Reducing rural poverty means rural development. Governments and donors in Central America, as elsewhere,have struggled to find paradigms and programmes that reduce rural poverty. An emphasis in the region in the 1970s and 1980s on agrarian reform, subsidies and strong intervention gave way to structural adjustment and state withdrawal in the 1990s. But conditions in rural areas have improved only slowly, and the rural poor have been further set back by natural disasters like Hurricane Mitch in 1998. What can be done to identify better rural development strategies? This paper explores the options, focusing particularly on the two poorest countries in Central America, Honduras and Nicaragua.