From income diversification to market vulnerability: the risk–reward dynamics in Tanzanian horticultural value chains

Abstract

Export-oriented horticulture can generate substantial income and create market opportunities for smallholders, yet the governance of exchange may simultaneously create, redistribute or intensify risks. This study examines how governance arrangements shape risk–reward dynamics in orange, avocado and snow peas export value chains in Tanga Region, Tanzania. The cases represent informal, semi-formal and formal coordination, respectively. Drawing from Social Exchange Theory, the study analyses how trust, dependency, power asymmetry and commitment operate through pricing, grading, payment, technical support and market access. Evidence was generated from 20 focus group discussions involving 179 participants, 23 in-depth interviews and nine key informant interviews, and analysed through deductive and inductive qualitative content analysis. Findings show that governance does not merely determine access to rewards; it conditions where risks emerge, how they are transmitted, and who ultimately bears them. Informal orange exchange sustained flexible market participation but exposed farmers to opaque pricing, selection and counting practices. Semi-formal avocado arrangements facilitated export access while concentrating grading, information and purchasing power among intermediaries. Formal coordination of snow peas reduced production and market-entry constraints through bundled services, but dependence on a dominant buyer concentrated systemic exposure, magnifying losses following the buyer withdrawal. Across cases, governance also mediated economic consequences of production and climatic shocks. The study demonstrates that greater coordination does not inherently reduce vulnerability, rather, it reconfigures risk. Effective governance therefore requires transparency, accountability, enforceable safeguards, diversified market access and mechanisms for sharing concentrated risks, while preserving the benefits generated by coordination.