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Figure 5. Estimated Gross Domestic Product (GDP) by Sector, 1988

Unloading harvested corn
Courtesy Inter-American Development Bank Agriculture played a smaller role in the Venezuelan economy than in virtually any other Latin American country in the 1980s. In 1988 the sector contributed only 5.9 percent of GDP, employed 13 percent of the labor force, and furnished barely 1 percent of total exports (see fig. 5). Agricultural output was focused almost entirely on the domestic market.

The backbone of the national economy for centuries, agriculture entered a period of steady decline in the early twentieth century as the oil industry eclipsed all other sectors of the economy. As late as the 1930s, agriculture still provided 22 percent of GDP and occupied 60 percent of the labor force. The industrial development of the nation by the 1940s, however, seemed to have relegated agriculture to permanent secondary status.

Agriculture recorded its worst growth in years in the early 1980s, and the decade saw successive programs designed to revive agriculture in the face of a weakened economy. Government policies toward the sector often alternated between deregulation and extensive government intervention, with the latter being the more typical response. In 1984 the Lusinchi administration confronted rural stagnation with a multifaceted program of producer and consumer subsidies, import protection, and exchange rate preferences. The plan also reduced interests rates on agricultural loans through scores of government development finance institutions serving the sector. Government decrees also required commercial banks to hold at least 22.5 percent of their loan portfolios in agriculture. Farmers were exempt from income taxes. These measures paid off handsomely in the short run. During one five-year period of expansion, for example, annual growth rates in the agricultural sector reached 8 percent in 1984 and 1985. The government's program to resuscitate the rural economy, however, was extremely costly because it entailed high levels of subsidization.

The Ministry of Agriculture and Livestock (Ministerio de Agricultura y Cría--MAC) designed and implemented the nation's agriculture policy. The most drastic changes in farm policy in 1990 occurred through the devaluation of the bolívar, which automatically eliminated previous preferential rates for certain agricultural inputs. Likewise, the Pérez government's policy of price deregulation affected many basic agricultural commodities, and ensuing price rises were a factor in the February 1989 riots. As a result of government cutbacks in subsidies and price supports, agriculture registered a 5 percent decline in 1989.

Data as of December 1990