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U.S. Growers Split on How to Restore Bloom to Farming

January 11, 1987|BRUCE KEPPEL | Times Staff Writer

Gathering this week in Anaheim just over the fence from Disneyland, members of the nation's largest organization of family farmers will wander through their own versions of Frontierland, Tomorrowland and Fantasyland.

They are embarking on a perilous quest to solve the nation's pressing farm problems and to wean themselves from costly federal subsidies without driving many of their counterparts out of business.

Delegates to the 68th annual meeting of the 3-million-member American Farm Bureau Federation face unsettling political and economic facts: Not only did an estimated 100,000 families lose their farms last year, but the five-year farm program enacted by Congress in 1985 cost $25.6 billion in its first year, nearly 50% more than initially expected.

That, in turn, has given rise to a proposal by the Reagan Administration to speed up cutbacks in government payments to farmers.

In the fiscal 1988 budget proposal released last week, the Administration calls for reducing subsidies by 30% over three years, instead of the scheduled 10% cutback. The Administration's goal is to trim farm spending by $24 billion through 1990.

Leading farm organizations are divided over the Administration proposal. The American Farm Bureau Federation, eager to make U.S. agricultural exports more competitive on world markets by phasing out government aid, voiced qualified support.

Although the farm bureau frets that reworking the existing legislation could prove to be like opening Pandora's box, lobbyist John Datt said the Reagan proposal is "headed in the right direction."

Other farm groups--notably the 250,000-member National Farmers Union and the 150,000-member American Agricultural Movement--adamantly oppose the proposal and the current farm program itself.

Mark Steiner, spokesman for the Minnesota chapter of the National Farmers Union in St. Paul, said it would take farm policy in "the opposite direction" of where it should go. Cutting subsidies by 10% a year without offering some other means of increasing farm income would only make "what is currently a disaster even worse," added Robert Denman, a spokesman in Washington.

Supporters of reduced subsidies concede that the cutbacks will eventually force out many marginal and inefficient small producers.

But, the theory goes, the reductions also would eliminate overproduction, boosting worldwide prices and restoring the industry's health.

The American Farm Bureau pressed hard to phase out the old system of rigidly set subsidies, which inflated the prices of U.S. exports, causing problems for the nation's farmers in the early 1980s, when they already were being hurt by a strong dollar and increased foreign competition.

Because of the modest pace that the 1985 legislation set for reducing price supports, the farm bureau only reluctantly supported the painfully crafted compromise. But, while thus supporting the Administration's plan to speed up subsidy cuts, the organization's leaders worry over what else opening up the law might bring forth from Congress.

Would Send 'Mixed Signals'

Farm Bureau President Dean R. kleckner, who raises hogs, corn and soybeans on 550 acres in tiny Rudd, Iowa, said reworking the legislation would send "mixed signals" to foreign competitors about U.S. resolve to regain lost markets.

The current farm program sets so-called target prices intended to give farmers a fair return on their investment for each of a dozen basic farm commodities: such leading California crops as cotton and rice, as well as wheat, corn, oats, barley, honey, milk, soybeans, sorghum, wool, peanuts, tobacco and sugar, which are important crops in the Midwest and South.

Farmers receive "deficiency" payments, or subsidies, to cover the difference between the target prices and actual market prices.

Rice and cotton growers, including many Californians, also have received subsidized loans authorized under the farm program to improve their competitive position in world markets, and these have largely cleared out surplus inventories in these commodities.

The National Farmers Union, however, maintains that such loans only drive down world prices and encourage foreign governments to provide bigger subsidies, further aggravating the American farmer's plight.

"We're not going to recapture those markets," Steiner said.

The farmers union and the American Agricultural Movement support legislation that would strictly control production of crops in oversupply. Overproduction was spurred, the major farm organizations agree, by the national farm policy of the late 1970s, when agricultural exports were booming.

They argue that by rewarding farmers for increasing production, the federal government encouraged producers to plant their fields and even marginal farm land "from fence post to fence post." The policy also attracted non-farming investors seeking tax shelters.

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