Estimation of constant elasticity of substitution (CES) production function with capital and labour inputs of agri-food firms in Tanzania

This paper focused on estimation of the impact of capital and labour inputs to the gross output of agri-food products using constant elasticity of substitution (CES) production function in Tanzanian context. The CES production functional form was estimated by maximum likelihood estimator (MLE). The empirical results revealed that capital and labour inputs have impacted the gross output of the agri-food products by 97, 96, 94, 78 and 61%, for bakery, grain mill, fruits and vegetables, oil seeds and fats, meat and dairy products, respectively. However, interventions in terms of economic policy instruments such as capital goods and skilled labour are highly encouraged for the worthwhile economies of the agri-food firms’ in the country.   Key words: Agri-food, capital, constant elasticity of substitution (CES), gross output, labour, maximum likelihood estimator (MLE), Tanzania.