considered to a maximum of 250 km and compute values of _Lijtd_ for the cases with inner and outer radius _d_ of 0 to 25, 25 to 50 and 50 to 100 km. The parameter of main interest, _β,_ is the estimated effect of a new farm having been established within a concentric circle (or ring) with inner and outer radius _d_ from small farm _i_ on the given outcome variable (i.e. adoption of practices, input use, output and labor market participation).

To complement the zero-one indicator of large farm establishment at the extensive margin with a measure the intensity of treatment, we also run regressions where _Lijtd_ is replaced by _Aijtd_ , a vector containing the log of total area cultivated by newly established large farms in the concentric ring of radius _d_ around the small farm of interest (e.g. _Aijt(25-50)_ would denote the area cultivated by new large farms in the 25-50 km range from small farm _i_ ). Use of logs implies that relevant elements of the coefficient vector _β_ can be interpreted as elasticity.

# **3. Data and descriptive statistics**

Data from both large and small farms provide evidence on (i) the smallholder sector’s stagnation in terms of access to extension, use of modern practices and purchased inputs as well as yields; (ii) vast differences in yield and intensity of input use between large and small farms and by region that could create potential for spillovers; and (iii) different levels of spatial proximity between small and newly established large farms that can serve as a basis for econometric identification of such effects.

# **3.1 Data and basic characteristics of the smallholder sector**

To explore the interaction between large farm establishment and smallholder productivity, we use various years of the _Trabalho do Inquérito Agrícola_ (TIA), a nation-wide survey of all of the country’s large farms together with a rather large sample of small and medium ones that is regularly carried out by the Ministry of Agriculture (Megill 2011).<sup>11</sup> The sample for each survey is drawn from a master list that uses information from population and agricultural census (Keita and Gennari 2014). While this design limits the scope of using panel estimation techniques, the 2012 and 2014 small and medium scale survey was carried out in the same enumeration areas (EA) allowing us to use at least EA fixed effects. Also, while earlier attempts to use GPS to record interviewed farms’ location were unsuccessful, we have coordinates for large farms that entered the sample in 2014 as well as smallholders in the 2012 and 2014 rounds.

Use of survey weights allows us to compute the number of farms and distribution of cultivated area as well as crops planted across farm size classes. Table 1 suggests that less than 6 million of the country’s estimated

> 11 Small holdings are defined as cultivating less than 25 ha overall, with less than 10 ha of annual crops and less than 5 ha irrigated land as well as less than 10 cattle, 50 small ruminants or pigs, and less than 200 poultry. Large holdings are defined as cultivating a total of more than 100 ha or more than 50 ha of annual and permanent crops or having at least 100 cattle, 500 small ruminants and pigs or 2000 poultry. Any farm that is neither large nor small will be categorized as medium.

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