Toward higher import substitution: does quality governance matter for uptake and pricing of improved local rice in Ghana?

Purpose - Product quality standardization is the solution to market collapses due to quality-insensitive pricing regimes prevalent in West African (WA) rice value chains. However, access to local rice that is differentiated by quality standards is limited. This paper explores feasibility of quality standardization of local rice and evaluates how its price–quality connecting effect depends on retailer characters/reactions. Design/methodology/approach - This study uses panel data from a wholesale randomized control trial (RCT) and three surveys of 135 rice retailers in Ghana. Findings - Improved local food value chains and access to quality differentiated products are impactful entry points for import substitution policies. The strength of interretailer competition, retail infrastructure and wholesaler activities matter for a stronger connection of prices and quality, given uptake of quality-standardized local rice. Research limitations/implications - Access to quality-differentiated local rice can be increased via private and third-party certification. This addresses the prevailing inefficient pricing and its related problems. The positive impacts of such access would be magnified by designing quality certification interventions to elicit regular-frequent purchases by retailers and target retailers with adequate retail infrastructure in high competition areas. However, this study only explored profitability and opportunities for strategic behavior as the behavioral basis for quality-sensitive pricing. Other impact mechanisms could be explored in further research that includes consumer data. Originality/value - Despite their difficulty and limited use in value chains studies, RCT and panel data methods are used. This study is the first to empirically analyze feasibility of introducing product standardization, a missing institution in the WA local rice markets.