🌾 Indonesia–US Agreement: A New Era for Indonesia’s Agricultural Strategy
In July 2025, Indonesia and the United States signed a strategic agreement covering agriculture, energy, and aviation. The deal was finalized after intensive negotiations, resulting in reduced US tariffs on Indonesian goods—from an initial threat of 32% down to 19% (source).
1. US Agricultural Product Imports 🇺🇸
Indonesia committed to importing US$4.5 billion worth of US agricultural goods, including wheat, soybeans, corn, and cotton between 2026–2030.
A major part of this commitment is the annual purchase of 1 million tons of wheat, valued at approximately US$1.25 billion, by local flour producers from companies like Cargill, ADM, and Bunge.
2. Tariff Adjustments & Market Access
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The US reduced tariffs on Indonesian products to 19%.
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In return, Indonesia opened access for US agricultural goods with zero tariffs or non-tariff barriers.
3. Strengthening Food Security
The influx of US products—especially staple commodities like wheat and soybeans—is expected to enhance Indonesia’s food security. However, the policy could also place pressure on local farmers competing in the same sectors.
4. Broader Deal Scope: Energy & Aviation
Beyond agriculture, the agreement includes:
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A US$15 billion commitment for energy procurement from the US.
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An order for 50 Boeing aircraft for airlines like Garuda Indonesia as part of fleet modernization.
🔍 Impact on the Agricultural Machinery Sector
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Technology Opportunities
The lower tariffs create opportunities for importing modern agricultural machinery from the US—tractors, post-harvest equipment, and precision farming tools. -
Accelerated Modernization
Indonesia’s Ministry of Agriculture can utilize this opportunity to upgrade existing infrastructure and improve efficiency in the farming sector. -
Challenges for Local Producers
With greater competition, local producers must respond with innovation and capacity building to remain competitive. -
Global Supply Chain Integration
The deal opens the door for collaboration between Indonesian and US machinery producers, driving innovation and access to broader markets.
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