| Summary: | In January, 1986, Portugal became a part of the European Community. Although this will have many beneficial effects on Portugal's industrial sector, the agricultural sector will be negatively impacted by the regulations under the Common Agricultural Policy (CAP) due to take affect in 1996. The Entre Douro e Minho (EDM) region, in particular, will be hard hit by the CAP regulations. Modeling of the EDM suggests that farm operators can offset many of the negative impacts through increases in farm investment and farm size. However, legislation in both the credit and land markets hinder this process. This study analyzes the rental-market legislation in light of tenancy theory. The analysis suggests that changes in the method of calculating maximum rent along with changes in the security of tenure provisions will stimulate the rental markets and lead to the desired increases in farm investment and farm size.
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