House Panel OKs 5-Year Farm Bill : Late Change Sharply Raises Price Supports on Wheat and Corn

The House Agriculture Committee approved a five-year farm bill Tuesday night, making a last-minute change that would dramatically shift the direction of wheat and corn subsidy programs in a bid to help debt-ridden farmers and to win full House acceptance of the legislation.

The amendment, adopted narrowly, would significantly increase price support levels for the two key commodities instead of lowering them as proposed by the Reagan Administration and as originally supported by the House panel.

But in exchange for higher prices, farmers would have to make huge reductions in planted acreage--a move that the amendment’s sponsor, Rep. Berkley Bedell (D-Iowa), said would save taxpayers $1.7 billion over three years by reducing the amount of surplus wheat, corn and other feed grains that the government would have to buy.

Drive Up Food Prices

At the same time, Bedell argued, farmers’ incomes--and therefore their ability to repay heavy debts--would rise substantially.

Opponents protested that the scheme of planting less for a higher price would drive up food prices and severely reduce farmers’ exports because foreign competitors would be selling wheat and corn much more cheaply. They argued that lower prices, combined with sharply increased export potential, would prove a better deal for American farmers in the long run.

Agriculture Secretary John R. Block has said that President Reagan will veto a production control program of the type embodied in the Bedell amendment, adopted on a 22-18 roll-call vote shortly before the committee approved the farm bill by voice vote.

How to handle corn and wheat subsidies--which have cost taxpayers billions of dollars as massive surpluses mount--is the most controversial issue in the farm bill.

Modest Changes

Earlier this summer, both the House and Senate Agriculture committees had voted to make relatively modest changes in current crop subsidy programs. Both panels would have lowered crop “loan rates,” or price support levels, in an effort to make them more competitive with world prices.

At the same time, both bills would have offset these reductions in farmers’ incomes by refusing to make cuts in the “target price” program, which pays farmers cash for the difference between market prices and arbitrarily set target prices.

The Senate committee is still struggling to complete its version of the farm bill. The House panel, before Congress adjourned for its August recess, had rejected a somewhat stronger version of the Bedell amendment by a vote of 24 to 17. And, in fact, the stronger alternative--calling for even higher support prices and a stiffer acreage reduction program--failed again Tuesday night on a 22-19 vote.

But Bedell finally prevailed because a majority of the committee clearly believes that a new direction is needed in the face of a worsening economic crisis in rural America. Troubles have deepened in recent weeks, with predictions of a bumper crop and reports of banks in the Farm Belt in dire straits.

Bedell said he and many other representatives from the hard-hit Midwest would oppose the bill on the House floor without his amendment.

“I think my amendment did an awful lot toward the possibility of passing the farm bill,” he said, adding: “This is a significant change in policy made necessary because of the terrible change in the economic situation.”

Under the Bedell amendment, the new programs for wheat and feed grains (corn, oats, barley and sorghum) would not take effect unless 60% of the farmers approved them in nationwide referendums.

Technically, the programs would be voluntary instead of mandatory--but it likely would be economically difficult for farmers not to choose to participate.

The crop loan rate--in effect, the guaranteed price floor--for wheat would rise to $4.50 a bushel from the current $3.30. For corn, it would jump to $3.25 from $2.55.

Meanwhile, the secretary of agriculture would announce an acreage reduction requirement for each commodity, taking into account probable program participation, estimated supply and demand and other factors.