Agriculture Secretary Bob Bergland, citing a study by his staff economists, has concluded that the Interior Department has not gone far enough in its move to break up huge farm landholdings in the West.
The study and Bergland's comments seem certain to add to the controversy over Interior's proposals to force large farmers to give up thousands of acres of federally irrigated land.
The controversy has been especially intense in California's rich Imperial Valley.
President Carter, among others, has expressed opposition to limiting ownership of farmland served by federal water projects to 160 acres per person. Carter has suggested amendments to the 1902 law that sets the 160-acre limit.
In a letter to Interior Secretary Cecil D. Andrus, Bergland said proposed regulations "move in the right direction" but still could frustrate development of small family-owned farms with federally subsidized water.
These were among the changes suggested by Bergland:
Requiring purchasers of excess land to operate and live on or near the farm to be eligible for reclamation benefits.
Using a system other than the proposed lottery for distributing excess land, so that present occupants will have a greater opportunity to obtain land.
Settign maximum acreage on a project-by-project basis to allow for different soil and growing conditions in the 17 western states where the Bureau of Reclamation operates.
Bergland sent his suggestions for revisions in the proposals and a copy of the economic study to Andrus this week.
Andrus commented yesterday that the study was "encouraging" about the economic potential of smally farms on the irrigated lands, but that other factors must be considered before final regulations are issued.
Interior proposed new regulations last August after a federal judge held that long-term violations of the Reclamation Act of 1902 had prevented small family farms from developing on irrigated land.
Another court order last month stopped Andrus from putting the regulations into effect until an environmental impact statement is prepared, a procedure that will take months.
Western-state legislators and farm interests have reacted angrily to the Interior proposals. Andrus is scheduled to go before a Senate committee next month to explain the regulations and possible amendments to the 1902 law.
The Agriculture Department study found that, contrary to popular belief, relatively small family farms can be operated at a profit in many areas where federal reclamation projects provide irrigation water.
The study also showed that the use of the federal water represents a huge subsidy to farm operators, lifting their net income substantially above that of farmers in areas where federal water is not used.
The researchers studied reclamation land in the Imperial Valley and Westlands water district in California, the Columbia basin in Washington and the North Platte area of Nebraska and Wyoming.
The study was based on economic projections related to the Interior proposals, including a central requirement that would limit an individual farmer to owning no more than 160 acres of reclamation-water land. Family partnerships would be allowed, however, with 160 acres for each person and a right to lease an equal amount.
Income varied in each of the study areas, but the researchers found that all farm sizes considered in the Westlands and Columbia basin would produce annual returns exceeding median family income.
In the Imperial and North Platte areas, the study found, using current land prices, farms would have to be at least 320 acres to equal or surpass median annual family income.
Net income on a 640-acre Columbia basin farm under the proposed rules could reach $189,000 a year, the study said. In Westlands a similar sized farm could produce $81,000 per year.
Bergland noted that in 1976 four out of five American farmers grossed less than $4,000 in sales - a discrepancy he said Interior must consider in setting "a more precise limit" on benefits for project lands.