THE FARM BILL Congress passed last winter was a compromise between two goals. The first was to lower support levels, reducing incentives to produce and making U.S. products more competitive abroad. The second was to do the first gently, minimizing both pain to farmers and the risk of farm bank failures.

Congress, as you might expect, steered to the generous side. The most immediate result of the bill has been an increase in government costs, now expected to exceed $20 billion next fiscal year. Nor is all this going to family farmers; some very large payments are going to very large producers. The air is thus full of election-year calls to revise the law before it is seven months old.

Some who favor revision think the answer is to impose production controls. They would bolster prices by cutting production, then allocate the proceeds by assigning each farmer marketing rights. The idea is to share, which is fine, except that the government can only clumsily do all the things this system would require of it. It is not clear either that in a large and free economy the government should be asked to do these things.

Others argue for increasing export subsidies for the major crops of wheat and corn as the bill is already doing for rice and cotton. But this is a fool's game in which the government pays first to raise prices for domestic producers, then to lower them for foreign buyers. If the United States increases export subsidies, other countries that can afford it will increase theirs. The losers, other than taxpayers, will be weaker countries, some of whom need the foreign exchange from agricultural exports to pay off U.S. bank loans. The United States is squeezing friendly Thailand now with its export subsidies on rice.

The right way to fix the farm bill is to:

* Do a better job of capping and otherwise targeting support payments, so that fewer large payments go to large producers. But although such payments are offensive, they are not where the main costs are.

* Increase acreage set-asides. The set-asides, by which the government seeks to limit production and costs, are already 20 percent for corn and 25 percent and more for wheat, high by historical standards. But they need to be higher.

* Reduce more than Congress voted to do last year the target prices on which subsidies are based. Because these are so high there is still too great an incentive to produce, and too much production is for the government.

Some of those now most loudly bewailing the cost of last year's bill were among the most insistent that these target prices be kept high. There is a lot of grandstanding on these issues. An entire sector of the economy is vastly overbuilt and depressed. There is no quick or cost-free way to correct this.