the use of policy analysis matrix in agriculture policy analysis

Abstract

The aim of this study is to demonstrate the use of the policy analysis matrix (PAM) in analyzing the impact of agricultural policies and to assess the agree to which domestic input and output prices, of agricultural commodities, differ from their equivalents in international markets, thereby determining the extent of protection. Also, to perform a similar procedure with respect to comparative advantage. The methodology used here is the standard calculation of protection coefficients and of domestic resource costs. Price distortions are defined as the divergence between the price of at the border and at the farm-gate adjusted for equivalent location and stage of processing. The distortions are expressed through the standard indicators of nominal and effective protection by commodities. Comparative advantage is examined in terms of value-added, at border prices, per unit of domestic resource with costs measured as marginal opportunity costs.