Two decades of organic farming in Portugal
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Organic farming is a high potential strategic activity for the Portuguese agricultural sector. It generates differentiated value-added products increasingly demanded by consumers, based on environmentally friendly production techniques, thus sustainably managing rural development. Portugal enjoys a renewed interest in organic farming as result of the current economic crisis, the existence of young generations with strong environmental awareness and facing difficulties in finding employment in more traditional activities and the reformed EU agricultural policy backing-up organic farming. However, Portuguese organic farming is far from reaching its potential, showing up a modest weight to agricultural economy.
This work aims to contribute to the growth of organic farming in Portugal. To this end it analyses the evolution (1994-2014) and main constraints of Portuguese organic farming, based on statistical data published by Direção Geral de Agricultura e Desenvolvimento Rural and other secondary sources, including academic and industry studies regarding this subject.
Portuguese organic farming starts flourishing in the nineties, as the land and number of organic farmers had average annual growth rates above 20% and 40%, respectively. However, recent data show that it lost momentum, being highly dependent of the European Union - EU and national government financial support policy.
In Portugal, organic production is concentrated mainly in the regions of Alentejo, Beira Interior and Trás-os-Montes. In 2014, more than 85.5% of livestock breeders and 66.5% of farmers were located in these regions, representing approximately 84% of the total organic farming land. In this year, there were 3,132 farmers dedicated to organic crops, occupying 228,841 hectares, particularly, grasslands and olive trees, and 1,003 livestock breeders, mainly cattle and sheep. In the last decade, the aromatic plants show up a high dynamism among crop production, while for livestock production the highlight is for beekeeping.
Nowadays organic production is already present in the main grocery store chains and became widespread in speciality retailers, such as natural and healthy food stores, gourmet food stores and street markets. Nevertheless, the penetration rate in the market is low. In 2014, Portugal was responsible for 2.23% of the EU organic farming land. However, Portugal had a share of only 0.8% of the European organic market (FiBL, 2016). Also, the domestic market share of organic products was the lowest in Europe, accounting for only 0.2% of the national market, due to a low per capita consumption of organic products (€2).
Overall Portuguese organic producers refer struggling with production and marketing difficulties as the major barriers their growth (Barrote, n/d; Cabo et al., 2013, 2014; FiBL, 2014; Ribeiro et al., 2014; Simões et al., 2008). Those producers relate having difficulty in buying production factors approved for organic farming and its high price. This is recurring problem. The market demand is undersized, due to the low number of organic producers, which makes unprofitable for commercial companies to develop therapeutic drug products suitable to organic farming. The scarce supply discourages the entry of new organic producers in the business. Furthermore, since organic farming is primarily based on prevention actions, it needs further monitoring by producers, thus rising labour costs. The farmer's marketing competences can define the success or failure of a farm business. This proves to be the main constraint to the expansion of organic production since the market of organic products is yet small and very fragile. Offer is sparse, scattered and does not guarantee regularity in supply, due to the small size of farms and the lack of organization in the production. The lack of specialized marketing channels for organic products and the distance to the main consumer centres withhold producers, particularly, in the case of perishable products. Finally, the high consumer prices are not reflected in the producer prices and also make organic products only accessible to a minority of population. This price barrier, combined with the economic recession, and the lack of information and knowledge by consumers about the advantages of organic products, holds back consumption growth.
However, it is possible to highlight success stories able to break this cycle that traps organic production, by focusing on producers organizations to achieve scale, creating their own marketing channels and adopting differentiation strategies, either by developing their product range or by making use of both organic and geographical certification, such as the Montesinho Protected Designation of Origin and Organic Farming honey.
