Early last week, Iowa's governor, Terry E. Branstad (R), whose party traditionally champions bankers' interests, declared a statewide economic emergency to stop bank foreclosures against farms.

In an interview a few days later, he expressed great concern about suicides in the stricken countryside and despaired about whether President Reagan grasps "the tremendous damage" being inflicted on rural America.

The same week, the John Deere farm-implement giant, the state's largest private employer despite a payroll that has been halved to about 15,000 people in recent years, cut another 480 production jobs at its Waterloo factory complex.

Meanwhile, Brandstad's state party chairman, Robert Bauer, resigned, saying financial reversals on his cattle farm require his attention full time.

His successor, Sally Novetzke, is a longtime Republican Party activist who got her start in the 1964 presidential campaign of Arizona Sen. Barry Goldwater and who worked in 1980 for George Bush. "We want sympathy and compassion for a lot of hurting people," she declared.

Welcome to Iowa, once one of America's most successful and self-assured places.

Today, amid the gathering clouds of a wet autumn harvest season, a visitor to the state capital here can almost cut the spirit of discontent and the sense of frustration with a plow.

As in other states of the world's most fertile agricultural zone, the rural distress in Iowa has challenged conventional political wisdom.

Although the number of farms in serious trouble is estimated to total not more than 10,000 of the state's 110,000 farms, 65 percent of the state's jobs are connected with agriculture.

With preparations under way for the 1986 political season, both parties are scrambling to deal effectively with the depression in agriculture and the opportunity it offers.

Branstad, whose triggering of the foreclosure moratorium brought headlines across the nation, said no one should attempt to make political hay out of the current farm distress.

Novetzke, elected Friday night as new GOP state chairman, agreed, saying, "This is a bipartisan problem, and it can't be a partisan issue."

But partisan politics is the name of the game. And Democrats, shut out of the governor's residence for more than 15 years, are eager to take on Branstad.

"The governor is very vulnerable, and he will become more vulnerable as the campaign develops," said Democratic Party Chairman A. Arthur Davis, 56, who heads the state's biggest law firm.

So eager are Iowa Democrats to battle Branstad that three are seeking the job, ensuring a bruising, costly primary fight.

Lt. Gov. Robert T. Anderson, state Attorney General Thomas Miller and state Senate Majority Leader Lowell Junkins have declared their candidacy.

The primary is in June. Each will need about $250,000, and the outcome will weed out two proven vote-getters.

Branstad, who in 1983 succeeded Robert D. Ray, a GOP legend in Iowa, views the Democratic scramble with undisguised pleasure.

"The more the merrier," he said with a small grin.

Sen. Charles E. Grassley, a first-term Republican, also faces reelection.

He has taken a very hard line against Reagan's farm policy and is considered a strong possibility to win a second term, even though Iowans have made a habit in recent years of one-term senators.

Whatever Grassley's fate, Branstad's chance to succeed himself will be strengthened if the moratorium succeeds in saving some farmers from foreclosure.

Based on an Iowa law passed 52 years ago during the Depression and recently updated by the state legislature, the measure activated by Branstad allows foreclosed farmers a one-year state court continuance of foreclosure.

The court appoints a receiver to rent the farm land, with the applicant given rent preference.

Only real estate loans are eligible for the court's protection, and a farmer must have his interest payments up to date in order to qualify for consideration. The program does not apply to farm machinery.

Support for such a move is strong across the agriculture community, from the traditionalist Iowa Farm Bureau to the activist Iowa Farm Unity Coalition.

Even these supporters said the measure will likely apply to no more than 1,000 farmers in the first year.

Even so, one activist said, "Branstad just bought himself another term."

The governor had been saying for months that he would issue the executive order at the best moment to "send a message to Washington," where a farm bill is grinding through Congress.

A poll by The Des Moines Register, Iowa's dominant newspaper, showed that two out of three Iowans approve of Branstad's action.

Two days later, the U.S. House easily defeated a controversial amendment to the proposed farm bill that would have given farmers the right to vote on setting strict production controls as a way to force agriculture prices up.

Branstad never took a position on the proposal by Rep. Berkley W. Bedell (D-Iowa).

The plan was opposed by the Iowa Farm Bureau Federation and supported by the Iowa Farm Unity Coalition.

Such pulling and tugging reflects huge disagreements within the agricultural community about potential solutions to their problems.

"The farmers don't want government in their lives, and yet they can't live without it," Novetzke said. "I don't think the farmers themselves know what to do . . . . I don't know where you lead the party on this one."

Watching developments from the sidelines is Bauer, who runs a 4,000-acre beef operation in Winterset, southwest of here, and whose family has farmed Iowa soil since his great-grandfather emigrated from Germany in the 1840s.

"I planned for everything when I became chairman nine months ago, except for what happened to cattle prices," said Bauer, a staunch partisan who said his goals included recapturing the state legislature from the Democrats.

But the price of beef on the hoof fell from about 70 cents a pound to about 50 cents.

Although Bauer had left management of his farm in capable hands, he said economizing the operation, one of the state's largest, became paramount.

Contributing to Bauer's decision, Democrats hinted, was the state GOP's failure in a strenuous bid to take a state Senate seat from the Democrats in a recent special election.

"I personally am not better off than I was in 1980, but I don't blame that entirely on the administration," Bauer said.