As earlier results suggest that spillover effects are almost exclusively limited to the 0-25 km range, table 9 reports results from estimating equation (3) at the kebele level for this range with total or crop-specific area as an independent variable in the top and bottom panel, respectively. Coefficients on rainfall deviations imply that having rainfall that is up to or more than one standard deviation below the long-run mean would be predicted to reduce yields for maize and teff by 4% and 11% and 4% and 10%, respectively, compared to the base category of the z-score between 0 and 1 but not significantly different from 0 for sorghum or wheat. Maize is the only crop that benefits from higher than normal levels of rainfall over the growing season.

Coefficients on interactions between rainfall deviations and commercial farm presence suggest that having more area cultivated with the same crop by large farms in the vicinity helps to reduce, though not fully offset, negative effects of drought on yields.<sup>20</sup> While technologies for moisture conservation in general might play a role for teff, the fact that estimated effects are most pronounced for same crop area rather than area by commercial farms in general points towards a more technology-driven mechanism such as learning from commercial farmers’ crop-specific practices rather than construction of moisture conserving structures.

# **5. Conclusion and policy implications**

Exploring the magnitude of spillovers from large farm establishment allows us to contribute to the debate from a methodological and substantive perspective. Methodologically, we show that it is possible to assess spillover effects from large land-based investment by using data on location to link information on intertemporal changes in large farm presence over time to household or farm survey data. As the latter are routinely available in many countries where large farms are a policy issue –and modest investments to adjust data collection instruments and sample frames can further enhance their relevance– this provides an opportunity to regularly monitor and assess the impacts of large land-based investment in a way that can complement and go beyond potentially non-representative case study evidence.

Substantively, a number of findings stand out. First, we show that, despite a secular increase of Ethiopia’s smallholder yields over the last decade, gaps in productivity or input use between small and large producers persist for most crops, creating potential for spillovers. Second, although evidence of positive spillovers emerges in several instances, consistent effects on yields and input use are evident only for maize, a crop where small and large producers use similar technology and where large farm density is sufficiently high to facilitate interaction with small farmers. Most of these effects are confined to a distance of less than 25 km and contingent on large and small producers growing the same crop. Third, though rural households’

> 20 As can be verified from the relevant coefficients, fully offsetting estimated drought-induced yield reductions would require a 10-15 fold increase in the area cultivated with maize or teff from the level attained in 2014.

15