The Agriculture Department is threatening to kill about 1,000 rare and exotic birds in order to protect the American chicken.

The birds, being held in an Alexandria warehouse, include a number of Moluccan cockatoos and Australian cockatiels that are valued at $1,000 each. They are scheduled to die today because animal inspectors say they have been exposed to exotic Newcastle disease, a foreign plague on this nation's billion-dollar poultry business.

"It very deadly . . . an insidious thing," said veterinarian W. E. Bechdolt, who was in California nine years ago when the worst outbreak of the disease wreaked havoc on the poultry industry on the West Coast. Before that epidemic could be checked, Agriculture officials said 12 millions chickens were dead, causing losses amounting to $56 million.

"It's a holocaust," complained Kevin Smith, the 19-year-old president of Smith's Exotic Aviaries Inc., which owns the threatened birds. Smith started the business in his Herndon home four years ago and it is now the largest wholesale distributor of exotic birds in the middle-Atlantic states.

"No matter what species a bird is . . . whether it's a pet or on the endangered list . . . if it has feathers . . . they want to kill it," said Smith bitterly.

Agriculture officials admit that in a beak-to-beak comparison, a 69 cents-a-pound American chicken does not fare well against a rainbow-colored, South American parrot, which doesn't say a word for less than $1,000. But the true comparison, say officials, is between that parrot and the entire $14 billion American poultry industry.

"People say, 'How can you kill such pretty birds?'" said an agriculture spokesman yesterday. "We tell them we've got to protect millions of birds."

Exotic Newcastle disease is caused by a highly contagious virus that can affect all species of birds and amost always kills young birds that contract it. It is not a hazard to people who consume eggs and poultry products, agriculture officials say, but an outbreak of the disease on the East Coast could sharply curtail poultry production and boost the cost of chicken by as much as 20 cents a pound.

Agriculture officials said they discovered the bird disease last month in Pennsylvania after the death of a yellow-naped Amazon parrot that had been sold by Smith's firm.When officials traced the parrot back to the Alexandria aviary, they said they found another Amazon parrot that tested positive for the virus.

Smith said he bought the parrots from a certified "quarantine station" in Southern California. Agriculture officials said that the Los Angeles dealer who supplied the birds is being investigated on charges of circumventing the 30-day quarantine required for all imported birds. That same dealer was arrested last month for allegedly smuggling more than 200 Amazon parrots into the United States from Central America, agriculture officials said.

"We understand it's more profitable to bring birds across the [Mexican] border than marijuana," said Bill Roenigk, a spokesman for the Washington-based National Broiler Council, which represents most of the poultry companies in the United States. The council is supporting the planned kill of Smith's birds, saying the disease poses a serious threat to poultry farmers.

Another group in support of the Agriculture Department plan is the American Federation of Aviculture, which includes more than 30,000 bird breeders, pet shop owners and wholesalers. Clifton R. Witt, a vice president of the federation, said the "USDA is handling this properly," even though some pet store owners in the federation who bought birds from Smith may have some of their own stock killed.

Agriculture officials would not say yesterday what method would be used to kill the estimated 1,000 birds at Smith's warehouse at 4548 Eisenhower Ave., near Cameron Station and the Capital Beltway. Officials did say, however, that the birds would probably be gassed or injected with lethal drugs. h

Agriculture officials said that Smith's firm will be compensated for all of its birds that the department kills. Negotiations were under way yesterday over what would be a "fair" price for the warehouse full of feathered stock.

Smith said he does not believe the government's payment will approach his actual loss. He declined to place a dollar value on his inventory.

"Some of these birds you can't replace," he said yesterday. "They are no longer imported. Then we have some breeding birds . . . that took five or six years and a lot of time, money and luck. You can't just go to Murphy's and buy another one."