U.S. Reduces Support Price Rate for Wheat : Takes Aim on Bigger Export Market Share

The U.S. government on Thursday reduced its support price for wheat, raising the stakes in the struggle for a share of the export market among wheat-producing nations.

Agriculture Secretary Richard E. Lyng announced that the department cut the federal support price for next year’s wheat crop to $2.17 per bushel from $2.28, the maximum allowable reduction.

The government support price serves as a floor for the open market. The government’s move Thursday is expected to lower the market price, meaning that exporters can buy grain more cheaply and offer it at lower prices to foreign buyers.

The Agriculture Department also announced that it would require participants in the wheat program to idle less land than White House budget officials, who were looking for cost savings, had advocated. It costs less for the government to pay for land to be idled than to buy the crop after it is harvested.

Move Praised

The National Assn. of Wheat Growers praised the move, saying it would help U.S. producers compete in global markets.

The government guarantees a minimum price for wheat program participants, who must idle some of their land in exchange for price and income protection.

Congress, perturbed by accumulating wheat surpluses and the high price of U.S. grain, approved a law in 1985 that permitted annual reductions in the wheat support price. The Reagan Administration on Thursday followed its pattern of trimming the support price to the maximum extent permitted under law each year.

With the move, the United States sent another shot across the bow of foreign wheat producers. The Administration has vowed to regain lost wheat markets overseas by cutting the support price, matching foreign subsidies with assistance to exporters and profiting from the decline in the value of the dollar.

Changes in the U.S. support price can have an important impact on world prices. The latest reduction puts pressure on other wheat-producing countries, especially those in the European Community, which is experiencing intense budget pressures as its grain surpluses and subsidy costs mount.

Victory for Lyng

The announcement also marked an important victory for Lyng, who battled for more than a month with White House budget officials over how much acreage producers should be required to idle. The acreage reduction requirement is part of the government’s efforts to trim surplus production.

Administration budget officials had argued in favor of increasing the acreage reduction requirement to 30%, the maximum level allowable, as a means of saving several hundred million dollars.

Lyng argued that stronger foreign and domestic demand for wheat had reduced surplus stocks.