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What determines market participation and trade intensity? The case of smallholders in Kenya

Year: 2025

Type: article

Abstract: Subsistence smallholders in sub-Saharan African countries are either autarkic or partially integrated into grain markets as net buyers or net sellers. However, scant empirical evidence exists regarding whether market participation decisions as either buyers or sellers are influenced by same factors. This study examines the factors influencing both market participation and grain trade intensity decisions by analyzing a three-wave survey dataset of 585 smallholder maize-legume producers in Kenya. We employ a double-hurdle model with a correlated random effects procedure and a control function approach to address unobserved heterogeneity and potential endogeneity problems. The findings reveal asymmetries in how exogenous factors influence market engagement decisions. Specifically, the likelihood of market participation as net buyers increases with low farm output, whereas the intensity of participation increases with increased maize output and greater market distance. Conversely, the probability of selling is significantly constrained by production shocks, while trade intensity among sellers is enhanced by human capital, engagements in off-farm employment, and household wealth. However, it is adversely impacted by prevalence of crop diseases and an upsurge in livestock holdings. These insights carry profound policy implications for fostering a resilient, efficient, and inclusive agricultural market system that integrate smallholder farmers into markets. Those include strengthening agricultural extension service establish a robust early warning systems for adverse weather conditions, and provide financial support mechanisms that facilitate the adoption of climate-smart agricultural practices. Additionally, subsidizing agricultural insurance can serve as a critical risk mitigation strategy, enabling farmers navigate production shocks effectively.

Source: Scientific African

DOI: 10.1016/j.sciaf.2025.e03057

Authors: Wilckyster Nyateko Nyarindo, Amin Mugera

Institutions: University of Embu, The University of Western Australia

Language: English

Topic: Agricultural Innovations and Practices

Subfield: General Agricultural and Biological Sciences

Field: Agricultural and Biological Sciences

Domain: Life Sciences

SDGs: Zero hunger, No poverty, Decent work and economic growth

Open Access status: gold

Estimated APC paid: $590