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Policy Analysis Matrix Applied to the Study of Tunisian Sugar Industry (. Before 1962 Tunisia depended completely on foreign markets for its needs in sugar. The installation in the north-western region of two transformation units had two objectives ; the first was to produce part of the sugar consumed locally the second was the need to introduce sugar beet crop to equilibrate the rotation plans in the new irrigated perimeters. The present paper use the policy analysis matrix PAM to show that Tunisia does not have comparative advantage in the production of sugar and that to maintain current level of production it is necessary for the government to subsidize farmers and processors and to assume a social loss because of the misallocation of resources.