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The research was conducted to quantify farm and household characteristics of sheep farmers, evaluate farmer access to and the effectiveness of livestock services in sheep farming areas, and examine regional constraints to improving sheep productivity and profitability in Nepal. A rapid diagnostic socioeconomic survey of 200 sheep farmers was carried out in 1996 and all four ecological regions (Trans-Himalayan, Mountains, Hills and Terai), each with a distinct local sheep breed, were represented in the survey. Six major constraints were identified: (a) poor performance of local sheep breeds, (b) a serious seasonal deficit of pasture and other feed, (c) the lack of an organized market for wool and meat, (d) poor access to agricultural credit, (e) primitive shearing equipment, and (f) an inadequate supply of drinking water for sheep. Strategies to assist farmers develop their sheep management skills, improve access and quality of support services, improved technology adaptable to local conditions and effective linkages with local carpet and meat industry are likely to overcome the constraints and alleviate persistent poverty faced by sheep farmers in Nepal.