The Agriculture Department, in the wake of a conference with Vice President Mondale, has scrapped efforts to head off a pre-election increase in federal milk price supports that could cost consumers billions of dollars in higher retail prices.
Sources confirmed yesterday that Agriculture Secretary Bob Bergland, who had sought as recently as July to tighten present dairy price-support formulas, now had dropped his earlier stand and will not oppose the increase.
The secretary's decision, made during an early-August meeting with Mondale, paves the way for approval of a scheduled Oct. 1 increase in dairy price supports that could boost milk and other diary prices by as much as $1.6 billion.
The Commodity Credit Corporation board Friday is scheduled to consider boosting current dairy price supports by between 65 cents and 70 cents per 100 pounds from the current $12.36 level. The increase would amount to about 5 percent.
Bergland had served notice in June he planned to ask Congress to revamp the dairy price-support program to do away with the traditional automatic Oct. 1 increase on grounds that it is unnecessary and only hurts consumers.
Under current law, the department is required to boost dairy price supports twice a year unless market prices have reached 80 percent of "parity" -- the high attained during the years 1910-1914, now used as a federal benchmark.
Dairy farmers already are collecting more than $1.3 billion in price supports this year -- more than six times what the White House originally had budgeted for fiscal 1980 -- in large part because of lower-than-expected prices as a result of slumping demand.
Moreover, these increases come at a time when prices are at an all-time high and there is a surplus of dairy products on the market and dairy farmers generally are well-off financially.
Experts estimated yesterday that a subsidy boost of the size now being contemplated could raise the price of cheese, for example, by between 7 cents and 11 cents a pound and result in comparable increases in other dairy products.
The estimate of a total $1.6 billion in higher prices was calculated by Agriculture Department economists. Some outside analysts contend the combination of increases could hike dairy prices over the year by $3.5 billion.
Bergland had told reporters in June he thought continuing the twice-a-year increases would over burden consumers. "There is very skimpy justification for adjusting price supports based on the merits, politics aside," he said then.
Agriculture Department officials still were touting the legislation to cut back on dairy price-support increases as late as mid-July in meetings with congressional staffers and consumer groups.
A bill similar to Bergland's proposal was introduced in the House by Rep. Paul Findley (R-Ill.). The measure would have eliminated midyear increases in price supports when government stocks of dairy products reached certain levels.
However, the department shifted gears abruptly after the precampaign meeting with Mondale. Bergland declined to support his own legislation in testimony before the House Agriculture Committee. The bill later was defeated.
Key administration officials insisted the decision was based on legislative realities and not on political considerations. They asserted that Congress did not appear to have time to pass the bill before the campaign recess.
Officials said the administration most likely would revive the dairy-subsidy cutback as part of any 1981 farm-legislation package it proposes, if Carter is re-elected. However, they conceded the bill seems dead for now.