Give Wheat to Farmers?

It sounds like a rural version of the coals-to-Newcastle bit: giving farmers wheat, corn, rice and cotton. In fact, the payment-in-kind (PIK) plan unveiled last week by Agriculture Secretary John Block is an intriguing idea that just might reduce bulging Government stockpiles and prop up depressed farm income.

The Government already requires farmers to take 15% to 20% of their land out of production to qualify for price supports. Under the PIK plan, farmers would idle an additional 10% to 30% of their land and receive crops that are now being held in Government storage. They could then sell the crops for whatever price they could get.

These sales might further depress already low farm prices, but Block thinks the effect would be minor. The reason: if a farmer let land lie fallow on which he could grow, say, ten bushels of wheat, the Government would give him only eight bushels (though exact ratios are not settled). Thus the total reaching the market would be reduced. Farm income would be bolstered because farmers could sell crops without the expense of growing them.

In some cases, a farmer could in effect sell the same crop twice. He could grow wheat on land he kept in production, sell it to the Government at the support price, get it back in payment for the acreage he had idled--perhaps before the wheat had left his farm--and resell it on the open market.

All of this would enable the Government to begin to shrink its monstrous stockpiles, which now amount to a full year's domestic consumption of some grains, and, by Block's perhaps overly optimistic estimate, could save as much as $5 billion between now and fiscal 1985 in price-support payments and storage fees, which totaled $12 billion in the past fiscal year. Block also believes the plan would have a negligible effect on retail food prices.

Farm organizations, though waiting for more details, seem willing to consider the plan. Among some two dozen ideas for reducing stockpiles that Block reportedly discussed with farm lobbyists, the lobbyists chose PIK as the most promising. Block can probably start the plan without congressional approval, but he is asking the legislators for authority to freeze "target" (support) prices at their 1983 levels for the next two years. He is unlikely to get that authority from the current lameduck session and is uncertain whether he should start PIK without it.

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