In the valley of Tehuacán Mexico, the Calipam sugar central is bringing about the socio-economic development of small, individually unviable properties within its tributary area. The economic dominance by the sugar central of its tributary area results in its ability to control and direct changes in the economy of that area. The valley of Tehuacán is a dry, densely populated area, with a great number of very small agricultural land holdings. One major problem of the area is that individually these properties are too small to achieve an economy of scale of production. Within the tributary area of the Calipam sugar central, however, it appears that a large number of small sugar cane producing farms are undergoing socio-economic development. It is then important to examine why this is taking place, and what is the part of the sugar central in this socio-economic development. The topic for this study first came to the attention of this writer during a research season in Mexico in 1967. During summer of 1968 this writer spent a research period in the valley of Tehuacán. At that time, through access to the records of the Calipam central, and through individual investigation of the cane system of the valley, including a sample of some ten percent of the peasant farmers of the cane area of the valley, a considerable amount of verbal evidence and documentary material was obtained. Furthermore, through research into statistical sources and records in numerous government ministries in Mexico City, Oaxaca, Puebla, and Tehuacán, it has been possible to obtain a reasonable picture of the role of the sugar central in the valley of Tehuacán. From the data collected, it has become possible to assess in some detail the abilities and opportunities for the central to act as an agency for the socio-economic betterment of its tributary area. Moreover it has become possible to show some of the environmental, economic and institutional constraints which cause the central to act in a manner which benefits not only the central itself, but also the small farmers of its tributary area. It was found that, in the case of the Calipam central, although the principal motivation for the actions of the central were those of economic self-interest, the central acted as an economic stimulus for the small farms which were associated with its cane sugar production system. As well, largely due to the legal contracts and constraints upon the actions of the central, credit programmes and social programmes were provided for the small farmers of the cane system. These programmes acted both as incentives to produce cane for the central, and as programmes of benefit to the well-being of the small farmer. Although the nature of controls, and the exercise of power by the central are closely parallel to the traditional hacienda system or the classic plantation type, the most important difference is that the small producer receives direct benefit from the system. The central, properly controlled, can then be seen as a developmental, rather than an exploitive system. The success of the Calipam central in the valley of Tehuacán suggests that the central system may be useful as an agency for socio-economic development of other regions where realities of population pressures or tenure laws prevent the achievement of economies of scale on the present small agricultural units. The success of the central system is to a large extent predicated on a mutually beneficial relationship between the peasant and the central, as part of a cash crop production system. / Arts, Faculty of / Geography, Department of / Graduate