The hilly rainfed areas of Mediterranean Italy are among the most sensitive to CAP reform because these areas specialize in cereal and livestock production. The region selected for investigation, the Viterbo-Grosseto area in Lazio and Tuscany, is typical of much of central Italian agriculture. It is a dry hilly environment, with a small share of the labor force engaged in agriculture and relatively good opportunities for off-farm employment. The opportunity costs of labor resources are high and the pressures on small farm agriculture are great. The survival of small farms depends not only on the potentials to offer farmers relatively high rates of return to resources, but also to offer employments that can be integrated easily into a pluri-employment strategy that includes the non-agricultural sectors (Saraceno, 1994). Together with agro-ecological conditions, this requirement puts constraints on the types of farm systems that small farmers can consider. Systems like dairy or beef thus face pressures not only from new CAP policies, but also from the timing and incidence of labor input requirements (Gasson, 1988). Such systems are difficult or impossible to operate on a part-time basis. The niche for small farm agriculture is likely to include farm systems that are complementary to the requirements of off farm employment. Without such possibilities, agriculture will be left to larger, full-time farms.