CREDIT AND MARKETING OF SUGARCANE 63 prices at which the mills buy cane is specified by the state government which 'advises' mills to pay higher prices (Attwood, 1984). Sulphur plants are privately 'owned and located in towns like Shamli and Kairana and the cane has to be delivered to the plant. Kolhos are located in the villages and are owned by the shopkeepers or rich households. The data has been drawn from field studies carried out in western Uttar Pradesh which provides an interesting universe for studying problems with its wide use of new technology2 (Dasgupta, 1977) and commercialisation of crops. Muzaffarnagar district presents a particularly important case to be studied. The present paper is divided into sections. The first section deals with the introduction; the second section focuses on classification of peasantry; third section outlines the importance of credit in the-spread of new technology; the fourth section looks at the credit markets; and the fifth section analyses at the marketing of cane by the peasants. For peasants to find markets for cane is important. If they get high prices for their products, the return rises for those who are able to sell their products at mills; and finally we summarize our findings. In the beginning of the twentieth century, in western Uttar Pradesh the historical factors were acting positively towards expansion of cultivation of commercial crops: the prevalence of khudkast proprietors (land cultivators by owners also called bhaichara)3, public investment in irrigation, availability of credits and sugarmill (Pradhan, 1966). While in eastern Uttar Pradesh, parasitic zamindars, absence of public investment in irrigation, rigid revenue burdens—the mass of the peasantry has been reduced to such a pauperised situation of dependence on merchants and usurious capital that the class of genuinely independent small producers—middle peasants—has been reduced to insignificance. Instead it created a mass of indebted pauperised peasants and tenants on the one hand, with no surplus to invest, while at the same time a small minority of merchants and landlords with surplus and capacity to invest, but no interest to invest in agriculture because they find high returns from pre-capitalist sources like ground rent and usury interest (Amin, 1984). Western Uttar Pradesh was historically among one of the most dynamic regions in India, with the highest rate of growth of both foodgrains and commercial crops output; under a moderate khudkast system, it enjoyed the benefits of the heaviest concentration of public investment in canal irrigation along with Punjab in whole India. At Independence, the region emerged with one of the least polarised class structures and with a strong and large class of independent producers (Baden-Powell, 1972). Thus, conditions were exceptionally favourable in this region for widespread adoption of new technology. This is not to say that new technology is benefiting all rural households.4 On the contrary, we find in our field study that ownership of tractors,.