For the Reagan administration, it's not a question of whether to help farmers -- it's how
Agriculture Secretary John Block is trying out new ways to curb US farm output - and meeting a ''too-little, a-year-too-late'' response from farmers.
The fundamental problem facing farmers and the US Department of Agriculture (USDA) is that both domestic and world grain stocks are almost certain to increase substantially this year after a third straight year of bumper US crops and recession-pinched world demand. For farmers, this means low prices for what they produce. For the USDA, it means that government support programs compensating farmers for low prices may cost more than $10 billion both this year and next.
Increasingly, farm state congressmen and leading farm organizations such as the American Farm Bureau Federation have come around to support returning to a ''paid diversion program.'' This would mean paying farmers not to plant a portion of their land. The aim would be to reduce farm production. In theory at least, reduced supplies would push up farm commodity prices, resulting in better incomes for farmers and lower government farm-price payments.
Tomorrow (July 20), Rep. Thomas S. Foley (D) of Washington plans to introduce the ''1983 Emergency Grain Diversion and Conservation Act,'' billed as a measure both to help farmers and to reduce government outlays by at least $1 billion. Senate Republicans plan similar action designed to force Agriculture Secretary Block to revive the paid diversion system, last used in 1978.
Mr. Block has consistently rejected the idea of a paid diversion as contrary to the administration's goal of reduced government interference in market forces. Instead, in his latest response to a farm sector squeezed between high costs and stagnant or falling prices for farm products, Block has called on farmers to cut their 1983 wheat acreage by 20 percent voluntarily. One innovative sweetener, just in time for the November elections, is that farmers agreeing to cut their wheat acreage will be advanced half of next year's price support money in September.
In January, Block announced a similar program for the 1982 crop. Under this, to qualify for government support payments, farmers had to reduce wheat, cotton, and rice acreage 15 percent, and corn and feedgrain acreage 10 percent. Later this year, Block is expected to expand the 1983 diversion program to cover other crops.
With less than 50 percent participation, the 1982 diversion program has been followed by only a 2 percent reduction in wheat and 2.5 percent reduction in corn acreage. The program was late and lacked incentives. The 1983 program may bring a better response. Block says he hopes farmers will withdraw 6 to 10 million acres from wheat production - rather than the 1.7 million drop this year.
Congressman Foley and others says they feel that the US and world supply situation calls for a far more effective response to increasing surpluses. The Foley bill being introduced this week would use direct payments to encourage farmers to reduce wheat acreage by 25 percent and corn by 20 percent. Without such a beefed-up diversion program, a House Agriculture Committee aide explains, next year's surpluses and government payments caused by these surpluses would climb substantially from this year's.
Elmer Wells, a Texas farmer, is doubtful about Mr. Block's 1983 diversion program. Mr. Wells, raising 2,150 acres of High Plains cotton, wheat, and corn in Ralls, says that more farmers will go out of business this year ''unless we get the government out of farming and just let the farmers sell what we produce without government intervention.''
Tom Jones, a farmer in Illinois, agrees. With ''what looks so far like the best crop I've ever had'' from his 2,900 acres in corn and 1,400 in soybeans, Mr. Jones blames the 1980 Soviet grain embargo for having had a disastrous long-term effect on US farm exports.
''If the government wants to get into programs to help the farmer,'' he says, ''I'd much rather see federal programs to subsidize our exports going overseas, so our grain can compete with the grain subsidized by the Europeans and other governments.''
Secretary Block has announced an extra $300 million for export loan guarantees, expanding that program to $2.8 billion. But the farm sector and some congressmen have asked for at least another $1 billion.
With or without additional support, however, boosting farm exports will be difficult. In the shadow of swelling stocks, boosting commodity prices and lowering government support payments will be difficult.