Supply Response of Sugar Cane in Indonesia

Abstract

The paper investigates the supply response to sugar cane using an extended Nerlovian model. The analysis is separated into sugar mills and farmers response. Output response is decomposed into area response and yield response An important finding shows farmers to be responsive to price while millers are not. The insignificant results on sugar mills indicate that when they are under strict control, and are no longer profit maximizing, the Nerlovian supply response does not apply.