This article describes the federal government's rural policy activities during 1986. It emphasizes the interactions between rural and other policy areas and the prevailing influence of "politics". The Labor Government's rural policy-making in 1986 was preoccupied with the ramifications of the intensifying contemporary "rural crisis". This overshadowed the continuing, incremental additions to and reformations of the implementation of agricultural policy and processes that are integral to its policy management. Institutional and "political" constraints on federal policy also absorbed much of the government's attention. The year was dominated by a struggle between the Government and the National Farmers' Federation for the "agenda" of rural/agricultural policy. Within its self-imposed macro-economic constraints, the Government applied, with mixed success, a number of strategies intended to defuse the rural crisis. Somewhat surprisingly Labor ended the year in a better political position than objective economic and market circumstances would seem to warrant.