For centuries prior to the beginnings of the oil industry in 1917, agriculture served as the engine of the Venezuelan economy. As recently as the 1930s, agriculture employed 60 percent of the labor force and accounted for 21 percent of GDP. Today, agriculture is one of Venezuela's weakest sectors: as of 1999, it employed 13 percent of the labor force and accounted for 5 percent of GDP. Major crops include sugar cane (56 percent of total production in 1999), bananas (9 percent), maize (7 percent), and rice (5 percent). Crops are grown in the northern mountains of Venezuela and their foothills. In 1998, of the country's 15.367 million heads of livestock, 61 percent were cattle and 19 percent were pigs. Cattle grazing takes place in the plains (Llanos) area of Venezuela. This is an area about 800 miles wide that lies between the Mérida mountain range in the east of the country and the Orinoco River in the middle. Of its 2.708 million tons of livestock product in 1998, 56 percent came from cow's milk, 18 percent from poultry meat, and 13 percent from beef and veal.
Subsidization (government payments to farmers to grow or not grow their crops) of agriculture is a tool that has been consistently used by various administrations to assist Venezuela's ailing agricultural sector. The right of farmers to receive government subsidies was made a part of the new 1999 Venezuelan Constitution. This policy has given rise to a powerful farmers' lobby that is dedicated to maintaining the subsidies, often criticized for maintaining inefficient and obsolete production techniques and ineffective management strategies. Since the 1980s, however, subsidies have resulted in an increase in the country's agricultural output.
Another approach used by the Venezuelan government to bolster the agricultural sector has been the redistribution of land that can be used for planting and grazing. These land giveaways have had the added benefit of addressing the problem of land concentrated in the hands of a few owners. Today, only 3 percent of landowners hold 70 percent of the agricultural land in Venezuela. In 1999, after 12,350 acres of land were forcibly occupied by squatters, the government responded by promising that it would redistribute 6.175 million acres of government land, create 504,000 farming jobs, and give significant tax breaks to farmers. The government had been pursuing such policies since 1958, when it created its National Agrarian Institute. Although at least 10 percent of the country's land has been redistributed, these redistribution policies have had limited success because the dropout rates for participants has been as high as 33 percent. The government has also tried to protect Venezuelan farmers from international competition by limiting the number of competing crops that can be imported into the country.
Despite all of these difficulties, the Venezuelan agricultural industry has remarkable promise. In the 1990s, only 4 percent of the country's land area was being used for agriculture, but it has been estimated that 30 percent of the total is suitable for such purposes. Some 50 percent of the agriculture industry's revenues came from cattle ranching in 1999, though production of such basic food crops like rice and maize has been declining.