An experiment was conducted at ICRISAT Center, Patancheru, India from June 1984 to April 1988 on a shallow Alfisol to determine whether the productivity of annual crop systems can be improved by adding perennial species such as Leucaena leucocephala managed as hedgerows. Except in the first year, crop yields were suppressed by Leucaena due to competition for moisture. The severity of competition was high in years of low rainfall and on long-duration crops such as castor and pigeonpea. Based on total biomass, sole Leucaena was most productive; even on the basis of land productivity requiring both Leucaena fodder and annual crops, alley cropping had little or no advantage over block planting of both components. Application of hedge prunings as green manure or mulch on top of 60 kg N and 30 kg P 2 O 5ha−1 to annual crops did not show any benefit during the experimental period, characterized by below average rainfall. Indications are that (i) alley cropping was beneficial in terms of soil and water conservation with less runoff and soil loss with 3 m alleys than with 5.4 m alleys, and (ii) root pruning or deep ploughing might be effective in reducing moisture competition.