Estimation of Factor Demand and Output Supply of Sorghum in Maharashtra

Considering the fact that any change in factor and product prices affects the input demand and output supply simultaneously, the present study has estimated the factor demand and output supply of sorghum in Maharashtra using cross sectional cum time series data of Vidarbha region for a period of ten years from 1999–00 to 2008–09. The analysis of factor demand equation has shown that the demand elasticities with respect to own prices had the expected negative sign, indicating that the results were in accordance with the theory of demand. The absolute value of own price elasticity of human labour, bullock labour and seed were greater than unity, indicating thereby an elastic response of input utilization to their own price. One per cent increase in own price, holding other prices constant, will reduce human labour employment by 1.26 per cent, bullock labour demand by 1.13 per cent and seed demand by 1.08 per cent in sorghum crop. Joint estimation of Cobb-Douglas profit function and factor demand equation by using Zellner's method has shown that the profit function was decreased in prices of bullock labour and fertilizer.