We examine how modern, polluting industries can affect agricultural productivity. The focus is on large-scale gold mining in Ghana, which is capital-intensive, releases environmental pollutants and is located near agricultural areas. Guided by a consumer-producer household framework, we estimate an agricultural production function and find that farmers located near mines experienced a relative reduction in total factor productivity of almost 40% between 1997 and 2005. We examine alternative mechanisms and find that pollution is the most plausible explanation for our results. This article highlights an important externality through which industries can affect living conditions in rural areas.Economists studying the interplay between traditional agricultural activities and modern industries generally focus on the implications of input reallocation across sectors. 1 Other mechanisms that are independent of input use, such as pollution or technological spillovers, have received less attention despite their potential to affect output or productivity. In this article, we address this issue by providing evidence that modern industries can impose a non-input externality on the traditional sector. Using the case of modern gold mining in Ghana, we document that the expansion of mining activities is associated with an economically significant reduction in agricultural total factor productivity. We subsequently explore potential mechanisms and conclude that environmental pollution is the most plausible explanation. We find that other channels, such as changes in farming activities or in the composition of agricultural workers, cannot account for our results. 2 We study gold mining in Ghana as it presents three useful features for our purposes. First, most gold production is done in large-scale, modern mines. These mines are heavily mechanised and release air pollutants similar to other fuel-intensive activities, such as power plants and urban traffic. These pollutants can be carried over long