Abstract:
This paper is based on New Institutional Economics (NIL), particularly on institutional
arrangements. It used 'transaction cost' approach to find out potentials of vegetable farmers
and traders in participating in formal contractual arrangements. The study employed sectional
design while using both quantitative and qualitative methods. Quota sampling and then
systematic sampling techniques were used to select small-scale farm vegetable wholesale
traders for the surveys. The sample consisted of a total of 153 small-scale vegetable farm
owners and 788 wholesale traders. Latent Class (LC) cluster analysis was used to identify
clusters for the potentials of using formal contracts. Methodological triangulation was used.
Both quantitative and qualitative narrations and explanations of experiences of participants
used in the analysis of data. According to this study, most vegetable farmers preferred forma/
to informal" when compared to wholesale traders. Trust and weak contract enforcement mg
framework were a concern for both farmers and wholesale traders. Consequently; to sensitize
'public private partnership' to link vegetable farmers in contract farm to be given their due
consideration.
