This paper summarizes a 22-month ethnographic study of rural Shandon (California), a community that demonstrates the social and demographic changes resulting from agricultural intensification in rural California. Changes in the Shandon area's agricultural production have produced a demographic shift from the homogeneous Anglo-American farming and ranching community of the 1960s to the current heterogeneous community, where over one-third of the population consists of Mexican-American farm laborers producing high value, labor intensive, specialty crops. This shift was documented by school district records. A strong ethnic boundary separates Shandon's American and Mexican communities, but flagrant systematic discrimination is found only in the rental housing market. Children of both groups readily cross the ethnic boundary, influenced by systematic integration and small class size in Shandon schools. Consequently, Mexican-American children have graduation rates and occupational mobility equivalent to Anglo children. Because of low wages, a prosperous agriculture in California actually has added to the number of local poor, and has done so in the form of an ethnically distinct immigrant population. In areas similar to Shandon, the scale and composition of foreign immigration stimulate a nativist reaction and increase ethnic tensions in the absence of racially divided labor markets, racially based systems of exploitation and discrimination, or economic crises. (RAH)