The New York Times

December 12, 1985, Thursday, Late City Final Edition

SECTION: Section A; Page 31, Column 5; Editorial Desk

LENGTH: 714 words

HEADLINE: The '85 Farm Bill Will Hurt Exports

BYLINE: By James Bovard; James Bovard writes frequently on agriculture.


BODY: The 1985 farm bill is likely to be one of the biggest Federal handouts in history. It may also mean that by 1989 the United States will be importing more food than it exports.

House and Senate leaders are in conference ironing out differences in their farm bills. But it does not matter whether we throw some $50 billion or $60 billion at farmers in the House fashion or in the Senate fashion -both bills are flounders. On agricultural policy, Congress has learned nothing and forgotten nothing.

Agriculture Secretary John Block says President Reagan will veto any farm bill with predicted costs of more than $50 billion over the next four years. This is like the Pentagon announcing that it will now pay only $500 instead of $600 for toilet seats. Even if the bill costs only $50 billion, the Government will be spending the equivalent of more than $70,000 per full-time farmer through 1998.

Supply control is the soul of the 1985 farm bill. From corn to wheat to cotton to rice, Congress intends to enrich farmers by bribing them not to plant. This has always been a bad idea, but in an age of world markets it is downright suicidal.

Exports are the life blood of American agriculture. More than 40 percent of America's grain harvest is sold overseas, and world market demand largely determines crop prices.

Thanks partly to the 1981 farm bill, American crop exports have fallen 25 percent in recent years, and experts predict that wheat and corn exports could fall another 20 percent next year. Our agricultural trade surplus (exports minus imports) has fallen from $27 billion in 1980 to a predicted $9 billion in 1986. At the present rate, the United States could be a net agricultural importer by 1990.

And what is Congress's reaction? More schemes to boost prices by reducing production. The 1985 farm bill could result in paying farmers to idle up to 70 million acres a year. The Senate bill, for example, would pay farmers who in 1986 idle 40 percent of their acreage $5.50 a bushel for their wheat - almost double the September 1985 market price. Rice growers who idle some of their land will be paid $11.90 a hundredweight - roughly double the market price. Lavish

(c) 1985 The New York Times, December 12, 1985

subsidies are provided not to plant other crops as well. The obvious effect will be to reduce exports and surrender markets to foreign farmers.

The purpose of both bills is to bail out struggling farmers. But most of the handouts will go to farmers who don't need help. In 1984, less than 20 percent of all direct Government agricultural handouts went to financially stressed farmers. In order to give $1 to a struggling farmer, we will be giving $4 to his prosperous neighbor - and competitor.

Federal agricultural policies have greatly increased the cost of production. Easy Federal credit has inflated land prices, while acreage reduction programs have increased overhead costs. The Government is the farmer's biggest handicap; the key to increasing exports is decreasing intervention.

Instead of paying perpetual bonuses for not producing, the Government should offer struggling full-time farmers a onetime severance payment. In return for hanging up his plow, every farmer with a negative net worth or net worth of less than $50,000 could be given up to $50,000 to help start a new life. This would provide a humanitarian transition and would cost relatively little since most farmers are still wealthier than other Americans.

After this generous bailout, there would be no excuse for crafting agriculture policy as if most farmers were widows and orphans. Price supports should be slashed slightly to below world market prices, and target prices - rural America's guaranteed-income program - should be abolished. There would be a shakeout, but it would be far cheaper than continuing to gold plate every granary in the land.

When Congress agrees on a bill, Mr. Reagan should veto it and take a firm position in favor of reducing all acreage reduction programs. This is a common sense notion the American people will support. After Mr. Reagan spikes one or two farm bills, Congress may come back to earth.

We can no longer afford to pay our farmers not to work. The farm bill is a death warrant for future exports. We need an agricultural policy designed as if world markets mattered.