FARM DEBATE BEGINNING

DON'T DO AS I DO, do as I say. The United States often has lectured its European trading partners and Japan for their costly, inefficient and trade- inhibiting systems of agricultural protection. Among other things, they have credited them with causing major trade disputes and doing great harm to well-functioning international markets. And yet in comparison U.S. farm policy has almost nothing to commend it.

Consider this devastating criticism: "Besides costing taxpayers $34 billion this year alone, these (U.S. agricultural) programs divert land, labor and other resources from their most productive uses. Most farm programs are costly and unfair because they give literally hundreds of millions of dollars to relatively few individuals and corporations while many family farmers - who are most often in need - receive little. In the process, farm programs raise the prices of many food items for all Americans, rich and poor." Who is this speaking? None other than President Reagan in his 1987 economic report. To hear him tell it, you would think the programs he is describing are more of those carry-overs from the Carter administration he has been so ready to condemn. But no, they are the result of the 1981 and 1985 farm acts the president himself signed and enthusiastically endorsed as recently as 14 months ago.To its credit, the administration at long last is advocating a complete about-face. It wants farm income support separated from production. And it wants that support redirected toward family farmers, who need it most.

The 1985 bill moved haltingly in those directions, but far too slowly. So- called target prices, government-mandated prices that help determine the subsidies farmers receive, don't begin to move downward until 1987 and 1988. And the steps in the direction of market prices are baby steps, not giant steps.

Moreover, since farmers continued to be paid subsidies in direct relation to the amounts they produced, the 1985 act encouraged them to produce even more. This contributed to the huge surpluses the government was forced to stockpile or dump on world markets. Rather obviously, since subsidies were related to production, it meant also that farmers who produced the most - the giant farms often operated by corporations - got the biggest handouts.

The economic report makes the point that financial distress has been

concentrated among family-size commercial farms. Farms with sales between $40,000 and $250,000 represent about 25 percent of the total number of farms, but include in their numbers more than 50 percent of all financially distressed farms. (The Department of Agriculture considers a farm to be financially distressed if it has more than $4 of debt to every $10 of assets and if it cannot generate enough cash to pay its bills.)

By way of contrast, government subsidy payments have been concentrated among the bigger spreads. A chart included in the economic report shows that farms with $40,000 to $100,000 in sales got something in the neighborhood of $5,000 in government payments, while those with sales of $100,000 to $250,000 got about $13,000. But farmers with sales in excess of $500,000, the biggies, averaged almost $40,000. And, the report says, since many farms do not produce commodities eligible for government programs, those that do get considerably more.

With Democrats in control in the Senate as well as the House, what chance is there that the administration will get the farm reform it is seeking? More perhaps than at first might be imagined. The farm population is becoming a smaller and smaller part of the national electorate, although its wide geographical distribution gives it outsized legislative clout. And urban dwellers from New Jersey to California don't cotton much to multibillion

dollar handouts to corporate farmers. Not when mass transit and other urban amenities are being sacrificed in the name of budgetary hold-down.

In this connection, though, the administration may get more than it is bargaining for. A wing of the Democratic Party wants the government to impose strict controls on what a farmer could plant and market as a means of limiting supply and driving up prices. The administration is adamant in its opposition. Such a program, it says in the economic report, "would discourage domestic use, cut exports sharply, devastate the farm supply industry, raise costs for the entire food processing and distribution chain, and impose huge losses on U.S. consumers." Such a program would cause a drop of 40 percent in farm exports, a reduction of $64 billion in GNP and a loss of 2.2 million jobs, "a number almost equal to all the farmers in the United States."

A key demand of the United States in the upcoming meeting of the General Agreement on Tariffs and Trade is that Europe and Japan pull back their subsidies. To make such a demand, the United States first must get its own house in order.

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