DENVER (AP) _ New York City's sludge has been banned from the ocean and raised fears in Oklahoma about AIDS and organized crime. But some Colorado farmers are awaiting shipments of the muck with open arms.

Starting in April, Enviro-Gro Technologies Inc. plans to transport New York sludge to southeastern Colorado to fertilize 17,000 acres of winter wheat. The project will provide New York with a much needed way to recycle waste and give farmers an effective fertilizer free.

''When they first approached me, I thought it was one of those deals that would never happen,'' said John Stulp, a Lamar-area farmer who signed up for the sludge program.

But he and his neighbors did some research and learned that sludge fertilizer is safe and, in some instances, is better than more traditional fertilizers - cow manure, for example.

Besides, Stulp said, ''You can't beat the price.''

Enviro-Gro is one of three companies under contract to New York to recycle the city's 1.7 billion gallons of treated sewage a day. New Yorkers produce about 385 dry tons of sludge per day; that's more than three times the amount produced in Colorado in a single day.

Under its contract with Colorado farmers, Enviro-Gro has agreed to ship about 100 dry tons of sludge a day by rail to Colorado, transport it by truck to 23 farms in Prowers and Kiowa counties, and spread it on the crops.

The costs will be borne by the Baltimore-based Enviro-Gro, which means farmers will save between $10 and $12 an acre in fertilizer costs, Stulp said.

Fertilizer products made from treated human waste have been on the market for decades. About 60 percent of the nation's sludge recycling programs involve using the waste as fertilizer, in mine reclamation and other land uses, said Kelly Sarber, an Enviro-Gro spokeswoman.

Ken Barbarick, a Colorado State University agronomy professor who has researched sludge for 17 years, said studies have shown sludge fertilizer releases nitrogen more slowly over a growing season and can improve the soil by packing it with organic materials.

The Denver Public Works Department markets its sludge to farmers, home gardeners and landscapers in half a dozen states.

Bill Martin of the department said the only major problem that has surfaced in the 20 years of the city's sludge fertilizer program is quantity; there's only so much waste to recycle, and demand exceeds supply.

But in Oklahoma, sludge fertilizer imported from New York is anything but welcome.

''You wouldn't believe some of the things we've heard from people in Oklahoma about New York sludge,'' said Ian Michaels, a spokesman for New York's Department of Environmental Protection. ''There are people in Oklahoma who knew what sludge was who were claiming that the sludge would bring more AIDS to Oklahoma.''

Ellen Bussert, an environmental advocate with the Oklahoma Department of Health, said some residents were concerned that pathogens in the sludge would contribute to an increase in AIDS cases. Medical studies show that AIDS only can be transmitted through the exchange of body fluids, such as blood.

Other Oklahomans were convinced New York sludge would enable organized crime to muscle its way into the state, with crime syndicates surreptitiously injecting hazardous wastes into the shipments.

The controversy surfaced when Merco Joint Ventures of Oklahoma City, another contractor for New York sludge, planned a program similar to Colorado's.

Merco filed for a state permit for the shipping part of its project and met a wall of hostility, even though Oklahoma has a successful land application program for sludge produced in the state.

Aside from the more outlandish claims, the concerns were that the state would be turned into a hazardous wastes dumping ground; that the sludge was to come from out of state, and that the proliferation of industry in New York would lead to a heavy concentration of metals in the sludge, she said.

The whole process has been delayed while Merco's application is reviewed by state officials.

Stulp and other Colorado farmers are concerned about metal concentration in the sludge, too, but are counting on monitoring programs by the Environmental Protection Agency, the Colorado Department of Health and the company itself to ensure the product meets standards.