The present contribution of small scale agriculture to rural livelihood in north-west Peddie district and the four factors identified by Lipton (1996) as being essential for small scale farming to flourish, were analysed by making use of data obtained in two recent studies conducted in the area. The two studies, which both used a questionnaire survey for data collection, enabled a comparison between dryland and irrigated agriculture. The analysis showed that agriculture adds to rural livelihood in a modest way only, and hardly ever constituted the main source of household income. For the majority of households in both the dryland and irrigated production environments the main source of income consisted of State transfers of which pensions were the most important. In the area, three of the four factors identified by Lipton (1996), namely access to agricultural land, research and development of appropriate technology, and rural infrastructure were found to require reform for local small scale farming to become a viable livelihood option. The only factor which did not appear to present a major constraint was access to markets. Relative to the present level of production, the market in the rural area itself is sufficiently large to absorb most produce, usually at prices higher than those offered by formal markets. In future, access to markets could become a constraint if production by small scale farmers were to be increased significantly.