Abstract:
The changing farm structures in sub-Saharan countries, with the emergence of medium and large
scale farmers, has elicited opposing views in the literature. While much of this is largely positive,
pointing to positive spillover effects in the larger agro-food industry, some studies point to some
evidence of negative spill overs, especially due to land scarcity in the rural areas due to holding of
land for speculation purposes, or higher food prices where large producers dedicate land to
production for non-food crops. Nevertheless, evidence on the effects of these investments is scarce,
with much of the evidence coming from case studies. This study investigates spillover effects of
medium-scale farms and large scale farms on small scale farms productivity and
commercialization in Tanzania. The study utilizes a sample of about 600 small scale farmers (less
than 5 hectares of cultivated land) and about 600 large farmers, 300 medium scale (5 hectares to
10 hectares of cultivated land) and 300 large scale (greater than 10 hectares cultivated land)
farmers drawn from eight district in rural Tanzania. A spatial econometric method is used to
capture spillover effects from the large farms to small scale farms. Results show positive
significant spatial dependence and spillover effects among medium scale and large scale farms on
small scale maize productivity and commercialization, but not on rice, another major crop in the
region.
