California's agricultural leaders welcome the changed attitude reflected in the three-year, $52-billion farm bill that President Reagan signed into law Monday.
The new legislation, which replaces the 1981 farm program, marks the first step in reducing price supports for such commodities as rice, wheat and corn in an effort to make U.S. agriculture more competitive in world markets.
Lowering subsidies on these goods will lower the price the government pays for crops, bringing them in line with world prices, thus increasing free market sales and reducing government-owned surpluses.
"That sends a good signal to our (foreign) competitors and to the marketplace that we're going to be in that market" and competing aggressively, said Henry J. Voss, president of the California Farm Bureau Federation, the state's largest organization of farmers and ranchers.
Not Bold Enough
If anything, the state's farmers believe the massive legislation was not bold enough in its price support reductions.
But their Midwestern counterparts take another view, according to Cy Carpenter, president of the American Farm Union, whose 250,000 farm families are concentrated in the Midwest.
"This legislation is totally inadequate," Carpenter said. Among other things, he said, it fails to address the continuing massive debt borne by farmers--about $70 billion, he estimated, of which about 30% is currently uncollectable. Lowering prices that farmers get for their crops will only make it more difficult for them to pay their debts and finance production, he said. "We need to face this emerging situation," he said.
Separate congressional efforts to deal with farm debt by shoring up the Farm Credit System will prove inadequate, Carpenter predicted. If so, he said, farmer unrest next year may force Congress to redo the new legislation.
The bill--as stitched together by representatives of both houses--trims about $3 billion a year from current commodity support programs. It also increases food-stamp benefits, expands food export efforts and institutes a new soil- and water-conservation program.
California Senators Split
California's two senators split on the final vote. Republican Pete Wilson opposed the measure, saying it maintains subsidies at too high a level. Democrat Alan Cranston voted for it, though also criticizing the bill's $52-billion price tag.
Voss of the farm bureau similarly expressed concern that the legislation does not reduce subsidies significantly. The problem, he said, is that support prices are frozen in the legislation, which requires the government to pay any difference between the target prices and actual market prices. Thus, if market prices continue to decline, program costs will rise.
"That's been the history of the program over the years," he said. The real debate now will focus on the detailed regulations to implement the new measure, he added.
Nonetheless, Voss said approval of the legislation was significant in itself. "Now we can get on with our planning," he said. Ralph S. Newman, president of Farmers' Rice Cooperative, based in West Sacramento, said the reduced price support favors California's rice growers--who have lost their market to foreign competitors--at the expense of their less efficient competitors in the Southern rice belt. But, he warned, the move toward a more competitive posture in foreign markets will prove difficult in the short term.
"Additional uncertainty for everyone has now been introduced into the market," Newman explained. "New rules will apply. As a result, new business is already hand-to-mouth because everyone expects prices to decline."