Farmers have been using heavy lifting equipment to remove carcasses from fields that once provided grazing for thousands of cattle but are now brown and bare, singed by the extreme heat of the summer.

“Things have never been as bad,” Francisco Palma, the president of the farmers’ association of the southern province of the Alentejo, said.

The province is known as the breadbasket of Portugal for its high wheat production. These were “very, very difficult times”, Senhor Palma added. INE, the country’s national statistics institute, estimated that cereal production would fall by up to 70 per cent this year, making it the worst grain harvest in two decades.

The drought has already cost farmers in Portugal at least €1 billion (£0.69 billion) in lost income and extra costs, with livestock farmers especially hard hit, according to estimates by CAP, Portugal’s main farmers’ association. About 97 per cent of Portugal is officially afflicted by severe drought, forcing the Government to take action to ensure supplies. The European Union has agreed to an unprecedented transfer of surplus grain from Central Europe to Portugal and Spain.

The outlook is little better in Spain, where the country’s driest winter and spring since the 1940s have left reservoirs in some regions only 20 per cent full and rivers down to a third of their normal volume. Government estimates put losses attributable to the drought in Spain at €1.7 billion.

With water at a premium, last month Portugal accused Spain of stealing its water, demanding €6 million in compensation after water levels in the River Douro fell below limits established in a bilateral agreement.

Portugal is also is on maximum alert against the danger of forest fires. Since June 15 some 21,500 hectares have been destroyed by fire, although no residential or commercial areas have been affected. Three major highways were closed, including part of the main road between Oporto and Lisbon.

In southern Portugal more than 22,000 people living in 39 rural villages are dependent on deliveries of water by lorries after nine months of below-average rainfall.

Tourist complexes on the southern Algarve’s Atlantic coast have resorted to drilling to find unexploited water reserves. Environmental groups gave warning that this will do irreparable long-term damage.

Water consumption multiplies by up to five times during July and August in coastal regions.

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