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Most attempts to increase agricultural production rely on incentives to the farmer, especially regarding market prices, and a positive response by him. In this paper the latter is analysed with reference to two major oilseed export crops in the Sudan, groundnuts and sesame, under small peasant farming conditions. The methodology used to study the behaviour of farmers is based on Rational Expectations techniques and the data used are drawn from official time series material. The results obtained show that small farmers are responsive to price changes for these crops by adjusting crop areas. The implications of the results are of importance to policy makers in that peasant production can be stimulated by ensuring that the producers obtain sufficient price incentives to do so. An immediate priority is an in-depth study of the competitiveness of the marketing system to provide adequate information on which to base remedial measures to ensure that the price mechanism transmits the appropriate signals to the farmers. A further important policy aspect is the need to change the reliance of the small peasant sector on shifting agriculture to maintain soil fertility, because of the increasing population pressure on land. In the longer term farmers should adjust to real price rises not by increasing the amount of land cultivated but by raising the productivity of their holdings in a new system of sedentary agriculture.