The broadleaf forests of Honduras are among the most extensive in Central America and have been subject to rapid deforestation. Among the important factors in the process of deforestation has been the growth of cattle farming. Structural adjustment policies enacted in 1992 have been directed at overcoming grave economic problems. The authors of the adjustment plans have assumed the same policies will help protect the natural resource base of the country, including its forests. Field research conducted in August - November 1994 sought to understand the effect of the 1992 Agricultural Modernization Law (AML) on the cattle sector and on the management of broadleaf forests in eastern Honduras. The research found that the cattle sector may have benefited from reforms introduced through the new policies (this remains to be proven), while state capabilities in forest conservation and management have clearly declined. The recommendations of this report are to: (1) strengthen the capacity of the state to enforce existing laws aimed at protecting broadleaf forests; (2) revise and amend the provisions of the AML to include provisions aimed specifically at the protection of broadleaf forests; (3) strengthen efforts to harmonise policies among various eco-nomic sectors; (4) conduct a national cadastral survey and implement national land-use planning; and (5) strengthen official support and the policy environment for community-based forest management. There are three further research questions in need of attention: (1) Would intensification of the cattle sector assist efforts to reduce deforestation?; (2) Is halting of road construction in the vicinity of forests a promising way of lowering rates of deforestation?; (3) To what extent is broadleaf deforestation alleviated through attention to the cattle sector alone?