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Three livestock/crop demonstration-cum-training farms have been established on plots of half, one and two acres, typical of the "Kandyan Forest Garden System" Vegetables, bananas, pepper, coffee, coconut and fruit trees are widely spaced, for intercropping with grass, and have been surrounded with live fences that also provide fodder for livestock to increase the family income. Each unit is operated by a selected employee and his family under a monthly incentive scheme based upon the gross margin. On these farms the technical parameters in dairying are better than elsewhere in the Mid-Country. Economic performance over 1985-1992 showed that dairying contributed most to the total gross margin of the half, one and two acre units, i.e. 31, 63 and 69%, respectively. Next came crops (29%, 37% and 19%), poultry (22%, 0% and 9%), and goats (18%, 0% and 3%). In the three farms the cash income per Sri Lankan Rupee spent was 1.5, 4.6 and 2.1, respectively. The overall ratio was 3.2 for dairying, 1.1 for poultry, 4.5 for goats and 9.9 for crops. Actual family labour in the three farms was 548, 548 and 639 days, compared to the 270, 330 and 440 days anticipated in the initial feasibility study. The average incentive payments, which were 20% (half acre), 61% (one acre) and 133% (two acres) of the parastatal salary of the employee, were only insufficient for the extra labour applied in the half acre unit. Dairying and goats proved to be attractive cash earners with a domestic fuel were important benefits. Poultry did little to improve farm income.