Secretary of Agriculture John R. Block warned yesterday the United States may dump $3 billion of surplus dairy products on the world market if European countries do not back off from subsidized exports, which Block said rob U.S. farmers of their markets.
Saying there was "no excuse for their playing the kind of games they are," the Agriculture secretary told a group of reporters the U.S. dairy surplus could be "a very effective 2-by-4" against European countries.
Block said he had discussed with U.S. Trade Representative William E. Brock and Commerce Secretary Malcolm Baldrige the possibility of using this threat in the General Agreement on Tariffs and Trade (GATT) ministerial meetings scheduled for later this month in Geneva.
"I think we'll have support" for such a stand within the administration, he said.
Block's threat was provoked by what he said were recent moves by France to "steal" a portion of the Russian grain market from the United States by subsidized sales and moves by several European countries to drive the United States out of the Middle East soybean market by similar devices.
Block said he would oppose U.S. retaliation with its own program of subsidized farm sales, but said, "We can't be a paper tiger and just talk. Eventually we have to take action and that's what I would urge."
The government has about $3 billion worth of powdered milk, cheese and butter in its warehouses. The products were acquired under the farm support program and, Block noted, accumulate faster than they can be given away through domestic and overseas distribution programs for the needy.
Putting those products on the world market at world market prices would undercut the subsidized prices in the European countries.
American trade negotiators have tried to persuade the Europeans to end their farm subsidies so the huge U.S. farm surpluses, especially in dairy products, would be more competitive in overseas markets. Europeans, however, argue that they see no reason to cut their subsidies while American farmers continue to receive government aid.
The Agriculture secretary said he knew there was widespread discontent among dairy farmers with the 1982 price-support program, which includes for the first time penalties designed to reduce excess dairy production. But he said he was "not going to come out with any new program" of his own until the dairy producers reach a consensus on the steps they want taken to reduce production.
Similarly, on grain crops, Block said he would "continue to oppose mandatory acreage and production controls" and would favor what he called "voluntary incentive programs" to cut back production.
The Agriculture secretary said he had no indication yet whether or when the Soviet Union would respond to President Reagan's pre-election offer of additional and guaranteed deliveries of American grain.
Block also rejected calls from Democratic National Chairman Charles T. Manatt for a one-year moratorium on foreclosures of farm loans, despite reports that many such loans are delinquent because of low farm prices.
He said he would continue to deal with the problem loans on a case-by-case basis.