Plummeting Export Sales, Bumper Grain Crop Blamed : Cost of Farm Programs May Soar

The Reagan Administration conceded Thursday that the cost of federal farm price and income support programs will soar to near-record levels next year unless agriculture policies are changed.

Robert Thompson, the Agriculture Department’s chief economist, told the Senate Agriculture Committee that the grim financial state of U.S. agriculture means that previous estimates of farm program costs for fiscal year 1986 are “absurdly low.”

He said plummeting export sales and an expected bumper crop of grains will likely add some $2 billion to $3 billion to commodity program costs, pushing them to $17 billion or $18 billion next year. The previous record spending year was 1983, when crop programs cost $18.9 billion.

“We’re very close to 1983’s record,” Thompson told reporters after a committee session at which senators worried aloud about their slow progress on new farm legislation to replace current law, which expires Sept. 30.

“So much depends on the Soviet crop,” Thompson added. If the Soviet Union experiences a drought and has to import more grain, costs could ease back from the record. If there is a bumper Soviet harvest, the 1986 farm program price tag could set a record, he said.

July 15 Deadline Set

Added to the cost in 1983 was some $9 billion worth of government-owned commodities given away in the “payment-in-kind” program. Current surplus stocks are threatening to return to levels that prompted that program.

Senators, at the urging of Senate Majority Leader Robert Dole (R-Kan.), voted 14 to 0 to set themselves a July 15 deadline for completing work on the farm bill, a goal that some staff members privately said was unrealistic.

But that action--coupled with votes Thursday to kill two proposals requiring producer votes on mandatory supply-control crop programs--was intended to satisfy Agriculture Secretary John R. Block’s demands for progress toward a farm bill before he would delay a scheduled July 19 referendum among wheat producers.

Just two hours after the committee session, Block announced that he was putting off the referendum until at least Oct. 1. A few minutes later, the Senate passed legislation authorizing him to do so, and the House was expected to follow suit.

The referendum is called for under so-called permanent law that would take effect if no new farm bill is enacted by Sept. 30. It would ask wheat growers whether they want to institute strict production controls and marketing quotas in return for high price and income supports.

Dole and other referendum opponents say the vote would be meaningless and would merely confuse farmers because it ultimately will be superseded by a new wheat program.

Wheat is the first crop to be planted each crop year, and producers are clamoring to know the outlines of the new program on which to base their planting decisions, Dole said.

“Those of us who live in wheat areas are going to be under the gun if we don’t report (a bill) in July,” he told colleagues.

The panel also voted down proposals to extend current farm law for one year and to hold producer referendums on mandatory supply controls.