The wave of bankruptcies and foreclosures that engulfed thousands of financially troubled farmers during the mid-1980s has left millions of acres (and millions in assets) in the hands of bankers, insurance companies and other lenders, says an Agriculture Department report.

But the situation is slowly improving, according to the department's Economic Research Service. As of mid-1988, about 7.93 million acres of farm property valued at $3.29 billion were held by the primary lending groups, down from a peak of 8.98 million acres and $3.59 billion on Dec. 30, 1987.The groups include the cooperative Farm Credit System, commercial banks, Farmers Home Administration and life insurance companies.

Lenders acquired much of the property through farm bankruptcies, foreclosures or transfer of deed in lieu of foreclosure.

"The drop in lenders' property holdings reflects an improving farm economy and rising land values," the report said. "Earlier fears that lenders would dump acquired farmland on already weak land markets now appear unfounded. The drought last year probably had little net effect on lenders' holdings."

One of the report's authors, economist Jerome Stam, said that he believed the decline in property holdings has continued but that he had no idea what the figures might show by mid-1989.

"I'm not going out on a limb on that one," he said. "But I would like to think it would keep on going down."

Life insurance companies hold the most farmland, 4,125,000 acres as of June 30, 1988, valued at more than $1.52 billion. The companies surpassed the Farm Credit System, or FCS, in mid-1987 as the largest holder of farm property.