The Portuguese Farmers' Confederation estimates the drought, which began last year, has so far caused agricultural losses worth two billion eurosbillion dollars).

It wants the government to declare a state of "calamity" to free up more emergency aid and provide free grain to livestock farmers who are struggling to feed their herds because grassland is sparse.

"The losses at this moment are huge," said the president of the body, Joao Machado, who organized the rally.

Farmers blew whistles and slowed traffic as they gathered in front of parliament to press their demands.

The agriculture ministry has set aside 425 million euros in aid, most of it in the form of credit.

"Obviously this did not resolve the effects of the drought, but it has mitigated them," Agriculture Minister Jaime Silva told a news conference.

But farmers say the credit is hard to obtain and it would be difficult to pay back the loans even if they are given at low interest rates.

The vast majority of the funds set aside in aid come from European Union farm funds given to Portugal and not from the national budget, added Machado who said Lisbon could do more to help the sector.

The dry spell, which is also affecting neighbouring Spain and parts of France, is the nation's worst since 1945.

Production of barley is expected to fall by 52.4 percent and wheat by 34.4 percent this year in Portugal because of the drought, according to forecasts by the EU.

An average of 120 cows, goats or other animals are dying every day in the south of Portugal because farmers cannot afford feed to make up for the lack of grassland, according to the Association of Southern Sheep Farmers.

In September, hundreds of farmers from across Portugal protested in the southern farming town of Beja, located some 200 kilometres (120 miles) southeast of Lisbon, over the same issue.