Ward Sinclair's article ("Farm Failures Threaten to Reshape Rural U.S.," Jan. 27) made some excellent points about the plight of the American farmer, but there is more to be said about the impact of farm failures on rural economies and small towns in general.

The future of our nation's farms is tied inextricably to the overall health of our rural communities. The impending, massive agricultural economic crisis addressed in Mr. Sinclair's article will definitely exacerbate the problems already facing America's small towns and the rural officials who govern them. These problems are wide- ranging and include difficulties such as unemployment and underemployment, substandard housing and sanitation systems, contaminated drinking water, inadequate health care and the like.

In theory local government officials in these hard-pressed countryside communities are in a good position to attack these problems and take care of the basic "quality of life" needs of their people. But, no matter how much voluntarism and charity are at work locally, it takes at least a minimal amount of money to pay for the most necessary human services and public facilities.

For literally thousands of rural hamlets, such "seed" money has been impossible to generate. By their very nature, these small towns have been forced to operate with severely limited local tax bases. Federal rural development grant and loan programs provided some relief, but they've gone the way of the dinosaur during the past several years. Now, the administration has targeted for extinction one of the few remaining small-town funding sources -- general revenue sharing. For many in rural America, federal economic recovery and deficit-reduction policies have not simply meant tightening the belt; it's meant cutting to the bone and into the marrow.

If, as Agriculture Secretary Block said the other day, rural America is facing a farm crisis that may be worse than that experienced during the Depression, shouldn't the administration be working to restore -- not cut -- rural development aid? This might not be a popular notion with Office of Management and Budget Director David Stockman but, under these extreme circumstances, his appeasement isn't what counts. The lives of literally millions of rural people are at stake, and their needs should come first.