A spat between the Agriculture and State departments has blocked a crop assistance program that could help wean Bolivian farmers from growing coca, the raw material used in making cocaine.

The Agriculture Department says the aid could harm the export competitiveness of U.S. soybeans. The State Department says the program can encourage Bolivian farmers to grow something besides coca.

The dispute could have important implications in the international drug war. Bolivian farmers, plagued by a months-long slump in the price of coca leaf, for the first time are abandoning the crop in large numbers and looking for alternatives.

In an effort to investigate the matter, a House panel has scheduled hearings today to discuss the $136.7 million U.S. aid program in Bolivia and the relationship between Bolivian soybeans and the drug war.

"If we've had a calculated policy to prevent the shifting of crops away from coca because of a few bushels of soybeans, we're making a big mistake," said Rep. Dan Glickman (D-Kan.), chairman of the House Agriculture subcommittee on wheat, soybeans and feed grains. "If what was alleged was true, it would be a classic example of the government working at cross-purposes."

Glickman's office has documented two instances in which the Agriculture Department and the State Department's Agency for International Development (AID) clashed over the allotment of aid money destined for Bolivian economic development.

In both cases, in 1988 and early this year, the Agriculture Department successfully argued that under U.S. law the aid program could not be used to encourage production of commodities that might potentially compete with U.S. exports. Soybeans are an export crop both in the United States and Bolivia.

Controversy over these interchanges surged in early June after a report in the Washington weekly law newspaper Legal Times said the Agriculture Department had blocked the Bolivian soybean programs after succumbing to the lobbying efforts of the 34,000-member American Soybean Association.

Agriculture Department sources said no one in the department hierarchy had spoken directly about Bolivia with the soybean lobby at any time this year. In a separate interview, soybean association officials also said they had not discussed Bolivia with the department.

The Agriculture Department acknowledged, however, that it had opposed and successfully blocked AID in consultations over two assistance programs to Bolivia.

The sources noted that blocking such programs is an administrative action that occurs almost automatically whenever the Agriculture Department judges that aid might promote products that could compete with U.S. exports. The United States is expected to export 16.6 million tons of soybeans in fiscal year 1990.

American Soybean Association President James Lee Adams, speaking in a telephone interview from his Georgia farm, said that although no one in his organization had directly lobbied the department about Bolivia this year, he and other association officials had been "going in for quite a few years" to discuss soybean development projects "not only in Bolivia but in other countries."

Adams said the association regards any soybean producer as a potential competitor in "the long term." Bolivia, the poorest country in South America, projects 52,000 tons of soybean exports this year.

"We deny categorically that we're in favor of drugs; that's not the question," Adams said. "But, frankly, we don't see how increased soybean production can decrease coca production."

The State Department agrees that soybeans are not directly replacing coca cultivation in Bolivia, for most Bolivian coca is grown in the hilly central Chapare region, an area unsuited to soybeans. Soybeans are grown in sub-tropical lowlands near the province of Santa Cruz several hundred miles away.

The department argues, however, that soybeans clearly represent an opportunity for Bolivian farmers who would like to grow something besides coca. "It's true you can't grow soybeans where you grow coca," U.S. Embassy spokesman Bruce Wharton said in a telephone interview from La Paz, Bolivia's capital. "But it is alternative development."

And, as such, soybean cultivation clearly comes under the umbrella "Andean strategy" adopted by the Bush administration to promote the war against international cocaine trafficking.

The United States formally endorsed the strategy in the Declaration of Cartagena signed at a Feb. 15 "drug summit" by President Bush and the presidents of Bolivia, Peru and Colombia, the three countries where nearly all the world's coca and cocaine are produced.

The agreement specifically mentions the desirability of "alternative development," "crop substitution," "broad-based rural development" and promotion of "non-traditional exports" as alternatives to coca cultivation and processing.

Such plans lay moribund for years, however, because there was no crop or program that farmers could grow that was as lucrative as coca. Bolivia, with an estimated 165,000 acres planted with the shrub, is the world's second coca producer after Peru. U.S. law enforcement officials estimate that the Bolivian industry is worth $550 million to $600 million per year.

Since August, however, a crackdown on Colombia's cocaine bosses has put a continent-wide damper on the business. Colombian entrepreneurs, who purchase most of the coca leaf in South America, have been forced into hiding, leaving growers in Bolivia and Peru without a buyer.

Prices of coca leaf in the Chapare began to tumble late last year, and by March 1990 had dropped to $7 per hundred pounds. Growers must sell at $30 per hundred pounds to break even. For the first time, "alternative development" began to look attactive.

The U.S. Embassy's Wharton said prices had come up since the beginning of June to $20-$25 per hundred pounds, but growers were still rushing to take advantage of a voluntary crop substitution program run by the Bolivian government. Wharton said some 11,250 acres of coca had been plowed under so far this year, nearly twice as much as in all of 1989.

Both Bolivia and the U.S. Embassy regard the recession in coca leaf sales as a golden opportunity to put a significant dent in coca cultivation and get large numbers of coca farmers out of the Chapare and into another line of work.

Soybeans and other forms of "alternative development" are the hook.