U.S. Will Sell Algeria Wheat in Subsidy Plan

Agriculture Secretary John R. Block said Tuesday that the United States will sell Algeria up to 1 million metric tons of wheat in the first of a series of subsidized sales designed to offset what he termed unfair trade practices by competing agricultural nations.

Block, who earlier had conceded that the new subsidy program was “not good policy,” said Algeria was targeted for the first sale because the European Economic Community had displaced the United States as that country’s chief supplier of wheat in the last five years.

The secretary said that, since 1979, the U.S. share of the Algerian market had dropped to 16% from 41%. During that same period, he said, the EEC share rose to 59% from 29% because of subsidies that undercut American prices.

Block said this sale, as well as others that will follow, are intended to allow U.S. farmers to compete more effectively while “sending a message” to other agricultural exporting nations that it is time to reform world trading rules.

Farm State Pressure

An EEC agricultural official in Washington, Durwent Renshaw, said it was “premature to give a detailed reaction. . . . The secretary did not give many details. The program doesn’t seem to be very well conceived. The only sure thing is that it will depress world prices.”

Some U.S. legislators and export company officials have raised similar criticisms of the subsidy program. But the Reagan Administration, under strong pressure from farm-state lawmakers to demonstrate its seriousness about recapturing slumping U.S. export markets, has reluctantly gone ahead with it.

The Administration agreed to the subsidy scheme as part of a deal forced by farm state legislators in return for votes on a federal budget resolution in the Senate last month. Sen. Edward Zorinsky (D-Neb.), one of the key players in the deal, was at Block’s side Monday as he made his announcement.

Alluding to the pressure from Capitol Hill, Block noted that “the American farmer has lost 25% of his international markets in the last five years.” That situation, he said, was “politically intolerable.”

But he ranked the strong dollar and farm programs that “have priced the American farmer out of the market” ahead of unfair trading practices as factors that have seen U.S. agricultural sales fall to a projected $33.5 billion this year from a high of $44 billion in 1981.

Block also said the United States is prepared to spend “every penny” of the $2 billion allocated for the program over the next three years in an effort to beef up exports. He indicated that future subsidized sales will be targeted to markets where U.S. commodities face unfair competition.

“We’re not going to shoot everyone in sight,” Block said.

“The export enhancement program is not one we would freely choose. It is a risky yet necessary step,” he continued. “We see it as a counter to unfair trade practices in the present and as an encouragement to trade talks in the future.”