Disillusioned by the unfulfilled promise of the cities and feeling stifled by tough austerity measures aimed at coping with an economic downturn, some Portuguese are opting out and returning to the land.

In tough times, this is a way for people to generate some income

Jose Diogo, who spent two years in Lisbon working as a technical adviser at a meat company, was one who fled at the beginning of Portugal’s debt crisis in 2009, and has no regrets.

“I lived in Lisbon and decided to go back home to the interior to grab the opportunity of exploring the land my father owned,” Diogo said on the porch at his stone farmhouse, looking out over apple orchards and grazing fields for his 30 cows.

Far from discouraging people like Diogo, the government is trying to get others to follow in his footsteps.

In February it launched an initiative to map the country’s unused land and terrain that does not have a known owner, with the aim of making it available to be rented to those who want to work it.

The government has also approved a land exchange scheme by which private owners of unused land will win tax benefits if they make their properties available to be rented by farmers. Around 1.5 million hectares are expected to be made available through the scheme.

“In tough times, this is a way for people to generate some income, both those who put the land out for rental and those who exploit it,” said Agriculture Minister Assuncao Cristas.

One of the key objectives of the land exchange is to increase the average size of plots, making them more profitable and reducing production costs.

“Portugal is at a turning point in its relation with the land,” Cristas said in a telephone interview with Reuters. “There are many people committed to go back to it and invest.”

The policy marks a bit of a reversal. After Portugal joined the EU in 1985, economic growth was driven by the services and industry sectors of the two largest cities, Lisbon and Porto.

The 1974 overthrow of Portugal’s military dictatorship, which glorified agricultural life, triggered a Soviet-inspired collectivisation process that dismantled large landowners’ estates but undermined productivity.

Although the policies were eventually reversed, Portugal’s farming plots remained relatively small in size and its agriculture sector chronically inefficient.

However, despite the country’s mismanagement, relatively small geographical size and a total population of just 11 million, Portugal has managed to remain a key player in certain industries.

Portugal is the world’s largest cork producer and the seventh largest wine exporter. Farming, including forestry and production of everything from olives to oranges, strawberries and cherries, account for 10 per cent of gross domestic product – with a strong component coming from food processing.

The sector has grown since the crisis. Food exports jumped 17 per cent in the last quarter of 2011 to €1.2 billion and are already the country’s second fastest-growing export.

Demand for government help is growing as well.

Last year, the government announced that farmers submitted €900 million of applications for €50 million offered under a European-backed rural development programme, PRODER.

The government announced more incentives in March 2012, offering an extra €63 million to support the projects.

It’s not just life on the farm that is enjoying a resurgence.

In Portugal’s poorest and most remote region – Tras-os-Montes (Behind-the-Mountains) – a group of former city dwellers have bigger ambitions.

Frederico Lucas came from Lisbon to launch the New Settlers, a consultancy company which aims to attract people in the cities who want to set up businesses to the interior.

Financed by the local town hall and utility company EDP, New Settlers headhunts possible candidates for resettlement, gives advice on their business plan, helps families to resettle and plug into the local economy, and helps cut bureaucratic red tape.

The city and EDP, which has a direct stake in the development of Tras-os-Montes, where most of its hydroelectric dams are located, pays the consultancy a set fee of €3,600 for each family they resettle.

Lucas said that since they started bringing in families at the end of last year, he has struggled to keep up with demand. A total of 1,000 families have applied, 32 have moved inland and 30 more families will resettle by year-end.

“Applications jumped after the government announced it was slashing two months of salaries in October for public sector workers,” he said. “That’s when we received more than half of the applications.”

Lucas blames the country’s crisis on years of easy money that failed to reach any productive use, including billions of euros in EU funds that was poured into building infrastructure like highways, libraries, schools, hospitals and pavilions, many of which are in the interior and barely used.

“This infrastructure is now built and, although the money often went to the wrong things, we must now activate them,” he said in his office integrated into the library of the town of Alfandega da Fe, an example of such a public investment.

Among those who have resettled is Patricia Guimaraes, who moved with her husband Luis at the end of last year to Alfandega da Fe from the city of Braga to create ‘Monte Mel’ (Honey Hill), a company that helps small farm producers coordinate and sells their products online.

“Here we are close to the growers and have fresh produce all around, it is just so much more practical than if we were in the city,” said Guimaraes.

Lisbon and Porto, Portugal’s densest urban areas, lost three and 10 per cent of their population, or 15,000 and 26,000 people, respectively, to the periphery and countryside in the last decade. Lower living costs are the main driver.