Organic Farms Inc., a Beltsville-based company long regarded as one of the pioneers of the organic food industry, has filed for bankruptcy court protection from its creditors.

At same time, the Beltsville wholesaler said this week that a new owner has agreed to invest $200,000 in the nine-year-old company in hopes of reinvigorating what has been the East Coast's largest organic produce distributor.

The new owner -- and chairman -- is Allan Gallant, former chief financial officer of B. Green & Co., Maryland's largest wholesale grocery company.

"This is the company that helped start the {organic} industry nine years ago and I don't want to see it go under," Gallant said yesterday. "The only way I had a chance of saving it was to file Chapter 11 and put a hold on the secured creditors while I put money back into rebuilding the business."

Organic Farms's troubles come at a time when the interest in organic produce appears to be on the wane, at least from Washington's largest supermarket chains. Pressed by consumers to stock pesticide-free fruits and vegetables after the Alar chemical scare in early 1989, both Giant Food Inc. and Safeway Stores Inc. set up separate organic produce sections in several stores to test overall interest.

Giant discontinued its test after two months; Safeway did after four -- with both chains citing disappointing sales. "It just didn't work," said Giant spokesman Barry Scher. "The sales never materialized." Supermarket officials noted that the organic produce often cost nearly twice as much as conventional produce.

Organic Farms executives do not blame the supermarkets for Organic Farms's financial troubles. "A lot of it was our own fault," said Joseph Dunsmoor, a farmer who started the company after he saw a need for a marketing outlet for organic food -- not just fruits and vegetables but also organic juice, grains and even potato chips.

"The company overpositioned itself after Alar," Dunsmoor said yesterday. Among other things, Organic Farms bought more organic apples than it could sell. Additionally, he said, "we spent money on fancy labels" and training seminars for farmers "and ran out of cash and couldn't buy any inventory."

Complicating matters was the arrival of a competitor, Albert's Organics, one of the nation's largest organic food wholesalers. Based in Los Angeles, Albert's opened an East Coast outlet in Kennett Square, Pa., earlier this year.

"That absolutely creamed off some of our business, no question about it," said Gallant. "We probably lost $80,000 to $90,000 a week" to Albert's.

Those circumstances combined to cut Organic Farms's annual sales -- which in 1988 totaled nearly $20 million -- to $7.5 million this year, half of last year's sales of $15 million, Gallant said.

Gallant is confident, however, that he can turn the company's fortunes around. Despite the disappointing supermarket sales here, the organic industry has been growing at breakneck speed, selling $1.25 billion in 1989, a 40 percent increase from $893 million in 1988, according to marketing research firm Marketdata Enterprises. In 1980, the organic industry had sales of only $174 million.

For a turnaround to be possible, Gallant said, bankruptcy court protection is vital. He said debt totaled slightly more than $3 million. Its assets are listed at about $1.25 million.