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Financing Memorandum n 11 IDNIB7-3001/B/9611

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FINANCING MEMORANDUM

between
THE COMMISSION OF THE EUROPEAN COMMUNITIES

and
THE REPUBLIC OF INDONESIA

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Satellite Assessment of Rice in Indonesia

SARI Project

2

FINANCING MEMORANDUM

The Commission of the European Communities. hereinafter referred to as "THE
COMMISSION" acting for and on behalf of the European Community, hereinafter referred to
as 11THE COMMUNITY"

on the one part, and

The Government of the Republic of Indonesia, hereinafter referred to as "THE RECIPIENT"

on the other part,

HAVE AGREED AS FOLLOWS:

The project referred to in Article I below shall be implemented, is set out of the budget
resources of THE COMMUNITY in accordance with the provisions set out in this

Memorandum. The technical, legal and administrative framework within which the project
referred to in Article I belw shall be implemented, is set out in the General Conditions
THE COMMISSION and
annexed to the Framework Agreement of Sth August 1982 「セZエキ・ョ@
THE RECIPIENT, as amended and supplemented by the terms of this Memorandum and the
Special Provisions annexed hereto.

ARTICLE J

NATURE AND SUBJECT

As part of its 1995 aid programme, THE COMMUNITY shall contribute, by
way of grant, towards the financing of the following project:
Project N°

ALA/96/01

Title

"SARI PROJECT''

(Satemte Assessment of Rice in Indonesia)

Hereinafter referred to as "THE PROJECT".

ARTICLE2

COMMITMENT OF THE COMMUNITY

The total direct cost of the project amounts to 5,000,000 ECU. The
Commitment of THE COMMUNfTY is fixed at maximum 3,000,000 ECU
(three million) hereinafter referred to as "EC GRANT". The commitment of
THE RECIPIENT is estimated to amount to 2;000,000 ECU (Two million
ECU).
Any expenditure over and above the commitment of TilE COMMUNITY shall
be borne by THE RECIPIENT.

3

ARTICLE3


ADDRESSES

Correspondence relating to the execution of THE PROJECT number and title,
shall be addressed to the following:
for THE COMMUNITY:
Commission of the European Communities
Directorate-General for External Relations
Direction Asia- DG 1/C/4
Rue de Ia Science, I4- B - I049 Brussels - Belgium
Fax: (3 2-2) 299 I0 62

1
,-

for the RECI PlENT:
BPPT
(Agency for the Assessment and Application ofTechnology)
Directorate of Techno logy for Natural Resources Inventory
JaJan M.H. Thamrin n° 8, lhkarta I0340- Indonesia
Fax: (62-21) 324 990

ARTICLE4

NUMBER OF COPfES

This Memorandum is drawn up in the English language in two copies each
being oqually valid.
ARTrCLE 5

ENTRY I NTO FORCE

This Memorandum shall enter into force on the date that it has been signed by
both parties.
This Memorandum is subject to an expiry date, after which any balance of
fu nds remaining available under THE EC GRANT shall be automatically
cancelle9. THE COMMISSION may however, depending on the circumstances,
agree to an appropriate extension of this expiry date, should such an extension
be requested and properly justify by the recipient.
For the present project, the expi1ry date of the Memorandum is hereby set at 31
December 200 I.
Done at


Done セエ@

on

on

FOR THE COMMUN ITY :

FOR THE GOVERNMENT OF THE
REPUBLlC OF INDONESIA:

Signed

Annex 1:
Annex 2:
Annex 3:

Special Provisions
Organigrammes

Abbreviations

).8 - Pセ@

-

loj

Signed

err-

ANN EX

1

SPECIAL PROVISIONS

Recipient:


Republic of Indonesia

.

Title of Proiect:

SARI PROJECT
Satellite Assessment of Rice in Indonesia

Executing Agency:

Agency for the Assessment and Application of
Technology (BPPT}

ALA/96/01

1.

BACKGROUND
Rice being the staple food of the people of Indonesia, plays a central role in the

Indonesian commodity production system. Rice self-sufficiency has always been a
major priority for the Government; in 1984, this objective was reached and the
Government proclaimed Indonesia rice self-sufficient. However, securing the rice/food
self-suffi ciency remains a top priority of the prest'nt 6th Five Year Development Plan
and a permanent challenge to the Government: the ever growing population of
Indonesia growing towards 200 million inhabitants at the eve of the year 200(} aod the
inevitable conversion of rice fields for other purposes are already two main factors
which pose a permanent threat to rice self-sufficiency.
ln order to control rice intensification and extensification efforts, the Government
wishes to develop an efficient monitoring tool as it has been developed by tbe European
Union for its agricultural statistics (the MARS project (Mon itoring Agriculture with
remote sensing), which provides institutional support to the European Commission in
the field of agricultural statistics).

In Indones ia, statistics on rice are collected and processed by the Ministry of
Agriculture and the Central Bureau of Statistics. Most of the data, either on area or
production, is based on the field information collected by manual and conventional
means. The traditional method of field observation is still used for collecting paddy
production information in all provinces by predicting yields and planted surfaces rather
than measuring them. Therefore this information is subject to important distortions and

is generally considered as inaccurate because mostly predicted.
This lack of accuracy and day-to-day information system delays the Government's
decision making process, particularly on pricing policy for rice procurement and public
distribution schemes, resultjng in storage and marketing problems. This situation has
recently been illustrated with on the one hand the very successful and un-forecasted
harvest of 199211993 which resulted in large surpluses of rice, particularly in Java, and
on the other hand a massive import of rice in 1995.
Since monitoring of market prices can only help in a post evaluation technique, it is
difficult to use as a tool to predict crop yield and national production allowing the
Government to take the necessary measures. The existence of ERS I and 2 satellites
brought new perspectives to the Gor in combining optical and radar: images for statistic
purposes, permitting to monitor, despite an almost permanent cloud cover over the
Indonesian Archipelago, rice growing areas.

2.

OBJECTIVES
ッ ョ セ 、@ context, the Government of Indonesia (Gol) has requested
Given the 。「ッカ・Mュョエゥ
the assistance of the European Union for improving the accuracy, consistency and

objectivity of its rice production forecasting.

The present project aims at providing the Centre for Soil and Agro-Ciimatic Research
(MoA/CSAR) of the Ministry of Agriculture, with an operational system (equipment
and institutional strengthening) for the estimation and the pem1anent monitoring of
changes in:

3

.

.

nee growmg acreage;
rice growing conditions including indications of yields,
by satellite remote sensing (radar and optical) and agro-climatological methods applied
to agricultural statistics.
This system will be developed in a close partnership between the Project Executing
Agency- the Agency t'o r the Assessment and Application of Technology (BPPT), the
Ministry of Agriculture (MoA), the National Space Agency (LAPAN), the Ministry of
Planning (BAPPENAS), the Central Bureau of Statistics (CBS), and the main
beneficiaries which are: the Ministry of Food, the National Logistics Agency
(BULOG) and the office of the President of the Republic (B INA GRAHA).
At the end of the project, thanks to a significant training component aiming at an
effective transfer of technology, it is anticipated that a sufficient number of trained
technicians will be able to operate the system properly and timely provide the end users
with monthly situation analysis bulletins including year-to-year changes in rice acreage
statistics and growing conditions.
The present project is an application of the "MARS PROJECT" developed in Europe. It
intends to develop and adapt the same technique to the Indonesian context and
prevailing conditions for rice areas. Results obtained prior to this project and from ECASEAN ERS I project, regarding the use of ERS SAR data for rice monitoring, permit
to be confident about the transferability and adaptability of the European model.
The project is scheduled in phases as a follow up to the completed Feasibility study
(CNESIESA Financing).
The Feasibility study has been carried out from late 1993. The capability of the ERS l
satellite radar date (supplemented with some SPOT images) to detect and identify
paddy fields and to monitor the rice growing steps has been technically and successfully
assessed over two tests sites in Java (Jatiluhur irrigated area and Semarang).

3.

PROJECT COMPONENTS
The Project to be implemented in two phase comprises the following:
3. I

Technical Assistance


Phase A - Methodology Development
During Phase A, the methodology will be developed further with :
a) Statistical study aiming at stratifying the Indonesian territory and
selecting sample areas (sites) according to parameters such as: local
cropping pattern, potential irrigation, number of harvests per year,
representativity towards the national production The accuracy of the
statistics delivered at the output of the project rei ies, to a large extent, on
the quality of this statistical study.

4

b) An enhancement oftl1 e feasib ility study to:
optimise the sampling design includ ing stratification , number of sites,
s ize and form of the セ ゥエ・ウ[@
optimise the statistical analysis of the results;
extend the use of satellite imagery acquired to all seasons utions

CONTRIBUTION
Services
Technical assistance

t.

EC

G.O.l.
750,000

I ,789,000

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Equipment
Consumable

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9.

Contingencies
TOTAL

8.2

Use ッヲ」ョエゥ

220,000
3,000,000

ョ セZ・

330,000
2,000,000

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Eventual reallocations of the fund provisions for individual components within the
project activities budget which might become necessary to take account of the relative
progress and achievements of the different components, shall be proposed for the
agreement of the BPPT and the Commission in the annu.1l revisions' of the project
work plan.
9.

FINANCIAL PROCEDURES
9.1 For those expenditures funded under the EC grant and involving direct payments in
currencies other than Indonesia Rupiah. payment shall be made directly by the
Comm ission using its own procedures.
9.2 For those expenditures funded under the EC grant and involving local expenditures in
Indonesian Rupiah, payment shall be made as follows:
- the project shall establish appropriate bank accounts in Indonesia, one in Ecu and one in
Indonesia Rupiah , for this sole purpose. These accounts shall be operated with the joint
signatures of the n.vo Directors. Subordinate Indonesia Rupiah accounts may only be
opened with the express agreement of the Commission;
- the Commission shall make an initial advance of 40.000 Ecus following notification of
the open ing of the accounts; ·

12

-the Commission shall, on the セ。ウゥ@
of the agreed workplan and estimated make a further
advance of up to 80% of the estimated expenditure during the first year of implementation,
decreased by the amounts already transferred ,
- disbursement from the project accounts shall be made jointly by the two Directors, in line
R1,1piah account shall
with project re

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cv;?u-:

Remo1e Sensong & GIS

Croop>ng セ。エ・イョウ@
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PROJECT

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MANAGEMENT
UNIT

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16

ANNEX3

ABBREVIATIONS

EU
EC
TA
ERS I & 2
ECU
ESA
PSC

PMU
Go I
GIS
AIT
MoA
CAD
CBS
CNES
SPOT
AARD
SAR1

CSAR

BPPT
BAPPENAS
LAPAN
CRIFC

K.ANWTL
DTNAS
BULOG
BINA GRAI-lA

European Union
Eu ropean Commission
Technical Assistance
European Radar Satellite
European Unit of account
(I ECU = 2,900 IDR, Apri I 1995)
European Space Agency
Project Steering Committee
Project Management Unit
Government of indonesia
Global Information System
Asean Institute of Technology
Ministry of Agriculture
Centre of Agricultural Data
Central Bureau of Statistics
French Space Agency
Optical Satellite
Agency for Agricultural Research and Development
Satellite Assessment of Rice Growing Area in Indonesia
Centre for Soil and Agro-Climate Research
Agency for the Assessment and Application of Technology
Ministry ofPianning
National Space Agency
Central Research Institute for Food Crops
Representative of Minister of Agriculture
Provincial Administration
National Logistics Agency
Office of the President oflhe Republic