The Mitsugoro Project: Japanese Aid Policy and Indonesia

Abstract

A SSISTANCE TO RURAL development projects in developing counA tries had by I978 become a pillar of Japan's foreign aid policy. Historically, however, Japan's economic aid demonstrated the concern of parts of the Japanese government to expand Japanese exports, foster closer relations with Southeast Asian nations and build up the industrial and resource, rather than the agricultural, sectors of recipient economies. In the midI 96os, specific agricultural aid policies were neither well-defined nor well-integrated into aid and economic cooperation policies as a whole. Aid was not notably directed towards diversifying the sources of Japan's agricultural imports, let alone promoting the expansion and growth of developing country agriculture. Until that time, the link between Japan's agricultural aid policies and trade was extremely tenuous. The Mitsugoro maize farms established in the Central Lampung region of Southern Sumatra were among the first efforts by the Japanese government and private enterprise to develop supplies of agricultural commodities for export to Japan, but they failed as an aid project and as an attempt to satisfy Japanese policy goals. Begun in i968, the Mitsugoro scheme was backed strongly by the Indonesian government and supported financially by the Japanese authorities, who saw potential benefits therein for Japanese aid, trade, and food procurement policies. By I977, however, exports to Japan had stopped, farm production was maintained by diversifying crop plantings away from maize, and the company was losing hundreds of thousands of dollars per year. Nevertheless, the Japanese government continued to provide funds for the venture. The Mitsugoro story depicts some basic themes in Japanese aid policy and policy-making.1 The practical problems of the maize farms