A Mathematical Model that Estimates Input Demand in Respect to the Costs for Cotton Production

Busheni Dome, Dmitry Kuznetsov, Yaw Nkansah-Gyekye

Abstract


The agricultural sector is the backbone of economic activities to the farmers in Tanzania. Tanzania produces cotton as a commercial crop that is also produced by more than 80 countries in the world particularly those located in the tropics and temperate climate regions. In Tanzania, cotton is mostly grown in the western cotton growing area (WCGA) and eastern cotton growing area (ECGA). The serious problem facing farmers for cotton production is the continuous increasing costs of inputs in Tanzania. The aim of this paper was to build a mathematical model that estimates input demand in respect to the costs for cotton production. The primary data from 2003 to 2014 were collected from cotton farmers at Bariadi in Shinyanga. Moreover, secondary data were collected from the Tanzania Cotton Board, Ukiliguru Agriculture Training Institute, and Shinyanga Regional Commissioners. A mathematical model was estimated after taking out the reasonable statistical tests. The fixed effect and random effect were compared in the Hausman’s specification test. The coefficients (elasticities) in respect to the inputs and other elasticities were estimated by applying Ordinary Least Squares techniques facilitated by STATA 11 and EXCEL.


Keywords


Mathematical model; Cotton production; Cost of inputs; Demand of input.

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