Report No. 3170a-IND Indonesia E CoPY Transmigration Program Review (In Two Volumes) Volume 1: Summary of Major Findings and Recommendations April 2, 1981 East Asia and Pacific Regional Office FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Before November 15, 1978 US$1.00 = Rp 415 Rp 1.00 = US$0.0024 Rp 1 million - US$2,410 After November 15, 1978 US$1.00 - Rp 625 Rp 1.00 = US$0.0016 Rp 1 million - US$1,600 WEIGHTS AND NEASURES - METRIC SYSTEM 1 millimeter (mm) = 0.039 inches 1 meter (m) = 39.37 inches 1 kilometer (km) = 0.62 miles 1 square kilometer (sq km) 0.386 square miles 1 hectare (ha) = 2.47 acres 1 cubic meter (cu m) - 35.31 cubic feet 1 million cubic meters (MCM) - 811 acre feet 1 liter (1) - 0.264 gallons (USA) 1 liter/second (1/s) = 0.035 cubic feet per second 1 kilogram (kg) = 2.2 pounds 1 metric ton (ton) = 2,205 pounds INDONESIAN FISCAL YEAR April 1 - March 31 FOR OFFICIAL USE ONLY ABBREVIATIONS ATT - Agricultural Technical Team BAKOPTRANS - Badan Koordinasi Penyelenggaraan Transmigrasi - Coordinating Body for Executing Transmigration CRIA - Central Research Institute for Agriculture DGA - Directorate General of Agraria DGE - Directorate General of Estates DGFCA - Directorate General of Food Crops Agriculture DGT - Directorate General of Transmigration DOA - Department of Agriculture GOI - Government of Indonesia IGGI - Inter-Governmental Group on Indonesia IPEDA - Iuran Pembangunan Daerah - Land Tax JMT - Junior Minister for Transmigration NES - Nucleus Estate and Smallholder NPV - Net Present Value PIR - Perkebunan Inti Rakyat - A program to establish new migrants on tree-crop smallholdings PMU - Project Management Unit PNP - Perusahaan Negara Perkebunan - State-owned Estate Enterprise PTP - Perseroan Terbatas Perkebunan - State-owned Estate Corporation operating under the commercial code Repelita - Rencana Pembangunan Lima Tahun - Five-Year Development Plan REC - Rural Extension Center SATDAL - Satuan Pengendali Transmigrasi Control Unit for Transmigration SKP - Satuan Kawasan Pengembangan - Development Unit for 2,000 Families TSP - Triple Superphosphate GLOSSARY Alang-alang - A coarse grass (Imperata cylindrica) Padi gabah - Threshed unhusked rice Pasang surut - Coastal swamp influenced by tidal action Rawa - Freshwater swamp Thisdocument has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. INDONESIA TRANSIIIGRATION PROGRAM REVIEW TABLE OF CONTENTS VOLUME 1: SUMMARY OF MAJOR FINDINGS AND RECOMMENDATIONS Page No. SUMMARY AND CONCLUSIONS ... . . . . . . . . . . . . . . . . . . i-viii INTRODUCTION .... . . . . . . . . . . . . . . . . . . . . . . 1 1. BACKGROUND.. 3 Hlistorical Overview . . . . . . . . . . . . . . . . . . . . . 3 Past Transmigration Projects. . . . . . . . . . . . . . . . 3 Past Performance . . . . . . . . . . . . . . . . . . . . . 4 Factors Affecting the Formulation of the Repelita III Transmigration Program . . . . . . . . . 6 Increased Pressures for Transmigration . . . . . . . . . . 6 New Developments in Agriculture . . . . . . . . . . . . . . 7 Organizational Changes . . . . . . . . . . . . . . . . . . 8 Increased Funding. 8 The Repelita III Transmigration Program. 9 Current Program Status .10 2. MIGRANT WELFARE AND FARMING SYSTEMS FOR TRANSMIGRATION . . . 12 General Findings . . . . . . . . . . . . . 12 Recommendations on Farming Systems . . . . . . . . . . . . . 14 Farming Systems for Swamp Reclamation . . . . . . . . . . . 14 Farming Systems for Upland Transmigration . . . . . . . . . 14 Agricultural Supporting Services . . . . . . . . . . . . 16 Tree Crops for Transmigration . . . . . . . . . . . . . . . 18 Benefits . . . . . . . . . . . . . . . . . . . . . . . . 18 Demand for Tree Crops . . . . . . . . . . . . . . . . . . 20 Alternative Systems for Introducing Tree Crops .21 Issues in Tree Crop Establishment . . . . . . . . . . . . 22 3. PROGRAM EXPANSION, RESOURCE USE AND PROJECT QUALITY . . . . 24 Program Expansion .24 Optimal Use of Managerial Resources in the GOI Program. . 24 Promotion of Spontaneous Migration. . . . . . . . . . . . 25 -2- Page No. The Use of Natural Resources ... . . . .... . . . . . . 28 The Rehabilitation of Grasslands . . . . . . . . . . . . . 29 Timber Disposal . . . . . . . . . . . . . . . . . . . . . . 31 Environmental Awareness . . . . . . . . . . . . . . . . . . 32 Project Quality . . . . . . . . . . . . . . . . . . . . . . . 32 Project Preparation ... . . . . . ..... . . . . . . . 32 Land Identification ... . . . . . ..... . . . . . . . 33 Land Development Standards ... . . ...... . . . . . 33 Program Coordination ... . . . . ..... . . . . . . . 34 Institutional Development ... . . . . . . . . . . . . . . 36 4. THE OVERALL TRANSMIGRATION PROGRAM: THE DEVELOPMENT STRATEGY AND THE ROLE OF EXTERNAL ASSISTANCE . . . . . . . . . . . . . 37 The Development Strategy . . ... . . . . . . . ..... . 37 Program Objectives ... . . . . . . . . . . . . . . . . . 37 Program Uniformity ........... 39 Resource Constraints ... . .......................... . ..... 39 Development Strategy ... . . . . . . . . . ...... . 40 The Role of The World Bank . . . . . . . . . . . . . . . . . 40 Settlement Components . . . . . . . . . . . 41 Program Development ... ..... . . . . . . . . . . . . 42 Possible Project Pipeline ... .. .. . .... 43 Coordination of Donor Activities ... . 44 APPENDICES 1 - Conclusions and Major Recommendations . . . . . . . . . . 45 2 - Tables 1 - Location of Repelita III Transmigration Sites . . . . 54 2 - Repelita II Swamp Reclamation Sites . . . . . . . . . 57 3 - Regional Distribution of Tidal Swamp Development During Repelita II and III . . . . . . . . . . . . . . . . 58 4 - Repelita III Targets for Swamp Reclamation . . . . . 58 5 - Summary of Nucleus Estate and Smallholder Projects 59 6 - Proposed PIR Program (1980/81) . . . . . . . . . . . 60 3 - Note on Integrated Annual/Perennial Cropping Systems . . . 61 LIST OF TEXT TABLES 2.1 Yields Reported in Five Transmigrant Communities . . . . 13 2.2 Transmigration Schemes With and Without Tree Crops . . . . 19 2.3 Cost-Benefit Ratios by Year Tree Crops are Introduced . . . 20 4.1 Distribution of Central Government Development Expenditure by Sector for Each Province. . . . . . . . . . . . . . . . 38 -3- Page No. FIGURES 1 - Government Sponsored Migrants to the Outer Islands, 1905-1980 . . . . . . . . . . . . . . . . . . .5 MAPS IBRD 12696 R3 - INDONESIA - Administration and Population IBRD 15329 - INDONESIA - Activities Related to Land Settlement in Pelita III VOL[JME 2: ANNEXES Annex 1 - Key Constraints to the Implementation of TTpland Transmigration Annex 2 - The Swamp Development Program Annex 3 - Tree Crops for Transmigrants Annex 4 - Moving with the Flow: The Case for Spontaneous Transmigration in the Indonesian Transmigration Program -4- Working Papers for the Upland Program Review /a I Maps II Project Components, Transmigration II III Working Papers on Agriculture III/I Soils - I. Maude III/2 Cropping Systems for Red-Yellow Podzolic Soils - CRIA III/3 Migrant Welfare in Five Transmigrant Communities - G. Davis III/4 Upland Cropping Systems - A. MacMillan IV Working Papers on Physical Planning and Land Development IV/1 Resource Inventories for Transmigration - J.P. Malingreau IV/2 Standards for Physical Planning - A. MacMillan IV/3 Forestry Aspects of the Transmigration Program - L.G. Blomkvist IV/4 Additional Tables on the Implementation of Swamp Development - P. Momal IV/5 Additional Tables on the Economic Evaluation of Swamp Development - P. Momal IV/6 Swamp Program Accomplishments and Plans - P. Momal TV/7 Design of Government Canal Systems in Coastal Swamps - P. Momal V Working Papers on Organization and Manpower V/1 Organization and Functions of TKTD and Organization and Functions of PTPT - A. MacMillan V/2 Organization and Functions of DGT and Organization and Functions of Other Agencies - H. Thias V/3 Organization Charts for Swamp Development VI Working Papers on Costs VI/1 Regional Implications of Transmigration Expenditures - R. Key /a Available on file in the East Asia Projects Department. INDONESIA TRANSMIGRATTON PROGRAM REVIEW /1 SUMIMARY AND CONCLUSIONS 1. The transmigration program is a part answer to a number of problems facing Indonesia: employment opportunities for the rural poor, resettlement of farmers from critically impoverished watersheds and disaster areas, food self-sufficiency, and the development of remote and underpopulated provinces. The W4orld Bank recognizes the role which transmigration can play in meeting Government of Indonesia (GOT) objectives, and it is aware of the risks and responsibilities entailed by support for a resettlement program on the scale proposed. For this reason, the Bank has reviewed the upland, swamp and tree crop subsectors to identify the conditions for program success and to define those steps required to assure them. 2. The review indicates that the Government has made significant progress in mobilizing agencies and resources in support of the recently expanded transmigration program. In the first two years of Repelita III (the third five-year development plan), over 90,000 families were resettled, compared to 48,000 families in the preceding five years. The Public Works Department initiated studies to identify land suitable for the settlement of 300,000 families; the Directorate General of Transmigration (DGT) undertook a program to develop small sites (less than 2,000 families each); and the estate sector laid plans to establish tree crops for 75,000 new transmigrant families. The Directorate General of Agraria (DGA) began reviewing the status of land reform and land transfer in the outer islands, and a special Directorate was established within the DGT to promote spontaneous migration. Five hundred thousand families were registered to move. These actions illustrate the commitment of the Government to the transmigration program and suggest that more people will be moved during Repelita III, and moved under better conditions, than in any previous equivalent period. 3. The report also indicates that problems remain. High targets result in poor quality implementation; yields and incomes in upland sites are low despite significant increases in investment per family; and the /1 This Review combines four papers prepared between October 1979 and September 1980. The report on Upland Transmigration was prepared by Ms. C. Davis and Messrs. H. Thias, D. Mead (Bank), A. MacMillan (FAO Cooperative Program), L. Blomkvist and J. Malingreau (Consultants). Work on Swamp Development was carried out by Messrs. P. Momal, J. Coulter, T. Dwyer (Bank) and B. Rahman (Consultant). k paper on Tree Crops for Transmigration was written by Messrs. P. Melkye and D. Morrow (Bank) and one on Spontaneous Transmigration by Ms. C. Davis. Mr. P. Whitford assisted in finalizing this report. - ii - scale of the current program requires that questions on sustained resource use be more clearly addressed. This sector review focusses on four key questions. (a) How can migrant welfare be assured? (b) How can the scale of the program be expanded? (c) What steps are needed to assure sound use of the nation's natural resources? (d) How can the quality of projects be improved? Major findings are summarized below. Migrant Welfare 4. Farmers' welfare is based primarily on their means of production. For this reason, an evaluation of farming systems for transmigration constitutes a major part of the sector review and a major conclusion of this report is that a wide variety of farming systems will be necessary and appropriate in a transmigration program of the scale proposed. 5. Farming systems for Swamp Reclamation - A review of yields and incomes among migrants in swamp reclamation areas suggests that current farming practices are economically viable if deep peats and overdrainage can be avoided, and if the necessary infrastructure can be provided at relatively low cost. The Wiorld Bank, therefore, is prepared to assist the Government with reconnaissance and project preparation studies intended to eliminate areas with poor soils, and to develop a first-phase project to test the assumption that overdrainage can be avoided without costly water control structures. 6. Farming Systems for Upland Areas - A review of the upland transmi- gration program indicates that, while migrants in upland (rainfed) areas are better off at the new sites than they were in Java, yields and incomes are both low and extremely variable. This, coupled with the high visibility of the program, rising expectations resulting from economic development, and a broader spectrum of applicants, dictates that incomes should be increased and risks reduced, if communities are to be established which can attract and hold settlers. To achieve that objective, the following recommendations are made. (a) Food Cropping - Food crop production is an important aspect of the transmigration program and early Repelita III settlements in areas which are flat, suitably fertile and accessible to markets are encouraging. However, where food crop production alone is intended, the timely supply of inputs, good extension and adequate processing and marketing must be ensured. - iii - This can be achieved by strengthening existing agricultural supporting services including cooperatives, and such an effort is being made in the second Bank-assisted project for transmigration. Alternatively Government could develop agricultural Project Management Units (PMUs) to secure inputs, ensure good extension and provide access to credit, processing and marketing. (b) Integrated Farming Systems - Where good management and timely inputs cannot be ensured (for example, in remote areas where services and markets do not yet exist), settlement should begin with diversified farming systems based on farmers past experience. Such projects should place more emphasis on extended home gardens, and trees intercropped with food, fishponds, small livestock and off-farm employment. Less reliance should be placed on externally supplied inputs such as fertilizers, pesticides, extension. (See Appendix 3.) (c) Other Income Sources - Where soils, topography or rainfall are marginal for food crops or where distances limit the marketing of low value crops, tree crops or supplementary income sources (e.g. rural industries) should be provided as an integral part of project design. The World Bank is prepared to support projects to explore each of these options. 7. Tree Crops for Transmigration. A review of the tree crop subsector confirms the benefits of tree crops in terms of increased farmer incomes, reduced risk and improved cost recovery to the Government. It also shows that these benefits are greater the earlier tree crops are introduced. The Government, recognizing these benefits, has already agreed to the provision of at least 1.5 ha of tree crops for each existing transmigrant family, but it has not yet made firm plans for the implementation of this component. To speed up this program, it is proposed that: (a) a reconnaissance of agricultural conditions and income levels and an asessment of agricultural potential in existing transmigration areas be undertaken immediately by the Government; (b) based on the above, a comprehensive investment strategy in the tree crop subsector should be prepared by the Directorate General of Estates (DGE), taking into account the needs of transmigrants and other smallholders; and (c) should the Government so request, financial assistance for a program to provide tree crops to existing transmigrants and local smallholders in areas of major transmigration development should be considered by the Bank. 8. Given Indonesia's improved resource position, the need to increase migrant incomes, make better use of available land (particularly that over 8% slope), protect soils from erosion, and provide attractive benefits for - iv - indigenous smallholders, all point an increased role for tree crops in the transmigration program. The major vehicle for planting smallholder tree crops is now the Nucleus Estate and Smallholder (NES) program, but the Directorate General of Estates (DGE) has recently initiated a program in which migrants assist in the development of tree crops on their own land. This program called PIR (Perkebunan Inti Rakyat) is very promising and should receive strong GOI and Bank support. 9. Agricultural Supporting Services. Regardless of the farm model adopted, the coordination of agricultural supporting services is one of the most critical components of a successful transmigration program. At present this task is assigned to an Agricultural Technical Team (ATT) which has neither staff nor facilities and which has limited authority to make policy decisions. To circumvent this constraint, it is recommended that: (a) the Department of Agriculture (DOA) should take an increasingly active part in determining farm models for transmigration and in coordinating the tree crop and food crop subsectors; (b) the ATT should be given regular institutional status and permanent staff and should it be provided with technical assistance to establish procedures for monitoring input supply; and (c) agricultural supporting services should be strengthened. Particular attention, should be given to adequate budgeting for the distri- bution of fertilizers; improving seed production and distribution, particularly for secondary food crops; establishing and supervising standards for agricultural inputs and tools; training agricultural extension staff to meet the needs of transmigration areas; and establishing systems to monitor the delivery and use of agricul- tural services. Program Expansion 10. A main concern of Government is how to increase the scale of the transmigration program without jeopardizing either migrant welfare or the other commitments of the involved agencies. To this end, two major recommen- dations are made: to optimize the use of scarce managerial resources; and to promote spontaneous migration. 11. Manaqerial Resources (a) To effectively utilize existing managerial resources, settle- ments should be consolidated in areas with large development potential. This would also facilitate regional development. (b) To expand managerial capacity, there should be a very significant increase in the effort and funds devoted to institution building and training in the major implementing agencies. (c) To speed settlement, Government should consider subcontracting tree crop establishment and other forms of agricultural develop- ment. -v - 12. Spontaneous Migration. To facilitate spontaneous migration, community development should be phased (i.e., strong core communities should be established by the Government but subsequent growth should be based on spontaneous migration); existing constraints to movement and land transfer should be reduced; and employment opportunities in transmigration sites should be maximized. Spontaneous movement could be facilitated by a general program of investment in the outer islands and decentralization of educational facilities and administrative functions. Sound Resource Use 13. The Rehabilitation of Critical Lands. There are sound financial and ecological reasons for preferring the development of grasslands over forests. Transmigration projects in grasslands are up to 25% cheaper to implement than those in forested areas, due largely to the reduced cost of land clearing. This does not include the value to the nation of maintaining timber and preserving a unique ecological resource. However, most new sites are proposed for areas of primary forest, due, in part, to land tenure problems, the low soil fertility of grasslands and the difficulty of controlling invasive grasses. 14. To circumvent problems associated with land tenure, it is recommended that: (a) the Directorate General of Agraria (DGA) should work with Public Works to identify land, and committees should be established in receiving provinces to deal with problems of land alienation and compensation for transmigration; (b) the Public Works Department should undertake an inventory of grasslands with settlement potential and this inventory should be turned over to provincial authorities and the DGA to determine its ownership status and, where appropriate, to negotiate its release for transmigration; (c) the benefit package for indigenous people should be upgraded and they should be encouraged to relinquish land claims in return for this package; and (d) support should be given to the DGA for its efforts to develop a legal framework which permits the redistribution of underutilized land to both local farmers and transmigrants. 15. To permit smallholders to cope with grassland (alang-alang), the technical package and the funds allocated for alang-alang control also must be improved. To this end, it is recommended that: (a) projects should be undertaken to explore all aspects of the technical and economic parameters of grassland rehabilitation; - vi - (b) realistic alang-alang control measures should be included in all relevant projects; and (c) adequate provisions for renewable fuelwood supplies should be provided in grassland sites. The Review recommends that an early Bank-assisted project specifically address the problem of grassland development. 16. Timber Disposal. When national priorities and regional development interests do require land clearing in forested areas, as they will in pro- vinces such as East and Central Kalimantan, adequate timber recovery must be the aim. Procedures for timber disposal should be determined prior to project implementation. Acceptable arrangements might involve marketing through existing forest concessionaires, land development contractors, or the migrants themselves. In some cases processing facilities should be developed in association with the project and the Government slhould reconsider those poli- cies and regulations which limit the exploitation of timber from transmigra- tion sites. The third World Bank project in support of transmigration will address problems of timber disposal in East Kalimantan and technical assistance for studies on timber disposal in transmigration areas should be provided through the technical assistance credit now available to GOI or in the Forestry Project proposed for Bank assistance. Project Quality 17. Project Preparation. Adequate project preparation will permit improvements in farming systems and better pre-planning. For this reason, project preparation activities are now being financially assisted by the Bank and should continue to have high priority for Bank support. To have a greater impact on regional development, transmigration needs to be integrated with provincial planning. 18. Land Development. Review findings suggest that manual land clearing with chain saws, which is the most common method at present, has advantages for soil preservation and tendering when compared to mechanical land clearing. The Government, however, maintains a strong commitment to increasing mechanical clearing in order to obtain rapid land development. Under these circumstances, the mechanical land clearing done for the Transmigration Project II should be carefully monitored for both speed and quality and this evidence should be used to determine future land clearing methods. Different methods of land clearing should be attempted and monitored in other sites and the supervision of existing land clearing should be improved. 19. Coordination. To improve overall program coordination, the following steps are recommended: - vii - (a) The Office of the Junior Minister of Transmigration (JMT), which has the responsibility for overall coordination of budgeting and implementation, should use available staff to take an increasingly active role in coordinating implementation; and to increase its effectiveness and improve its ability to attract additional staff, it should be given regular institutional status. The World Bank, UNDP and FAO are currently supporting technical assistance to strengthen this office. (b) DGT staff will have the major responsibility for coordination once settlers have arrived on-site. Therefore, the Bank is prepared to consider financial assistance for DGT training activities and consideration of the incentive structure for DGT staff merits early attention by the Government. (c) In general, over the next few years, increased attention should be given to institution building and training in the terms of reference of consulting firms, and greater use should be made of specialist management and training consultants. The Development Strategy 20. Review findings suggest the following development strategy: (a) Future projects should aim at improving the welfare of those who move and at promoting ecologically sound regional development. To the extent that projects are successful in these aims, an impact will be felt on population redistribution and food security. (b) There may be many types of projects, both in agriculture and other sectors, which can contribute to transmigration goals, and a variety of farming systems and organizational arrangements is therefore necessary and appropriate. (c) To make optimal use of managerial capacity, sound core communities should be established in areas where large-scale regional development is desired and subsequent development should stress spontaneous migration. (d) To expand the scale of transmigration, a greatly increased insti- tution building effort is required and more preparation and imple- mentation should be contracted out to the private sector. (e) Implementation of this program will require increased attention to program quality and cost control. (f) Actions to strengthen program coordination mechanisms should receive high priority by the Government. - viii - The Role of the World Bank 21. The World Bank is prepared to assist GovernmLent in the irmplementa- tion of the transmigration program as long as reasonable standards of settle- ment are attained. To maximize thie impact of Bank-assisted projects, the Review recommends a shift from an emphasis mainly on area specific settlement to a combination of activities which improve migrant welfare and productivity, and promote prograt development. Three or four different types of projects could be ready for appraisal in the next few years. They would include Transmigration III, a project intended to resettle 12,000 families in East Kalimantan, address problems of timber disposal and continue project pre- paration and training. The pipeline could also include projects to improve the technical procedures for grassland developmernt; to rehabilitate existing sites; and to support the PIR /1 program in areas suitable for tree crop development. /1 Perkebunan Inti Rayat - smaallholder plantation developuent. INDONESIA TRANSMIGRATION PROGRAM4 REVIEW INTRODUCTION 1. Indonesia, the fifth largest nation in the world, contains 142 million people (1980), 92 million of whom reside in Java, an island with about 7% of the nation's land. Seventy percent of Java-s total area is cultivated and population densities in irrigated areas rise to 2,000 people/sq km. Meanwhile vast areas of low fertility soil lie uncultivated in the outer islands and low population densities in some of these areas impede regional development and economic growth. These facts have been so striking for so long that programs to wed the underutilized labor of Java with the underutilized land of the outer islands have figured in the programs of Indonesian Governments for three-quarters of a century. Together these programs have resulted in the movement of more than one million poor and landless farmers and it is estimated that at least two million people are in the outer islands as a direct result of transmigration programs and associated population growth. 2. Throughout the 20th Century, planners in Indonesia have seen transmigration principally as a means of reducing overcrowding in Java and providing land and employment to the poor. More recently, transmigration has also been seen as a means of increasing national food production and reducing Indonesia's dependence on imports, stimulating development in remote and under populated provinces and exploiting underutilized natural resources. Review findings suggest, however, that the solutions to the problems of Java and the other overpopulated inner islands lie largely within these islands. Government-sponsored transmigration is not seen as the solution to Java's population problem nor the answer to national food deficits, although in both areas transmigration can help. Of more importance will be the impact of transmigration on the lives of migrants and on the development of regions to which they move. 3. In the past, both the size and the quality of the transmigration program were limited by a shortage of funds; but the improved resource position of the country at the present time has prompted the Government of Indonesia (GOI) to call for a renewed effort to promote large-scale transmigration and in so doing to set the stage for balanced economic development and regional growth. This program was initiated in March 1979, the beginning of the Third Five-Year Development Plan (Repelita III), and both planning and settlement are now occurring on an unprecedented scale. 4. The World Bank recognizes the role which transmigration can play in meeting Government objectives. At the same time, it is aware of the risks and responsibilities entailed by support for a transmigration program of the scale proposed; and for this reason, the Bank has undertaken a review of the upland, swamp and tree crop subsectors in an effort to identify the key conditions for program success and to define those steps required to assure them. 5. In these sector reviews, the following questions are addressed: (a) How can migrant welfare be assured? (b) How can the scale of the program be expanded? (c) How can the program be developed in such a way as to make best use of the nation-s resources? (d) Ilow can the quality of projects be improved? 6. The following report summarizes the findings of the sector review and the Bank's recommendations to the Government. Chapter I provides the background material for understanding the transmigration program. Chapter 2 summarizes major findings on migrant welfare and their implications for farming systems adopted for transmigration, and Chapter 3 provides recommendations on program expansion, resource use and program quality. Chapter 4 outlines the Bank's proposed role in support of the transmigration effort. More detailed descriptions of Upland and Swamp Transmigration are given in Annexes 1 and 2 and a Tree Crop Subsector Report is included as Annex 3. Recommendations on spontaneous migration are covered in Annex 4. 7. The Review does not attempt an overall evaluation of the priority of transmigration within the Government-s total development program, nor does it evaluate whether the welfare objectives of transmigration might be achieved more effectively by investing in other activities on Java. Rather it examines transmigration in a historical context, looks at achievements and constraints and suggests ways in which implementation of the present pro- gram could be improved. - 3 - 1. BACIKGROUND A. Historical Overview Past Transmigration Projects 1.01 Indonesian resettlement efforts have had two critical components in common: all have been based on smallholder agriculture; and most have been Government sponsored. Within this agricultural framework, variations in the farm model have only recently appeared. 1.02 Irrigated Projects. Early Dutch efforts to resettle Javanese in the outer islands and most GOI transmigration efforts through the early 1970s were generally premised on irrigation. The Dutch in fact, assumed that without irrigation Javanese would not move and/or would not be succesful and, in the literature, problems were typically attributed to the failure of irrigation plans. In early schemes, migrants received 0.7 ha irrigated plots, an arrangement which placed considerable pressure on the land as children matured. In more recent projects, farmers received 2.0 ha of land with irrigation potential though irrigation itself frequently was delayed. In most sclhemes, migrants were provided with free transportation to the site, land, housing, an agricultural package and subsistence supplies for the first year. 1.03 Swamp Reclamation. A variation on irrigated farming was introduced in the 1930s along canals dug for log transportation purposes in Kalimantan. In these areas, in theory, tidal action backed fresh water up river estuaries onto low land making wet rice cultivation possible. In practice, canals provided drainage and most areas were used for rainfed rice. Only small numbers were settled on such schemes in the colonial period and a major effort announced by the Public Works Department in 1957 was hampered by lack of funds. Not until 1967-68 was the groundwork laid for the present program, which has since resulted in the opening of some 240,000 ha of tidally influenced land by the Public Works Department. Present swamp reclamation projects provide each farmer with 2.25 ha of land suitable for bunded rainfed rice and these projects absorbed 13% of all migrants moved during Repelita II. 1.04 Smallholder Tree Crops. Although during the Dutch period far more farmers were moved as estate laborers than as transmigrants, this program was not linked to transmigration until 1978, when the potential of the estate sector was first tapped for transmigration in Nucleus Estate and Smallholder (NES) projects. Under the NES concept, funds were made available to rehabilitate or expand existing estates and to increase their capacity to plant tree crops for smallholders, including both local people and transmigrants. Bank-assisted NES projects, including the proposed NES V scheme, entail planting (or replanting) some 86,600 ha of estate land and - 4 - 181,000 ha of smallholdings. The smallholder components of these projects will benefit 9,750 local families and 41,800 relocated families, of which 16,000 will be transmigrants and the rest local smaliholders (Appendix 2, Table 5). Farmers have generally received 2.0 ha of block-planted tree crops and 1.0 ha for food crops. In NES projects, unlike other transmigration efforts, incomes will be sufficiently high at project maturity to enable partial cost recovery. 1.05 Rainfed Food Cropping. The main farming system for the Repelita III transmigration program is based on foodcrop production by smallholders in rainfed areas in the outer islands. This concept was tested in two pilot schemes in South Sumatra in the late 1970s: by the Bank-assisted project at Baturaja and on an FAO-assisted project at Pematang Panggang. In these pilot projects, farmers received 5.0 ha of dry land, of which at least 1.0 ha was to be in tree crops established in the course of the project. The emphasis on food production under rainfed conditions was prompted by growing rice imports, by an increased availability of locally produced fertilizer and by the favorable results of research in areas of rainfed agriculture. Past Performance 1.06 By 1930, around 20,000 migrants had been moved to the outer islands, while over 600,000 had been relocated as estate laborers. With the decline of plantation investment in the outer islands from 1930 to 1970, transmigration became the major vehicle for movement, and since 1930 about one million people have been resettled through Government sponsored transmigration programs (Figure 1). 1.07 The extent of spontaneous movement is not known, but according to the 1971 census, of the one million Java-born residents in Lampung Province, only 250,000 were moved with Government support. The census also indicated that the total reverse movement from the outer to the inner islands was approximately one-third as large as the movement to the outer islands. 1.08 The major lessons from these data are as follows: (a) Sectors in which growth has taken place (i.e., the estate sector in the 1920s) have drawn migrants to the outer islands. As a corrollary, the low rate of outward migration to the outer islands between 1930 and 1970 is related to the collapse of investment in these areas during that period /1 and an acceleration of investment should speed maovement. /1 The importance of historical events in limiting economic expansion and migration in Indonesia cannot be overemphasized. The worldwide depression caused the collapse of Dutch investment in the 1930s and thereafter followed: the European and Pacific Wars (1939-1945), the Indonesian Revolution (1945-50), a series of internal rebellions (1957-1962) and a period of economic decline (1957-1967). Only since 1967 has an extended period of growth been sustained. GOVERMENT SPONSORED MIGRANTS TO THE OUTER ISLANDS 1905-1981 325, 000- 300,000- 275,000- 250,000- 225,008- 200,000 P E t75,000- 0 vP 1 50, 8000 L E 125,000- t00,000- 75,000 50,088 25,000 n 0- s90z 1~4NME Ot RAhIA BY YER t- s988/181 NUM1BER OF TRANSMIGRANTS BY YEARS llS-198W/181 (b) Centralization of educational and administrative opportunities have fostered Jakarta-bound migration on the part of both outer island residents and Javanese. Conversely, decentralization of educational facilities and administrative functions woul,l potentially slow iimmigration and promote the emigration of Java-born. (c) Sponsored transaigrants are followed by spontaneous settlers, and this process can be accelerated by an understanding of chain migration and by a reduction in the constraints to movement. B. Factors Mfecting the Formulation of the Repelita III Transmigration Program Increased Pressures for Transmigration 1.09 By 1978, transmigration had come to be seen as an important tool for providing relief to a number of critical problems facing Indonesia. These included: (a) Providing Opportunity to the Landless. Over 80% of Java's people live in rural areas. Of these, some 40% are landless and another one-third live on less than subsistence holdings. By the late 1970s, the need for land and employment opportunities among Java's poor was so strong that only a small number of the families which applied for transmigration could be moved. (b) Protecting Critical Lands. With increased population pressure, poor farmers in densely populated provinces are cultivating increasingly steep slopes in upper watersheds causing erosion and downstreami flooding. Transmigration is viewed as a part answer to this problem and to that of relocating people displaced by disasters and by development projects such as dams and roads. (c) Promaoting Regional Development. In the outer islands there are potentially productive areas with population densities so low that area development is not economically feasible. Transmigrants can provide the critical mass to justify infrastructure and services (such as extension and clinics) as well as labor and markets; and for this reason, transmigration has assumed a growing role in regional development. (d) Increasing Food Production. Finally, the Government sees transmigration as an important component in its effort to move - 7 - toward food self-sufficiency. Transmigration can contribute to increased food production in two ways: (i) by allowing poor farmers to produce their own food, and (ii) by opening new lands for cultivation. 1.10 For these reasons, the Government decided on a massive increase in the transmigration program in Repelita III. It also decided that movement on the scale envisioned should entail a reasonably low per family cost. New Developments in Agriculture 1.11 One of the significant changes in the transmigration program is an emphasis on food crop production on rainfed land. The present farm model was largely shaped by the following factors: (a) Increasing Demand. A growing population and rising incomes have expanded the demand for food, particularly rice. This, coupled with widespread harvest losses in 1977, led to the import of 2.3 million tons of rice, making Indonesia the world's largest importer of rice and a major influence on the world market price. (b) Agricultural Research. With traditional farming systems, the potential for surplus food production on the marginal soils of the outer islands is limited. But by the late 1970s, research by the Central Research Institute for Agriculture (CRIA) showed that improved cropping systems, fertilizer use and pest control in these areas could significantly increase food crop yields and farmers incomes./1 (c) Fertilizer Availability. The key element in the assumption of sustained food crop production in the outer islands is the availability of fertilizer. Because of limited funds and local supplies, no fertilizer was available for rainfed crops until 1974. By 1980, however, Indonesia produced more than two million tons of urea per year, increasing to 4 million tons by 1982. Production of phosphate based fertilizers, upon which urea uptake is dependent, remains limited and these fertilizers must still be imported. /1 Gross income on selected fields in one transmigrant community in Sumatra were increased from Rp 210,000/ha (US$336) with traditional farmer practices, to Rp 600,000/ha (US$960) with free inputs (fertilizers and pesticides) and CRIA management. To date this research has not fully evaluated economic and risk factors which continue to limit input use and yields (para. 2.01). -8- Organizational Changes 1.12 Until August 1978, the Directorate General of Transmigration (DGT) in the Department of Manpower and Transmigration was responsible for all aspects of the transmigration program. With a small budget and limited staff, the ability of the DGT to carry out its activities was constrained and during Repelita II, efforts to expand the scale and quality of the program led to significant shortfalls in the numbers moved. 1.13 In 1976, the Government, faced with the need to resettle 6,000 Javanese families from the reservoir area of the new Wonogiri Dam, turned to the Public Works Department for a crash program of land clearing and resettlement. Using heavy machinery, the Public Works Department developed 2,750 ha of land in Sitiung, West Sumatra and settled 2,000 families within a year./l This rate of implementation was sufficiently impressive for the Government to conclude that involvement of the Public Works Department in physical planning and land development would facilitate expansion of the transmigration program during Repelita III. 1.14 Under these circumstances, the Government began a major reorgani- zation of the transmigration program in early 1978. In March 1978, the President created the position of Junior Minister for Transmigration (JMT) to coordinate the activities of the various Directorates General working on the program and on August 31, 1978 the new organizational arrangements for Repelita III were set out in Presidential Decree 26/78. This decree transferred responsibility for project implementation from DGT to the agencies normally responsible for each sector. All told, 7 Departments and 53 Directorates General are involved in the Repelita III transmigration program, although only a few play major roles. Site selection, land development and road construction were given to Public Works; land alienation and land transfer to the Directorate General of Agraria (DGA); selection, resettlement, housing and community development to the DGT; and agricultural inputs and extension to the appropriate Directorates General in the Department of Agriculture (DOA). Other agencies, Health, Education, Religion, Telecommunications and the like, were to be involved as required. Increased Funding 1.15 A major factor altering the content and scale of the program was the country's improved resource position. This allowed the Government to undertake an expanded resettlement program despite a nearly tenfold increase in cost per family - from about US$500/family at the beginning of the Second Five Year Development Plan (Repelita II) to US$5,000/family in Repelita III. The difference in cost was caused by inflation, improved project design /1 While the rate of land development in Sitiung was satisfactory, faulty land clearing methods limited agricultural productivity (Table 2.1). In later sites, mechanized clearing techniques were improved although land clearing still suffers from an emphasis on the quantity rather than the quality of work accomplished (para. 3.30). (the introduction of feasibility studies, topographic mapping, detailed village design), new components (link roads, hydrological surveys, agricultural research), improved inputs (initial land clearing up to 1.0 ha, the provision of cattle, fertilizer) and by certain diseconomies of scale resulting from the centralization of the program and corresponding difficulties in contracting, supervision and quality control. With the program's increased access to funds, however, financing ceased to be the major constraint to effective program implementation. C. The Repelita III Transmigration Program 1.16 In response to these developments, the Third Five-Year Plan (Repelita III) proposed the settlement of 500,000 transmigrant families between April 1979 and March 1984 (Annex 1). These families were to be moved to 250 settlements located mainly in Sumatra, Sulawesi, and Kalimantan. Of the settlements originally proposed, 18% were intended for areas of swamp reclamation. All other communities were to be established under the standard upland program based mainly on food production in areas of rainfed agri- culture. In the initial stages of program formulation, Bank assistance was projected for nearly 50% of proposed settlement. Tree crops were to be introduced into these projects at a second stage of development. These targets did not include those to be moved under the NES tree crop schemes. To meet the cost of transmigration, the Government's indicative budget for Repelita III allocated Rp 1,240 billion (US$2.0 billion) for manpower and transmigration, nearly 6% of the projected development budget. 1.17 In 1979, the GOI and the World Bank agreed upon a second Bank-assisted project intended as a model for the Repelita III transmigration program. This project, which is to settle 30,000 families along the new Trans-Sumatra Highway /1 in Jambi Province and rehabilitate settlements for 4,000 additional families, had four important features: (a) large-scale settlement in a single development area; (b) an emphasis on rainfed food crop production;/2 /1 Partly financed under the Second Highway Project (Credit 260-IND). /2 The package to promote food crop production in Transmigration II (Ln. 1709/Cr. 919-IND) originally included the following components: (i) the identification of 2.0 ha of land of under 8% slope for food crops, plus 1.5 ha of land of under 15% slope for future tree crops; (ii) the provision of 1.25 ha of clean cleared land per family for houselot and foodcrops; (iii) the provision of appropriate seeds and seedlings; (iv) the provision of fertilizer and pesticides for three years; and (v) support for extension services and cooperatives. Since appraisal it has been agreed that settlement could proceed with only 1.25 ha available under 8% slope. - 10 - (c) a test of the cost and quality of mechanical land clearing; and (d) the use of the organizational arrangements specified under Presidential Decree 26/78. Based on the information available at the time (para. 1.11), strong support for the food crop model (with tree crop development projected for a later stage) was judged to be the best way to establish migrants while facili- tating large scale movement. 1.18 A year later, the Bank appraised a first project in swamp reclamation for transmigration. This project, a 9,000 ha pilot project for 3,200 families, will test the assumption that overdrainage and soil toxification can be avoided without costly structures for water control. It also initiates those studies on which future project preparation would be based, including an inventory of reclaimable swampland, a reconnaissance of existing areas which might be upgraded, and studies on potable water supply and on the ecological impact of swampland development. D. Current Program Status 1.19 Shortly after the beginning of Repelita III, the World Bank sent two review missions to Indonesia to evaluate the upland and swamp transmigra- tion programs. At the time of these missions (October 1979), program progress was slow. Of an adjusted target of 53,000 families for 1979/80, only 7,200 families were moved in the first six months. A lack of prepared projects and inadequate interagency coordination were identified as major constraints to program expansion. In the ensuing months, however, significant improvements were made. In the second half of 1979/80, 15,200 families were moved (for a total of 22,400 families in the first year of Repelita III) and 60,000 families were settled in the 80/81 fiscal year. These 90,000 families moved over two years represented a substantial increase over the rate of implementation during Repelita II, when 48,000 families were moved. 1.20 In addition, during 1979 and 1980, a series of new initiatives were taken to increase the numbers moved. Project preparation was begun by the Public Works Department to identify land suitable for the settlement of 300,000 families; a directive was issued permitting the DGT to develop small sites identified in cooperation with the provinces; the estate sector was enlisted by the Government to establish tree crops for 75,000 transmigrant families within the 500,000 overall target; and alternative management sources such as forest concessionaires and private voluntary organizations (e.g., church and social groups) were approached for assistance. The DGA - 11 - began work on the legal foundation for agrarian reform which would allow the redistribution of underutilized lands to both indigenous and transmigrant families and a new Directorate was established within the DGT to promote spontaneous migration. 1.21 These initiatives illustrate the high priority attached by the Government to the transmigration program and the dilemma faced by the Government and the donor agencies in attaining both rapid movement and sufficient quality to protect the welfare of the transmigrants and to establish a sound foundation for future development. Reconciling these objectives is the main task of the Government in Repelita III and the major subject of subsequent sections of this report. 1.22 The major findings of the Review on migrant welfare and the implications of farming systems for transmigration are discussed in Chapter 2. Findings on program expansion, resource use and the quality of implementation are dealt with in Chapter 3. - 12 - 2. MIGRANT WELFARE AND FARMING SYSTEMS FOR TRANSMIGRATION A. General Findings 2.01 One of the most important findings of this report is that, while migrants are better off in most transmigration sites than they were in Java, crop yields and incomes in upland areas are both low and extremely variable (Table 2.1). Of 592 farmers surveyed in communities dependent on rainfed agriculture, only 9% of farmers reported paddy yields of more than one ton per family (of padi gabah or unhulled rice)./l This would meet subsistence needs for a family of five if rice alone were eaten. Nearly two thirds (65%) of the farmers reported that they had obtained 500 kg of paddy or less. These farmers relied on crops other than rice for subsistence and obtained cash largely from off-farm work. By comparison, 84% of transmi- grants in Upang Delta, a tidal reclamation scheme in Sumatra, reported yields of more than one ton, while only 3% reported less than 500 kg of paddy. These low rice yields in upland areas, whether caused by environment and pests or by erratic input supply and the risks associated with higher use of cash inputs, cast doubt upon the ability of these small farmers to obtain projected yields and invest in the inputs upon which increased food production depends. 2.02 Based on yield and income data, the general conclusions of this report are as follows: (a) The incomes of migrants with two hectares of wet rice in swamp reclamation areas appear to be sufficient to justify the present settlement strategy, if deep peats and acid sulphate soils can be avoided, and if drainage canals and other infrastructure can be provided at relatively low cost. (b) Yields from early Repelita III settlements in areas which are flat and suitably fertile and which have access to inputs and markets are encouraging and food crop production which is an important objective of the transmigration program is worthy of support. It is apparent, however, that the diverse conditions in upland areas will require many farm models adapted to specific situations (see 2.05). (c) The tree crop alternative, as in NES, or PIR projects provides a technically acceptable method of increasing incomes and productivity on the marginal soils of the outer islands. However, tree crop establishment is constrained by the capacity of the DGE and other management sources to implement projects on the scale desired by GOI. /1 Only the results for rice are presented, as this is the preferred food of the transmigrants and also because production of a marketable surplus of rice was a major justification for transmigration. - 13 - Table 2.1: YIELDS REPORTED iN FIVE TkANSMIGRANT CUMS1UNITLES /a Number Rice yield Hectares Yield % farmers % Families Reporting of years per family under per using No rice 500 kg over Sample on site per year (kg) cultivation hectare/b inputs yield or under 1,000 kg size Rainfed Sitiung I1 1 314 0.60 523 100 20 89 0 (35) Sitiung I 2 221 1.19 185 100 46 96 2 (45) Baturaja 1 1.5 623 0.93 669 85 6 72 19 (32) Rimbobujang II-V 1.5 441 1.87 235/c 98 18 75 4 (178) 2limbobujang I 2.5 992 1.66 598/c 71 4 26 28 (114) Way Abung 9-12 4-5 504 1.05 480 29 16 68 4 (70) Way Abung 7-8 5-6 757 1.47 514 22 6 50 8 (36) Way Abung 4-6 7-8 585 1.39 420 9 7 59 9 (44) Way Abung 1-3 9+ 462 1.02 452 26 0 7b 3 (38) Tidal /d Upang-Purwobarjo 2 2,248 1.19 1,889 0 0 3 89 (37) Upang-Tirtakencana 4-5 2,371 1.80 1,317 0 0 0 97 (37) Upang-Tirtamulia 5-7 2,747 1.90 1,445 0 0 2 95 (41) Upang-Purwosari 7-8 1,865 1.85 1,008 0 0 11 88 (63) Upang-Makarti 9 2,664 2.30 1,158 0 0 2 71 (41) /a Farmner reports are typically lower than agricultural department statistics. This is due in part to the fact that agricul- tural department statistics are extrapolated from measured 5 meter-square plots on harvested fields, fields which fail are not measured and for this reason the statistics overstate aggregate yields. Harvests in the year of most of these surveys were also rather poor. /b Farmers cannot judge the percent of a field which is cultivated, particularly in primary forest areas which have residual logs and stumps. For this reason this statistic which represents the farmer's reported yield divided by the total area he reported cultivating is not comparable between villages. /c Field area is oversized in this community. These Fields are newly felled by migrants and have perhaps 0.50-0.60 ha of plantable land, thus distorting productivity on a per hectare basis. /d Upang Delta is one of the most successful of the tidal developments and may not be representative of all comumunities of this type. Source: Field surveys, Bank Staff - 14 - B. Recommendations on Farming Systems for Transmigration Farming Systems for Swamp Reclamation 2.03 The yields obtained by transmigrants in selected swamp reclamation sites (Table 2.1) demonstrate the possibility of developing swamps for either rice or coconuts even with minimal purchased inputs and modest on-site management. The economic viability of such projects is, therefore, high if deep peats and overdrainage can be avoided and if infrastructure costs can be kept low. For this reason, the Swamp Program Review (Annex 3) recommends improved site selection to eliminate areas with potential soils problems and better water control to reduce the probability of overdrainage and soil toxification, but it argues that infrastructure such as extensive dikes and polders do not appear to be economically justified. If the first Bank-assisted project (para 1.17) proves successful, continued support to swamp development would be justified. To improve the agricultural system, the Review recommends: (a) increased income diversification through expanded aquaculture and the introduction of small livestock, secondary food crops and tree crops such as coconuts, coffee and cloves; (b) increased attention to weed and pest control by the Directorate General of Food Crops Agriculture (DGFCA); and (c) further experimentation with estate crops, such as oil palm, which are tolerant of acidic conditions and grow in swampy land. Farming Systems for Upland Transmigration 2.04 Food crops are a critical part of the farming system for transmigra- tion since they provide early returns to labor and capital and meet subsistence needs. Furthermore, to the extent that communities are self- sufficient in food, or have surpluses, they reduce national food deficits. The World Bank supports Government efforts to improve food cropping systems under rainfed conditions and to improve agricultural supporting services for food crop production in the outer islands. At the same time it recognizes that present low yields of rice and maize in upland areas cast doubt upon the scale and viability of a transmigration program based primarily on food crop production. For this reason, the report recommends that the GOI adopt a range of farm models for transmigration suited to different land, market, and management possibilities. Among other things, the farm size and cropping system should be selected or adapted to suit the potential of each transmigration site and should be aimed at providing the settlers with an adequate and reasonably secure source of income. Furthermore, while farm models will be essential in the planning phase of a project and in the initial years of settlement, in order to ensure sufficient land of suitable slope and fertility for the farming system envisaged, they should not become a straitjacket after the settlers are established. Instead, projects should provide the fariaers with access to credit, planting materials, livestock and extension advice in order to diversify their farming systems. - 15 - 2.05 There are many farming systems appropriate to upland areas. Among them are the following: (a) Food Crop Production. Where soils and rainfall are suitable, (as in the alluvial areas now being settled in Central Sulawesi), where irrigation is feasible (as in some areas of South Sumatra and Southeast Sulawesi) or where markets dictate the need for food production (as in the proposed settlements around sawmills and mines), farming systems emphasizing food crops may be preferred. In such cases, it is essential that arrangements be assured for the supply of key inputs - fertilizer, pesticides, extension. These might be provided through improved provincial services, through food crop Project Management Units (PMUs) /1 run by specially recruited and trained GOI officials, or by turnkey projects in which private firms manage establishment and input supply. (b) Integrated Farming Systems. Where soils are relatively good and rainfall reliable, but where good management cannot be assured, highly diversified farming systems will be necessary to protect farmers from undue risk. These should place more emphasis on home gardens, intercropped tree crops, fishponds, small livestock, green manuring, and on-farm flexibility, and less emphasis on externally supplied inputs than current projects. Such farms would generally provide for the family˝s subsistence food needs and a modest marketable surplus of other crops. An example is given in Appendix 3. (c) Tree Crop projects. Where soils, topography or rainfall are marginal, as in many of the upland areas available for transmigration, tree crops or supplementary income sources (e.g. logging) should be provided as an integral part of the project design. With improved project preparation capability, the Government is now in a better position to design projects tailored to different land and management conditions, and for this reason, procedures are required which ensure the involvement of the Department of Agriculture in the choice of farming system. /1 Strong PMUs are now regarded as a critical element for tree crop establishment in the outer islands (para 2.14) but this concept has not yet been tried in the food crop subsector. - 16 - 2.06 Agricultural Supporting Services. Regardless of the farm model, the ability of the DOA to provide proper policies and adequate organizational arrangements for the delivery of agricultural services is critical to program success. At present these tasks are largely the responsibility of the Agricultural Technical Team (ATT), a committee consisting of representatives from each of the Directorates General in the DOA. While well informed, this group is handicapped by its lack of regular institutional status. Its members have other functions, it has neither staff nor facilities and it lacks authority to take policy decisions. These problems may be increased if recommendations on integrated farming systems are followed, as DGFCA and DGE are accustomed to operating independently. The Bank, therefore, attaches high priority to steps by the DOA to strengthen its role in providing agricultural policies for transmigration, improving its ability to define and deliver appropriate agricultural supporting services, and increasing its coordination of activities in the tree crop and food crop subsectors. 2.07 The following steps are recommended to achieve this: (1) A high level body should be established to make policy decisions in agriculture. One possibility is that this be an Agricultural Planning Subcommittee of the SATDAL /1 consisting of the five agricultural Directors General and those from the DGT and Public Works. Alternatively such a committee might be formed within the DOA. (2) The ATT should be given regular institutional status within the DOA and sufficient staff and facilities to program and monitor the provision of agricultural supporting services for transmigration. (One way to do this might be to incorporate the ATT into the Bureau of Planning within the DOA). Bank financing is also recommended for technical assistance to the ATT to establish procedures for management and monitoring. (3) Steps should be taken to strengthen agricultural supporting services for transmigration, particularly in the fields of agricultural extension, seed and input quality control and supply, agricultural tools standards, research and the distribution and overall monitoring of agricultural services. /1 The committee of all Directors General involved in transmigration (para. 3.33). - 17 - 2.08 Specific activities which should be undertaken to strengthen agricultural supporting services include the following. (a) Rural Extension Centers should be built and staffed prior to transmigrants arrival and the extension program strengthened through additional staffing, specialized training and wider distribution of written materials in transmigration areas. Bank support for these activities under the National Agricultural Extension Project II (Credit 996-IND) is recommended. Efforts to increase incentives for subject matter specialists in remote areas should be explored. (b) Seed improvement can be fostered by developing existing provincial seed farms in transmigration provinces and establishing small seed laboratories for quality control. These steps can be taken within the second Seeds Project proposed for Bank assistance. In addition, GOI should strengthen seed distribution firms and review seed distribution costs to ensure adequate budget provisions. Providing transmigrants with an initial seed package for the home lot at the point of origin would ensure quality seed and prevent transfer of pest-prone rice varieties by the trans- migrants. (c) The present policy of a three-year free supply of fertilizer to transmigrants should be continued and the transport subsidy required for each transmigration project should be estimated in advance and included in the corresponding DIP. Quality control standards for fertilizers, rock phosphate and lime should be established and used in conjunction with regional application guidelines to be prepared under Soils Research Institute supervision. (d) Research by CRIA should be increasingly focussed on farming systems integrating food crops and tree crops, and more attention should be given to improving the productivity of home gardens. Research should be intensified on the technology for alang-alang control and the reclamation of fresh water swamps. (e) Finally, the quality and the efficient and timely delivery of inputs and effectiveness of agricultural services should be monitored by the responsible agencies. Technical assistance to aid the establishment of monitoring systems should be provided by the management team providing assistance to the JMIT for monitoring and coordination. - 18 - Tree Crops for Transmigration 2.09 With Indonesia's improved resource situation, the need to increase migrant incomes, to make better use of available land (particularly that over 8% slope), to protect fragile soils from erosion, and to provide attractive benefits to local families, thereby facilitating land alienation, all point to an increased role for tree crops in the transmigration program. 2.10 Benefits. A review of food crop and tree crop alternatives confirm the benefits of tree crop developments to migrants and to the Government. (a) Income. Migrant incomes on standard transmigration schemes with 1.25 ha primarily under food crop production are estimated at US$530 per family annually. PMU established tree crops with 2.0 ha under rubber have projected incomes of approximately US$1,200 annually, while farmers on NES schemes with 1.0 ha of food crops and 2.0 ha rubber would have an annual income of US$1,600 per family. (b) Risk. An acceptable income from food crops assumes average rainfall, sustained fertilizer use and upland paddy yields of 1.7 ton/ha (or the equivalent from other crops) by year 5. Without adequate rainfall or fertilizer, or with paddy yields of 1.4 ton/ha, the average annual income per family would fall to about US$400, below the absolute poverty line of US$465 (1979) in the outer islands./l PMU tree crop schemes reduce this risk in early years by partial compensation for labor (for land clearing and planting) and by intercropping trees with rice or other food crops./2 NES projects provide a secure source of employment for migrants until tree crops are established. (c) Cost. While tree crop projects are initially more expensive to the Government, their cost is substantially reduced in the long run due to cost recovery enabled by higher family incomes (Table 2.2). (d) Other Models. Costs could be reduced and management constraints relaxed by consideration of models other than the PMU and NES prototypes. For example, settlers could be given the responsibility for land clearing, planting and maintenance of the tree crops, with the Government providing seedlings, inputs and limited supervision. This approach is being tried under the estates in the PIR program and this strategy should be encouraged by both the GOI and the Bank. /1 This effect may be understated, since paddy yields on good schemes average only 0.7-1.0 ton/ha at present. /2 In rubber replanting schemes, local smallholders plant one ha of rubber intercropped with rice in the first year of the project and a second ha intercropped in year 4. - 19 - Table 2.2: TRANSMIGRATION SCHEMES WITH AND WITHOUT TREE CROPS Trans scheme Trans scheme Trans II Trans II NES rubber NES rubber with 2 ha rubber with 2 ha rubber on on (2 ha) on (2 ha) on in Year 3 in Year 3 grassland/a forest/a grassland forest on grassland on forest Rubber Development Direct costs - - 2,527 3,108 2,527 3,108 Machinery - - 237 700 237 700 Overheads /b - - 253 310 253 310 Subtotal - - 3,017 4,118 3,017 4,118 Food Crop Development Initial land clearing (food crops) /c 73 806 58 645 73 806 Settler subsidy and cash grant 423 423 49 49 423 423 Seeds/fertilizers 487 487 41 41 487 487 Cooperatives/RECs/PMSU /d 263 264 240 263 317 317 Seed farms and equipment 17 17 17 17 17 17 Plant protection 3 3 3 3 3 3 Subtotal 1,266 1,999 408 1,018 1,320 2,03 Roads /e 600 600 700 700 700 700 Settler housing 400 400 400 400 400 400 Village infrastructure and health /f 200 200 200 200 200 200 Resettlement costs /f 287 287 287 287 287 287 Land alienation /f 80 80 80 80 80 80 Buildings and civil works /f 60 60 60 60 60 60 Equipment/vehicles /f 70 70 70 70 70 70 Management/consultant services 97 97 126 155 223 252 Administration/overheads 80 80 16 6 96 86 Total investment cost/family 3,140 3,873 5,364 7,094 6,453 8,306 Average annual net income/family over 25-year life 530 530 1,595 1,595 1,446 1,446 NPV - net family income 4,083 4,083 8,384 8,384 6,931 6,931 NPV - investment cost 2,875 3,574 4,789 6,442 5,072 6,552 NPV - total cost recovery Lg 133 133 2,456 2,456 1,845 1,845 NPV - net cost to GOI 2,742 3,441 2,333 3,986 3,227 4,707 Ratio of NPV net family income to NPV net cost to GOI 1.49 1.19 3.59 2.10 2.15 1.47 /a Excludes livestock from Trans II model to make constant with tree crop models. /b Equal to 10% of direct costs of rubber establishment. /c Land clearing on 1.25 ha food crops in Trans II and 1.0 ha in tree crops models. /d Assumes planting material supply units in tree crops models equivalent to cooperatives or RECs. /e Assumes an additional $100 per family for rubber area roads. /f All costs here standardized for all models. /g Represents cost recovery to GOI from IPEDA in case of Trans II and IPEDA and cost recovery of 25% of annual rubber production for tree crop farmers. - 20 - 2.11 The cost of typical transmigration and tree crops projects provide further support for tree crops. The initial investment cost on transmigration schemes in grasslands is US$3,140/family (1979, no cattle) compared to US$5,400 for NES schemes under similiar conditions (see Table 2.2). The investment costs in forested areas are US$3,900 and US$7,100 respectively. However, with projected cost recovery, NES schemes with 3 ha under production (2 ha tree crops, 1 ha food crops) cost US$440/family less on grassland than transmigration schemes with 1.25 ha under cultivation; and, in forested areas, a 3 ha NES scheme costs only US$560/family more. Processing facilities are not included in the comparison. Cost-benefit considerations as well as concern for migrant welfare indicate that it is wise to plant trees soon after migrant arrival (to avoid cost duplication and delayed cost recovery), and preferably no later than year 3 (Table 2.3). Table 2.3: COST-BENEFIT RATIOS BY YEAR TREE CROPS ARE INTRODUCED (10% discount rate) Grassland Forest One stage (NES) 1:3.6 1:2.1 Two stage - 3-year delay 1:2.2 1:1.5 Two stage - 6-year delay 1:1.9 1:1.4 Transmigration only 1:1.5 1:1.2 2.12 Demand for Tree Crops. The Government intends that transmigrants in areas of rainfed agriculture should develop at least 1.5 ha of their 3.5 ha plot for tree crops. (This was based on assumptions that a full 2.0 ha would be suitable for food crop production). Assuming that about 36,000 migrant families moved before 1979 should receive tree crops and another 48,000 moved by the end of 1980 will require tree crops within the next five years, Government should be prepared to provide 140,000 ha of tree crops for existing transmigrants by 1986. There is no program at present to meet this need. It is therefore recommended that GOI should move rapidly to develop a planting program for existing migrants and local smallholders within the same development area. - 21 - 2.13 Alternative Systems for Introducing Tree Crops . Effortc; to encourage migrants in Pematang Panggang (South Sumatra) and Riribobujang (Jambi) to plant rubber by themselves have been only minimally successful. Javanese are generally unfamiliar with plantation crops and are fully occupied by food cropping and off-farm work for subsistence. In addition, problems of obtaining planting materials and fertilizers have proven difficult in remote transmigration sites. Therefore, only those crops which migrants are familiar with and which require minimal inputs (coconuts, coffee, cloves) are likely to would be established by the settlers on their own, and crops such as rubber will require some degree of government assistance. Appendix 3 illustrates one proposal for facilitating settler established tree crops. 2.14 The PMU system, in which farmers are supplied with planting materials and inputs, organized by a PMU, and partially compensated for their labor, is an acceptable system for introducing tree crops to smallholders. Up to now, PMUs have been organized and staffed by the provincial staff of DGE and it is unlikely these PMUs could undertake additional large-scale tree crop planting at present. PMUs could potentially be established by the estates, however, and the PIR program, in which estates provide inputs and organizational assistance to migrants represents a step in this direction. 2.15 In the immediate future, the estates have the most evident capacity to meet the tree crop demand among existing migrants, but they are being asked to undertake "local NES" (domestically funded NES projects) and PIR programs as well as their own planting. Therefore, in view of their limited capacity, it is recommended that the Government give priority for tree crop development to: (a) migrants and local smallholders in the vicinity of existing or proposed estates; (b) those located in large settlement areas; and (c) the poorest migrants or those settled the longest. Scattered and remote settlements could be assisted by PMUs either managed by the estates or upgraded by technical assistance from estate staff. Further details are given in Annex 3. 2.16 To support this program it is recommended that: (a) a reconnaissance of agricultural conditions and income levels and an assessment of agricultural potential in existing transmigrant areas should be undertaken to determine those which require tree crop development; - 22 - (b) financial assistance should be made available, perhaps with Bank assistance within the NES pipeline of projects; and (c) priority should be given to expanding estate and PMU implementation capacity, through staff training and management assistance, especially for those estate groups not previously involved in externally-assisted projects. This activity is being considered for financing in the next NES loan. To supplement government estate capacity, the use of private sector firms to establish tree crops for smallholders would also be desirable. Such firms might be Indonesian or foreign-owned private estates, forest concessionaires or transnational agri-businesses. Their involvement might include any or all of the following elements: clearing, planting, maintenance, processing and marketing. Their compensation might take the form of a fee for service, a turnkey contract or a production sharing agreement. 2.17 Issues in Tree Crop Establishment. The preceding analysis suggests several issues of importance to the Government. (a) System of Tree Crop Development. Several management systems are available. In the past, the Government provided transmigrants with land and expected them to establish their farms largely by themselves. To stay within this tradition and avoid providing a single group with multiple benefits while others are neglected, GOI should consider maximizing the use of migrant labor and spreading labor requirements over several years. (b) Timing of Tree Crop Development. Economic analysis indicates that it is cheaper and less risky to establish migrants with tree crops rather than plant them at a second stage of development. This suggests strong support for programs such as PIR. However, the Bank recommends that highest priority be given to tree crops for migrants already settled, in order to build on sunk costs and reach viable income levels. (c) Tree Crop Beneficiaries. Present tree crop planting and replanting programs are geared largely to local smallholders who in many cases are dependent on tree crops for their livelihoods. These programs should not be reduced. To the extent they exhaust managerial resources, other management systems should be sought for trans- migration. - 23 - td) Cost Recovery. The high investment costs of tree crop developments and the higher incomes to be derived from them means that it is both desirable and feasible to achieve cost recovery at higher levels than the collection of land tax (IPEDA) in transmigration projects. Therefore, in designing projects based on tree crops, it is essential that attention be given to the instruments for and level of cost recovery. For those sites in which it is feasible, a system such as that adopted for NES projects, in which smallholders debt is collected by the estate which markets their output, appears viable. The use of export cesses and long-term bank credit should also be examined. - 24 - 3. PROGRAM EXPANSION, RESOURCE USE AND PROJECT QUALITY 3.01 Recommendations to facilitate program expansion, promote sound resource use, and improve the quality of project implementation are summarized in this chapter. A. Program Expansion 3.02 The World Bank shares the Government's view that the transmigration program should be of sufficient scale to meet national objectives. However, it also recognizes that high targets coupled with limited managerial capacity can cause project quality to suffer. For this reason, achieving a balance between the quantity and quality of settlements is one of the major challenges of the program. Therefore, to increase the scale of movement without further straining the institutions involved, steps are required to optimize the use of existing and new managerial resources and to promote spontaneous migration. Optimal Use of Managerial Resources in the GOI Program 3.03 To optimize the use of the limited managerial staff within the Government agencies, proposed transmigration sites should be consolidated and the program focussed upon areas with the largest development potential. This would: (a) facilitate the management of a larger number of sites with fewer mid- to high-level personnel; (b) simplify ongoing planning, monitoring and tree crops establishment; (c) maximize regional development impact; and (d) provide core centers for spontaneous migration. Consolidation may also exacerbate land acquisition and of farm employment problems and may not be appropriate in all settings. 3.04 To expand the managerial capacity of Government agencies, increased attention and funds are needed for institution building and training. In particular, programs should be initiated to: (a) train and upgrade DGT staff, particularly those serving as village heads and project managers; (b) improve the quality of extension workers and upgrade DGFCA staff to manage inputs for foodcrop production; (c) increase and train DGE staff; and (d) train personnel for planning, design and construction supervision within Public Works. - 25 - A component to train DGT staff is proposed for inclusion in the third Bank assisted project for transmigration; extension workers are to be upgraded through the National Agriculture Extension Project II. Intensive management training in DGE will be provided under the fifth Bank assisted NES project and a project is now being prepared to do manpower training in Public Works. 3.05 To accelerate settlement, the GOI should also explore alternative management systems for establishing settlements. The use of DGT to develop small sites and of the estates to develop smallholder tree crops is sound, as their experience and management capacity are known. Further room for expansion lies in enlisting other institutions such as private estates, forest concessionaires and social organizations to prepare and implement transmigration schemes. To maintain uniformity of standards, these developments should be approved and closely monitored by the Government. 3.06 Expanded use of the private sector offers the greatest opportunity for speeding implementation. Where management is the main constraint, the use of private contractors to provide inputs and establish migrants is possible. Consideration should also be given to turnkey projects in which experienced private firms handle all aspects of preparation and implementation in regions identified for development by the BAKOPTRANS./1 Promotion of Spontaneous Migration 3.07 There are no absolute constraints to movement in Indonesia. People are willing to move; people are moving; mechanisms exist for moving people and can be tapped to move them in greater numbers. What is needed is investment in the outer islands, the use of labor-intensive methods in the development process, and policies and infrastructure to support chain migration. 3.08 Chain migration. Virtually all spontaneous migration occurs through pre-existing chains of social support. When labor shortages arise, those in the labor scarce areas alert friends and relatives, encourage their immigration, and assist in their initial support. Therefore, to foster migration from critical areas in Java to specific areas in the outer islands requires two steps. First, seed communities must be established in which the Government assists migrants who have no way to bear early risks. In the second stage, however, cost considerations suggest that Government should concentrate on emnployment creation and land transfer and encourage unsponsored immigration through family ties. 3.09 Facilitating movement. Spontaneous migration can be facilitated by appropriate policy measures. Annex 4 includes recommendations on spontaneous movement which are summarized below. 3.10 Phased Community Development. To promote spontaneous migration, community development must be phased. This can be done by: (a) establishing nucleus communities with village infra- structure, seed farms, livestock stations and other services; /1 Badan Koordinasi Penyelenggaraan Transmigrasi (Coordinating Body for Executing Transmigration). - 26 - (b) providing the agricultural core with strong technical and social support; (c) emphasizing labor intensive activities; and (d) promoting immigration through established social networks by: (i) reserving land near established settlers for spontaneous immigrants; (ii) providing information on opportunities to those within the community; and (iii) encouraging communication and travel between home and settlements. 3.11 Removal of Existing Constraints. There are legal and practical constraints to spontaneous movement which should be removed. (a) Constraints To Travel. A lack of information on cheap travel and accommodation is a major constraint to the movement of the poor. To reduce this constraint, the Government should: (i) construct free or low cost transit hostels where migrants can rest and eat cheaply; (ii) provide barracks in new settlements; (iii) establish regular and well publicized transportation; (iv) subsidize outward transport; and (v) provide information on transit hostels and transport to sponsored migrants to be disseminated by them to relatives and friends at home. (b) Constraints To Orderly Land Transfer. The inability of migrants to obtain land in the outer islands is the major constraint to settlement. To reduce this problem, GOI should take the following steps. (i) Within transmigration sites: - allow spontaneous immigrants to register for settlement in the transmigration area; - 27 - - reserve land for homesteading and devise procedures for its transfer to new immigrants; and - reserve land for nonagriculturalists in core villages and establish procedures for its transfer. (ii) Adjacent to transmigration sites: - set aside unutilized land which can be redistributed to local settlers and spontaneous transmigrants; - develop a system of land transfer between local cultivators and spontaneous immigrants; and - establish a land transfer system between timber con- cessionaires and immigrants. 3.12 Employment Possibilities in Transmigration Areas. Most spontaneous migration is triggered by labor shortages. Therefore, to generate employment opportunities, planners should consider the following steps. (a) On-Farmu (i) intensify services (extension, etc.) to early migrants to establish sound core communities; (ii) diversify cropping so that the peak labor demands of a single staple (such as rice) do not set limits on sustained labor absorption; and (iii) provide farm land in installments, allocating new land as the first part is brought under cultivation. This would maximize the incentives for land development and on-farm work. (b) Off-Farm (i) permit off-farm work eitlher by farmers or relatives they recruit; (ii) encourage contractors to use laborers for half-days so as to limit interference with agricultural work and maximize the numbers receiving wages; and, (iii) encourage work arrangements within villages which allow villagers to share jobs. - 28 - (c) In the Services and Industry Sector (i) use local raw materials produced by transmigrant labor for construction; (ii) provide credit for small businesses; and (iii) provide small machinery (for example, food processing equip- ment) for cash or credit. (d) In Larger Industries (i) introduce sawmills and other large industries where feasible; and (ii) allow temporary land concessions for sugar, sisal, and lumbering to create employment. When homestead land is filled, concession lands can be broken up among small- holders. (e) In All Areas (i) provide manpower centers in core villages to disseminate information on employment opportunites; and (ii) encourage existing migrants to recruit and provide back-up support to relatives and friends. 3.13 The establishment of a Directorate for Spontaneous Migration within DGT should increase attention to the needs of spontaneous migrants and encourage their movement. Care must be taken, however, that this Directorate fosters spontaneous movement rather than attempting to move people under another kind of sponsored program. Because of the importance of spontaneous movement, components in future Bank projects are recommended to explore the above options. B. Use of Natural Resources 3.14 A major challenge of a large-scale program will be to reconcile it with the sound use of national resources. The transmigration program will not be remembered kindly if it leaves behind a legacy of primary forests converted to unused grassland and irreplaceble timber destroyed. Incentives and procedures, therefore, should be developed which give priority to the rehabilitation of grasslands, foster the recovery of timber in forested areas, and promote environmental awareness. - 29 - The Rehabilitation of Grasslands 3.15 There are strong economic and ecological arguments for prefering development in grasslands (alang-alang /1) over primary forests. In terms of cost, grassland development is significantly cheaper than similar developments in heavy forest. Standard transmigration projects are 20% cheaper when established in grasslands than in forests and NES projects are 25% cheaper. This is primarily due to the cost of land clearing, which is about ten times greater in forests. There are also sound ecological reasons for preferring grassland development. For example: (a) forest destruction may have an undesirable effect on the watertable and rainfall runoff, and may lead to leaching and erosion if land development is not properly controlled; (b) since forests are a renewable resource, they have a continuing economic value; and (c) since Indonesia has one of the largest and richest areas of remaining tropical forest, its stewardship is of both national and international concern. 3.16 Despite these advantages, grassland development is a difficult undertaking: land rights are complicated, soil fertility is low and alang-alang control is arduous. Rehabilitation may require sustained investment and possibly longer subsistence support. Nevertheless, since the advantages of grassland development are significant and forest clearing will not circumvent but only delay the appearance of alang-alang if remedial actions are not taken, the following steps are recommended to cope with problems of land tenure and alang-alang control. 3.17 Land Tenure. Since cash compensation is seldom available to indigenous peoples for unused land surrendered for transmigration, and the Public Works Department is limited in its authority to negotiate the release of underutilized land, areas with evidence of previous cultivation tend to be eliminated from the site identification process or cause difficulties when included. To overcome this constraint: (a) the benefit package for local people outside the settlement area should be better defined and should include both agricultural and social components; /1 A coarse grass (Imperata cylindrica) which invades deforested areas, often as a result of slash and burn agriculture. Unsuitable for animal feed, the grass is difficult to eradicate with the technology available to smallholders. - 30 - (b) local people themselves should be encouraged to identify and volunteer land for transmigration in return for this benefit package; (c) consideration should be given to cash compensation to indigenous farmers as, in many areas, this would be a very minor component of project costs; and (d) support should be given to the DGA to continue its development of a legal framework for the redistribution of underutilized land to both local people and transmigrants. 3.18 To improve coordination and speed land alienation, the DGA should participate in the land identification process and the Governors of receiving provinces should form special committees to deal with information dissemination to local people and to negotiate for the release of land for settlement. The DGA should develop procedures to speed the registration, acquisition and titling of land for transmigration. 3.19 As a first step toward a comprehensive program of grassland rehabilitation, the Public Works Department should identify grasslands with settlement potential. An inventory of these areas should be turned over to the DGA and to the provincial officials who would determine the tenure status of the land and, where appropriate, negotiate its release for transmigration. 3.20 Technical Package. To enable smallholders to cope with alang-alang, the technical package and the funds allocated for alang-alang control should be improved. To this end, it is recommended that: (a) full scale projects should explore various aspects of the technical and economic parameters of promising techniques of alang-alang control, including mechanical, vegetative and chemical methods which have only been tested on a small scale up to now; (b) a part of the savings realized by developing grasslands should be applied to realistic long-term alang-alang control measures in relevant projects; and (c) adequate provisions for fuelwood plantations in alang-alang areas should be made. Because of the importance attached to this problem, it is recommended that an early Bank-assisted project address the problems of grassland development. - 31 - Timber Disposal 3.21 The net value of exploitable timber in primary forest sites has been conservatively estimated at US$1,500/ha plus US$800 in tax (late 1979 prices). Therefore, where national priorities and regional development interests require land clearing in forested areas, appropriate methods of timber utilization should be assured. Present plans for timber disposal call for the land clearing contractor to stack all useable timber and for the Forestry Service to arrange for its disposal. The incentives for efficient utilization under these arrangements are uncertain. For this reason, the procedures for timber disposal should be determined before project implementation begins. This will be attempted in future Bank assisted projects and should be done as well in GOI financed projects. Alternatives, which potentially would reduce both land clearing costs and timber waste, might involve either contractors or migrants. 3.22 Contractor Clearing. To reduce land clearing costs and promote the effective use of timber, the land clearing contractor could be given the right to dispose of all useable timber. Under these conditions, the GOI should: (a) give high priority to soliciting land development proposals from companies which, besides clearing experience have a demonstrated capacity to market timber - especially lesser known species; (b) make exceptions to existing regulations which would limit timber exploitation from transmigration sites; (c) review timber taxation policies, for example, impose a tax on standing volume of timber rather than on timber utilized. This would discourage bids from contractors who could not market timber, and would reflect in the contract price the loss to the Government if timber utilization were low; and (d) undertake further activities to facilitate timber marketing, particularly of lesser known species. 3.23 Migrant Clearing. Alternatively, the migrants themselves could profit from the felling and processing of timber. To facilitate this: (a) migrants should be clearly told where their reserve land (the land not cleared before settlement) is, so they can exploit timber or control its use; (b) migrants should be trained in chainsaw use and arrangements made for chainsaw rental or purchase; (c) sawmills should be established in appropriate villages; and - 32 - (d) assistance should be provided, through sawmills or cooperatives, which will help in marketing of forest products (shakes, fuelwood, flitches, etc.). To assist the Government in evaluating the alternative methods, economic returns and constraints to timber disposal a study should be undertaken by the Directorate General of Forestry (DGF) dealing with all aspects of timber recovery in the transmigration program. Technical assistance for this study might be funded from an existing technical assistance credit or the Forestry Project being prepared by the IBRD/FAO Cooperative Program and proposed for Bank assistance. Environmental Awareness 3.24 All transmigration projects alter the environment in important ways. Swamp projects improve drainage and in so doing alter the acidity and salinity of surrounding rivers. Forest clearing affects run-off and erosion, and the development of existing alang alang areas leads to the opening of new lands to shifting cultivation and grazing. In most cases the benefits outweigh the risks; but to assure ecologically sound development GOI should encourage an interest in environmental concerns: those involved in project preparation should consider environmental impact in choosing sites, and sound resource management, including erosion control, should be taught to the migrants. C. Project Quality 3.25 Project quality can be improved by upgrading project preparation, land development standards, program coordination and by institutional development. Project Preparation 3.26 In the first two years of Repelita III all transmigration sites were being developed (with the exception of those in the second Bank-assisted project) on a plan-as-you-proceed basis, that is, without detailed topographic mapping and feasibility studies. Preplanning was therefore limited and no sites met standards acceptable for external financing. For this reason, the lack of adequately prepared projects was identified as a major constraint to program development. 3.27 A number of activities have since been initiated. The Government has begun a crash program of aerial photography and site identification for all remaining Repelita III sites, and with Bank assistance is about to undertake topographic mapping and feasibility studies on those sites proposed - 33 - for implementation during 1981/82. Completion of these studies will provide information on the land suitable for transmigration and give a firmer basis for future planning. For this reason, project preparation activities are strongly supported by the Bank. The Bank, however, recommends that future projects be initiated only with adequate preparation and that sufficient lead time be given for the completion of physical planning and project design. Transmigration planning must also be more closely coordinated with other infrastructural developments, such as roads, ports, industry, irrigation and forestry developments. This is already happening with highway planning, where transmigration settlements will provide the major justification for several new roads, which in turn provide essential access to the sites. Coordination also occurs in irrigation development, but is less apparent for activities undertaken by agencies outside the Department of Public Works. Land Identification 3.28 For projects to be economically feasible, land brought under the command of new infrastructure must be effectively utilized and design criteria must be adapted to the area's topography and pattern of existing settlement. This, however, is not the present procedure. For example, of the more than 2 million ha identified for transmigration along the new Trans-Sumatra Highway, only 110,000 ha suitable for 19,000 migrant families has yet been firmly identified for settlement. Some land has been excluded because of steep slopes, poor soils or present cultivation, but large areas have been eliminated because they do not fit the specific criteria of the upland food crop farm model, because of possible land claims, or because of poor coordination with local officials. To circumvent these constraints, it is critical to develop alternative farm models which can make better use of the available land, particularly that between 8-25% slope (para. 2.05); improve benefits to local families (para. 3.17); and better define and formalize land alienation procedures (para. 3.18). Land Development Standards 3.29 Appropriate land development is one of the most important aspects of the transmigration program. So far, high priority has been given to the scale and speed of development but the quality of land clearing has been poor. This causes concern because preplanning and settler support can be rendered fruit- less if faulty land clearing reduces or limits the agricultural potential of the soil. 3.30 Upland Program. The type of land clearing required on the highly erodible soils being opened for the standard transmigration program has been a topic of controversy. This is not surprising, as land clearing methods are both technically and organizationally complex and the available evidence, equivocal. For example, land clearing trials under controlled conditions have demonstrated the utility of mechanical methods when properly executed (e.g., the use of shearing blades to minimize disturbance of tree roots and topsoil), - 34 - but field observations suggest a number of disadvantages for tendering (large blocks of land must be committed to amortize equipment costs), for labor utilization (machine clearing reduces employment creation), and for soil conservation. 3.31 For these reasons, manual clearing with chain saws would appear to be preferable. The Government, however, maintains a strong commitment to mechanical clearing, assuming it is necessary for development of land on the speed and scale proposed. The Bank, therefore, recommends that the mechanical land clearing done in Transmigration II be carefully monitored for both speed and impact and that this evidence be used to determine future land clearing methods. It also recommends that alternative methods of land clearing be attempted in other sites and the results monitored to determine the best mix of efficiency and agricultural viability. Finally, the Bank strongly recommends steps to strengthen the supervision of land clearing at all sites and it is prepared to provide financial assistance to Public Works for technical assistance in this area. 3.32 Swamp Reclamation. Mechanical clearing is not possible in swampy areas being reclaimed for agriculture, but the recruitment and organization of labor in these remote areas is an important problem. To circumvent labor shortages, the first Bank-assisted project for swamp reclamation would use migrants in land clearing. This would provide labor for the project and an income to migrants in the early years of settlement. This feature of the project should be carefully monitored and, if successful, extended to upland as well as other swamp projects. Program Coordination 3.33 Apart from the coordinating role of the Junior Minister for Trans- migration (JMT), Decree 26/78 (para. 1.14) also provides for several other levels of coordination. First, a governing board, the BAKOPTRANS, which consists of involved Ministers and sets the policy guidelines under which the program operates. This board is chaired by the Minister for Manpower and Transmigration. Directly under the BAKOPTRANS is a coordinating body, the SATDAL,/1 which consists of the Directors General of the main implementing agencies. This body is responsible for integrating day-to-day implementation activities and is chaired by the JMT. Within each implementing agency, the Decree provides for a technical team responsible for the design and implementation of appropriate components for transraigration. Finally, to promote the integration of line agencies in the regions, Provincial Committees for Transmigration, chaired by the Governors, are established and charged with the coordination of participating agencies in the provinces. Similar committees are proposed at the District and project levels. /1 Satuan Pengendali Transmigrasi (Transmigration Control Unit). - 35 - 3.34 These organizational arrangements are still new and it is difficult to evaluate their efficacy. Preliminary observations suggest that a single agency with control of project formulation, the coordination of budgets, and the integration of donor agencies would facilitate project implementation, but the Bank agrees that further organizational changes are not advisable at this time. Therefore, in the short run, the new coordinating mechanisms for transmigration should be strengthened and their impact further evaluated./l Recommendations to this effect are detailed below. 3.35 Office of the Junior Minister. The Junior Minister is handi- capped by the fact that he stands outside the normal structure of the line agencies, which restricts his scope of influence in staffing and budgeting and his authority over agencies with divergent aims and goals. In recent months, the JMT staff has been expanded and has assumed new coordinating functions and the office has been relocated to the DGT complex, which has improved an exchange of staff between these two groups. But further steps to strengthen this office are urgently required. Among them, two have high priority: (a) the Office of the Junior Minister should be given regular institutional status; that is, a permanent place within the institutional hierarchy, a regular budget, staff and faci- lities; and (b) adequate counterpart staff should be provided to take advantage of the technical assistance available. 3.36 Project Coordinators. Of critical significance is the need to attract appropriate personnel as coordinators of Government and Bank-assisted projects. Severe manpower shortages at this level could be reduced by improving salaries and benefits; recruiting Indonesian staff on a consulting basis, allowing better remuneration without time-consuming changes in civil service regulations; relaxing regulations to encourage secondment from existing agencies; providing a much expanded program of training to in-house personnel; and/or contracting administration and coordination to the private sector. /1 Two major steps in this direction have recently been taken. First, technical assistance under a UNDP project, with partial funding from the Transmigration Project II loan, is. being provided to the Junior Minister to establish an overall management system for monitoring the rate of project preparation and implementation by the various agencies and to establish the offices of Project Coordinator and Deputy Project Coordi- nator for Transmigration II. Second, with funding from FAO, Transmigra- tion II, and ODA bilateral assistance, technical experts have been assigned to key implementing agencies to improve specific project components. - 36 - 3.37 Site Managers. DGT staff have the major responsibility for on-site coordination once settlers have arrived. To provide staff capable of assuming this work, the Government should improve the incentives for the recruitment of middle-level managers in the DGT, and the DGT should take immediate steps to define career paths and improve training procedures. These components are regarded as sufficiently important that the Bank has expressed its willingness to fund training activities in DGT, identified in conjunction with FAO (which is funding technical assistance for training) and it regards an evaluation of the incentives for DGT staff as a matter of high priority. Institutional Development 3.38 Poor interagency coordination is defined by Indonesians at all levels of Government as the single largest constraint to program implemen- tation. Similarly, managerial shortages and institutional limitations are regarded by the Bank as the major constraint to program expansion. In the short run these constraints can be partially overcome by the use of consulting firms in the preparation, implementation and coordination of projects. In the longer run, however, these tasks should be handled by Government officials; and, therefore, in the early years of the program, institution building and training should have greater emphasis in the terms of reference of consulting firms, and these TORs should include the use of specialist management and training consultants. This may slow program development initially, but it would ultimately ensure a sustained transmigration effort with less cost and dependence on expatriate assistance. - 37 - 4. THE OVERALL TRANSMIGRATION PROGRAM: THE DEVELOPMENT STRATEGY AND THE ROLE OF EXTERNAL ASSISTANCE The Development Strategy 4.01 Many of the conclusions emerging from the Bank Review apply to thie overall transmigration program and have an important bearing on the development strategy adopted. Of particular significance in shaping the Bank's position are findings on program objectives, program uniformity and the implications of Indonesia-s changed resource position in relation to transmigration. Program Objectives 4.02 The Government views the transmigration program as a partial answer to problems of overpopulation, food deficits, farmer welfare, regional development and resource exploitation. This review suggests, however, that the program will have a varying impact on these objectives, and that its most important role is in promoting programs, welfare and itmproving regional development. Migrant welfare has been reviewed in earlier chapters but regional development considerations have yet to be discussed. 4.03 For 11 out of 18 provinces receiving transmigrants, investments in transmigration constituted the largest single component in their 1978/79 development budgets (Table 4.1). In five of the least populated provinces - Jambi, Southeast Sulawesi, Central Sulawesi, East and South Kalimantan - transmigration provided from 40% to over 50% of proposed development expenditures and was potentially the principal vehicle of regional development. In addition, while Repelita III targets imply an increase of about 5% to the 1979 population of the recipient provinces, for a few provinces the increments are much higher. In Jambi, Bengkulu and Central Sulawesi, for example, population increase was about 1% p.a. during Repelita II, but would be 4 to 8% p.a. during Repelita III, if proposed targets are met. 4.04 These figures suggest not only the significant impact which trans- migration can have on regional development, but also the importance of designing projects which can benefit the receiving provinces as well as the migrants and the regions from which they are sent. The Bank, therefore, will give high priority in project formulation to steps which improve migrant welfare and maximnize benefits to settlement provinces. - 38 - Table 4.1: DISTRIBUTION OF CENTRAL GOVERNMENT DEVELOPMENT EXPENDITURE BY SECTOR FOR EACH PROVINCE 1978/79 /a (in percentages) Agri. and Transmi- Flec- Communi- Province irrigation gration /b tricity cations /c Social /d Other /e Total Java 22.3 2.1 6.1 9.4 31.3 28.8 100.0 Jakarta 15.2 2.4 2.9 6.4 36.6 36.5 1OO.0 West Java 40.0 1.0 8.4 19.0 15.5 16.1 100.0 Central Java 44.5 0.5 20.2 12.8 17.6 4.4 100.0 Yogyakarta 25.2 1.7 - 16.1 44.1 12.9 100.0 East Java 36.6 2.9 20.0 16.1 19.7 4.7 100.0 Sumatera 24.0 23.3 6.4 28.9 11.3 6.1 100.0 Aceh 15.8 16.8 7.9 41.2 12.6 5.7 100.0 N. Sumatera 24.2 4.0 14.3 39.6 11.0 6.9 100.0 W. Sumatera 21.3 14.5 10.5 29.7 17.2 6.8 100.0 Riau 27.7 29.1 - 23.3 11.7 8.2 100.0 Jambi 17.5 51.7 - 17.5 8.9 4.4 100.0 Bengkulu 29.8 30.1 - 26.3 10.0 3.8 100.0 Lampung 36.8 34.4 - 16.0 7.5 5.3 100.0 S. Sumatera 23.1 32.6 4.8 23.8 10.6 5.1 100.0 Kalimantan 16.9 34.4 2.5 21.9 14.9 9.4 100.0 V. Kalimantan 21.2 26.7 2.9 25.9 14.4 8.4 100.0 F. Kalimantan 9.6 39.7 - 27.5 13.1 10.1 10O.0 C. Kalimantan 16.1 26.8 - 18.6 22.3 16.2 10O.0 S. Kalimantan 19.6 39.1 5.2 14.8 14.4 6.9 100.0 Sulawesi 21.7 24.9 4.8 22.6 17.7 8.3 1on.o N. Sulawesi 30.7 5.3 12.3 28.4 16.( 6.4 100.0 C. Sulawesi 26.5 40.1 - 15.5 12.8 5.1 10O.0 S.E. Sulawesi 27.8 41.0 - 11.8 13.5 5.9 100.0 S. Sulawesi 8.9 21.7 - 4.7 28.2 23.6 100.0 Eastern Provinces 22.4 8.0 5.5 14.2 26.6 22.9 100.0 Maluku 11.2 26.5 10.7 24.4 18.0 9.2 100.0 Bali 20.3 3.3 11.1 32.2 22.9 10.2 100.0 West Nusatenggara 47.9 2.3 - 25.1 16.7 8.0 100.0 East Nusatenggara 22.5 1.0 - 40.4 21.3 14.8 100.0 Irian Jaya /f - 88.4 - - 4.6 7.0 100.0 East Timor 7T n.a. n.a. n.a. n.a. n.a. n.a. 100.0 Indonesia For comparison: Java excluding Jakarta 39.4 1.4 13.9 16.5 18.8 10.0 100.0 /a Figures refer to the rupiah Development Budget excluding externally financed expenditures. Transfers to local Government Development Budgets are also excluded. /b Includes manpower. Tc Includes tourisn. 7X Education (68%), health and family planning (18%), housing and water supply (11%), and religious affairs (3%). Ie Industry and mining (14%), trade and cooperatives (3%), judiciary (5%), defence (21%) and miscellaneous (57%). If For historical reasons, most expenditure on Irian Jaya and East Timor does not pass through departmental budgets but are reflected in special programs handled hy the Department of Home Affairs. Any items in the departmental budgets represent only small residual amounts. - 39 - Program Uniformity 4.05 In the early stages of program formulation, it was assumed that uniform farm models and management systems would simplify implementation and speed program expansion. Review findings make it clear, however, that uniform models provide neither the quality nor the quantity of settlements required. For this reason, a variety of models are recommended which will promote movement, improve migrant welfare and contribute to regional development. Such models are made feasible by good project preparation, which will allow each region to be treated individually, and by detailed project design. The ability to design varied projects, however, points to the urgent need to improve program coordination. More attention is also needed to complementary infrastructure. The World Bank has no commitment to either a single farm model or a single set of organizational arrangements for transmigration. It is prepared to assist a wide variety of efforts which meet the Government-s objectives and it looks to Indonesian agencies for pragmatic suggestions on ways to meet transmigration objectives. Resource Constraints 4.06 In the past, the transmigration program was limited by one absolute constraint - a lack of funds. Under these circumstances, preplanning was limited and food crop farming systems which could be established and sustained by the migrants themselves were advocated. Replicability depended on low cost. Today, however, increased foreign exchange resources, availability of foreign assistance for transmigration, and strong commitment to the program by the GOI mean that funding is, for the moment, no longer the chief constraint to program development. This has implications for several features of the program. 4.07 The Benefit Package. Rising living standards in the country, accompanied by decreasing selectivity in the choice of migrants (owing to the large numbers moved), means that higher benefits and less risk are required if migrants are to be attracted to remote settlements. However, the provision of improved benefit packages to migrants will also create a demand among local people for increased benefits for themselves. Fortunately, the Government can provide an improved benefit package to migrants and to local people and, for this reason, settlements tailored to the site and based on tree crops, integrated farming systems, and irrigation and industry, can play a growing role in the transmigration program and are strongly recommended by the Bank. 4.08 Management. The main constraints to project replicability will be organizational and managerial and, in the short run, the main way to circumvent these constraints will be through expanded use of external - 40 - assistance to increase implementation capacity and to assist in institution building and training. The alternative would be to reduce the program scale while indigenous institutions evolve. The Bank favors a mix of the two. It recommends external assistance (private firms and estates for example) to speed tree crop establishment for smallholders, create food crop PMUs, and assist in project preparation and implementation. It also recomuends technical assistance for training in the various Directorates General. At the same time, it recommends adjustments in the rate of implementation which will let sound working relationships and quality projects evolve. Development Strategy 4.09 Available facts suggest the following development strategy. (a) Future projects should put high priority on improved migrant welfare and regional development. To the extent that projects are successful in these areas, an impact will also be felt in population redistribution and food security. (b) Many types of projects both in agriculture and in other sectors can contribute to transmigration goals and should be attempted. (c) Implementation of a transmigration program with several develop- ment models will require that actions to strengthen coordinating mechanisms receive early attention by the GOI. (d) To maximize managerial capacity, sound core communities should be developed in areas where large scale regional development is desired. Further development should be based increasingly on spontaneous movement. (e) To expand the scale of transmigration, a vastly increased institution building effort is required and more preparation and implementation should be contracted out to the private sector. D. The Role of The World Bank 4.10 The Bank is prepared to continue its support of the Transmigration Program, as long as steps are taken to improve the quality of project design and construction, increase migrant incomes and assure ecologically sound regional development. However, since the success of all projects is linked to the development of appropriate policies, standards, coordinating and training mechanisms, there should be a shift from projects concentrating - 41 - mainly on resettlement to a more general effort to address key constraints to program effectiveness. This sectoral focus began in Transmigration Project II, which has components for the preparation of future projects and for technical assistance to the JMT and to several technical agencies to improve the management and implementation of the whole program. The Review recommends that this approach be expanded during Repelita III, with project loans to promote settlement, facilitate project preparation, improve environmental analysis, foster institutional development, and demonstrate solutions to key problems such as timber disposal and alang alang control. Projects to rehabilitate existing settlements and improve inputs, processing and marketing on a regional basis shouli also be considered. 4.11 At the end of Repelita III the program should be reevaluated to assess new constraints and developments and evaluate the possibility of sector lending. This evaluation should use the following criteria to measure performance and improvements in the transmigration sector: (a) the numbers of families moved (including spontaneous transmigrants) in comparison with past performance and targets; (b) the quality of settler life for established and new settlements, in comparison with poverty levels in sending areas and the performance of the program in the past; (c) the effect of settlement on resource utilization (forests, soil, water, fuel); .(d) the contribution of transmigration to environmentally sound regional development (multiplier effects, complementary investments); (e) the evolution of policies and procedures for planning, design and implementation, monitoring and evaluation, staff training and program coordination; and (f) need for further external assistance. Assuming that progress is made in addressing the technical and institutional constraints identified in this Review, the next sector review could take place in a macro-economic framework. In the short term, Bank assistance should concentrate on the following areas. Settlement Components 4.12 Upland Program. A large project preparation exercise is now under- way. Within a year it should lead to the preparation of feasibility studies for most sites to be implemented in 1982/83. If Bank assistance is requested for the development of some of these sites it is recommended that preference for Bank financial assistance be given to those sites which would: - 42 - (a) provide the core of future large-scale developments and in which start-up activities will be particularly urgent; (b) have the strongest effect in demonstrating procedures for circumventing key constraints; or (c) require especially intensive management and technical assistance. Such sites are likely to include grassland areas and sites with potential for spontaneous migration. 4.13 Swamps. Expansion of World Bank participation in the swamp program is limited by the small number of feasibility studies prepared for swamp reclamation and by uncertainties concerning appropriate technical solutions in this area. However, the Bank is prepared to assist the pilot project recently appraised and the reconnaissance and project preparation efforts associated with this project. It should also consider assistance for the evaluation and rehabilitation of sites which have been opened but not yet settled and support studies or second stage improvements in water control (including irrigation) in existing projects. 4.14 Tree Crops. A project to provide existing migrants with tree crops has obvious merit. For this reason, estate management should be used to: (a) establish tree crops for existing transmigrants in key areas around existing or proposed nucleus estates; and (b) establish or upgrade PMUs to assist in the provision of tree crops to sites which are small and scattered. Financial assistance for reconnaissance and for the implementation of such a project should be considered by the Bank. Program Development 4.15 Project Preparation. Success of the whole program is critically dependent on high quality project preparation. Therefore, support is recommended for the following new and ongoing project preparation activities: (a) Site identification, detailed design and feasibility studies for the standard transmigration program. This activity is now about to begin with funds allocated from Transmigration II and continued assistance in this area is recommended. (b) Reconnaissance of areas suitable for new swamp development and for rehabilitation and improved water control. This activity, initiated in Swamps Reclamation I, should be supplemented, as necessary, in future projects. (c) Reconnaissance, investment proposals and feasibility studies for introducing tree crops to transmigrants. If the Government desires to speed start-up, money could be allocated for these activities from funds available in NES III and NES IV. - 43 - If required, the funds for further feasibility studies could be supplemented in the proposed loan for NES V. 4.16 Training and Institution-Building. No activities initiated with Bank assistance are likely to have a more important impact on program imple- mentation than those associated with training and institution building. Therefore, in addition to ongoing assistance to strengtlhen the office of the JMT, the Review advocates technical assistance and brick and mortar compo- nents intended to: (a) strengthen the ATT; (b) expand and improve the training of DGT staff; (c) increase the capacity of estates to train their personnel and provide technical assistance to new PMUs; (d) upgrade personnel providing information on agricultural extension and environmental management in transmigration schemes; and (e) provide training to field level and higher level staff in Public Works engaged in the planning, design and construction supervision of transmigration projects. 4.17 Demonstration Components. Because Bank-assisted projects tend to be designed and supervised more intensively than other GOI projects, they provide a good vehicle for innovative components which, if successful, can be implemented throughout the program. For this reason, the Review urges that early Bank projects explore alang alang rehabilitation, the reclamation of freshwater swamps, the settlement of spontaneous migranlts and settler processing of timber. Experience gained in Bank projects would be expected to have a strong demonstration effect on the overall program. Possible Project Pipeline 4.18 The Bank is prepared to assist Government in the execution of projects to improve program quality and overcome the constraints identified in this Review. This suggests the following tentative pipeline of projects for Bank consideration within the next few years: (a) an early project to settle 12,000 families in East Kalimantan determine methods of timber disposal; provide funds to continue preparation of the upland transmigration program; improve staff training in the DGT; and strengthen agricultural supporting services (possible appraisal, August 1981); (b) a project to establish new estates in major settlemaent areas and to provide tree crops to existing transmigrants (possible appraisal, mid-1982); - 44 - (c) a large settlement project drawn from those sites for which detailed design will be available in mid-1981 and having demonstration potential, together with appropriate program components (possible appraisal, mid-1982); and (d) a possible project to explore all aspects of alang alang rehabili- tation. This project would not begin until land was alienated and the technical package for alang alang control was fully formulated. This might be prepared with the assistance of the FAO/IBRD Cooperative Program (possible appraisal 1982/83). Coordination of Donor Activities 4.19 The transmigration program is a massive one, which the World Bank will be able to assist only in part. However, given the importance of this program to the Government and given Indonesia's improved resource position at present, bilateral assistance and private sector investment can be expected to be attracted to this sector as goals and procedures are clarified. To facilitate this process, the Government should hold regular meetings to explain developments in transmigration, coordinate information exchange between interested agencies and solicit and review proposals for investment for either specific parts of the program or special projects identified and prepared separately. The groundwork for such coordination has been laid in the call of the IGGI /1 for a special meeting in Jakarta on transmigration and it is strongly recommended that, at this meeting, a mechanism be established to facilitate communication, to coordinate the activities of donor agencies, and to promote investment in the transmigration program. /1 International Governmental Group on Indonesia APPENDIX 1 - 45- -g INDONESIA TRANSMIGRATION PROGRAM REVIEW The recommendations in the preceding report indicate those areas of change on which the World Bank places priority. A few stand out because they require policy shifts or new initiatives. These are listed immediately below. A summary of the recommendations in the main report follows. Conclusions and Major Recommendations I. Policy Shifts A. Since managerial constraints are the major limitation to program expansion, the GOI should place increase emphasis on institution building and subcontracting. B. Farm models should vary according to land type and marketing possibili- ties. To develop more appropriate farming systems will entail: (i) site specific project preparation by TKTD; (ii) organizational arrangements permitting greater participation by the Ministry or Agriculture in the choice of farming system; (iii) development of diverse farm models through improved research and increase innovation in project implementation; and (iv) an increased emphasis on processing and marketing. C. Rising expectations on the part of migrants and improved economic opportunities in the country dictate that transmigrant incomes be increased more rapidly than originally anticipated. This can be accomplished by introducing tree crops (in which case this should be started by year 3); providing irrigation (which should be studied during project preparation) or introducing other income increasing activities. D. Sound resource husbandry dictates a preference for the development of grasslands. This will entail the identification of grasslands by TKTD; greater participation by the Directorate General Agraria and Provincial authorities in land identification and alienation and actions by the DGFCA to improve methods or control. E. Greater emphasis should be placed on spontaneous transmigration. APPENXDIX 1 - 46 - Page 2 II. New Initiatives A. P4S, the Directorate for Tidal Swamp Development, should undertake a study to identify swampy areas with acceptable soils. B. TKTD should begin an inventory of grasslands which can be turned over to provincial authorities. C. The Directorate General of Agraria should develop appropriate procedures to speed the registration, acquisition and distribution of land. D. The DGE should initiate a study of existing settlements to determine the location and amount of trees required by migrants who have already been moved. E. The Directorate General of Forestry should undertalke a study of methods of timber disposal from transmigration sites. F. The Ministry of Agriculture should promote integrated farming systems (food crops and tree crops) and study ways to improved hoime gardens in transmigration areas. G. The Agricultural Technical Team should be given the staff and facilities to monitor agriculture inputs for transmigration. Alternatively this task should be undertaken by the JMT. Summary of Major Recommendations I. Farming Systems A. Farming Systems for Swamp Reclamation (para. 2.03) 1. For farming systems in swvamp reclamation areas to be economically justifiable, GOI should: (a) improve site selection to eliminate areas with poor soils; (b) prevent over-drainage; and (c) keep infrastructure costs low. 2. To improve existing project design, GOI should: (a) increase income aiversification; (b) increase attention to pest and weed control; and (c) undertake studies on tree crops for swamp reclamation areas. - 47 - APPENDIX 1 Page 3 B. Upland Farming Systems (paras 2.04 to 2.05) 1. Food crop production Settlements based mainly on food crops must have timely inputs and good extension. To provide this GOI should: (a) upgrade existing agricultural supporting services; (b) provide strong on-site management; or (c) contract some agricultural supporting services to the private sector. 2. Integrated Farming Systems Where soils are relatively fertile but good management cannot be assured, farms should be diversified and limited reliance should be placed on externally supplied inputs. To diversify farming systems, GOI should place more emphasis on: (a) extended home gardens; (b) tree crops intercropped with food crops; and (c) fish ponds and small livestock. 3. Tree crops Where soil fertility or rainfall are marginal, tree crops should be provided as an integral part of project design. C. Tree Crop Farming Systems (paras 2.09 to 2.17) 1. Migrants in upland areas should begin to establish tree crops no later than the third year after settlement. To enable this GOI should: (a) locate estates in or near major transmigration areas; (b) give preference for tree crops to existing migrants and surrounding local smallholders; (c) sub-contract some tree crop establishment (through the DGE or estates) to the private sector; - 48 - APPENDIX 1 Page 4 (d) establish PMUs to assist remote and scattered settlements; and (e) devise a program to assist migrants not reached by estates or PMUs. 2. To speed implementation of a tree crop planting program, the Review recommends: (a) reconnaissance of existing transmigration sites with funds available in NES III or IV; (b) development of a comprehensive investment strategy by GOI; and (c) Bank financial assistance for program implementation. D. General Agricultural Support (paras 2.06 to 2.08) Regardless of the farming system adopted, steps should be taken to improve the policies, programming and coordination of agricul- tural supporting services. To this end, the Bank recommends: 1. formation of a high level committee to set agricultural policy; 2. provision of regular institutional status to the Agricultural Technical Team; and 3. strengthening of agricultural supporting services, through: (a) improved seed quality and distribution; (b) improved fertilizer quality; (c) construction of Rural Extension Centers before settlers arrive and the appointment of additional subject matter specialists; and (d) establishment of agricultural monitoring systems. II. Program Expansion To expand the transmigration program, without jeopardizing migrant welfare or institutional capacity, the Government should take the following steps: A. Optimal Use of Managerial Resources (paras 3.03 to 3.06) 1. To maximize existing managerial capacity, sites should be consolidated. 2. To expand managerial capacity, training and institution building should be increased and GOI should undertake programs to: - 49 - APPENDIX 1 Page 5 (a) train and upgrade DGT staff; (b) improve the quality of agricultural extension workers and other agricultural staff; (c) expand and strengthen DGE staff; and (d) train supervisory staff in Public Works. 3. To speed settlement, alternative managerial resources (e.g., forest concessionaires and the DGE) should be fully utilized. 4. To expand implementation capacity, the Government should significantly increase its use of the private sector. Policies to foster this should be considered immediately by the BAKOPTRANS. B. Promotion Spontaneous Migration (paras 3.10 to 3.12) 1. Chain migration should be facilitated by: (a) phasing community development (e.g. creating sound core communities and encouraging spontaneous immigration); (b) removing existing constraints: (i) to travel; (ii) to orderly land transfer; and (c) maximizing employment opportunities in transmigration areas. 2. Spontaneous migration should be fostered by investment in the outer islands and by decentralization of educational and economic resources. III. Natural Resources A. Grassland Rehabilitation (paras 3.17 to 3.20) High priority should be given to the development of grasslands. To do so, procedures for land alienation and alang-alang control should be improved. 1. Land alienation (a) the Public Works Department should make an inventory of grass- lands with settlement potential; (b) the DGA and Provincial level officials should determine the status of this land, and, where appropriate, negotiate its release for transmigration; - 50 - APPENDIX 1 Page 6 (i) the Governor should form a special provincial level committee to deal exclusively with information dissem- ination on transmigration and with land alienation; (ii) the benefits package for local people in transmigration areas should be upgraded; (c) DGA should be given strong support for developing a legal framework for the redistribution of underutilized lands to both local people and transmigrants. 2. Alang-alang Control (a) a project should be undertaken to test all aspects of the vegetative, chemical and mechanical control of alang-alang, and the provision of fuelwood in grassland developments; and (b) realistic alang-alang control measures should be included in all grassland projects. B. Timber Disposal (paras 3.22 to 3.24) In forested sites, arrangements should be made for the full utilization of timber from areas to be cleared. Alternatives to GOI sale of timber are to use contractors or migrants. 1. Contractors To assure full utilization with contractor clearing: (a) land clearing proposals should be solicited from companies with experience in marketing timber; (b) exceptions should be made to existing regulations which limit timber exploitation from transmigration sites; and (c) policies on timber taxation should be reviewed. 2. Migrants To assure full utilization with migrant clearing: (a) migrants should be told where their reserve land is so that they can exploit timber or control its use; (b) migrants should be trained in chainsaw use and arrangements made for chainsaw rent or purchase; - 51 - APPENDIX I Page 7 (c) sawmills should be established in appropriate villages; and (d) assistance should be provided through sawmills or cooperatives for the marketing of forest products. A study should be undertaken by the Directorate General of Forestry to explore all aspects of timber recovery in transmigration sites. IV. Project Quality To improve the quality of projects, attention should be focussed on the following four areas: A. Project Preparation (paras 3.26 and 3.27) 1. Project preparation should be completed before land development or settlement are undertaken. 2. Where possible, the standards for project preparation should be simplified. 3. Project preparation activity should be given priority for GOI and Bank support. B. Land Identification (para 3.28) 1. Farm models should be developed which make better use of land from 8-25% slopes - these are likely to be based mainly on tree crops. 2. The benefits to local families should be improved so that transmigration is welcomed. 3. Closer coordination should be encouraged between the land identification activities of the Public Works Department and the land alienation efforts of the UGA and Provincial level officials. C. Land Development (paras 3.30 to 3.32) 1. The land clearing of the Transmigration II Project should be closely monitored for speed, cost and quality. 2. FAO should compare the agricultural results of land clearing methods already used. 3. If mechanical land clearing is found to damage the soil, manual methods should be adopted. - 52 - APPENDIX 1 Page 8 D. Program Coordination (paras 3.35 to 3.37) Program coordination should be improved at all levels. 1. Office of the Junior Minister for Transmigration (JMT) (a) the Office of the JMT should be given regular institutional status, probably within the Department of Manpower and Transmigration; and (b) adequate staff should be recruited to take advantage of the technical assistance now being provided. 2. Project Coordinators and Site Mlanagers Severe manpower shortages at this level should be addressed by: (a) improving salaries and benefits; (b) employing local consultants as mid-level managers; (c) providing expanded in-house training, particularly in DGT and DOA; and (d) expanding the use of the private sector. V. The Development Strategy and the Role of the Bank A. Development Strategy (para 4.09) 1. Projects should give priority to improved migrant welfare and regional development. 2. Many types of projects should be implemented to meet Government goals. 3. Greater attention should be given to program coordination and insti- tution building. 4. Community development should be phased, with spontaneous immigration providing second stage growth. B. The Role of the World Bank (para 4.12 to 4.18) The Bank should continue to support the program, provided steps are taken to improve project quality. The Bank should consider financial assistance for: - 53 - APPENDIX 1 Page 9 1. Settlement Preference should be given to projects which: (a) provide the core of large scale development; (b) have a strong demonstration effect; and (c) require especially intense management and technical assistance. 2. Program Development Priority should be given to: (a) ongoing project preparation; (b) expanded training and institution building; and (c) demonstration activities. 3. Introduction of Tree Crops A Bank project to provide tree crops to existing transmigrants is strongly recommended. C. Donor Coordination (para 4.19) A committee to coordinate external assistance to the transmigration program is recommended. Appendix 2 - 54 - Table 1 Page 1 INDONESIA TRANSMIGRATION PROGRAM REVIEW Location of Proposed Repelita III Transmigration Sites Upland Swamp and Special Programs Number of Proposed SKPs /a Yr 1 Yr 2 Yr 3 Yr 4&5 Total Province Location 1979/80 1980/81 1981/82 1982-84 1979-84 Aceh Meulaboh - 2 1 2 5 Padang Mancang - - - 2 2 Cot Girek - 0.55 - - 0.55 West Kota Besar - 1 - - 1 Sumatra Silaut - - 1 2 3 Abai Siat 0.15 0.1 - - 0.25 Lunang - 1 - - 1 North Sinunukan 0.15 0.35 - - 0.5 Sumatra Riau Teluk Kuantan 0.65 1 1 2 4.65 Pasir Pangarayan 1.5 3.5 2 4 11 Rengat - 1.5 1 2 4.5 Siak 0.7 0.1 - Tampuling 0.35 - - Kuala Cinaku 0.35 0.5 Rokan 0.25 1.3 Jambi Pamenang 0.6 0.4 (Trans II Sites) - 1 3 6 10 Tungkal Ulu - - 1 2 3 Dendang 0.1 0.3 Lambur - 1.15 Simpang Pandang - 0.65 South Sekayu 1.5 1.5 1 2 6 Sumatra Betung (Pangkalan Kersik) 1.4 2.6 1 2 7 Pematang Panggang 1.2 1.8 1 - 4 Lahat - 1.7 1 2 4.7 Baturaja 0.05 0.45 - - 0.5 Telang 1.25 - Air Saleh 2.05 0.55 Lembah Liam - - 1 2 3 Air Sugihan 2.5 4.1 /a SKP = Development Unit for 2,000 families Appendix 2 Table 1 Page 2 - 55 - Number of SKPs Yr 1 Yr 2 Yr 3 Yr 4&5 Total Province Location 1979/80 1980/81 1981/82 1982-84 1979-84 Bengkulu Ketahun } Ipuh 1 1 1 3 6 Tais } Muko-Muko } West Pusat Damai 0.2 - - - 0.2 Kalimantan Sanggau - - - 2 2 Sintang - 3.35 2 2 7.35 Sambas - - - 2 2 Ketapang - - - 3 3 Sukadana - - 1 4 5 Nangatayap - - - 2 2 Sanggau Ledo - - 1 2 3 Central Kumai - - 1 2 3 Kalimantan Anjalipan - - 2 4 6 Kasongan - - 2 4 6 Buntok - - - 4 4 Nanga Bulik - - - 2 2 Jangkit - - - 2 2 Miuara Tewe - - - 2 2 Dusun Timur - - - 1 1 Tewe Timur - - - 2 2 Sampit - - - 2 2 Terusan Tengah 0.6 0.2 Pangkuh - 2.6 South Batulicin 1 1 1 2 5 Kalimantan Sebamban 1.4 2.6 1 2 7 Pondok Batu - - - 2 2 Sungai Kupang - - - 1 1 Tabunganen 0.25 - Sakalagun 0.2 0.05 Sei Muhur 0.1 - Sei Seluang - 0.25 East Tanggarong 0.7 1.3 Kalimantan Sangkulirang - - - 2 2 Muara Wahau - - - 2 2 Tanjung Redeb - - 1 3 4 Muara Ancalang - - - 2 2 Appendix 2 Table 1 - 56 - Page 3 Number of SKPs Yr 1 Yr 2 Yr 3 Yr 4&5 Total Province Location 1979/80 1980/81 1981/82 1982-84 1979-84 North Inobonto Barat - 0.4 - - 0.4 Sulawesi Bongo 0.25 0.25 - - 0.5 Marisa - 0.25 - - 0.25 Central Sausu 1 - - - 1 Sulawesi Bunta - 1 - - 1 Taopa Lambunu - 1 - 2 3 Mamo - - - 1 1 Kolonedale - - 2 1 3 Toili - 0.2 - - 0.2 South Kaluku/Budong - - 1 2 3 Sulawesi Angkona - 0.5 - - 0.5 South East Tinanggea 1.35 1.65 1 - 4 Sulawesi Wonotobi (ADB) - 0.75 Lahumbuti - 1 - - 1 Towari/Poleang - - 1 2 3 Maluku Buru 0.65 1.35 - - 2 Dataran Kao - - 1 2 3 Dataran Weda - - 1 - 1 Pasahari - - - 2 2 Irian Jaya Aimas 0.15 1.35 1 2 4.5 Prafi - 0.3 1 2 3.3 Grime - - - 1 1 Nabire - - 1 1 2 Kupeh - - - 4 4 Kurik 0.15 0.05 2 4 6.2 Nimbokrang 0.12 0.18 - - 0.3 Total 23.87 54.68 No. of families 48,000 109,000 Appendix 2 - 57 - Table 2 INDONESIA TRANSMIGRATION PROGRAM REVIEW Repelita II - Swamp Reclamation Sites Area Families (ha) settled Riau Teluk Kiambang III 1,354 504 Delta Reteh 12,620 801 Siak 26,199 101 Subtotal 40,173 1,406 Jambi Tanjang Jabung 10,300 434 South Sumatra Telang I 26,680 4,216 West Kalimantan Rasau II & III 3,980 750 Arus Deras 760 200 Pinang Luar 2,224 350 Subtotal 6,964 1,300 South and Central Kalimantan Tamban Lupak 1,492 250 Belawang 5,400 750 Subtotal 6,892 1,000 GRAND TOTAL 91,009 8,356 - 58 - Appendix 2 Table 3 INDONESIA TRANSMIGRATION PROGRAM REVIEW Regional Distribution of Tidal Swamp Development during Repelita II and III South/ West Central South Kali- Kali- Riau Jambi Sumatra mantan mantan Total Repelita II Original plan 75,000 25,000 75,000 25,000 50,000 250,000 (ha) (30%) (10%) (30%) (10%) (20%) (100%) Actual (ha) 59,303 22,400 67,115 30,905 28,588 208,311 (28%) (11%) (32%) (15%) (14%) (100%) Equipment Potential In April 1979 19,000 9,000 25,000 11,000 19,000 83,000 (ha/year) (23%) (11%) (30%) (13%) (23%) (100%) Repelita III Revised plan (ha) 50,000 10,000 240,000 - 100,000 400,000 (12.5%) (2.5%) (60%) (25%) (100%) Source: P4S. Appendix 2 Table 4 Repelita III Targets for Swamp Reclamation Tidal Swamps (Pasang Surut) Development projects (Extensifikasi) 400,000 ha Improvement projects (Intensifikasi) 30,000 ha Fresh Water Swamps (Rawa) Small projects (under 1,000 ha) 50,000 ha Medium projects (over 1,000 ha) 85,000 ha INDONES IA TRANSMIGRATION PROGRAM REVIEW Summary of Nucleus Estate and Smallholder Project Developments Smallholder Development Estate Development Settler Families Commodity New New project planting Replanting Subtotal planting Replanting Rehabilitation Subtotal Total New Existing Total I. Rubber NES I 11,500 - 11,500 3,300 6,000/a 15,000/a 24,800 36,300 5,750 - 5,750 NES II 15,200 7,500 22,700 3,500 - - 3,500 26,200 7,600 3,750 11,350 NES III 28,000 - 28,000 15,800/b - 2,400 18,200 46,200 6,000 6,000 12,000 NES V 3,700 - 3,700 9,000 - - 9,000 12,700 2,450 - 2,450 Subtotal 58,400 7,500 65,900 31,600 6,000 17,900 55,500 121,400 21,800 9,750 31,550 II. Oil Palm NES I T _ - 10,000/c - - 10,000 10,000 - _ NES III - - - 2,100 - 3,000 5,100 5,100 - - - lES IV 8,000 - 8,000 - - - - 8,000 4,000 - 4,000 NES V 19,000 - 19,000 - 7,500 26,500 9,500 - 9,500 Subtotal 27,000 - 27,000 19,600 - 3,000 22,600 49,600 13,500 - 13,500 III. Coconut NES I - - - 4,800/a - - 4,800 4,800 - - - NES V 9,800 - 9,800 3,700 - - 3,700 13,500 6,352 - 6,532 Subtotal 9,800 - 9,800 8,500 - - 8,500 18,300 6,532 - 6,532 IV. Food Crop NES 1 17,250 - 17,250 - - - 17,250 - - - NES II 22,800 - 22,800 - - - - 22,800 - - - NES III 22,000/d - 22,000 - - - - 22,000 - - - NES IV 4,000 - 4,000 - - - - 4,000 - - - NES V 12,500 - 12,500 - - - - 12,500 - - - Subtotal 78,500 - 78,500 - - - - 78,500 - - - Total 173,700 7,500 181,200 59,700 6,000 20,000 86,000 267,800 41,832 9,750 51,582 .> /a Revised program. 7b Includes 5,000 ha PTP VI Nucleus Estate established with own funds. /c Includes 5,000 ha PNP X established with own funds. /d Includes 18,000 ha of existing transmigrants in Rimbo Bujang. INDONESIA TRANSMIGRATION PROGRAM REVIEW Proposed PIR Program (1980/81) Project Area Estate Smallholder Province Kabupaten Location group plantings (ha) Oil Palm Riau Kampur Pasir Pangarayan PTP V 2,000 West Kalimantan Sanggau Sanggau PTP VII 2,000 East Kalimantan Pasir Kuaro PTP VI 2,000 Subtotal 6,000 Rubber Aceh North Aceh Cok Girek PTP V 2,000 Riau Bengkalis Siak PTP V 4,000 Jambi Jambi Singkut PTP VI 4,000 South Sumatra South Sumatra Pematang Panggang PNP X 4,000 Bengkulu North Bengkulu Ketahun PTP XXIII 2,000 West Kalimantan Sambas Sambas PTP XII 2,000 West Kalimantan Sintang Sintang PTP XIII 2,000 Central Kalimantan - Buntok PTP XIII 2,000 South Kalimantan Kota Baru Batulicin PTP XVIII 2,000 East Kalimantan Kutoi Tenggarong PTP VI 4,000 Subtotal 28,000 Cocoa East Kalimantan Kutai Sepaku PTP VI 1,000 -> Total 35,000 3 Appendix 3 -61 - Page 1 INDONESIA TRANSMIGRATION PROGRAM REVIEW Notes on Integrated Annual/Perennial Cropping Systems 1. The following notes and tables outline a generalized farm model combining food crops and tree crops that might be found suitable for some transmigration sites. Because it is not site-specific, the quantities should be treated as order of magnitude estimates only. Many details have been omitted. 2. The objectives of the model are to achieve self-sufficiency in food production, without necessarily a marketable surplus, to develop a tree crop (rubber) for cash income, to reach an acceptable income level (about Rp 800,000/family/year, intermediate between the present transmigration and NES models), and to maximize the contribution of the farmers themselves to their own development, while still keeping within labor availability constraints. The amount of cleared land, free inputs and other subsidized costs is similar to the present transmigration model. Additional land clearing and planting of rubber is undertaken by the farmer himself on a phased basis, with materials supplied on credit. 3. Appraisal reports for Transmigration Projects I and II, NES Projects I, II, III and IV and the Smallholder Rubber Development Project have been used as data sources for costs, yields and other figures. Notes on Assumptions 1. Each farmer would receive 1.25 ha cleared land at time of settlement the remaining 2.25 ha would be in forest. 2. Average labor availability would be 375 man days per family per year (250 days x 1.5 units). 3. All initial requirements of materials for food cropping would be provided free of charge. 4. Materials for rubber would be provided on credit by an estate or PMU (interest rate 10% p.a.; grace period 4 years; repayment up to 15th year). The estate or PM4U would also supervise planting and maintenance standards. 5. Farmers would follow extension recommendation on rubber and use a relatively high level of inputs. These inputs would give minor benefits to the intercropped annuals. Appendix 3 - 62- Page 2 6. TJse of purchased inputs for food crop production would be at a low level and so would yields. 7. Farmers would have flexibility to develop the remaining 0.75 ha but no inputs or returns are attributed to this in the present model. Such development could be expected to take place once the rubber is in production. 8. No income is attributed to sales of coffee, cloves and other non-food tree crops grown on the 0.5 ha garden lot, as market opportunities may be limited in remote sites. 9. Opportunities for off-farm work would exist in logging, construction and other year round activities. Tapping labor would be available. INDONESIA TRANSMIGRATION PROGRAM REVIEW Cropping Pattern Area Year 1 2 3 3.5 ha I I I I I11 I I I I I1 1 1 1 1 Symbol Land Use Description T-IT-i~~~~~fYTT7 1 I TlI A I A I RlI RI|I I T I Mixed Food Trees I 11 I_ _I_I_I_I_I_1_1_1 1 2 | T2| Tl| A I R2| R2| Rl| Rl| | | A | Annual Food Crops - Pure Stand I I I I I I I I I I I I I i I I I I I T TT 3 | T31 T2| A I R31 R3| R21 R2| Rl Rl| I | 1 I Annual Food Crops - 1st year I 1 111 1 11 I IIIll intercrop 4 1T | T31 A I RC RC| R31 R31 R21 R2| Rl| | I 2 | Annual Food Crops - 2nd year I I I I I I I I II 1 11 III intercrop 5 1 T I T | A I RC RCI RC RCI R31 R31 R2| A | I | R | I I I I I I I I I I I I l |I Rubber 6 | T I T I A I RC| RCI RC| RCI R31 RC| R31 A I I I C I Cover I. I I I I I I I I i I I I I I 6I ITIA I RCI RI RI RI RIRCR3A I I I T I coe T-T 7 | T I T I A I RC| RC| R RCI RC| RCI RCI A I I I I Forest/Woodlot/Pasture I I1I I I I I I I1I1I I I I I (No income attributed) w O I X -64 - Appendix 3 Table 2 INDONESIA TRANSMIGRATION PROGRAM REVIEW Assumed Yields per Unit of 0.25 ha Symbol | T | Mixed Food Trees l l Year Yield (in kg rice equivalent per year) 1 0 Note: 2 50 3 100 Sources of yield will vary over time, 4 150 initially mainly bananas, pigeon peas 5 200 papaya etc. but later jack fruit, 6 250 coconuts, cloves etc. Annual Food Crops - Pure Stand I A I 250 kg rice equivalent Source Rice, corn, cassava, beans lTl I 1 | Annual Food Crops - 1st year intercrop I I . 200 kg rice equivalent l--l | 2 I Annual Food Crops - 2nd year intercrop l 1 125 kg rice equivalent | 3 | Annual Food Crops - 3rd year intercrop l l 75 kg rice equivalent | R | Rubber ,1 1 Year Yield (kg) 1-5 0 6 50 7 125 8 162.5 9 187.5 10 200 11 225 12 onwards 250 - 65 - INDOtNESIA Appendlix 3 TRANSMIGRATION PROGIRM REVIEW Table 3 Projected Farm Output Food Honie Pure Inter- Avail- Year Gardens Stand crops Total sale /a Rubber ------------------(kg rice equivalent)------------------ (kg) 1 - 200 500 400 1,100 100 - 2 50 325 250 650 1,275 275 - 3 150 200 250 800 1,400 400 - 4 250 75 250 600 1,175 175 - 5 350 - 500 150 1,000 - - 6 450 - 500 75 1,025 25 100 7 500 - 500 - 1,000 - 350 8 500 - 500 - 1,000 - 675 9 500 - 500 - 1,000 - 1,000 10 500 - 500 - 1,000 - 1,225 11 500 - 500 - 1,000 - 1,340 12 500 - 500 - 1,000 - 1,540 13 500 - 500 - 1,000 - 1,650 14 500 - 500 - 1,000 - 1,725 15 500 - 500 - 1,000 - 1,750 16 on 500 - 500 - 1,000 - 1,750 /a Surplus to fanily subsistence needs (1,000 kg rice equivalent per year). Appendix 4 Table 4 Lower Case /a Year Food Crops Tree Crops Total US$ …_____-- (Rp…000 -------- 1 220,000 220,000 352 2 255,000 255,000 408 3 280,000 280,000 448 4 235,000 235,000 376 5 200,000 200,000 320 6 205,000 55,000 260,000 416 7 200,000 192,500 392,500 628 8 200,000 371,250 571,250 914 9 200,000 550,000 750,000 1,200 10 200,000 673,750 873,750 1,398 11 200,000 737,000 937,000 1,499 12 200,000 847,000 1,047,000 1,675 13 200,000 907,500 1,107,500 1,772 14 200,000 948,750 1,148,750 1,838 15 200,000 962,500 1,162,500 1,860 16 onwards 200,000 962,500 1,162,500 1,860 /a Assumled rice= 200 kg, Rubber = 550 kg, lIp 625 = US$1.00 - 66 - INDONESIA Appendix 3 TRANSMIGRATION PROGRAM REVIEW Table 5 Projected Cash Incomes Above Subsistence Needs (Lower Case) Off-Farm Total Year labor /a Food sales /b Rubber sales /c US$ -------------------------- (Rp '000) ------------------------ 1 31 20 - 51 2 11 55 - 66 3 (1) 80 - 79 4 19 35 - 54 5 45 - - 45 6 41 4 55 100 7 31 - 192 223 8 20 371 391 9 _ 550 550 10 (45) - 673 628 11 (45) - 737 692 12 (45) - 847 802 13 (45) - 907 862 14 (45) - 949 904 15 (45) - 962 917 16 onwards (45) - 962 917 /a Annual availability estimated at 375 man-days per family; assumes work outside farm for 50% of days surplus to farm requirement (Table 6), at Rp. 700 per day. /b Sales of food surplus to family subsistence needs, at Rp. 200 per kg (Table 3). /c Rubber sold at Rp. 550 per kg. - 67 - INDONESIA Appendix 3 TRANSMIGRATION PROGRAM REVIEW Table 6 Inputs per ha Materials (Rp 'OOO/ha) A. Rubber /a Planting Cover Year material Fertilizer Chemicals crop seed Utensils Total 1 50 20 10 - - 80 2 10 35 5 5 - 55 3 - 35 5 - - 40 4 - 30 15 10 - 55 5 - 30 5 - 15 50 6 on - 30 5 - 15 40 B. Food Crops (Pure Stand) Year Seeds Seedling Fertilizer Chemicals Total 1 ) _ 2 ) Provided free of charge by project 3) 4 on 7/b 3 10 Labor Input A. Rubber Year Mandays/hectare 1 A (precleared) 150 B (farmer cleared) 250 2 85 3 60 4 80 5 50 6 100 7 onwards 200 B. Tree Crop Garden 1 100 2 onwards 50 C. Annual Food Crops Pure Stand 130 Year 1 Intercrop 80 Year 1 Intercrop 60 Year 3 Intercrop 50 /a Derived from estimates in Smallholder Rubber Development Project. /b Equivalent to 100 kg fertilizer. - 68 - INDONESIA Table 7 TRANSMIGRATION PROGRAM REVIEW Inputs per Farm Materials Labor Annual Year Rubber Food Crops Total Food crops Rubber Other crops Total -------- (Rp '000) -------- ------------- mandays/year ---- 1 40 - 40 187 75 25 285 2 70 - 70 137 165 40 342 3 85 - 85 154 197 25 376 4 95 3 98 120 175 25 320 5 85 5 90 104 116 25 245 6 82 5 87 78 156 25 259 7 80 5 85 65 195 25 285 8 80 5 85 65 228 25 318 9 80 5 85 65 285 25 375 10 on- wards 80 5 85 65 350 25 440 Appendix 3 Table 8 Net Value of Production per Manday (Rp '000) Net annual Value of Net cash Total net returns per Year subsistence/a income annual returns mandays /b 1 200 51 251 669 2 200 66 266 709 3 200 79 279 770 4 200 51 251 669 5 200 40 240 640 6 200 95 295 787 7 200 138 338 901 8 200 197 397 1,087 9 200 350 550 1,466 10 200 383 583 1,554 11 200 457 657 1,752 12 200 577 777 2,072 13 200 647 847 2,258 14 200 699 899 2,397 15 200 722 922 2,458 16 on- wards 200 832 1,032 2,752 /a Equivalent 1,000 kg rice per year. /b Assumes 375 man-days per family per year. s I A ~ ~ - - - mrS:AL OOAL it 4> - L~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~>&|95 tli VE0);:ig t :25 l :2i~~~- I EMAL 'PRROM" ~~~~~--TA0 z ' 2 A C 'o- ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~' ; ld ';W5 ' ' -Sek ' S s; X 0 S 0 ~ 0 0;'S 0 =i;;E utglr l Y - p - a2-s r= ; ; ffffi9';;~t!-;A , 'TO'' SW ZEA- -gl ~' ' A A 2 K V - /QV=t E :t SP*' i'ss r~~~~f _ 11> c2 =J = .,.,, Lw 0 'd - ' 7 :~~~~~~,~ = -1 4 t= p q .= > *{e. = =