Agriculture provides 28 percent of Paraguay's GDP, but 45 percent of the population actually depends on agriculture and subsistence farming. This agricultural activity utilizes less than 6 percent of the nation's most arable land, concentrated in the east. Until 1970, the nation depended heavily on the production of meat, tobacco, and yerba maté (a tea). These highly-emphasized products have now been replaced by soybeans and cotton grown largely in the east.
Soybean production became important during the agrarian reform policies of the 1960s. The government sold cheap land to affiliates of the Colorado Party, which dominated the government at that time. These landowners were involved in highly profitable international agro-industrial agreements that called for large-scale production of soybeans. The government claimed that the agrarian reform would help alleviate overcrowding in the capital while developing unused land in the east. Cotton also emerged as a dominant export. The Colorado Party encouraged cotton production through government favors, but in the process encouraged the exploitation of peasant laborers as well. Nevertheless, soybeans and cotton now account for two-thirds of the nation's agricultural exports.
Cotton produced in Paraguay had generally been exported unprocessed until the 1990s. In the mid-1990s, an Italian-Paraguayan group built a US$10 million computerized cotton-spinning plant just outside of Asunción. Spinning the cotton domestically adds 140 percent profit to its export. It is exported primarily to Italy and Brazil. Brazilian investors have also built and renovated many other cotton mills in Paraguay. If the cotton industry continues to develop and farming is mechanized, many rural farmers who grow cotton may be put out of work.
Other important agricultural goods include coffee, corn, rice, wheat, citrus fruits, sugarcane, and peanuts. Paraguay produces some marijuana as well. Paraguay's productive agricultural sector makes the nation practically self-sufficient in food products.
Livestock is raised in the west, particularly in the Chaco region. Though pigs, sheep, horses, and chickens are raised, by far the most important livestock is cattle. Meat, dairy products, and hides are used both domestically and for export. Timber is another important export. Though Paraguay has utilized its rivers for transport, it has not yet developed a commercial fishing industry to tap into the abundance of fish.