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

• Production shocks significantly impede grain sales, underscoring the vulnerability of smallholder farmers to these challenges. • Households’ wealth is pivotal in shaping market engagements and determining sales volumes. • Implementing policies that promote resilience extension service for adverse weather conditions, can sustainably enhance smallholder market participation. Smallholder farmers in sub-Saharan Africa are either autarkic or partially integrated into grain markets as net buyers or net sellers. However, scant empirical evidence exists regarding their market participation decisions across these dual roles. Understanding this relationship is important because smallholder market integration is central to poverty reduction, food security, and agricultural transformation in the region. This study examines the factors influencing both market participation and grain trade intensity using a three-wave panel dataset of 585 smallholder maize-legume producers in Kenya. Unlike previous studies that treat smallholders solely as sellers, this research adopts a dual-market framework that simultaneously models households as buyers, sellers, or autarkic agents. Methodologically, it advances existing literature by integrating a correlated random-effects double-hurdle model with a control function approach to jointly address unobserved heterogeneity and endogeneity —enhancing robustness and causal interpretation. The results reveal that market engagement is asymmetric: households are more likely to buy maize when their own production is low but purchase larger quantities when output is high and markets are distant, reflecting liquidity and consumption-smoothing behavior. Conversely, selling decisions are constrained by production shocks and crop diseases but increase with human capital, off-farm income, and household wealth, while larger livestock holdings reduce selling intensity. These findings demonstrate that buying and selling decisions are influenced by distinct factors, implying the need for differentiated policy interventions. The study recommends improved extension services through localized digital platforms and subsidized index-based insurance to help farmers mitigate production risks and strengthen market integration. The results contribute new empirical and methodological insights that advance understanding of smallholder market behavior and inform policies for building inclusive and resilient agri-food systems in sub-Saharan Africa.