Planned Farm Subsidy Cuts Decried : Agriculture: The Grain Belt would take the biggest hit. But California won’t escape the trims sought by U.S. budget negotiators.

American farmers face $13 billion in budget cuts to federal agriculture programs, cuts that many farm groups argued Monday could unfairly burden wheat and grain growers nationwide and mete out the harshest punishment to the Midwestern Grain Belt.

“Certainly the states where grain and cotton are major commodities will be hit,” said Robert A. Denman, spokesman for the National Farmers Union. “The biggest hit will come out of the wheat producers in the Plains States. Their production costs are higher and their options are fewer.”

California farmers have traditionally fared best at budget-cutting time because the state grows an estimated 250 different crops on a commercial scale and hence its farm economy does not rely heavily on federal subsidies. But even California won’t escape the cuts proposed by budget negotiators on Sunday.

“It’s popular to say that California farmers aren’t impacted by the federal farm programs because we have a diverse agriculture here,” said George Tibbits, director of national affairs for the California Farm Bureau Federation. “I always end up refuting that. The farm programs do have a significant impact on farmers in California.”

Congressional and Administration budget negotiators have not pinpointed the agricultural programs that will be cut; the only strict orders were that $13 billion be trimmed over five years and that $1.3 billion worth of cuts must come out of fiscal 1991 subsidies.

But the Office of Management and Budget has made what one House Agriculture Committee source on Monday called “suggestions” for Congress to follow as it figures out where the $13 billion will come from.

One OMB suggestion was that “target prices”--the price for which crops should ideally sell--be cut by 2% a year. The target price generally is higher than the market price for which a crop actually sells. Since the government pays the difference to farmers in the form of subsidies, lower target prices mean lower government outlays.

OMB also suggested cutting “base acreage”--the number of planted acres covered by government subsidies--by 3% per year. The OMB figures that this two-part plan could save $500 million in 1991 and $12.4 billion over the life of the five-year budget plan.

States such as Kansas, whose farmers grow mostly wheat and are heavily enrolled in government subsidy programs, would be hardest hit. With $6.6 billion in farm revenue in 1988, the last year for which such statistics are available, Kansas was the No. 5 farm state in the nation. But a whopping $848 million--or 13% of its revenue--came from federal farm subsidies, making it No. 6 in the country in handouts.

California, by contrast, is the nation’s No. 1 farm state, with $16.6 billion in farm receipts in 1988, but it drops all the way to No. 15 when federal subsidies are counted. Only about 2%--or $335 million--of California’s farm income came from federal programs, said Frank Limacher, an economist with the state Department of Food and Agriculture.

Still, California is the No. 2 cotton state behind Texas, and an estimated 6% of the state’s irrigated agricultural land is planted in wheat. Both cotton and wheat are federally subsidized, and growers here will feel the pain of budget cuts.

“We think the deficit is being cut on the back of wheat, cotton, feed grain and rice programs, and the other elements of the farm program are really not taking that much of a hit,” said Daniel M. Weldon, executive vice president of the California Assn. of Wheat Growers.

In addition to what he termed the “unfair” distribution of the cuts, Weldon is concerned about the timing of the budget discussions and the uncertainty that timing causes.

“Planting of wheat starts in late October and goes through through November,” Weldon said. “Right now, farmers really don’t know what the farm program is. Farmers are making plans with bankers, getting loans arranged, making projections about what they want to plant.

“The banker looks at farm - program income,” he said. “As that is reduced, it’s going to put lending to farmers in greater jeopardy.”

REVENUES VS. SUBSIDIES

Although California is the nation’s No. 1 state in farm revenues, it gets a disproportionally small amount of federal farm subsidy payments because of its diverse crop production. The following figures are from crop year 1988, the most recent year for which statistics were available.

Revenues Revenues Subsidies Subsidies State ranking (billions) ranking (billions) California No. 1 $16.6 No. 15 $0.335 Texas No. 2 10.3 No. 3 1.15 Iowa No. 3 9.1 No. 1 1.665 Nebraska No. 4 8.0 No. 4 1.091 Kansas No. 5 6.6 No. 6 0.848 Illinois No. 6 6.5 No. 2 1.374 Minnesota No. 7 6.1 No. 5 1.036

Source: California Department of Food and Agriculture