Agribusiness
Updated in May 2025
WHY INVEST IN AGRICULTURE IN PORTUGAL?
Portugal is well-known for the quality of its agricultural products. Olive oil, wine, fruits, and vegetables are highly valued in international markets.
The Iberian Peninsula's unique mix of Mediterranean weather and soil conditions is ideal for growing a wide range of premium quality and high-value crops in highly productive lands. This is one of the reasons why Iberia has the greatest crop diversity in Europe. Additionally, the availability of water resources has made Portugal an attractive destination for international investors.
SOIL AND IRRIGATION REGIONS
Despite its small size, Portugal's topographic conditions vary significantly across the North, Centre, and South of the country. In the North, the terrain is characterized by steep slopes, a landscape dominated by forest, and small properties (typically less than 1 hectare).
In the Centre and South, the slopes are generally gentle, but the topography is diverse. The western region (Oeste) and the Tejo valley (Ribatejo), located north and northeast of Lisbon, respectively, feature thousands of hectares of high-quality plains with optimal soils, irrigated by underground water, and well-suited for cereal and horticulture production. In southern Portugal, the conditions are ideal for Montado forests (cork oak forests). Public investments in irrigation perimeters have enabled this region to transform into a significant agricultural hub, capable of producing high-value permanent crops such as almonds and olives, as well as annual crops. The Algarve region, influenced by the sea, has a fresher microclimate, allowing for the production of crops like avocados, citrus fruits, and berries.
The major irrigation schemes in Portugal are located in the Alentejo region, the Tagus Valley, and the Centre of Portugal. Alqueva, in Alentejo, is the largest irrigation scheme in Portugal, irrigating more than 130,000 hectares by itself.
Public Irrigation Areas
| Region | Total (Ha) |
|---|---|
| Alentejo | 173,473.20 |
| Algarve | 8,067.20 |
| Centre | 23,797.60 |
| Lisbon and Tagus Valley | 29,742.30 |
| North | 4,025.70 |
| Total | 239,105.00 |
Source: DGADR
Portugal is an ideal location for high-value crops
South of Europe, particularly Iberia and Italy, are the leaders in the production and export of highly profitable crops with high potential for diversification.
Europe itself is one of the most important markets for many agricultural products, making market proximity a key element in reducing the carbon footprint of global trade.
MAJOR IRRIGATION CROPS
The majority of irrigated crops are located in the Centre and Alentejo regions due to their low precipitation levels. The northern region does not have significant irrigation perimeters.
In 2023, olives and cereals for grain were the crops with the largest planted areas, with olives covering almost 381,000 hectares and cereals 188,000 hectares, being obvious to denote that the area dedicated to row crops has declined over the last 10 years. The growth of olive orchards has been moderate over time, reflecting a steady increase in plantations.
Among nut trees, almond orchards occupy the largest area, covering 74,000 hectares, while chestnut orchards occupy around 50,000 hectares.
In the category of fresh fruit, apples are the crop with the largest planted area, with 14,000 hectares.
Surface Area per crop in 2023 vs 2013
INVESTMENT MARKET
The Portuguese agribusiness market is characterized by non-institutional private ownership of the main arable areas. This means that the most productive land is still owned by private owners. This reality is changing, and more industrial and institutional investors are now actively looking at the country's agricultural potential. The ability to produce high-value crops, combined with political stability, water security, and competitive land prices, makes it an attractive option compared to other agricultural regions in the world
Land prices are still competitive versus other regions
We have observed a slight increase in land prices over the past couple of years, and we expect them to stabilize in the near future. The gross prime yield for a greenfield leased property is around 4-4.5%. The irrigated land prices in Iberia remain significantly lower than those in other parts of the world, such as California and Australia. This fact makes this region very interesting for safe and long-term investments.
Why Invest in Agriculture?
1. A profitable and resilient sector
Farmland (in the USA) has shown solid yields over the past decades. According to NCREIF, over the last 30 years, the total annual return has been +10% (income and appreciation). Additionally, the sector has demonstrated stability and resilience in the face of various economic cycles. For these reasons, investors find agriculture an attractive sector in terms of profitability, valuing the security of this asset class and long-term stability.
Farmland Returns vs S&P 500 (1991-2024)
2. Low Volatility
Farmland has historically experienced less volatility than most traditional and alternative assets. Taking data from NCREIF, the historical standard deviation of farmland has been around 6.5%.
Annualied average total returns and volatility (%) (1992-2022)
