El Salvador Table of Contents

Industry and agriculture were the most dynamic sectors of the economy during the 1965-80 period, growing each year by 5.3 percent and 3.6 percent in real terms, respectively. Between 1980 and 1986, the value of agricultural output dropped by an average 2.3 percent per year. This decline was influenced by a number of factors, among them guerrilla sabotage, the comparative inefficiency of farms created by the land reform program, and the ineffectiveness of many government policies. Despite the general decline of agricultural output, coffee, which generated half the country's export earnings in 1987, continued as the most important commodity produced in El Salvador.

The agricultural sector accounted for nearly 25 percent of GDP in 1987 and was responsible for about 80 percent of the country's export revenue. Although the number of people employed in agriculture increased from 3.5 million in 1970 to 5.7 million in 1986, the share of the economically active population employed in agriculture declined from 56 percent in 1970 to only 40 percent in 1986. After coffee, sugar and cotton were the most important agricultural commodities. Basic grains (wheat, rice, and corn) were also grown extensively, but for domestic consumption.

Despite the relative importance of agriculture to El Salvador's economy, absolute levels of production declined dramatically after 1979. Several factors, especially the civil conflict, were blamed for the decline. Guerrilla attacks on farms, processing plants, and infrastructure undermined efficiency, precluded investment, and intimidated laborers. The impact of the conflict varied, however, depending on the crop. For example, the geographical location of the most important coffee-growing area--the western sector of the country--insulated most coffee producers from the violence. In contrast, cotton production, centered in the eastern part of the country, was devastated by guerrilla activities.

The Land Tenure System
Basic Grains

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Source: U.S. Library of Congress