-AAD 763w c

DEPARTMENT OF STATE AGENCY FOR INTERNATIONAL DEVELOPMENT

WASHING rON DC 20523BEST AVAILABLE DOCUMENT ACION MEIORAIDUM FOR THE ASSISTANT ADMINISaATOR 15 DEG 19BURiZAU FOR ASIA

THRU EXSEC

FROM ASIATD T C Clark

SUBJECT Indonesia - Assistance to Agriculture - Brackish Water Fishery Production Project - 497-11-110-1892 - Project Paper Approval (AID Funding Life of the Project Total $599000-Grant)

Problem

Your approval is requested for this technical assistance project whichinvolves a US input of $599000 grant in technical assistancecommodities and participant training beginning in FY 76 and concluding at the end of FY 77 (TAB A-PP)

Discussion

This project represents USAIDs initial efforts to assist the GOI in develo-ment of the fisheries sector Recognizing the potentials of anestimated 600000 hectares of land suitable for brackish water pondsplus an undetermined area suitable for fresh water ponds USAID considers this project the first discrete increment of assistance to a sector with which we may choose to develop continuing or additionalproject aid (See PP page 13 - TAB A)

The project emphasizes intensified production for existing ponds with a secondary emphasis on providing a base for replication USAID loansand grants assistance in future years may be merited in additional prolect increments in the same andor different geographic areas of +he country

The goal of this project is to increase fish production with benefits reflected in higher net income to producers expansion of fish productionareas increased employment and greater availability of pond-raised fish and shrimp

L

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During the irst project year it is estimated that new off-farm jobs will be created for 425 men 425 women and for additional indirect jobs for 2550 people In year 2 this will increase to 5960 full-time farm-owner family members and 2397 outside hire

In the project hand labor will be used to level the land build dikes and create fish-raising ponds The soils -rill be treated with certain

chemicals to control deleterious plant and animal life (These chemicals have been determined to be short-lived and biodegradable) Wild juvenile fish will then be introduced to the ponds Through newly-developed feeding and management technology these fish fingershylings will be raised to marketable size harvested and sold on local markets

The major US inputs over the life of the project are 48 man-months of technical assistance assigned to the project one individual will be stationed in each of two provinces for a two-year period Additional short-term consultants (12 man-months) will be utilized by the project to provide advice to the two existing marketing facilities in such areas as marketing and processing US commodity inputs include transportation equipment (land and water) and office and scientific equipment

In-country and off-shore academic and short-course training will be provided to the provincial staff members of the Fisheries Department Commodities fertilizers pesticides and credit programs are to be provided by the GOI

Previous action on this project is aummarized

The PRP was reviewed by the East Asia Adv~sory Committee on March 21 1975 and preparation of the PP authorized

2 The Asia Project Advisory Committee (APAC) review of the attached PP was held on December 4 1975 and the project was approved

The APAC feels that the project is in conformity with AID policy that it is directed at assisting the rural poor that the project emphasizes the role of the farm-family members including farm women In the implementation the fisheries staff will work with local authorities to insure the iscuance of land certificateuse rights It is also determined that implementation is within the capabilities of the GOI Ministry of Agriculture

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Progran or Sector Goal Increased agricultural producticonthrough technology introduction and intensified extension activities

Project Purpose Increased brackish waterinland fisheries(taniba ) production in Leven kabupatens in the provinces Acehand North Sumatra and the creation of a physical and organishyzational structure base upon which tambak area exparnsion can take place

Also in the review process the environmental impact statement wasdiscussed arid determined adequate to support the projeOt overallIn evaluation the project is to be judged primarily n its ability

to provide employment increase incowe and increase high-qualityfood to the region

Recommendation

1 That you approve the attached Project Paper

2 That you clear the attached-approval cable to the Mission

APPROVEDV

DISAPPROVED -

DATE let 7s-

Attachments 1 TAB A - Project Paper2 TAB B - Cable for USA1DMa-i lcaA

SBEST AVAILABLE DOCUMENT ASSISTAN2 T) _ I T

AVKIS ATi F15 LY pound

497-11-110-1892

PIOJECT PAP-

1 7NU E X

Page

Summarv[ and Recommendations

A Face Sheet Data 1

Recormendations 2

1 ecomendat ions 2

2 Waiver of 2ompetitive Selection 2 of Jontractor

2 Description of the Project 2

D Summary Findings 5

E Project issues 6

I Future levelopments 13 Project ackgroundand Detailed Description 14

a ackground 14

3 etailed Description 15

iZ iProject Analysis 17

A Technical Analysis 17

i inancial and Economic Analysis 29

0 Focial Analysis 36

IV implemenitation Arrangcments 48

A Administrative Arrangements 48

Iimplementation Plan 49

valuation Plan 51

BEST AVAILABLE DOCUMEtII nexo~s

A A PRP Approval Message

L Project Technical Details

1 Biudget Tables

2 Project Organization Charts

3 ourse Outline for Training PFDU Staff

4 Farm and Project Analysis Tables

5 Draft Waiver Request

C Environmental Assessment

i Logical -7ramework Matrix

Z Project Performance Tracking Network Chart

11 Crantees Application for Assistance

C Project fescription to be Usod in the Project Agreement

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

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__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

L

-2-

During the irst project year it is estimated that new off-farm jobs will be created for 425 men 425 women and for additional indirect jobs for 2550 people In year 2 this will increase to 5960 full-time farm-owner family members and 2397 outside hire

In the project hand labor will be used to level the land build dikes and create fish-raising ponds The soils -rill be treated with certain

chemicals to control deleterious plant and animal life (These chemicals have been determined to be short-lived and biodegradable) Wild juvenile fish will then be introduced to the ponds Through newly-developed feeding and management technology these fish fingershylings will be raised to marketable size harvested and sold on local markets

The major US inputs over the life of the project are 48 man-months of technical assistance assigned to the project one individual will be stationed in each of two provinces for a two-year period Additional short-term consultants (12 man-months) will be utilized by the project to provide advice to the two existing marketing facilities in such areas as marketing and processing US commodity inputs include transportation equipment (land and water) and office and scientific equipment

In-country and off-shore academic and short-course training will be provided to the provincial staff members of the Fisheries Department Commodities fertilizers pesticides and credit programs are to be provided by the GOI

Previous action on this project is aummarized

The PRP was reviewed by the East Asia Adv~sory Committee on March 21 1975 and preparation of the PP authorized

2 The Asia Project Advisory Committee (APAC) review of the attached PP was held on December 4 1975 and the project was approved

The APAC feels that the project is in conformity with AID policy that it is directed at assisting the rural poor that the project emphasizes the role of the farm-family members including farm women In the implementation the fisheries staff will work with local authorities to insure the iscuance of land certificateuse rights It is also determined that implementation is within the capabilities of the GOI Ministry of Agriculture

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Progran or Sector Goal Increased agricultural producticonthrough technology introduction and intensified extension activities

Project Purpose Increased brackish waterinland fisheries(taniba ) production in Leven kabupatens in the provinces Acehand North Sumatra and the creation of a physical and organishyzational structure base upon which tambak area exparnsion can take place

Also in the review process the environmental impact statement wasdiscussed arid determined adequate to support the projeOt overallIn evaluation the project is to be judged primarily n its ability

to provide employment increase incowe and increase high-qualityfood to the region

Recommendation

1 That you approve the attached Project Paper

2 That you clear the attached-approval cable to the Mission

APPROVEDV

DISAPPROVED -

DATE let 7s-

Attachments 1 TAB A - Project Paper2 TAB B - Cable for USA1DMa-i lcaA

SBEST AVAILABLE DOCUMENT ASSISTAN2 T) _ I T

AVKIS ATi F15 LY pound

497-11-110-1892

PIOJECT PAP-

1 7NU E X

Page

Summarv[ and Recommendations

A Face Sheet Data 1

Recormendations 2

1 ecomendat ions 2

2 Waiver of 2ompetitive Selection 2 of Jontractor

2 Description of the Project 2

D Summary Findings 5

E Project issues 6

I Future levelopments 13 Project ackgroundand Detailed Description 14

a ackground 14

3 etailed Description 15

iZ iProject Analysis 17

A Technical Analysis 17

i inancial and Economic Analysis 29

0 Focial Analysis 36

IV implemenitation Arrangcments 48

A Administrative Arrangements 48

Iimplementation Plan 49

valuation Plan 51

BEST AVAILABLE DOCUMEtII nexo~s

A A PRP Approval Message

L Project Technical Details

1 Biudget Tables

2 Project Organization Charts

3 ourse Outline for Training PFDU Staff

4 Farm and Project Analysis Tables

5 Draft Waiver Request

C Environmental Assessment

i Logical -7ramework Matrix

Z Project Performance Tracking Network Chart

11 Crantees Application for Assistance

C Project fescription to be Usod in the Project Agreement

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

- 9shy

Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

- 12 - Table 1

__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

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Progran or Sector Goal Increased agricultural producticonthrough technology introduction and intensified extension activities

Project Purpose Increased brackish waterinland fisheries(taniba ) production in Leven kabupatens in the provinces Acehand North Sumatra and the creation of a physical and organishyzational structure base upon which tambak area exparnsion can take place

Also in the review process the environmental impact statement wasdiscussed arid determined adequate to support the projeOt overallIn evaluation the project is to be judged primarily n its ability

to provide employment increase incowe and increase high-qualityfood to the region

Recommendation

1 That you approve the attached Project Paper

2 That you clear the attached-approval cable to the Mission

APPROVEDV

DISAPPROVED -

DATE let 7s-

Attachments 1 TAB A - Project Paper2 TAB B - Cable for USA1DMa-i lcaA

SBEST AVAILABLE DOCUMENT ASSISTAN2 T) _ I T

AVKIS ATi F15 LY pound

497-11-110-1892

PIOJECT PAP-

1 7NU E X

Page

Summarv[ and Recommendations

A Face Sheet Data 1

Recormendations 2

1 ecomendat ions 2

2 Waiver of 2ompetitive Selection 2 of Jontractor

2 Description of the Project 2

D Summary Findings 5

E Project issues 6

I Future levelopments 13 Project ackgroundand Detailed Description 14

a ackground 14

3 etailed Description 15

iZ iProject Analysis 17

A Technical Analysis 17

i inancial and Economic Analysis 29

0 Focial Analysis 36

IV implemenitation Arrangcments 48

A Administrative Arrangements 48

Iimplementation Plan 49

valuation Plan 51

BEST AVAILABLE DOCUMEtII nexo~s

A A PRP Approval Message

L Project Technical Details

1 Biudget Tables

2 Project Organization Charts

3 ourse Outline for Training PFDU Staff

4 Farm and Project Analysis Tables

5 Draft Waiver Request

C Environmental Assessment

i Logical -7ramework Matrix

Z Project Performance Tracking Network Chart

11 Crantees Application for Assistance

C Project fescription to be Usod in the Project Agreement

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

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__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

SBEST AVAILABLE DOCUMENT ASSISTAN2 T) _ I T

AVKIS ATi F15 LY pound

497-11-110-1892

PIOJECT PAP-

1 7NU E X

Page

Summarv[ and Recommendations

A Face Sheet Data 1

Recormendations 2

1 ecomendat ions 2

2 Waiver of 2ompetitive Selection 2 of Jontractor

2 Description of the Project 2

D Summary Findings 5

E Project issues 6

I Future levelopments 13 Project ackgroundand Detailed Description 14

a ackground 14

3 etailed Description 15

iZ iProject Analysis 17

A Technical Analysis 17

i inancial and Economic Analysis 29

0 Focial Analysis 36

IV implemenitation Arrangcments 48

A Administrative Arrangements 48

Iimplementation Plan 49

valuation Plan 51

BEST AVAILABLE DOCUMEtII nexo~s

A A PRP Approval Message

L Project Technical Details

1 Biudget Tables

2 Project Organization Charts

3 ourse Outline for Training PFDU Staff

4 Farm and Project Analysis Tables

5 Draft Waiver Request

C Environmental Assessment

i Logical -7ramework Matrix

Z Project Performance Tracking Network Chart

11 Crantees Application for Assistance

C Project fescription to be Usod in the Project Agreement

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

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__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

- 47 shy

enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

BEST AVAILABLE DOCUMEtII nexo~s

A A PRP Approval Message

L Project Technical Details

1 Biudget Tables

2 Project Organization Charts

3 ourse Outline for Training PFDU Staff

4 Farm and Project Analysis Tables

5 Draft Waiver Request

C Environmental Assessment

i Logical -7ramework Matrix

Z Project Performance Tracking Network Chart

11 Crantees Application for Assistance

C Project fescription to be Usod in the Project Agreement

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

- 12 - Table 1

__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

- 14 -

II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

PROJE CT DEVELO IMET T LEA

Mr Fuad Tholik B Sc Chief of Inland Fisheries Research Institute Directorate General of Fisheries Ujung Pandang

hrs ediyatmo Economist )irectorate for Development

Enterprise Directorate General of Fisheries

)rs 2ujono Joyodiharjo Sociologist Teaching Staff of Social Science Vaculty University of Indonesia

Sr T0ovoval oss Pond lonstructi n and Program Plannin AuburL University

r gthward 1 Icoy [ishery cono-iist Auburn tniversity

Dr 1Inow Fish 11atchcry Management Specialist

Auburn University

r Johnl 11 Crover Tropical Fish Culturist Auburn University

1r 2obert L Sweet Deputy Food and Agriculture Officer USAID

-r James A Norris Economist USAID

irs udibyo Economist USAID

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

- 12 - Table 1

__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

ocabulary and Acronyns Use in This Report

GO - (overnment of Indonesia

DGF - Directorate General of Fisheries Department of Agriculture

USAID - United States Agency for International Development

BRI - Bank Rakyat Indonesia

Tambak - Brackish water fish pond

PDU - Provincial Fishery Development Unit

TI - Tambak Intensification Agent

PIS - Provincial Production Supervisor of the DGF

Jepara Project - Brackish Water Shrimp and Milkfish Applied Research and Training Project at Jepara Jentral Java (UNDP)

Kabupaten - Political Subdivision or regency of a province

Kecamatan - Political Subdivision of a kabupaten Desa - Political Subdivision of a kecamatan equivalent

to a village

Ha(s) - Hectare(s) equal to 10000 m2

Kg(s) - Kilogram(s) equal to 1000 grams or 22 US pounds

Pp- Indonesian rupiah $i = Rp 415

Intensificatioii - Tie introduction of modern technology packages to existing subsistence farmers

Eteni ficition - The bringing of now lands into production with modern technology packages

Adat - Communal lands used by farmers under letter of use riglits

- National intensification programs in level of developing food crop production including credit

INMAS - National intensification programs in level of developing food crop production excluding credit

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

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__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

-46shy

project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

_ _ ____

3

I A

I- Tl7A0ACT ION CODE AOENr rO INTERNATIOtAL OEVEC PMENT AI BOX)ArPROIVATC pp

PROJECT PAPER FACESHEET [OPIGINAL CwAwz TO BE COMPLE GINATING OFFICE ADD DELETE

2 COUNTRY NAL ENTITY ANTEE DO(UMENT REVISIOu NUMBER INDONESIA

PROJECT NJ R 5 BUREAU 6ESTIATED FY OF PROJECT COMPLETION

497-01892 A SYMBOL BCOOE

EA 2 FY 17181 PROJECT TITLE -SHORT (STAY WITHIN BRACKETS) 8 ESTIMATED FY OF AUTHORIZATIONO6LIGATION

IMOe YR [ASSISTANCE TO AGRICULTURE ] A INITIAL 1111751 B FINAL FYLI2Jj

9 SEC0 ARY YECHNICAL CODES (MAXIMUN SIX CODES OF THREE POSITIONS EACH)

031 063 242 1 150 111 112 10 ESTIMATED TOTAL CST O opt IEaUIVALENTIi1= AL

A PROGRAN FINANCIM I FIRST-YEAR ALL YEARS _ A Sh Fh C LC 0 TOTAL E FX F LC G TOTAL

AID APPROPRIATED TOTAL 389 389 599 _99

(GrANT) ( 389 ) ( ) ( 389 599 ) () ( 599L)(LOAN) ( ) ( ) ( ___ J ( J L f )

OTHER I Trust Fund 87 87 138 1 138 S E _

_-T GOVERNENT 386 I 386 741 I

741 TOTALS 389 473 862 599 879 1478

1 I E3TIMATE OSTS APPROPRIAED FU DSMO)Po-aPt q IArY cPRtIjAjqY FY lb- Y - FY 7A L Y)E-S ATIO~ j IRPOSE TECHALtACCJE CODE CODE D GRANT E- LOAN F GRANT G LOAN AN I LOAN RANA K- LOAN FN 1 101 077 389 - 210 - shy - 599 _

K

ESTIMATOD EXPENDURES - 10 IPROJECT PURPOSE(S) (STAY WITHIN BRACKETS) ij CHECK IF DIFFERENT FROM PIDPPP

KIncreased brackish waterinland fisheries production (tambak) in seven kabupatens in the provinces of Aceh and North Sumatra and the creation

of an infrastructure base upon which tambak area expansion can take place

iWERL CHAr(ES MVADE IN THE PIDPRP FACESHEET DATA NOT INCLLT)ED ABOVE IF YES ATTACH CHANGED PID ANDOR RP FACESHEET

O YES ~ iNo_______ I ORWGINATING OFFICE CLEARANCE

___

16 DATE RECEIVED IN AIDA SIGNATURE OR FOR AIDA DOCUMENTS

DATE or DISTRIBUTION TITLE DATE SIGNED

Deputy Directoro-5-AY - 0 R D Y

AID 1304I (5-75V1

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

- 12 - Table 1

__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

- 14 -

II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

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T kecormn Iat ion

Tie iss ion recommends that this grant sulproject be approved and that it have a two-year obligation spa6 and a three-year impleshyieita t ion i fe

The total cost of this project is projected at 1478000 with ri grant funds in the amount of $599000 provided

UAI) implementation will be under the guidance of the USAID Agriculture Division with field implementation carried out by a grant-funded intermediary contractor The Nission recommends that Auburn University International Center Aquaculture AuburnAlabama be this contractor Draft waiver request is attached as Annex B 5

2 Description of Project

The project a subproject of the Assistance to Agriculture projectis located in Aceh and North Sumatra provinces and will be named Brackish Water Fisheries Production

I Subproject Purpose

The purpose of this project is to increase brackish water inland fisheries (tambak) production in seven kabupatens inthe provinces of Aceh and North Sumatra and to create a projectorganization hase upon which tambak area expansion can take place Through intensification of aquaculture practices byapplying known technology there will be increased employment in the area increased fisheries production and increased tambak operator incones The thrust of the project will be the creation of a system of eight provincial fishery developshyment units (PFDUs) and employment of tambak intensification agents (TIAs) who will demonstrate and teach methods of increased production

To achieve the purpose of the subproject the following inputs are programmed

a Two full time technical advisors (483 nli)will be assignedto the project One individual will be stationed Ln each of the two provinces Additional short term consultints(12 -u) will be utilized by the project in uch areas as marketin and processing

b iglit PF)ts will be establishd on existing private nr government-owned ponds Private ponds will receive conshypensation in the form of leases or pond improvement

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

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__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW

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arrangEments They will function under the following criteria

i PFDU size will be approximately seven hectares which is considered of sufficient size to have five demonstrations phased during a given cycle of proshyduct ion

ii PFDIo will be renovated to demonstrate a proper management system

iii PFDUs will demonstrate proper utilization of production inputs

iv PFDUs will be used for demonstration courses during which farmers will be trained in all stages of production

c In-country and offshore academic and short course training will be provided the provincial staff members

d Commodities as listed in Annex B 1 will be provided

e upporting Activities Provided

Project-trained staff will be stationed in rural areas and will train and demonstrate modern technoshylogy to farmers

(10I professional staff will work with provincial and local authorities to insure availability of necessary inputs in the free market

The fish farmer association concept that is currentlyoperational in Aceh will be expanded to orth Sumatra These associations are not economic enterprises but will serve the project as vehicles for organizing training programs and for providing production and market information to their members

flank credit for production intensification and extensification will be progranmed by the DCF provinshycial staff and supervised by the BRI

COL professional staff will work with national and local authorities to insure the issuance of land certificatesuse rights in order that these documents can be used by farmers as collateral for bank loans

GY professional staff will work with banks and local authorities to insure establishment of marketing facilities

The program will insure adequate guidance for new pond development and management in areas selected by the project technicians

2 Subproject Organization and Implementation

Subproject supervision will be the responsibility of ther)irectorate Ceneral of Fisheries within the Department of Agriculture Provincial production supervisors (PPS) willbe appointed in each province and they will be responsible for work plan development issuance of instructions to field staff and program evaluation and modification

Close participation will be insured with the Bank RakyatIndonesia in order that loan financing may be sound and available for capital development and that operating capital requirements maybe fulfilled Additionally the project will cooperate withlocal governmental officials to insure land use rights and the organization of fishery associations Marketing responsibilityis assigned to the private sector which to a large extent is already in place but continual cooperation and advice is required from the subproject staff and advisors to insure an expansion of its capabilities

3 Relationship of Outputs to Inputs

luring the project preparation stage several conclusions were reached regarding changes that were necessary if production was to increase significantly These conclusions are listed be low

a Production brackishfrom ater ponds is still below

full potential

b Traditional systems and culture are still in use

c Farmers skill and scientific knowledge of brackish water pond management is still marginal

d Farmers have limited finarcial capability

e The fishery extension service does not have enough manpower nor skill to conduct adequate demonstrations for fish farmers

g anagement of ponds land and labor is not efficient

h The design of ponds and canals can be improved

i Facilities for and availability of production factors (labor fertilizer pesticides and fry) are not stable

In summary these call attention to a lack of technology introshyduction and organizational and physical structure within the)G c for program implementation marketing expansion and supply of agro-iputs

The project technical assistance input is aimed at training of project staff and tambak operators and the introduction of miethodology and program development including establishment of a continuing relationship with the credit and land tenure organizations Commodity inputs are directly related to the provision of equipped facilities for demonstration and trainingactivities The more formal element of training is aimed at institutional development in order that the Indonesian staff may stand alone and continue the expansion program This projectwith a three-year life will provide the DGP with programstrained staff and the capability of continuing the task needed to bring all the tambak operators in the area into full production

4 nd of Project Status

virst and foremost the project will establish programs and trained staff and facilities with which the DCF can continue a rational program of expanding the technology and thereby contrishybute to increased economic and social benefits to the remaining137750 hectares of existing (12300) and potential (125450)land of the area These will include an established dynamic policy on land tenure and credit 58 trained staff and an increase in the two-year period of approximately 4610 tons of marketable fish products

D Summary Findings

Mlission reviews including the Auburn University technical and economic analysis indicate the following

1 The project is technically feasible

2 The iiiternal rate of return is very favorable both to the farmer participant and the nation

-he roject caters to snall tarmers and enhances weoen s rile in the COiunity

4 The social and political environment is positive and should lead to a successful project

5 The GOT has provided for the necessary inputs and the impleshymenting agency has the administrative structure to insure a successful project

6 The implementation plan is feasible

7 The project meets all applicable statutory criteria and

S The project is considered by the Mission to be high onits priority list and recommends it be expeditiously approved

Project Tssues

1 Issues addressed in the PRP (page 14) were as follows

a) I ratios for typical farm operations within the projectarea h) internal rate of return for the project as a wholec) project management and administrative capabilitiesd) existence of any disincentive resulting from CO policies(fertilizer settlement marketing and credit) and e) technical and economic feasibility

a) B ratios were found to be favorable At a 157 discount rate the F ratio for the farmers for a change from anbutemediate level of technology to intensified level Ais 154 For the extensification program the BC ratio forintensified level A is 112 at a 15 discount rate

b) 7inancial and economic internal rates of return are computedat over 100 for the intensification program and 35 for the extensification program

c) Project management and administrative capabilities arediscussed in section IV A of this report Reviews of the number and quality of staff show no net deficienciesTraining is required an will be provided for in the projectWith the exception of 33 new high school graduates (TIAs) allrequired managerial and technical staff are currently employedand available for project work

d) COT programs that received attention during the feasibilitystudy were fertilizer settlement credit and marketing

t Ii I t 1975 fish farmL rs 7ould not Ise-- fort i-Z on the frcee market ecent negotiations have otained a riulins that fertilizer would be made available to fish farmers in the free market at Rp120 per kg It is that rate which was used in the BC ratios and found to be feasible In addition there will continue to be a leakage of fertilizer from the subsidized BIMAS program (Rp60kg) to the fish farmer sector

The settlement issue is not relevant to the intensification program as all lands have titles or land-use certificates The extensification efforts of the GOIs to which this project will provide some support and the infrastructure for future expansion were found to be quite rational Both provinces have programs that address the problem and set limits to the lands obtainable In Aceh under the Adat system the governiient is issuing to settlers land-use letters that are accepted by the BMl and limits are set at five hectares per settler In orth Sumatra certificates of land ownership can be obtained for vacant lands for up to five hectares upon the payrent of administrative charges of approximatelyIll000 per hectare In both provinces land cannot be ohtained untilafter the area has been zoned for fish farming All such areas are presently located in mangrove areas

Marketing was surveyed and not to be a limitingfound factor in the early stages of the project and problems anticipated later are to be addressed by short term consultants In North Sumatra three large private processing plants are operatingand have subitted plans to commercial banks for expansionAceh has in the past marketed its shrimp through the North umatra processing plants but at present is experiencing difficulties in selling its products due to an oversupply of shrimp caught in the Nalacca Straits The fish farmers have switchndi from growing large shrimp (6 months) to the productionof small shrimp (4 months) for the local market This does not appreciably affect the iA ratios for the farmers as larger iuirbers and shorter time practically coripensate for reduced prices There also exists a proccsLn plant in Aceh province that is at prosent not function ing but the planthas apiied For additional resources to reenter the market I dditioially there is pending a feasibility study of a plant near antda ceh that seeks entry into the markcet 1both of these operations and the local commercial banks who will provide loan funding for the activities need technical assistance the project will providle

The is not considerin entring the inarket and isa11cvin th private sector to operate in a businesslikenman-er ocal arkets are functioni-lt fer nilkfish ani small shrimp and little help is needeol here Consumptionin the t wo provinces is still below the national averageAdit onally the area is undergoing petrochemical industryexpansion and this new demand during the construction phasewill also have to be met

The project cannot succeed without a ine of short terminvestnent and operational crelit for the tambak owners operators During GOI FY 7475 intensification and productioncredit programs were operational in North Sumatra and in Aceh These programs were reviewed by the project development team and found to be well organized and administrated The projectestimates a demand for credit for the first and second yearat 32946472 This program has been negotiated between the 7irectorate General of Fisheries and the BT and found to beimplementable See the GOT project request for confirmation of this acceptance

e) The technical and economic aspects are covered in sections III and TII B of this paper

2 TA gt 073443 (PRP review) addressed the following issues

a) project not clearly directed to smaller fish farners b) cost and return of brackish water pond not clear c) costs of technishycal assstancc confusing d) need detailed discussion ability of GC1 to ana o e project and potential for replication elsewheree) status of existing packages of improved practices and f) outtpt targets seem optimistic

a) The present ownership records of existing tambak in Aceh shows that 5562 licensed fish farmers are farming 13912hectares with an ave-i-age holding of 25 hectares per farmerA 33 kecamatan sample of the complete list of farmer projectsestimates that the 727 of the farmers with over six hectares own 2697 of the land The remainin 5161 farmers hold l017C hectares of land with an average ofholding 197 hectaresOne of the project purposes is to provide the infrastructure for Izitor expansion The COT hopes to bring an additionalSO30 hectars into production within five years and with new farmers averaging 25 hectares At that tim the percentageof holling over six hectares will drop t) 27 holding 9 of theland Addhitionally the Di ten-year target includes an additional 29101 hectares andat that time the percentage ofholdings over six hectares will be 1Irepresenting 5 of the lands

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Vile tailed lists of ta1 ak oners are not available for Torth Junatra CI employees kw le2 able ith the area state that there are very few ldins n c o six hectares in the province and that the province is holling the liit for extensification to five hectares per family

Techaiical studies inlicate that 25 hectares is operationally a family-unit tambak This fully employs the farm family ancl requires only minimal hired labor whichunder present systems of management is largely traded with neighborsT he hired labor factor is used at harvest time During intensificarion the farm family will hire labor to increase production as soon as possible

The project is directed to those farmers holding under six hectares for two reasons First because equity is an expressed concern of the GOI other donors and the USAID Secondly because those holding over six hectares already have access to capital for expansion and field studies indicate that they are investing and using some new technology The Mission feels that the project participants with an apparent average holding of 197 hectares are a valid small farmer group that need help and that this group will be responsive given the availability of the factors of production that the project orients directly toward them

b) -ost and returns are favorable and discussed in section II B of this paper

c) Figures containel in the Pl logframe were clearly in error Technical assistance is progranmed at 48 manmonths of full time assistance and 12 manmonths of short term consultants

d) The Directorate Ceneral of Fisheries is one of the most able agencies of the GOI from an administrative standpoint It is dynamic and delegates authority to its divisions and field staff In Jakarta the head office is well staffed in the administrative area and its technicians are receptive to new technology Two years ago the Directorate General recognized certain weaknesses in the headquarters staff and instituted programs of overseas studies to correct these deficiencies It also invited donor assistance while it was training its staff At the present time it has 22 staff members in academic training abroad and the Directoshyrate eneral of Fisheries has ten technical assistance pershysonnel from various other donors working in Jakarta

-At the province level the departments ar2 ielI staffed by collegegraduate staff Aceh has nine and North Sumatra has eleven

One of these graduate staff in each province will be assignedfull time to manage the work (PPS) These individuals are scheduled for short term training in the Ohilippines where the technology to be used by the project was first developed prior to its being Indonesianized at Jepara

There are presently some 180000 hectares of brackish water fish pond culture in Indonesia and the Directorate General of Fisheries estimated an additional 600000 hectares of land are suitable for this type of activity Approximately125450 hectares of the latter area are Acehin and North Sumatraandat the erd of the two-year project 13300hectares of existing tambak will still require intensificashytion While this project is targeted at some 4800 hectares of landi in Aceh and North Sumatra it has the second goal of developing physical and organizational infrastructure in place to continue the intensification of the remaining existingtambak lands and expansion to other new lands The GOI would like to achieve expansion to approximately 59600 hectares in a ten-year period This in itselfwill be a large taskbut does represent spread effect that is directly related to the project Additionally there remains the probability that administrative programing and technical knowledge gained in this area will be considered when tackling the remaining potential lands in this and other provinces

To reach these goals would require intensification and extenshysification of approximately 7190 hectares per yearand maybe ambitious Project design estimates that a farmer will be given guidance for a three-year period and that the PFDU and TIA farmer participants will be staged as follows

P F ) TIA

Year Total New Total New 1 1600 ha 1600 ha 100 ha 100 ha

2 3200 ha 1600 ha 200 ha 100 ha

3 4800 ha 1600 ha 300 ha 100 ha 4 4800 ha 1600 ha 300 ha 100 ha

From this dateone can see that with the programmed resources of eight PFT)Us and 40 TIAs some 5600 hectares can be added

to the project each year without unue stress rho are would rt-quire some 2240 far alnilv 1lIrticilants ii this figure doos not present problens IncIeasel credit roquiireshymients are shown in Table I and are not consiWered excessive

If the C i continues to seek its ten-year goals it would require no additional PFDUsbut would require approximately ten more TIAs That in itself would not be a problembut credit availability might be

Aceh has five field extension agents (TIAs) and North Sumatra has three All these employees will be given additional training at Jepara and will be employed by the project full time An additional 33 agents all of whom hold fisheries high school certificates will be employed by the GOI under contract arrangements trained at the PFDUsand assigned to the project on a full time basis

The iiission feels that the Directorate General headquarters and field staff have the capability of administrating the project with technical assistance and that the physical and organizational infrastructure in place at the end of the project will be able to handle future expansion activities at the rate of 5600 hectares per year

e) The package of technology presented in section III A of this report is a combination of knowledge gained from the Ihilippines andi two years of trials in Jepara in South Sttlawesi and in Java Additionally the technology was field tested in Aceh and North Sumatra during the past year and has proved effective and acceptable to the local fish farm owners

f) AIDIs comments on output targets being optimistic can be interpreted in two ways Firstly that the farm production is opti mistic or secondly that the project target for fish production increase is optimistic

Addressing the first interpretation farm yields are projected at 600 kg of milkfish and 300 kg of shrimp under intensificashytion Under intensification yields were computed at 1300 kg inilkfish Yields on ponds at Jepara still under construction and less land waterwith favorable and conditions under intensification A have been 1200 kg per hectare Additionally in the province of Aceh the feasibility team had tlie opportunity of interviewing the owner of a private company enpaged in fish farming with holdings of 52 hectares

- 12 - Table 1

__ _ntensi catieno 2r]it (p 009 __)e3r e Lands Total i tirin arvs Total apital cpay-ient of jperation a (Cumulation) 2ait -ny re IL lo (Cumulation) it

1 0 17100 900 0 900 2 0 17100 3900 0 4300 795014 50000 892855

1700 1 00 3 -00 0 8700 p97720 778300 1185370 4 1700 20500 3900 0 12600 1023520 812040 1717380 5 1700 22200 3900 0 16500 1100190 383440 2222375 6 5000 27000 600 0 17000 830300 323960 2332490 7 5600 32300 1700 18800 1020360 418560 2565260 3 5600 38400 1700 20500 1213920 608040 2810580 9 5600 44000 1700 22200 1402080 583120 3030300

10 5600 49600 5000 27200 1431360 996720 3712800 11 5600 55200 5600 32800 1431360 1080830 4477200

33100 55200 32800

Each ha each year

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an -5 ol f rI

yfigu esthe inr oted Ln the iinc ira and eci~~i

colp tations are realistic

Adclre sinV the second interpretation the project work planscall for the staged introduction of land at the rate of 00 hectares the first year and 3900 hectares the second

year Phis amounts to an accumulation of 4800 hectares during the life of the project and allows for a break in period prior to reaching full capacity starting in Year 3 of 5600 hectares per year If these targets are achieved iL is predicted that the project production goals will be reache- The Iission feels that this is not a heavy work load for the agents and the PF)Us and that it is reasonable to expect that the goals will be met

r Future evelopments in the Fisheries Sector

This project represents USAIDs initial efforts to assist the GOI in Ievelopimtnt of the fisheries sector Recognizing the potential0 an estimatel 600000 ha of forlaud suitable brackish water ponds plus au undetermine area suitable for fresh water ponds ~ T considers this project the first discrete increment of

isLin e to i sector with which we may choose to develop continuing or additionll project aid

he project described herein will emphasize intensified productionfrom existind ponds with a secondary emphasis on providing a baseFor future -tensification USAID assistance in future years maybo mrited in additional project increments in the same andor

(Offrentgeogiraphical areas of the country

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II Project Background and Detailed Description

A Background

Brackish water pond culture has been practiced traditionally forcenturies in Indonesia and particularly on Java It was inishytiated at least 600 years ago as mangrove swamp fishery usingtraps Gradually the mangrove was removed dikes were conshystructed ponds built and finally the custom prevailed ofstocking the ponds with milkfish shrimp and other fingerlingscaught at sea

Background papers provded by the Directorate General of Fisheriesindicate that there are at present an estimated 180000 ha ofbrackish water ponds in Indonesia mainly distributed along thenorth coast of Java South Sulawesi and Aceh It is estimatedthat the area of brackish water pond fish culture could beexpanded up to 600000 ha or approximately lY4 of the existingcoastal area of Indonesia

From 1969 through 1973 collective brackish and fresh water fishproduction increased by an annual growth of only 23 The probshyhble causes of the brackish and fresh water fish production stagshynation are 1) aquacultural fisheries have reached a plateau withthe use of traditional technology and new and more productivetechnology is not being adopted and 2) removal by capturefishing is at or near he maximum sustainable yield in natural waters

During Repelita I (1969-1974) the Government of Indonesia concenshytrated its fisheries efforts in 1) the area of concession fishingof its sea and the direction of this product to domestic andforeign markets 2) the adaptation of new brackish water methoshydology to Indonesia using the vehicle of a UNDPFAO project atJeparB Central Java as a base of operations and the introductionof credit to fishermen with an IDA project using the Bank RakyatIndonesia as its implementing arm and 3) the building of astaff base through the use of local universities and secondaryschools for the extension of technology to existing and potentialbrackish water fish farmers

Aceh and North Sumatra were chosen by the Directorate General tobe the first in a series of project sites where packages of reshysources would be brought to bear in concerted effort to increasesmall farmer income and brackish water fisheries production TheDirectorate General in late 1974 prepared a paper entitled theBackground Information and Project Idea of Brackish Water Pond in

Aceh and North Sumatra and asked AID to appraise the idea In November 1974 USAID obtained the services of Dr H R Schmittou USAIDPhilippines and the international Center for AquacultureAuburn University to conduct a technical survey of this area His report was largely favorable and a PRP was written and transshymitted to AIDW in January 1975 In June 1975 the USAID employed a team of consultants from Auburn University to prepare an operational plan for a grant project in the area completewith a set of preconditions and recommended actions

Attached is a grantees request for assistance for the project See Annex F

B Detailed Description

The project site comprises four kabupatens on the north coast ofAceh and three of the northern kabupatens of North Sumatra proshyvince InAceh there are presently some 16498 ha of existing tambak and there exist another 75450 ha of potential tambak This area is considered a fertile ground for intensification work North Sumatra has a limited area of tambak (1100 ha) but has a potential area of 50000 ha This area needs a broader understanding of known production technology and work plans and a demonstration of that technology before it can proceed in area expansion

The subproject is directed at intensification work in Aceh and North Sumatra and program development and extensification demonstrations in North Sumatra

The sector goal is the increased agricultural production through technology introduction and intensified extension activities

The subproject purpose is to increase brackish waterinlandfisheries production in seven kabupatens in the provinces of Aceh and North Sumatra and the creation of an infrastructure base upon which area expansion can take place The end-of-subproject status is quantified in terms of trained staff existing demonshystration ponds infrastructure existing and functioning and increased production of approximately 4610 tons from intensified tambak area representing approximately 4810 ha of the area of existing tambak

It is planned that nine DGF staff will be trained at the MSc level and that these men will represent the core of the headshyquarters and provincial organizational and physical infrastructure

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for future expansion 58 staff will be trained in the Philippinesand at the Indonesian staff training school at Jepara and that these men will function during the life of the project and on future intensification and extensification efforts eight demonshystration ponds (DPUs) will be developed in the first year andbe operational during the life of the project and with modifishycation in future expansion efforts and that commodities and equipment will be in place for the life of the project and used on future activities Technical assistance is part of the AID inputs and will function in planning guidance infrastructure development and technical on-the-job training

During the subproject design stage programs for fertilizer supply were developed credit requirements were considered and programmed and budget requirements were identified and proshygrammed

A final Logical Framework Matrix is attached as Annex D

Site investigations show that factors of production such as land climateand raw material are optimum in the area and willrespond to intensification effortsthat the farmer is profitmotivated and will respond to new technology to enhance his standing in the community and provide for his felt needs that the staff of the provinces staff need training and once theyreceive it and are equipped will transmit the knowledge to the tambak operators that the private sector is profit motivated and will respond by expanding this present base in processingand marketing the product and that the Local demand for the product exists for milkfish and small shrimp and that the largeshrimp will move in the world market It is also assumed that once the output of reaching 27 of the existing tambak operatorsis obtained a continual spread effect will also be obtainedwith continued extension effects to other farmers in the area

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II Project Analysis

A Technical

1 State of Production Skill

Brackish water fish ponds in tropical Asia concentrate mostly on milkfish and shrimp productionutilizing small fish or fry originating in the sea Ponds built along the coast are filled using natural tidal actionand then stocked with the desired species which are allowed to grow until large enough to market This type of fish culture appears to have started in Java several hundred years ago and is now widely practiced in Asia especially in Indonesia Philippines and Taiwan

In the most primitive form a pond is simply opened to fill allowing whatever fish might come to enter and be trapped The fish are then held for several months sometimes up to a year without further attent-lnand then the pond is drained and the resulting fish harvested This type of culture seldom produces more than 200-300 kgha total fish per year though inputs are minimal

More sophisticated production systems such as stock manipulation and pond fertilization when practiced result in 500-1000 greater yields Government statistics report average annual brackish water fish pond yields of approximately 334 kgha for Indonesia 570 kgha for the Philippines and 1600-2000 kgha for Taiwan Almost all of the production is milkfish though incidental shrimp yields also make an important financial conshytribution to the value of the harvest

The higher average yields in other countries are a direct result of more sophisticated technology High productions in Taiwan are obtained in spite of a cold winter season during which fish do not grow The Philippines is in a typhoon belt which hampers fish production There selected operators are achieving proshyduction levels approaching those of Taiwan Recent production trials using heavy fertilization at the Jepara Project have resulted in milkfish yields representing a production rate of 1200 kghayr There are reports of productions in Siouth Sulawesi Province ranging from 800-1500 kghayr as a result of fertilization pest and predator control

Though current brackish water fish pond production in northern Sumatra (490kghayr) is above average for Indonesia it still is much below the potential Fish farmers in the provinces of Aceh and North Sumatra where most of the tambaks on the island

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are located have little access to the knowledge they need toincrease production There have been constraints such as thelack of fertilizer for use in fish ponds On the other handclimatic and land conditions in the area are very favorable for tambaks Besides the existing 17598 ha of tambaks in thetwo provinces there are more than 125450 ha that could be developed into tambaks

Conservative estimates of production response for various inputshave been made based on experience from those places wherethese inputs have been tested and applied These estimates aregiven and the resulting impact is analyzed in the economic section

2 Recommended Technology

The specific and tested techniques which if followed in tambakoperation would give high production may be summarized as follows

a Fertilization Currently little fertilizer is used in northern Sumatra tambaks and what is used is mostlylow quality cow dung or diverted chemical fertilizers intended for rice production Government policy has been to subsidize the price and direct fertilizer to rice andcertain other annual food crop production because of the recent world shortages and dramatic cost increases Recent policy changes have made fertilizer available to tambak farms at Rp120kg (unsubsidized)

The use of limited quantities of high quality organicfertilizers such as night soil or chicken manure canbe verj effective in fish ponds However there is noapparent source of significant quantities of these materials in northern Sumatra Poultry houses and animal feedlots of any size are practically nonexistentas areseptic tanks or a honey bucket system for collectingnight soil Field-weathered cow chips might be gatheredfor fish pond use though their benefit would be marginalThey are however programmed by the project due totraditional feelings on the subject as farmers feel theyimprove water holding capacity of the soil and save fertishylity

Concentrated chemical fertilizers are also extremelyeffective in stimulating natural food growth and the

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resulting fish production in fish ponds Of the three elements (NPK) common in fertilizers phosphorus appears to be the most critical in fish ponds Nitrogen also may be beneficial but potassium has not been demonstrated as essential Multiple applications of N-P fertilizers in a ratio of about 21 weight provides a constant nutrient supply in the water Urea (45 nitrate) and triple superphosphate (46 phosphate) are the forms commonly available in Indonesia and should be applied approximately eight times per year depending on the response and draining schedule in the tambaks A total of 250 kghayr for these two fertilizers should keeppond fertility at a high level

A key feature of tambak management with a fertilization scheme is to hold the rate of water exchange to a minimum This reshyquires that dikes be maintained in a good state of repair to minimize leaks and that water fluctuations such as are now common to capture shrimp fry with the inflow be avoided It is also desirable to put the fertilizer on a platform or in a perforated container in the water off the bottom to be sure the elements go into solution and that they are not chemicallybound by the soil so readily This system also provides for the slow solution of the elements over several days which also increases its efficiency

b Stocking Use of fingerling milkfish for stocking the growing pond increases production in at least two ways First fingerling survival is higher and more consistent than that of fry Thus stocking with fingerling better assures the operatorthat the proper number of fish will be present to utilize the expected food supply Second growing space in the pond is used more effectively with fingerling stocking Depending upon the size of fingerlings used a growing period of 90-120 days will produce a desirable market-size fish (300 gm) Stocking fingershylings can produce three crops per year instead of the two which are normal under the traditional fry stocking plan Four crops per year can be obtained by rearing the fingerlings to an even larger size before stocking in the growing pond Fingerlings for stocking can be grown by the individual farmer for his own use or they can be purchased from a nearby fingerling producerGrowing fingerlings fof sale can be a profitable enterprise for operators who have the necessary pond space along with the knowledge and skill

c Use of Pesticides Mollusca (snails) compete with milkfish for bottom food supplies Wild fish enter the nursery transhy

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sition and growing pondsto prey upon the milkfish or to comshypete for food and space Most wild fish should be eliminated with powdered derris root before stocking with milkfish snails can be killed with Brestan (Triphenyl tin acetate) where they are a problem Both products are available in the projectarea By applying these pesticides as needed better survival of the stocked milkfish results and the available food supplycan be consumed by the milkfish or shrimp instead of by competing organisms

d Minimizing Losses During Handling Stress placed upon fryand fingerlings during collection transportation and stocking may cause injuries which temporarily slow growth or cause mortality Under some conditions a marked change in salinity or temperature between transport water and receiving water willimpose stress Use of proper collecting and transport equipmentand measurement of salinity and temperature of the receivingwaters before stocking fry or fingerlings will minimize these stresses and get the stocked fish off to a good start in the growth cycle

e Physical Improvement of the Tambak Construction standards for many existing tambaks are poor Ponds may be too shallow too large for effective management or lack ar adequate water supply Lack of bottom leveling makes draining slow or imposshysible Inadequate gates make water distribution slow or inshysufficient Narrow dikes readily develop leaks which result in entrance of wild fish (often predators) and loss of shrimpmilkfish and fertilized water Presence of stumps or other obstructions interfere with fish cultural operations and presence of islands within the pond reduces the productive area and provides a shelter for fish-eating birds or predators such as otter A minimum standard for physical development of a tambak might include main and secondary canals wide and deepenough to supply water and drain all the ponds A one-meter tide fluctuation is probably the minimum which can permitnormal tambak operation Tides in the project area have a rangeof approximately 3 m Dikes with a 15-3 m top width and with a 21 slope and 05 m freeboard above the highest tide are desirable A minimum depth of 0cm in the nursery and transishytion ponds and 30 cm in the growing pond are desired The pondbottom should slope gently to the channels and the outlet gateGrowing trees on the dikes develop root systems which ultimateshyly produce leakage and increase dike maintenance Planting a low-growing grass which will develop a sod to minimize erosion

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frcun wave action and rainfall can reduce the wo1-J of vbu1Idl n the dikes Subdividing large ponds or conirling those too small for efficient operation will make better use of labor and minimize time involved in harvesting after fish are market size If a pond can be readily drained and holds water well all asshypects of management can be applied with more efficiency Of particular importance is provision for each pond to be filled and drained independently Water movement from pond to pond is incompatible with use of modern aquacultural technology

3 Transfer of Technology

The willingness of farmers and government fisheries personnel to adopt modern technology is apparent However it also is apparent that this technology is not available in the targetedprovinces nor is there an effective system in place for transshymission of the technology to producers To overcome these deficiencies this project would create a system of eightProvincial Fisheries Development Units at the kabupaten level five in Aceh Province and three in North Sumatra These PFDUs would be staffed by DGF personnel and be directed by a Provinshycial Production Supervisor (PPS) who would be assisted by an American advisor Each PFDU would consist of a model 5-7 ha fish farm created from existing tambaks acquired by the DGFeither through lease or purchase Stationed at each PFDU would be several Tambak Intensification Agents (TIAs) whose job itwould be to assist individual farmers increase production A chart giving this organization is presented in Annex B2

There are more than 350 DGF personnel now employed in these two provinces Only a few (19) of them have post-high-school fisheries education so it will be necessary to launch a training program for people assigned to this project To get the programstarted the two PPSs will be be selected and sent as USAID partishycipants for three months training with the Aquaculture Production Project in the Philippines In this training they will learn both the technique for intensive brackish water pond managementand the methodology of outreach programs directed to fish farmers

At the same time a group of PFDU staff will be identified and undergo a similarly directed three-month training course at the Jepara Project A suggested course outline for this training ispresented in Annex B3 Expertise for giving this program should be available within the DGF including technical staff at the Jepara Center Facilities at the Jepara Center include approxishymately 80 ponds classroom and labs and dormitory facilities for

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both men and women The universities also have some resources that could be tapped for the training However if necessary TDY out-of-country assistance could be procured by project planners

Upon returning to their province of assignment the PPSs and PFDU personnel will locate suitable sites and establish the PFDUs in model operation A second group PFDU staff would undergo training at Jepara shortly after the first When finished they would report to their units and offer training to the TIA team assigned to the units Within one year each PFDU should be offering at least one farmer training session each month using station facilities and supported by contacts made through the TIAs Overall there would be 40 TIAs represhysenting about one per 300 ha of existing tambaks The responshysibility of each team would be to 1) collect baseline informshyation on the amount and methods of existing tambak production in its assigned area 2) assist fish farmers increase production through literature handouts illustrated lectures and demonstrations personal contactand farm visits 3) assist farmers prepare applications for bank loans 4) encourage farmers organizations and help to strengthen their function 5) introduce more efficient gear and better handling methods to fry collectors 6) evaluate the success of its work and give feedback to the DG1 on the needs of the fish pond industry The PPS in addition to having responsibility for the overall function of the PFDUs and TIAs would work with governmental and industrial planners to insure that credit fertilizers chemicals and fry supplies were adequate to support fish proshyduction efforts in the province He would also be responsible for developing literature for distribution to fish farmers and for mass media presentations

USAID would also contract for two advisors and 12 months of TDY consultants to assist the project The advisors should undergo a 16-week language training course at the Foreign Service Institute in Washington DC or a similar courseprior to departure One advisor would be stationed at Medan in North Sumatra and the other at Banda Aceh in Aceh where for 24 months they would assist the DGF in implementing this project The contractor would also serve as purchasing agent for equipmentwhich will be purchased for use in the project as specified in AnnexB 1 Table 7 Up to 12 manmonths of in-country consulting would also be contracted which would address specific problems of fish production marketing and infrastructure planning needed

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by expanding production Looking to the long term need for technically trained manpower within the DGF in aquaculture an additional four participants would be sent for two years each either to the US or the Philippines for post-graduate aquaculture training Upon return some would take over the work of the American advisors and participate in national planning for future fisheries development Participant funding would also be used to complete the support for fisheries partishycipants already under training in planning and economics from the DGF

4 Discussion of Constraints

a Credit Intensification of tambak operation will require credit The BRI serves as a credit source for the agrishycultural sector in Indonesia The GOI insures the bank against losses on long term loans The bank hac funds availshyable for both short term (one year) operating capital and and for longer term (five years) investment capital The terms on short term credit are similar to short term credit loans in other areas For intermediate term credit the bank charges 12 interest and allows one year of grace before repayment begins For tambak intensification and extensification the credit repayment period is four years Typically short repayment periods are used for depreciable assets The loans are not extended and the bank holds a first mortgage on the land Repayment of capital investment in such a short time period requires substantial net incomes from tambak operations In some areas the benefit-cost ratios are excellent and the returns to family labor are high however loan repayments require the family to earn additional income from off the farm for subsistence Many tambak operators or potential operators are willing to receive a low level of spendable income for the four- or five-year life of the loan however a family-size tambak requires full time family labor

With longer term loans or time-phased loans over a threeshyyear period more tambak operators would be willing to reconstruct tainbak for better water control Production from reconstructed tambaks is increased by a factor of three over traditional production Using operating capital only production can be doubled however a high degree of manageinent is required

The optimum size of tambak unit (25 ha) was determined assuming the existing repayment schedules for credit will exist during the life of the project With the optimum size of tambak substantial incomes will be gained by some tambak operators following the repayment period of credit however the operators income will be substantially lower during the loan period Optimum tambak size and loan phasing was detershymined on the basis of spendable income received by tambak families during the project life

b Refrigeration and Transportation Requirements Milkfish are marheted fresh smoked or dried in the project area Over 90 of the current production is transported directly to local markets and sold fresh the same day or the followingmorning The fish are harvested from the pond placed in baskets without ice and transported to market The tambak operator may sell to a collector at the pond site or transport the fish directly to market

Within tambak areas the ponds are located adjacent to each other with narrow dikes Excepting the few tambaks located on access roads the harvested fish must be transported by carrying pole bicycle or motorcycle to the nearest road In some areas the nearest surfaced access vehicle road is more than ten kilometers from the tambak During the rainy season marketing fish requires more labor movement bybicycle may involve three people to push the vehicle to the access road

Shrimp production is marketed for local consumption and for export The shrimp are separated and the larger are sold to shrimp processors while the smaller are retained for local use

The methods of transportation are similar to those for milkshyfish for local areas however for export sales the shrimp are iced and transported to Banda Aceh Lhokseumawe or Medan The main road from Banda Aceh to Medan is under construction in several sections and presently requires 18 hours to travel During wet seasons portions of the road could be impassable An alternate route could be transported by boat to the landing at Belawan (North Sumatra)

Milkfish fingerlings fertilizer and other inputs to tambak operations must be transported into tambak areas Since all

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tambaks are located in tidal areas the feasibility of boat transportation should be investigated by a short term marshyketing specialist The ports and landings have ice facilities and ice could be transported into the area Icing the catch immediately after harvest would retain quality and allow shipshyment to distant markets Boats are also used to transporttambak inputs into the area and in the process of transporting harvest

The refrigeraton plants in both provinces are presentlyoperating at less than capacity A substantial increase in shrimp production from tambaks in North Sumatra could require even additional capacity in that area One plant in Medan is presently expanding and will have sufficient capacity for anyprojected increases in shrimp production from tambaks during the project period

c Road Requirements In future tambak extensification proshyjects the main canal systems should be designed as transportashytion systems In existing tambak systems the dikes and existing roads must be used During intensification proceduresthat involve reconstruction of facilities the dikes can be widened and flattened for easier access by bicycle or motorshycycle The amount of increased production from tambaks will be phased throughout the year and will provide additional year-round employment without causing excessive strain on the transportation system at any specific time period As proshyduction increases more permanent access into the tambak areas will be required Many areas are now accessible only by foot Some relatively simple briges sufficient to support bicycles or motorcycles loaded wilu baskets of fish would improvemarketing efficiency These bridges could be built by local fish farmer associations as a civic project The cost of hard surfacing roads into tambak areas would be prohibitive when considering the economic benefits derived Boat transport duringthe rainy season would be more feasible and represent a much lower cost solution

d Marketing Marketing of milkfish and shrimp in the two provinces is relatively simple in concept The producer can sell to a collector (middleman) sell to a retailer or sell directly to consumers in the local areas

Under prevailing market conditions the majority of the proshyduction is sold to middlemen who arrange for distribution of the

product to larger tcwns The wholesaler will distribute theproduct among local retailers and ultimately the productreaches local markets and the consumer While the productmay pass through three or more hands between the producer and consumer the tirae period is very short A tambaks supplyof milkfish can be harvested in the evening and sold the folshylowing morning

The method of marketing has been established by custom andmaintained by convenience Near perfect competition exists at the producer and retailer levels the intermediate levels appear to approach a market dominated by a few buyers where abuyer has an area and tiie seller has limited choices between middlemen buyers Few producers have sufficient production toinfluence price or volume of an individual middleman No legalrestrictions exist to prevent a tambak operator from direct selling in the market however the costs involved for a limited volume of fish do not warrant this marketing approach

Under the prevailing system the middlemen are able to extract most of the income resulting from short run increased demand atthe consumer level or to reduce the costs at the producer level

Fish-farmer associations cannot legally serve as marketing agentsfor fishermen However within the context of a fishermans association information service to producers can time productionand harvesting to ootain maximum marketing leverage Producers can enter into informal agreements to sell directl to retailers in larger cities As the associations evolve more formal arshyrangemcits between associations within an area can develop

With proper coordination production can be staged to supportdirect sales in the lnarLt or markets The associations canarrange with one wholesaler to handle the entire volume of fish or rent space for direct retail sales The TIAs with assistance from short term marketing specialists can assist the farmer associations in examining the marketing options

e Land Ownership Three levels of land ownership exist in theproject area private adat (communal lands) and governmentalOnly the latter two present special problems For loan funds todevelop or improve tambaks the credit agencies require a firstmortgage on the land In order to obtain a first mortgage thetambak opdrator must have a land certificate On adat landsthe property is held in common and a special letter from the

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chief official of the adat is necesssry to estnblish l earland right-of-use and holding for the operntr lroblens can arise in any adat area when some individuals wish to use credit to improve operations while other members including the chief do not wish to relinquish use control of the land At the present time the bank is accepting for collateral letters stating use rights to land The TIAs will have to work veryclosely with the adat leadership in these areas in order to clearly distinguish the benefits to be gained from intensifishycation

In areas where government land is available a land certificate is granted however the recipient must agree to develop the tambak under land use regulation under the supervision of local fisheries officers The TIPs can work closely with new owners of developing tambaks in order to speed the introduction of new techniques

f Fertilizer Supply Intensification and extensification require inputs of fertilizer Under present arrangements rice production has first priority for fertilizer and receives fertishylizer at a subsidized price During 1974 the subsidized pricewas less than one-third the open market price Under th~se circumstances fish farmers could bid fertilizer away from rice producers at a price substantially above the subsidized pricebut well below the open market price

The ability of fish farmers to bid fertilizer away from rice farmers indicates the rice farmer perceives the gain from the sale of fertilizer to exceed the gain from the additional rice the fertilizer would produce To the contrary some fish farmers are aware that income resulting from using fertilizer will far exceed the cost of the input While the rice farmers logic may be erroneous the fish farmer is correct The marginalbenefit-cost ratio for adding fertilizer and pesticides to tradishytional ponds is about 21

Tambak operation should be recognized as an agricultural entershyprise with the same requirements and priorities as rice productionTambak operators can pay for fertilizer at the market price howshyever as long as a two-tiered price system exists it will be to their advantage to purchase rice fertilizer

g Fry Supply If the intensification and extensification activity achieves the high rate of success which can reasonablybe assumed it is imperative that an ample supply of milkfish fry be provided Presently fry sources along the east coast of

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Aceh province supply both Aceb and North Sumatra FisheryDepartment sources report an estimated surplus of 25-30 million at present However if the application of modern technologyto existing hectarage in the two provinces is coupled with newconstruction to bring potentially suitable brackish water areas into extensive production an additional 250-300 million frywill be needed It is believed that application of improvedhandling techniques by collectors and dealers can assure better survival of fry from existing collecting grounds This savingalone will not provide more than a small fraction of the addishytional fry needed Consequently itwas recommended that a milkshyfish fry survey team be provided to make a thorough study of all potential collecting grounds along the coast of North Sumatra The survey team would make collecting trips during a continuous twelve-month period to locate and establish the productionpotential of grounds in North Sumatra To date DGF officers have located one point where fry have been collected Howeverthe duration and extent of the supply is unknown The DGF plansto initiate this survey yet this year The PFDUs located nearest fry collecting grounds could be assigned the study to determine fry losses during collection and distribution and to evaluate promising methods of minimizing these losses where they are of a significant nature

h Construction Equipment While it is possible to construct tambaks with heavy machinery it is no less expensive than using hand labor Conventional bulldozers cannot operate on the swampy ground so a dragline crane on a floating barge is the usual heavy equipment employed In areas where ground canbe dried during the hot season it is sometimes possible to usewide track low-pressure bulldozers Hand labor is as efficient howeverjn terms of overall cost and is readily available The manual techniques for building tambak dikes and water control structures are well understood by local inhabitants and need notbe taught The various project staff will be trained in simplesurveying techniques and equipped with basic equipment so they can help producers plan and know the size of their different pond units Project staff training will also include information for transmission to producers on basic principles of tambak layout and desirable design features such as size elevationsbank slopes compaction and material selection for dikes gatelocation and size requirements pond clearing and leveling etc

Financial and Economical Analysis

B Background Information on Project Area

The 1971 census provides the following information on the popushylation of Aceh and North Sumatra prcvinces (in thousands)

Province Rural Population Urban Population Total

Aceh 1839 169 2008 North Sumatra 5485 1136 6621

Total 7324 1305 8629

( of Indonesia) (75) (64) (73)

From the above it can be seen that 85 of the population in the project area is rural About 76 of the labor force in these provinces is employed in the agricultural sector

The pattern of per capita consumption in the rural areas of North Sumatra and Aceh is shown in the following table

Rural Aceh and North Sumatra 1974 Per Capita Annual Expenditure Pattern

Annual Per Capita Percentage of Population Consumption Expenditures Expending less than this amount

Rp L2000 ($29) 25 24000 15lo 36000 380 48000 570 60000 ($145) 705 72000 795 840oo 87M96000 ($231) 902

Although the definition of poverty is in no way precise AID has used a variety of indicators to delineate that portio of a popushylation which should be considered impoverished Among these indicators AID has used per capita annual income below $150 in 1969 as a measure of who belongs to the poor majority Given the inflation and foreign exchange rate changes that occurred in Indonesia between 1969 and 1974 it would require $245 (Rp102000)in 1974 prices to achieve the standard of living that a per capita

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income of $150 permitted in 1969 It is clear that more than 90 of the rural population in these provinces fall within this definition of poverty Indeed in 1969 over 90 of the rural population in Aceh and North Sumatra had per capita levels of consumption less than $110

Another indicator of poverty is a daily diet that provides less than some minimum nutritional requirement For Indonesia the minimum daily requirement is estimated at 2150 kilo calories and 50 grams of protein For the project areathe calorie requirement is estimated not to be met for the 36 of the popushylation with per capita annual consumption expenditures less than Rp34500 ($83) Although the statistical information necessary to estimate the portion of the population not reshyceiving adequate protein is not available it is clear that this is even greater than the fraction not receiving adequate calories

Other indicators of poverty and the corresponding statistics for Indonesia are

- Life expectancy below 55 years (Life expectancy on the outer islands of Indonesia is 45 years)

- Infant mortality over 33 per thousand (Estimated at 125 per thousand live births for all of Indonesia)

- Birth rates over 25 per thousand population (The birth rate on the outer islands of Indonesia is estimated at 46 per thousand)

Although information is not available that would permit a quantishytative estimate of the percentage of the population in Aceh and North Sumatra that fit the above three indicators of poverty it is clear from the expenditure distribution information given earlier that this percentage is large

As discussed elsewhere about 95 percent of existing fishpondsin Aceh and North Sumatra are located in Aceh The initial conshycentration of the brackish water fisheries program in the project area will be on the intensification of production from existing fishponds with increasing attention given subsequently to expand the area under production Of the existing 16000 hectares (40000 acres) of fishponds in Aceh it is estimated that 40j are producing shrimpusing traditional techniques 35 are producing

shrimp and milkfishusing traditional techniiues ACare proshyducing shrimp and milkfishwith intermediate technology and only 5 are using modern techniques in the production of milkshyfish The costs of production and earnings to the farmers of these types of production are given in Annex B 4

The size distribution of fishpond ownership in Aceh is as follows

Percent of Percent of Pond Size Farmers Hectares Avg Size Pond

0-I ha 358 131 79 ha 101-2 ha 270 181 174 201-6 ha 300 438 376 60 and above 27072 960

Detailed information is not available on the type of production by farm size However based on qualitative surveys of the region it is believed that the smaller farms are using tradishytional techniques and the larger farms are using intermediate to modern technology Using this conclusion a rough first approximation for the distribution pattern of income from fish farming in the project area can be calculated

of Type of Average Farmers Production Farm Size Average Annual Family Income

Per Family Per Farm Member

111 Traditional 79 Rp43300 Rp 9600 shrimp

18i - - 174 95300 28200 108 - - 376 206000 45800 330 - - 376 288000 64000

and milkfish 20 Traditional 96 735000 163300

shrimp and milkfish

200 Intermediate 96 1080000 240000 50 Intensified 96 2640000 586700

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Baeed on this distribution of inuome app ximte]y 3(4 of hc

farm familins are earning less than the amoxmt necessary to maintain a minimumly awequate dietand about 74 fall below the $150 per capita income (1969 prices) poverty indicator level

As discussed elsewhere the intensification program will benefitall of the above farmers The extensification program will be structured through its related credit activities and land certishyfication policies to have its primary impact on the poor Farmsin excess of five hectares will not be allowed and the credit program will be designed to encourage family labor and maintain family income at no more than a minimally acceptable level duringthe development phase - thereby encouraging participation in the program by the poorer rather than the more well to do elements of the population

Financial Return to Farmers

Intensification The detailed schedule of costs and benefitsborne by the farmer for intensification and extensification are given in Annex B 4 They are summarized below

Intensification (25 ha farm in Aceh)

(Rp 000)

ItemType of Production

Traditional Shrimp Shrimp

and

Inter-mediate

Intensified AIntensified B Year 1Year 2 Year 1Year 2

Milkshyfish

Investment Costs Secondary Dikes Gates and Screens

0 0

0 0

0 0

92 100

0 0

92 100

0 0

Operating Costs Family Labor 95 97 99 107 107 103 103 Fry fertilizer

etc 0 50 88 253 253 250 250

Interest Costs Capital Operating

0 0

0 8

0 13

23 38

0 38

23 38

0 38

Total Costs 95 155 200 6a3 398 606 391 Gross Sales 138 250 383 772 772 998 998 Net Farm Income 43 95 183 159 374 392 607 Farm plus family 138 192 282 266 481 495 710

labor income

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It is clear from the above that projected yields or prices would have to be significantly reduced before intensification would cease to be profitable for farmers Thusprojected yields or prices (both of which are conservatively estimated) for Intensified A would have to decrease more than 25 to reduce family income to the same level as the Intermediate level A reduction of 43 would be necessary to reduce family income under Intensified B to that obtained at the intermediate level At the projected levels of productionthe capital costs of moving to Intensified levels A or B are recovered within one year

In terms of the total family income associated with the above levels of production the two traditional levels of production and the intermediate level provide incomes that are below the AID poverty indicator level The income obtained from tradishytional shrimp production is insufficient by itself to permit a minimally acceptable level of nutrition Intensified A proshyvides income that is 5 above AIDs poverty levelwhile Intensified B provides income that is slightly more than 50 greater than the poverty indicator level

Extensification The summary costs and benefits for the extensification program in North Sumatra are summarized below The data shown here for costs differ from the previous intensishyfication table for Aceh primarily due to the higher estimated cost of fry in North Sumatra Gross sales are based on a projected five year period to obtain a level of production corresponding to Intensified A technology Projected earnings are conservative in that the following analysis assumes no increase in yields beyond Intensification level A A movement to Intensification level B would double net farm income

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Extensification (25 ha farm in North SunmtraO

( cax

Year 1 2 3 4 5 6 7 8

Investment Costs

Iamily labor 140 140 113 92 (10 0 0 0 Other labor 0 45 0 0 0 0 0 0Other costs 121 0 0 30 0 90 0 0

Operating Costs Family labor 0 0 27 48 106 106 106 106Other labor 0 26 3 0 0 0 0 0Other costs 0 5 20 99 385 390 385 380

Interest Costs Capital 26 31 38 39 41 27 10 1Operating 0 0 3 15 59 59 59 59

Total Costs 287 247 204 323 591 672 560 546

Gross Sales 69 160 206 325 773 773 773 713

Net Farm Income -218 -87 +2 +2 +182 +101 +213 +227

Plus Borrowings 218 185 113 122 0 0 0 0

Less repayments 0 93 105 109 128 42 149 12

Plus Family labor earnings 140 140 140 140 106 106 106 -)6

Equals spendable family income 14o 145 150 155 160 165 170 321

The financial rate of return represented by the above net farm income (excludingcapital interest changes) is 35 The financial rate of return is over 100 when family labor income is added to net farm income

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C Economic Returns and Employment Creation

As discussed above for the intensification program farmer investment costs are Rp192OO per 25 ha farm ($185ha) Of these costs Rp92000 are labor costs associated with digging secondary dikes and RplOO000 are for gates and screens shywhich also includes a significant labor content The increase in operating costs associated with intensification are primarily due to greater payments for fry (mainly cost of labor) and fertishylizer If all the costs associated with this technical assistance projectas well as the related ongoing GOI budgetary expenditures are added to the above investment and additional operating costs for intensification the economic internal rate of return for the intensification program is over 100 As noted abovethis is conservatively calculated on the basis of intensification level A

Farmer investment costs for the extensification program in North Sumatra are Rp771O00 per 25 hectare farm ($743ha) Of these costs Rp531O00 are direct labor costs Rp210000 are for gates (which includes a significant labor component) and only Rp30O00 are for strictly non-labor costs

The economic internal rate of return for the extensification proshygram in North Sumatra is 35 The IRR for extensification in Aceh would be higher due to the lower cost of fish fry The calcushylation was based on earnings from Intensification A andhenceis conservative

The total employment creation due to the intensification and extenshysification programs will be about 1500 manyears in the second year of the program 6000 man years in the fifth year and 20000 man years in the tenth year

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J Sccial Analysis

The opinions in this presentation were derived from a study of literature as recommended by Dr Sajogyo of IPB Rural Socioshylogy Department information collected in interviews by the feasibility team and conversations with people from the proshyvince presently working in Jakarta Specific references to the literature were 1) M Sc dissertation Muhammad Amin AzizRural sociology University of the Philippines 1973 Entreshypreneurial Behavior among Acehnese Farmers 2) a case studyby Herman Soewardi 1972 Village Societys Response Toward the Modernization of Agriculture Production and 3) Southeast Asian Studies Vol XII No3 November 1974 Tomoo Hattori Agriculture of Six Villages in Central Thailand and Central Java

a The Project Area

The subproject area is located in Kabupatens of Aceh and North Sumatra Provinces of Indonesia This encompassesthe northern coast of the two provinces The following data is provided to show the place of fish farmers in the area

Total Fish Tambak Additional Kabupaten Population Producers Area Tanbak Area

and Family Existing Potential (1972)

Aceh Province

Aceh Besar 181339 1372 1051 1700Pidie 291026 4473 3530 6000 Aceh Utara 471589 14593 8949 13750Aceh Timur 303632 4590Not identified 2318 54000

by kabupaten 650

North Swnatra Province Deli Serdang 1431633 610 803 20000 Langkat 523212 234 145 14500 Asahan 587348 192 154 12500

3789779 26064 17600 122450

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Participants of the project live in open villages along the coast which are situated on higher ground but within walking distance of the fish ponds They are in the fish production business and are in the cash economy to the extent-that few are engaged in other farming activities They thus sell their fish to buy other food items The population is made up of Acehnese Javanese Bataks and coastal Malays

They operate as family units and consider their loyalty first to the family and then to the community There is little interest in tribal affairs and they are found to consider their religious affiliations and service to the community as demands that must be met

The religion of the area is predominantly Muslim and the people of Aceh are known in Indonesia as being conservative and basic in their doctrine North Sumatra is less conservative but the Muslim religion still is predominant in the rural area

Land ownership is considered to enhance ones status in the comshymunity and this is reflected in the farmers motivations The survey found little evidence to support a non-owner operator condition in the project areas This is not true in other areas of Indonesia where population densities are greater and one finds four different types of holdings in tambak farming

i Operated by the owner and his family with a small amount of hired labor

ii Absentee ownership with the owner responsible for all costs and laborers to do the work

iii Share arrangements with the owner responsible for all costs and the tenant doing all the work and receiving a 50 share of the crop

iv Rent arrangements where Rp25000 to Rp50O00 are paid per year regardless of the number of crops

The decision of the government to open new lands to settlement was well received in the area There is to a degree overshypopulation on some of the existing farms and these farmers are looking for new lands for their sons and also in larger numbers there are deck hands on fishing boats that wish to leave the sea and its poor pay and settle on fish farms These people are largely Javanese and have had prior experience

in fish farming before being displaced by population pressure The settlement plan of both provinces is directed toward emll owner-operator holdings

b Project Organization

From a project administration standpoint little new is contemshyplated by the project The GOI is presently organized on a line staff basis The DGF headquarters in Jakarta has its function of program development and instruction to its provincialstaff as to what where and when The how part of the formula is largely left to the provinces and they are expectedto contribute this at the time of design They are held responsible for implementation and reporting This project is a product of consultants DGF and provincial design efforts Both provinces have sections for sea fisheries and brackish water fishery production the latter represented in the kabushypaten by district officers demonstration stations (PFDUs) and intensification agents (TIAs) Lacking at this time is a program and training and equipment

From a farmer standpoint there is also little contemplated in changing the present system of operations The farmers are largely owner-operators in a cash economy and their production system reflects this fact They are largely unorganized but react to outside information Such information will come throughthe TIAs the PFDUs and the farmers associations The farmers are used to farmer association organizations and they have been used successfully in the past In the project there is a lack of information and it is to this end that the project is directed The how and when of production will be extended and the market conditions will also be provided for the farmers to use in their decision-making process Membership in these associashytions is not compulsory but represents a grouping of those farmers who wish to join (most do) who elect a governing body select a meeting place in the area (usually a coffee shop thatis made available free by the owner) assess their members 1 -3 of their gross sales use the money on schools playgroundsand other social activities provide production information receive visitors and provide (by black board) yesterdays proshyduct (input and output) prices

The project can be replicated in other areas of the province andindeed in other areas of Indonesia It is to the first howeverthat the GOI is looking at this time There is an additional 122000 ha of land in the two provinces that can be opened up

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for settlement and replication of the project principlesBoth provinces have plans for this effort at this time Theyare however awaiting the testing of the technology by the project before launching an extensive expansion effort

Land holdings in North Sumatra are by certificate and in Aceh where community land holdings (Adat) are the rule land use is by letter of use The latter is acceptable to the banks for collateral purposes and completely accepted by the land users In both cases the operator is subject to expropriashytion and in both he is compensated for surface improveshyments From the point of view of the projectthere is no objection to either type of holding

No new laws are contemplatedand disruption of present social organization is not seen as a consequence of the project

c Allocation of Time

With the exception of the large holders who are not directlyassociated with the project the land holders are in the cash economy and consider their first responsibility to be their farm Except for a home garden usually trees these farmers are not engaged in other agricultural activities and are not consishydered in the subsistence agriculture society The units encountered are full time farms which if intensified willproduce good income for the holders Wives of the fishermen spend little time actually working on the tambaks They have the responsibility of maintaining the household Some will collect fry at various seasons of the year but they do this only to provide added personal income At seasons in the proshyduction cycle the farm family will engage outside labor butby large this is obtained on a shared labor basis There is usually no more than one farm harvestIng at one time due to marketing requirements This is in practice now and there is little chance it will change and it is not desirable to changeOperational time requirements after intensification put littleadditional labor requirements on the participant Well built and stocked ponds require considerably less time than presentconditons where dikes are continually bursting gates are notoperational and considerable time is required sorting unshydesirable fish Marketing is a different story as here thefarmer with more product will be required to spend more time getting the fish to market or if he opts to sell to middlemen The first option appears from interviews to be the one that the farmer will choose

Leisure time was found by Aziz to be a valued objective ofthe farriers This time is not wasted as the farmersspend their leisure talking with friends business associates and village leaders Azis found that 100of his sample respondents learned some of the what wherefand when of agriculture innovation from these meetings Healso found that it is a goal of each farmer to be heard atthose meetings and to add his knowledge to the conversation

A fish farmer with from two to three hectares of holding willbe fully employed on his farm With less land he will seekoutside employment and with more he is required to hire additional labor

d Motivation

The farmers of the area are basically motivated by a desirefor consumer goods These include a better standard of livingthat is tempered by a feeling that one should not be extrashyvagant| savings for wedding and burial obligations and edushycating their children There is also the ever-present desireto be able to obtain land for their children and the feltobligation of being hospitable to visitors The income of thewomen of the area derived from the garden and fry collectionis for additional household consumption savings andprimashyrily for the education of their children

e Minimum Profile

The project design anticipates that 27 of the tambak fishfarmers in the area will put into practice the new technologyby the end ofear 2 It is felt that this percentage will besufficient to reach a take-off point at the end of the actualproject and allow for continued intensification and extensishyfication in subsequent years Hattori found that the averagetime response for technology adoption by farmers without intenshysive extension work in Indonesia was 10 in the first two yearsand that this rate rose to 50 in the next two years He foundthat the time lag from information to adoption was approximateshyly 066 years in villages in cash economy Hattori found thatintroduction adoption resulted from information obtained fromI) recommendation by governmental officials (61) 2) seeingresults from neighbors (35) 3) seeing results of extensionfarms (39) and 4) farmers who after obtaining information from

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-)t~er sources cons i~rc it worth a tr Wgspecificall with Aceh Azi otund th a ohtlind infornation from the follovin sources which they lAter used 1) chatting at the mosque (100l) 2) chatting at a village meeting ground (100o) 3) listening to agrishyculture extension programs on radio (337) 4) listening to radio news (31Z) and 5) others (22)

Adoption will be encouraged by the project through village meetings (farmer associations and others) encouraging disshycussion at the mosque (Aziz found that one of the goals that a farmner seeks is to be able to speak and be listened to at a meeting) the provision of well trained TIAs who will meet the farmer and provide radio information and the provision of demonstration farms (PFDUs) Some information on the new technology is presently in the area and being used by the large farmers including some private companies with holdings up to 60 hectares This also will be a source of information to the small farmers

The population of the area is made up of several segments

I) The rice farmers farming the lands above the swamps are presently using improved varieties and have some of the best rice the survey team has seen in Indonesia They are open to innovation and have support from the BIMAS programs and should not object if their fish farming brothers have governshyment support 2) Fishermen who are catching shrimp tuna and other small fish in the ocean The tuna fishermen are receptive to innovation and are receiving assistance from a long-line tuna project in the area Shrimp fishermen will benefit from the marketing aspects of this project as their product will be marketed through the same facilities It might find competition from tambak production but it is felt this will be outweighed by the movement of some sea fishermen

to new lands and the consequent reduction of sea catch and also by the fact that growth of the area is being promoted by the petrochemical industry and new markets in the developmental stage are evolving every day 3) Consumers made up of urban inhabitants loggers and oil workers who can only stand to benefit from increased supplies on a reliable basis 4) Nangrove crab catchermen and charcoal makers who will experience temporary dislocation When extensification occurs some of the habitat for the mangrove crab will disappear These men will have to seek alternative employment but the project takes this requirement into account The charcoal makers will in the long term also lose some of their supply Their work at this time is not licensed and one could assume that they could move

inzo the mcuntains (-ore frmend on by the governmrent than their present cuttings) seek alternative employment or join in the fish farm settlement scheme 5) Tambak farmers who are the recipients of assistance from this project

All elements of the central and local governments support the project and no indications were received by the survey team that vested interests will place obstacles in the path of the project

2) Spread Effect

The project will have effects on several sectors in the area The participants of the projects direct involvement are the small fish farmers of the area There are presently some 5]00 of these individuals and the GOIs gcal is to bring an additional 59601 ha of land into the sector in the next ten years While these small farmers are now operating at or near the subsistence level with the introduction of technology they might move into the upper quartile of the rural income group Even at that level they will not be rich Aziz indishycates that the average family size is 45 and this means that 130000 people will be directly benefited by the project Further discussion of this area is covered in part IE2 of this report

Fish fry are presently collected by women and children of the area The two-year goal of 60 million fry per year will provide employment for some 300 women and children (500 fry per day 100 day year) The task is not usually done by the farmer as he feels a community responsibility of allowing widows and children a livelihood from this activity

Employment generation is estimated at 1500 manyears in the second year of the programraising to 6000 in Year 5 and 20000 in Year 10

Shrimp processing factories in Medan are presently three in number and are employing some 7000 people mostly young girlsand women They are presently marketing some 1500 tons of shrimp per month Two of these plants are planning expansionand it is envisioned that at least two plants will be needed in the long term in Aceh

The petrochemical industry in the region is developing at a fast rate This industry will need an additional food supply during the development stage and a lesser amount during operations

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Infrastructure development financed through Inpres (GOI revenue returned to the districts) will expand and create employment for construction and maintenance Farm-to-market roads are necessary and are being programmed by the provinces New fish markets will be required as the area expands and this will also provide employment to the region

Consumers of the area will also benefit from the project Fish is a priority component of the diet of the area Consumption in the area is presently running between 8 kginhabitant in the highlands to 23 kginhabitant in the coastal villages The GOI believes that 30 kginhabitant is a good target

a Leadership

Village leadership in the area is not lacking From a goveraishymental standpoint leadership on both areas is reasonable and accepted by the population This governmental leadershyship recognizes and uses the local leadership in all its programs The farmers-association concept works well in the community The associations were one of the prime extension vehicles for making the rice intensification program in the area a success The propensity of the farmers to obtain information by chatting at the mosque and in the village has also been used by all arms of government Radio broadcasts are common and received by the inhabitants

Village leadership in the communities is not inherited Aziz found that the villagers chose their leaders based on the following characteristics

Heredity 3 Religion 17 Wealth 2 Knowledge 46 Rationality in arguments 2 Relations beyond the village (business connections) 25

There is also a strong desire on the part of the farmers to be involved in community activities with specific reference to the introduction of technology into the community Leading farmers budget for expenses involved in comminity efforts in the farm budgets and expend the effort to fulfill their obligations Farmers strive to contribute to the village body of knowledge and spend their leisure time to this

en ALizs findings indicate that blIf of the people placea high value on obtaining knowledge and establishing reshylations beyond the village This can be interpreted as adesire for new knowledge and the capability of going outand getting it

Changes in this leadership requirement are not needed5 infact it represents what is believed is needed in the rural comunity

b Patterns of Mobility

Project professional officers will be provided with vehiclesin order that they can function in two areas 1) projectsupervision and 2) provision of a source of new knowledgeto the farmers The need was evidenced during the feasishybility study where repeatedly the team was asked where DrSchmittou was (he had visited the area in November 1974)and could they show us what he had recommended and how theywere implementing it Project subprofessionals will beequipped with motorbikes in order that they can be on thefarms at PFDU and in the village meetings

The participants in the project are mobile They areinvolved in the cash economy and regularly travel to thevillages on marketing trip These trips are undertaken onprivately owned bicycles (with side baskets for fish) inrented vehicles (there are passable roads within 2 kmmost farms) by small privately owned boats of

or by walkingIt is during these trips that they are receptive to chattingwith leaders and either gaining knowledge or imparting it

While the project area on a map of Indonesia seems largethe locations of the land resources available for technologyintroduction are several small enclaves situated alongthe coast where small and large streams enter the seaand along canals dug for the purpose of having sea waterinterchange in the tambaks In Aceh there are five ofthese enclaves at the present time none of which has aradius of more than 15 km Even within the largest enclavethere are several market points and villages at a maximumof 3 km distance from the tambak In North Sumatra theenclaves are more concentrated except for the Deli Serdangarea which is a swamp area with laterite hills relativelyclose to the estuaries In this area (accessible only byboat) the tambaks are located about one farm deep along theestuaries and extremethe distance may be up to 30 km

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There are however many villages in the area as a result of primary extraction of petroleum products Fishermen in this area are presently traveling up to three hours by nonshymotorized boats to market their fish and obtain information and supplies

The project design has taken this information into account and allotted TIAs at the rate of one TIA per 300 ha of tambak

c Other Project Effects

Intensification work on tanbak in Indonesia is in its third year Technology has been imported from Taiwan and the Philippines and for the past three years this has been refined at Jepara (experimental fields) and in the province of South Sulawesi (working with farmers) The Jepara station is supported by the UNDP An IDA credit (No 80) is also operational and is directed at the estashyblishment of a tambak credit scheme design and implementashytion and intensification of selected smallholder brackish water ponds along the northern coast of Java and on South Sulawesi Both of these projects were reviewed by the feasibility team and found to be well designed and effective The lessons learned by these two projects were taken into consideration by the project designers

Additionally the project area is currently subject to development demands from the oil sector and public works There are at least three areas where extensive development plans are being implemented in the petrochemical sector One is in the Deli Serdang area of North Sumatra and the other two are in the southern part of Aceh where multishymillion dollar investments are proceeding related to natural gas Pertamina (State oil corporation) prior to its financial problems had plans to improve the main road in Aceh Timur Its present plans are not known but the feeling in the GOI is that the work will be done by Pertamina or Public Works Improvement is not critical to the projectdesign but would have a positive effect on fry prices in North Sumatra

The improved transportation in Aceh will have a positivemarketing effect on the project as will the petrochemicalindustry development The project did not try to quantify the indirect effects that this development will have on

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project success Returns to the project are fully satisshyfactory without taking these factors into consideration

d Information and Resource Distances

The areas of intensification and extensification designatedin the project area are contiguous units Technology isalready moving into the area by work of the large farmersand spread effect to small farmers was witnessed by thefeasibility team The critical elements seen as missingin the area were a project infrastructare base trainedextension workers technology and market informationEach extensification agent (TIA) will be located in an areawith his participants living in a 1000 ha area (each TIAwill be assigned 300 ha of selected tambak upon which hewill work on technology introduction) From a distance pointof view he will be at a great advantage over the rice intenshysification program where lands are more scattered Indonesiais considered to have a good rice production program throughthe BIMAS effort and this leads the project designers tobelieve that a better record will be obtained in this projectwhich enjoys a more contiguous area

From a vertical information standpoint the project istraditional with lines of authority and information passingfrom the Jakarta headquarters to the provinces the districtsand to the farmers The project also programs the use of a horizontal information system with information from theselected farmers passing into the community and on to otherfarmers This design is compatible with the informationAziz obtained from his studies of the area

3 Social Consequences and Benefit Incidence

Tambak improvement is one of several programs in the areadesigned to enhance the social and economic welfare of the rural poor Rice and upland crops are covered by BIMAS Inpresgrams and are providing infrastructure such as proshy

schools clinitsand transportation facilities Estate crop developments aresupported by government programs The demands of the petrocheshymical industry in the developmental stage will be large andcreate large numbers of job opportunities Sea fishermenreceive support from the government and the private sectorTambak fishermen and livestock owners appear to be among the have-nots of the area

This project is designed to help the tambak farmer Thesefarmers are using resources that have little economic value to

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enterprises other than fish farming There will be no disshyplacement of people in the intensification area except for a few hundred charcoal makers (presently unlicensed and operating without the blessing of the government) and crab catchermen The project will offer alternative opportunities to these people through creation of employment and availabishylity of lands for settlement The consumer of the area feels that fish is in short supply and thus somewhat high in price The increased production resulting from this project will serve to keep fish prices from increasing as they otherwise would from increased demand

There are approximately 900 large land holders (greater than six ha) in the area While the project will not be directly related to these individuals they will reap benefits from the project They are presently leaders in the community and their assistance must be sought They cannot be replacedwithout upheaval in the area All constraints identified in the PRP have been taken into consideration prior to the project design fertilizer is available land zoning and use-rights programs are in place and budgets have been assured Subshysidiesother than governmental infrastructure are not included

The project is a labor-intensive project Capital material cannot be used in the area If development is to take placelabor will be required but the development of tambak is not seasonaleg labor can be hired at any time it is available and efficiently used This might be during the off season in the small grain crops area Once a tambak is improved it becomes a family operational unit Data on labor is shown in the economic analysis section

Rural displacement is not a part of the project Settlement is to be considered by the project for later extensification proshygrams There is a ready body of men available to take up the new lands in the proposed intensification units They will be drawn largely from deckhands from the present shrimp fleet operating in the area These men predominantly Javanese have had experience in tambak prior to being displaced from overpopulated areas of Java Javanese currently make up some 50 of the tambak owners and are well accepted by the commushynity

No significant changes in the rural power structure are enshyvisioned The area has a democratic village structure and leaders are selected on a democratic basis This structure is not static and will change as new individuals become recogshynized Some of these will come from tambak farmers

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implementation Arrangements

A Analysis of the Recipients and AIDs Administrative Arrangements

1 Recipient

The grantee is the Government of Indonesia (MI) The executingagency is the Directorate General of Fisheries (DGF) of theDepartment (Ministry) of Agriculture Implementation will becarried out by their provincial organizations In each provinceunder the guidance of the provincial fishery officer therewill be appointed a project program supervisor (PPS) who willestablish a program committee and establish district fisheriesdevelopment units (PFDU) at sites designated in the projectreport and tambak intensification agents (TIA) who will bestationed in the field under supervision of the PFDUs at therate of one agent per 300 ha of tambak With the exception ofan additional hire of 33 TIAs all the required staff ispresently crployece by the DCF New TIAs with fishery highschool certificates will be hired This type individualis not in short supply Presently the GOI graduates 110 peryear Assurance has been given that the required numbers (40)will be posted to the project as soon as the project agreements are signed

The DCF has good administrative capability It is one ofthe best organizations in this regard that the USAID has dealtwith in Indonesia in recent years It delegates authorityperforms in a timely manner and enjoys excellent rapport and staff working arrangements The staff does needtechnical training at all levels and the project addressesthis requirement Training needs are both academic and jobspecific This training will not have a braking effect on project progress

Organizations associated with the project areplanning units 1) the provincial(BAPPEDA) 2) the Bank Rakyat Indonesia (BRI)3) th provincial office of Agraria and 3) the private sectorAll of these organizations were interviewed during the feasibishylity study and found to be responsive Both provinces havesettlement programs (agraria) and a review of their programsas they relate to tambak showed them to be well orientedProgress to date on issuance of titles and certificates indishycates that canthey meet the project demands ithout addedstaff or training The BRI programs are very well designedand they have been meeting their targets in both provincesOfficials of the BI indicate that they callmeet the new targets without assistance The provincial planning unit inAceh is particularly sound Its capability was reviewed by

Plan f1 -oer n ve e tn4 02 et Plannin 1na38 e o stoject (497-C3V to ne the in Indonesia The North Sumatra P considers the project of value and participated in the project development Given the statements in the GO1 letter of request for this project the USAID does not see any stumbling blocks from these organizations

2 AID

This project is largely a technology transfer project and the USAT has chosen to implement it through a contractor -ertain local cost commodities will be procured directly by the Mission and it will also handle offshore training JSAID-aiministrated trust funds will be used to support the contractor personnel in the field

A USAI-) project manager will be appointed by the LSAID It is presently contemplated that this assignment will be given to one of the agriculture division staff and that additional positions are not needed The other duties such as training and procurement can be handled by the poundission with positions presently assigned

B Implementation Plan

The project for AID purposes is considered a two-year funding project with three years of implementation For GOI purposes some of the work is being done under current year budgets and they will provide support for an additional three years The initial critical points for the project are in getting the GOI budget submitted by the October 15 1975 deadline and agreeshymvnt on the project from AID before December 1975 in order that funds nay be included in the GO FY 197677 budgets

ther important project implementation actions are listed below The dates shown are proposed schedules for taking important actions and are slightly earlier than the Critical Performance Indicator (CPI) dates by which certain performance levels must be performed if the project is to succeed

AI)ontractor

1 October 1975 Project Paper completed and transmitted to AID

2 )ecember 1975 AIDW paper review completed allotments transmittedi to USAI]) and project agreeshyment and implementing documents signed and transmitted to AIDW