Yemen’s difficult terrain, limited soil, inconsistent water supply, and large number of microclimates have fostered some of the most highly sophisticated methods of water conservation and seed adaptation found anywhere in the world, making possible the cultivation of surprisingly diverse crops. The most common crops are cereals such as millet, corn (maize), wheat, barley, and sorghum; myriad vegetables from a burgeoning truck farm industry have appeared on the market in recent years. There has also been extensive cultivation of fruits—both tropical (mangoes, plantains, bananas, melons, papayas, and citrus) and temperate (pears, peaches, apples, and grapes).

The two main cash crops in the northern highlands are coffee (Coffea arabica) and khat (qāt; Catha edulis). The coffee trade, which began in the 16th century, was originally based on Yemeni coffee, and, for centuries, coffee was the most important and renowned export of Yemen. The port city of Mocha—from which a distinctive style of coffee takes its name—was the point from which most of Yemen’s coffee was exported between the 16th and 18th centuries, before more-economical plantation cultivation was introduced in other parts of the world. In Yemen the coffee tree grows best in the middle highlands, at elevations of 4,500 to 6,500 feet (1,400 to 2,000 metres), where khat also flourishes. The latter is an evergreen shrub whose young leaves, which contain an alkaloid, are chewed as a mild stimulant. The production and consumption of khat occupy a prominent position in the culture and economy of Yemen. Increased affluence has allowed a growing section of the population to indulge in its use, which the government has attempted—with little success—to discourage. Greater demand has fueled a substantial increase in khat acreage. Although older coffee terraces are often converted to khat as their productivity declines, much of the land being devoted to khat was formerly considered marginal for commercial agricultural purposes and now benefits from regular soil-enhancement programs and terrace-maintenance efforts.

Beginning in the 1970s, the cultivation of cotton—both in the Tihāmah coastal plain in the north and in the coastal plain east of Aden—was strongly supported by the respective national governments, and for a while it contributed significantly to national income. At the end of the 20th century, a significant decline in world cotton prices, as well as the high costs of initiation and development, meant that the Yemeni cotton industry was not competitive.

The typical Yemeni farmer raises at least some poultry and livestock, typically regional varieties of chickens, goats, sheep, or cattle. Agricultural aid programs sponsored by Western countries in the 1970s and ’80s introduced new varieties of dairy and beef cattle in the more temperate regions of the north, but Yemen still imports much of the livestock and dairy and poultry products it consumes.

Another important economic development has been the growth of both the artisanal and the industrial fishing industries. The waters of the Arabian Sea, the Red Sea, and the Gulf of Aden are extraordinarily rich in a wide variety of commercially desirable fish and crustaceans. In the past, very small quantities of some species were marketed locally; the foreign technical and financial assistance provided to the fishing industry (notably by the Soviet Union) contributed markedly to its increased role in the national economy. At the beginning of the 21st century, the developing fishery sector, also increasingly supported by domestic government programs and foreign assistance, was a major and growing contributor to Yemen’s economy.

Resources and power

The export of oil generates a major portion of national income and government revenues. Oil and natural gas were first discovered in commercial quantity in North Yemen on the edge of the eastern desert near Maʾrib in 1984 by the Hunt Oil Company. Two years later, oil was found by a state corporation of the Soviet Union in the south, near the juncture of the two Yemens and Saudi Arabia. Since then, several other significant finds have been made, most notably the major commercial strike in 1991 in Masīlah, north of Al-Mukallā, by Canadian Occidental (later known as Nexen Inc.); the Masīlah field is one of Yemen’s most productive. New exploration and the development of existing finds by several foreign companies continued in the early 21st century. Pipelines in Yemen carry crude oil to export facilities on the Red Sea, the Gulf of Aden, and the Arabian Sea.

As important, if not more so, are Yemen’s large proven reserves of natural gas, located mostly in the western part of the country. Yemen has signed agreements with foreign companies to begin full exploitation of natural gas, but in the early 21st century the sector remained underdeveloped, and production was limited. Electricity is mostly generated by oil-burning thermal plants. At the end of the 20th and the beginning of the 21st century, energy restructuring plans provided for the construction of a number of gas-powered plants, with hopes that switching from oil to natural gas as Yemen’s principal fuel for meeting electric and other domestic needs would maximize oil available for export and relieve domestic Yemeni oil dependence. Installed electrical capacity does not meet national demands, and scheduled blackouts are common. In the 2000s only about two-fifths of the country was tied into the national grid.

There has never been a thorough survey of Yemen to determine precisely what other mineral resources might be commercially exploitable. Salt is extracted from underground mines near Al-Ṣalīf in the Tihāmah and from surface deposits near Aden in the south. In the past, coal and iron deposits supported a small-scale steel industry (primarily for the manufacture of swords and daggers, particularly the janbiyyah, a symbolic, largely ornamental dagger worn by many Yemeni men). There are deposits of copper, as well as some evidence of sulfur, lead, zinc, nickel, silver, and gold, and surveys in the late 20th and early 21st centuries indicated that some of these deposits were commercially exploitable.

Manufacturing

Continuing today in Yemen are traditional handicraft industries that achieved great renown in the past for the quality of their products: jewelry, especially silver and gold filigree; leatherwork; carpets; glass; utensils, especially for cooking; daggers and other metalwork; decorative woodwork; and stained-glass windows. Modern manufacturing enterprises did not contribute to the national income until the 1970s, with the exceptions of the oil refinery in Little Aden (the peninsula that encloses the western side of Aden’s harbour), built originally by British Petroleum in the 1950s and nationalized in 1977, and the cotton textile industry established in North Yemen in the last years of the imamate at the beginning of the 1960s.

The multiyear development plans of the governments of both Yemens after the 1960s focused on the establishment of a more diversified and modern industrial base. Most of these manufacturers were designed as import-substitution enterprises, producing such items as cement, aluminum ware, plastic products, paints, textiles, furniture, cooking oil, foodstuffs, soft drinks, and tobacco products; some have since become significant contributors to the national income. Much of new manufacturing in recent decades has been related to transportation and communications infrastructure: road building, the construction of electrical power stations, electrification, and the stringing of telephone lines. The oil and natural gas industry entails—in addition to the foreign primary firms—an array of local subcontractors and allied services. Pipeline construction and maintenance, as well as new refineries, make substantial contributions to the economy.

Finance

The Central Bank of Yemen was formed in 1990 from the merger of the central banks of the two Yemens. It is responsible for issuing the rial, the national currency, and for managing the government’s foreign exchange and other financial operations. The Yemen Bank for Reconstruction and Development (1962) provides commercial and customer services. Banking is a small sector of the economy; services have traditionally been difficult to obtain since, because of a weak court system, collecting money owed has been difficult. Many Yemenis rely on informal systems to meet financial needs.