Farm belt reacts to US-Soviet talks on new grain pact
Houston — US Secretary of Agriculture John R. Block says the Soviet Union's ''willingness to negotiate'' a new long-term grain sales agreement is ''a milestone'' and a sign that ''agricultural trade relations are going to be normal again.''
But after watching the United States' share of Soviet grain imports plunge from 70 percent in 1979 to 20 percent today, America's farmers and grain traders are far less enthusiastic.
The farm belt is blooming with hope that the Soviets will sign a new grain agreement before the current one runs out on Sept. 30. Convinced that a new agreement would help reduce the Midwest's massive grain surplus and boost farm commodity prices, farmers generally support signing another government-to-government long-term agreement (LTA). But many of them contend that restoring trade relations torpedoed by President Carter's 1980 grain embargo depends primarily on major policy shifts in Washington.
Carol Chaloupka, who raises grain and cattle on 10,000 acres in Texas, says he hopes for a ''sizable agreement.'' He says American farmers ''certainly have all the grain and all the technology we need to guarantee to deliver far more than the 6 million tons we've sold the Russians this year.''
Along with Mr. Block, who offered the Soviets 23 million tons this year, Mr. Chaloupka would like to replace the 1975 contract for a minimum of 6 million to 8 million tons per year with a new five-year agreement raising the minimum purchase to 12 million tons.
Larry Abeldt, chairman of the US Feed Grains Council and a Kansas grain farmer, says that the US by rights should dominate the world grain trade. He says the American farmer's ability to produce grain cheaply and consistently year after year makes the US the obvious choice as the world's chief source of supply. What has brought recent cutbacks in US agricultural exports to the Soviet Union and China in particular, he insists, is not high US prices as much as the risk of supplies being cut off by governmental interference.
Mr. Abeldt calls for a shift in US farm policy toward longer-range planning. He explains that the Reagan administration could have avoided paying farmers so much to reduce production through this year's ''payment-kind-program'' if the administration had planned ahead rather than waiting to react after a major crop surplus developed.
''We can't any longer afford to produce all out and take the risk on what the price is going to be,'' Abeldt says. ''Like any company that is doing well, agriculture will have to plan four or five years in advance and set production goals based on what our projected markets will be.''
Abeldt argues that the US can raise overseas demand for grain and raise grain prices at the same time if it guarantees that supplies will not be cut off for political reasons. If the US reestablishes itself as a reliable supplier, the Soviets will return as a major purchaser, he says, because ''the Soviets need grain and even if we raise the price, they could still buy our grain cheaper than they could produce it themselves.'' He says that rather than setting quantity levels, a new US-Soviet grain agreement could set a price floor. ''As long as the Soviets can buy our grain cheaper than they can produce it, we ought to price it at a level which meets our cost of production and gives us some profit rather than subsidizing that grain into the Soviet bloc and leaving them with that extra money to spend on defense and more missiles.''
A spokesman for a major international grain trading company agrees that opening negotiations on a new LTA is ''certainly a step in the right direction.
But he says he sees no likelihood of the US regaining a 70 percent share of the Soviet grain market. He says that the Soviets have successfully developed alternate sources of supply following the 1980 US embargo on grain sales. The grain trade spokesman says he expects that Soviet-US talks in June will result in a signed LTA this autumn. He says that one key to the Reagan administration's switch to supporting an agreement is ''growing recognition within the administration that grain exports have a great deal to do with a healthy US economy.'' A political plus, he adds, is that, because of huge US grain stocks, ''any export sales will have virtually no impact on consumer prices in the foreseeable future.'' Still, he warns, even if Soviet purchases double or triple , ''what the farmer really needs is an end to the worldwide recession and more people out there with money to buy grain.''
One congressional aide dealing with farm policy is even more downbeat about prospects for a new US-Soviet LTA. He says it will be ''very difficult to rebuild trading relations between the two countries (the Soviet Union and the US) at a time when the political relations seem to be deteriorating.''
''The leverage rests on the Soviet side because they have demonstrated that they can find grain elsewhere without having to pay an exorbitant premium,'' he says.