Cashew is an increasingly important export commodity for Indonesia. In this article, the authors use data obtained from primary and secondary sources to examine the competitiveness and efficiency of monoculture and intercropping systems of cashew production in West Nusa Tenggara province, and the likely impacts of selected scenarios of anticipated policy changes on the competitiveness of these two systems. This research uses the Policy Analysis Matrix as a data analysis tool. The research shows that both cashew systems are strongly competitive and efficient in resource use due to generation of high positive private and social profits. On this basis, the authors propose that policy makers consider the expansion of cashew plantations as one of the best options to improve smallholders' incomes, particularly smallholders living in dry land areas. They further suggest that emphasis should be placed on expanding the intercropping cashew system, given that intercropping cashews with corn leads to higher productivity of cashews and significantly higher private and social profits for cashew farmers.

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