Block Backs Plan to Trim Farm Supports

Despite the threat of widespread farm bankruptcies. Agriculture Secretary John R. Block on Sunday defended proposed cuts in fiscal 1986 farm support programs and added that “we can come up with something” in the week ahead to ease the farm credit crisis.

Up for review by Block and other Reagan Administration officials is a proposed emergency program, discussed last week with farm-state members of Congress, under which the government would guarantee a major portion of farm loans if banks agreed to reduce interest rates and/or forgive 10% of the principal of loans headed for default.

Final decisions have yet to be made on the plan, according to Edwin L. Dale Jr., chief spokesman for the Office of Management and Budget.

Block, who owns a large Illinois hog farms, emphasized during an appearance on CBS News’ “Face the Nation” program that the Administration is “very concerned” about the plight of farmers unable to meet carrying charges on bank loans in a time of sagging farm prices. But the time has also arrived to reform the agricultural price support system, he said.

President Reagan is proposing that Agriculture Department spending in fiscal 1986 be reduced by $7.5 billion below the $12.6 billion in outlays projected for the current year, with $4.5 billion of the cut coming out of price support programs. Even so, Block argued that “reduction in the budget for farm programs is not that deep.” He predicted that after five years, supports “will still be in the range of $5 billion.”

Block said he and Reagan are aware “that it is very difficult out there, that farmers are in trouble,” but “the solutions are not as easy to come by.”

“I think we all know that we’ll lose some farmers,” he said. “We’ve been losing farmers through an evolutionary process for 50 years.”

The Administration debt relief proposal drew a negative reaction from DeVon Woodland, president of the National Farmers Organization, when he was questioned on the program before Block’s appearance.

Calling the plan “simply a political game” to alleviate pressure from the Farm Belt, Woodland questioned whether banks would agree to forgive any part of interest charges.

He called for development of a plan to help farmers “operate on earned income.” It should be aimed, he said, to assist “the full-time, the commercial, the mid-size farmer and rancher,” excluding “absentee ownership and part-time farmers.”

In the long run, Woodland said, full-time farmers most need a profitable price structure. He suggested that the only way to bring this about would be through “collective bargaining,” but offered no specific proposal.

The proposal under consideration within the Administration is a refinement of a plant that Reagan put forward last year during his reelection campaign under which $650 million would be made available to guarantee farm loans through commercial banks if the banks would agree to forgive 10% of the outstanding principal.

Rural banks were concerned about reduction of their assets and resisted participation in the plan, but a worsening credit crunch in the Farm Belt has increased pressure to expand the plan.