Abstract: In the last decade, Indonesian sugar industry has faced some inter-related problems that have caused a setback of the industries. Besides inefficiency in farm and plant levels, the declining performance of the industry has been attributed to the inappropriate government policies related to international trade and domestic support. In response to these problems, this study is aimed at evaluating and formulating alternative government policies related to international and domestic market policies. The method used is policy simulation analysis based on econometric model of Indonesian sugar market. The results of this study show that under heavily distorted international market of sugar, policies directly related to farm gate price are more effective in affecting some aspects of Indonesian sugar industry. In this respect, provenue price policy is more effective than tariff-rate quota, import tariff, and input subsidy. Sugar cane smallholders in general are more responsive toward government policies, compared to governmentowned estates, and private estates. Policy implication of this study is that to create a fairer playing ground, Indonesian sugar industry still needs some government supporting policies. Provenue price, tariff-rate quota, import tariff, input subsidy, are policies that can be used to achieve the goal.

Keywords: sugar industry, input subsidy, provenue price, tariff policy

Eka Bambang, Jurusan Manajemen Fakultas Ekonomi Universitas Negeri Jember Jl. Kalimantan 3 No. 37 Kampus Tegalboto Jember Telp. 0331330224

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