African Journal of Agricultural Economics and Rural Development
African Journal of Agricultural Economics and Rural Development ISSN 2375-0693 Vol. 9 (2), pp. 001-009, February, 2021. © International Scholars Journals
Full Length Research Paper
Input Demand Response Analysis of Wine Grape Farmers in Dodoma City and Chamwino District in Dodoma Region, Tanzania: Application of the Profit Function
*Natalia N. Kalimang`asi1 Aida C. Isinika2 and Gaspar P. Mwembezi3
1Local government training Institute (LGTI), P. O. Box 1125, Dodoma, Tanzania.
2School of Agricultural Economics and Business Studies, Sokoine University of Agriculture, P. O. Box 3007, Chuo Kikuu, Morogoro, Tanzania.
3Institute of Rural Development Planning (IRDP), P. O. Box 138, Dodoma, Tanzania.
Accepted 03 January, 2021
The study analysed factor demand response of smallholder wine grape farmers. Maximum Likelihood Method was used to estimate profit function while Ordinary Least Square was used to estimate demand function. A multistage and random sampling method was used to obtain 176 farmers under irrigation and 183 farmers under rain fed production. A cross-sectional data was used. Results indicate that estimated short run factor demand responses for labour, manure and agrochemicals were price inelastic, implying that in a short run farmer`s input demand does not quickly adjust to changes in their own input prices. Results also reveal that two pairs of inputs i.e., agrochemical and manure as well as labour and manure had a complementary relationship, while labour and agrochemical had a substitute relationship. It is therefore recommended that any policy measures targeting on reducing fertilizer, labour and agrochemical price would improve grape productivity and hence increase farmer`s income. It is also important to strengthen farmer`s knowledge and skills on agrochemical and manure application for wine grape farming because these inputs have a joint effect on improving wine grape productivity and profit among farmers.
Keywords: Wine grape, profit function, factor demand response, price elasticities.
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