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Small victories in battle to cut farm surpluses. But scale-back effort taking much longer than expected

The United States has started to cut back its mountain of surplus farm products. But the effort is more difficult and time-consuming than anyone anticipated. Farmers received another setback this week. The US Agriculture Department now estimates this fall's corn and soybean crops will be larger than expected. The result is likely to be lower crop prices and further delay in cutting back surpluses, analysts say.

``The surveys ... are very much on the bearish side,'' says William Winnie, a grain analyst with Continental Grain Company. ``It has set us back.''

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Cutting surpluses has been delayed, says Richard Feltes, an analyst at Refco Inc. ``We have turned the corner. It's just going to be later than a lot of us would have wanted.''

For corn, the survey released Tuesday estimated a fall crop of 7.2 billion bushels - about 0.1 billion bushels more than many analysts had forecast. While the crop is still 1 billion bushels below last fall's crop and will draw down the surplus, the reduction is minimal, analysts say.

If anything, the new soybean estimates are even more dismal. This fall's crop is expected to total 2 billion bushels, about even with last fall's production and about 80 million bushels above what many analysts expected for the coming crop year, which begins Sept. 1. Soybean farmers, who had made progress in trimming back surpluses, are likely to see a record surplus for the 1987-88 crop year.

The lack of progress on trimming surpluses comes despite strenuous US efforts to cut production and boost consumption.

On the production side, the government has lowered price supports and idled huge tracts of cropland. This year, for example, about 24 percent of US cropland was taken out of production - nearly equal to the 24.5 percent taken out in the sweeping and expensive crop-idling program of 1983. The federal government is also trying to expand sales through export subsidies. The subsidies are controversial: partly because they've angered America's West European allies and partly because they have helped the Soviet Union buy cheap grain. This year the US counted on selling substantial amounts of grain to the Soviets to make up for their own short crop. But a separate Agriculture Department report released Tuesday estimated total Soviet grain production at 205 million metric tons - nearly the level of last fall and about 10 million tons higher than was forecast a month ago.

These estimates of bigger US production and smaller Soviet purchases have tempered the optimism that market analysts held earlier this year.

``I don't think this is a case of despair in the marketplace,'' says Gordon Linn, president of his own trading firm here. But ``this is a case of discouragement.''

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The next step, virtually everyone agrees, is up to the government.

Some observers want to change current policy, replacing voluntary controls with mandatory limits on production.

``The evidence is accumulating on our side,'' says Cy Carpenter, president of the National Farmers Union. ``You're going to need a stronger, more effective method of regulating production. And it's going to have to have authority.''

But other observers and many economists prefer to hold the course with the current program, even if progress is slow. One Chicago-based analyst estimates the return to supply-demand balance will take five to 10 years.

``It's still a ways off,'' concedes Richard Pottorff, director of US agricultural services at Wharton Econometrics. But ``we think the 1985 farm program is cutting back on production.''

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