GOVERNMENT INTERVENTION IN PAKISTAN’S SUGARCANE SECTOR POLICY ANALYSIS MATRIX (PAM) APPROACH

The study applied Policy Analysis matrix (PAM) to introduce Nominal Protection Coefficient (NPC), Effective Protection Coefficient (EPC), Producer Subsidy Equivalent (PSE) and Subsidy ratio to Producer (SRP) to gauge government intervention in Pakistan’s sugarcane sector and draw policy implications for possible adjustments in policies and future strategy. The NPC and EPC analysis of Pakistan’s sugarcane sector revealed that under import substitution regime, the cane farmers in all farming regions of Pakistan were taxed both in input and output markets in 2004-05 and 2008-09. While, under export promotion regime, the cane farmers enjoyed a positive support in input and output markets in both harvesting years 2004-05 and 2008-09. The PSE and SRP analysis depicted that overall transfers have taken place from cane producers to society in import substitution regime and from society to cane producer in export promotion regime in both harvesting years 2004-05 and 2008-09. This implies that the current macroeconomics and agricultural policies were inconsistent with the existing pattern of comparative advantage and have discriminated against the sugarcane production in both import substitution and export promotion regimes. The study recommends that Pakistan’s top administrators/policy makers should make serious efforts to formulate policies which are consistent with national goals of agricultural development, trade and food security.