TAMUIN, Mexico (AP) _ The creators of a ''minicow'' produced near this northern town through cross-breeding and genetic engineering claim the smaller species can revolutionize cattle and milk production in the Third World.

The 27 animals grazing on a ranch at nearby Tanleon are the product of 18 years and six generations of genetic manipulation. The smaller versions of the ox-like Brazilian zebu or Brahma species stand 3 feet and weigh 300 pounds.

The experimenters began with a small pair of zebu that weighed more than a ton each and stood nearly 5 feet tall.

''Each generation has become about eight inches shorter than the one before it,'' says Angel Castrillon, the local rancher who has conducted the minicow experiment since its start. ''We have created a genetic work that produces almost the same quantity of milk as a normal cow, occupies much less space and uses fewer resources,'' he told a visitor.

People working on the project believe the mincows will enable many densely populated, land-poor countries to start or upgrade their cattle industries.

Ten minicows can graze on less than three acres of land, the area one normal cow generally requires. Those 10 minicows produce 2,970 pounds of meat, about 330 pounds more than the one big cow would.

Horses and other animals have been reduced in size in other parts of the world, Castrillon said. But, he said, ''what surprised us was that the minicows are producing three of four liters (about one gallon) of milk a day, compared to the six liters (about 1.5 gallons) that a normal cow produces.''

Castrillon, whose ranch is in the fertile ''Huasteca'' region of north central Mexico, first proposed the idea to Manuel Berruecos, a geneticist at the National Autonomous University of Mexico, at a Mexico City conference.

The rancher said he suggested doing the opposite of what animal breeders traditionally do: instead of producing bigger and heavier specimens, why not make them smaller, on the model of the bonsai trees in Japanese gardens?

''Unfortunately we have the theory and the prejudice that the bigger things are the better,'' Berruecos said in an interview in Mexico City. ''We want to make everything bigger, but the world isn't growing. Our project may seem like science fiction, but we are close to a world that perhaps will have to adopt these (types of) measures.''

To achieve the smaller species, experimenters selected prospective breeding candidates with small heads and cross-bred to achieve smaller offspring.

In the laboratory, Berruecos works to weaken and eventually eliminate altogether large-growth genes in the herd's semen.

Berruecos, who holds a doctorate from the University of North Carolina, claims that ''in terms of quality, our experience shows no difference in the milk or the meat.''

Field specialists from West Germany, Japan and the United States are watching the experiments with interest. In fact, Castrillon said one American offered $1 million to take over the research, an offer he said he rejected.

Castrillon's ranch is home to 15 adult minicows and a dozen offspring. Another three are under care of the veterinary faculty at the national university.

''The minicows are gentle, but also very strong. They come close to you and strongly nudge your legs,'' said Anabella Castrillon, the rancher's wife.

The researchers' next step?

''We're planning to cross the tiny zebus with the Jersey type, which is small and the best milk producer,'' Castrillon said.

He said he will continue cross-breeding until he produces the tiniest possible species with maximum productive efficiency.

''We're thinking that this species would be about 2 feet tall.''