Japan carries out a unique form of cooperation in Indonesia called Umbrella Cooperation, which is designed to provide comprehensive aid to specific development sectors through coordinating technical cooperation (development study, project-type technical cooperation, dispatch of experts, and training programs) and financial assistance (grants and loans). Aid under this form of cooperation has been provided for the Indonesian agricultural sector in three stages to date, and has helped Indonesia achieve self-sufficiency in rice production.

In the first stage (FY1981-1985), Japan implemented Umbrella Cooperation for Increasing Rice Production, which was built on earlier aid efforts in the same field. This Cooperation covered several series of projects that aimed to produce and distribute quality seed, strengthen crop protection, improve irrigation infrastructure, and improve post-harvest crop processing. These projects included Feasibility Study on the Rice Seed Production and Distribution Project (development study), Extension Strengthening of Plant Protection (project-type technical cooperation), Riam Kanan Irrigation Pilot Scheme (grant aid), and Supply of Post-Harvest Agricultural Equipment to KUD (loan). These projects contributed to improving yields through the use of better rice seeds, protecting crops through pest control, and expanding cultivable acreage through the improvement of irrigation infrastructure. In 1984, while this stage was in progress, Indonesia achieved self-sufficiency in rice production. (Although in 1980 the country had to import 10 percent of the rice it consumed, in 1985 it had a rice surplus equivalent to 10 percent of total consumption.)

In the second stage (FY1986-1990), Japan implemented Umbrella Cooperation for Promotion of Major Food Crops Production. The Indonesian government was implementing its agricultural policy positively also on crops other than rice, accompanying the achievement of self-sufficiency of rice and the change of eating habits. This second stage cooperation expanded the scope of cooperation to mechanization, the areas receiving cooperation from 8 provinces in the first stage to 13, and aimed at stable rice production and the increase of soy bean and potato production. In this stage, the coordination between each cooperation scheme and the coordination between each ministry concerned in the Indonesian government were enhanced. During this period, the growth rate of agriculture increased (from 3.8 percent during 1969-1989 in average to 4.5 percent during 1987-1989), and the poverty rate in rural areas decreased (from 40 percent in 1976 to 14 percent in 1990).

Umbrella Cooperation is now in the third stage (FY1995-2000), and places emphasis on the improvement of the standard of living of farmers. This stage has three major objectives: improving farming productivity, efficiency and sustainability, increasing quantity, quality and diversification of farm production, and adding value to farm products. Furthermore eight detailed objectives have been set, including development of training and extension strategies and techniques, development and strengthening of cooperation and other farmers' organizations, and development of capabilities and institutions. Furthermore, four major agro-ecosystems have been selected as model areas.

In 1997, agriculture in Indonesia was seriously affected by both the Asian economic crisis and drought. There have been hopes that Japan will help Indonesia overcome these difficulties. For that purpose, in March 1999 Japan sent the Interim Evaluation Study Team for the Third Umbrella Cooperation to Indonesia, and agreed with the Indonesian government that Japan would prioritize assistance aimed at increasing food production. As a result of that agreement, in FY1999 Japan intensified the dispatch of experts to Indonesia to assist the Model Farm Project.