Clearly, any approach adopted for farm economics must be applied within the context of government policy. Many of the exogenous conditions for the planning phase in particular will be dictated by policy objectives, price or output control, foreign exchange needs, and import substitutions. But farm economics has a dual role, and although this study concentrates on its contribution to extension strategy, there is a circularity. The potentials indicated by the analyses at the micro level will themselves be a factor in policy decisions, especially in choosing between alternative agricultural development strategies of improvement or transformation. This chapter supports the assumption of the study that improvement is the appropriate general strategy for agricultural development and identifies a particular role for transformation.