Throughout Paraguay's history, agriculture has been the mainstay of the economy. This trend continued unabated in the late 1980s as the agricultural sector generally accounted for 48 percent of the nation's employment, 23 percent of GDP, and 98 percent of export earnings. The sector comprised a strong food and cash crop base, a large livestock subsector, and a vibrant timber industry.
Growth in agriculture was very rapid from the early 1970s to the early 1980s, a period when cotton and soybean prices soared and cropland under cultivation expanded as a result of agricultural colonization. Growth in agriculture slowed from an average of 7.5 percent annual growth in the 1970s to approximately 3.5 percent in the mid- to late 1980s. Agricultural output was routinely affected by weather conditions. Flooding in 1982 and 1983 and severe droughts in 1986 hurt not only agriculture, but, because of the key role of the sector, virtually every other sector of the economy as well.
In the aggregate, however, the advances experienced by the sector during the 1970s and 1980s did not reach many of the small farmers, who continued to use traditional farming methods and lived at a subsistence level. Despite the abundance of land, the distribution of the country's farmlands remained highly skewed, favoring large farms. Epitomizing the country's economic activity in general, the agricultural sector was consolidating its quick expansion over the two previous decades and only beginning to tap its potential in the late 1980s.