Five years ago, authorities believed that they had brought under control the narcotics industry centered in these rugged mountains along Mexico's Pacific coast. A special Army unit, aided by U.S.-supplied helicopters, had seriously disrupted cultivation of opium poppies and marijuana here.

Today the authorities know better. Local farmers are planting the illicit crops at the bottoms of deep ravines and canyons where they cannot be seen from the air. These highlands, 450 miles south of the U.S. border, remain the only significant source of heroin in the Western Hemisphere.

Moreover, the crackdown begun in the mid-1970s failed to break up a network of drug traffickers who were raised in this area and have handed on the family business from one generation to the next. The antidrug offensive, called Operation Condor, mostly jailed peasants who grow the crops rather than traffickers who buy the harvest and arrange for delivery to the United States.

As the Army grew troublesome and as police reportedly demanded increasingly large bribes, the drug bosses moved south to Guadalajara, Mexico's second-largest city. From there, they oversaw a revival of the Mexican drug industry marked by two significant developments in recent years:

* For the first time, marijuana has been planted on a substantial number of large farms. These "plantations" range as large as 500 acres, and many use irrigation, fertilizers and insecticides to maximize output.

As a result, Mexico replaced Colombia as the principal supplier of marijuana to the United States in about 1982, according to U.S. Drug Enforcement Administration officials. Mexican marijuana once was considered inferior in quality to Colombian, but under the supervision of agronomists and botanists this country now produces the sinsemilla or "seedless" variety preferred by U.S. consumers.

* In addition, Mexico has become a major stopping-place for cocaine routed from South America to the United States. About six tons of cocaine each year, or 30 percent of total U.S. "imports," pass through Mexico before reaching the United States, according to the DEA.

Much of the cocaine is refined in Mexico in clandestine laboratories, which often are located on isolated ranches. The cocaine business has brought Mexican dealers into contact with some of the world's leading narcotics traffickers, and the Mexicans' contacts now extend from Peru and Ecuador to Spain and Italy.

Despite this revival, the Mexican drug trade drew relatively little attention from the United States in this decade until six months ago. Operation Condor temporarily had shut down most of the traffic in the late 1970s, and the State Department wished to play down U.S.-Mexican differences, U.S. sources said.

Interest began to focus on Mexico again with the discovery in November of a cache of 8,000 tons of marijuana. It alone was larger than some U.S. estimates of an entire year's production in Mexico. Then in February, Mexican traffickers in Guadalajara abducted and killed DEA agent Enrique Camarena Salazar and a Mexican pilot employed by the DEA.

"Uncle Sam hadn't realized it, or didn't care" about Mexico's increasing role, a DEA agent said. "Maybe we were too busy looking at Colombia. There's a lot more looking at Mexico now."

Mexico's narcotics trade, which also includes large-scale manufacture of pills such as amphetamines and barbiturates, probably now touches every part of the country, investigators say. But the industry originated in these mountains, part of the Sierra Madre Occidental range, and this region continues to play an important role in the trafficking. The point where this state, Sinaloa, meets Chihuahua and Durango states sometimes is called the center of Mexico's own "golden triangle."

Immigrants of Chinese origin, who moved to Mexico after helping to build the U.S. transcontinental railroad, planted the first opium poppies here around the turn of the century. The poppies became big business during World War II, when demand rose sharply for morphine to relieve the pain of soldiers' wounds.

Poor farmers found that they could earn much more money from poppies -- whose fruit yields a milky liquid refined to make morphine, opium or heroin -- than from their traditional crops of corn and beans. By the late 1960s, many campesinos, or peasants, had diversified and were planting marijuana as well.

This was the situation that led the Mexican government, with U.S. encouragement and financial backing, to launch Operation Condor. The Condor antidrug unit still operates out of a modern white barracks in this county seat with a population of 3,500, and the Army regularly announces how many hundreds of acres of marijuana and poppies it has burned or uprooted.

But investigators and local residents say that the mountains still conceal hundreds or thousands of small plots of illegal crops. Soldiers frequently find only women and children at their homes in the mountains because the men are out tending these patches.

The reason for the farmers' persistence, of course, is money. Between four and six poppy plants nurtured to harvest will yield a kilogram (about 2.2 pounds) of negro, or black, worth between $9,000 and $13,000. Negro is the gummy substance left after boiling the liquid drained from the poppy's fruit. Traffickers usually buy negro from the farmers and then refine it further .

Marijuana must be planted in larger quantities to fetch such large profits, thus increasing the grower's risk of being caught by the Army. On the other hand, marijuana plants are concealed easily among cornstalks, while the poppies' brightly colored flowers are more likely to attract the attention of helicopter-borne soldiers.

"If you only grow corn, you don't earn enough to pay your living costs for the time it took to grow it. If you grow poppies or marijuana, you can earn enough to support you not only this year, but for years to come," said Ruben Rocha Moya, a university professor and left-wing politician who comes from this area and has written about its social problems.

The men identified by Mexican and U.S. officials as three of the nation's top drug dealers -- Rafael Caro Quintero, Ernesto Fonseca and Miguel Felix Gallardo -- all come from this area but moved to Guadalajara in the late 1970s. Police arrested Caro Quintero and Fonseca last month in the crackdown following the killing of DEA agent Camarena, but investigators surmise that others already are stepping in to take their places.

Caro Quintero, 33, and Fonseca, about 60, both are said by officials to come from families that were involved in the narcotics trade. Fonseca, nicknamed "Don Neto," took over as the "godfather" of the local trade from 1960s drug king Pedro Aviles, according to U.S. and Mexican officials.

Caro Quintero and Fonseca both dealt primarily in marijuana, drug agency officials say. Theirs are the large farms that have sprung up in recent years, dwarfing the mountainside plots of their hometowns.

Farmhands have been recruited by the thousands in recent years to work as migrant laborers in the marijuana fields. The workers are paid between $13 and $20 a day, a huge amount in a country where the minimum wage is less than $4 a day, and they receive free transportation in trucks and buses to the fields. From this municipality alone, which has a population of about 35,000, about 3,000 youths left last autumn to pick marijuana, local officials estimate.

Residents here even have developed a slang expression to say that they are working in the marijuana fields: they say they are working in el norte chiquito, or "the little north." This is a play on "el norte," or "the north," which refers to working in the United States, and reflects the fact that many of the larger plantations are north of here in the Mexican border states of Chihuahua and Sonora.

While Caro Quintero and Fonseca were building up the marijuana trade, officials say, Felix Gallardo was doing the same for cocaine. The DEA says he is the top Mexican dealer involved in what it calls "the Mexican trampoline" that "bounces" cocaine from South America to the United States.

Felix Gallardo's main contact in the cocaine business has been a Honduran who uses the name Jose Mata Ballesteros and who recently was arrested in Colombia on a tip from the DEA, officials say. Mata Ballesteros has been called by U.S. officials the "administrative, management genius behind the Mexican trampoline operation."

The wave of recent arrests certainly has hurt the Mexican drug trade, but it will take a lot more to cripple it, U.S. officials say.

"There's always somebody that's going to step into somebody else's shoes," a DEA agent said. "They've rolled up a few major traffickers, but they haven't done anything about the traffic itself."