Reagan farm bill: stormy weather ahead

The Reagan administration's proposed new farm bill faces a rough passage -- particularly if some Midwestern farmers have their way. The issue centers on Secretary of Agriculture John Block's plan to eliminate federal "target prices" or "deficiency payments" -- the traditional safety net protecting farmers from disastrously low prices for their crops.

Eliminating these direct payments fits with the administration's pledge to cut spending and reduce government interference in private industry. As such, ending these cash payments has firm backing from the American Farm Bureau Federation, the country's largest and most conservative farm organization.

Secretary Block, himself an Illinois grain ang hog farmer, told the Monitor that this policy change will make farmers "somewhat more vulnerable." However, he argues that farmers will benefit overall. The farmers' greater risks, he says, will be offset by new opportunities for profit through a farm policy that Block promises will "take the lid off prices." He says the result will be "less government involvement and a freer market for agriculture."

Don Paarlberg, an agricultural economist who worked in the Nixon administration and has contributed to Reagan farm policies, expects "considerable battles" in Congress and in the countryside over Block's free-market policies for agriculture. But he predicts the proposals will go through since they reflect "the mood of the country to reduce the role of government and cut federal costs."

In fact, government subsidies in the past injured farmers, says Professor Paarlberg.

"We have overprotected them against low income and, in the process, priced them out of markets," he says. "We have sought to overprotect them from competition by reducing their acreage and so conceeded markets to competition abroad."

Instead of relying on government programs, Paarlberg says, farmers today should protect themselves by such means as contracts selling their crops even before planting, to "lock in" a fixed price and fixed return.

But many farmers have a different answer, convinced that, in practice, they do not have access to a free market.

Adrian Polansky, who farms 1,500 acres in Belleville, Kan., says he is "very apprehensive at this moment." He notes that the Reagan administration is maintaining the Soviet grain embargo that cuts off a major market for US grain. He sees "the so-called free-world market" further restricted by foreign governments subsidizing their own farmers. "It doesn't seem consistent," says Mr. Polansky, for the Reagan administration to lower price supports at home while keeping the embargo and acting as though US farmers could sell into an unrestricted world market.

So Polansky and other farmers are fighting back. The first skirmishes are taking place in Kansas itself, where farmers proportionately have much more clout than inside the Reagan administration or Congress.

The farmers' first goal is to pass a state law setting a minimum price for wheat. A bill now before the Kansas Senate would make it illegal to sell wheat in Kansas for less than $4.87 a bushel. That is $1 more than farmers get today. That price hike would add another $460 million per year to the state's income -- and so, not surprisingly, Kansas Gov. John Carlin (D) supports the plan.

Block's farm proposals threaten "a weakening of price protection," says Polansky. The Kansas response is to raise wheat prices by state law, with the hope that five other top wheat-producing states will quickly do the same. This would make up for federal failure to act and show Washington politicians the strength of farm-belt feeling, say Kansas farmers.

Nebraska farmer Roger Clark explains that government price supports simply "have the same effect as the minimum wage for the working man." Any cutback in "this insurance program," he says, "will force farmers to add more costs to their inputs."

Mr. Clark has seen his costs shoot up 148 percent, from $45,605 to $113,444, over the past five years for his 500 acres of irrigated cropland and 1,500 acres in pasture. Adding new costs, Clark says, will speed up the land sales he sees stripping his area. This week, at a time of the year when farm auctions should have stopped until next autumn, he has counted 32 neighbors selling out.

"Suddenly they've decided that it's just not worth fighting anymore -- fighting the high interest rates, uncertainty on prices, the high energy costs, the whole inflation," he says. "They are just quitting, and there's a possibility some of them couldn't even get the finance if they wanted to, because they are in debt bad enough."

Like Adrian Polansky in Kansas and Roger Clark in Nebraska, Minnesota farmer Tom Benson says US farmers now operate in a restricted world market. He sees any Reagan-Block attempt to impose new free-market principles on farmers as a guarantee of disaster. Instead, these Midwest farmers insist that the Reagan administration should learn a lesson from Kansas. They'd like to see Secretary Block erect a firm new floor under farm prices rather than dismantle the few remaining props.