The Costs of Indonesian Sugar Policy: A Policy Analysis Matrix Approach

Indonesian sugar policy is a complex web of contradictory policies, including mandatory production, price supports, and fertilizer and credit subsidies. The policy analysis matrix (PAM) was developed by Monke and Pearson to provide a more complete perspective on social profitability and the divergence between private and social costs than other commonly used social cost-benefit measures. The PAM is used to analyze the effects of Indonesian sugar policy on sugar production in irrigated and dryland areas on Java, the main sugar-producing region in Indonesia, and to identify the distribution of resource transfers.