Indonesia’s national sugar market continues to face a structural imbalance between demand and supply, as reflected in high import dependency and the persistent failure to achieve sugar self-sufficiency targets. This condition is driven by limited sugarcane productivity, evolving consumption patterns, and complex interactions among actors within the national sugar industry ecosystem. This study aims to design and evaluate appropriate government policies to balance national sugar demand and supply in order to enhance self-sufficiency while maintaining price stability. A system dynamics approach is employed to capture the integrated dynamics of the sugar industry by incorporating the roles of sugarcane farmers, processing industries, government, and trading actors through the development of causal loop diagrams and stock-and-flow diagrams. The model is simulated under three main scenarios which are Business-as-Usual, Economic Boom, and Worsening Climate, with consistent testing of policy interventions in the form of import tariff adjustments and improvements in domestic sugar productivity. Simulation results indicate that, without significant policy intervention, the system tends to maintain long-term dependence on imports. Increasing domestic sugar productivity emerges as the most effective strategy for reducing the self-sufficiency gap, while import tariffs function mainly as a short-term balancing instrument.