President Carter unexpectedly has delayed a decision on reducing U.S. wheat production next year because some senior advisers fear the effect on food prices and worldwide supplies of grain.
The postponement came after representatives of the Council of Economic Advisers, the Treasury Department and State Department warned the President Tuesday that the impact on the U.S. economy, diplomacy and world hunger could be severe if a production cutback coincided with a global harvest failure in 1978.
Yesterday, Secretary of Agriculture Bob Bergland cancelled a scheduled press conference at which he was to announce a plan for combating the surplus of unsold U.S. wheat by idling millions of acres of productive farmland.
Bergland favors substantial acreage reduction to increase sagging wheat prices. In some regions, these prices are now running 25 cents a bushel below the $2.25 floor at which the government supports them. Budget planners fear that, without some acreage reduction, federal price support outlays could become enormous next year when a farm bill with a higher floor goes into effect.
However, Charles Schultze, chairman of the Council of Economic Advisers, is said to have cautioned against too sharp a curtailment in wheat output because of the possibility of a new round of food scarcity and higher food prices. Wheat is the world's largest crop. Surplus U.S. wheat has been the world's main source of food to combat famines since World War II.
"There are valid arguments on both sides," said an administration official. He added that, except for the Agriculture Department, all of the agencies involved in the policy debate have some degree of doubt.
Carter ordered aides to report back quickly on the alternative. A decision on land retirement policies cannot be delayed much past next Tuesday. About three - quarters of the U.S. wheat crop is planted in the fall andfarmers are now making final planting preparations.
The plan under consideration by the goverment would be voluntary, but there would be strong incentives to comply with cutback provisions. Farmers who fail to do so would be ineligible for government price supports and payments.
For this year's crop, wheat farmers planted 74.4 million acres of wheat and harvested 65.6 million acres. A middle -of-the-road plan under study would reduce the planted acreage by five to 10 million acres. Economists say this would cause the nation's stocks of excess, unsold grain to decline by about 5 million tons by 1979. Officials say the decision is fraught with political, economic and climatological uncertainly, however.
The last time the government keptfarmers from growing all the wheat they could was in 1973. That decision was sharply criticized in 1974 when bad weather and drought caused global food shortages.
Global grain supplies are now larger than at any time since 1972 because harvests in the last two years have been unusually good. But "we're not that flush," said a private economist. Dryness in the southern hemisphere has caused forecasters to reduce earlier estimates of this winter's grain output below the equator.
State Department officials reportedly have argued for caution, citing the need for adequate supplies of food to serve the needs of U.S. diplomacy.
There also is concern at State and at the Office of the Special Trade Representative at the White House that a unilateral reduction of U.S. wheat output could complicate coming international negotiations for free trade.
The United States is attempting to convince its trading partners to share in the costs of maintaining an international reserve stock of grain. Some fear that land retirement could be viewed as an admission that the United States, when under pressure, will regulate global grain supplies on its own, without demanding comparable steps by other countries.
A major U.S. aim of coming trade negotiations will be concessions from the Europeans on agriculture. American officials claim one reason there is so much unsold wheat in the United States now is that European farm and trade policies prevent U.S. grain sales there. These policies include lavish subsidies to grain farmers and high tariff walls. Stephen Bosworth, deputy assistant secretary of state for international resources and food policy, said in Hilton Head Island, S.C., yesterday that the United States would not make trade concessions to others unless there are "meaningful and significant" trading improvements for U.S. agriculture.