EFFECT OF PRICE INTERVENTIONS ON FINANCIAL PERFORMANCE OF MUMIAS SUGAR COMPANY
Yusuf Birgen - Student, Department of Economics, Accounts and Finance, School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya
Jared B. Bogonko - Lecturer, Department of Economics, Accounts and Finance, School of Business, Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods. It therefore encourages the management focus on value creation performance improvement of the organizations. Traditionally, governments have a number of times come to the aid of various organizations when they seem to hit the rock bottom. This however does not seem to be the solution to such organizations since most of them keep on nose-diving as much as the intervention is in place. This study intended to establish the relationship between price intervention and financial performance of Mumias Sugar Company. The study was guided by transaction cost theory. The study adopted a mixed research design and targeted employees working in Mumias Sugar Company and farmers (former members of defunct Mumias Out growers Company (MOCO)) in Mumias town. This included the Chief Executive Officer, the managing director, the departmental managers, the supervisors and the representatives of MOCO a total of 236 respondents. A sample of the study population was done. Questionnaires and were used as data collection instruments. To determine the validity of the questionnaire items, research experts were used to examine them and their suggestions and comments used as a basis to modify the research items. Cronbach alpha coefficient was used as a reliability test. A value of above 0.7 confirmed the reliability of the research instruments. The data was analyzed using both inferential and descriptive statistics and were presented by use of tables and figures. It was established that (β= .328, p=0.00) there exist a significant relationship between price intervention and financial performance of Mumias Sugar Company. The study recommend that the government before putting any direct injections in terms of finances to the sugar companies need to do a cost benefit analysis but more so an in-depth research on how such finance would be put to valuable use. The government should also review on the management of the Mumias Sugar Company and consider privatization of the sugar milling companies the stakeholders and more so the farmers do not feel that it is the right solution to the sugar crisis in the sugar belt areas.
