WASHINGTON— FOUR years ago, John Kinsman stood outside his barn in Lime Ridge, Wis., and vowed to halt a new advance in farm technology, a genetically engineered drug to increase milk production in cows, that he believed would sweep small dairy farmers like himself from the land.

Last month, in a singular decision prompted by the political opposition generated by Mr. Kinsman, Wisconsin's Governor, Tommy G. Thompson, signed a law banning the sale or use of the drug in the nation's largest milk-producing state for more than a year.

The new law is the first in United States history to bar an advance in farm technology before it reached the market. Though largely a symbolic act, the law is the most vivid evidence yet of a widening view in rural America, and the political clout associated with it, that some technological advances have done more to hurt farmers and rural communities than to help them. It is a trend that frightens biotechnology industry executives but gives hope to small family farmers.

''We're looking at technology in a different way,'' said Mr. Kinsman, who at age 64 milks 35 Holsteins twice daily on his 150-acre farm 70 miles northwest of Madison, Wisconsin's capital. ''We're asking whether this technology is another that could haunt us and cause problems, as some of the pesticides and drugs we used have. We're asking whether this is another expensive technology that's going to make its manufacturers rich but won't make us any more money.''

The drug, bovine somatotropin, has been touted by its manufacturers as the first economically important product of genetic engineering in agriculture. Produced from genetically engineered bacteria, artificial bovine somatotropin is a nearly identical copy of a natural hormone that controls milk production in dairy cows. When injected, it raises the levels of the growth hormone in the cow's blood and causes an increase of milk production by 10 to 25 percent - or 1 to 3 extra gallons to the 12 to 15 gallons a high-producing cow yields daily. Some analysts predict sales of $1 billion annually for the drug.

The Food and Drug Administration, which is considering the drug for approval next year, said the drug is harmless to people. And the four chemical and drug companies that hope to bring it to market - Monsanto, Eli Lilly, American Cyanamid and Upjohn - say the drug is a tool for increasing production and lowering costs that favors neither small nor large producers. It will be readily affordable to each, they say, although prices are as yet unknown.

Unlike Mr. Kinsman, some of Wisconsin's dairy farmers have said they are eager to buy the drug. ''It is an effective tool for improving efficiency in the dairy industry,'' said Judith A. Klusman, a dairy farmer from Oshkosh and a Republican state representative who opposed the ban. ''To compete globally, we can't afford to be cut out from using such an effective tool.''

But judging from several polls, Mr. Kinsman and others in Wisconsin were successful in turning bovine somatotropin into a crisp symbol of the technological determinism in modern farming that has sought ever-greater production and efficiency virtually at the expense of all other values. The costs of the system, he argued, have been enormous. Agriculture has become dominated by expensive technology that pollutes, causes toxic threats to the food supply and encourages enormous corporate farms.

A Return to Milk Surpluses

Bovine somatotropin represented a sublime technical achievement, Mr. Kinsman argued, but it was also the last thing dairy farmers needed. Consumers had indicated in polls that they were not anxious to buy milk containing an artificial hormone. Farmers were worried that if the drug were widely used, it would mean the return of the milk surpluses that had cost the Government more than $16 billion in the 1980's and driven tens of thousands out of business. Rural bankers and businesspeople were anxious about more bankruptcies caused by failed farms.

For nearly as long as Americans have farmed, rural communities have shown a persistent skepticism about new agricultural inventions - from steel plows to barbed wire - that has blossomed periodically in active protests. In the 1940's, Southern sharecroppers raised objections to the mechanical cotton picker, accurately predicting that its use would help to drive millions of farmers and field workers from the Deep South and shift cotton production to the West.

A Beneficial Trend

But not until the conflict over bovine somatotropin had concerns about new agricultural tools been translated into law. The Wisconsin law barring the drug led to enactment of a similar law in neighboring Minnesota. Legislators in Pennsylvania, New York and New England also are considering bills.

Executives at Monsanto said they are concerned about the laws, but expressed hope that the protest has peaked. On Tuesday, the Vermont legislature rejected a proposal that would have temporarily barred sales of the drug.

Other experts, though, view the new laws as a political trend that could benefit agriculture and the rest of American society.

''It represents a point in our history when people are questioning what progress is,'' said Pete Daniel, a curator at the National Museum of American History in Washington and author of ''Breaking the Land,'' a 1985 book on how technology transformed cotton, tobacco and rice farming. ''There is a conception in this country that science always produces something new and better. But is it progress if a new bovine hormone produces more milk that's not needed and puts people out of business?''

Photo: Wisconsin and Minnesota have banned bovine somatotropin, a genetically engineered hormone that is injected in cows to boost milk production; Vermont has approved its use (Elliott Erwitt/Magnum)