The Carter administration and key congressional interests are in the midst of a litt-noticed but bloody struggle over the traditional method of allocating agricultural research funds.

At issue is whether billions of federal dollars will continue to be funneled through the nation's land-grant colleges, as they always have been or whether the process will be thrown open to the agricultural equivalent of competitive bidding.

Involved in this, administration officials say, are the directions and to some extent the creavity, of future farm research in this country.

Also involved is who runs the Agriculture Department-Jamie Whitten or Bob Bergland.

The focus of the fight is the administration's request for $30 million to be put up for competitive grants. The idea is to begin to attract to agricultural research a broader spectrum of scientific talent, and to involve the nation's most prestigious schools, such as Harvard and the California Institute of Technology, where agricultural research money has never gone before.

There is a large segment of Congress that wants none of this. There is a strong fear in Congress that if farm research funds go to places like the Massachusetts Institute of Technology and Stanford it could be the beginning of the end for land-grant colleges like Michigan State and Mississippi State that have won the lion's share of the farm research budget since the land-grant system was begun 116 years ago.

Not so, insists the Carter administration which claims that the competitive grant system will only enliven agricultural research in the United States.

"The tension caused by this budget request," says Dr. M. Rupert Cutler, assistant agriculture secretary for research, "comes from our attempt to get some new blood in the scientific community dealing with agricultural problems. It's that simple."

So far, the Carter administration is losing. The House Appropriations subcommittee on agriculture two weeks ago cut out the entire $30 million. Last week, the full House sent the Agriculture appropriations bill on to the Senate with no money in it for competitive Grants Research Project.

"It always pays to follow what's tested, tried and true," explained Rep. Whitten (D-Miss.), chairman of the subcommitte on agriculture and the acknowledged leader in the House against the administration's move. "It pays to put the money where you can expect returns."

What's tested, tried and true to Whitten is the money funneled to the land-grant schools through the Hatch Act, which does not call for competition. Whitten's subcommittee appropriated $109.7 million for Hatch Act research money to land-grant institutions, $12 million more than the administration request.

The way land grants work, money is parceled out to all states and Puerto Rico for their land-grant institutions. The schools get the money with no competition. The size of their grants depend on farm populations and outputs.

In contrast, competitive grants go only to institutions that submit proposals that service the "peer review" process. Institutions compete for research money, with the winners getting the contracts after review of the bids by their peers.

The Agriculture Department did not help its cause when it asked for $98 million in land-grant research money, $12 millions less than it requested last year. Congress bristled at the idea that the hand-grant institutions would get $12 million less this year while the Harvards and the MITs might get $30 million in new money.

"There ought to be competitive grants but the money was supposed to be in addition to and not instead of ," said Rep Mark Andrews (N. D.), ranking Republican on the agriculture subcommittee. "This is not what we had in mind."

There's little question that Andrews and subcommittee members like Rep. Bob Traxler (D-Mich.) were also suspicious of a competitive grant system where peer-review involves the award of money to scientists who are often their colleagues.

"I don't think we want to do away with something that's worked for 100 years," said Andrews, "and substitute for that a peer group of 10 scientists who maybe went to school together. None of them stand for election. there's no way for there to be open hearings on what they've done."

To make sure Agriculture gets the "message." Whitten's Appropriations subcommittee tacked on some unusual language to the Agriculture bill it sent to the House floor. Not a single amendment was proposed to change them.

Of the $334 million appropriated for agricultural research, the subcommittee "ordered" that $215 million be spent on personnel in the Agricultural Research Service. This ensures that Agriculture will not "divert" any of its own funds to universities.

It was the first time the subcommittee had earmarked money for personnel. The panel, also for the first time, earmarked research money for specific plant and animal diseases. Traditionally, Agriculture has given money to the 50 states and let them decide how to spend it on regional pest problems.

Not this time, Whitten's subcommittee ordered that $100.000 be spent on cattle fever tick research and $100.000 on mesquite research. It ordered $154.000 for research on the Japanese beetle. Agriculture requested none of this money.

"The line-item stuff doesn't bother me too much because it's in such small amounts," Agriculture's Cutler said. "But it's another way they're sending us the message this year."

The administration is lobbying hard for competitive grants before the Senate Appropriations subcommittee, whose chairman, Thomas F. Eagleton (D-Mo.). has indicated sympathy for that approach.

President Carter has sent personal letters to Eagleton, urging him to approve the competitive grants. Agriculture Secretary Bob Bargland attacked Whitten personally in testimony before Eagleton, accuring Whitten of "seriously impairing" his right to run the Agriculture Department.

"I view this as a very serious matter," Bergland said at the end of 14 pages of testimony he gave before the Senate subcommittee, "and hope that you [the Senate] will consider these comments very seriously in your review of the USDA budget."

Agriculture has made a strong case for the program in the Senate, which gave it $15 million in the fiscal 1978 budget to get the program underway. The first request for bids left Agriculture only six weeks ago and the response was what Agriculture aide Joseph Key called "astounding."

In six weeks, Agriculture has received 1.109 proposals requesting more than $200 million in research money. Proposals came from university scientists in every state but Alaska. They came from Harvard, MIT. Cal Tech. Stanford. Yale Michigan. Northwestern and the University of Chicago.

Ironally, 722 of the 1.109 proposals have come from the land-grant colleges. Mississippi State sent in three, the University of Georgia sent in 20, Michigan State 30 and Cornell University 35.

"Competitive grants doesn't mean the land-grant schools are excluded." Agriculture's Cutler said. "All I know is that it would be a tragedy for American agricultural research if we have to turn all these people off."