Farm Desperation

The sense of economic desperation in the farm belt has created enormous pressure on Congress as it tries to write a new five-year farm bill, and the consequences are as bad as they usually are in such circumstances. President Reagan already is threatening a veto. There may be no alternative.

In the House Agriculture Committee, desperation has translated into reviving the failed remedies of the past as if they had not in themselves contributed to the sorry state of American agriculture. In the end, a formula for farm income maintenance and crop subsidies was adopted by the committee that would cost at least $42.8 billion over the next three years. The effect would perpetuate uncompetitive prices, a burden on domestic consumers and such a problem in world trade that export subsidies would be required to unload commodities abroad.

All the special programs for limited, special interests have been preserved by the House committee, including protection for peanuts, dairy products and sugar. Those programs alone add $7 billion a year to Americans’ grocery costs, according to a new study by Public Voice for Food and Health Policy. In addition, sugar import quotas also disrupt the economies of many friendly nations in the Caribbean and Central America that depend on sugar exports for survival.

There is one positive element of the House legislation: It would provide new incentives to retire from production land that is subject to high erosion.

Basic to any new farm bill must be the beginning of a transition to market-clearing prices--that is, getting the price of American commodities competitive in the world market once again so that the commodities sell. That means sharp reductions now in loan rates that prop up the American prices. The effect of the transition could be softened by a slower downward adjustment of the target prices that protect farm income. But Congress must heed the call of the President to make sure that the income maintenance is narrowly targeted solely to protect the commercial family farm, with tight limits on the amount of individual subsidies.

Moving to realistic prices for corn, wheat, oats, barley, sorghum, soybeans and cotton must be matched by an end to the peanut, dairy and sugar programs.