We use a unique panel dataset of smallholder farmers that were collected in central rural Malawi in 2006/07 and 2017/18 agricultural seasons to test whether there are spillover effects of groundnut Fairtrade arrangement on small-scale agricultural commercialization and household welfare for smallholder farmers that did not participate in the arrangement. Our findings reveal that implementation of groundnuts the Fairtrade arrangement in Mchinji district has 29% spillover effect on commercialisation intensity for smallholder farmers that did not participate in the arrangement. However, the arrangement did not contribute to the improvement of agricultural income and asset value of non-participants. Based on our results, we recommend government’s support to smallholder farmers to allow them continue commercialising farming, and improve their welfare.