Agriculture, forestry, and fishing employed 17.8 percent of Portugal's labor force but accounted for only 6.2 percent of GDP in 1990. With the principal exception of the alluvial soils of the Rio Tejo (Tagus River in English) valley and the irrigated sections of the Alentejo, crop yields and animal productivity remained well below those of the other EC members. Portugal's agro-food deficit (attributable mainly to grain, oilseed, and meat imports) represented about 2.5 percent of GDP, but its surplus on forestry products (wood, cork, and paper pulp) offset its food deficit.

Portugal's overall agricultural performance was unfavorable when viewed in the context of the country's natural resources and climatic conditions. Agricultural productivity (gross farm output per person employed) was well below that of the other West European countries in 1985, at half of the levels in Greece and Spain and a quarter of the EC average.

A number of factors contributed to Portugal's poor agricultural performance. First, the level of investment in agriculture was traditionally very low. The number of tractors and the quantity of fertilizer used per hectare were one-third the EC average in the mid-1980s. Second, farms in the north were small and fragmented; half of them were less than one hectare in size, and 86 percent less than five hectares. Third, the collective farms set up in the south after the 1974-75 expropriations proved incapable of modernizing, and their efficiency declined. Fourth, poor productivity was associated with the low level of education of farmers. Finally, distribution channels and economic infrastructure were inadequate in parts of the country.

Agricultural Zones

Portugal is made up of the mainland and the Azores and Madeira islands, which altogether include an area of 91,640 square kilometers, about the size of Indiana. The mainland's land area of slightly more than 9.2 million hectares was classified as follows (in thousands of hectares): 2,755 arable land and permanent crops (including 710 in permanent crops), 530 permanent pasture, 3,640 forest and woodland, and 2,270 other land.

A useful categorization divides the mainland into three distinct topographical and climatic zones: the south (the Alentejo and the Algarve), the center (the Ribatejo and Oeste), and the north (the Entre Douro e Minho, the Trás-os-Montes, the Beira Litoral, and the Beja Interior).

The north is mountainous, with a rainy, moderately cool climate. This zone contains about 2 million hectares of cultivated land and is dominated by small-scale, intensive agriculture. High population density, particularly in the northwest, has contributed to a pattern of tiny, fragmented farms that produce mainly for family consumption interspersed with larger and often mechanized farms that specialize in commercial production of a variety of crops. On the average, northern levels of technology and labor productivity are among the lowest in Western Europe. Extreme underemployment of agricultural workers accounts for the north being the principal and enduring source of Portuguese emigrant labor.

The center is a diverse zone of about 75,000 hectares that includes rolling hills suitable primarily for tree crops, poor dryland soils, and the fertile alluvial soils of the banks of the Rio Tejo (Tagus River in English). A variety of crops are grown on the productive areas under irrigation: grains, mainly wheat and corn, oil seeds (including sunflowers), and irrigated rice. Farms located in the Rio Tejo Valley typically are 100 hectares in size.

The south is dominated by the Alentejo, a vast, rolling plain with a hot, arid climate. The Alentejo occupies an area of approximately 2.6 million hectares, about 30 percent of the total area of mainland Portugal, and produces about 75 percent of the country's wheat. Although much of the area is classified as arable land, poor soils dominate most of the area, and consequently yields of dryland crops and pasture are low by West European standards. The Alentejo is also known for its large stands of cork oak and its olive groves. The Algarve, less than a third the area of the Alentejo, occupies the extreme southern part of Portugal. This dryland area is characterized by smallholdings where animal grazing and fishing are the principal occupations of the inhabitants.

Crops and Livestock

In 1990 wheat was the leading Portuguese grain crop, followed by corn, which was grown mainly on the small farms of the north. Rice, although occupying less than one-tenth of the area of either wheat or corn, was a significant grain crop. Potatoes and corn silage were found throughout the north.

Portugal's leading edible tree crop was olive oil. In spite of the importance of olive oil for the economy and the increasing production of other edible oilseeds, such as safflower and sunflower, Portugal was a net importer of vegetable fats and oils. The country produced a variety of horticultural crops, some of which were exported. As an example, Portugal was a leading world exporter of tomato paste.

In the mid-1980s, over 300,000 hectares were in vineyards, and Portugal was one of Western Europe's major producers and exporters of wines. The most important vineyards were located in the northern valleys of the Rio Douro, Rio Mondego, and Rio Lima, but vineyards were also found in the Algarve and the Setúbal Peninsula. Portugal's dessert wines--port and muscatel--and rosé wines, notably Mateus, were well known abroad. Portuguese red and white table wines were less well known outside of the country, but their export and reputation were gradually increasing.

Crop yields, as noted above, and animal productivity remained well below those of Portugal's European counterparts as of the early 1990s. Yields of dryland crops and pastures were low by EC standards, but yields on irrigated land and in the alluvial soil areas of the Ribatejo were comparable with EC member countries. Portuguese grain-crop yields (kilograms per hectare) were less than a third of those in (Federal Republic of Germany (West Germany) and France and about 60 percent of those in Greece. Portugal's wheat, corn, and barley yields compared unfavorably with its European counterparts. Portuguese rice, grown on irrigated land, showed yields only about 14 percent below those of France and about 25 percent below those of Spain and Greece.

Although pastureland was scarce, livestock constituted a significant share of total agricultural production. Because of growing domestic demand for animal products and low livestock productivity, Portugal had to import about 10 percent of its meat requirements. Three-fourths of the mainland's milk was produced in the northwest's coastal areas.

The mainland's livestock numbers in 1987 included over 1.3 million head of cattle, over 5 million sheep, nearly 3 million pigs, and 745,000 goats. About 18 million chickens supplied the country's poultry industry that year.

Forestry and Fishing

Over a third of the mainland was forest and woodlands, and commercially valuable timber stands included pine, cork oak, and eucalyptus. Pine was used not only for timber but also for resin, pitch, and turpentine. Eucalyptus, a fast growing import from Australia, had become a major source of pulp and paper. Cork oak, found mostly in the Alentejo, was the source of processed cork, a traditional Portuguese export commodity accounting for about 60 percent of world sales.

The country's long coastline and seafaring tradition made fishing a significant, but declining, source of income and jobs. Lisbon, Setúbal, Matosinhos, and Portimão were Portugal's main fishing ports and centers of commercial fish processing. Of the more than 200 edible species caught in Portuguese coastal waters and off West Africa, the most valuable was the sardine, an important source of domestic food supply and, in canned form, a traditional manufactured export product.

Notwithstanding Portugal's maritime tradition, the country's fishing industry in terms of fish catches in 1986 (390,000 tons) compared unfavorably with those of other small European countries, notably Norway (1,898,000 tons), and Denmark (1,871,000 tons).

Land Tenure and Agrarian Reform

The system of land tenure on the eve of the revolution was anachronistic. Very large estates in the south-central region coexisted with peasant farming in minute, fragmented plots in the north. The small farms typically were owner-operated, with the proprietors' families clustering in villages. Absentee landownership characterized the latifundio system with day-to-day operations in the hands of estate managers. Because of the high concentration of ownership in the south-central provinces, nearly half of the country's agricultural labor force in 1973 consisted of landless wage-earning rural workers whose standard of living was extremely low.

Holdings of over 200 hectares (about 0.3 percent of the total number) accounted for 39 percent of all farm land, whereas at the other end of the scale holdings of less than one hectare (about 39 percent of the total) represented no more than 2.5 percent of total Portuguese farm land.

The Agrarian Reform Law of July 29, 1975, which laid down the principles for the expropriation of land, validated de facto land seizures by rural workers that actually had begun five months earlier. The law provided that expropriation should apply to rural estates in the "intervention zone" south of the Rio Tejo. Lands that could have been expropriated under the provisions of the Agrarian Reform Law amounted to 1,640,000 hectares, but the area occupied by the rural workers reached only 1,140,800 hectares, or about one-fifth of the country's total farm land. On the occupied land, 449 "collective production units" were set up, bringing various estates of the former owners under a single peasant directorate. Major expropriations took place in the districts of Évora, Beja, Portalegre, Setúbal, and Santarém. Very large collective farms were formed in Portalegre and Beja (averaging between about 3,500 and 4,200 hectares); smaller units were created in Santarém and Setúbal (averaging between about 860 and 1,180 hectares).

As Portugal shifted toward moderation and the political center, collectivized agriculture increasingly was perceived as a counterproductive approach to the problems of the rural south. By the middle of 1990, only one-tenth (104,000 hectares) of the more than 1,080,000 hectares taken from the original landowners was still in possession of the remaining 30 collective farms. The gradual decollectivization of agriculture, which began in modest form in the late 1970s, culminated in a reformed agrarian law enacted by parliament in late 1988. Under its provisions, the maximum size of properties eligible for reprivatization was increased, and land could be divided among the heirs to an estate. Many collective farm members agreed to accept cash payments from the original owners in order to facilitate change of ownership or received individual titles to small shares of the former collective production units.

Agricultural Policy and the European Community

Portuguese agricultural markets, both inputs and outputs, were subjected to substantial policy intervention, particularly after the revolution. Under the old regime, agricultural pricing policy was largely oriented toward the provision of low-priced foodstuffs to urban areas, which required extensive controls over imports and marketing. Three state marketing enterprises were organized after 1974, primarily to manage trade in their respective commodity groups--cereals, oilseeds, and sugar and alcohol--in pursuit of price control objectives. Public assistance to farmers and ranchers involved subsidizing intermediate inputs, primarily fuels, fertilizers, and mixed feeds. These subsidies, however, were largely removed in June 1983. After the revolution, de facto credit subsidies for farmers (often associated with negative real interest rates) entailed very high transaction costs. As a result, only large farmers had access to the formal credit system.

As a condition of EC membership, Portugal adopted the Common Agricultural Policy (CAP), a basic instrument of the community's integration since 1962. The CAP was based on the principles of common pricing, EC preference, and joint financing. As Portugal adopted the transitional arrangements leading to full compliance with the CAP, both the locus of agricultural decision making and the level of incentives given by the system of price supports shifted from the nation to the EC. Portuguese prices of some commodities at the time of entry into the community were well above the EC levels. Cereal and dairy sectors would experience the most serious declines in real prices because they benefited most from price increases in the early 1980s and because they produced the commodities in chronic surplus in the EC. The Alentejo wheat and livestock systems, both based on poor soils, would likely become unprofitable during the transition to EC price levels. On the other hand, the prospects for rice, tomatoes, sunflowers, and potatoes, as well as Portugal's higher quality wine systems appeared to be favorable under the CAP regime.

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Source: U.S. Library of Congress