Maybe 1999 was the era that had the longest life expectancy for the average human.
Neo: If you're killed in the Matrix, you die here?
Morpheous: The body cannot live without the mind.
Maybe the machines thought humans would relive their past, and in the early 20th century they would have major wars that resulted in "entire crops" being lost. Or a repeat of the crusades.
The average life expectancy in 1900 was 47 years, compare that to 1999 where it was 76.7 - cdc.gov. That doesn't necessarily mean anything though, because the humans are in a controlled environment. Presumably, they don't have exposure to viruses, bacteria, or harmful substances (unless the gel is harmful).
If the most common cause of unexpected death in the Matrix is violent death, you want to choose a setting where that is at a minimal. Maybe you could disperse the population over a massive area, so no one ever interacts with anyone else, but then people would die from lack of social contact. Better to choose a time and place where the people are more docile. Perhaps 1999 marked a time with less conflict (although the movie didn't know this, it was right before 9/11, and the subsequent wars with Afghanistan and Iraq).