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. 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.
Despite agrarian reform efforts beginning in 1960, Venezuela's land tenure patterns in 1990 still portrayed the typical Latin American dichotomy between latifundios and minifundios (small holdings). For example, data on land tenancy from agricultural censuses from 1937 through 1971 pointed to a pattern of land concentration. More recent estimates mirrored data from these earlier censuses. One estimate in the late 1980s, for example, held that the smallest 42.9 percent of all farms covered only 1 percent of the arable land, while the largest 3 percent accounted for as much as 77 percent of arable land.
The country's major land reform program began with an initial decree in 1958 after the fall of the dictatorship of Marcos Pérez Jiménez. The Agrarian Reform Law of 1960 created the National Agrarian Institute (Instituto Nacional Agrario--INA), which sought to provide land to those who worked it, initially by transferring public lands and later by expropriating private holdings of arable land not under cultivation. Although the government invested substantial resources in an effort to integrate its rural development strategy through the provision of roads, markets, schools, and clinics, new agricultural colonies rarely had the conveniences of earlier farming towns. Accordingly, the land reform experienced a dropout rate as high as one-third. Moreover, few of the peasants who stayed in the settlements actually obtained legal title to their land, which remained in the hands of the state.
Land reform had made only modest adjustments in Venezuelan land tenure through 1990. By the 1980s, over 200,000 families had benefited from the state's distribution of nearly 10 percent of the country's total land area. The average size of the country's 400,000 farming units stood at eighty hectares in 1989, considerably higher than earlier decades. Improved access to land helped expand the country's total land under cultivation and accelerated the country's attainment of self-sufficiency in certain crops and livestock. On the negative side, however, the benefits of land reform were seriously tainted by the programs' high failure rate and the fact that as many as 90 percent of participants never gained title to their land. Without land titles, farmers lacked collateral to obtain financing for needed agricultural inputs. These factors, combined with the fact that immense private tracts of land remained intact, demonstrated the relatively minor impact of land reform.
Only some 4 percent of Venezuela's total area, or about 3.8 million hectares, was considered readily arable or already under cultivation in the late 1980s. Some estimates claimed that as much as one-third of the country's total land area was suitable for agriculture. In general, however, Venezuela's vast expanse was better suited to forest or pasture than to crops, and much otherwise arable land had been relatively neglected because of adverse weather conditions or lack of access to markets.
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