Iran is a mostly arid or semi-arid country, with a sub-tropical climate along the Caspian coast. Deforestation, desertification , overgrazing, and pollution from vehicle emissions and industrial operations have harmed the land over the last few decades and hampered production. Other significant problems include poor cultivation methods, lack of water, and limited access to markets. Iran's agricultural sector is especially dependent on changes in rainfall, and although the government has attempted to reduce this dependence through the construction of dams, irrigation and drainage networks, agriculture remains highly sensitive to climate developments. Still, the agricultural sector accounts for about one-fifth of the GDP and employs one-third of the workforce. The country's most important crops are wheat, rice, other grains, sugar beets, fruits, nuts, cotton, and tobacco. Iran also produces dairy products, wool, and a large amount of timber. Irrigated areas are fed from modern water-storage systems or from the ancient system of qanat. Qanat are underground water channels stretching up to 40 kilometers (26 mi) and first used at least 2000 years ago. Unfortunately, many of them have fallen into disrepair in recent years.
The centerpiece of the "white revolution," during which the shah pressed the modernization of Iran during the 1960s, was land reform. Until the 1950s, only about 5 percent of peasants owned sufficient land to maintain themselves. The dominant figures in rural areas were the landowners; it is estimated that about half of Iran's cultivated land was held by big landowners, those who controlled one or more villages, a typical holding being between 20 and 40 villages (there were some 70,000 villages altogether). These landowners were absentees and included members of the royal family, military officers, tribal shaykhs, religious dignitaries, and big merchants. The land reform, which began in 1961 and was not completed until 1971, had dramatic effects. The power and influence of large landowners was extinguished; smaller absentee landowners survived and in 1971 still owned half of all cultivated land. Seemingly, the benefits went to those 50 percent of peasants who had cultivation rights. By 1971, 90 percent of them were owners of land, though it turned out that for most of them acquired holdings were too small to support a family. Farm laborers remained without rights and holdings.
The traditional dominance of agriculture was eroded by oil and gas exploitation, which became the country's major source of export revenues as population growth made Iran a net importer of foodstuffs. The agricultural sector has nevertheless usually been the largest contributor to the GDP, its share falling only slightly in the 1990s, from 23.9 percent in 1992-93 to 19.7 percent in 1997-98, when it was overtaken by the industrial sector. In 1999-2000, real growth in the sector declined by 0.3 percent, production of cotton fell by 9 percent, and wheat and barley outputs declined by 27 percent and 39 percent, respectively. This came after the successful year of 1998-99, when a rise in rainfall led to sharp overall growth in the sector, achieving 9.5 percent growth. The government continues to gear efforts toward reducing its role in agriculture and encouraging private sector activities and the growth of cooperatives, while restricting itself to the provision of infrastructure. Subsidies have been reduced over the last few years, but agriculture remains favored with price guarantees and persisting subsidies, in particular for wheat.
The offshore fishing industry is important in Iran both for domestic consumption and for export, mainly of caviar. The total Iranian fish catch rose from 327,727 metric tons in the year 1991-92 to 385,200 tons in 1997-98, of which 244,000 tons came from the Persian Gulf and the Gulf of Oman, 76,200 tons from the Caspian Sea, and 65,000 tons from inland waters. The government remains committed to increasing the annual catch to at least 700,000 tons, principally by the development of fisheries in southern waters. The caviar industry, which enjoys a worldwide market, is by far the most developed field within Iran's fisheries sector. Iran, Russia, Azerbaijan, Kazakhstan, and Turkmenistan form a cartel to protect caviar prices and sturgeon stocks in the Caspian Sea, but over-fishing has begun to threaten the industry. Caviar exports averaged around US$30 million per year in the 1990s.