IMPACT OF THE 2003 CAP REFORM AND THE HEALTH-CHECK IN ALQUEVA IRRIGATED PROJECT

Abstract

One of the major challenges of the Alqueva Irrigation project is to benefit with irrigation, 110 000 ha. of dryland area. This project has a huge potential because it is located on a traditional agricultural area and has agro-weather conditions favourable to the development of irrigation crops. However, there is some challenges that needed to be overcome, namely the recent developments of the Common Agricultural Policy (CAP), the expected water price increase and the latest guidance in the water management policy. Considering this framework, the main goal of work is to assess the impact of the 2003 CAP Reform and the Health-Check in Alqueva irrigated project. Based on a survey sample of farms of the irrigation scheme of Monte Novo, three representative farms were selected using multivariate statistical methods. To assess the competitiveness of Monte Novo farms, a multi-period programming model was developed that allowed to analyse the inter-temporal nature of investments, optimal crop and livestock activities mix and structural farm changes. The farmer goal was assumed to be the maximization of the final farm net worth. The results showed that 2003 CAP reform and the implementation of Alqueva irrigation project lead to significant changes in the traditional agricultural model. However these changes are not determinant for long run farms competitiveness. The competitiveness is dependent on farmers’ adoption of new technologies and activities, such as vineyard, olives, industrial fruits and legumes.