This study uses one year (1989-90) of households survey data covering all livestock transactions and input expenditures to examine the equity impacts of the Senegalese livestock policy and the factors affecting purchases and sales of small ruminants in three study zones of the Senegalese Peanut Basin. It also explores the potential for market development through more production and sales of small ruminants. The study found that a price depressing policy on small ruminants hurts richer households more than poorer households and that the two income groups of households have the same strategy of purchase and sale of small ruminants. The major cause of small ruminant income disparities are the relatively low productivity of the poorer households. The study also found that ethnic group is an important variable to consider when analyzing factors affecting small ruminants production and marketing. Overgrazing limits any production technique based on increasing livestock numbers when feeding is mainly based on the natural grazing lands. Intensification/semi intensification of livestock and improvement of credit programs and small ruminant health have been recommended.