Innovation is essential for agricultural and economic development, especially in today’s rapidly changing global environment. While farmers have been recognised as one of the key sources of innovation, many studies on agricultural innovations continue to consider farmers as adopters of externally-driven technologies only. This thesis, in contrast, analyses the innovation-generating behaviour among rural farmers. Specifically, the study looks at the determinants, impacts and identification of farmer innovation. The study is based on primary data obtained from a survey of 409 smallholder farm households in the Upper East region of northern Ghana. Additional data were collected through an innovation contest and a stakeholder workshop conducted in the region.

Employing recursive bivariate probit and endogenous treatment-regression models which control for selection bias, it was found that participation in Farmer Field Fora − a participatory extension approach with elements of the innovation systems perspective − is a key determinant of innovation behaviour in farm households. Other important determinants are education, climate shocks and risk preferences. These results are robust to alternative specifications and estimation techniques. The study also found no spillover effect of FFF on farmers’ innovation capacity and discussed its implications.

Using endogenous switching regression and propensity score matching techniques, the effect of farmer innovation on household welfare was analysed. The results show that farmer innovation significantly improves both household income and consumption expenditure for innovators. It also contributes significantly to the reduction of food insecurity among innovative households by increasing household food consumption expenditure, reducing the length of food shortages, and decreasing the severity of hunger. However, the findings show that the positive income effects of farmer innovation do not significantly translate into nutritious diet, measured by household dietary diversity. The results also indicate that though households innovate mainly to increase production, their innovations indirectly contribute to building their resilience to climate shocks. Overall, the results show positive and significant welfare effects of farmer innovation.

Through an innovation contest that rewards farmers’ creativity and a household survey, 48 outstanding innovations developed by smallholder farmers were identified in the study region. The innovations are largely extensive modification of existing practices or combination of different known practices in unique ways to save costs or address crop and livestock production constraints. While some of the identified innovations can be recommended or disseminated to other farmers, most of them may require further validation or research. The multi-criteria decision making analysis − based on expert judgement ¬− is proposed as a simple and useful method that can be applied in prioritising high-potential innovations. Using this method, it was found that among the most promising innovations involve the control of weeds, pest and diseases using plant residues and extracts, and the treatment of livestock diseases using ethnoveterinary medicines.

In conclusion, this study provides empirical evidence that smallholder farmers develop diverse and spectacular innovations to address the myriad challenges they face. These innovations also contribute significantly to household well-being, hence, need to be recognised and promoted. An institutional arrangement that permits interactions and learning among stakeholders may be a potential option for strengthening farmers’ innovation capacity.