Spillover Effects of Medium-Scale Farms on Smallholder Behaviour and Welfare: Evidence from Nigeria

Abstract

Many countries across Africa are seeing an increasing share of farmland being classified as medium-scale farms (MSFs). MSFs are defined as farms operating between 5–100ha. MSFs co-exist with small-scale farms (SSFs, defined as farms below 5ha), who still constitute the majority of households in rural areas of Africa. While there is growing literature documenting the drivers of the rise of MSFs and their characteristics empirical evidence on how this rise in MSFs impacts neighbouring SSFs is still thin. This study addresses these observed gaps in the literature. We developed a theoretical model to explain some mechanisms through which spillovers on SSFs can be generated from the existence of MSFs around them. We empirically tested for evidence of these spillovers with data from Nigeria, Africa’s largest economy and most populous nation. By exploring the spillover effects of MSFs on a broader set of SSF outcomes, including input use, productivity, commercialisation and welfare (captured via several measures of household income and poverty status), this paper provides a more comprehensive view of spillover effects.