The Influence of Bullwhip Effect on Fluctuation in the Price of Agricultural Products.

Abstract

The trends and causes of fluctuation in the price of agricultural products have been viewed and reported from different perspectives. Along the supply chain of agricultural products, the influence of bullwhip effect on price fluctuation has not been addressed. This study employed a cross-sectional research design and stratified random sampling to assess the influence of bullwhip effect on fluctuation of the price of agricultural products. Data were collected from 296 agricultural supply chain actors at Mbalizi market in Mbeya, Tanzania using a questionnaire survey and supplemented by document review. The influence of bullwhip effect on fluctuation in the price of agricultural products was established by using descriptive statistics (frequencies and percentages). The study revealed that lead time, aspiring to achieve economies of scale, batch ordering system, inflated orders, government policies, fear of price increases and shortage gaming influence fluctuation in the price of agricultural products. The study concludes that bullwhip effect amplifies the phenomenon of price fluctuation along the supply chain of agricultural products due to increased or decreased demand expectations among traders and farmers. We recommend on centralisation of demand information and the adoption of supply chain computer-based systems through coordination, collaboration and strategic partnerships among traders and farmers. This will enhance better information sharing, thus minimising the domino effect of bullwhip.