The President's chief inflation fighter, Alfred Kahn, and the Council on Wage and Price Stability are "suspicious" that the margin between farm and retail food costs is higher than it ought to be.

COWPS Deputy Director Bob Russell told a White House meeting of food writers on Monday that the current rapidly expanding difference between the cost of food at the farm and the supermarket "is a phenomenon that is of great concern to the Council." Until three months ago, the farm to retail margin was about 12 percent: Now it has risen to 18 percent.

Russell was quick to point out that "a rapid rise of the spread doesn't necessarily mean violations of gross margins, but it does raise serious suspicions about the degree of compliance in food processing and retailing." Russell said the council was "looking at it intensively."

According to Kahn, who also spoke at the meeting arranged by Esther Peterson, the President's consumer affairs advisor, "there is some tendency for these margins to go up too sharply."

COWPS Chairman Barry Bosworth said the greatest problem has been with beef margins. The costs he said were passed through very quickly in the period through March. But the slowdown in meat prices (at the farm) has not shown up. We don't think it's anything that can be explained by lags." Although Bosworth added, "We don't know whether it's the processor or the retailer," he said that figures available for April suggest it may be the processor. Data for May will not be available until late this month.

Since the Administration's program for wage and price guidelines is strictly voluntary, Kahn was asked what the Council would do if it found that processors and retailers were violating the standards.

"The threat of publicity is an extremely potent weapon," he said."We get the clear impression (if we threaten to expose a company for violating the guidelines) they will send people down very quickly to beg us not to publish."

Russell point to Giant

Kahn said the council does not expect people to "boycott" a company which is out of compliance. He said he didn't like to use that word. "We urge people to be prudent shoppers. That's the euphemism in Washington. We think if people are informed they will behave prudently."

He agreed that "studies do seem to demonstrate that margins in concentrated markets seem to be higher than they should be." As a remedy, he suggested more "intensified anti-trust scrutiny" and said he had that day sent a letter to the Justice Department asking them to look into the pricing of soft drinks. Kahn urged his audience to help inform the public so they can help the Administration "counter special interests."