Disagreements in Congress Over Best Way to Achieve Supply-and-Demand System : Block Expects ‘Furious Debate’ on Farm Plan

Agriculture Secretary John R. Block said Wednesday that he expects “some furious debate” as Congress attempts to devise a new farm program this year, but he predicted that the result will force growers to respond more to economic forces than to government price supports.

“There is reasonably strong support . . . for a market-oriented agriculture,” Block told reporters at a Beverly Hills press conference, but added: “There is going to be some furious debate on how we get there.”

U.S. agriculture suffers from chronic overcapacity, Block said, and a start must be made to reduce that while cushioning the transition for those farmers least able to compete.

“I don’t believe in pulling the rug out from under farmers,” Block told the 91st annual meeting of Sunkist Growers Inc. at the Beverly Hilton Hotel.

Block, whose family farms 3,000 acres in Gilson, Ill., said the Reagan Administration’s farm-policy proposal, to be submitted to Congress early next month, will seek to “chart the direction of farm policy through the end of the 20th Century”--and that direction, he said, will be guided by supply and demand.

The proposal, he said, will call for phasing out present price supports over “perhaps five years”; will treat all commodities alike, and will strive for consistency among government policies--”not encouraging production on one hand and discouraging it on another, as we have done in the past.”

The Administration, Block said, will also push for a strong export element in the new legislation, which will replace the expiring 1981 Farm Act. Countries that fail to give U.S. crops “a fair shake,” he said, will be subject to “severe pain.”

However, Block blamed artificially high commodity price supports and a persistently strong dollar for causing a 30% drop in U.S. agricultural exports, which totaled nearly $40 billion last year--$4 billion from California growers alone.

“We are at a crossroads,” Block told 1,100 Sunkist members. “If we stay on the same road we’ve been traveling, we will be headed for more government controls, more losses in the world marketplace, more limits on our opportunities and more cheap-food policies. And that spells nothing but more troubles on the farm,” he said.

An indication of support for a market-oriented farm policy came last week as the 3.3-million-member American Farm Bureau Federation voted to push for such a program, with price supports pegged to a moving five-year average of market prices rather than fixed in law as at present.

Block’s appearance before Sherman Oaks-based Sunkist’s grower-members was something of a peace-making gesture.

A major dispute erupted last year between the Agriculture Department and Sunkist after the department proposed 22 amendments to federal marketing orders covering citrus and sought to force growers to either approve all 22 changes or see the orders lapse, Sunkist President Russell L. Hanlin recalled in remarks preceding Block’s appearance.

Under pressure from Congress, however, the department backed away from the all-or-nothing approach and allowed growers to vote on each amendment.

The marketing orders are a system under which growers and packers of certain commodities are permitted to control the marketing and promotion of their products.

Citrus packers and growers in California and Arizona, for instance, determine the supply of fresh fruit permitted to reach the market.

Hanlin praised Block’s “honesty and courage” in reconsidering the action.

Also at the meeting, the Sunkist president reported record sales and returns in 1984, representing a strong rebound from 1983 for the growers cooperative, which has 6,000 grower-members in California and Arizona.

Hanlin said total revenue was $748 million for the fiscal year ended last Oct. 31--an increase of $104 million, or 16%, over 1983.

Sunkist paid members $545 million, up 29% from $424 million in 1983.

The 1983 crop was “enormous” but marked by small fruit and poor prices, Hanlin said.

Last year’s crop, on the other hand, benefited from better quality, and prices were further buoyed after severe freezes cut orange, lemon and grapefruit production in Florida and Texas.

Sunkist processed just 506,000 tons of products-grade fruit in 1984, compared to 1.1 million tons in 1983.

This enabled Sunkist to reduce inventories and increased net margins from the sale of products to $41 million, up 64% from 1983’s $25 million, he said.

Hanlin said the 1985 outlook was favorable but added that Southern California and desert crops may have been scarred by last weekend’s windstorm.