The African Continental Free Trade Area (AfCFTA) aims to create a single African market of about 1.3 billion people and to liberalize up to 97 percent of trade in goods and services. Many studies project large gains in intra-African agricultural trade, which could raise producers’ incomes and reduce reliance on food imports from outside the continent.

But will smallholders share in those gains? Most smallholders in East Africa have a weak asset base, limited access to credit and inputs, and no direct access to markets. They typically sell at the farm gate to intermediaries, often at harvest when prices are lowest. Climate change adds pressure through erratic rainfall, pests and lower yields. Expanded trade may favor large, well-connected commercial producers, while cheaper imports and rising production costs could cut smallholder incomes.

This working paper combines a literature review with interviews with 26 stakeholders in Kenya, Tanzania and Rwanda, including smallholder farmers, extension workers, trade officers, NGO staff and trade and climate experts. It uses an agricultural household model to examine how trade-driven changes in prices affect smallholder welfare as producers, consumers and workers, and how climate change shapes their ability to adapt and seize new market opportunities.

The authors recommend that governments and development partners:

  • support independent farmer organizations and cooperatives, and frameworks for bulk purchase of smallholder produce;
  • make yield-enhancing inputs, especially fertilizer and seed, more affordable and available;
  • scale up climate adaptation support, including irrigation, climate information, climate-smart practices, credit and insurance;
  • collect disaggregated data to track who gains and who loses from trade liberalization.

Key Findings

  • In principle, expanded intra-African trade could raise farmers’ incomes by opening new markets and improve food security through lower-cost imports.
  • In practice, smallholders may be unable to benefit because of limited market access, low productivity and climate vulnerability.
  • Large-scale commercial producers are better placed to seize AfCFTA opportunities. Modeling for Zimbabwe projects output gains for large producers but a fall in smallholder output.
  • In Kenya and Tanzania, liberalization is projected to boost cash crops but reduce demand for some food crops, which smallholders mainly produce.
  • High input costs, especially fertilizer and seed, and limited credit keep productivity low and constrain climate adaptation.
  • Distress sales at the farm gate at harvest time mean higher prices under the AfCFTA may not reach farmers.
  • Cooperatives and group contracts with buyers can strengthen bargaining power and access to inputs, finance and markets.
  • Without effective adaptation, yields could fall by 30–50 percent, deepening inequality between small and large producers.
  • Data gaps make it hard to predict or monitor impacts. Disaggregated data is needed so that gains for some producers do not mask losses for others.

Executive Summary

The African Continental Free Trade Area (AfCFTA) aims to create a single African market of about 1.3 billion people, with up to 97 percent liberalized trade in goods and services. Expanded access to continental markets could boost producers’ incomes and reduce dependence on food imports from outside Africa. However, the welfare impacts are likely to vary across farmers. Large-scale producers are expected to gain, while smallholders’ output may fall.

Drawing on a literature review and interviews with smallholders, government and NGO staff, trade officers and experts in Kenya, Tanzania and Rwanda, this study examines how trade liberalization may affect smallholders amid intensifying climate change. Most have a weak asset base, limited capacity to pay for inputs or adapt to climate change, and no direct market access, so they depend on intermediaries at the farm gate.

To benefit, smallholders need support to strengthen their bargaining power, productivity and climate resilience. Governments and partners should back cooperatives and independent farmer organizations, make inputs affordable, expand climate adaptation support, and collect disaggregated data to track who gains and who loses.