Abstract:
This study focused on price fluctuations and their influence on the financial performance of
agribusiness firms in Kenya. The study was guided by three specific objectives: Establish the
effect of international commodity price fluctuations on the financial performance of agribusiness
firms in Kenya; determine the effect of raw material price fluctuations on the financial
performance of agribusiness firms in Kenya; establish the effect of cost of labour fluctuation on
the financial performance of agribusiness firms in Kenya and determine the moderating effect of
subsidy fluctuations on the financial performance of agribusiness firms in Kenya. The study
involved a survey of agribusiness firms that are operating in Kenya. Secondary data was
collected for the purpose of answering the research questions. Stratified sampling was adopted in
selecting 27 firms that formed the sample size. Regression analysis was used to determine the
effect of price fluctuations on the financial performance of agribusiness firms in Kenya. The
research established that based on the data collected, the impact of international commodity
prices and raw materials prices are not very significant in affecting financial performance. Cost
of Labour fluctuation was found to be a significant factor affecting the financial performance of
the agribusiness firms with or without the moderating effect of subsidy fluctuations. However,
before the introduction of subsidy fluctuations into the regression model, all the three variables,
international commodity price fluctuation, raw material price fluctuation and cost of labour
fluctuation were found to have a statistically significant relationship with ROA. It was further
evident from the research findings that the moderating effect of subsidies indicates that it has a
significant effect on financial performance. The study recommended that subsidies granted by
government in agribusiness should be grounded on facts about their impact on price fluctuations
and eventually their consequences on the profitability of the market.
