Agriculture chief hopes to cut farmers' need for support
Chicago — Giant combine harvesters combing through the Midwest's grain fields from dawn to after dark are reaping record yields -- along with new worries about how many farmers can survive another year of bumper crops driving prices down.
Secretary of Agriculture John Block is well aware of farmbelt problems. But as a Reagan Cabinet member, Mr. Block is also committed to doing his part to keep within the administration's budget Restrictions. Accordingly, Block Says he will recommend that President Reagan use his veto power to prevent Congress from bringing in a new four-year farm bill that would exceed administration spending guidelines.
Block's answer is to reduce farm price supports -- but balance the cutbacks by reducing the farmers' need for federal support.
The difficulty of achieving both goals is clear from the latest US Department of Agriculture figures. They point to bumper harvests pushing farm support spending this year up from an expected $2 billion to $4 billion or more. The extra cost is for higher payments to compensate farmers for low grain, dairy, and cotton prices caused by oversupply and for storage programs to hold excess supplies off the market.
Just before leaving Oct. 9 on a two-week export-promotion trip to the Far East, Block told the monitor that he is deeply concerned about this year's low farm incomes. He explained he is introducing a number of shortterm programs designed to help farmers through a difficult period. These measures include a grain reserve program which now covers wheat and may be extended to corn as well.
For a long-term solution, Block Says, "If we really want to help improve the profitability of this industry, we must do one of two things: increase demand or reduce supply."
Reducing supply, as current federal programs do, is costly. In addition, a return to paying farmers for notm planting a portion of their cropland or for plowing under good crops seems wrong at a time when malnutrition and hunger affect many parts of the world.
The wiser course, Block explains, is to increase demand: "We increase prices and profitability more certainly if we can increase demand, because the demand side is where you'll be able to sell more at a better price."
With domestic demand for US farm products expected to remain roughly static, Block is concentrating a great deal of his sales effort on South Korea, Japan, and China. These countries together purchased an estimated $11.4 billion in US farm products in fiscal 1981 -- one-quarter of US farm exports. Block considers these areas, "our best potential market for expansion."
Block's objective is "to have a market where we can produce at 100 percent of capacity. . . . So export markets have to be one of our highest priorities in order to find demand for products."
It is counterproductive for farmers to rely on government supports, Block argues. "[Farmers] cannot anticipate that government will solve all their problems," he states. "government in the past has not been successful . . . and [it] can't solve all of the problems in the future."
Block insists, "the answer has to be finding markets, creating more demand, and, on the other side of the coin, reducing costs and bringing inflation uder control and interest rates down, because interest rates have been very damaging to agriculture."
One key tool in increasing US farm exports has been the Department of Agriculture's Foreign Agricultural Service (FAS). Under The Reagan budget cuts, total FAS funding will drop from the originally proposed $69.7 million to $61.3 million for fiscal 1982. Block's answer to this cut is to lead the promotional drive personally -- and to add a new twist.
Block plans to "encourage" America's top farm-product customer, Japan, to "buy agricultural products in advance." At a time when Japan continues to sell more to the US than it buys, Block explains, increased agricultural sales would "make the trade deficit that we are experiencing with Japan less, make our Congress happier, and make the administration happier with our trade relationship with Japan."