village organization system

site preparation, contouring, replanting, and other conservation measures.

Reforestation and restoration will be implemented through a partnership between the

Aceh provincial government, local universities, and local and international NGOs.

Appropriate management and monitoring mechanisms ensuring transparency and

accountability will be established. A rigorous due diligence process will be instituted to

identify the most appropriate institution(s) to undertake this portion of the program.

Funding will be sought from the Australian government’s new US$ 200.0 million

Indonesia-wide reforestation initiative, the World Bank’s pilot carbon facility, and other

possible sources.

Component 3: Community Forestry and Agro-forestry Development

The strategy calls for community-based, multi-purpose tree crop planting involving about

150,000 hectares throughout Aceh province. Tree crop planting will generate initial

employment and long-term income for farmers and laborers in a number of districts

(

diverse permanent tree crops for biofuels, fuel wood, building materials, gums and resins,

and essential oils, as well as fruit trees for immediate consumption and/or sale. Species

could include jatropha, candlenut (

Communities in former conflict areas will be prioritized. Nurseries and tree planting

teams similar to those described in Component 2 will be established in the target areas.

Local community organizations will coordinate planting with cooperatives and individual

families managing the trees thereafter.

These various efforts will be coordinated with existing and future NGO initiatives such as

the Ulu Masen and Leuser Ecosystem Corridor Conservation Program. Specific technical

assistance and training expertise will be sought. Financing for this component -

estimated at US$ 150.0 million – will be sought through carbon trading and multilateral

finance organizations.

Component 4: Smallholder Estate Crop Development in Partnership with Private Sector

and Parastatal Estate Crops and Associated Infrastructure Development

Smallholder estate crop development on land suitable for specific priority commodities is

the fourth major component. The Governor has established a special body called the

Aceh Plantation Development Authority (APDA) modeled after and receiving technical

and managerial support from the Malaysian organization FELDA (Federal Land

Development Agency).

FELDA has more than 45 years experience in organizing smallholder palm oil, rubber,

and cocoa projects. As the largest oil palm producer in Malaysia, it is well versed in

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agronomic issues, post-harvest processing, and cooperative development. The following

crops will be prioritized:

a) Oil Palm

Development of oil palm plantations is considered to be a central element of plans to

deliver livelihood opportunities for rural communities and economic development of the

province. Oil palm would be developed through smallholder out-grower plantations

working in partnership with private and government plantations. Participating families

would own (e.g., have title to) and achieve secure employment and incomes through the

out-grower plantations.

Currently in Aceh approximately 89,000 hectares are cultivated by smallholder oil palm

producers, 39,000 hectares of government-managed estates (PTP) and 132,000 hectares

in private estates. The total annual production of crude palm oil (CPO) in Aceh from

these lands is currently about 400,000 metric tons. This falls well below the national

average per hectare output. The strategy calls for a substantial increase in smallholder

production combined with anticipated increases in land devoted to private and

government estates.

APDA and the

in strengthening and improving the productivity of the palm oil smallholdings that are

developed as part of the plasma component of private plantations.

The strategy will assure that both existing and new oil palm development in Aceh -

whether government, private, or smallholder – will closely follow the principles and

criteria of the Roundtable on Sustainable Palm Oil (RSPO), based in Kuala Lumpur,

Malaysia. This global initiative of businesses, government, and civil society is creating

high standards and strong incentives for environmental and social responsibility in the

global palm oil industry. The strategy will stimulate cooperation among the various

stakeholders in Aceh in order to maximize compliance with RSPO and to minimize major

problems with oil palm expansion common in Indonesia and elsewhere. These problems

include forest conversion and land tenure conflicts. If the strategy is instituted, Aceh

will become a model for sustainable palm oil production worldwide.

The smallholder expansion program will be financed in stages, with initial pilot projects

in former conflict areas such as Aceh Jaya/Aceh Barat (Meulaboh), Aceh Utara/Bireuen,

Langsa/Aceh Tamiang and Aceh Selatan/Singkil.

Site selection and planning will be conducted through a participatory landscape-planning

process that combines sophisticated land-use analysis and mapping technologies with

grassroots organizing.

Plantations will be consolidated by local farmer organizations and cooperatives. In turn,

they will have contractual processing and marketing relationships with large estates

attached to crude palm oil (CPO) mills. Participating families will receive land titles,

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land preparation assistance, optimal seedstock, tools, transition financing and

management support until their plantations reach maturity. The strategy mandates that

smallholders have an effective voice in local pricing boards, along with industry

representatives and state government officials.

b) Coffee

The strategy calls for the rehabilitation of smallholder coffee plantations located in

Aceh’s interior Gayo highlands, specifically the districts of Aceh Tengah and Bener

Meriah. These plantations were abandoned and degraded, and many buildings (mosques,

schools, and homes) in the communities were severely damaged during the last years of

the conflict, from 1998-2005.

After palm oil, coffee is the second-most valuable export commodity in Aceh — and the

best-known one in the international market. Annual production is now about 40,000 tons

and is valued at more than US$ 110.0 million. Aceh’s unique Arabica specialty coffee is

prized by major international buyers such as Starbucks in North America and Europe.

This coffee will be very helpful in establishing Aceh’s post-tsunami / post-conflict

branding and marketing strategy.

Rehabilitation of smallholder coffee could assist more than 12,000 families to recover

their livelihoods and increase total production by about 15,000 tons.

In addition to rehabilitation of existing areas and replanting of new coffee trees, the

strategy establishes post-harvest processing and marketing infrastructure and calls for the

creation and strengthening of farmer organizations and cooperatives.

The strategy also increases certification and marketing via specialty channels such as

organic and Fair Trade. Higher prices and greater incomes for farmers will result.

c) Other Estate Crops

The Governor’s strategy proposes to establish smallholder plantations in other estate

crops, especially rubber, cocoa, and nutmeg. This effort, similar to the coffee program

above, includes new plantings through nursery establishment, modest post-harvest

processing managed by farmers themselves, cooperative formation, and certification.

Two programs supported by the German agency GTZ in the districts of Pidie and Bireuen

in the northern part of Aceh covering 4,000 hectares will serve as a pilot project for these

crops. Additional proposals will be formulated by NGOs and/or the private sector and

presented to the BRR and other bilateral funders.

Private and parastatal companies with proven track records in Aceh and other parts of

Indonesia will provide the needed capital, infrastructure, expertise, and market access for

the new and existing smallholders. The private sector in Aceh, in Indonesia and

internationally will be invited to make substantial equity and debt investments toward the

rehabilitation of existing, and the setup of new, large-scale plantations and processing

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plants, primarily for oil palm. The private sector and NGOs will also be encouraged to

provide training and technical support to smallholders in such areas as Good Agricultural

Practices (GAP), worker health and safety, quality control, and financial management.

The strategy anticipates new oil palm plantings by private companies in several coastal

districts of Aceh within the next three-five years. These companies will also establish

new large-scale CPO mills and create significant expansion of storage tanks and

distribution facilities. Within five years, one or more palm oil refineries will also be

established for value-added palm and palm kernel oil products. Investment of US$ 1.0

billion by private companies and banks can create a minimum of 30,000 full time jobs

over the next 10 years. The strategy provides for special incentives and regulations to

support private sector compliance with sustainability principles and practices, such as the

RSPO, and fair labor and wage standards.

Biofuels development: The strategy encourages the private sector in developing a

biofuels industry in Aceh. Biofuels would be based initially on palm oil and branch out

to include other products such as jatropha, sago palm, and sugarcane. The strategy sets

up a framework for Aceh’s biofuels industry based on avoided deforestation, carbon

credits, and strict sustainability standards. This will serve to distinguish Aceh from other

parts of Indonesia and regions of the world and boost investor and consumer confidence

in the province. The overall strategy for Sustainable Biofuels in Aceh – including

financing, investments, infrastructure, and business development – will be developed

within the next year.

During the Governor’s trip to the U.S. in September 2007, two of the largest biodiesel

producers expressed solid commitments in sourcing verified and/or certified sustainable

palm oil from Aceh. These companies expressed strong interest in partnering with

Indonesian and Malaysian companies to secure long-term product sourcing needs. This

might include co-investment in existing and new plantations, supporting biofuel

technology transfer, and underwriting long-term off take (supply) agreements. With the

likely conversion of most of the liquid fuels in Hawaii to biofuels by 2010, the market

needs for sustainable palm oil in the U.S. will rise substantially. The EU’s mandate to

increase biofuel content of overall engine fuels to 10% by 2020 and consumer preference

for sustainable sourcing can help create a strong market opportunity for Aceh.

Component 5: Spatial Planning, Management, and Development of Capture Fisheries and

Aquaculture

At least 21% of the total population in Aceh (810,000 of a total of 4 million) depends on

the fisheries sector – as either fishermen, fish pond cultivators, traders, manufacturers,

service providers, collectors and others – for their livelihoods. Currently there is an

urgent need for greater attention to be concentrated on the fisheries sector to help

facilitate livelihood rehabilitation and economic development. However, meeting this

need will likely create changes in exploitation levels of fishery resources and changes in

how marine and coastal ecosystems are used. It is therefore important that a

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comprehensive process of sustainable management planning and policy formation

accompany the development of the fisheries sector.

a) Coastal, Marine, and Fisheries Resources Conservation

Environmental conditions for Aceh coastal and marine resources have been under

pressure because current rehabilitation activities have not adequately considered

environmental impacts. This situation could lead to ecological imbalance, biological

extinction, and reduced biodiversity, which will affect fisheries livelihoods.

There is a need for a community-based management model. This model is believed to be

more efficient, effective, and strongly accepted by the public, which will lead to

successful implementation. Local wisdom that is implemented as traditional law

(“hukum adat laot”) should become the basis for this management model. Governmental

policies will need to be integrated with traditional “hukum adat laot”, with more

emphasis on efforts to care for, save, and protect marine and fisheries resources.

b) Fisheries Products

Post harvest handling and processing of fisheries products in Aceh are not optimal, which

causes a loss in quality, economic value, and market access opportunities. An increase in

productivity must be supported with good post harvest handling along the supply-chain to

sustain quality and increase product value in the market.

In order to increase marine and fisheries contribution to Aceh public welfare and

economic development, there is a need to promote fisheries products for marketing and

distribution network expansion. There is also a need to empower public institutions, such

as co-ops, to accommodate collection and distribution. Additionally, there is a need for

processing and transportation infrastructure establishment, rehabilitation, and

improvement that accelerate distribution for quality preservation. All of these initiatives

must consider prioritization as well as unique characteristics of each area. There is also a

need for an easily accessible integrated fisheries information system. Additionally,

capacity building for any entities, which are involved in fisheries activities, must be

strengthened to improve handling, processing, management, and diversification of

fisheries products. All of these efforts are necessary to increase public revenue from

fisheries activities.

c) Fair and Sustainable Policy on Resource Management: A Green Fisheries Investment

System

Current problems in the fisheries sector appear because of policy, authority or

institutional shortfalls – including, insufficient extension services for fishermen, conflict

among fishermen, overlapping of exploitation licenses in coastal and marine areas, and a

lack of spatial planning for aquaculture activities. There are also problems related to the

unclear division between coastal and marine management authorities, no clear rules in

regards to the amount, or allocation, of mangroves that can be converted or developed

into

government level, and inter-autonomy areas). There is also no institutional system to

accommodate co-management among the government and other important parties and,

just as important, there is no financial institution that can lend necessary capital.

There is an urgent need for the Aceh government to develop a Green Investment System

as a base policy for any activities related to investments, infrastructure, and

developments, which will be conducted on, or will impact, the marine, coastal, and

fisheries resources. There is also a need to develop a compensation strategy or

accreditation as ordered in UU no 27 2007 on coastal areas and small islands

management. This accreditation will be applied to anyone who will utilize coastal and

marine areas for developments or investments as a mean of responsible conduct. This

strategy will ensure sustainable management of marine, coastal, and fisheries resources.

Component 6: Public Infrastructure Development

This component involves government programs and investments for significantly

improving Aceh’s infrastructure – specifically communications, transportation, and

logistics. Such investments will be critical in boosting the competitiveness,

attractiveness, and security of Aceh as a whole. Clearly, infrastructure development will

cross between and establish linkages between the various development / planning zones.

An estimated minimum of US$ 525.0 million in credits, low interest loans, and partial

grants is required to successfully launch this part of the strategy. This would include

upgrading and expansion of major port facilities, setup of feeder ports and CPO

terminals, and building of specific connective roads. On the communications side, it

entails targeted improvements in communications infrastructure (i.e., satellite, wire, and

cable) and power generation facilities.

Perhaps more important than the physical improvements, the Aceh government needs to

create an educated and properly motivated workforce that abides by international

standards of integrity and accountability to the fullest extent. This requires extensive

, religious groups, or NGOs) will be contracted to carry outkabupaten). Community forestry and agro-forestry will promote intercropping ofkemiri), betel palm (pinang), and dammar.Dinas Kehutanan dan Perkebunan (Dishutbun) will play important rolestambak, and there are conflicts in exploration (conflict among inter-sector, inter12insitu