Improving Smallholder Participation in Regional Agricultural Trade: Evidence From the Malawi–Tanzania Sesame Value Chain

Abstract Sesame (Sesamum indicum L.) has emerged as a strategically important oilseed crop with significant potential to enhance smallholder commercialization in sub-Saharan Africa. Despite increasing production across the region, proportional income gains at the farm level remain elusive due to structural inefficiencies within marketing systems. This study provides the first comprehensive analysis of Malawi's cross-border sesame value chain with Tanzania, offering novel insights into the institutional and coordination failures that constrain smallholder value capture. The study examined the socio-demographic characteristics and participation of sesame value chain actors, assessed the structure, governance, and performance of the Malawi-Tanzania sesame value chain, and identified key constraints and opportunities for enhancing production and market access. A cross-sectional mixed-methods design was employed, integrating quantitative surveys (n = 150) with qualitative key informant interviews (n = 18) and focus group discussions (n = 3). A multistage sampling procedure yielded 81 randomly selected smallholder farmers, while purposive sampling was used to select 20 input suppliers, 32 traders, and 19 retailers. Data were analyzed using SPSS version 27, Stata 17, and NVivo 14, applying functional analysis, value chain mapping, gross margin estimation, and thematic analysis. A novel contribution of the study is the quantification of hidden transaction costs arising from non-standardized measurement practices. The sesame marketing system exhibits a distinctive structure characterized by smallholder-dominated production (with 57.46% female participation) linked to decentralized aggregation through middlemen. The system features limited vertical coordination but maintains strong cross-border linkages to Tanzanian markets. Gross margin analysis reveals a paradoxical distribution: farmers capture the highest margin ratio (68.2%), followed by middlemen (21.13%), retailers (16.7%), and wholesalers (10.71%). However, this distribution reflects low production costs rather than market power, as farmers operate within informal exchange arrangements marked by weak price transparency and limited bargaining capacity. Systemic constraints include non-standardized measurement practices affecting 19.1% of farmers, limited access to working capital (11.4%), inadequate extension support (23.01%), and weak regulatory enforcement. Notably, 22.9% of farmers identified the lack of formal markets as a critical constraint, while 51.3% of traders cited infrastructure deficits. This study makes four original contributions: (1) the first empirical documentation of Malawi-Tanzania cross-border sesame value chain dynamics; (2) quantification of hidden transaction costs arising from informal measurement systems; (3) identification of a "margin paradox" in which high producer margins coexist with limited market power; and (4) demonstration of how institutional voids shape coordination failures. Despite these constraints, strong cross-border demand from Tanzania presents a strategic upgrading opportunity. We propose a novel typology of intervention points, including institutional upgrading (cooperative formation, standardized measurements), technical upgrading (improved varieties, post-harvest handling), and infrastructural upgrading (storage, market facilities).