All you have to do is:

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First, put a villager to extract pulp from the vines north of the granary. You would need cutting tools for this. Then, get salt water and cook the concoction. The villager will spread the extract to a flat rock southeast of the granary. Put villagers to the yellowish colloid until the cloth is made to 100%.


Glad this helps! This is exactly Puzzle # 8.
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I told you to research, not to clear the stream debris.