Although the Rahad Irrigation Project in Sudan, partly AID-funded and nearly complete, has been operating for only four seasons, it faces problems which threaten its viability. This report assesses these problems, the project's impact, and the lessons learned. Designed to maximize use of government investments in Nile water management, to upgrade the living standards of 100,000 herders and farmers, and to produce cotton and groundnuts for export, the project is pursuing full mechanization and 100% intensive rotation of crops. Production is supervised by the Rahad Corporation which controls pricing, marketing, and most decision-making. The Corporation has not coped well with management of a mechanized operation, erroneously perceived labor shortages, and tenant dissatisfaction. Faced with little incentive to grow cotton, farmers have produced less and are working as day laborers and raising livestock, sorghum, and groundnuts. Mechanization has further reduced project-generated income and threatens to displace labor. In addition, limitations on local currency have resulted in the inadequate and unequal provision of educational, health, and other promised services. Among the lessons taught by the project are that: a policy of 100% mechanization needs more analysis; farmers must be given a role in the decision-making process and be allowed choices; harvest-time labor shortages must be viewed in relation to prevailing wage rates; environmental analyses must be conducted and used in designing and implementing irrigation projects; programs to control water-borne diseases should be designed and funded in irrigation projects; and crop protection techniques should be reviewed prior to project implementation and coordinated with public health officials. Appended are photographs; a list of contacts; a 56-item bibliography (1968-81); and reports on: the institutional and social effects of controlled resettlement, micro-level management of technical resources, economic analysis of agricultural enterprises, labor/tenant relations, and Sudan's environment and natural resources.