Block defends tight Reagan budget, pledges aid to hard-hit small farmer

America's biggest industry, agriculture, is alarmed by 19 percent interest rates, but it's not head for a ''depression.''

That's what Secretary of Agriculture John R. Block told the Senate Budget Committee March 8.

Secretary Block said the administration is working to forestall growing foreclosures. But Sen. Jim Sasser (D) of Tennessee charged that farmers in his state are seeing ''a wave of foreclosures unprecedented in the last 30 to 40 years.'' Sen. J. James Exon (D) of Nebraska, another troubled farm state, got assurances that the administration has no immediate plans to embargo US grain to Poland or the Soviet Union.

''I realize that the outlook for agriculture is not now a particularly bright one,'' said Mr. Block. ''I realize that this budget is an austere one. However, I believe that the administration's economic and fiscal policies, given the chance to work, will get America back on the road to prosperity.''

Secretary Block's conditional assurance came at a time when America's unprecedented ability to produce has left granaries bulging with food and support prices threatened. Till now Washington's anxiety over the economy has largely turned on cities and industries. But Block recalled, at the opening of budget hearings here, that agriculture ''is the nation's largest employer.'' US farm output is such that while the Soviet Union has had a series of crop disappointments, US agriculture has increased ''70 percent since 1950'' (while total US output has increased only 4 percent). Sixty years ago one US farmer supplied only 10 Americans with food; ''today each farmer provides food and fiber for 60 Americans as well as a growing number of foreign customers,'' Block said.

But farmers suffer from low prices and sky-high interest rates. ''Is this a depression?'' asked Mr. Sasser, recalling the 1930s.

No, said Secretary Block, but he agreed farmers need help. Committee chairman Pete V. Domenici (R) of New Mexico, who is increasingly critical of the administration's deficit program, noted that 1982 ''is likely to be the third year in a row of declines of cash incomes for farmers.'' His formula: reduce the US deficit, reduce federal borrowing, and ''bring down interest rates.''

Representatives of the farm machinery industry and the agricultural credit institutions denounced high interest rates. They denied that the present recession is like that of the 1930s, but used the latter for comparison. The last three-year period of declining farm prices and real purchasing power, said Carl T. Fredrickson of the Farm Credit Administration, was in the depression years of 1931-33. He added, however, that the government's Farm Credit System ''does not expect a great number of foreclosures during 1982.''

Robert P. White of Minnesota, a manufacturer representing the Farm and Industrial Equipment Institute, said farmers for the third year face rising equipment costs and declining crop prices. Two of three American jobs are associated with agriculture, he said. When the largest US industry can't pay its bills and ''hasn't been able to for two years,'' it convulses the entire economy , he said.

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