Programming analysis related to agricultural planning in portugal

Because of the inability of the Portuguese agricultural sector to supply the increasing domestic demand, the Portuguese balance of trade for agricultural commodities has shown increasing deficits in recent years. To investigate the possibility of expanding domestic production, a case study linear programming model maximizing the sum of producers' and consumers' surplus was implemented for two important agricultural regions in Portugal. In the model formulation, modernized (potential) production techniques (with their required investment activities) were considered along with traditional production activities. Moreover, differences in agrarian structure were explicitly taken into account by recognizing separate farm-size subsectors within each region, each subsector having different factor endowments and using different production technologies. Empirical results suggest that self-sufficiency in agricultural production cannot be foreseen by the end of the planning horizon (1980) but that the adoption of modernized activities do translate into production increments that at least might reverse the recent observed tendency for increasing trade balance deficits. Model results also reveal that the modernization process takes different patterns; according to farm size. While in the smaller farm subsector modernization does not appear to be efficient, in the intermediate and larger farm subsector it is more successful and results in higher land and labor produclivíty gains. Capital is shown to be one of the most constraining factors of production. When credit constraints are partially relaxed, permitting a more capital-intensive technology, model results show an expansion in modernized livestock production that leads to a further reduction in the balance of trade deficit. In another extension of the analysis, labor availability is reduced. Although substitution of mechanical power for labor and a higher rate of adoption of modernized production techniques takes place as a result, crop production suffers substantial cuts that lead in turn to a reduction in Gross Agricultural Product. A final extension of the analysis is an attempt to evaluate the effects of Portuguese integration into the European Economic Community. The empirical results of this highly tentative evaluation indicate that substantial changes In production patterns can be expected, resulting in a general reduction of equilibrium prices below recent observed producer prices