Analysis of competitive and comparative advantages of potato production in Indonesia

Abstract

Fundamental issues in sustainable development of competitive potato production in Indonesia are production and distribution inefficiencies. This study aims to examine the potato production competitiveness through competitive and comparative analyses as well as evaluating the impacts of government policy on potato production. This study employs Policy Analysis Matrix (PAM) to analyse the cross-section data collected from six regencies in Indonesia. Potato production in Indonesia was profitable privately and socially. The highest value of competitive advantage was indicated by PCR value in the dry season in Wonosobo Regency, Central Java Province. The lowest values were found in Bandung Regency. Highest comparative advantage was revealed in Tanah Karo Regency, North Sumatra Province, during the rainy season. Highest comparative advantage was found in Bandung Regency, West Java Province, in the dry season. However, the social profit was lower than the private profit indicating the potato farmers dealt with disincentives due to imperfect market. It implies that increasing domestic potato production will be more profitable rather than import. The policy makers need to evaluate the recent policies on input and output markets as well as the supply chain of potato to cope with imperfect markets in order to increase farmers’ income.