Historically, agriculture has played a more important role in Israeli national life than its economic contribution would indicate. It has had a central place in Zionist ideology and has been a major factor in the settlement of the country and the absorption of new immigrants although its income-producing importance has been minimal. As the economy has developed, the importance of agriculture has declined even further. For example, by 1979 agricultural output accounted for just under 6 percent of GDP. In 1985 agricultural output accounted for 5.1 percent of GDP, whereas manufacturing accounted for 23.4 percent.

In 1981, the year of the last agricultural census (as of 1988), there were 43,000 farm units with an overall average size of 13.5 hectares. Of these, 19.8 percent were smaller than 1 hectare, 75.7 percent were between 1 and 9 hectares, 3.3 percent were between 10 and 49 hectares, 0.4 percent were between 50 and 190 hectares, and 0.8 percent were more than 200 hectares. Of the 380,000 hectares under cultivation in that year, 20.8 percent was under permanent cultivation and 79.2 percent under rotating cultivation. The farm units also included a total of 160,000 hectares of land used for purposes other than cultivation. In general, land was divided as follows: forest, 5.7 percent pasture, 40.2 percent cultivated, 21.5 percent, and desert and all other uses, 32.6 percent. Cultivation was based mainly in three zones: the northern coastal plains, the hills of the interior, and the upper Jordan Valley.

Agricultural activities generally were conducted in cooperative settlements, which fell into two principal types: kibbutzim and moshavim (see Glossary). Kibbutzim often served strategic or defensive purposes in addition to purely agricultural functions. In the 1980s, such settlements usually engaged in mixed farming and had some processing industry attached to them. A moshav provides its members with credit and other services, such as marketing and purchasing of seeds, fertilizer, pesticides, and the like. By centralizing some essential purchases, the moshavim were able to benefit from the advantages of size without having to adopt the kibbutz ideology (see Distinctive Social Institution , ch. 2).

The agricultural sector declined in importance from 1952 to 1985. This decline reflects the rapid development of manufacturing and services rather than a decrease of agricultural productivity. In fact, from 1966 through 1984, agriculture was far more productive than industry.

Efficient use of the factors of production and the change in their relative composition explain a significant portion of the increased productivity in the agricultural sector. From 1955 to 1983, the agricultural sector cut back on employed persons and increased the use of water, fertilizer, and pesticides, leading to a substantial increase in productivity. Other factors that contributed to increased productivity included research, training, improb77 roved crop varieties, and better organization. These changes in factor utilization led to a twelvefold increase in the value of agricultural production, calculated in constant prices, between 1950 and 1983.

In absolute terms, the amount of cultivated land increased from 250,000 hectares in FY 1950 to 440,000 hectares in FY 1984. Of this total, the percentage of irrigated land increased from 15 percent in FY 1950 (37,500 hectares) to around 54 percent in FY 1984 (237,000 hectares). The amount of water used for agricultural purposes increased from 332 million cubic meters in FY 1950 to 1.2 billion cubic meters in FY 1984.

The most dramatic change over this period was the reduction in the agricultural labor force. Whereas the number of workers employed in agriculture in the early 1950s reached about 100,000, or 17.4 percent of the civilian labor force, by 1986 it had dropped to 70,000, or 5.3 percent of the civilian labor force.

Agriculture has benefited from high capital inputs and careful development, making full use of available technology over a long period. Specialization in certain profitable export crops, in turn, has generated more funds for investment in agricultural production and processing, as has the development of sophisticated marketing mechanisms. In particular, Israel has had success in exporting citrus fruit, eggs, vegetables, poultry, and melons (see table 9, Appendix A).

Another factor important in Israel's agricultural development has been the sector's impressive performance in foreign trade. The rapid growth of agricultural exports was accompanied by a general increase in total exports. Between 1950 and 1983, a prominent development was the decline (by 65 percent) in the importance of citrus fruit exports in relation to total raw agricultural exports. This decrease was more than balanced by the increase in importance of processed agricultural products, whose exports increased by 4,000 percent over the same period.

Data as of December 1988