The Department of Agriculture, in another sign of the toll being taken by the drought in the farm belt, announced yesterday that it will allow farmers in the driest areas to graze their livestock on land idled for conservation purposes under the payment-in-kind (PIK) program.

The decision, tacitly acknowledging that the ominous weather and the PIK crop-reduction plan together are squeezing livestock producers, means farmers will now be able to use some of the land they took out of production in return for payments of surplus federal grain.

The decision came after several weeks of pressure by midwestern governors, agriculture departments, legislators and farm groups, who contended that intense heat and minimal rainfall had created a crisis in the livestock industry.

The drought has decimated pastures in many parts of the country. And, in combination with the PIK program, it has cut sharply into the likely corn harvest, threatened soybeans and driven up prices for both crops, which are important ingredients in livestock feed.

Because of the heat and dryness, livestock producers and dairymen around the country are taking action to cut back herds--moves that will put more beef, pork and lamb on the market soon, but could reduce supplies and raise prices in the future. And in other instances, because of arid pastures, farmers already are using hay set aside for next winter.

"We're approaching a disaster situation . . . . I see us coming out of this year with the worst per-acre crop production in the last couple of decades in Illinois," said Larry Werries, the state director of agriculture. "USDA has taken a legitimate, justified action, although there has been some concern that they were changing the rules of PIK in the middle of the game."

Richard E. Lyng, deputy secretary of agriculture, said yesterday that the grazing provisions will be approved on a county-by-county basis. Farmers may graze only their own livestock on their own land, planted with cover crops of clover, alfalfa and other grasses, but must continue to protect it from weeds and erosion.

One conservation expert, R. Neil Sampson of the National Association of Conservation Districts, said the decision "doesn't undermine the conservation idea of PIK a whole lot. If it's controlled grazing, it is not likely to have much adverse effect."

But the Agriculture Department's action will be of no help to drought-blitzed cattle and sheep ranchers in a 30-county area of west Texas, which has had no appreciable rain for 18 months and where ranchers are culling and disbanding herds to avoid total total disaster.

Most of that area, described by one official as "dead from the heat," is not in the PIK program, so there is no additional grazing land available to ranchers. Texas officials have lobbied Agriculture Secretary John R. Block to provide federally owned grain on an emergency basis to ranchers.

Block refused one request last month. One emergency grain-supply program that could have provided help was ended by Block last year for budgetary reasons. Under another program, however, the Texans are seeking a quantity of USDA corn, stored in west Texas, as quick feed for 1.8 million cattle, sheep and Angora goats.

Tommy Beall, a market analyst for the National Cattlemen's Association in Denver, said the industry is "in a very critical situation right now. Even without the bad weather, we were faced with growing meat supplies and, at best, a stable price situation. But now with the higher feed costs and the continuing liquidation of herds because of the weather, that means higher supplies of beef and pork. The price and profit situation for producers is bleak."

Beall noted that the summer heat has had another impact: "It has affected demand for our products. It has been hot in the major consuming areas--all of the Northeast is abnormally hot and humid. People just don't eat as much meat."

And down in Georgia, Frank Owsley, an extension service swine scientist, added a grace note. The heat has cooled the ardor of both boars and sows, which means less money for the farmer and less pork for the consumer.

"Hogs are a lot like us when it comes to the weather," said Owsley. "When it's hot, they try to hold strenuous activities to a minimum. And that includes reproductive activities . . . . Quite frankly, the boars aren't in the mood, and the sows aren't in the mood, either. And I don't think I blame them much."