Vegetable farming in Bali is less desirable by the farmers because the input price is expensive. Whereas Bali is one of the city's tourism industry which the need of vegetables were expected to continue rising. In line with this the government provides subsidies for production input, especially fertilizer input to improve agricultural competitiveness in Indonesia. This research aims to: (1) determine the competitiveness of vegetable farming in Bali and (2) determine the impact of the fertilizer subsidy policy of the government towards the development of vegetable farming in Bali. This research was conducted in Tabanan Bali Province on the consideration that the district is the center of vegetable production in Bali. This research was conducted by focus group discussion (FGD approach), which was attended by 50 vegetables farmers. The data obtained in this study are primary data in the form of input output data in vegetable farming during 2014. The analytical method used is the policy analysis matrix (PAM). The results showed that vegetable farming in Bali still has comparative and competitive advantages, especially in red chilli, cayenne pepper, and tomatoes. Fertilizer subsidy policy of the government have an impact on the development of vegetable farming in Bali mainly on red chilli, chinese cabbage, and cabbage. To improve the competitiveness of vegetables farming and to stimulate farmers to increase production of vegetables in Bali, local government is expected to be able to provide additional policies such as socialize how to use chemical pesticide and set an output pricing policy on vegetable commodities.