Away From Freedom

One of the few domestic economic accomplishments of the Nixon Administration was to maneuver through Congress a 1973 law that dismantled most of the creaky, and costly, machinery of farm price supports and acreage allotments. Farm prices have shot up in a relatively free market for most of the past two years. Now, however, some of those prices are declining again, bringing to consumers a taste of sorely needed relief in food prices (TIME, March 24). Unfortunately, this renewed demonstration that free prices go down as well as up has sparked a powerful movement in Congress to bring back the Government's heavy hand in agriculture.

Last week the House passed, 259 to 162, an "emergency" farm bill that is certain to clear the Senate. The bill would:

1) Raise "target prices" of basic commodities. If market prices fall below the targets, the Government will send the farmer a check for the difference. The targets since 1973 have replaced the old-style support prices, under which the Government actually bought up the commodities and stockpiled them. The new target price would be increased as follows: on wheat from $2.05 per bu. to $3.10; on corn from $1.38 per bu. to $2.25; on cotton from 38-c- per Ib. to 45-c-.

2) Increase the support price for milk, one of the few products still under old-fashioned supports, from 75% to 80% of so-called parity.

3) Boost the amount of the loans that the Government can make to wheat, corn and cotton raisers who hold their crops off the market while waiting for higher prices and extend the term of the loans to 18 months from the present twelve.

That may be only the start of congressional efforts to aid the farmer at the expense of other consumers and taxpayers. Says New York Republican Peter Peyser: "I think there have also been some commitments made on rice and peanuts. The next thing that is going to come up is some direct subsidies for the cattle producer."

The increase in milk supports would raise consumer prices by 6-c- per gal. on milk and 15-c- per Ib. on butter, the Department of Agriculture estimates. The rise in target prices on cotton would immediately start Government payments flowing to farmers because the new target price would be above the present market level of about 40-c- per Ib. The rise could also cause some farmers who had been diverting land from cotton to soybeans to switch back again, thereby shrinking soybean supplies and possibly raising prices of the beans and also of cattle and hogs that are fed on them.

Don Paarlberg, chief economist of the Department of Agriculture, figures that the bill would raise retail food costs this year by anywhere from $500 million to $1.2 billion. By the 1977-78 crop year, he estimates, extra payments to farmers under the new bill could cost the taxpayers as much as $7 billion.

Supporters claim that the bill is necessary to keep farmers from suffering losses because their production costs are rising while market prices are dropping. But there are huge holes in this logic. First, it is questionable whether the Government has an obligation to ensure farmers--or any group in society against losing money. Second, the farmers are doing well. Their net income rocketed from $17.5 billion in 1972 to $32 billion in 1973. It fell back to $27 billion last year, but the situation hardly seems an emergency. In farm families the disposable personal income per capita last year was $4,577, almost exactly as much as for nonfarm families. Livestock raisers, it is true, are hurting--but that is because prices of soybeans and other feeds are high.

Political Skill. The House passage of the bill illustrates the political skill of the farm bloc. Many liberal urban Democrats were won over by farm-bloc promises of votes for measures that the city Democrats want, including food stamps for striking workers. The urban representatives were also persuaded by an argument that a heavy Democratic vote for the bill would pull rural voters away from the Republican Party and reforge the old Roosevelt coalition of farmers and city workers.

Even so, the bill did not win enough votes to override a presidential veto, which Agriculture Secretary Earl Butz said he will recommend. Butz usually supports any measure that will raise farmers' income, whatever it might do to other consumers, but he argues forcefully that the "emergency" bill would take farmers a long way back toward working for a Government check rather than for the consumer market.

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