The case examined is the Carrizo Valley irrigation scheme in N.W. Mexico. Members of the ejidos (land holding communities) as beneficiaries of the agrarian reform, were granted usufructural rights over 76 per cent of irrigated land, and were obliged by decree to form credit societies and farm collectively. This article documents some of the internal and external factors which brought about the progressive disintegration of the centrally managed and unified collective production units. It then identifies some of the major problems facing the cjido sector as a result of its dependence on other sectors, and examines attempts at solving these problems through the creation of Unions of Credit Societies.