The failure of “Parceling to Organize”

On December 14, 2021, the presentation of the “Emparcelar para Ordenar” program took place in the municipality of Castelo Branco, an initiative of the Ministries of Agriculture and Environment and Climate Action (Decree-Law No. 29/2020 of June 29).

It was a multidisciplinary cooperation project, managed by the Directorate-General for Agriculture and Rural Development (DGADR), and which also involved the Institute for Financing Agriculture and Fisheries (IFAP) and the Directorate-General for Territory (DGT).

Its objective was to provide support for the acquisition of land in smallholding regions for land consolidation purposes, with a view to promoting the valorization of vulnerable territories and increasing agricultural and forestry activity, the dynamism of rural territories, and the creation of value in innovation and food security.

The “Parceling to Organize” Program also aimed to stimulate the increase in the physical size of rustic buildings, with the objective of promoting the increase in the size of the plot and, consequently, increasing the surface area of ​​the farms, contributing to economies of scale, greater economic profitability and greater sustainability of agricultural and forestry activities.

I have seen a huge interest from rural landowners in this type of program, as they have a direct positive impact on the resilience of territories and the dynamization of agroforestry activities, encourage those who own larger rural properties to remain in the territory, provide greater focus on activities and results, and inject critical social mass into low-density territories.

I received dozens of phone calls from farmers and agricultural entrepreneurs interested in buying land when the first legislation was published, which resulted in practically nothing.

Earlier this month, a business newspaper headlined “Land parcelling with PRR support does not convince landowners” and also, “Of the initial forecast of parcelling 2,000 hectares, only 57 were covered. Monitoring committee recommends reassessment of the measure which, it says, is one of those at risk of non-compliance”.

It further stated: “The “Emparcelar para Ordenar” program, launched in 2020 with support from the PRR, has “little uptake” and a “very low approval rate”. This is the conclusion drawn from the annual report of the national monitoring committee for the PRR, recently released, which warns of an increase in the number of investments that present a high risk of non-compliance and that could lead to a cut in funding for Portugal.

How can this failure be explained? It is a very poorly designed program, with too much bureaucracy, weak support, and processing by entities that are not qualified to issue notices and analyze applications.

After the 1st application period, in 2022, the result was a very low number of application submissions and a very high number of failures in raising financial funds (43%), with the amount used being very low compared to the available budget.

This programme should not have maximum limits (a loan of €150,000 is a very low amount); it should be processed by commercial banks, with a credit line from the EIB, debt service over 30 years, a 7-year grace period, debt service conditions that fit within the average net income from agricultural activities, without any subsidy, with the property mortgage and a household effort rate of 40% as collateral.