[page 58↓]

5.  The Project Plan

The project plan is evolved to present and coordinate a structure to ensure that stakeholders are consulted, and defines key decisions, information requirements and responsibilities at each phase in the life of a project. Required preparation, implementation and evaluation are feasible and accomplished. Drawing up the project plan evokes a differentiation of two participating groups.

5.1. Organizational structure

The two differentiated aspects may be described as "nucleus" and "plasma". The name "nucleus" determines the non-governmental organisation Banyumas Sutera Alam and the "plasma" that means farmers of several regions in Central Java that surround Banyumas Sutera Alam. Organisational aspects concerning the planners, participants will be presented in detail. Figure 6 shows the separated activities of "nucleus" and "plasma".

Figure 6: The Activities of nucleus and plasma.


[page 59↓]

The institution that is providing the Non Government Organization with silkworm eggs is a breeding station run by the government. The supplement, reaching from delivery of eggs until giving young silkworms away to farmers is done by the Non Government Organization. Farmers provide advanced silkworms, feeding the worms for two weeks and waiting for one week for processing of cocoons. The harvest of fresh cocoons is sold to the Non Government Organization.
The Non Government Organization takes on responsibilities for spreading of sericulture, silk production among rural smallholders and buys their produced fresh cocoons. Further processing of bought cocoons is then accomplished by the Non Government Organization. Simultaneously, Non Government Organization has also established market and technical assistance network with Indo Jado Sutera Pratama, Ltd. Co., a local silk thread factory. Indo Jado would buy the silk worm cocoons produced by the farmers and provide technical assistance to the farmers to improve their skill in silkworm farming to enable them to produce better cocoons. These products are sold on local markets to guarantee sustainability of the project.

5.2. Activities and actors

Banyumas Sutera Alam is a new Non Government Organization specialize in silkworm farming activity, in Kaliori-Village, Banyumas, Central Java, Indonesia. Banyumas Sutera Alam is part of Yayasan Sosial Bina Sejahtera (YSBS), founded 1972, is a non-profit organization that belongs to Catholic Church diocese in Central Jawa.

Banyumas Sutera Alam started the cultivation of silkworm farming in 1997 with a mission to help village people to have more prosperous life through silkworm farming.

BSA has functions as a coordinator, young worm producer and purchaser of fresh cocoons. Activities are being planned as follows:

5.2.1. Preparation

An Experimental Project (EP) and on-farm demonstrations (Pilot Project /PP) are carried out before sericulture is promoted to potentially participating farmers. EP tests the sericulture production in project areas, including mulberry cultivation and silkworm production.
On-farm demonstrations increase participation of farmers due to easily comprehensible training courses. The farmers can see and learn practically how sericulture production is
executed and how it positively affects their income. Participation often increases when farmers have conceived thoroughly how to carry out sericulture.


[page 60↓]

The Experimental Project is planned for one year and a Pilot Project is prepared for two years (see figure 8, page 64).

For mulberry cuttings required by participating farmers the Non Government Organization has planted sufficient supply of mulberry trees. To cultivate an area of 1 ha mulberries an amount of 20,000 mulberry cuttings are needed. Mulberry cuttings can be cultivated from the branch of the mulberry tree itself. The Non Government Organization cares for distribution and supply of mulberry cuttings from the Experimental Project so that farmers get cuttings on time to begin cultivating. After one-year growth farmers can transfer mulberry cuttings again to other farmers.

5.2.2. Training and extension service

Training has to be conducted after farmers display interest in joining sericulture activities. Training courses give practise oriented know-how. After the training, the farmer’s land is surveyed. This survey is needed to investigate and gain certainty of the availability of such production factors as the following: size of land for cultivation; height of location levels and availability of family labour. The training courses are conducted in the raining season (from October to March) because farmers can successfully cultivate mulberry trees. The water is available, they can plant mulberry cuttings.

Extension services are an important element within the array of market and non-market entities and agents that provide human capital enhancing inputs, as well as flows of information that can improve farmers` and other rural peoples` welfare; an importance long recognised in development dialogue (Leonard 1977; Garforth 1982; Hazell and Anderson 1984; Jarret 1985; Feder, Just and Zilbermann 1986; Roberts1989 in Anderson and Feder 2003).
The Goal of extension services in this project is to give information or solutions to farmers involved in sericulture. With thisservice the farmers are to be controlled and supported.

5.2.3. Credit system

The investment required for a sericulture production unit amounts to about USD 404 for small land, USD 600 for medium and USD 823 for larger land (see table 7). Because the target
group is defined as small farmers in the rural area the farmers' financial capacity is not given. The farmers would have to be provided with an adequate credit program (Henny, 2002)


[page 61↓]

Credit supports farm development in at least three ways:

5.2.4. Organisation of cocoon production

The following activities need to be organised:

5.2.4.1. Silkworm egg ordering

The silkworm egg producer is a governmental breeding station and the eggs have to be ordered a minimum of two weeks before they hatch. The orders for eggs by the farmers („plasma“) are collected by the Non Government Organization (NGO) staff and they ultimatively give these orders to the breeding station.

5.2.4.2. Early instar silkworms cultivation and distribution

Egg hatching and early instar silkworm cultivation are very sensitive and require high hygiene. Therefore, the incubation chamber and all utensils have to be properly sterilized before beginning the process of incubation. The young silkworms should have uniformity of growth. Uniformity of growth is important for the next growth stages so that the mature silkworm can spin cocoons at the same time, and the farmers also can feed the mature silkworms and harvest the cocoons at the same time.

Distribution of young silkworms to the farmers is accomplished in the morning. It avoids high temperatures and overhead sun. Distances between farmers should be logistically well organised so that distribution runs efficiently. The hatch of eggs, young silkworm cultivation and their distribution require many operations and high costs, but it is important to do if the farmers are not sufficiently experienced.
That system can be changed in future by the time the farmers have gained experience and are technically skilled.

5.2.4.3. Fresh cocoons purchase

The fresh cocoons are sensitive to mechanical influences and can be broken easily. Therefore, cocoons should either be processed or dried within five days after harvesting.
The farmers bring fresh cocoons in sacks and sell them to the NGO. Fresh cocoons will be [page 62↓]tested and selected. The price depends on the quality of delivered cocoons. Prices are
fixed according to the following conditions: 1) the percentage of broken cocoons and 2) texture of cocoon skin (see appendix 1).

5.2.4.4. Processing of cocoons

The fresh cocoons can be processed to dried cocoons, raw silk, thrown silk and cloth. For efficient production the NGO organises the total cocoon harvest; in other words, the amount of cocoons that should be produced for every month.

5.2.5. Marketing of products

For sustainability of the sericulture project, silk products need to be sold. The silk products are dried cocoons, silk yarn and clothes. The products can be sold at domestic markets and export market.

Export markets need large quantities and high qualities. Table 12 shows cocoon grading for international markets.


[page 63 - 63↓]

Table 12: Cocoon grading

  • Results of cocoon filament length

Cocoon filament length (metres)

Less than 800

From 891 up to 960

From 961 up to 1030

From 1031 up to 1100

From 1101 up to 1170

From 1171 up to 1240

From 1241 up to 1310

From 1311 up to 1380

From 1381 up to 1450

More than 1451

Points

38.0

38.5

39.0

39.5

40.0

40.5

41.0

41.5

42.0

42.5

  • Results of reelability

Reelability (%)

Less than 39

From 40 up to 46

From 47 up to 53

From 54 up to 60

From 61 up to 65

From 66 up to 70

From 71 up to 76

From 77 up to 80

From 81 up to 85

More than 86

Points

47.0

47.5

48.0

48.5

49.0

49.5

50.0

50.5

51.0

51.5

  • Cocoon quality grading

Grades

4 th grade

3 rd grade

2 nd grade

1 st grade

Excellent

Points

Less than

87.5

88.5

88.0

90

89.5

89

91.0

90.5

More than

91.5

Source: Veda, K. (1997) p. 300, modified.

The price for an excellent cocoon quality is the highest cocoon price. The excellent cocoons have a filament length of minimum 1171 metres and a reelability of a minimum of 61 percentages. The lowest quality is the 4th grade. Standard quality is commonly defined as a grade of "2A".

5.2.6. Project personnel

To achieve the above named activities the NGO requires special personnel. The persons that should be employed are:

  1. Project Manager

Projects are recommended to designate or hire a project manager with a background in sericulture production and project management to coordinate the team effort. The level of effort required is to be determined by local needs. Duties include coordination of all project activities thus, tracking and reviewing progress and ensuring that efforts are directed towards the project goals and coordinating project report preparation. The structure of the project organisation is presented in figure 7 below.

Figure 7: The Structure of project organisation

[page 64↓]

A project manager organises three sections: Sericulture, administration and processing of cocoons section.

The sericulture section comprises responsibilities for training the farmers, young worm cultivation and distribution, extension services for the farmers. A responsibility concerning the administration section is for administration works, credits and purchasing of cocoons. The processing section includes responsibilities for cocoons processing, silk yarn and clothes.

  1. Technical Support Manager of sericulture production

Future projects should employ core staffs that are informed in detail about the project activities of participating agencies. Assigning personnel to the project for a specified time period of two to three years during implementation helps to ensure they give the project proper attention, are accountable for progress and feel a sense of ownership in the project. Participating agencies must ensure that adequate staff time is allocated for each aspect of the project, including follow-up and report preparation, both key components of effective technology transfer.
The project's Technical Support Manager is responsible for mulberry section, young silkworm cultivation at "nucleus"-area and cocoon production at "plasma"-areas. He/she will be supported by field staff.


[page 65↓]

  1. Trainer and field staff

Specialised agents commonly are employed after completing advanced formal training in their area of specialisation. To be effective, however, they also need competencies in the extension education process. In addition, they must understand the human development of learning, social interaction processes and they must become knowledgeable about the organisation within which they work.

  1. Technical assistance

In order to produce high quality cocoons, the whole silkworm cultivation process must be done with care. One of the important factors is for farmers to cultivate the silkworms with using the methods given in the training course. The Banyumas Sutera Alam`s supervisors should be providing assistance to farmers. Because the silkworm cultivation is a new activity, the availability of technical assistance is perceived as valuable because it can give farmers success in the project.

  1. Administration and accounting personal

Scopes of work for these positions are to manage activities administration and the bookkeeping of all cash flows in the project.

5.2.7. Farmers

  1. Target groups

The target groups are small farmers in rural area in Central Java, who have their own land for planting mulberries and have family labour available.
The Project will impact directly on the disadvantaged farmers; -they are the villagers who are the underprivileged group of society eking out a subsistence level of living. They were born on the land. Their parents have no education, are illiterate, -their children often dropout of school at primary level due to lack of motivation.
The whole family can be involved in the cultivation of silkworm, grand parents, parents and children can all participate in the harvesting of the mulberry leaves and feeding the silkworms which is a task carried out 3 times per day and in the cleaning and disinfecting of the silkworm shed.


[page 66↓]

  1. Promotion of Women

This project will also improve the life of women in the following ways:

  1. Beneficiaries

As more farmers realize the potential in silkworm farming they will change from seasonal dependent crops to mulberry plantation. Within the first 5 years of the project 2500 farmers will be targeted with the training and support programs. Potentially 10.000 people can improve their conditions.
Employment will also be available in the spinning and weaving and garment making when they come on line in 3-5 years from the start.

  1. The activities of farmers

Mulberry cultivation

The processes of planting mulberries are: preparing of land, planting of the mulberries cuttings, harvesting mulberry leaves and cutting of branches.
The cuttings of mulberries must be free from diseases, be aged from three and half months olds and must come from prime seeds. Farmers directly plant the cuttings in the cultivated and fertilized land.
The first harvest of mulberry leaves is up to six months after planting and leaves can be harvested every day for one month. The next harvest is three months after cutting of the branches.


[page 67↓]

Cultivating silkworm

Because of the high risks and the quite expensive tools and know how included, farmers start to rear silkworms in the 4th instar. Banyumas Sutera Alam does the silkworm rear until 3rd instar.
Before the rearing of the silkworms, farmers empty and clean the rearing shed.
Feeding the silkworms with fresh mulberry leaves is done three times a day: morning, noon and evening
It takes around 20 days from 4th instar until the cocoons can be harvested. The silkworm rearing can be done for 8-10 periods per year.

5.2.8. Phasing of the activities

The complete project is divided into four overlapping phases:

  1. Experimental Project (EP)
  2. Pilot Project (PP)
  3. Nucleus Project (NP)
  4. Industry Project (IP)

The Overview of the project plan is shown in figure 8.

Figure 8: The Silkworm project plan BSA

Source: BSA (1998), modified

  1. Experimental Project (EP)

The project duration is 18 months. The project area is situated in Kaliori Village, Banyumas, Central Java and covers 2 hectares.
This Stage is to experiment in both the cultivation of various varieties of mulberry plants and breeding of silkworms to the stage of producing cocoons. In other function this stage is as source of mulberry cuttings for the next project stage (Pilot Project).

The materials from of these plants will be used for further planting of ten hectares on the assumption that this planting will provide:

1 Hectare block

: 20,000 Mulberry plants

1 Mulberry plants

: 10 cuttings

1 Hectare (Production)

: 200,000 cuttings

From 2 hectares we will produce 400,000 cuttings.

Our quota for the pilot stage (10 hectares) is 200,000. The remaining 200,000 cuttings will be divided between the farmers who attend our training courses.

The progress of the Experimental Phase will be carried on at the same time as Phase II (Pilot Project) and Phase III (Nucleus Project).

  1. Pilot Project (PP)

The project is planed for duration three years with the area 50 hectares in five locations of 10 hectares each. The reason for choosing 5 locations is to attract more farmers who will be able to see the progress of the project in their own locality.
The overall goal of this project is to improve the living standard of the targeted farmers by enabling them to increase their income through silkworm farming. Each farmer family will manage approximately 0.02 hectare of mulberry plants. At the same time, using the now-grown mulberry, the farmers will also start rearing the silkworms, which eggs will be supplied by the project partners on low interest credit system. The project partner will buy the cocoons from the partners and sell them to Indo Jado company.

The Objectives for this stage are:

Training courses will be carried out 10 times each year with 20-25 farmers per course. 200 farmers will be trained each year. The training centre will be at Kaliori as the infrastructure is already available, including meeting and accommodation facilities.

After the farmers complete the course they will practice their training in their own locality.

  1. Nucleus Project (NP)

Duration of the project is for 5 years with an area for 2,500 hectares in 5 locations of 500 hectares each.
In this phase the BSA acts as the catalyst and the farmers as the nucleus.
Cooperation between the two is as follows:

Banyumas Sutera Alam’s Role :

Farmers Role:

  1. Silk Industry Project

This stage is the added-value production of Silk garments by use of the traditional methods of spinning and weaving, -thus encouraging the home industry. This stage can be done in the 3rd/4th year when the supply of cocoons is sufficiently stable.

5.3. Appraisal (financial and economic calculus)

In this chapter the investment analysis and financial plans for the farmers in three sizes of farm will be presented. Further on, sensitivity and critical points are calculated.

5.3.1. Terminology

The project is designed for ten years, started from 1998 and will be completed in 2008. Duration of each sericulture period cycle at the project is one month. The number of period’s cycle in a year is ten periods.

5.3.2. Farmer point of view

  1. Investments

Table 13 (page 48) shows the detail of investment by three size of farm. The small size of farm requires USD 400, medium size of farm USD 593.82 and larger size of farm USD 822.94. Proportion of mulberry section in the budget for small size of farm is at 21 percent, middle size of farm at 34 percent and larger size of farm at 49%, graphically detailed in figure 9.

Figure 9. Mulberry and silkworm section proportion in budget of sericulture investments.

The silkworm section shows higher proportion than that of mulberry sections, particularly by rearing-sheds and accessories (e.g. seriframe). Due to these investments, credits for smallholders are required.


[page 71↓]

Table 13: Investment of sericulture production for the farmers with three sizes of farm (USD)

Note:
* Price of rearing sheds: small size of farm = 176.47 USD; middle & larger size of farm = 235.29 USD
# Price of storage: small size of farm = 41.18 USD; medium & larger size of farm = 58.82 USD

  1. Cash flow

Due to grow of mulberry, the leaves can be used for the feeding of worms up six months after they are planted, so that the first cocoons production in first year starts on seventh month. In the first year of cocoons production the small size of farm can cultivate only a quarter box of worm per period, middle size of farm a half box of worm, and larger size of farm 0.75 box of worm. Total of box in the first year small size of farm can cultivate 1.25 boxes of worms; middle size of farm cultivates 2.50 boxes of worms, and larger size of farm 3.75 boxes of worms.

These sum of worms box increase in the second, third year and reach in the forth year. Complete of mature worms requiring is presented in Appendix 2.

Assumed, that one box of worms can produce 25 kg fresh of cocoons, with the price of fresh cocoons 2.08 USD per kg in the first and second year, and 2.38 USD up third to tenth year, so that income in first year for the small size of farm: 1.25 boxes x 25 kg x USD 2.08 = USD 65; middle size of farm: 2.50 boxes x 25 kg x USD 2.08 = USD 130; larger size of farm: 3.75 boxes x 25 kg x USD 2.08 = USD 195.

Besides of fresh cocoons the farmers can sell mulberry branch as cuttings. Assumed, small size of farm can produce 10,000 pieces of cuttings; middle size of farm 15,000 pieces of cuttings and larger size of farm 20,000 pieces of cuttings. The price of cuttings was assumed USD 0.002 per pieces, so that small land has additional income in worth of USD 20, middle size of farm USD 30 and larger size of farm USD 40. Total of revenue for small size of farm = USD 85; middle size of farm USD 160 and larger size of farm USD 235. Complete of revenues are presented in Appendix 3.
In the first year cost for the small size of farm USD 39.12; middle size of farm USD 88.52 and larger size of farm USD 154.88. The majority of sericulture costs are labour costs (± 60 %) and rearing of silkworm (± 30%). The costs are detailed in Appendix 4 to 6.

  1. Investment Analysis

Investment analysis used the data with the basis of costs and revenues from three sizes of farm. In the calculation was assumed reference interest 13 % p.a. and ten year for duration. Results showed that all of three sizes of farm are profitable. The internal of return (IRR) for small size of farm is at 48.42%, middle size of farm is 54.26% and larger size of farm is 72.70%. Net present worth (NPW) for small size of farm is USD 1,148.42, middle size of farm is USD 2,526.06 and larger size of farm is USD 3,534.86.


[page 73↓]

The values of Benefit Cost Ratio (BCR) for the three sizes of farm are more than 1.00. The complete of result is shown in table 14.


[page 74↓]

Table 14: Investment Analysis of sericulture production (USD)


[page 75↓]

Sensitivity analysis

Sensitivity analyses are carried out on two groups of variables: income variables and production costs variables. Six models are simulated with variation of values 20 % to 30%. Each model simulates a situation of sericulture production.

  1. Frequency of production cycles per year: 7 periods
  2. Fresh cocoon production per box: 20 kg
  3. Total of grownup worm boxes
  4. Price of fresh cocoons: 1.90 USD
  5. Price of mature worm: 12.86 USD
  6. Hired labour per day: 1.19 USD

Model I, II and III represent the unfavourable of environments for sericulture production e.g.: long dry season, diseases of mulberry and silkworms etc. Model IV, V and VI represent the economically influence e.g.: increase of costs, and decrease of sell price of cocoons
Results are shown in table 15 to 17.

Small size farms

Table 15: Result of sensitivity analyses for small size farms

No

Model

IRR (%)

NPW(USD)

BCR

1

I

24.28

199.31

1.29

2

II

35.38

515.24

1.38

3

III

30.58

357.28

1.34

4

IV

16.65

347.98

1.31

5

V

45.25

1,013.91

1.51

6

VI

37.68

738.25

1.39


[page 76↓]

Middle size farms

Table 16: Result of sensitivity analyses for middle size farms

No

Model

IRR (%)

NPW(USD)

BCR

1

I

41.26

627.90

1.29

2

II

46.31

1,259.76

1.39

3

III

43.91

943.83

1.34

4

IV

28.99

951.90

1.31

5

V

51.44

2,257.10

1.52

6

VI

44.56

1,668.61

1.39

Larger size of farm

Table 17: Result of sensitivity analyses for larger size farms

No

Model

IRR (%)

NPW(USD)

BCR

1

I

54.34

687.54

1.21

2

II

61.90

1,635.33

1.31

3

III

58.40

1,161.43

1.26

4

IV

41.92

1,136.21

1.23

5

V

69.58

3,131.35

1.43

6

VI

61.30

2,192.85

1.31

The results (table 15, 16 and 17) showed that all of three sizes of farm still are profitable, even values 20 % to 30% changed.
The Frequency of production cycles per year (model I) is more sensitive than other variables, but such the value has changed from 10 to 7, 30% decreased, results were rentable.
The price of mature worm (model V) had the best results, even the price increased from 10.71 to 12.86 USD.
In compare between the unfavourable of environments variables (Model I, II and III) and economically influence variables (Model IV, V and VI), unfavourable of environments variables had more influenced to the profit.


[page 77↓]

Critically value

Table 18: Values minimum of key variables


[page 78↓]

5.3.3.  Additional considerations (“packaging”)

As shown in chapter 5 section 5.3.2, sericulture has an economic benefit. The availability of family labour (see Appendix 7: Population of Central Java) and conditions of climate (see Appendix 8: Rainfall, temperature and humidity) in the envisaged location of the project in Central of Java are suitable for this project.

The benefits of sericulture are presented in the following sections:

  1. Rural production

Sericulture is a very promising prospective sector for rural economies. Sericulture is a highly labour intensive sector, employs a large number of labourers at various stages of its operation, does not require high-tech scientific skills or expertise, can be set up with small funds, and does not require full-time involvement (Halder, 1999). In China, this sector occupies some 20 million farmers, as well as 500,000 people in the silk processing industry. In India, sericulture is a cottage industry in 59,000 villages. As one of the most labour-intensive sectors, it provides full- and part time employment to some six million people (ITC, 1999).

In Indonesia 60% of the population (126 million) live in rural areas, of which a great majority are agriculture labourers (World Bank, 2002). Central Java, the third of high-density population province, has a 31 million population (BPS, 2000) and they mostly live in rural areas. Sericulture has a great potential for creating jobs and increasing income of the farmers.

  1. Income generating, cash money possibility and long-term

The basic characteristics of traditional silk production areas are family units and sufficient land to grow the required amount of mulberries. According to the cost production at 70% of labour costs, sericulture can realize higher income for family units. In chapter 3 section 3.1, table 5, it is shown that sericulture increased income figures at 75%. The life cycle of silkworms is completed in 3-4 weeks, thus, possible harvest of fresh cocoons is monthly. In consequence, farmers can achieve cash money every month.

Since the mulberry is a perennial plant, once fields are established, they may be continuously cultivated with mulberries (Veda,1997). The farmers plant mulberry cuttings only at the beginning of their sericulture activities because sericulture is a long-term project.

  1. Environmental aspects

Sericulture is associated with very few potential adverse impacts. Mulberry cultivation generally has beneficial environmental effects through soil conservation and provision of pruning reducing unsustainable harvesting of fuel wood (World Bank, 1997).
Silk has the advantage of being produced with few chemical fertilisers and practically no insecticides. Silk is user-friendly and environmentally friendly. Essentially composed of proteins, it is similar to human skin characteristics. It can absorb up to 30% of is own weight in moisture, making it extremely comfortable to wear (ITC, 1997).

  1. Demand for silk products

Asia, Western Europe and North America are the major markets for silk products. In Asia the silk producing countries themselves are the major consumers. Asia utilises about 60% of the world’s silk supply.
China and India have become major consumers, whilst Japan imported raw silk and cocoons in 2001 in amounts of USD 67.7 million. Korea is another major producer and consumer of silk products. Thailand also both produces and consumes significant amounts of silk. The demand for silk products is also high in other South Eastern Asia and Middle East countries. As the income increases in many of these developing countries the demand for silk will also increase (Henle, 1994).
Western Europe is one of the major silk demanding countries. Italy is the highest consumer of silk. The FAO (2002) reported that in the year 2001 Italy imported raw silk totalling 92.53 million USD, Germany an amount USD 21.75 million and France USD 11.26 million. The import quantity of raw silk is shown in Table 19.

Table 19: Raw silk imports to Europe from 1997 to 2001 (mt)

Year

Italy

France

Germany

Switzerland

Spain

United Kingdom

1997

5,482

582

2,889

236

377

499

1998

4,088

592

2,034

264

134

607

1999

4,985

579

2,210

283

200

223

2000

5,906

481

2,529

376

146

402

2001

4,506

452

1,598

170

263

332

Source: FAO (2002), Statistics


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