Senate facing up to farm crisis. Bill to help farmers is likely to `bend the budget a little'
Washington — America's sagging farm sector is moving into the political spotlight. The United States Senate is tentatively slated to turn to a farm bill later this week.The measure carries a growing price tag and mounting political risks for the Republican Party. Before the week is out the nation's largest farm lender is scheduled to announce a major loss, thus setting the stage for a multibillion-dollar federal bailout.
Meanwhile, steps taken by the Reagan administration last week to improve the troubled farm sector's foreign sales have added further strains to US relations with the nation's second-largest trading partner, the European Community.
Ironically, one of the brightest bits of recent farm news came last Thursday when the Soviet Union announced plans to purchase up to 22 million metric tons of US grain next year, 10 million tons above the annual level specified in a long-term agreement between the two superpowers.
Despite the anticipated Soviet purchases, the American farmers' problems are far from over, Agriculture Secretary John R. Block admits. Among farmers, ``there will be some more casualities, maybe 5 percent for the next couple of years. . . . It is not going to be easy in agriculture but the family farm will survive.''
Finding ways to help the farmer cope with depressed commodity prices and plummeting land values is the challenge the Senate will face when it takes up the farm bill. The committee-approved measure carries a price tag estimated at $19 billion above the congressionally approved budget target.
Senate majority leader Robert Dole (R) of Kansas said at a luncheon with reporters Friday that if the farm bill did not break the budget, it ``may bend it a little.'' The farm bill passed by the House Oct. 8 carries a five-year price tag of $141 billion.
Already some senators, including farm-state Republicans, are considering boosting the Senate farm bill's price tag by adding a $5 billion program to aid soybean farmers. Democrats see costly ornaments for the bill as a way of embarrassing President Reagan.
The theory is that if the President were to veto the farm bill, it could hurt Republican chances of holding the Senate in the 1986 elections. By some counts, 14 of the 22 GOP seats being contested are in the economically hard hit farm belt.
According to Senator Dole, there ``is a great deal of danger'' of a veto. If the Congress does not come up with a farm bill the President can sign, ``we are going to be here to Christmas'' working on one.
``I don't imagine he will sign [just] any farm bill he gets,'' Secretary Block says. But he added that ``my objective is to work with the Senate in order to get a bill the President can sign. The President wants to be able to sign.''
In addition to drafting legislation to support sagging farm income, Congress will soon face the question of how to shore up the troubled Farm Credit System. The little-known system is owned and controlled by farmers and farm cooperatives and holds one-third of the nation's staggering $212 billion in farm debt.
The system on Wednesday is expected to report a loss for the third quarter of 1985. Congressional hearings on the results are likely to follow in short order.
A Government Accounting Office report said the system will lose $2.6 billion in the year ending June 30, 1986, although system officials note the GAO report had ``numerous limitations.'' There are published reports that the system plans to ask Congress for up to $10 billion in aid, a bailout dwarfing the government's $4.5 billion rescue last year of Continental Illinois Corporation.
Block said he ``wouldn't want to speculate'' on the size of any aid package that might be required although the ``federal government will be prepared to play a part,'' once remedial steps are taken in the system's operations. Without reform ``you have a system in a death spiral,'' he said in an interview conducted for a Voice of America broadcast.
There is ``no question'' that recent tightening of the system's lending practices has made the credit crunch that farmers face even worse, Block said.
Recent Reagan administration moves to help farmers by boosting their foreign sales have angered America's allies. Last week the President accused the Common Market of unfairly subsidizing wheat exports, thereby forcing world grain prices down and hurting overseas sales of American crops. Mr. Reagan is seeking relief from the General Agreement of Tariffs and Trade.
The European Community responded by saying it was ``astonished to be reproached'' by the US and said it would file a ``parallel procedure'' accusing the US of improperly subsidizing wheat sales in North African markets.
In the Oct. 21 issue, the Monitor incorrectly reported that the Soviet Union had agreed to purchase 22 million metric tons of US grain in the current fiscal year, 10 million tons above the maximum level specified in an agreement between the two nations. In fact, the US last week offered to sell the additional grain, but the Soviet Union has not agreed to purchase it.