In this report, Dipokusumo et al. examine the impacts of government policy on the profitability of wetland and dryland soybean in West Nusa Tenggara and the extent to which the province has a comparative advantage in soybean production. The research uses data collected through interviews with 90 soybean farmers, as well as policymakers, end users, extension agents and traders, in the districts of Central Lombok, Sumbawa and Bima. It uses the Policy Analysis Matrix as a data analysis tool. Findings show positive profits at both private and social prices, meaning that farmers have an incentive to grow soybeans under the current (no tariff) policy regime. Positive social profits indicate that soybeans also have a comparative advantage in West Nusa farming systems. Under these conditions there is no reason to distort prices in an effort to increase land devoted to soybeans. The authors suggest that government intervention should instead focus on improved extension services and better research programs that would lead to more productive soybean varieties. This type of research is important as it reinforces the need for Indonesia to promote agricultural production in order to avoid becoming dependent on foreign markets.

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