For centuries Iceland's main industries were fishing, fish processing and agriculture. In the 19th century, 70–80% of Icelanders lived by farming, but there has been a steady decline over the years and now that figure is less than 5% of the total population. It is expected that the number will continue to fall in the future. Only 1% of the total land area (of 100,000 km2) is under arable cultivation, confined almost exclusively to the peripheral lowland areas of the country.
The raising of livestock, sheep (the traditional mainstay for generations of Icelandic farmers) and cattle (the latter grew rapidly in the 20th century), is the main occupation, but pigs and poultry are also reared; Iceland is self-sufficient in the production of meat, dairy products and eggs. There is also an important export trade in horses.
Despite the cool climate  and restricted growing season, a variety of food crops are grown, such as potatoes, turnips, carrots, cabbage, kale, and cauliflower. Other hot crops (such as tomatoes, cucumbers and green peppers), cut flowers and potted plants are grown in greenhouses heated with geothermal energy (of which Iceland has in abundance)—in some cases artificial light is required to supplement the shorter daylight hours at these northern latitudes. Even bananas and grapes can be grown in this way—but not usually on a commercial scale. Fodder crops are also important: this includes grass (which in Iceland is exceptionally nutritious as a result of the long periods of daylight in the short, cool summers), rye and barley.
The cool climate and northern latitude has certain advantages for agriculture: The lack of insect pests means that the use of agrochemicals—insecticides and herbicides—is very low, and the long hours of daylight in the cool summer allow grass to grow exceptionally well. The general lack of pollution—due to sparse population—means that food is less contaminated with artificial chemicals—advantages which have been capitalised upon by a small but growing organic sector.
The Norsemen were pastoral people who relied heavily on a succession of successful farming years in order to survive. Norwegian settlers who inhabited the coasts of Iceland in the late ninth century brought their farming traditions with them.
The settlers brought sheep, cattle, horses, and goats from Norway to supply their farms with animals. Every animal served a purpose on the farm; sheep were valuable because of their ability to graze outside in the winter and they provided food and wool. Cattle supplied most of the dairy products for the farm, which were stored over winter. Cattle were also eaten.
Viking farmers relied heavily on the natural pastures that encompassed their farm, but also planted grain, to be harvested for bread and fodder.
Farming in Iceland during the Viking Age was complemented by hunting and gathering along the coast. Coastal areas facilitated fishing, whaling, and hunting. Sea birds, eggs, walrus, and lichens rounded out the Viking diet.
Viking farms had a significant impact on the landscape in Iceland. Widescale erosion began in the land-taking stages of settlement. Coupled with deforestation, this had a profound effect on the landscape of Iceland.