because the various fractionation processes yield liquid and solid phasesin different proportions, its choice depends largely on the expectedprices of the two main outputs, olein and stearin. At present the marketfor palm olein is considerably stronger compared to that for palm stearin.This gives physical fractionation a competitive edge over chemicalfractionation.

/3 The poor lathering properties of palm oil compared to coconut oil limitthe demand for palm oil in this end-use.

/4 Household surveys indicate that approximately one-third of the coconutsconsumed directly by households were processed into klentek oil; theremaining two-thirds were consumed as fresh coconuts.


30. In recent years the domestic copra processing industry has claimedan increasing share of the domestic copra production. Copra exports declinedsharply with the expansion of domestic copra processing capacity (Table 1).The bulk of the copra production was processed, in the past, on the OuterIslands, Indonesia's main coconut producing region. The coconut oil wasshipped to Java, the main consuming area. This pattern changed with theexpansion of copra processing capacity on Java.

Table 1: COPRA PRODUCTION AND EXPORTS IN INDONESIA, 1961-74

Year Copra Production Copra Exports Share of ProductionExported

…------------ 1,000 MT ------------- -------- % --------

1961 733 273 37.21962 720 201 27.91963 692 136 19.71964 527 191 36.21965 548 126 23.0

1966 598 175 29.31967 562 140 24.91968 712 260 36.51969 715 200 28.0

1970 748 185 24.71971 730 77 10.61972 762 42 5.51973 660 45 6.81974 720 2 0.3

Source: FAO.

31. Coconut production has grown at an average annual rate of 1.4%between 1955 and 1974. This low growth rate is largely due to the substantialshare of over-aged trees, low yields and a slow expansion of the area undercoconut. The Bank's staff projects that coconut production will grow atpast growth rates during the remainder of the seventies. Alarmed by thewidening gap between supply and demand for vegetable oils and the potentialthreat of a decline in the earnings of coconut farmers, the Government hasembarked on an ambitious coconut replanting scheme. Although the impactof this scheme will not be felt until the eighties, the average annual growthrate of coconut production is projected to increase to 4.4% between 1980 and1990.


32. Coconut is largely a smallholder crop. Although the share of coconutestates has increased slightly, their share in Indonesia's total coconut pro-duction is currently only about 1% (Table 2).

Table 2: COCONUT PRODUCTION BY SMALLHOLDERS AND ESTATESIN INDONESIA, 1970-74

Smallholder Estates TotalYear Production Share Production Share Production

(1,000 MT) (%) (1,000 MT) (%) (1,000 MT)

1970 1,198.9 99.3 8.8 0.7 1,207.71971 1,273.9 99.3 8.9 0.7 1,282.81972 1,248.7 99.2 10.1 0.8 1,258.81973 1.274.4 99.0 12.5 1.0 1,286.91974 1,352.5 99.0 13.0 1.0 1,365.5

Source: Statistik Indonesia (Biro Pusat Statistik, Jakarta).

33. In general, coconut yields reflect the age distribution of thetrees and the weather conditions during the year before harvesting. Since1966, the area planted with coconut has expanded steadily, at an average rateof 4.2% per year. Yet, during the same period (1966-75), coconut productionincreased only at an average annual rate of 2.3% (Chart 1). Average coconutyields declined at an annual rate of 1.8% (Chart 2). This decline in yieldsreflects mainly the advanced age of the major portion of Indonesia's coconuttrees. Since coconut trees reach their productive stage not until five to tenyears after planting, new plantings during the late sixties will affect averageyields during the remainder of the seventies. Whether the downward trend ofyield will be reversed depends on the overall age distribution of trees and theyield pattern of the coconut trees planted during the past decade. The Govern-ment plans to replant existing coconut trees with hybrids, which would raiseannual potential yields from the current average of 700 to 5,000 kg of copraper hectare.

34. The Bank's staff projects an increase in Indonesia's coconut produc-tion from 1.366 million tons (copra equivalent) in 1974 to 2.3 million tons in1990. This corresponds to an average annual growth rate of 3.3% for the periodbetween 1974 and 1990. Coconut production will grow initially at a slower rate(1.5% per year) mainly because of the large number of trees which will becomenonproductive and the new plantings which will not have reached their fullproduction potential. Between 1980 and 1990 coconut production is projectedto expand at an average annual rate of 4.4% climbing to 2.3 million tonscopra equivalent. The more rapid growth in coconut production reflects both anexpansion in the area under coconut and improvement in average coconut yields.


Palm Oil

35. Faced with a rapidly growing demand for fats and oils - mainlybecause of population growth and increasing per capita incomes - and theprospects of a slowly expanding coconut industry, the Government looks at oilpalm as a major source of vegetable oil to meet the domestic needs for fats andoils. Although it is generally argued that the Indonesian consumer prefers theflavor of coconut oil to that of other oils, modern refining techniques,particularly fractionation, have made palm oil products acceptable to theIndonesian taste.

36. Unlike coconuts, oil palm is largely an estate crop in Indonesia.At present, public sector estates account for about two-thirds of the outputof oil palm products (palm oil and palm kernels), the remaining third comesfrom private estates. Most of these estates are located in North Sumatera,where soil and climatic conditions are suited ideally for oil palm cultivation.Since the early sixties, palm oil production has grown at an average annualrate of 7.7% a year. The combined output of palm oil and palm kernel oil isprojected to reach 1.2 million tons by 1990. This corresponds to an averageannual growth rate of 7.3% for the period 1975-1990. This projection takesinto account the age distribution and planting material of existing oil palmand available information on expected plantings of public sector and privateestates (Table 3).

Table 3: SUPPLY AND DISPOSITION OF,MAJOR EDIBLE OILSIN INDONESIA, 1970-90

Item 1970 1975 1980 1985 1990

…--------------------------- 1,000 MT ------------------------------

Total Supply 693 965 1,330 1,782 2,143Palm oil 214 404 695 986 1,164Palm kernel oil 23 38 65 89 104Coconut oil 456 523 570 707 875

Exports 300 462 445 592 573Palm oil 159 386Palm kernel oil 20 30Coconut oil 121 46

Domestic Disappearance 393 503 885 1,190 1,570M---------------------------- Million ----------------------------

Population 118 133 155 176 197--------------------------------- kg ---------------------------------

Per Capita Disappearance 3.3 3.9 5.7 6.8 8.0

Source: FAO (1970, 1975); IBRD (1980, 1985, 1990).


37. Indonesia exported in the past approximately 85% of its palm oiloutput. The small portion of Indonesia's palm oil production which was consumeddomestically has been processed into soaps, detergents and edible fat products(margarine, shortening and baking fat). According to Bank staff projections,Indonesia's total demand for fats and oils /1 will increase from an estimated660,000 tons in 1976 to 1.6 million tons in 1990. This projection reflectsthe growth in per capita incomes, which will raise per capita fats and oilsconsumption from about 5 kg in 1976 to 8 kg in 1990, and the overall increasein population. If the supply and demand projections shown in Table 3 material-ize, then Indonesia will increase its net exports of fats and oils only margin-ally between 1975 and 1990./2 The growing domestic demand for fats and oilswill require either substantial imports or a reduction in the share of the palmoil production which is exported.

38. Although several studies of the Indonesian fats and oils marketfound that consumers prefer coconut oil over other fats and oils, these studiesconcluded also that palm olein (the liquid portion of fractionated palm oil),blended or flavored with coconut oil, could fill the gap left by decliningcoconut oil supplies. At present, Indonesia has a fractionation capacity of24,000 tons of palm oil. Current investment plans indicate that Indonesia willboost its fractionation capacity to 108,000 tons by 1978. Assuming that thecapacity is used fully, the fractionation plants will yield 70,200 tons oflow-melting palm olein and about 37,000 tons of high-melting palm stearin. Thepalm olein will be used domestically, mainly as cooking oil. The domesticmarket for palm stearin, which is mainly used as an ingredient in the manufac-ture of margarine, shortening, baking fat, ghee and soaps, is considerablysmaller compared to that for cooking oil. It is likely that part of the stearinwill have to be exported. The further expansion of Indonesia's fractionationindustry will depend largely on the costs of palm olein relative to the pricefor coconut oil. Because palm olein is recovered jointly with palm stearin,the domestic price for olein will be strongly affected by the market prospectsfor stearin.

/1 The total demand for fats and oils includes, in addition to the threemajor oils shown in Table 3, several minor fats and oils (groundnutoil, corn oil, etc.).

/2 Indonesia's projected exports of palm oil, palm kernel oil and coconutoil would amount to about 2.3% of projected world trade in all fats andoils by 1990.


Technical Assistance to Ministry of Agriculture in Project PlanningImplementation, Monitoring and Evaluation

Specialist in Project Preparation, Planning and Evaluation

Terms of Reference

Background

The Directorate General of Estates in the Ministry of Agricultureis responsible for the execution of several ongoing, large scale, smallholdertree crop projects, involving rubber, tea and oil palms. A major increase inthis program is planned for the near future. Accordingly, the Government ofIndonesia intends to improve the operating capacity of the Directorate Generalof Estates in relation to the large program ahead. Specifically, a majoreffort would be made in the spheres of project preparation, program planning,implementation, monitoring and evaluation and for this purpose, the DirectorGeneral of Estates wishes to recruit internationally, experienced specialistsin (i) project preparation, program planning and evaluation; and (ii) projectfinancing, administration, monitoring and evaluation. The specialists would belocated in the office of the Director General of Estates, Jakarta, but wouldhave to spend considerable periods in the field guiding and assisting fieldproject staff. They would be responsible to the appropriate Directors withinthe Directorate General. The positions would be financed through arrangementsbetween the Government and World Bank and the terms and conditions of employmentwould be subject to Government and Bank agreement.

Experience and Qualifications

1. As a minimum an honors degree or equivalent in agriculture froma recognized University.

2. A minimum of 10 years experience in tree crop tropicalagriculture.

3. A minimum of 3 years in project identification and preparationand in development planning.

4. Demonstrated ability in training staff in project preparation.

Duties

To assist the Directorate General of Estates in the following:

1. Planning the development programs for the smallholder estatesector.


2. Project reconnaissance, identification and preparation.

3. Preparation of project feasibility reports in a form suitablefor presentation to Government or external donors for financing.

4. Organizing the work of the project preparation teams.

5. Preparation and execution of formal training programs for theproject preparation staff.

6. Development of project organizational management and evaluationsystems suitable for Indonesian conditions.

7. Maintenance of close links with BAPPENAS, the National PlanningAgency, to ensure that project formulation is in line withGovernment policy.

8. Settler Administration. Guidelines for settler selection andrecruitment, settlement planning and supervision, preparationof agreements for settler participation, arrangements forallocation of land titles, settler training guidelines andmaterials, evaluation of settler development performance andprogress.

9. Physical and Crop Development. Planning and preparing develop-ment schedules. Procurement of inputs for food crop programs.Planning, surveying and demarcation of farm areas, villages androads. Preparation of settler training materials and technicalguidelines (in cooperation with the Nucleus Estate developmentcontractor and with the extension agents of the ProvincialGovernment).

10. Crop Exploitation. Planning for tree crop exploitation, process-ing and marketing. Arrangements for marketing food crops.


Technical Assistance to Ministry of Agriculture in Project PlanningImplementation, Monitoring and Evaluation

Specialist in Finance Procurement and Administration

Terms of Reference

Background

The Directorate General of Estates in the Ministry of Agricultureis responsible for the execution of several ongoing, large scale, smallholdertree crop projects, involving rubber, tea and oil palms. A major increase inthis program is planned for the near future. Accordingly, the Government ofIndonesia intends to improve the operating capacity of the Directorate Generalof Estates in relation to the large program ahead. Specifically, a majoreffort would be made in the spheres of project planning, implementation, monitor-ing and evaluation and for this purpose, the Director General of Estates wishesto recruit internationally, experienced specialists in (i) project preparation,program planning and evaluation; (ii) smallholder agriculture (with emphasis onrubber), and smallholder development and performance evaluation; (iii) projectfinancing, administration, monitoring and evaluation. The specialists wouldbe located in the office of the Director General of Estate, Jakarta, but wouldhave to spend considerable periods in the field guiding and assisting fieldproject staff. They would be responsible to the appropriate Directors withinthe Directorate General. The positions would be financed through arrangementsbetween the Government and World Bank and the terms and conditions of employ-ment would be subject to Government and Bank agreement.


1. Qualified in accounting with at least 10 years experienceincluding both commercial accounting and public administration.

2. Experience in the financial operations of smallholder develop-ment projects preferably in conditions similar to Indonesia.

3. Experience as a procurement officer for at least five years.

Duties

1. To assist the Directorate General of Estates in (i) guidance tofield staff in financial operation; and (ii) in overall planning,management and control of the financial and administrative opera-tions of large scale projects. Specifically the specialist wouldbe responsible for:


(a) development of suitable project financing, auditing andaccounting procedures;

(b) supervision of preparation of budgets, accounts, financialstatements and inventory records;

(c) budget and inventory control and internal audit;

(d) procurement supervision and coordination, including thepreparation of procurement documents;

(e) advice upon the provision of clerical and supportstaff services.


Technical Assistance to Ministry of AgricultureSupport Staff for Agricultural Enterprises

Advisor in Investment Appraisal and Planning

Terms of Reference

Background

The public sector estates industry in Indonesia comprises 650,000 haincluding rubber, oil palm, sugar, tea, coffee, cocoa, tobacco, pines andseveral fiber, spice and medicinal crops organized in 30 estate groups. Thesecrops are grown under a wide range of ecological conditions but are concentratedin North Sumatra, West and East Java. The estates were badly maintained duringthe serious political and financial difficulties of the early and mid-sixtieswith an inevitable decline in estate conditions. Since 1968 however, successiverehabilitation programs have been initiated and steady progress in physical con-dition and technical method has been accomplished. The stage had been reachedwhere it is now opportune to devote much more attention to: overall developmentpolicies, corporate business objectives such as evaluation of investment proposals,coordination of investments between estate groups, improvement of financial manage-ment, strengthening marketing organization and to centralization of specialistadvisory services. Accordingly, the Government of Indonesia intends to recruitinternationally, a number of specialists, to assist the Support Staff of theMinister of Agriculture or its successor in the operation of this estate industry.The specialists would be located in the Support Staff Headquarters (or that of itssuccessor) and would be responsible to the Assistants for Production/Developmentand Marketing/Finance. The positions would be financed through arrangementsbetween the Government of Indonesia and the World Bank, and terms and conditionsof employment would require the agreement of the Government and the Bank.


1. A well qualified accountant with at least 5 years experience atsenior management level, preferably in investment and merchantbanking.

2. At least 10 years working experience in evaluation and appraisalof corporate investments and in the operation of investmentplanning, and in programming and budgeting systems.


Duties

He would assist the Assistant for Production/Development in thefollowing duties for a period of three years.

1. Formulation of short and long-term investment plans and programsfor the whole public sector estates industry.

2. Recommendations on overall public sector estate developmentpolicies in accordance with national economic policy.

3. Assistance to the estate groups in preparing terms ofreference for investment studies.

4. Financial and economic analysis of feasibility studies andmajor investment proposals submitted by the estate groupsfor approval.

5. Training of Indonesian staff to fulfill similar duties.

6. Coordination and cooperation with the staff of the Assistant forFinance/Marketing.



Advisor in Financial Management and Control

Terms of Reference

Background



1. A well qualified accountant with at least 10 years experience atsenior management level, preferably in agro-industry.

Duties

He would assist the Assistant for Finance and Marketing in the follow-ing duties:

1. Scrutiny of estate group budgets, cash flows and estimates ofexpenditure for the coming year.

2. Comparative analysis of estate group performance jointly withthe staff of the Assistant for Production/Development in termsof group financial management and individual estate efficiency.

3. Formulation of policies and principles, for the guidance ofGovernment, in management of estate group corporate finance.


4. Continuing review of the effectiveness of the "ManagementInformation systems" which were installed in 1975 andformulation of recommendations for necessary improvementsin the systems.

5. Formulation of recommendations on financial policies concern-ing taxation, dividend payments, asset valuation, depreciation,allocations to reserves as they influence estate groupviability.

6. Training of Indonesian staff.

7. Coordination and cooperation with the staff of Assistant forProduction/Development.



Advisor in Rubber Exploitation and Production Management

Terms of Reference

Background



1. At least 10 years experience of intensive yield exploitationtechniques and production management in a progressive rubberindustry.

2. At least 3 years experience at field level of the Indonesianrubber industry.

3. Ability to impart advice effectively and to report conciselyand analytically on progress in implementation of exploitationtechniques.


Duties

He would assist the Assistant for Production/Development in thefollowing duties for a period of three years:

1. to devise schedules of tapping and yield stimulation systems foruse throughout the tapping period. The systems would be variedappropriately in relation to planting material, environment,field history, tree condition, intended date of replanting, laboravailability and requirements.

2. in the implementation of the systems and would report regularly at6 monthly intervals on the progress of implementation to theAssistant for Production/ Development. In these progress reportsattention would be placed on yield performance, latex quality, barkconsumption, tapping disciplines, incidence of panel diseases andtapping costs.

3. train staff specially selected by the Assistant for Production/Development and the Production Manager of each estate group tocarry out similar advisory duties. These staff would be consideredas key personnel and the advisor would be required to report inwriting on their progress to the Assistant for Production/Developmentand the Production Manager. The training program would includeshort overseas visits to study yield exploitation systems inneighboring countries.

4. in (a) scrutiny of estate group budgets, cash flows and estimatesof expenditure for the coming year, and (b) comparative analysisof estate group performance in terms of individual estate effi-ciency jointly with the staff of the Assistant for Finance/Development.



Advisor in Estate Processing/Engineering

Terms of Reference

Background



1. Well qualified in mechanical engineering with at least 10 yearsexperience in processing of estate produce with emphasis onrubber and palm oil.

2. Experienced in drawing up technical specifications, in evaluationof machinery and equipment tenders and in procurement proceduresrelating to importation into Indonesia.

Duties

The duties of the advisor would be:

1. To advise the Assistant for Production/Development on the feasi-bility of estate group proposals for investment in new or expandedprocessing facilities.


2. To analyze estate group efficiency in processing and in theuse of agricultural equipment, transportation facilitiesand estate infrastructure and to advise the Assistant forProduction/Development accordingly.

3. To improve and standarize tender documents and specificationsand tender evaluation procedures.

4. To collate and maintain full performance data on selectedmachinery and equipment in use in Indonesia.

5. To record for use in tender evaluation, the delivery performanceof all suppliers, their after sales service and the availabilityof spare parts.

6. To collate records of procurement progress by all estate groupsand make recommendations for improvement in the process ofprocurement and disbursement.

7. To train Indonesian staff in the above duties.



Advisor in Marketing

Terms of Reference

Background

The public sector estates industry in Indonesia comprises 650,000 haincluding rubber, oil palm, sugar, tea, coffee, cocoa, tobacco, pines andseveral fiber, spice and medicinal crops organized in 30 estate groups. Thesecrops are grown under a wide range of ecological ccnditions but are concentratedin North Sumatra, West and East Java. The estates were badly maintained duringthe serious political and financial difficulties of the early and mid-sixtieswith an inevitable decline in estate conditions. Since 1968 however, successiverehabilitation programs have been initiated and steady progress in physical con-dition and technical method has been accomplished. The stage had been reachedwhere it is now opportune to devote much more attention to: overall developmentpolicies, corporate business objectives such as evaluation of investment proposals,coordination of investments between estate groups, improvement of financial manage-ment, strengthening marketing organization and to centralization of specialistadvisory services. Accordingly, the Government of Indonesia intends to recruitinternationally, a number of specialists, to assist the Support Staff of theMinister of Agriculture or its successor in the operation of this estate industry.The specialists would be located in the Support Staff Headquarters (or that of itssuccessor) and would be responsible to the Assistants for Production/Developmentand Mfarketing/Finance. The positions would be financed through arrangementsbetween the Government of Indonesia and the World Bank, and terms and conditionsof employment would require the agreement of the Government and the Bank.


1. Qualified in economics and marketing.

2. At least 10 years working experience in international commoditymarketing and in operation of a large marketing organization.

Duties

He would assist the Assistant for Finance and Marketing in the followingduties for a period of three years. Initially, he would review the following:

1. The organization, policies and procedures of all Estates JointMarketing Organizations.

2. The marketing techniques and instruments now in operation.


3. The system of forward sales and of allocation of sales.

4. The financial arrangements in use regarding terms of payments,credits, discounts, claims settlement, use of banking andother services.

5. The existing marketing infrastructure both in Indonesia (transport,storage, handling and post facilities) and at major destinations,including the effectiveness of Indoham.

6. The cost and effectiveness of the present marketing system.

7. Following this review to be completed within 12-18 months oftaking up position in Indonesia, he would recommend areas forimprovement.

Further duties would be to:

8. Advise on (a) export policies, (b) potential for processingfor export or local use, (c) expansion programs for particularcommodities, and (d) export documentation and regulations.

9. Make periodic market analyses for the several commodities andadvise the Joint Marketing Organizations in their dailyoperations.

10. Assist in improving the data and information base in the JointMarketing Organizations and the Ministry of Agriculture withregard to past and estimated future production and demand of theseveral commodities produced by the Government Estates.

11. Arrange and provide training to Indonesian marketing staff,including participation in marketing training by the LPP.Report upon training progress of individual staff.



Advisor in Organization of Inspection Services

Terms of Reference

Background



1. At least ten years experience at senior management level in theestates industry.

2. At least five years experience of inspection and advisory work inthe estates industry.


Duties

He would assist the Assistant for Production/Development in thefollowing duties for a period of three years.

Set up and assist in the organization of Inspection ServiceTeams which would have the following duties:

1. Report periodically on the physical progress of the Governmentestates companies, identify problem areas and recommend actionsto overcome them.

2. Recommend on techniques for planting, upkeep, maintenance,harvesting/tapping, processing, transport, civil works, etc.

3. Advise on general estates policies, practices and proceduresand potential for future investments.

4. Evaluate cost effectiveness of operations and investments.

5. Review and evaluate implementation in comparison with annualbudgets and long-term plans.



Consultants in Management Information Systems

Terms of Reference

Background

In 1972, Government and IDA financed a management survey of theGovernment-owned estates. The objectives of the survey were to (i) recommenda suitable organizational and management structure for the above estatessector, and (ii) develop an outline of a comprehensive management informationsystem. This survey was carried out by Sycip, Gores Velayo and the majororganizational recommendation to decentralize direction of operations wasimplemented in early 1976. During 1974 and 1975, Sycip, Gores Velayo in afurther assignment developed management information systems applicable to allestate groups. These were established in several but not all groups. Thereis now a need to establish the systems universally and to further streamlinethe existing systems. Government has requested that in view of their previousinvolvement, Sycip, Gores Velayo be employed to continue this work.

Duties

The consultants would execute the duties listed below and be res-ponsible to the Assistant for Finance and Marketing in the Ministry of Agri-culture Support Staff.

1. Advise Government on further necessary improvement in theorganization of the Government-owned estates sector (PNP/PTPs).

2. Evaluate the existing management information systems and recommendimprovements for simplification of the systems. Assist implementa-tion of the improved systems in all PNP/PTPs.

3. Provide training to the staff of all PNP/PTPs and of the Ministryof Agriculture Support Staff in the operation of the managementinformation systems and in the interpretation of the data producedby the systems. Training programs for about 1,000 staff would beappropriate to the staff level in the organization and wouldinclude:

(i) financial statements,(ii) systems of account,(iii) principles and techniques of financial analysis,(iv) reporting,(v) internal control and audit,(vi) budgeting and control,


(vii) financial forecasts, and(viii) investment appraisal techniques.

4. Coordination of training work with that of the Estates TrainingInstitute and the financial advisors to the Ministry of Agriculture SupportStaff.

Staffing

The consultants would carry out the assignment over a period of abouttwo years. It is estimated that a consultant team of about 18 individualswould be necessary with a time provision of 240 man-months.

ANNEX ISection AIOPage I

Technical Assistance to Ministry of Agriculturefor the Estates Training Institute

Senior Training Advisor

Terms of Reference

Background

The smallholder estate crops industry in Indonesia involves some5 million ha. The public sector large estates industry comprises 650,000 haincluding rubber, oil palm, sugar, tea, coffee, cocoa, tobacco, pines andseveral fiber, spice and medicinal crops organized in 28 estate groups. Theprivate large estates amount to 300,000 ha. The large estates were badlymaintained during the serious political and financial difficulties of the earlyand mid-sixties with an inevitable decline in estate conditions. Since 1968however, successive rehabilitation programs have been initiated on the publicsector estates and steady progress in physical condition and technical methodhas been accomplished. The stage has been reached where it is now opportuneon the public sector estates to devote much more attention to: overalldevelopment policies, corporate business objectives such as evaluation ofinvestment proposals, coordination of investments between estate groups,improvement of financial management, strengthening marketing organizationthrough centralization of specialist advisory services and training in estatecrop management. Accordingly, the Government of Indonesia intends to recruitinternationally, four specialists, for a period of three years to assistimplementation of the accelerated training program of the Government EstatesTraining Institute (LPP) located in Jogjakarta, Central Java, and be responsibleto the Ministry of Agriculture. The specialists would be responsible directlyto the Director of the Institute. The positions would be financed througharrangements between the Government of Indonesia and the World Bank, andterms and conditions of employment would require the agreement of the Govern-ment and the Bank.


1. General acquaintance with large scale plantation agriculturaland processing operations.

Duties

He would be the senior member of the team of specialists and wouldassist the Director of the Institute in the role of chief advisor with thefollowing duties:

ANNEX ISection AIOPage 2

1. Reorganization of the LPP along functional lines as describedin the Nucleus Estates and Smallholders Project I AppraisalReport.

2. Creation of a subcenter of the LPP in Medan, North Sumatra,to teach rubber and oil palm agronomy and processing.

3. Identification of public sector private sector and small-holder estates training needs.

4. Planning and direction of a program of local and overseastraining for Indonesian staff of the Institute.

5. Overall planning and direction of training programs for thestaff of the public sector and private estates industry andfor project staff of the Directorate General of Estates.

6. Evaluation of the impact of the above training programs.

7. Coordination of the work of the team of specialists.


Technical Assistance to Ministry of Agriculturef or the Estates Training Institute

Financial Control Advisor

Terms of Reference

Background

The smallholder estate crops industry in Indonesia involves some5 million ha. The public sector large estates industry comprises 650,000 haincluding rubber, oil palm, sugar, tea, coffee, cocoa, tobacco, pines andseveral fiber, spice and medicinal crops organized in 28 estate groups. Theprivate large estates amount to 300,000 ha. The large estates were badlymaintained during the serious political and financial difficulties of the earlyand mid-sixties with an inevitable decline in estate conditions. Since 1968however, successive rehabilitation programs have been initiated on the publicsector estates and steady progress in physical condition and technical methodhas been accomplished. The stage has been reached where it is now opportuneon the public sector estates to devote much more attention to: overalldevelopment policies, corporate business objectives such as evaluation ofinvestment proposals, coordination of investments between estate groups,improvement of financial management, strengthening marketing organizationthrough centralization of specialist advisory services and training in estatecrop management. Accordingly, the Government of Indonesia intends to recruitinternationally, four specialists, for a period of three years to assistimplementation of the accelerated training program of the Government EstatesTraining Institute (LPP) located in Jogjakarta, Central Java, and be responsibleto the Mlinistry of Agriculture. The specialists would be responsible directlyto the Director of the Institute. The positions would be financed througharrangements between the Government of Indonesia and the World Bank, andterms and conditions of employment would require the agreement of the Govern-ment and the Bank.


1. Qualified in accountancy with at least 5 years experience atmanagement level in the plantation industry and/or in agro-industry.

2. At least 5 years experience in implementation of trainingcourses in financial control methods.


Duties

He would assist the Director of the Institute in the followingduties:

1. Identification of training needs.

2. Planning and implementation of training courses in financialanalysis, planning and control methods. The management informa-tion systems recently installed by Sycip, Gorres & Velayo wouldbe fully utilized in this training program.

3. Planning and implementation of training courses in the use ofdata derived from financial analysis and control for decisionmaking and planning of resource use.

4. Evaluation of the above courses.



Advisor in Training Methods

Terms of Reference

Background



1. At least 5 years experience in training junior staff and manualworkers in agro-industry and in selection and development oftraining methods appropriate to the training needs of suchworkers.

Duties


1. Development of the proposed Teaching Methods and Liaison Divisionof the LPP.


2. Appointment of staff to the Division with skill in theselection of appropriate methods of teaching adults.

3. Guidance to the Training and Development Managers of theestate groups in designing effective training programs forjunior staff and manual workers.

4. Guidance to the above managers and to the LPP lecturing staffin modern teaching methods, including visual aids and trainingevaluation.



Advisor in Management Training/Marketing

Terms of Reference

Background



1. Qualified in business management with at least five years experienceat management level in agro-industry.

2. At least five years experience in implementation of training coursesin management as applicable to large scale agriculture.


Duties


1. Identification of training needs.

2. Planning and implementation of training courses in managementactivities, management relationships, decision making, coordina-tion and delegation and systems thinking and organization ofmarketing. In the latter function, assistance would be providedby the marketing specialist in the MOA Support Staff.

3. Evaluation of these courses.

ANNEX I

INDONESIA Sectto All

NUCLEUS ESTATES AND SMALLHOLDERS I PROJECT Page 1

PROJECT IMPLEMENTATION SCHEDULESETTLEMENT PROJECTS MAIN ACTIVITES

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ANNEX ISection All

INDONESIA Page 2NUCLEUS ESTATES AND SMALLHOLDERS I PROJECT

PROJECT INPLEMENTATION SCHEDULEESTATES PROJECTS MAIN ACTIVITIES

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