Market Stability as a Boundary Condition for Smallholder Spice Production: Evidence from Zanzibar, Tanzania

Purpose: To assess the effects of capital sufficiency, labour competence, and entrepreneurial skills on the spice production of smallholder farmers in Zanzibar, as well as to assess if and how market stability conditions the strength of these associations. Design/Methodology/Approach: The study employed a cross-sectional survey with a quantitative explanatory design grounded in the positivist philosophy. Out of a total population of 763 smallholder spice farmers in five regions of Unguja and Pemba, a sample of 256 farmers was selected through stratified and simple random sampling, respectively. The sample size was determined using the Krejcie and Morgan (1970) table at a confidence level of 95% and a margin of Error of 5%. A total of 214 valid responses (83.6%) were analysed using Confirmatory Factor Analysis (CFA)-based Structural Equation Modelling in IBM SPSS AMOS 28. Findings: Capital sufficiency, labour competence, and the entrepreneur’s skill are each positively and significantly related to spice production, with the entrepreneur’s skill having the strongest standardised effect. Keeping the above in mind, a multi-group moderation analysis sought to evaluate the role of market conditions in moderating. Meanwhile, in normal or stable market conditions, the relationship between farm resource allocation and farm output was insignificant. Implications/Originality/Value: The study contributes to Production Theory by showing that production-side interventions alone may be insufficient where output markets are volatile, and that market governance functions as an enabling condition. Given the cross-sectional design, the associations are interpreted as predictive relationships. The findings inform an integrated policy approach combining farmer skills development, improved access to finance, and market-stabilisation measures for commodity-dependent smallholder contexts