The brave new farms of tomorrow, according to a National Academy of Sciences panel, could be raising biologically reengineered animals that reproduce more prolifically, eat wood pulp and convert more of their feed into meat instead of fat.

Their fields could be planted with genetically modified crops that make their own fertilizer, survive droughts and freezes and put more of their growth into the edible part of the plant.

The key to such developments, the panel said in a report released this week, is to reform the Agriculture Department's vast but ponderous Agricultural Research Service. The panel said the ARS, which has been doing traditional research for decades, could become a world-class center for basic research if it adopts advanced methods of genetic engineering and biotechnology.

A reorganized ARS, the panel's chairman said, could play a role like that of the National Institutes of Health in medical research, discovering the fundamental knowledge that allows others in academics and industry to develop practical applications.

The report was produced by the Committee on Biosciences Research in Agriculture appointed by the National Research Council, the working arm of the National Academy of Sciences. The committee comprised 18 agricultural researchers from universities and industry.

If the ARS does not adopt the recommendations, committee chairman Ralph W.F. Hardy said, American agriculture is likely to lose its competitiveness in world markets.

Most of the advances envisioned by the committee could be used to increase production or to reduce costs. For example, the report notes that about 2.2 billion pounds of fat is trimmed from beef carcasses every year. The wasted fat is equivalent in weight to 2 million head of cattle and costs U.S. farmers about $1 billion to produce.

If more were known about the metabolism of beef cattle, the report suggests, it might be possible to manipulate their heredity so that more of the feed they eat is converted to meat instead of fat.

Other possibilities cited in the report include:

* Genetically modifying bacteria that aid digestion in the stomachs of ruminant animals so that they could digest lignin, the protein that is a major component of wood.

* Identifying the gene that makes certain breeds of sheep produce multiple births routinely and transferring it to champion cattle and other species that normally have single births.

* Finding out why certain plants have drought or cold tolerance or resistance to diseases and insects. Better knowledge of these mechanisms -- most are presumably genetic -- would make it easier to transfer the traits to other species.

The report said that advances such as these are more likely if the ARS consolidates its 147 centers around the country into fewer but better-staffed facilities, creates advisory councils of leading scientists to review programs, appoints highly qualified scientists to positions as laboratory chiefs, and encourages more scientific exchange with universities, industry and other centers through joint seminars, sabbaticals and cooperative projects.

The panel also recommended that the ARS enlarge its small postdoctoral program from 25 people to 750. "Postdocs" are recent recipients of PhDs who are given short-term appointments to do research.

Hardy, a faculty member at Cornell University and president of BioTechnica International Inc. of Cambridge, Mass., said that, to accommodate the postdocs without increasing the ARS budget, the agency will have to reduce its number of permanent employes.