Institutional innovations to reduce transaction costs and risks between smallholder farmers and traders in rural markets in Ghana

Despite the vast research by the New Institutional Economists on impacts of high transaction costs on market participation by farmers in Sub-Saharan Africa (SSA), little is known in the literature about how institutional innovations can be used as a tool to address high transaction costs and risks associated with smallholder farmers market participation in Ghana. Consequently, this study aimed at finding out how institutional innovations can be used to address high transaction costs and risks affecting smallholder farmers’ and traders’ marketing transactions. The study used a mixed methods approach to collect data from the participants (farmers, traders and other stakeholders). The quantitative data was obtained from smallholder farmers and traders through questionnaire interviews. The qualitative data was collected through key informants and vulnerability (MARISCO) analysis. All the data were collected and analysed concurrently using SPSS, Excel and PAST. The data was interpreted through cross tabulation, chi-square test, and PCA. The data generated from MARISCO vulnerability analysis was analysed through results chain, gap analysis and cause-effect. The study discovered that institutional innovations can address high transaction cost and risks affecting smallholder farmers and traders market interactions. Also, the chi-square test (0.047) shows statistical significance on the ability to use institutional innovations to address high transaction costs and risks with institutional innovations. Additionally, commissioners (lead boys) in the local markets of Ghana were discovered to be a source of high transaction costs and risks. Finally, price fluctuation was discovered as a major marketing problem in all the data collection methods used.