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I ,
AGREEMENT
BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FOR THE SALE OF AGRICULTURAL COMMODITIES

I (

AGREEMENT BETWEEN THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA
AND THE GOVERNMENT OF THE UNITED STATES OF AMERICA
FOR SALES OF AGRICULTURAL COMMODITIES

The Government of the Republic of Indonesia and the
Government of the United States of America agree to the
sale of agricultural commodities specified below.

This

Agreement shall consist of the Preamble and Parts I and
III of the Agreement signed December 2 , 1980, as amended
below, together with the Part II Particular Provisions
contained in this document .

The Government of the Republic of Indonesia and the
Government

of

the

United

States

of

America

agree

to

amend Part I of the Agreement dated December 2, 1980 in
the following manner :

(A) Article

I,

Paragraph

F

The

words

contained

within the first parentheses are deleted , as are
the first parenthesis marks.

(B) Article III, Paragraph D - Replace the existing
text with the following:

D.

Reporting

In addition to any other reports agreed upon
by the

two Governments,

importing

country shall

the Government of
furnish,

in

such

the
form

and at such time as may be requested by the Government of the exporting country :

1.

A report on the arrival of each shipment of

commodities purchased under the Agreement which
shall include: the name of each vessel; the commodity

and

quantity

received;

the

discharge

port; the date discharge was completed; the condition of the commodity on arrival; any significant loss or damage in

transit ; and advice of

any claim for, or recovery of, or reduction of
freight charges due to loss or damage in transit
on u . s. flag ships ;

2.

A report covering the supply period speci-

fied in Part II,

Item I

containing:

- 2 -

I

of the Agreement and

statistical
origin

to

data on

meet

usual

imports by
marketing

country of
requirements

specified in Part II, Item III of the Agreement;
a statement of the measures taken to implement
the provisions of Section A,
this

Article;

statistical

Items 3 and 4 of

data

on

exports

by

country of destination of commodities the same
as or like those imported under the Agreement,
as specified in Part II, Item IV of the Agreement; a statement on utilization of commodities
imported under the Agreement; and a statement of
measures taken to implement the publicity provi sions of Section I of this Article .

(C) Article III , Paragraph F- Change the title of
this paragraph

to

Utilization

and

replace

the

existing text with the following:

Utilization shall be deemed to have occurred
when

the

commodity

clears

customs

and

enters

normal distribution channels within the importi ng

country ,

bakeries ,
further

including:

refineries
processing ;

or

transported

other

to

mills ,

facilities

transported

to

for

local,

regional or central storage for subsequent dis-

-

3 -

tribution; or transported directly to commercial
or government wholesale, retail, or ration center outlets.

PART II - PARTICULAR PROVISIONS

ITEM I . COMMODITY TABLE:

Supply Period

Commodity

( 0 . S. FY)

Wheat

1986

ITEM II .

Approximate
Quantity
(MT)

Maximum Export
Market Value
(Million us Dollars)

250 ,000

30 . 0

PAYMENT TERMS:

Convertible Local currency Credit

( CLCC).

Thirty

( 30)

years.

A.

Initial payment - ten (10) percent.

B.

Currency use payment - ten (10) percent for Section 104{A) purposes.

c.

Number of installment payments - twenty-six (26).

D.

Amount

of

each

installment

payment

-

appro xi-

mately equal annual amounts .
E.

Due date of the first installment payment - five
(5)

ycarc

after

､＼Ｚｾｴ｣＠

of

last

commodity in each calendar year.
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I

delivery

of

the

F.

Initial interest rate - two (2) percent .

G.

Continuing interest rate - three (3) percent.

ITEM III .

USUAL MARKETING TABLE:

Import Period
(O.S . FY)

Commodity
Wheat

1986

ITEM IV.

A.

Usual Marketing Requirement
(Metric Tons)
1 , 329,000

EXPORT LIMITATIONS:

Export Limitation Period

The Export Limitation Period shall be United States
Fiscal Year 1986, or any subsequent united States Fiscal
Year

during

which

the

commodity

financed

under

this

Agreement is being imported or utilized .

I
B.

commodities to which Export Limitations Apply

For the purposes of Part I,

Article III A (4)

of

this Agreement, the commodities which may not be exported are: wheat, wheat flour, rolled wheat, semolina, far ina and bulqur

(or the same products under a different

name).
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ITEM V.

A.

SELF-HELP MEASURES :

The Government of the importing country agrees

to undertake self - help measures to improve the production , storage , and distribution of agricultural commodities .

The self - help measures shall be implemented to

contribute directly to development progress in poor rural areas and enable the poor to participate actively in
i ncreasing agricultura l

production

through

small

farm

agriculture .

B.

The Government of the importing country ctgreeo

to undertake the following activities and in doing so to
provide adequate

financial ,

technical ,

and

managerial

resources for their implementation:

1.

PADAT KARYA GAYA BARU PROJECT

Objectives : (1) To provide job opportunities and increase farm family income and welfare through increasing
participation

of

r ural

people i n

rural

infrastructure

development, and (2 ) to enhance increased food and agricultural production .

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I

Benchmarks:

Project activities

to be

carried out

under the Directorate of Development of Intensive Labor
and Self-Employment , Directorate General of Manpower and
Placement of the Ministry of Manpower , include the constructions/ rehabilitations of ( 1) approximately 833 km
feeder roads, (2) 26 units water reservoirs, and (3) 15
units flood control dikes in provinces of North sumatra,
south Sumatra, South Kalimantan, Bali I

West Nusa Teng-

gara and East Nusa Tenggara.

Completion of all activities is scheduled for Indonesian
FY 1986/198 7.
located

from

Approximately US$5 . 0 million will be alsales

proceeds

under

this

Agreement

to

cover costs of this project .

2.

I

APPLIED AGRICULTURAL RESEARCH PROJECT

Objectives :
population
by

improve

through assistance

constructing

ment,

To

upgrading

building
staff

the

welfare

of

the

to agricultural

facilities,

capabilities

research

procuring
through

rural

equip-

short-term

training, and provision of technical assistance to one
Central

Research

I nstitute ,

four

Research

Institutes,

seven Research Sub-stations and seven Experimental Farms .

- 7 -

Benchmarks :

At 19 different locations

the

Applied

Agricultural Research Project of the Ministry of Agriculture

is

constructing

400

farms for field research .
sion

of

improved

structures

and

developing

This is aimed at the provi-

technologies needed

by

farmers

in

a

number of different agroclimatic zones.

During 1986/1987 the following project activities have
been planned by the Project Unit:

( 1) continuation of short- term training and technical assistance programs to increase AARS staff capability to conduct agricultural research;

(2) completion of the construction program at ten of
the 19 locations

where

construction

has

not

yet

been

completed (nine are completed);

(3) continuation of the procurement program to provide field

and

laboratory equipment

to

the

institutes,

sub-stations and experimental farms for improving capacity to perform research.

Approximately

US$0 . 8

million

will

be

earmarked

from

sales proceeds under the Agreement to cover the cost of
the remaining construction at ten of the 19 locations .
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3.

RESEARCH AND COMMUNITY SERVICE DEVELOPMENT

Objectives:

( 1) to promote research capability and

community service ,

( 2)

to promote sectoral studies for

the development of the regions and (3) to promote application of sciences and technology.

Benchmarks:

The Directorate General of Higher Edu-

cation, through the activitities of universities in Java
and in the outer islands, will focus the project activities in Indonesian FY 1986/1987 on but not limited to
the following:

(1) Researches for improving research capability and
promoting science and technology .

( 2)

studies

to

support

different

sectors,

with

special emphasis on regional development .

I

( 3)

community Service in Action with special refer-

ence to rural areas of the universities concerned .

( 4) Dissemination of scientific information and application of adapted technology .

- 9 -

To carry out these activities, approximately OS$1.0 million will be earmarked

from sales proceeds

under

the

Agreement to cover the total costs .

4.

BOGOR AGRICULTURAL INSTITUTE PROJECT

Objectives:

To strengthen the institutional build-

ing effort being carried out in cooperation with the agricultural

faculties

of

universities

in

the

outer

islands, with special reference to the island of sumatra .

Benchmarks:

The Bogor Agricultural Institute (IPB)

will focus the project activities during the Indonesian
FY 1986/1987 on the following:

(l)

Out-reach activities of IPB staff to some uni-

versities in the outer islands .

(2) Providing further education at different levels
and improving learning processes,

research

capability,

and extension of staff from other agricultural institu tions.

- 10 -

Approximately us$2.0 million of the sales proceeds under
the Agrement will be earmarked to cover

the costs of

this program.

5.

SCIENCE AND TECHNOLOGY RURAL DEVELOPt1ENT PROJECT

I
Objectives:
nesian

staff

(1) To increase the capability of Indo-

and

areas critical

institutions

in

scientific/technical

to Indonesian economic development with

emphasis on rural areas, (2) to create jobs for the increasing younger population entering the workforce ,
to support manpower development for
nesia's

industrialization

those in rural areas,

with

( 3)

the stage of Indo-

particular

stress

on

(4) to increase health standards

of the rural poor and control diseases that affect them,
and to improve public science for

rural,

agricultural

populations in the fields of health and non-formal education ,

and

( 5)

to

increase

the

capacity

of

the

country ' s road and rail systems for safe transportation
of people and of agricultural goods.

Benchmarks :

Project activities to be carried out by

RISTEK (Office of the Minister for Research and Technology) and BPPT (Agency for the Development and Application of Technology) will:
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( i) Develop basic staff and institutional capability throJgh such activities as:

development of staff of the research institution and strengthening the institution of
the National Research Council so

that

it can

manage regions in rural areas.

conceptual planning of laboratories which
will

create

jobs

for

the

rural

poor

through

staff training in the efficient application of
rural technology.

planning
hands-on

of

science

an

Indonesian

center

which

non-formal

will

increase

employment access for the rural poor by enhancing science awareness and the curiosity of rural youth.

program definition and institutional planning for a national biotechnology and genetic
engineering

center

to

strengthen

agriculture and fisheries

industries, as well

as the pharmaceutical industry.

- 12 -

I

Indonesia's

a training program for Indonesian specialists on curtailment of post-harvest losses .

formulation of the Agro-Industry Development pattern relevant to the regional potential
and capability .

(ii) create

jobs

through

new

scientific

knowledge

the

economic

potential

of

seaweed,

shellfish

and basic industrial development by:

an
for

assessment

coastal - zone

of

crops

and fresh water shrimps.

establishing an oceanographic data center
to

strengthen

Indonesia ' s

fisheries

industry

and expand its employmnt opportunities .

•

planning

and

initiating

an

industrial

function which will impact on agriculture and
rural industries.

(iii) Increase transportation safety,
and injury in

the transport

reducing death

of agricultural

goods

to

market by carrying out •a study for improving road/rail

- 13 -

freight transport of farm products to market which will
reduce costs , shorten delivery time and increase safety" .

(iv) Improve
education

for

public
rural

science

health

populations

by

and

non-formal

searching

for

a

method of guidance to the village society to achieve a
better

living,

permanent

settlement,

self-support

and

productivity.

A sum of OS$1 . 0 million of the sales proceeds under the
Agreement will be allocated for these projects.

6.

COOPERATIVE

AGRIBUSINESS

ENTERPRISE

DEVELOPMENT

FUND PROJECT

Objectives:
with

I

the

To establish a

Indonesian

cooperative

financial
movement

mechanism

capable

of

rapidly responding to financing viable business propositions involving cooperatives in the production, processing and marketing of high

priority

substitutable

Special

commodities.

export
attention

or

import

will

be

paid to ventures or production arrangements in collaboration with Indonesian private sector firms and foreign
private sector firms or cooperatives in the development
of such joint operations .
- 14 -

Benchmarks:

The

project proposes

to

underwrite

investments on a revolving credit basis to cooperatives
with proven credit worthiness,

capable management ,

experience in working with the commodities involved
the proposed ventures .

and
in

It will prioritize business ac-

tivities outside those traditionally implemented by cooperatives within government programs and seek private
sector collaboration and investment in those activities
where such consolidation will enhance viability to both
parties .

Initial

emphasis

will

be

placed

upon

areas

where cooperatives have had experience in agrobusiness
enterprise

development/joint

private

sector

operations

or where the potential for the creation of such opportuni ties exists.

It

is initially envisioned that such

investments will focus upon the following provinces:

I

1.

North Sumatra

2.

Aceh

3.

west sumatra

4.

East Java

5.

Central Java

6.

South Sulawesi

7.

North Sulawesi

8.

Bali

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In FY 1986/1987 , the program will investigate feasibility study and commence investment which will include but
not be limited to the following activities:

(i) Recruitment and training of project management
and operational personnel ;

(ii) Construction of investment facilities;

(iii) Procurement of operational equipment, machinery
and vehicles;

(iv) The mobilization of required working capital;

(v) The implementation of business operations.

ａｰｲｯｸｩｾ｡ｴ･ｬｹ＠

US$4 . 0

million

will

be

earmarked

from

sales proceeds under the Agreement to cover the cost of
this program's implementation.

- 16 -

I

7.

MEDIUM AND SMALL SCALE

IRRIGATION AND

SWAMP

AREA

DEVELOPMENT

Objectives:

1. To develop the swamp area, and small irrigation

I

2 . To improve the existing scheme
3 . To extend the agricultural area
4 . To support the transmigration program

Benchmarks:

The

swamp

area

and

small

to

medium

scale irrigation development is to be implemented in the
ｦｲ｡ｭ･ｷｯｾ＠

of

regional

development

concerned

into account the environmental aspect .

and

take

The project will

be intitiated by the comprehensive study to assess all
aspects

such

as

engineering,

hydrology,

agriculture,

manpower, and social economy.

The promising swamp area and small scale irrigations to
be developed are located in the following provinces of
Indonesia:

1.
2.
3.
4.
5.
6.

Aceh
Sumatra utara
Riau
Sumatra Barat
Jambi
Sumatra Selatan

- 17 -

7.
8.
9.
10.
11.
12 .
13.

14.
15.

Bengkulu
Kalimantan Tengah
Kalimantan Barat
Kalimantan Selatan
Kalimantan Timur
Irian Jaya
Maluku
Nusa Tenggara Timur
Timor Timur

Activities for the fiscal year of 1986/1987 include:

new area development
rehabilitation
improvement
survey and

investigation

on

soil 1

social

economy 1

hydrology
assessment of use of existing scheme
design

Approximately

us$5 . 6 million of the project cost will be

covered by the sales proceeds under this Agreement .

8.

RURAL ROADS PROGRAM

Objectives :

The main objective of the Project is to

improve the rural
Project

will

roads which serve rural areas.

enhance

economic

- 18 -

development

in

The
rural

areas,

provided better

mobility

to

rural

communities,

and increase accessibility .

Benchmarks:
under

During

the Project ,

proved,

of

which

the

Indonesian

FY

1986/1 987 ,

about 150 km of road will
100

km will

be

improved

be

im-

to bitumen

sealed standards , and the rest will be provided with improved
also

gravel

include

surfacing .
construction

The
of

improvements
bridges

on

envisaged

these

roads

where necessary .

The location of the Project wi l l be in the provinces of :

1.
2.
3.
4.

South Sulawesi
South East Sulawesi
Central sulawesi
Maluku

To implement

the Project,

the Government of

Indonesia

will allocate about US$4 . 6 million from the sales pro ceeds under this Agreement.

ITEM VI. ECONOMIC

DEVELOPMENT

PURPOSES

FOR

WHICH

PRO-

CEEDS ACCRUING TO THE IMPORTING COUNTRY ARE TO BE USED :

A. The applicable proceeds accruing to the importing
country from the sale of the commodity financed under
- 19 -

this Agreement will be used for financing the self - help
measures set forth in the Agreement for development in
the agricultural sector ,

in a

manner

designed

to

in-

crease the access of the poor in the importi ng country
to an adequate , nut r itious and stable food supply .

B. In the use of proceeds for these purposes empha sis 1·1ill be placed on di r ectly improving the lives of
the poorest of the Indonesian people and their capacity
to participate in the development of their country .
measures identified unde r

The

Item V will directly benefit

the needy in the following ways:

( 1)

Padat Karya Gaya Baru Project will provide improved

access roads , water reservoirs for irrigation and drink ing water and flood con trol dikes/dams for a r eas of con centrated

r ural

pove r ty ,

t hus

improvi ng both

economic

opportunity and the quality of life for the needy .

( 2) The Applied Agricultural Research Project will help
improve the lot of rural poor by providing additional
facilities
farming

and

systems ,

disease

resistant

thereby

crops

increasing both

and

improved

the

economic

return from small landholdings and the productivity of
landless farm workers .

- 20 -

(3) Research
assist

the

and

community

university

Service

activities

Development
in

the

field

will
of

research and studies to promote the application of sci ence and technology by the rural communities through the
university service actions , thereby increasing the capability of the rural poor to improve their welfare .

( 4) The Bogor Agricultural Institute ( IPB) Project will
help the needy through increasing the capacity of educa tional institutions in both Java and the outer islands
to

train agricultural

nical

expertise

and

technicians
community

to a level of tech -

development

appropriate for assisting small farmers,
landless

laborers

to

improve

the i r

orientation

villagers and

skills,

modernize

their outlooks and raise their income levels.

(5) The Science and Technology Rural Development Project
will benefit the needy through facilitating the provi sion of upgraded rural health services, assisting in the
establishment and operation of small scale rural indus tries ,

developing programs in non- formal science educa-

tion for
throughout

the rural poor , strengthening food production
the archipelago,

and aiding the

of farm-to-market transportation systems.

- 21 -

improvement

(6) The Cooperatives Agribusiness Enterprise Development
Fund

Project

will

assist

the

Indonesian

cooperative

movement through establishment of investment facilities
to finance viable business ventures of the cooperatives
and

intensification

of

on-going

cooperative

programs

assisting the rural poor in producing and marketing food
crops, livestock, seafood and handicrafts through local,
grass-roots cooperatives serving both small farmers and
the landless and joined into CLUSA-assisted coop federations,

thus giving the needy more

equal

economic and

competitive opportunities .

(7) Medium and

Small Scale

Irrigation and

swamp

Area

Development Project will assist the improvement of irrigation systems and development of new areas of farming
for the small farmers, thereby providing them with needed agricultural infrastructures and new farming areas to
produce better crops.

(8) The Rural Roads Program is designed to improve road
communication in the rural areas to enable small farmers
to

have

better

access

to

market

centers

and

enhance

economic development for the community in the area .

- 22 -

This Agreement shall enter into force upon signature .

IN WITNESS WHEREOF ,

the respective representatives ,

duly authorized fo r the purpose , have signed the present
Agreement.

DONE

at

Jakarta ,

Indonesia ,

in

duplicate ,

this

second day of June , 1986 .

FOR THE GOVERNMENT OF THE
REPUBLIC OF INDONESIA

Signed

Atmono Suryo

Paul

ｗｯｬｦｾｩｴｺ＠

Director General

Ambassador Extraordinary

for

and Plenipotentiary of

Foreign Economic Relations ,

the United States of

Department of

America to the Republic

Foreign Affairs

of Indonesia

- 23 -

I

GOVERNMENT OF THE

UNITED STATES OF AMERICA

Signed

I

FOR THE