The effect of farm size and farmland use on agricultural diversification: a spatial analysis of Brazilian municipalities

Abstract

AbstractBrazilian agriculture is characterized by the prevalence of small farms and regions with a high degree of rurality and dominance of the agricultural sector in the economy. These two characteristics affect the diversity of agricultural production in the country. Specifically, the article aims to analyze the effects of size farm and farmland use on agricultural diversification and the effects of demand and technology adopted by farmers. The database encompasses 4298 Brazilian municipalities from 1996 to 2017 (the last three agricultural censuses). Empirically, we consider spillover effects by estimating spatial models at the municipal level using panel data, highlighting the importance of location and neighborhood. The study’s findings indicate a tendency toward local concentration of agricultural production in the country, despite the balance between municipalities with diversified and concentrated production. The results showed a significant effect of small farms and the municipalities’ rurality degree on the agricultural output diversification. The study provides insights into the discussion on measures to strengthen support for small properties and regions that diversify crops to ensure economic efficiency and food security.