1. When Portugal joined
the EEC (we shall refer to it as the European Union, or EU,
from now on) in 1986, her agriculture had never previously
had to face external competition. The only exceptions to
this were the Port wine trade, which has been expanding on
the international market for over two centuries now, and
the cork and wood pulp industries.
Prior to EU membership, both external trade and internal
market mechanisms were controlled by state boards. One board
existed for each commodity - cereals, olive oil, wine, livestock
products, and so on. All imports and exports were subject
to authorisation by the appropriate board, though in practice
the latter - exports - were practically non-existent. It
must be stressed that this tradition of state intervention
in agricultural markets was not an outcome of the 1974 revolution,
but rather a legacy of Salazar's extreme-right government.
As a result of such protectionism, Portuguese agriculture
had never been forced to adjust structurally to compete on
an open market; and consequently it was very inefficient.
The prices of major commodities such as cereals, beef and
dairy products were higher than the corresponding prices
throughout the EU; average farm size was only about 5 hectares;
agricultural labour accounted for 23% of the nation's total
workforce; and the organisation and marketing structures
of farmers were extremely underdeveloped.
2. Membership of the EU therefore signified the first
real challenge to Portuguese agriculture - for it meant the
abolition of the state boards,
harmonisation of prices and the establishment, after a period of transition,
of free trade within EU territory. This transition period was to last for
ten years for most produce (two stages of five years each) and seven years
the less significant and less problematic areas (representing only 15% of
final production). For the former, Portugal was only obliged start harmonizing
and implement EU rules at the beginning of the second five-year stage, that
is in 1990/91.
But the challenges which Portuguese agriculture faced as
a result of EU membership were aggravated by a number of
other factors, such as the continued decrease in EU prices
which led to the 1992 CAP reform, and the implementation
of the single market in 1993 which implied the overnight
elimination of all existing transition arrangements and the
reduction of the second stage of the transition period to
two and a half years. For a sector so accustomed to protectionism,
such a sequence of events was a shock therapy, which almost
killed the patient. As a result of price adjustments and
the abolition of border tariffs, farmer income per labor
unit decreased by 40% between 1991 and 1993. In spite of
all the tribulations which EU membership has brought with
it, however, the fact is that Portuguese agriculture has
been able to adjust to the new economic framework.
shock it has been recovering little by little, in such
a way that it experienced an annual average increase
of 4,5% between 1988/90 and 1998/2000, wile the equivalent
rate for the agricultural added value was 2,4% in the same
To gain a more precise idea of such changes, it should
be noted that total labour units in agriculture fell from
than 1.1 million in 1980 (29% of the country's total workforce)
to 806 000 in 1990 (18%), 520 000 in 1993 (12%) and 408.000
(10%) in 1999. In the same period, the total number of
farms has fallen from 823 000 in 1980 to 380.000 at present.
other words, in the last twenty years the agricultural
workforce has decreased by 63%, while the total number of
fallen by 54% and average farm size has increased from
5 to almost 10 hectares. Since the agricultural market prices
fell 50% in relation to those in the overall economy, the
positive evolution in income was a result of: i) a moderate
increase in production and added value; ii) a substantial
decrease of labour and consequent increase in labour productivity;
and iii) an increase in subsidies as a result of the CAP
reforms started in 1992.
3. Now that the reforms arising from our EU commitments
have been implemented, Portuguese agriculture has started
stabilise its process of modernisation, having been able
to keep a reasonably high investment effort of around 20%
along the last decade. As a result of that effort our gap
vis a vis the EU average has been made shorter along the
period: 33% of EU average for labour productivity and 32%
for labour income, against values of 23% and 22% at the beginning
of the period. And, inspite of the structural adjustment
(which was much needed) the overall chain associated to agriculture
and forestry (production and first stage processing) still
represents 11% of the total GDP, 17% of employment and 14%
of all portuguese exports.
But the evolution of Portuguese agriculture has not been
limited to the structural adjustments mentioned above, either
from the physical or the economic point of view. It has gone
- Farmers are now much better organised and stronger, and
have absorbed some of the functions previously performed
by the state, such as vocational training, information
and assistance and extension. They are also much better
at marketing their produce.
- Quality of produce has improved greatly. This is a result
both of increased investment in production and processing
and of the introduction of a quality control policy including
the demarcation of specific production areas along the
lines of the appelation contrôlée system.
Portugal is not, in general, an efficient producer in sectors
such as oilseeds and cereals, except for some production
systems, which rely on irrigation. But it has proved, in
recent years, that it can be very competitive in products
such as wine, fruit and vegetables (fresh and processed),
olive oil quality meat and cheese and forestry products.
How this competitiveness will develop depends on the evolution
of the Common Agricultural Policy (CAP). It is clear that
agriculture in Europe needs some type of support. However,
since the 1992 reform it has also become clear that this
support cannot be linked to product quantity. It has to be
more decoupled from production levels and yields. If the
CAP follows this new course, the EU will attain four main
goals: it will bring its agricultural policy into line with
WTO regulations; it will positively discriminate in favour
of farmers in the less-favoured areas in order to ensure
their survival and to help them adjust to the new globalised
economic framework; it will offer incentives to quality and
not quantity; and it will ensure that agriculture fullfils
its multifunctional role in our society.
It is impossible to say just how the CAP will be altered.
But I am quite convinced that it will develop along the lines
I have indicated the 1999 Agenda 2000 reform was consistent
with the 1992 CAP reform and the adjustments to be made until
2006 in order to incorporate the new eastern Member States
will likely continue that evolution. If the european agricultural
and rural policy goes on that direction, then we have good
reasons to hope a better future for the portuguese agriculture.