The Portuguese economy seems ready for steady growth in 2026 and 2027. However, a new study by the OECD (Organisation for Economic Co-operation and Development) points to important reforms that could strengthen long-term prosperity – also for agriculture and rural areas. The recommended policies focus on using public spending more efficiently, developing skills, and reforming housing policy. Although these ideas are broad, they can bring direct or indirect benefits to the farming sector.
Beeld: © OECD / OECD
According to the OECD's study, Portugal’s gross domestic product (GDP) will grow faster than the eurozone average. This growth is driven by strong domestic demand and better public finances, such as falling government debt since the pandemic. This gives the government more room to invest. For agriculture, this strong economic position is very important. Farming is a key source of jobs in rural areas and plays an important role in exports. A healthy economy helps keep demand for agricultural products stable, supports farmers’ incomes, and creates opportunities for investment in rural development.
One of the OECD’s main recommendations is to improve skills and employment, especially as Portugal faces a shrinking workforce. This is very relevant for agriculture, where many regions struggle to attract and keep young, skilled workers. Investment in vocational training, retraining, and career guidance can help close gaps in technology and modern farm management. Digital and technical skills can also speed up the use of precision farming and sustainable land management. Compared to other OECD countries, Portugal still has room to grow in this area, which creates opportunities for innovation in agriculture.
Housing policy and rural areas
The OECD notes that a lack of affordable housing can limit investment in new homes. Slow permit processes and high building costs hurt the housing market, and this also affects rural areas. A shortage of affordable housing makes it hard for seasonal workers and young employees to live near farms. This reduces the available workforce in an already tight labour market. Changing housing policy and encouraging investment in rural housing can improve worker mobility and strengthen the rural labour market.
Climate transition and sustainability
In the OECD report Portugal is strongly advised to do more to cut greenhouse gas emissions and adapt to climate change. For agriculture, which both contributes to and suffers from climate change, this brings both challenges and opportunities. Low emission practices could be a challenges that ask for craftmanship while with carbon capture initiatives farmers also could bring solution to mitigate climate change. A possible stronger carbon pricing and support for low-emission practices could make sustainable farming a competitive edge. Something the LAN team in Portugal wil investigate further this year. Public investment in transport and energy infrastructure also supports farm logistics and access to renewable energy.
Final thoughts
Although the OECD’s advice is general, it points to important policy directions that can support agriculture in Portugal:
- Developing skills to support the rural workforce.
- Public investment in infrastructure and agricultural technology.
- Housing reforms that make living and working in rural areas more attractive.
- Climate strategies that support a sustainable transformation of agriculture.
As Portugal faces demographic change and aims for resilient growth, it is essential that economic reforms match the needs of agriculture and rural development. This is key to securing the country’s long-term prosperity.
With thanks to Jasper Dalhuisen, Agricultural Counsellor at the Permanent Representation of the Kingdom of the Netherlands to the OECD.