The Indonesian Government is constantly searching for ways to make Indonesia’s agriculture more productive. If greater output could be produced with the country’s land, labor, and other scarce resources, Indonesia could grow more food and raise rural incomes. How can analysts, at both central and local levels, best evaluate proposed agricultural projects and policies to see if they would increase productivity?

This book is written for Indonesian policy analysts and policy makers, especially those who work outside of Jakarta, and for students and practitioners of agricultural policy in Indonesian universities. The purpose is to introduce a method of economic analysis to evaluate public investment projects and public policies in the agricultural sector. An approach called the Policy Analysis Matrix (PAM) is proposed to serve that purpose. The unique feature of the PAM method is its flexibility. It can be used for both project and policy analysis.

The PAM approach is more than two decades old, and much has already been written to explain its theoretical foundations and demonstrate its use.[1] The method also has been used widely to analyze Indonesian agricultural issues.[2] In this book, the authors hope to explain the conceptual essence of the PAM method, give practitioners practical exercises in applying the approach, and provide recent case studies of PAM analysis in Indonesian agriculture. The goal is to make the PAM method easily accessible for wide use in Indonesia.

Part One contains an integrated discussion of theoretical concepts and empirical procedures. The authors firmly believe that the best way to understand an analytical approach is to try it out. But learning-by-doing can only be successful if the analyst travels two parallel paths – understanding economic principles and applying practical concepts. Learning through classes, books, and computer tutorials needs to be accompanied by experience in the field and in the policy maker’s office. Part One of this book, therefore, is both conceptual and empirical. It shows why specific types of information are needed for project and policy analysis and how to go about finding that information in Indonesia.

The second section of the book, Part Two, is a collection of case studies. Busy policy analysts often can appreciate the value of an analytic approach most easily if they see examples of its application. The illustrations can be especially persuasive if they contain timely analysis of recent agricultural issues in various regions of Indonesia. The studies summarized in Part Two are all drawn from work carried out under the Food Policy Support Activity, a collaborative program involving BAPPENAS, the United States Agency for International Development (USAID), Development Alternative, Inc. (DAI), The Ministry of Agriculture, and faculty from more than forty universities in Indonesia. These case studies illustrate well how the PAM approach can be applied fruitfully to a wide range of project and policy issues in rural Indonesia.

Topics to which the PAM methodology described in Part One has been applied include rice, soybeans, potatoes, cloves, cashews, shrimp, and broilers. Repeated interactions with FPSA staff have produced papers whose results provide interesting views on such current policy debates as the comparative advantage of rice and the desirability of subsidizing soybeans.

Part Three consists of an overview of the lessons learned from the Outreach Project’s research activities. Although there was a good deal of variability in the skill with which the research projects were carried out, most researchers had difficulty with one or more problems associated with their empirical work. Part Three focuses on the most frequently encountered issues and reviews the appropriate procedures for resolving them. The section emphasizes the importance of thinking through carefully the commodity system being studied in order to be sure that the study incorporates all the material needed to answer the policy issues being addressed.

The book also contains an associated computer tutorial covering the materials discussed in Part One. The authors have much experience in teaching short courses and workshops in Indonesia and in many other developing countries. With the introduction of inexpensive microcomputers, computer tutorials have become an integral part of successful teaching of agricultural policy analysis. Since most Indonesian analysts and university teachers and students now have easy access to computers, computer tutorials have become a feasible and popular means of complementing and deepening written instruction. The focus of the tutorial is on how to carry out the basic PAM method and important extensions of it. Most students can understand concepts better and learn them more quickly if they combine reading with practice.

PART ONE: THEORETICAL CONCEPTS AND EMPIRICAL PROCEDURES

Chapter 1: A Framework for Agricultural Policy Analysis

Everyone involved in agricultural policy and project analysis should have a clear way of thinking about evaluating decisions. On what grounds can one alternative be judged better than another? How much policy is enough? Is economic efficiency the only thing that matters? For rational decision-making to take place, each of us needs a clear and logical way to evaluate policy options. In an ideal setting, everyone would have a similar way of approaching policy decisions. Then disagreements would be limited to genuine differences of opinion rather than including also misunderstandings about approaches to problem solving. This chapter sets out a general logical approach for carrying out agricultural policy analysis.[3] The specifics of the Policy Analysis Matrix (PAM) then are introduced in succeeding chapters.

A well-understood framework for agricultural policy analysis is needed for decision-makers and interest groups to understand the consequences of policy actions. The clarity of definitions is critical in policy analysis. What is meant by the term, “framework for agricultural policy analysis?” A framework is an organized and consistent approach for clear thinking. Without it, policy debate can quickly reduce to misunderstanding and emotionalism. A framework is designed to permit the study of linkages in economic systems. Good economic analysis is fascinating for economists, frustrating for non-economists, and relevant for everyone because it focuses on linkages within an economy – on why one group’s actions influence others in the system. Agricultural refers to the production and consumption of commodities that are produced by cultivating crops or raising livestock. Policies are government actions intended to change behavior of producers and consumers. Analysis consists of the evaluation of government decisions to change economic behavior. A framework for agricultural policy analysis, therefore, is a logical system for analyzing public policies affecting producers, marketers, and consumers of crops and livestock products.

Four Components of a Policy Framework

The four central components in the framework for agricultural policy analysis proposed in this book are objectives, constraints, policies, and strategies.[4] Objectives are the desired goals of economic policy as defined by the policy makers. Government officials wish to achieve certain ends when they intervene in economies. Constraints are the economic realities that limit what can be accomplished. If land is used to grow rice, it is not available to produce an alternative crop in that production season. Policies are the instruments that governments can use to change economic outcomes. Effective policies change the behavior of producers, marketers, and consumers and create new economic outcomes. Strategies are the sets of policy instruments that government officials can use to achieve their objectives. Each strategy is enacted through the introduction of a coordinated set of policies.

The policy framework, portrayed in Figure 1.1, is represented by a circular (clockwise) set of causal linkages among the four components. The strategies of policy makers consist of sets of policies that are intended to improve economic outcomes (as judged by the policy makers). The selected policies work through the constraints set by economic parameters.

The constraints, set by supply, demand, and world price conditions, either further or impede the attainment of objectives. An assessment of the impact on objectives permits an evaluation of the appropriateness of given strategies. Governments thus form agricultural strategies by choosing a set of policies to further their objectives subject to the constraints on the agricultural economy. With this logical picture in mind, it is important to review each of the four components in more detail.

Figure 1.1. Graphic Representation of a Policy Framework

consist of

Strategies

Policies

work

through

Objectives

Constraints

further or impede impede

Fundamental Objectives of Policy Analysis

Most goals of government policy fall under one of three fundamental objectives – efficiency, equity, or security. Efficiency is achieved when the allocation of scarce resources in an economy produces the maximum amount of income and the allocation of goods and services brings highest consumer satisfaction. Equity refers to the distribution of income among groups or regions that are targeted by policy makers. Typically, greater equity is achieved by more even distribution of income. However, because policy refers to government actions, the policy makers (and indirectly voters in a democracy) define equity. Security is furthered when political and economic stability allows producers and consumers to minimize adjustment costs. Food security refers to the availability of food supplies at affordable and stable prices. In this framework, any goal that a policymaker is hoping achieve through government intervention will be incorporated within one of the three fundamental objectives – efficiency, equity, and security.

Trade-offs arise when one objective can be furthered only if another is impeded – that is, when gains for one goal result in losses for another. When trade-offs exist, policymakers have to place weights on the conflicted objectives – by determining how much they value gains from one objective versus losses associated with a second objective. Policy makers – not economic analysts – have the responsibility to make these value judgments and assign weights to objectives. These government officials have the ultimate responsibility to be accountable for their policy actions. In the rare instances when trade-offs do not arise, policy analysis and policy making are easy. The desired result is to move forward to the extent that resources permit.

Typically, however, trade-offs do exist. Then economic analysts need to evaluate policies, and policy makers need to make decisions by placing weights on objectives. The weights have to add to one (e.g., an individual policy maker might place weights of 0.6 on efficiency, 0.3 on equity, and 0.1 on security).

Constraints That Limit Agricultural Policy

The scope for agricultural policy is defined by three basic constraints – supply, demand, and world prices. Supply, national production, is limited by the availability of resources (land, labor, and capital), technologies, relative input prices, and management capabilities. These parameters are the components of production functions and thus limit the ability of the economy to produce agricultural commodities. Demand, national consumption, is limited by population, income, tastes, and relative output prices. These parameters are the components of demand functions and thus limit the ability of the economy to consume agricultural products.

World prices, for internationally tradable outputs and inputs, define and limit the opportunities to import to increase domestic supply and to export to increase markets for domestic production. These three economic parameters define the market for an agricultural commodity and are the fundamental forces that influence price formation and the allocation of resources. The economic constraints lead to trade-offs in policy making.

Categories of Polices Affecting Agriculture

Policies influencing the agricultural sector fall into one of three categories – agricultural price policies, macro-economic policies, or public investment policies. Agricultural price policies are commodity specific. Each price policy targets only one commodity (e.g., rice) at a time. Price policies also can influence agricultural inputs. Macro-economic policies are nation-wide in coverage. Macro policies thus affect all commodities simultaneously. Public investment policies allocate capital expenditures from the public budget. They can affect various agricultural groups – producers, traders, and consumers – differently because they are specific to the areas where the investment occurs.

Agricultural Price Policy Instruments

All agricultural price policy instruments create transfers either to or from the producers or consumers of the affected commodity and the government budget. Some price policies affect only two of these three groups, whereas other instruments affect all three groups. In all instances, at least one group loses and at least one other group benefits. Policy analysts need to consider three categories of agricultural rice policy instruments – taxes and subsidies, international trade restrictions, and direct controls.

Taxes and subsidies on agricultural commodities result in transfers between the public budget and producers and consumers. Taxes transfer resources to the government, whereas subsidies transfer resources away from the government. For example, a direct production subsidy transfers resources from the government budget to agricultural producers.

International trade restrictions are taxes or quotas that limit either imports or exports. By restricting trade, these price policy instruments change domestic price levels. Import restrictions raise domestic prices above comparable world prices, whereas export restrictions lower domestic prices beneath comparable world prices.

Direct controls are government regulations of prices, marketing margins, or cropping choices. Typically, direct controls must be accompanied by trade restrictions or taxes/subsidies to be effective. Otherwise, “black markets” of illegal trade render the direct controls ineffective. Occasionally, some governments have sufficient police power to enforce direct controls in the absence of accompanying trade regulations. Direct controls of cropping choices can be enforced, for example, if the government allocates irrigation water or purchased inputs.

Macro-economic Policies Affecting Agriculture.

Agricultural producers and consumers are heavily influenced by macro-economic polices even though they often have little influence over the setting of these nation-wide policies. Three categories of macro-economic policies – monetary and fiscal policies, foreign exchange rate policies, and factor price, natural resource, and land use policies – affect agriculture.[5]

Monetary and fiscal policies are the core of macro-economic policy because together they influence the level of economic activity and the rate of price inflation in the national economy, as measured by increases in indexes of consumer or producer prices. Monetary policies refer to controls over the rate of increase in the country’s supply of money and hence the aggregate demand in the economy. If the supply of money is increased faster than the growth of aggregate goods and services, inflationary pressure ensues. Fiscal policies refer to the balance between the government taxing policies that raise government revenue and the public expenditure policies that use that revenue. When government spending exceeds revenue, the government runs a fiscal deficit. That result creates inflation if the government covers the deficit by expanding the money supply.

Foreign exchange rate policies directly affect agricultural prices and costs. The foreign exchange rate is the conversion ratio at which domestic currency exchanges for foreign currency. Most agricultural commodities are traded internationally, and most countries either import or export a portion of their agricultural demand or supply. For internationally tradable commodities, the world price sets the domestic price in the absence of trade restrictions. The exchange rate thus directly influences the price of an agricultural commodity because the domestic price (in local currency) of a tradable commodity is equal to the world price (in foreign currency) times the exchange rate (the ratio of domestic to foreign currency).

Factor price policies directly affect agricultural costs of production. The primary factors of production are land, labor, and capital. Land and labor costs typically make up a substantial portion of the costs of producing most agricultural commodities in developing countries. Governments often enact macro policies that affect land rental rates, wage rates, or interest rates throughout the economy. Other factor price policies, such as minimum wage floors or interest rate ceilings, influence some sectors more than others. Some governments introduce special policies to attempt to control land uses or to govern the exploitation of natural resources, such as minerals or water. These macro policies can also influence the costs of agricultural production.

Public Investment Policies Influencing Agriculture.

The third category of policies affecting agriculture includes public investments from the country’s capital budget – in infrastructure, human capital, and research and technology. Public investments in infrastructure can raise returns to agricultural producers or lower agricultural costs of production. Infrastructure refers to essential capital assets, such as roads, ports, and irrigation networks, which would be underprovided by the private sector. These assets are known as “public goods,” and they require public spending from the government’s capital budget. Investments in infrastructure are by nature particular to specific regions and benefit mostly the producers and consumers who live in those regions. Public investment policy is complicated by the fact that infrastructure must be maintained and renewed.

Public investments in human capital include a wide range of spending from the government’s capital budget to improve the skill levels and health of agricultural producers and consumers. Investments in formal schools, training and extension centers, public health facilities, human nutrition education, and clinics and hospitals are examples of public capital spending that could raise the level of human capital in the agricultural sector. These investments are critical for long-term development, but they often take many years to show dividends in agriculture.

Public investments in research and technology are another example of “public goods” that directly benefit agricultural producers and consumers. Countries that enjoy rapid agricultural growth typically invest heavily in agricultural research to breed or adapt high-yielding varieties of food and cash crops developed in international research centers abroad. These “miracle seeds” often require new agricultural production technologies, utilizing better water control and more intensive application of purchased inputs. For some commodities, the technological breakthroughs, funded by public investment, are in agricultural processing rather than in farming.

Application of the Framework to Past Rice Policy in Indonesia

A study done by the Food Research Institute, Stanford University in the late 1980s provides an illustration of applying the framework for agricultural policy analysis.[6] The framework included rice strategy targets (“strategies”), rice policy instruments (“policies”), principal economic variables (“constraints”), and fundamental food policy objectives (“objectives”). Figure 1.2 is drawn from that study.

Figure 1.2. The Framework Applied to Past Rice Policy in Indonesia

The rice strategy targets consisted of three alternatives. One was to strive for regular exports of rice by attempting to achieve an annual growth rate for rice production of 4 percent. Another was to aim for regular imports of rice by expanding rice production at an annual rate of 1 percent. The third was to hope for an annual growth rate of rice output of 2.5 percent to retain self-sufficiency in rice production on trend (by importing some rice in poor production years and exporting some rice in good production years). The study assessed the likely impact of each of these three strategies.

The RPI book assessed the reasons for Indonesia’s success during the Green Revolution period of the 1970s and 1980s.[7] During that period, Indonesia evolved from being the largest importer of rice in the world to achieving rice self-sufficiency on trend for a decade beginning in 1984. Among the five available types of rice policy instruments, government decisions in four areas were essential for success.

Price policy instruments altered the level of domestic rice prices. Price stabilization policies reduced the fluctuation of domestic rice prices. Public investments, especially in infrastructure and research, affected prices, costs, and yields of rice production systems. Macro-economic policies, notably those affecting inflation and the exchange rate, influenced rice production costs and the value of the rice produced. But rural regulations impeded some rice farmers’ ability to plant rice.

Rice price level policy was neutral. The government desired to have efficient rice expansion so it kept domestic rice prices close to the trend of world rice prices, providing neither protection nor disprotection to rice production. However, to encourage farmers to adopt the new technologies featuring high-yielding varieties of rice seeds, the government heavily subsidized chemical fertilizers during this period, thereby reducing costs of rice production.

Rice price stabilization policy was very positive. The National Logistics Agency, BULOG, stabilized domestic rice prices so that domestic rice price fluctuations were considerably less than world rice price fluctuations. BULOG had a monopoly on international trade in rice and varied imports or exports to meet domestic needs. The agency maintained a public buffer stock in rice by buying paddy at a guaranteed floor price and injecting the milled rice into the markets when prices rose. This stabilization policy was expensive but largely successful.

Public investment policy in rural infrastructure, health and education facilities, and agricultural research and extension was a key component of Indonesia’s success in tripling rice yields and production and thus in achieving temporary rice self-sufficiency. The government invested heavily in rural roads, ports, and irrigation facilities and for a period devoted as much as 30 percent of its capital budget to rural infrastructure and agricultural research.

Macro-economic policies during the 1970s and 1980s were appropriately neutral. The annual rate of inflation typically was held beneath 10 percent, and the exchange rate was devalued periodically to offset the difference between inflation rates in Indonesia and those of its main trading partners. Rice producers thus were neither implicitly taxed nor subsidized by longstanding disequilibrium exchange rates, and they could count on quite stable macro-economic conditions in planning their investments and annual production inputs.

Rural regulations were the only negative area of policy affecting rice production in the 1970s and 1980s. In parts of East and Central Java, many farmers were forced by a policy decision to grow sugarcane when they preferred to plant rice. This decision led to less rice production, lower farmer incomes, and less employment relative to levels that would have been created under a free choice of cropping patterns.

These policy instruments affected levels of rice production through their influence on three principal economic variables – the amount of rice produced domestically, the level of rural income that was generated directly in rice production or indirectly from the investment or consumption of rice-related incomes, and the level of rural employment created directly or indirectly by rice production.

Each of these three variables in turn influenced the three fundamental food policy objectives. Regular increases in domestic rice output contributed to food security and price stability by reducing exposure to world price fluctuations. The efficient generation of income through rice expansion led to rapid income growth regionally and nationally. The creation of additional rural jobs, directly in rice production or indirectly in rice-related activities, improved the distribution of income between urban and rural areas.

The RPI book concluded that the strategy of trend self-sufficiency was likely to be the one preferred by policy makers in the early 1990s.[8] An effort to achieve regular rice exports would have been inefficient and required regular subsidies, whereas a strategy to import regularly in the early 1990s would have left efficient production opportunities unrealized.

Analysis of Current Rice Policies in Indonesia

Current rice price policy in Indonesia attempts to raise domestic rice prices to levels about 30 percent higher than they would be if they were instead set wholly by rice import prices. The strategy is to assist rice producers during a period when world rice prices are low, about one-fourth less than their expected long-run trend levels. However, this strategy prevents Indonesian consumers of rice from benefiting from the low world prices and thus has adverse impacts on human nutrition and poverty alleviation..

The policy instrument used to implement this strategy is a specific tariff on rice imports of Rupiah 430/kilogram. If this tariff were collected on all imports of rice, the policy would raise domestic prices to levels about 30 percent higher than they would be in the absence of policy. Recent observed levels of domestic rice prices in Indonesia have been about 25-30 percent higher than comparable import prices of rice. However, this outcome does not mean that the tariff is being collected fully and that smuggling is absent. The highly uncertain economic and political environment in Indonesia has caused rice importers to charge a premium of perhaps 10-20 percent to cover the risks of exchange rate changes and the costs of extra banking charges.

The policy of protecting rice furthers the goal of increasing rice farmers’ income within the broader equity objective. However, the policy leads to important trade-offs because it penalizes poor rural and urban consumers of rice. The tariff does not improve economic efficiency because it causes scarce resources to be used inefficiently. In an era of low and relatively stable world rice prices, the rice tariff does little to contribute to food security. Raising the price of rice also has serious consequences for the nutrition of poor people, and it creates additional poverty by pushing more poor families beneath the poverty line.

In principle, the government could assist rice farmers by using a different price policy instrument – a direct production subsidy through which farmers would receive a government subsidy according to the amounts of rice marketed. This policy would avoid raising the domestic price of rice and thus would eliminate the trade-offs between producers and consumers. However, the subsidy policy would be difficult to implement and it would put great pressure on the government budget during a time of fiscal stringency. Some analysts argue that scarce government resources instead should be used to assist rice farmers to switch gradually to higher valued commodities.

Impact of Current Rice Policies on Objectives

In contrast to the rice policy during the Green Revolution period of the 1970s and 1980s, current rice policy in Indonesia has not been very successful. Rice policy has floundered since the mid-1990s and especially since the macro-economic crisis began in mid-1997.

The appropriateness and effectiveness of the policy to raise rice prices has been hotly debated. The specific tariff of Rupiah 430/kilogram of rice and the rice traders’ risk premium have together raised domestic rice price levels about 25-30 percent above comparable import prices. Many government officials appear to feel that the gain to rice producers offsets the loss for rice consumers and the poor, but the issue is under frequent review.

Price stabilization policy has fallen into disrepair. Since 1997, BULOG, the agency charged with stabilizing rice prices, has been unable to stabilize domestic rice prices. During 1998, the agency was forced to abandon its effort to prevent rice price increases and the domestic price of rice doubled in four months. In December 1998, the government set an unrealistically high floor price for paddy, and BULOG has not been able to defend that floor price. The agency instead buys about enough rice for its own distribution needs and fails to defend either floor or ceiling prices for rice. Due to ineffective price stabilization, the government removed BULOG’s international trade monopoly on rice imports in 1999.

Public investment policy for rice has continued as before, but at lower and less effective levels. Some of the earlier irrigation and transport infrastructure now requires rehabilitation and greater maintenance. Budgetary stringency during the macro crisis has added greatly to the difficulties of expanding rural infrastructure.

Macroeconomic policies became much less stable because of the macro crisis. With the important exception of 1998 (when the annual rate of inflation exceeded 80 percent), the government’s monetary and fiscal policies have kept inflation in reasonable check (8-12 percent per year). But enormous uncertainty for the Indonesian economy has come from the widely fluctuating foreign exchange rate, which depreciated from about Rupiah 2,500 per US dollar in mid-1997 to over 16,000 in early 1998 before settling in a range of 8,000-12,000 thereafter.

Rural regulations have been reformed. Rice farmers in East and Central Java are no longer required to plant sugarcane for mills operated by the Ministry of Agriculture. However, some Javanese farmers complain that local government officials still attempt to regulate their choices of cropping patterns.

Rice Policy in the Framework for Agricultural Policy Analysis

In principle, governments form agricultural strategies by choosing a set of policies to further their objectives subject to the constraints on the agricultural economy. This conceptual framework has been illustrated by contrasting rice policy in Indonesia in two periods – the Green Revolution of the 1970s and 1980s and the macro crisis period of 1997-present. The earlier period is analyzed in the RPI book, whereas the recent period is examined in numerous papers written by the FPSA team, all available in the “Food Policy Agenda” section of the project website (www.macrofoodpolicy.com).

During the Green Revolution, rice strategy was to introduce a new technology of high-yielding varieties, improved water control, chemical fertilizer applications, and better marketing and irrigation infrastructure. Fertilizer subsidies, stable rice prices, free irrigation water, better roads, and stable macro-economic conditions complemented this new technology and encouraged its rapid dissemination. These policies significantly altered the economic constraints and allowed a tripling of output and incomes from rice.

These happy circumstances promoted all three primary objectives – efficiency, equity, and security. The increases in rice production were created by improved technologies, not policy transfers, rice prices were maintained at about the trend of world prices, and efficiency was improved. Technological gains permitted increases in rice farmer profits and incomes while consumers of rice benefited from the gradually declining world and domestic rice prices. Hence, there were few trade-offs in equity. Food security improved as Indonesia eliminated rice imports with efficient increases in domestic output, in an environment of relatively stable domestic rice prices. The strategy to promote the dissemination of new high-yielding technologies was thus successful on nearly all accounts.

During the recent macro-economic crisis, rice strategy has fallen into disarray. The rice strategy has been to attempt to aid rice farmer incomes in a period of unusually low world rice prices. In contrast to the earlier period, there has not been any new technology to disseminate. Nearly all Indonesian farmers now plant high-yielding varieties of rice. Severe budgetary pressure and the consequent need to limit government capital spending have hampered the government’s ability to make further improvements in irrigation and transportation. Struck by fiscal limitations, contradictory policies, and charges of corruption and mismanagement, BULOG has not been able to stabilize rice prices. Rapid and sizeable swings in the exchange rate have greatly increased the uncertainties in rice production and marketing.

Difficult trade-offs now affect rice policy. The principal policy instruments have been the specific tariff on rice imports, which has helped to raise domestic prices by 25-30 percent, and a limited subsidy on rice consumption in selected poor villages and urban centers. The rural and urban poor have been compensated only partly for the increase in rice prices caused by policy. Public opinion favoring rice farmers argues for maintaining or even raising the rice tariff, especially to offset unusually low world rice prices. The opposite opinion, favoring poor rice consumers, argues that the country should take advantage of low world rice prices to benefit the nutrition of poor Indonesians and to alleviate their poverty. The weights that policy makers place on these conflicting objectives thus take center stage in the policy debate as Indonesia seeks to identify a consistent and successful rice strategy.

Chapter 2: Introduction to the Policy Analysis Matrix

In their efforts to raise agricultural productivity, the central, provincial, and local governments in Indonesia can intervene in agriculture by using three different kinds of policies – agricultural price policies, public investment policies, and macro-economic policies. Macro-economic policies can only be imposed at the central level and require separate analysis by specialists in macroeconomics. Agricultural economists study the impacts of price and investment policies. Fortunately, the efficacy of both agricultural price policies and public investments in agriculture can be studied with one approach – the Policy Analysis Matrix (PAM). PAM results show the individual and collective effects of price and factor policies. The PAM also provides essential baseline information for benefit-cost analysis of agricultural investment projects. The main purpose of this chapter is to show how and why the PAM method can apply to both price and project analysis.

Issues and Purposes of PAM Analysis

The PAM methodology provides information to help central and regional policy makers address three central issues of agricultural policy analysis.[9] One issue is whether agricultural systems are competitive under existing technologies and prices – that is, whether farmers, traders, and processors earn profits facing actual market prices. Prospective price policies would change the value of output or the costs of inputs and thus the private profitability of the system. A comparison of private profitability before and after the policy change measures the impact of the policy change on competitiveness in market prices.

A second issue is the impact of new public investment in infrastructure on the efficiency of agricultural systems. Efficiency is measured by social profitability, the valuation of profits in efficiency prices. Successful public investment (in irrigation or transportation) would raise the value of output or lower the costs of inputs. A comparison of social profits before and after the new public investment measures the increase in social profits.

A third issue, closely related to the second, is the impact of new public investment in agricultural research or technology on the efficiency of agricultural systems. Successful public investment in new seeds, farming techniques, or processing technologies would enhance farming or processing yields and thus would increase revenues or decrease costs. A comparison of social profits before and after the investment in research measures the gain in social profitability.

The three principal purposes of the Policy Analysis Matrix (PAM) methodology are to provide information and analysis to assist policy makers in these three central areas of agricultural policy.[10] The construction of a PAM for an agricultural system allows one to calculate private profitability – a measure of the competitiveness of the system at actual market prices. Similar analyses of other systems permit a ranking of the competitiveness of agricultural systems at market prices. The calculation of private profitability or competitiveness is carried out in the first (top) row of the PAM matrix. This result serves as the baseline for benefit-cost analysis in actual market (private) prices, as explained in Chapter 3.

A second purpose of the PAM approach is to estimate the agricultural system’s social profitability – the result if products produced and inputs used are valued in efficiency prices (social opportunity costs). Complementary analyses of other systems allow a ranking of the efficiency of agricultural systems. The calculation of social profitability is carried out in the second (middle) row of the PAM matrix. This outcome provides baseline information for social benefit-cost analysis, using efficiency prices, as shown in Chapter 4.

The third purpose of PAM analysis is to measure the transfer effects of policies. By contrasting revenues and costs before and after the imposition of a policy, one can determine the impact of that policy. The PAM method captures the effects of policies influencing both products and factors of production (land, labor, and capital). The measurement of the transfer effects of policies is carried out in the third (bottom) row of the PAM matrix, as demonstrated in detail in Chapter 5.

Identities of the Policy Analysis Matrix

A matrix is an array of numbers (or symbols) that follows two rules of accounting – one defining relationships across the columns of the matrix and the other defining relationships down the rows of the matrix. These accounting relationships are termed the identities of the matrix because they are true by definition.[11] An analyst can specify any identities in a matrix so long as the definitions are applied consistently. The PAM matrix consists of two accounting identities – the profitability identity and the divergences identity.

The profitability identity in PAM is the accounting relationship across the columns of the matrix. Profits are defined as revenues less costs. All entries in the PAM matrix under the column defined “profits” thus are identically equal to the difference between the columns containing “revenues” and those containing “costs” (including both costs of tradable inputs and costs of domestic factors).

The divergences identity in PAM is the relationship down the rows of the matrix. Divergences cause private prices to differ from their social counterparts. A divergence arises either because a distorting policy intervenes to cause a private market price to diverge from an efficient price or because underlying market forces have failed to provide an efficient price. All entries in the PAM matrix under the third row, defined as “effects of divergences,” thus are identically equal to the difference between entries in the first row, measured in “private prices,” and those in the second row, measured in “social prices.”

Profitability Identity – Private Profits

Figure 2.1 shows only the entries for the first row of a PAM, which contains measures of prices in private prices (the observed market prices). The symbol A measures revenues in private prices, the symbol B stands for tradable input costs in private prices, the symbol C represents domestic factor costs in private prices, and the symbol D is private profit.

Figure 2.1. Private Profits in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Private (observed market) Prices
Private	A	B	C	D
Social
Divergences

In empirical PAM analysis, the revenue and cost categories in private prices (entries A, B, and C) are based on data from farm and processing budgets. The symbol D, profits in private prices, is found by applying the profitability identity. According to that accounting principle, D is identically equal to A - (B + C). Private profits in PAM thus are a residual discovered by subtracting private costs from private revenues.[12]

The calculation of private profits, from data in farm and processing budgets, measures the competitiveness of agricultural systems. One key result for agricultural policy thus is obtained from the first row of the PAM matrix. Procedures for the empirical estimation of private profitability are outlined in Chapter 3.

To compare results from agricultural systems that produce unlike outputs, analysts compute ratios.[13] In the calculation of ratios, the unit of measurement (sometimes called the numeraire), such as Rupiah per kilogram of rice, cancels out. The computation of ratios thus avoids having to compare profits per kilogram of rice, for example, with profits per kilogram of soybeans. The comparison of competitiveness of unlike systems is facilitated by computing the private benefit-cost ratio (PBCR) for each system and then comparing these ratios across all the systems. The PBCR is equal to the ratio of private revenues to private costs, or PBCR = A/(B + C).

Profitability Identity – Social Profits

Figure 2.2 depicts only the entries for the second row of a PAM, which contains measures of prices in social prices (prices that would result in the best allocation of resources and thus the highest generation of income).

Figure 2.2. Social Profits in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Social (efficiency) Prices
Private
Social	E	F	G	H
Divergences

The symbol E measures revenues in social prices, the symbol F stands for tradable input costs in social prices, the symbol G represents domestic factor costs in social prices, and the symbol H is social profit. Countries achieve rapid economic growth by promoting activities that generate high social profits (large positive H).

In an empirical PAM analysis, the revenue and cost categories in social prices (entries E, F, and G) are based on estimates of the social opportunity costs of commodities produced and inputs used in production. These estimated social (or efficiency) prices then are applied to the original quantities of outputs and inputs (those used in the calculation of private profits in the top row of PAM). The symbol H, profits in social prices, is found by applying the profitability identity. According to that accounting principle, H is identically equal to E - (F + G). Social profits in PAM thus are a residual discovered by subtracting social costs from social revenues.[14]

The calculation of social profits, from estimates of social prices applied to input-output data in farm and processing budgets, measures the efficiency of agricultural systems. A second key result for agricultural policy thus is obtained from the second row of the PAM matrix. Procedures for the empirical estimation of social profitability are summarized below and detailed in Chapter 4.

The social (efficiency) prices for tradable outputs and inputs are the comparable world prices – import prices for commodities that are partly imported (importable) or export prices for commodities that are partly exported (exportable). The efficiency value (social opportunity cost) of producing an additional ton of an importable commodity (e.g., rice in Indonesia) is the amount of foreign exchange saved by replacing a ton of imports – given by the import price. Similarly, the social opportunity cost of producing an additional ton of an exportable commodity (e.g., palm oil in Indonesia) is the amount of foreign exchange earned by increasing exports by a ton – given by the export price.

The social (efficiency) prices for domestic factors of production (land, labor, and capital) are estimated also by application of the social opportunity cost principle. Because domestic factors are not tradable internationally and thus do not have world prices, their social opportunity costs are estimated through observations of rural factor markets. The intent is to find how much output and income are foregone because the factor is used to produce the commodity under analysis (e.g., rice) rather than the next best alternative commodity (e.g., sugarcane).

To compare social results from agricultural systems that produce unlike outputs, analysts again compute ratios. Comparison of the efficiency of unlike systems is done by computing the social benefit-cost ratio (SBCR) for each system and then comparing these ratios across all the systems. The SBCR is equal to the ratio of social revenues to social costs, or SBCR = E/(F + G).

Divergences Identity

Figure 2.3 shows all twelve entries for a PAM, given by the letter symbols A through L. It adds a third row termed the Effects of Divergences row. As noted above, divergences arise from either distorting policies or market failures. Either source of divergence causes observed market prices to differ from their counterpart efficiency prices.[15] The symbol I measures divergences in revenues (caused by distortions in output prices), the symbol J stands for divergences in tradable input costs (caused by distortions in tradable input prices), the symbol K represents divergences in domestic factor costs (caused by distortions in domestic factor prices), and the symbol L is the net transfer effect (arising from the total impact of all divergences).

Figure 2.3. Divergences in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Private	A	B	C	D
Social	E	F	G	H
Effects of Divergences	I	J	K	L

In empirical PAM analysis, the effects of divergences (in the third, bottom row) are found by applying the divergences identity. According to that accounting principle, all entries in the PAM matrix under the third row (defined as Effects of Divergences) are identically equal to the difference between entries in the first row (measured in private prices) and entries in the second row (measured in social prices). Therefore, I is identically equal to (A – E), J is identically equal to (B – F), K is identically equal to (C – G), and L is identically equal to (D – H). The sources of divergences are introduced below, and procedures for the empirical estimation of divergences are detailed in Chapter 5.

One source of divergence is the existence of a market failure. A market fails if it does not generate competitive prices that reflect social opportunity costs and lead to an efficient allocation of products or factors. Three basic types of market failures create divergences. The first is monopoly (seller control over market prices) or monopsony (buyer control over market prices). The second are negative externalities (costs for which the imposer cannot be charged) or positive externalities (benefits for which the provider cannot receive compensation). The third are factor market imperfections (inadequate development of institutions to provide competitive services and full information).

Efficient policy is a government intervention to correct a market failure and thus offset a divergence. For example, successful regulation of a monopoly would reduce seller prices, cause private and social prices to become equal, and increase income.

The second source of divergence is distorting government policy. Distorting policy, implemented to further non-efficiency objectives (equity or security), prevents an efficient allocation of resources and thus creates divergences. A tariff on rice imports, for example, could be imposed to raise farmer incomes (equity objective) and increase domestic rice production (security objective), but it would create efficiency losses if the replaced rice imports were cheaper than the costs of domestic resources used to produce the additional rice. Hence, a trade-off would arise, and policy makers would need to assign weights to these conflicting objectives to decide whether to introduce the tariff.

The most efficient outcome could be achieved, in principle, if the government were able to enact efficient policies that offset market failures and if the government were to decide to override non-efficiency objectives and remove distorting policies. If these actions – the introduction of efficient policies and the removal of distorting policies – could be carried out, divergences would be offset and the effects of divergences (measured in the bottom row of PAM) would be zero. In this idealized example, all entries in the bottom row of the PAM matrix – I, J, K, and L – would be zero. Hence, the entries in the top row would be identical to those in the second row, i.e., private revenues, costs, and profits would be the same as social revenues, costs, and profits (A = E, B = F, C = G, and D = H).

Research Inputs and Outputs in the Policy Analysis Matrix

The principles and practices of the PAM are illuminated through examination of the research inputs and research outputs in the matrix. Because the PAM is based on two accounting identities, the analyst needs only to enter data into half of the entries of the matrix (called the research inputs). The remaining entries then become results of the analysis (called the research outputs). Of the twelve entries in the PAM matrix, therefore, only six need to be data or research inputs. The remaining six entries then can be found as research results by applying the profitability or divergences identities.

Research Inputs for Efficiency and Policy Analysis

The six categories of research inputs in empirical PAM analysis (A, B, C, E, F, and K) are underlined in the PAM matrix shown in Figure 2.4.

Figure 2.4. Research Inputs in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Private	A	B	C	D
Social	E	F	G	H
Effects of Divergences	I	J	K	L

Most of the data for the six research inputs are obtained from the activity budgets (farming, marketing, and processing) for each agricultural system. The data for private revenues (A) and costs (B, C) typically come directly from these budgets. These budgets usually are based on both secondary data (gathered by other researchers) and primary data (obtained by the field research team), as described in Chapter 3.

The entries for social revenues (E) and social tradable input costs (F) come partly from the system budgets and partly from government documents or industry sources, as detailed in Chapter 4. The information on input-output relationships (quantities of inputs needed per hectare or per ton of output) typically is assumed to be the same in both private and social analysis and thus is obtained from the system budgets (and then from the first row of PAM). However, social prices differ from their private counterparts if distorting policy or market failures cause divergences. The social prices for tradable outputs and inputs are comparable import or export prices, found in government or industry documentation.

The entries for social valuation of domestic factor costs (G) cannot be observed directly in the field or taken from government or industry documents (because comparable world prices do not exist for factors). Instead, field researchers study rural factor markets to search for the presence or absence of divergences in each factor market – effective distorting policies or significant market failures. Hence, the entry for factor divergences (K) becomes a research input, which then is used to estimate social factor prices from observed private factor prices. This empirical procedure for factor markets is described in Chapter 4

The six categories of research results in empirical PAM analysis (D, G, H, I, J, and L) are underlined in the PAM matrix shown in Figure 2.5.

Figure 2.5. Research Results in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Private	A	B	C	D
Social	E	F	G	H
Effects of Divergences	I	J	K	L

Research results in the PAM approach flow directly from application of either the profitability identity or the divergences identity. Since these accounting principles govern the relationships in the PAM matrix, the key results are obtained from straightforward subtraction among entries of research inputs.

The first two results – private profits (D) and social profits (H) – are obtained from application of the profitability identity (revenues less costs equal profits). Private profits (D), a measure of competitiveness, equal private revenues (A) less private costs (tradable input costs (B) and domestic factor costs (C)). Similarly, social profits (H), a measure of efficiency, equal social revenues (E) less social costs (tradable input costs (F) and domestic factor costs (G)). The calculation of social profits (H), however, must await the estimation of social factor prices (G), itself a research result.

The next two results – output transfers (I) and tradable input transfers (J) – are obtained from application of the divergences identity (entries in private prices less entries in social prices equal the effects of divergences). Output transfers (I), a measure of the implicit tax or subsidy on outputs, equal private revenues (A) less social revenues (E). In turn, tradable input transfers (J), a measure of the implicit tax or subsidy on tradable inputs, equal private tradable input costs (B) less social tradable input costs (F).

The last two results – social factor prices (G) and net transfers (L) – are less straightforward. As noted above, social factor prices (G) are found by adjusting private factor prices (C) for observed divergences causing factor price transfers (K). Because the divergences identity requires that (C – G) = K, it is also true that (C – K) = G. The final result, net transfers (L), can be found by applying either the profitability identity (I – (J + K) = L) or the divergences identity (D – H = L). The net transfer (L) thus can be interpreted either as the net effect of all divergences or as the difference between private and social profitability. This single measure thus shows the extent to which distorting policies and market failures implicitly subsidize an agricultural system (by transferring resources into the system) or tax that system (by transferring resources away from the system).

Chapter 3: Private Benefit-Cost Analysis (The PAM’s Top Row)

The empirical application of the Policy Analysis Matrix (PAM) begins with an assessment of revenues, costs, and profits in private (actual market) prices. Data on private revenues and costs are entered in the top row of the PAM, often termed the “private row.” Figure 3.1 shows the entries for the top row of PAM, which contains measures in private prices (the observed market prices). As noted in Chapter 2, the symbol A measures revenues in private prices, the symbol B stands for tradable input costs in private prices, the symbol C represents domestic factor costs in private prices, and the symbol D is private profit. Application of the profitability identity (D = A - (B + C)), introduced in Chapter 2, to private revenues and costs gives private profits.

Figure 3.1. Private Profits in the Policy Analysis Matrix
	Revenues	Costs		Profits
		Input	Factor
Private (observed market) Prices
Private	A	B	C	D
Social
Effects of Divergences

The purpose of this chapter is to explain how an analyst goes about the practical task of deciding what data to use in the top row of PAM and how to find that information.

Constructing PAMs for Commodity Systems

Most agricultural policymakers are interested mainly in understanding competitiveness and efficiency at the farm-gate, since they are concerned with farmer welfare. But comparable world prices are needed to assess efficiency (as explained in Chapter 4). For many agricultural commodities, there are no comparable world prices until after the raw commodity has been processed (e.g., from paddy to milled rice). Comparable world prices for processed goods are available only at the nearby wholesale markets. Hence, PAM analysts need to define their studies of commodity systems to include four activities – farm production, farm-to-processor transportation, processing, and processor-to-wholesale-market transportation. Figure 3.2 gives a visual representation of these four activities in a single commodity system and summarizes the content of each activity.

The numeraire (unit of account) typically differs across the four activities within a commodity system. In most instances, the analyst chooses the numeraire for the processed product in the nearby wholesale market (e.g., Rupiahs per kilogram of milled rice). Occasionally, it is appropriate to use instead a numeraire that measures revenue per hectare (e.g., Rupiahs per hectare), the farm-gate unit of account. In either case, it is necessary to use conversion ratios as one moves from the budget for one activity to another within a commodity system. These conversion ratios (Figure 3.3), contain important physical information such as yields (tons of paddy per hectare) and milling conversion ratios (tons of rice per ton of paddy).

Figure 3.2. The Structure of a Commodity System for PAM Analysis

Source: Adapted from PAM, p. 133

Figure 3.3. Conversion Ratios Used in the Calculation of System Cost and Returns
Activity	Original units of measure for the activity	Conversion ratios for activity and secondary product revenues	Adjusted units of measure for activity
Farm	rupiahs/hectare	(hectares/mt paddy) X (mt paddy/mt milled rice)	rupiahs/mt milled rice
Farm-to-processor	rupiahs/mt paddy	mt paddy/mt milled rice	rupiahs/mt milled rice
Processing	rupiahs/mt milled rice	None	rupiahs/mt milled rice
Processor-to-market	rupiahs/mt milled rice	None	rupiahs/mt milled rice

Farm	rupiahs/hectare	None	rupiahs/hectare
Farm-to-processor	rupiahs/mt paddy	mt paddy/hectare	rupiahs/hectare
Processing	rupiahs/ mt milled rice	(mt milled rice/mt paddy) X (mt paddy/hectare)	rupiahs/hectare
Processor-to-market	rupiahs/mt milled rice	(mt milled rice/mt paddy) X (mt paddy/hectare)	rupiahs/hectare

Source: PAM, p. 135

The Construction of Private Budgets for PAM

What kinds of data should be entered in the top (Private) row of a PAM? Empirical application of the PAM approach is based on the compilation of data in budgets.[16] Because the PAM approach is based on budgets, PAM input data are revenues and costs and profits are found by subtraction as a research result. Four different budgets are put together for each agricultural system – one on farming, a second on marketing (from the farm to the processing center), a third on processing, and a fourth on marketing (from the processing center to the wholesale market).[17] But before beginning the search for budget information, the PAM analyst needs to select the representative commodity systems that will be studied. That choice depends on the policy questions that will be addressed by the results of the study.

Selecting Representative Commodity Systems

PAM analysis is carried out at the individual commodity level (for rice, soybeans, coconuts, or cloves). An early issue that PAM researchers confront is how many agricultural commodity systems to study.[18] This decision depends critically on the nature of the questions to be addressed in the study. If the policy of interest were a tariff on rice, for example, the analysts would want to choose a wide range of rice-production systems, including some marginal ones that might require tariff protection to maintain private profitability. Or if the question were a subsidy on chemical fertilizers, the researchers would want to select a range of crops that use fertilizer, including some systems that might have negative profits without the subsidy.

In general, researchers need to stratify the population of farmers according to a subset of several variables – the commodities of interest, the geographic regions or agro-climatic zones (distinguished by rainfall, soils, elevation, and slope), the seasons of production and cropping rotations (one wet season and one or two dry seasons), the agricultural technologies (differentiated by water control, inter-cropping, high-yielding seeds, modern inputs, and mechanization), and the areas cropped (owned, rented-in, and rented-out). By choosing a subset of these stratification variables, researchers can select a workable number of agricultural systems for which to create PAMs. These variables need to be chosen carefully, because the choice of only four variables, for example, leads to sixteen commodity systems. That number is near the maximum that any study can easily cover, and it is usually preferable to narrow the system coverage to half that number or even less.

Constructing Farm Budgets

A number of guidelines assist the compilation of farm budgets.[19] For most PAM analyses, the farm budgets should be based on actual data from a recent time period, not on optimal performance. The budgets are intended to be representative of current average farming behavior, not that of the best and most progressive farmers. The data in the budgets should be measures of average costs and returns. In this important respect, PAM analysis differs from efforts to build supply schedules of agricultural commodities, which are based on marginal (incremental) costs of production. The numeraire (the units used to denominate entries in the PAM) is usually domestic currency units per quantity (ton or kilogram) of output, since only farming budgets (and not marketing and processing budgets) can be done using domestic currency units per hectare. The categories and quantity and price measures for inputs and outputs in farm activity budgets are summarized in Figure 3.4.

Figure 3.4. Inputs and Outputs in Farm Activity Budgets

Constructing Post-farm Budgets

The principles and procedures for putting together post-farm (processing and transportation) budgets are similar to those used for farm budgets.[20] In both instances, researchers select representative activities (farm and post-farm) based on the policy issues under study. Budgets for both on-farm and post-farm activities require careful compilation of data on revenues and costs and strict application of the opportunity cost principle. Although the post-farm budgets require different numeraires than those used for on-farm budgets (as explained earlier in this chapter), all of the other procedures outlined for farm budgets apply for post-farm budgets. Both are based on average, rather than marginal, cost data. Analysts in both cases should begin by compiling synthetic budgets from secondary information and then verify results through field surveys. In both types of budgets, researchers can rely on small sample sizes to construct the budgets. All PAM activity budgets need to be crosschecked for data accuracy and quality.

Post-farm budgets differ from their on-farm counterparts in two main ways. Because typically there are far fewer processors and transporters than there are farmers, primary surveys are easier to carry out for the post-farm activities and coverage in the post-farm sample is wider. Further, most farmers in Indonesia use little, if any, fixed capital equipment. In contrast, processing and transportation usually involve high fixed capital costs. Hence, economies of size – declining costs per unit handled as quantities processed or transported increase – are much more important in the post-farm activities than in farming. Measuring the effects of size economies and estimating depreciation and returns to capital thus are critical issues in post-farm budgets but of little importance in farm budgets.

Once the PAM researcher has compiled the secondary (based on others’ studies) and primary (field-based) information on private revenues and costs for farm and post-farm budgets, s/he is in position to complete the top row of the PAM. The PAM for a commodity system is the summation of the PAMs for the four component activities (farm, farm-to-processor, processing, and processor-to wholesale-market). Application of the profitability identity (D = A - (B+C)) gives private profits, an indicator of competitiveness in private (actual market) prices. This calculation is identical to that done for private benefit-cost analysis. The usual indicator is the private benefit-cost ratio (PBCR = A/(B+C), which gives a numeraire-free ranking of private profitability.

Tutorial Example of Private Profitability

The computer tutorial contains a full explanation of how to calculate private costs, returns, and profits in PAM analysis. The illustrative example used is a high-yielding paddy system in Indonesia. The analysis proceeds in three steps that are summarized here. The reader is encouraged to carry out the computer exercise after completing this chapter, because the tutorials are designed to complement the discussion here.

The first step is to construct a table of physical input-output relationships for the paddy system. This numerical description of the production function summarizes the technology used in this system. The entries in Table 3.1 are measures of quantities per hectare planted to paddy. In this illustrative system, among the many inputs used the representative farmer applies 240 kilograms of urea fertilizer and 600 labor hours for crop care per hectare of paddy land. The average yield of paddy is 6,000 kilograms per hectare. These input-output coefficients are drawn from the synthetic budgets, the farm interviews, and local expert information.

Table 3.1. Physical Input-Output
I-O	Quantities	HY Paddy
Tradables	Fertilizer (kg/ha)
	Urea	240
	SP-36	100
	KCl

consist of Strategies Policies work through

Objectives Constraints further or impede impede

Agricultural Price Policy Instruments

Macro-economic Policies Affecting Agriculture.

Public Investment Policies Influencing Agriculture.

Impact of Current Rice Policies on Objectives

Profitability Identity – Private Profits

Private

Profitability Identity – Social Profits

Private

Divergences Identity

Private

Research Inputs for Efficiency and Policy Analysis

Private

Private

Private

Selecting Representative Commodity Systems

Constructing Farm Budgets

Constructing Post-farm Budgets

consist of

Strategies

Policies

work

through

Objectives

Constraints

further or impede impede