Next week President Carter will be called upon to declare himself on an issue that has complicated the life of every President since Franklin D. Roosevelt, and on which Carter stayed fuzzy in last year's campaign:
How high to set federal farm price supports.
His decision could have an obvious effect on farm income over the next several years, and thereby on voter contendedness in the Farm Belt.
At the same time it could affect food prices and federal spending.
Farm policy tends to be what game theorists call a zero-sum game, in which there can only be winners to the extent there are offsetting losers.
That is why Presidents do not like it.
Carter's hand is being forced this early in his administration by an accident of timing. The existing federal farm legislation expires this year, and new legislation must be passed.
Some people in the administration and in Congress would like to pass a simple one-year extension of present law to buy time. But Sen. Herman E. Talmadge (D-Ga.), Carter's fellow Georgian and the chairman of the Senate Agriculture Committee, is determined to have a multi-year bill, has introduced one and has started hearings. So has the House Agriculture Committee.
Agriculture Secretary Bob Bergland has said he, too, would rather have a multi-year bill if possible, and he is now scheduled to relay Carter's recommendations to the Talmadge committee on March 15.
Former Agriculture Secretary Earl L. Butz liked to say that during the Nixon-Ford administrations the Republicans finally got the government out of agriculture. He gave the impression that the entire price support structure begun by the Democrats in the New Deal days had been torn down.
Actually, while there have been many changes in nomenclature and details, the structure has remained essentially unchanged through both Democratic and Republican administrations for 40 years.
To prevent the recurrence of agricultural depression, the government has set minimum prices for such basic crops as wheat, corn, cotton and soybeans, putting a floor under farmer's incomes.
As a way of enforcing those minimum prices, the government has bought up and stored surplus production in bumper years, for use in lean times or as foreign aid, and has also often restricted production.
All these supportive provisions were retained in the 1973 farm bill of which Butz liked to boast - the bill that is now expiring. But by and large they have not been used. The reason is that market prices have been so high in recent years. For most commodities the market price has been higher that the government price, so the government has not had to step in.
Spending for what the government calls farm income stabilization was $4.6 billion in fiscal 1972, the year before the present law was passed and the year before farm prices took off. Estimated spending in fiscal 1978, which will begin Oct. 1, is $1.2 billion. But there are signs that these days of low spending may now be over.
The years farm prices and farm income soared were 1972 and 1973. Wholesale prices of farm products jumped 18.7 per cent on average in 1972, 36.1 per cent in 1973. Net farm income in 1973 was $33.3 billion, more than double the $14.6 billion of 1971.
There were several reasons for these increases. Dollar devaluation increased foreign demand for U.S. goods; a worldwide boom increased demand generally; while at the same time poor harvests diminished supply. On top of these general conditions, and in part because of them, came the Soviet wheat deal, in which, in effect, the United States sold off a great part of its grain reserves.
Since this tumultuous 1972-73 period, however, prices received by farmers have leveled off, while prices paid by farmers - both production costs and living costs - have continued to rise. Thus net farm income, or farm profit, has declined; it was around $23 billion last year, 30 per cent below the peak it reached in 1973.
In real terms - after allowing for inflation - farmers made only slightly more, last year than they did in 1971, the year before the recent price fluctuations began.
Nor have all farmers fared the same in the last several years. Some have done better than average, some worse. As a general proposition, crop producers have done better than livestock producers, partly because, with feed grains, the crop producer's price is the livestock producer's cost.
Among crop producers, moreover, wheat farmers are now being squeezed more than most of their brethren. A big wheat crop last year depressed wheat prices, and this winter's crop looks large as well.
Former peanut producer and processor Carter had relatively little to say about farm and food policy during the campaign. The few things he did say leaned all ways at once, as in Iowa in February, when he responded to a question from Common Cause by declaring:
"We need a national food policy that will assure the consumer abundance of supply at prices he or she can afford and will avoid the shortages that drive prices higher. Such a policy can also assure farmers that they can produce abundantly at a fair price to them. We can do both . . ."
Present law sets both a so-called target price and a somewhat lower loan price for wheat, corn and other supported commodities. If the market price falls below the target price, the government gives the farmer the difference in what is called a deficiency payment.
In addition, the farmer can put his product in storage and borrow on it at the loan price. At the end of the loan period, which is generally a year, he can either forfeit the product and walk away with the loan money or - if prices have risen in the interim - pay off the loan, redeem his product and sell it in the private market.
The target prices for wheat and corn last year were $2.29 and $1.57 a bushel, respectively. Under present law target prices go up each year under a formula that supposedly takes account of increased production costs. Congressional forecasters estimate that under this formula the target prices would rise to $2.54 for wheat and $1.75 for corn in 1978.
Talmadge, however, says the present formula ignores one important aspect of production costs - the rising value of farm land. His proposad formula would produce target prices of $2.91 for wheat and $2.28 for corn. Present market prices are between $2.50 and $2.60 for both.
Unless wheat prices increase sharply in the next year or two for some unforeseen reason, the Talmadge bill would thus trigger deficiency payments to wheat farmers.
Others, however, think the Talmadge bill goes too far in insuring farmer's against risk and loss. Even Iowa's Democratic Sen. Dick Clark has said, "Target prices ought to be tied to cost of production, but shouldn't guarantee it. We should not guarantee absolutely no chance of loss. I don't think we do that in any business."
The administration had given no indication of what target prices it might support.
In addition to protection for farmers through price supports, the farm bill raises the related question of whether the government should protect consumers by accumulating reserves that could be sold in lean years. Carter and Bergland have both indicated they favor creation of small reserves of some kind, but have not spelled out how they would do it.
Still another question involved in the farm bill is extension of the controversial food stamp program, which is now run by the Department of Agriculture.
Food stamp extension is part of the problem of welfare overhaul, on which Carter is also scheduled to make proposals this year. But on this issue, too, no decisions have been made.