Farmers in the hill region of Nepal face many challenges in trying to attain food security. The first partof this paper outlines the problems facing farmers in the hill region and examines how the changes in thepolicies of the Government have affected agricultural production in the hills since the First Five-YearPlan in 1956. Since the 1990s, agricultural policies in Nepal have focused on the growing of cash crops,as a way to increase the incomes of farmers and thus enable them to buy food to meet their food suffi-ciency needs. The second half of this paper takes a look at the development of agriculture in IlamDistrict, which is undergoing a change towards cash crop production. The benefits and problems ofcash crop farming are examined with the help of data collected in the field. It is found that while tradi-tional cereal crops play an important part of farmer's incomes, cash crops can provide a good source ofincome and some of the crops had beneficial effects on the environment. However, problems withextension services and price instability still have to be overcome if this form of farming is to provide astable living for farmers.