Funding advertisements for Japanese-made underwear is not how the Agriculture Department usually promotes American farm products abroad.

But ever since USDA created the Market Promotion Program in 1986, it has given scores of private companies - foreign and domestic - a total of $400 million to, quite literally, advertise their "wares" overseas. In particular, the program provided $1.6 million to a leading Japanese underwear manufacturer last year so the company could advertise its briefs in Japan.Sen. Thomas A. Daschle, D-S.D., calls the entire MPP an "international corporate slush fund" that helps pay the advertising budget of some enormously profitable corporations but does virtually nothing for farmers.

More galling to Daschle, however, is the fact that over the past three decades, on average, USDA has paid farmers to stop farming 40 million acres of productive land per year.

Daschle, chairman of the Senate's Subcommittee on Agricultural Research, is pushing for a slice of those costs to be plowed into a revolutionary new program at USDA that's commercializing agricultural products for new industrial uses. The problem is that the Alternative Agricultural Research and Commercialization Center, an independent entity within the USDA running the program, had only $10 million to spend on developing new uses for crops with diminished markets this year.

So on one hand USDA is pouring billions of dollars into idling these crops and millions more promoting odd products like Japanese-made underwear. But on the other hand, it's short-changing a program that has serious potential to develop new markets for struggling farmers.

The district of Rep. Tim Penny, D-Minn., is home to what many observers consider to be the most innovative "new use" for farm products.

It's called "NewStone," a unique composite material that looks like marble but cuts like wood and is four times harder than oak. It meets all specified conditions for interior applications and meets most requirements for exterior application, and it can be used to make furniture, flooring, wall paneling and picture frames - at half the price.

Most importantly, it is made from soybeans and recycled newsprint. Fifty pounds of paper and one bushel of soybeans is needed to make 22 board feet of NewStone material. So, besides the benefits to farmers, consumers and businesses, the new uses will also be very friendly to the environment.

Other new industrial uses that have been found for struggling crops run the gamut from soybean ink, to diesel fuel made from vegetable oils, and golf tees made from cornstarch. But besides the novelty of these products, they have intriguing long-term economic possibilities. One USDA-sponsored task force commissioned in the mid-1980s estimated that creating new uses for at least 150 million acres of farmland would generate 750,000 new jobs

More than 400 companies from across the country applied late last year for grants from AARC to support new use products, but only 20 products have been given seed money because of AARC's limited budget.