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

 Abstract

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.