Does Large Farm Establishment Create Benefits for Neighboring Smallholders? Evidence from Ethiopia

Large-scale agricultural investment has expanded rapidly over the past decade, justified partly by the expectation that established smallholders will benefit from positive spillovers. We estimate spillovers between large and small farms in Ethiopia, using variation over time in proximity or intensity of exposure to large farms. We find that between 2004 and 2014, establishing commercial farms did not lead to job creation and provided only modest benefits in terms of technology, input market access, and resilience to crop shocks. This suggests that in Ethiopia a more strategic approach may be needed to maximize benefits from large farm formation for smallholders. (JEL Q18, Q24)