BUENOS AIRES -- In the first part of this century, Argentina's humid grasslands fed Europe and made this the world's sixth-wealthiest country.

So in the late 1940s, when President Juan Peron decided to build a mighty industrial sector here, it was only natural that he turn to agriculture to finance his plan.

Over the next 40 years, through taxes and a variety of government regulations, Peron -- and successive presidents -- used income from cattle and grain production to build automobile plants, steel mills and petrochemical factories in Buenos Aires and Cordoba.

Today, another Argentine president, Raul Alfonsin, is turning to agriculture, but for the opposite reason.

Alfonsin is trying to revive the agricultural sector as part of his program to rebuild Argentina's deteriorating economy and to meet interest payments on the country's massive foreign debt.

But his plans to reinvigorate agriculture are hindered by low international grain and meat prices and by years of economic stagnation and triple-digit inflation that have left the once-bounteous agricultural sector decapitalized and unprofitable.

Argentina became the world's granary in the years leading up to World War II, thanks to a rich soil and climate that allows year-round farming and ranching.

But Peron challenged agriculture's preeminence when he imposed a tax on its exports and held down prices for meat and grains sold domestically.

For years, farmers were able to withstand the government's unfriendly policies, with Argentina enjoying some of the world's lowest production costs.

But by the late 1970s, the government policies began to take their toll, and livestock production became unprofitable. Many farmers slaughtered their cattle and increased grain production, especially in 1980 when President Carter embargoed U.S. grain sales to the Soviet Union to protest the Afghanistan invasion.

Argentina stepped in, shipping well over half of its grain production -- or about 15 million tons of wheat, corn and sorghum -- to the Soviet Union that year.

The temporary windfall masked a steady decline on the pampas, the name given to the rich flatlands in Buenos Aires province and bordering provinces. The area is roughly equal to Iowa, Nebraska, Kansas, Missouri, South Dakota and Illinois combined.

Argentina has lost several export markets, beginning with its biggest customer, the European Community, whose members subsidized local production to build up self-sufficiency.

Having lost most of its European market, Argentina then increased exports to Latin America, Africa and the Middle East.

But in the past few years, as the EC built ever-growing surpluses and began aggressively selling its excess at discount prices overseas, Argentina lost many of its newfound markets as well.

Then in the past two years, the United States has taken away additional Argentine markets, government officials here said, in seeking to counter EC subsidies with its own Export Enhancement Program.

The U.S. and EC export subsidies have also driven down beef and grain prices over the past two years.

Altogether, the United States and the European Community -- either through direct export subsidies or from the price decline blamed on their excess production -- have cost Argentina $11.5 billion in exports over the past five years, Agriculture Secretary Ernesto Figueras said in an interview.

Most recently, Figueras said, U.S. subsidies have taken away most of Argentina's soybean sales to India.

"The Soviets no longer buy from us either because they can buy from the rest of the world -- including the U.S. -- at subsidized prices we can't match," he added.

Dawson Ahalt, the agricultural attache at the U.S. Embassy here, rejected Figueras' charges, saying the United States only subsidizes trade with markets that the EC has already captured with its discount policies. "We have been very careful not to take away their {the Argentines'} markets."

With exports and prices down, Argentine farmers have reduced cattle herds and grain and oil-seed production.

The number of cattle -- 60 million 10 years ago -- declined to 50 million in 1987. Grain and oil-seed production, which was 44 million metric tons two years ago, fell to 32.6 million tons in 1987.

The situation looks better for 1988, with grain and oil-seed production expected to rise to 37 million tons and the number of cattle having stabilized.

Figueras attributed the improvement to a small increase in international grain and meat prices and the government's efforts to revitalize agriculture. Most notably, the government has eliminated or removed the export tax for most products.

The U.S. Embassy estimated that agriculture exports, which fell from $6.3 billion in 1984 to $4.3 billion in 1987, will be almost $5 billion in 1988.

Agriculture accounts for 70 percent to 80 percent of exports and 15 percent to 20 percent of gross domestic product.

Even with the rise in agricultural exports, Argentina will be left with about a $2 billion balance of payments deficit in 1988. The country, which is dependent on additional loans to meet interest payments, has a $54 billion foreign debt, third largest in the developing world.