The complex historical relationship between commercial agriculture and capitalist transformation is examined here by looking critically at cotton production in two areas of the Ottoman empire during the nineteenth century. Cotton became important economically on large farms established to meet increasing foreign demand. In Egypt, which was a major region of the southern empire, a state monopoly was established under the control of a governor with the object of participating in the growing foreign trade in cotton-based products. These attempts did not, however, lead to a transformation of rural property relations in Ottoman agriculture. This process of commercialisation led much rather to the consolidation of petty commodity production, not least because of its economic role as a source of labour-power.