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A qualitative model of smallholder agriculture with a few core variables and two allocation rules for labour and investment in agricultural resources was developed to cover spatial heterogeneity in Northeast Brazil. This region is characterised by large natural and socio-economic variance, recurrent droughts and widespread rural poverty. The resulting system dynamics essentially consists of a cycle of four qualitative states, each depicting a typical pattern of trends in smallholder agriculture. Municipal statistical data were used to identify the spatial distribution of these patterns for the 1990s and the internal transition likelihood between subsequent states. Additionally the influence of external perturbations like droughts and producer price shocks on the smallholder system was investigated.