For 127 years, Herdade de Manantiz has been producing olive oil, mostly for the domestic market. But having suffered through recession like thousands of other traditional businesses, it has started overhauling its operations and searching for customers outside Portugal.
In February, Manantiz installed its first irrigation system, an investment of 197,000 euros, or $263,000, that is meant to help quadruple production. In May, the company completed its first overseas sale — to a Brazilian retailer that bought 504 bottles of oil. It is pursuing buyers in Sweden and Japan for its oil made from galega olives, which are unique to Portugal.
“It’s difficult to change direction for very small companies like ours, but there comes a point when there is really no other choice,” said António Morais de Almeida, who is part of the fifth generation of the family that owns and operates Manantiz.
Portugal is clearly hitting its export stride, a step that economists view important not only in a Portuguese rebound but in the revival of other parts of Europe. Small businesses like Manantiz cannot on their own mend Portugal’s long-suffering economy. But as many of the country’s businesses have accepted that true growth must occur beyond the country’s borders, the economy is beginning to improve.
Portuguese authorities said this month that rising exports were the main reason Portugal posted the strongest growth in the second quarter among the nations of the European Union. The country’s gross domestic product rose 1.1 percent from the previous quarter, according to data from Eurostat, the union’s statistics agency.
Struggling euro zone countries cannot make themselves globally competitive by devaluing the local currency to make their exports cheaper because they belong to the currency union. But Portugal’s unexpected increase in G.D.P., which followed 10 consecutive quarters of contraction, “shows that you can increase export competitiveness even without the option of an exchange rate devaluation,” said Luis Cabral, an economics professor at New York University.
Like other Portuguese economists, Mr. Cabral warned against overstating Portugal’s turnaround. Its economy is still expected to contract over the full year, partly because the second-quarter results were buoyed by seasonal factors like better prices for petroleum.
Further drag on the economy is expected because the government is likely to introduce further austerity measures to help meet its budget deficit targets.
Still, Mr. Cabral suggested that Portugal had reached “if not the end of the recession, at least the beginning of the end of the recession.”
Further indications of whether a broader euro zone recovery is taking shape might come on Friday, when data including the region’s July unemployment rate will be released.
Lisbon continues to have financing difficulties despite the bailout worth 78 billion euros it negotiated in 2011 with international creditors. Several of the country’s banks have possible capital shortfalls, say analysts at Barclays Capital in London.
Barclays cited the continued deterioration of the loan portfolios of the six largest Portuguese banks, estimating that their ratio of nonperforming loans would rise to 15 percent by the end of next year, from 11.2 percent in June. That could leave those banks, which account for four-fifths of the country’s banking sector, with combined losses of 20.5 billion euros, or 9 percent of all their loans, exceeding their existing reserves by 6.6 billion euros.
Miguel Morale de Almeida, another member of the olive-producing family, said Manantiz had wanted its irrigation system in place earlier in the crisis, but was unable to arrange an affordable bank loan.
“Had a bank given us credit, we could have done this irrigation revolution two or three years earlier,” Mr. Morale de Almeida said.
Eventually, Manantiz managed to tap into European and Portuguese rural development subsidies to cover 40 percent of the construction cost. The rest of the financing came from the savings of family members, which Mr. Morale de Almeida called “a significant personal sacrifice, but a controlled risk.”
Previously, Manantiz had relied on rare rainfall to water its 30,000 olive trees, planted across 529 acres of parched land in one of southern Europe’s driest regions.
Article source: http://www.nytimes.com/2013/08/29/business/global/portugal-looks-outward-in-bid-for-recovery.html?partner=rss&emc=rss