Quantifying Spillover Effects from Large Farm Establishments

Almost a decade after large land-based
investment for agriculture increased sharply, opinions on
its impact continue to diverge, partly because (positive or
negative) spillovers on neighboring smallholders have never
been rigorously assessed. Applying methods from the urban
literature on Mozambican data suggests that changes in the
number and area of large farms within 25 or 50 kilometers of
these investments raised use of improved practices, animal
traction, and inputs by small farmers without increasing
cultivated area or participation in output, credit, and
nonfarm labor markets; or, once these factors are controlled
for, yields. The limited scope and modest size of the
estimated benefits point toward considerable unrealized
potential. The paper discusses ways to systematically
explore the size of such potential and the extent to which
it is realized.