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Making the Farm Program Work

January 15, 1986

The Department of Agriculture has done the best that it could with the new farm measure, announcing the largest acreage set-asides and loan-rate cuts allowed by the legislation. These steps, if matched by continuing declines in the value of the dollar against principal foreign currencies, will help restore the competitiveness of American food and fiber exports.

Congress insisted on a short-term freeze of target prices for major commodities, thus assuring income support for farm families. Farmers under the support program are given deficiency payments when the selling price falls below the target price. This is a costly support program, but at least it does not serve to inflate prices, as can happen with high loan rates.

Under the department's implementation of the new farm bill, farmers who want to participate will be required to set aside large amounts of acreage, 20% of feed grains including corn, 25% of wheat, 35% of rice.

The department also is moving ahead with what is perhaps the most constructive element of the controversial bill--the program to remove from production about 5 million acres of land that is highly susceptible to erosion.

The drop in loan rates is the maximum allowed by Congress, and so it should be. On wheat, for example, the rate will be $2.40 a bushel, compared with $3.30 last year. Rates for cotton, rice and soybeans have not yet been announced.

Some of the regulations for implementing the costly dairy-support program also have been made public. It and the sugar program were among the most flagrant special-interest elements that impose unreasonable burdens on consumers. If they prove as onerous as now seems likely, Congress will need to take a second look before the bill runs out five years hence.

The first steps to make prices competitive will help one of the two priorities weighing on the Department of Agriculture. The other challenge is sorting out the farm-credit crisis so that as many full-time family farms as possible can be saved from the effects of the recession of recent years--a recession that has been the worst since the 1930s.

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