The paper examines the social structure of Canada's agricultural production. It argues that "the official development strategy is typical of state involvement in maturing capitalist economies and that, in so far as these policies are successful, they bring to an end small scale production of primary products by absorbing rural people into an industrial capitalist society". In 1961, the Federal government initiated an agricultural rehabilitation and development programme. Later the legislation was expanded to include the whole question of regional development. A detailed breakdown of farms by economic class in 1971 indicated that the petit bourgeoisie, although still dominant in numbers, was economically dominated by a small group of large capitalist enterprises, although there was much variation by region and type of product. This relative weakness of the petit bourgeois system of production resulted in rural poverty and regional depopulation. Large scale, technically sophisticated industry, located in the major urban markets, had made small manufacturing uncompetitive, even in its local markets. In order to provide for their families, many of the poorest farmers migrated to more rewarding urban employment. In so far as they are successful, the government policies on rural and regional development in Canada have actually sped up this process. (NQ)