Market Power, Monopsony, and Smallholder Welfare in Nigerian Agricultural Export Value Chains: Evidence from the Sesame Sub-Sector

Market power exercised by export traders in agricultural commodity chains is a theoretically important but empirically underexplored determinant of smallholder welfare outcomes in African economies. In Nigeria's sesame export value chain, a small number of large export trading firms dominate procurement from a fragmented smallholder producer base across North West and North Central states, creating conditions potentially consistent with monopsonistic exploitation. This study investigated market power, monopsony, and smallholder welfare in Nigeria's sesame sub-sector using a structural market power model estimated with primary price and quantity data from 380 sesame producers, 120 village assemblers, and 40 export trading firms across Jigawa, Kano, and Niger States. The New Empirical Industrial Organisation approach was applied, with market power parameters identified through instrumented price-cost margin analysis. Results provided evidence of significant monopsonistic market power at the export trader level, with market power parameter estimates implying that farmers received prices approximately 23 percent below competitive levels. Smallholder welfare simulations suggested that a shift to competitive procurement would increase producer surplus by an equivalent of N42,000 per tonne annually. The study makes an original contribution to the empirical industrial organisation literature applied to African agricultural export chains. Policy recommendations focus on market competition enforcement and collective marketing organisation for sesame producers. Keywords: market power, monopsony, sesame, export value chain, smallholder welfare.