Effects of Price Fluctuations on the Financial Performance of Agribusiness Firms in Uganda

Abstract

The study was aimed at establishing the effect of price fluctuations on the financial performance of agribusiness firms in Uganda. The study was based on different objectives including; determining the effect of raw material price fluctuation on the financial performance of agribusiness firms in Uganda, and establishing the effect of Uganda commodity price fluctuation the financial performance of agribusiness firms in Uganda, among others. The study involved a survey of agribusiness firms that are operating in Uganda. Primary data was collected from a sample of 96 farmers who were proprietors of the selected 96 agribusiness firms. A response rate of 74% was obtained after data collection. Pearson correlation coefficient was used to determine the effect of price fluctuation on the financial performance of agribusiness firms in Uganda. The research established 43.7% of the respondents were dealing in banana farming and were facing high rivalry and competition for their products. It was also established that commodity prices and raw material prices are not significant in affecting the financial performance. Cost of labor was found to be significant with or without the moderating effect of subsidy fluctuations. The study showed a significant relationship between price fluctuation and the financial performance of agribusiness firms in Uganda with a Pearson correlation coefficient R=0.751. It was concluded that subsidy fluctuation has the greatest factor that cause fluctuation which in turn affects the financial performance of agribusiness firms. The study recommended that subsidies granted by government in agribusiness should be grounded on facts about their impact on the price fluctuations and eventually their consequences on the profitability of the market.