t's a small place, with a yard full of heavy equipment out back and the smell of hogs everywhere, but to Delbert Spillman it's home, where he was born and makes his living.

The knobby hills bob and weave around the Deep River valley and were it not for a vicious watchdog that patrols Spillman's place, it would be just about paradise: good farm land, a solid rural tradition, people who stick together.

Trouble is, the U.S. Army Corps of Engineers has its eye on this enclave of tranquility in central North Carolina. The corps wants to dam Deep River so it can supply nearby Greensboro and High Point with water for growth and development.

If that happens -- and Congress already has authorized the Randleman Dam project -- Delbert Spillman will be among the first to go. He and at least 50 other farmers will have to give up their land in this productive part of Randolph County and find their way elsewhere.

"With the lake, farming around here will come to an end. Good land in this area is almost nonexistent. And there wouldn't be enough other land available to keep the little piece we have," said Spillman, 41. "Without the lake, farming will go on through the rest of my lifetime."

The farmers and their neighbors here have formed a coalition to battle the corps, but what's happening here is a microcosm of the push-pull over land use that has caught many of the nation's farmers during the last 15 years.

There is debate over how rapidly the crop land base is being lost to development, ranging from dams and highways to subdivisions and parking lots, but there's no question that it's happening at a steady and substantial rate.

A Department of Agriculture study last year, started by the Carter administration, found that nonfarming uses gobbled up about 3 million acres of agricultural land every year between 1967 and 1977. The Reagan administration has worked up its own figures, which show a loss of about 875,000 acres annually.

Once actual and potential crop land is paved or subdivided, it is lost to farming, a situation that the National Agricultural Lands Study (NALS) last year said "could seriously increase the economic and environmental costs of producing food and fiber in the United States during the next 20 years."

The issue has created no enthusiasm among the Reaganites, although Agriculture Secretary John R. Block has been a strong advocate of prime farm land protection.

Block was thwarted last year in an effort to get a presidential order setting protective guidelines. Opponents within the administration argued that farm land would be more effectively used if left to the forces of a competitive marketplace.

Congress, in the 1981 farm bill, then ordered the Agriculture Department to draw up land protection criteria that must be considered by federal agencies before they can go ahead with future projects such as dams, highways, airports and other land-consuming activities.

For the first time, the loss of agricultural production would have to be weighed against the need for the project. But the department missed its June deadline and now, sources say, its proposals may not be ready before year's end.

Rep. George E. Brown Jr. (D-Calif.), an author of the farm bill directive, said this week that "It is becoming increasingly clear that this administration opposes a meaningful federal role in agricultural land-protection efforts . . . . I fear that Congress can expect little in the way of concrete results in implementing the farm land protection policy act."

Robert Gray, who headed the NALS project and then joined the American Farmland Trust, a preservation group, charged this week that the Agriculture Department has "dragged its feet" in complying with the farm bill. But he also noted that there has been a "dramatic" surge of new state and local farm-land protection programs across the country.

"Since 1977 there has been a 20 percent increase in the rate of conversion of farm land to other uses," Gray said. "In other words, it is happening faster than before, but I'm encouraged with the activity at the state and local level. People are starting to ask more questions about the misuse of good agricultural land."

Encouraged as Gray might be, and even if the department had met its deadline, none of that would help the farmers here in Randolph County. Randleman Dam was authorized by Congress in 1968, which would put it outside the guidelines' reach.

The $159 million project is a textbook example of the conflict between farmers and their nonfarming neighbors over land use. For Greensboro and High Point in Guilford County to get the water they contend they need, they and the engineers decided the best source would be a dam in Randolph County to the south.

To make the project fit federal cost-benefit requirements, the corps had to assign nearly a third of Randleman's potential benefits to recreation. That would mean buying up 2,500 acres for recreation facilities, in an area where a half-dozen water recreation sites are within easy driving range.

That's not a lot of land, considering a national prime farm-land base of about 345 million acres. But the NALS survey last year projected that if land conversion continued at current rates in North Carolina, the state would lose another 966,000 acres of prime farm land by the year 2,000.

Harvey Fouts, the Randolph County agricultural extension agent, isn't taking sides. But he pulled some research data from his files on a recent morning that illustrate what the hubbub is all about.

"We believe there are at least 50 commercial farms -- and probably more -- in the area the corps wants for the dam," Fouts said. "There is no way the agricultural loss would be $250,000, as the corps claimed 10 years ago. I could comfortably say the annual loss would be $3 million."

Fouts calculated that 10 dairy farms in the area with 1,441 cows account for $2.5 million annual income, with production of 18.4 million pounds of milk, a third of the production in the state's sixth largest dairy county. More than two dozen chicken and egg producers, with a combined income of about $600,000, would be lost. Beef, pork, corn and small grains also figure prominently in farmers' income in the dam target area.

Randleman didn't get much attention until the administration decided to put the project in its fiscal 1983 budget under an innovative New Federalism cost-sharing approach. It would change the old formula and require project beneficiaries, including people in Randolph, to contribute more to its construction.

Even though there was a local flap over the additional costs the new formula entailed, the Randolph farmers got a reprieve last month when the House energy and water appropriations subcommittee balked at the new formula and refused to give the administration the money it wanted for Randleman.

Meanwhile, Randolph County commissioners, who include Richard Petty, the race-car driver, reversed their earlier position and came out against the dam, partly because of the higher costs and partly because of pressure from the 300-member Deep River Citizens Coalition.

Dairyman Kemp Davis, 27, the seventh generation of his family to farm here, heads the coalition. His farmer father, R.S. (Sonny) Davis, who, like 65 percent of Randolph County residents, voted for Reagan for president, said he feels betrayed by it all.

"I've been to every meeting that's been held on the dam for 30 years," the elder Davis said. "We've always said if the facts support the need for water in Guilford, we would give up our land . . . . But it's extremely hard for me to give up land that has been in seven generations so people can walk a nature trail or water ski over a milking barn."

Kemp Davis put it another way. "The corps' recreation plan will take 200 of our 500 acres. Once they take a big chunk I don't know where that will leave us. If I go out of business I can't recoup. Believe me, I'm going to have a voice in any decision that's made."

"They couldn't have picked a worse spot for a dam," he continued. "This is a prime area. We've said we're willing to work with Greensboro and High Point if they show some water-conservation interest, if they scale down their needs, if the recreation part of the project is cut back."

Then Davis added, "You know, the strength behind this country is our agricultural production. If we keep needling away at it, what are we going to be standing on?"