Lush Crop of Discontent

By his own party.

All across the nation's grain belt last week, farmers were bringing in the third bin-busting wheat crop in a row. Huge plantings of soybeans, corn and other grains are completed and, weather permitting, prospects for bumper yields of these crops also are as bright as spring sunshine. All this is the best of news to inflation-pinched consumers, who can now count on relatively moderate increases in food prices. Despite the big winter run-up in fruit and vegetable prices, caused by Eastern freeze and Western drought, the Government predicts that food prices this year will rise somewhere between 4% and 6%, v. painful leaps of 14.5% in 1973 and again in 1974.

On the farm, the picture is very different; the farmers who are gathering the big harvests are in a mood of wintry discontent. Prices for some of their most important crops are sliding, and their incomes are falling. Now farmers want Government help in the form of higher subsidies, especially for wheat and corn--to the embarrassment of President Carter, who has threatened to veto any farm bill so generous as to imperil his goal of balancing the budget by 1981.

Pangs of Plenty. The biggest headache for farmers is the growing glut of wheat. Last week the Agriculture Department forecast that despite last winter's drought and destructive winds, this year's winter wheat crop would come to 1.53 billion bu., only about 3% less than last year's mammoth harvest. The total crop, including spring wheat (harvested in the fall), is expected to be about 2 billion bu. That would be slightly less than the record 2.15 billion bu. crop in 1976--but still more than U.S. and foreign buyers combined are likely to buy.

As a result, wheat prices have dropped to little more than $2 per bu., v. an average of almost $3 for last year's crop. Growers complain that if prices continue to slip they will not earn enough to cover production costs. Says Earl Hayes, president of the Kansas Wheat Growers Association: "Wheat farmers are in a severely depressed situation." Net farm income has already fallen from an alltime high of $33 billion in 1973 to $22 billion last year, and has continued to decline so far in 1977. Much of the rise in food prices in recent years, says Hayes, was caused by climbing costs of transportation, processing and retailing. Hayes notes that a recent Government survey of 400 banks in nine farm states found that 14,000 farmers will not be able to repay their bank loans and could go out of business.

Part of the responsibility for the growing wheat surplus rests on the farmers themselves. Sensing last fall that an expanding "carryover" of unsold wheat would depress prices, they paradoxically overplanted. Reason: federal price supports are based on the percentage of acreage seeded, and farmers wanted to get as much of their land covered by the supports as possible. In addition, record-breaking wheat crops were harvested worldwide last year, cutting into American farmers' export markets. The U.S. consumes only about two-fifths of its wheat crop, relying on foreign buyers to gobble up the rest. Another bounteous global grain crop is forecast for this year, which will further soften demand for U.S. wheat. The Soviet Union, for example, is likely to gather in a near record 215 million tons of grain this year, just 4% less than last year's peak.

Some farmers are planning to feed some of the excess wheat to livestock. But that would further lower the price of corn, the principal animal feed, by reducing demand. Farmers have planted almost 84 million acres of corn, about the same as last year, when they grew a record 6.2 billion bu. Growers are concerned that the huge crop will cause corn prices to fall well below their current level of $2.35 per bu., which is nearly 20% lower than last year's price. Of all the nation's farmers, the best off are the growers of soybeans, which are in great demand for use in livestock feed and a wide variety of foods. Prices for soybeans have climbed from an average $5.25 per bu. last year to as high as $10.27 this year--and could go higher still.

The huge crops and falling farm incomes pose a monumental problem for the Carter Administration, which wants to help farmers without pushing prices too high. The main point of contention between the White House and Congress is the level of the so-called loan support and target prices to be included in a new farm bill. Under the present system, if market prices for wheat fall below a "target" of $2.47, the farmers get a Government check to make up the difference.

Open Confrontation. Peanut Farmer Carter has proposed raising the targets in 1978 to $2.90 for wheat and $2 for corn (v. $ 1.70 now). He calculates the cost to taxpayers at $2 billion a year, and has theatened to veto any farm measure that raises the tag. But the Senate has passed a bill that would cost almost twice as much; the House is preparing to vote on a measure priced at $2.3 billion. Both want to raise target prices this year. The differing versions will have to be reconciled in a joint conference, and the final bill is not expected to reach the President's desk before August.

Many economists believe that Carter's proposals are more than adequate to stabilize farm prices without driving them so high that U.S. goods are forced out of foreign markets. High price supports, critics contend, fuel inflation, tempt farmers to grow more than they can sell and enable less efficient growers to pursue wasteful ways. So far, legislators do not agree--and unless they back down, the stage is being set for an open confrontation between Carter and a Congress controlled by his own party.

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