Special government aid of about $18 million to help potato farmers - now suffering from sharply depressed prices in the wake of a bumper fall crop-is expected to be announced today by the Agriculture Department.
Critics of the USDA move say the government support will only fuel inflation and encourage some farmers to plant even larger crops next year, which could in turn lead to another round of aid to the farmers in 1979.
Some investors in the commodities markets also may suffer from the potato support plan - those who have speculated that prices will be lower than they will be if the government steps in.
Members of Congress and White House aides concerned about the question of inflation have become involved in the conflict, but concern about the plight of potato farmers in Idaho, Oregon and Washington state is expected to override worries about the economic impact.
Largely because of unusually good growing weather this year - "perfect moisture, temperatures, and length of the harvest season," said one congressional aide - Idaho produced a bumper crop of 97.3 million hundred - weight russet potatoes this year, compared with 80 million in 1977.
Nationwide, the nation's stock of potatoes stands at a record 218.7 million hundredweight, up about 6 percent from last year. Earlier this fall, Maine growers complained when they began receiving $3 a hundredweight for their crops compared with $6 last srping, and the Agriculture Department authorized a $5 million program t "divert" part of the crop for cattle feed.
Sen. Frank Church (D-Idaho) subsequently led a delegation of his state's potato growers to USDA in November, to seek a similar aid plan for western growers. In Idaho, it costs farmers about $3 to grow a hundredweight of potatoes, and the current market price there for the best russets is $1.85-$1.90.
Reportedly, the western growers asked the Agriculture Department to divert 15 million hundredweight of potatoes, and the agency has agreed to a diversion program involving 9 million hundredweight.
Sources said yesterday the USDA will permit farmers to sell their potatoes for the cattle-feeding program at $2 a hundredweight for 30 days and $1.75 for the next 30 days. Idaho would be allocated 4.7 million hundredweight, Washington 2 million, Oregon 1.2 million and Maine, 0.3 million.
A spokesman for Rep. Al Ullman (D-Ore.), chairman of the Ways and Means Committee, said yesterday that the congressman "always has considered potato farming to be one of the last bastions of free enterprise and hates to see the government involved."
But in one area of Oregon, the spokesman continued, farmers are in "bad trouble . . . and to allow the farmers to get on an even keel, he won't oppose the diversion ardently."
However, the aide said, Ullman has told Oregon growers and state officials "they won't be able to rely on this next year . . . the government just won't be there." Ullman has offered to help in cooperative efforts to reduce acreage planted with potatoes, the aide added.
Another congressional staff member said the situation in 1978 is unique, and that even if the same number of acres are planted next year it is unlikely to produce the same bumper crop. Many of the growers have bank loans that became due Dec. 1, and selling under a government program at less than production costs is "hardly a bailout but saving them from financial ruin," said a man familiar with the Idaho situation.
The USDA aid would not come from the taxpayers but rather from a special assistance fund for farmers financed by other government revenues.
A spokesman for the Council on Wage and Price Stability said yesterday his agency has been in touch with USDA and "is evaluating now" data on the potato diversion program. The possible inflationary impact "is the obvious focus of our concern and interest," he said.
Less clear is the potential impact on commodities speculators. At least one western commodities broker was here recently to talk to USDA officials, arguing that the free market is the best way to allocate goods and urging that no diversion program be approved. The broker, who asked not to be identified, denied that he represents investors with significant "short positions" on potatoes futures - people betting that prices will remain low.
Another source said, however, that these "short" investors stand to lose up to 10 million if the USDA diversion's approved.