Shadow Exchange Rate Keunggulan Komparatif dan Kompetitif Industri Feedlot Indonesia

Determination of Private and Social Profitability After obtaining the complete list of input and output measured in private and social price, the PAM is easily constructed Table 7. Table 7. Policy Analysis Matrix Description Revenues Cost of Inputs Profits Tradable Domestic Factors Private Price Rev p C Tp C DFp П p Social price Rev s C Ts C DFs П s Transfers Rev t C Tt C DFt П t Source: Monke Pearson 1989 The term private in the first row refers to the observed revenue and costs reflecting actual market price received or paid by feedlots, merchant or processors in agricultural system. Therefore, the private profitability П p is equal to difference between the revenue and costs at the private price Rev p – C Tp – C DFp . The Rev p are obtained from multiplication of output quantity with its private price. Further, C Tp and C DFp are computed from multiplication of input with its private price. The private profits positive value П p 0 indicates that commodities can expand the system if the resources are available or more valuable alternatives. On that account, the private profitability demonstrates the competitive advantage of the systems according to technology, input cost, and policy. The similar procedure can also be adopted to obtain social profitability П s . On the contrary with private profit which measured at market price, the social profit is obtained according to multiplication of production component with its social price. Thus, the social profitability П s is equal to the difference between revenue and cost at social price Rev s - C Ts – C DFs . The social profit positive value П s 0 indicates that the feedlot industry revenue for producing the output is exceeding the cost to use the input. It describes that the feedlot industry remain profitable after paying the tradable and domestic factor component without any protection from the government. The transfers’ row is fulfilled immediately after all the first and second row entries were assigned. It reflects how much the private price to be different with the social price. Thus, the value of transfers is equals to the difference between values in private and social price. For instance, output transfers obtained from revenue measured in private price less revenue measured in social price. The same procedures are also applied for tradable input, domestic factors, and profit. The net transfer in the fourth row fifth column reflects the total impact of divergence. Data Analysis Competitive Advantage Entries in the first row of PAM is used to determine the competitive advantage. Competitiveness indicator are obtain through comparing the domestic cost with the difference between revenue and tradable cost, all measured at a private price, written as Private Cost Ratio PCR: PCR = � �� � − � Thus, if 0PCR1 : Feedlots have competitive advantage PCR=1 : Feedlots are competitively neutral 0PCR1 : Feedlots have competitive disadvantage Comparative Advantage Entries in the second row of PAM are used to determine the comparative advantage of the industry. Comparative advantage indicator are obtain through comparing the domestic cost with the difference between revenue and tradable cost, all expressed at a social price, written as Domestic Resource Cost DRC: DRC = �� − Thus, if 0DRC1 : Feedlots have comparative advantage DRC=1 : Feedlots are comparatively neutral 0DRC1 : Feedlots have comparative disadvantage Impact of Policy Analysis PAM is convenience to be used as analysis tools because it shows indirect estimations for competitive and comparative advantage. Furthermore, other indicators such as policy to input, output, and both can also be evaluated from the information in the matrix. Its processes are as shown below:

a. To Output

- Output Transfer OT The value of OT is obtained from the second column in the last row of matrix Rev t . The producer’s incentives as an impact of a policy to output is equal to difference between revenue in private and social price. It written as: Output Transfers OT = Rev t = Rev p - Rev s Thus, if: OT 0: The producer would have sufficient incentives due to a subsidy or any resource transfers to output that favorable for the system. OT 0: The producer would have limited incentives due to a tax or any resource transfers to output that unfavorable for the system. - Nominal Protection Coefficient on Output NPCO The government protection to output is reflected in the value of NPCO. The ratio describes how much the market price of output to deviate from its efficiency price. It is written as: NPCO = �� � �� Thus, if: NPCO 1: The output system is protected by policy and the producer receive higher domestic price than the world price. NPCO 1: The output system is not protected by policy and the producer receive lower domestic price than the world price.