In a move that could be a boon to consumers and manufacturers, the House Agriculture Committee voted yesterday to squeeze some of the cream out of the $2 billion federal dairy support program by cutting farmers' prices.
The compromise was reached after weeks of hard dealing by industry, administration and congressional leaders. It is designed to reduce budget costs and slow federal purchases of dairy surpluses, which will exceed 14 billion pounds this year.
If the new plan moves quickly through the House and Senate, the federal support price for milk over the next two years could drop by as much as $1.50 a hundredweight from its current level of $13.10--a change that could bring lower consumer prices by fall.
"There is a lot of pain and misery to go all the way around for farmers on this one," said a committee aide. "But commercial users of milk and consumers are the big winners. Beginning Oct. 1, there would be a cheaper raw material."
Rep. Jim Jeffords (R-Vt.), chief sponsor of the compromise, said the plan left a sour taste in everyone's mouth, but he said all parties involved in the negotiations agreed that soaring federal costs and the growing mountain of dairy surpluses had to be reduced. Congressional and administration estimates of the cost of the new program varied substantially, but Agriculture Secretary John R. Block said it would cost about $2 billion in fiscal 1984 and 1985 compared with more than $2.5 billion this year and a total of $1.3 billion in FY 1984 and 1985.
The committee vote was a victory of sorts for Block, although he had to rely on House Democrats to get it. His efforts to move a revised dairy plan through the Republican-controlled Senate have gone nowhere.
But the administration had to accept another proposition that it considers anathema--paying farmers not to produce. Those who cut production up to 30 percent would be paid $10 for every 100 pounds of milk they don't produce, a costly step but still less expensive than paying the guaranteed price support. The diversion would be financed by assessing farmers 50 cents on each 100 pounds of milk they market.
"This will let the dairy farmer reduce production without committing suicide or making financial sacrifices," Jeffords said.
The House Democrats, however, rebelled yesterday against pressure by Block to get them also to support a freeze on 1984 commodity target prices (direct subsidies to farmers) at this year's levels to reduce federal budget outlays. The payments are made to growers of wheat, rice, cotton and feedgrains.
The Department of Agriculture could not give precise figures on savings from a freeze on the subsidies. But Block, in a letter to Chairman E (Kika) de la Garza (D-Tex.), indicated the freeze would make up for the extra costs he calculated from the new dairy plan.
Rep. Tom Harkin (D-Iowa), chairman of the dairy and poultry subcommittee, typified Democratic feelings about the Block approach. "The secretary ought to get the Senate to act on his target-price freeze first," he said, noting that the Republicans control the Senate. "Here we have the Democrats again being asked to save the administration."
De la Garza agreed at Block's urging to to consider the commodity price-freeze proposal this morning, although it is given slim chances of passage.