The folks at Farm Fresh Inc. went out into the Kidder, Peabody & Co. garden this week and harvested a $39 million crop. That brought to $79 million the amount of cash the fast-growing Norfolk supermarket chain has raised since it went public two years ago.

"We're in the third year of a vigorous expansion program," said vice president A. Kent Little, noting that Farm Fresh was operating 30 stores at the end of 1984 and will build seven more this year. Two will be built in Richmond, one in Tidewater and four in eastern North Carolina.

Seeking a new niche in the food market business, Farm Fresh builds what it calls "super combination" stores -- elaborate facilities that offer customers the usual supermarket products plus hardware and automotive items, clothing, books, jewelry, cameras, toys and video games. Then, when shoppers are finished checking out, they can stop at the store's cafeteria. Farm Fresh's effort is to create a mini-shopping center, one that promotes family shopping.

Profits on hardware, automotive and clothing items are higher than the razor-thin margins that generally accompany food store operations. In an industry where the net aftertax margin averages 0.9 percent, and the Giant chain does well at 2.1 percent, Farm Fresh is expected to make 2.7 percent, reported Kenneth M. Gassman Jr. of Wheat, First Securities in Richmond.

Farm Fresh sales jumped 22 percent from $294.4 million in 1983 to $359.5 million in 1984 and its profits moved up 38 percent from $7 million (79 cents a share) to $9.7 million ($1.02).

Farm Fresh, which has been in business since 1957, went public in 1983 at $24.50 a share and raised $22.4 million. It then split its stock 3 for 2. Last year the company issued a 2 percent stock dividend and, in October, sold more stock and raised $18 million.

The latest money-raising effort was in the form of 7 1/2 percent convertible subordinated debentures due in 2010. That is another name for a corporate bond that allows the holder to trade it in for shares of stock at a specific price.

The Farm Fresh bonds cost $1,000 each, pay 7 1/2 percent interest and can be converted to stock at a price of $25.25. The stock's price was $20.375 on the day the bonds were issued. Farm Fresh pays no cash dividends.

An investor buys a convertible bond in the hope that the price of the stock will rise above the conversion price. For example: The $1,000 cost of the bond, divided by $25.25, will give the investor 39.6 shares. If the price of the stock rises to $30, the investor would be able to sell his shares (39.6 x $30) for $1,188, or a profit of $188, in addition to the interest he has already realized.

In the normal course of events, however, investors may prefer to hold onto the bonds. The price of a convertible bond will rise as the price of the underlying stock rises. Investors then are getting not only interest on their bond but a more valuable bond, as well.

Farm Fresh stock, traded over the counter, closed Friday at $20.375 bid. Its 1984 price range, adjusted for the 3-for-2 split, was between $13.675 and $19.125. The bond was quoted Friday at $1,005 bid, $1,012.50 asked, an indication that it was already selling at a premium.

Why do public companies raise money by selling convertible bonds, rather than by selling stock?

Steve Guttman, president of Federal Realty Investment Trust of Chevy Chase, who has just arranged a $35 million offering in convertible bonds, said there are several reasons:

* It is a way of selling stock at a price higher than the current market price.

* Convertible bond financing can be worked out with underwriters in a matter of days, while it takes two to three weeks to issue stock, during which market conditions can change dramatically.

* Commissions to brokerage houses on convertible bonds tend to run about 2 percent, compared with 6 to 7 percent on stock issues.

* A company generally can raise larger sums by using the convertibles.

* Is a way of borrowing money below the prime rate.

* Bond holders are not likely to convert for several years, thereby avoiding the dilution that accompanies new stock issues.

Federal Realty bonds pay 8.75 percent interest and are convertible at a price of $24, or 41.6 shares per $1,000 bond. Federal Realty stock closed Friday at $21.75. In the case of Federal Realty, Guttman said, investors are likely to hold the bonds until the dividends paid per share, now at the rate of $1.44 a year, exceed what investors are earning on their bonds.

Several dramatic moves are focusing attention on the stock of Maryland National Bank. First the bank, the largest in Maryland, announced a 100 percent stock dividend, which is the same as a 2 for 1 stock split and raised the dividend on post-split shares from 20 cents to 25 cents quarterly. Then, the bank decided to sell 1.7 million additional shares, which will increase the number of outstanding shares to about 17.3 million, an 11 percent increase.

David Spilman, the bank's vice president and treasurer, said that because of improvements in the price of its stock, the bank decided "the time was right" to raise new money. Maryland National stock, which closed Friday at $46.25 bid, sold at $37.50 last September and recently was as high as $52.

Legg Mason, an old-line Baltimore brokerage house, has bought Hill & Co. an old-line Cincinnati one-branch brokerage house. Hill has about 25 brokers and brings in about $3 million a year in gross revenue. Chip Mason, chairman of the Baltimore firm, said Legg Mason was approached by Hill, which wanted to join a firm with similar investment ideas. Mason would not disclose the acquisition price.

Hill will become a division of Legg Mason, giving the Baltimore firm a base in Cincinnati. Legg Mason already has 38 offices in the eastern United States, including an office in Columbus. Mason said he did not think his firm would go beyond Cincinnati. "Our desire," he said, "is to concentrate on the area from North Carolina's research triangle up through Pennsylvania."

Piedmont Aviation is "attractive for aggressive growth-oriented accounts," said Michael L. Mead, research director for Scott & Stringfellow in Richmond. Piedmont revenue, he noted, exceeded $1 billion for the first time in 1984, rising 36.1 percent over 1983. Profits, meanwhile, were up 127.8 percent from $25.5 million in 1983 ($1.82 a share) to $58.2 million ($3.75). Traffic figures, too, were impressive, Mead said.

Piedmont stock, selling at $30 a share, has been trading "in a sideways fashion, despite the company's rapid growth," Mead said. But despite the intensely competitive airline business, he said, Piedmont has shown an interesting blend of growth and prosperity.

Growth at Syscon Corp., which derives 95 percent of its revenue from government contracts, is expected to continue unabated, reports Dean Witter Reynolds Inc. analyst Joseph A. Rugilio Jr. Syscon, he writes, "racked up its 18th consecutive year of higher sales and earnings in fiscal 1984. . . and we expect this string of annual gains to be extended.

It is estimated," Rugilio adds, "that the government spends $6 billion to 8 billion per year on computer software, and forecasters believe that these expendituress could reach $32 billion annually by 1990." Rugilio believes that Syscon stock, selling at about $16.75, "is undervalued at current levels." As a result, Dean Witter is continuing its buy/hold rating on the stock.