hen the chairman of the Prince Edward County Board of Supervisors harvested more popcorn than he could eat last fall, he did what most civic-minded white citizens of Farmville would do: he donated the surplus to the Prince Edward Academy.

From Charles B. Pickett's popcorn to the local optometrist's free eye exams for students, the 10,000 whites of this poor community for 22 years have boosted their school in an extraordinary way, lifting it from scattered church basements to a $1.75 million hilltop campus with three cases of athletic trophies and a remarkable record of college placements.

The academy has become so much a part of Farmville life that it is sometimes possible to forget the force that created and still nourishes it: the belief that white children should not have to go to school with blacks. Prince Edward shut its public schools for five years rather than integrate them, and the academy has offered an alternative--and an example for segregationist educators elsewhere--ever since.

"This is a southern county," board chairman Pickett said last week. "I have colored neighbors and white neighbors. I have one colored man who's been with me for 25 years, so I must have treated him all right.

"But I've just been raised that way, raised that there were two separate races," said Pickett, who was first elected to the county board in 1959, the year the public schools were closed. "It's a way of life."

Prince Edward Academy is perhaps the best known of 111 allegedly discriminatory schools whose tax-exempt status would have been restored under a Reagan administration policy announced two weeks ago. When the president effectively reversed the decision after three days of protest from civil rights and congressional leaders, academy headmaster Robert T. Redd was disappointed but not disheartened.

"We've survived much worse than this," said Redd, whose school lost its tax-exempt status after a long battle last year but still pays no local property taxes.

Prince Edward's dual school system has thrived in a tobacco and dairy farming county 60 miles southwest of Richmond in Virginia's Southside where the average per capita income is $5,994, less than half of Arlington's $16,000. Prince Edward's population in 1980 was 16,000, not much larger than the 1830 total of 5,000 whites, 500 free blacks and 8,600 slaves, though the county is now 62 percent white.

A dime still buys two hours of parking meter time in front of the Farmville Baptist Church on Main Street, and dialing five digits still connects you with any local telephone. The county prosecutor has been named Watkins for 92 years: William F. Watkins Jr. was elected in 1963 to replace his uncle, who had been elected in 1934 to replace his father, who in turn was first elected in 1890.

Whites in Farmville, who control the few minimum wage jobs that exist, fought off school integration in an atmosphere of calm civility, and they boast that relations between the races have always been fine. There have never been riots or confrontations, and blacks have never embarrassed the academy by encouraging a black to apply.

"As far as race is concerned, it's a dead issue in this county," said Commonwealth's Attorney Watkins.

Education in Prince Edward remains more segregated than in most of the South. About 950 whites attend the academy, while about 550 whites and 1,650 blacks go to public schools. White representation in the public schools, which have improved dramatically since they reopened in 1964, has increased from virtually none to 26 percent.

The gradual erosion of white unanimity has come despite pressure for a solid front from the old guard. Many white parents believe the academy offers more rigorous discipline, and many say the principles of segregation and local control they championed two decades ago still must be defended.

Black leaders say their children's education has suffered as a result. James E. Ghee Jr., a Farmville lawyer who was 14 when the county locked the schools in 1959, said white taxpayers remain reluctant to support the public schools, which are controlled by a majority-white county board (five whites and two blacks), a majority-white appointed school board (six whites and two blacks) and a white superintendent. According to the Virginia Education Association, Prince Edward ranks 112th out of 136 Virginia localities in the proportion of its wealth it spends on public schools.

"The white power structure still has not only the political power, but the economic power," Ghee said. "That might have accounted for the fact that there was no open hostility. There was no alternative."

Until 1954 Prince Edward differed little from any other Southside county, where blacks attended separate but--thanks to pressure from the NAACP--gradually improving schools. In May 1954, however, the Supreme Court spotlighted Prince Edward and four other jurisdictions when it ruled in Brown v. Board of Education that separate but equal public schools would violate the Constitution.

County leaders stalled as long as they could and then, in 1959, acting under Virginia's "Massive Resistance" policy, dissolved their public school system. For five years most Prince Edward blacks received little or no education.

"There are only four places in the world where children are denied the right to attend school: North Vietnam, Cambodia, North Korea and Prince Edward County," President Kennedy said in 1963, according to a history by Neil V. Sullivan, who for one year ran a program of free schools for blacks.

White children moved directly from public school to the academy in 1959, thanks to a remarkable pooling of community resources. Local carpenters built desks with lumber donated by local merchants. The Junior Chamber of Commerce bought grass seed for the football field, which a local contractor graded for free. High school students volunteered to drive school buses. Fourteen thousand volumes were collected for a library named for columnist James J. Kilpatrick, who as editor of The Richmond News-Leader championed the academy.

Today the academy is well ensconced on its hill, its modern gymnasium and single-story brick classrooms giving it the air of a modest community college. More than 700 admirers from Maryland and the South have visited the school for advice, Redd said. Eighty-five percent of academy graduates pursue some form of higher education.

The school, nonetheless, retains a pioneer spirit of community involvement and sacrifice. Teachers and guidance counselors earn less than they could in public schools. Students sit at desks purchased second-hand from public school systems around the state.

The academy has no cafeteria, because the federal lunch subsidies that would put meals within students' price range would also give Washington a wedge of control. Redd views the academy's history as a crusade against such federal interference.

"Everyone tries to make us out to be a bunch of damn rednecks. We're not," Redd said. "The Southern family takes a particular interest in religion and education, and we don't believe the federal government should tell us how to go about either."

In fact, government has helped the academy. Parents received state tuition aid in 1960-61, until federal District Judge Oren R. Lewis of Alexandria ruled the practice unconstitutional. For most of the school's history, donations of land, materials and money could be deducted from federal taxes.

James M. Fleetwood, Prince Edward's commissioner of revenue for 14 years, is the man who decides what gets taxed by the county. Fleetwood's wife ran the guidance department at the academy until last year, he scrimped to put three children through the school and he does not believe it should have to pay property taxes.

"If they the federal government determine the academy is taxable, they ought to do the same thing for every private educational institute in the country," Fleetwood said last week, leaning back from a bare desk in his courthouse office.

Just outside Fleetwood's office sat a reminder that the courthouse veterans no longer speak for the entire white community. Deputy commissioner Linda Burger, 31, is married to a Farmville native who graduated from the academy. But Burger and her husband send their 5-year-old boy to public school.

"There are definitely two factions here, but I find that a lot of the younger people feel the way I do," Burger said. "The public schools are definitely not the best in the world, but if we don't support them they're not going to grow."

Another white parent with a child in public school, attorney Marshall L. Ellett, said not all his friends were pleased when his eighth-grade son chose public school.

"They said, 'Here you are, an attorney in the establishment--you should support the academy, it stands for the things your daddy and granddaddy stood for, and the public schools are rotten, there's no discipline,' " Ellett said. "Some of it was kidding, some was serious."

Both Ellett and Burger add that they have nothing against the academy. "I know there are people years ago who put everything they had into that school, and you have to admire that," Burger said.

Still, the academy's enrollment has dropped from a high of 1,350 to 950, with an entering class two-thirds the size of the graduating class. Ghee said he believes that without the tax exempt status to spur donations the academy will not survive. Annual tuition has climbed to an average of $1,250, low for Washington but a burden for a rural family with two or three children.

"I don't think they can continue to pay teachers with 10 years experience $8,000 to $10,000 a year," Ghee said. "I believe even dedicated segregationists will say, 'I've got to eat.' "

Academy officials, who organized a fund-raising drive just before they lost their exemption, disagree. Redd says donations account for about 15 percent of the school's income. "They always said we were a fly-by-night school, and we wouldn't function over a year, maybe two," Redd said.

Redd said he believes integration cannot succeed because blacks are, on average, less intelligent than whites. "Most blacks simply do not have the ability to do quality school work," Redd told University of Delaware historian Raymond Wolters last year. The headmaster recently said his views have not changed, although "some individual blacks will perform even better than the top whites."

Redd denies that Prince Edward Academy is discriminatory. "We've never had a black apply," he said, "so how the hell can we discriminate?"

Today academy events are woven into the routine of Farmville. Radio station WFLO broadcasts academy football games on some weekends, Prince Edward County High games on others. News of the two systems appears side by side in The Farmville Herald, an academy booster.

"I look at it from the outside and it looks like a very unnatural situation," Ellett said. "If you stay here a while, it becomes a very natural situation."