Reagan Intends to Sign Farm Bill, Block Says : Decision Resolves Split Among Advisers; Some Apparently Feared Effects of Import Barriers

President Reagan has settled a deep split among his top advisers by deciding to sign the five-year farm bill passed by Congress, Agriculture Secretary John R. Block announced Thursday.

Reagan will also sign a related measure designed to restore investor confidence in the faltering Farm Credit System, Block told a news conference. The President is expected to sign both bills Monday at a White House ceremony attended by congressional leaders.

Veto Had Been Urged

Block gave no details of the farm bill split, but sources said that several foreign policy officials, at a meeting with White House Chief of Staff Donald T. Regan, had urged a veto on grounds that new export subsidies and import barriers would offend European allies and Caribbean neighbors.

Block said he had “argued strongly” that the bill be signed because it “makes significant strides in moving agriculture toward a market-based economy.” He added that Congress had made “a good-faith effort to hit the President’s $50-billion spending target” for crop subsidies over the next three years. The farm bill, whose overall five-year price tag is $168 billion, exceeded Reagan’s target for subsidies by an estimated $2 billion.

“This program is compassionate,” Block said. “It will provide considerable support to farmers in this transition period, but, at the same time, agriculture will be moving in the direction . . . where farmers in the end will be less dependent on government.”

Interestingly, Block referred twice in his announcement to the recently enacted Gramm-Rudman balanced-budget measure, which may force deep cuts in the new farm programs as early as next year.

On Road to Recovery

He said that Gramm-Rudman, the farm bill, the Farm Credit System rescue measure and a pending tax overhaul bill formed a “package” that would “get the agricultural sector back on the road to economic recovery.”

Block, who allowed only a few questions from reporters, did not explain what he meant. But Robert L. Thompson, assistant agriculture secretary for economics, said in an interview that “the most important legislation for American agriculture today is not the farm bill but deficit reduction.”

He contended that lower deficits would bring down interest rates and foreign exchange rates, which have the dollar pegged at a high value.

“Farmers are suffering financial stress mainly due to high interest rates, not low commodity prices,” he said. “Beyond that, exchange rates have priced our crops out of the world market.”

Thompson said that the House-passed tax revision bill would help many farmers by lowering income tax rates and by cracking down on tax shelter investments made by non-farmers in the dairy, poultry, livestock and orchard industries.

Like Block, many members of Congress urged the President to approve the farm bill as a compromise that would restore market competitiveness in American agriculture while offering farmers an income safety net at a time of severe stress in the Farm Belt.

Cuts Price Supports

The legislation, which was passed Wednesday, would lower price support levels for grain, cotton, rice and soybeans to make them more competitive in world markets. However, direct income subsidies paid to many farmers would be effectively increased for two years before gradual reductions take effect.

At his news conference, Block--who has weathered intense controversy over Administration farm policies that originally called for sweeping cutbacks in subsidies--dodged a question about his future.

“When will you be leaving and where will you be going?” he was asked.

“In five minutes, I’m leaving for lunch,” he said amiably, “and I’ll be back at 1:30.”