Senate and House conferees reached agreement yesterday on a new farm bill that chops federal programs by 25 percent and could lead to a major restructuring of U.S. agriculture.

The bill represents a fundamental change in government's attitude toward programs that have been dominated for 50 years by an ever-more-elaborate system of federal subsidies and price supports. It seeks to free the farmer from government control and obligation and push him toward free-market policies. "We are moving into uncharted seas," said Rep. E "Kika" de la Garza (D-Tex.), chairman of the House Agriculture Committee.

The bill incorporates about $13.6 billion in spending cuts negotiated by the conferees as agriculture's share of the five-year, $500 billion deficit-reduction package that Congress is struggling to enact. Farm spending is pegged at $40.4 billion for the next five years, a 25 percent reduction from the $54 billion the Office of Management and Budget had projected it would be.

The bill's centerpiece is a plan to reduce by 15 percent the amount of cropland eligible each year for subsidies, the artificially high prices the government pays to farmers to cushion them from fluctuations in commodity markets. The government pays subsidies for wheat, corn, oats, grain sorghum, barley, rice and cotton.

Savings from this reduction and other subsidy cuts comprise about $8 billion of the $13.6 billion. A further reduction in the amount of acreage planted in wheat and corn in 1991-92 was expected to save another $1 billion.

Under current farm policy, set by a farm bill enacted in 1985, farmers tend to "plant for the program," often refusing to change crops even if the prices are low because they know they would get a subsidy. But as a result of the policies set by the 1990 bill, farmers on their unsubsidized land will likely grow the crop with the highest market price. In 1991, for example, midwestern corn farmers are expected to move heavily into soybeans, a crop with a much higher free-market price than corn.

Other farmers may abandon federal programs altogether, feeling that the shrinking benefits are not worth the regulations that accompany subsidy programs, some farm groups predict.

"I don't mean a mass exodus, but the situation is changing," said Carl Schwensen, president of the National Association of Wheat Growers. "As farmers look in their crystal ball, they're going to see that the level of income protection and economic stability in the future is diminished and their risks are significantly enhanced."

For the Bush administration, which advocates free markets and less government involvement in agriculture, the final product represented vindication and a meeting of minds with the committees after months of farm bill debate.

"It's a start," said Deputy Undersecretary of Agriculture John Campbell. "With flexibility we wanted the market price of one commodity to compete with other commodities. That's what this program does."

The conferees finished deliberations on the farm bill at 3:45 a.m. yesterday, nearly 14 1/2 hours after they began Monday afternoon. The bill, which dictates price supports and subsidies for a variety of grains and other commodities, and mandates spending levels for programs as diverse as food stamps, agricultural research, rural electrification and farm credit, is expected to be approved by both chambers of Congress and signed into law by President Bush.

For the nation's grain farmers, who received $3.5 billion in subsidy payments and price supports in 1989, the new farm bill is a heavy hit. "We don't like it, these are big cuts for agriculture, and they're coming out of farm income," said Schwensen. "This farm bill is not calming."

De la Garza and other congressmen, however, focused not on the loss of subsidy payments but on the opportunities the new legislation afforded farmers. Under the farm bill provisions, the 15 percent of cropland that does not receive payments can be planted in another crop, a "flexibility" option that did not exist in the past.

"When we started, we were not going to change policy," de la Garza said. "But when we didn't have the luxury of funding, we gave them {farmers} a safety net of sorts and aim them toward the market."

Contentious debate over environmental provisions of the bill failed to materialize, largely because Senate Agriculture Committee Chairman Patrick J. Leahy (D-Vt.) withdrew from consideration a controversial measure regulating the export of pesticides rather than have it watered down in conference. Failure to enact the "circle of poison" legislation was the lone setback in the generally successful effort by environmentalists to attach conservation provisions to the bill.

Any large-scale abandonment of federal programs would also jeopardize the environmentalists' efforts to require conservation practices as a condition of program participation. Farmers outside the programs would no longer need to comply with environmental requirements.

Besides the reduction in subsidy payments, the bill cuts direct loans made by the Farmers Home Administration and the Rural Electrification Administration ($2.2 billion over five years) and a variety of assessments and fees charged to dairy farmers and producers of soybeans, sugar, tobacco, peanuts, honey and wool.