The Carter administration yesterday announced its first significant concession to demonstrating farmers - a series of steps that it claimed would raise farm incomes by $3 billion to $4 billion a year without having any "measurable impact" on food prices.
A statement released by Vice President Mondale at the White House also declared that the president would veto a more expensive Senate-passed farm bill, termed "ill-conceived, short-sighted and unworkable."
With House and Senate conferees scheduled to take up that legislation Monday, the stage was set for a confrontation over aid to farmers.
Agriculture Secretary Bob Bergland denied yesterday that the administration was bowing to pressure in its new announcement. However, he acknowledged that even as the administration acted this week, grain prices were rising on their own.
Asked what had happened to make the administration go back on its earlier refusal to submit to the demands of the militant farm organization, American Agriculture, Bergland said that additional help had always been under study and that it was now "timely."
Bergland also denied that the new steps announced yesterday were intended to "derail the legislative process." Officials said privately, however, that the administration was acting hastily to head off the legislation, which it fears could seriously undermine the Carter anti-inflation program.
The major features of the administration measure:
Government payments to corn and cotton farmers who agree not to grow crops on some of their acreage. This would be the first paid land diversion program since the early 1970s. About 4 million fewer acres of corn and 1 million fewer acres of cotton would be put in production as a result, the administration calculates.
Support for legislation that would provide a "modest" increase in government payments to wheat farmers. These are payments that Washington makes from the budget to make up the difference between what wheat farmers get for their grain and a fixed "target price."
A $1-a-bushel increase, from $3.50 a bushel to $4.50 a bushel in the support price for soybeans.
Government purchases over a period of time of up to 220 million bushels of wheat (6 million tons) that could be earmarked for an international reserve to combat famine if Congress approves. Officials said this wheat could be bought now, or in the near future, in anticipation of such approval.
Relaxation of the 35-million ton ceiling on farmer-held grain reserves for which farmers receive payment incentives to cover the costs of holding the grain.
The administration statement called this a "prudent, considered program, serving the interests of both farmers and consumers." By contrast, it said, the Senate-passed legislation would "destroy" export markets by overpricing U.S. grain; cost the Treasury an extra $2.5 billion and "drastically alter American agriculture as we know it."
Before the Easter recess, senators from agricultural states rushed through a number of amendments in response to an unprecedented lobbying effort by militant farmers claiming their prices no longer equal their costs. Administration officials assert that the Senate was "stampeded" into action.
The major objections that the administration has to the admendments of Sens. Bob Dole (R-Kan.), Herman E. Talmadge (D-Ga.) and George McGovern (D-S.D.) is that they would raise price supports of basic commodities, something the administration says it feels would fuel inflation. The administration favors helping farmers with direct payments that do not affect grain prices much.
Bergland made clear yesterday that the president opposed higher price supports - indicating that any bill including them would be vetoed. Whether the concessions would prevent congressional action is uncertain. Bergland said that Chairman Talmadge of the Senate Agriculture Committee was "pleased with the direction we're going," but had not indicated that he would withdraw his own proposals.
Somebody will have to pay the farmers the $3 billion to $4 billion a year more the Carter plan would give them. But Bergland said yesterday that it would not be either consumers or the U.S. government.
Except for a possible "10-cent-a-shirt" increase in the price of cotton T-shirts, there would be no impact on prices, he said.
The U.S. government would pay corn farmers an additional $600 million to $700 million a year for idling their croplands. But department economist Howard Hjort said this should reduce corn supplies, raise corn prices and lower other government relief payments, canceling out the new obligations.
Bergland hinted that the brunt of higher grain prices would be borne by cattlemen and cattle feeders, who use corn to fatten their animals.
Under current farm legislation, wheat and corn farmers have to idle some of their land to be eligible for government price support and income support programs. Administration officials say they fear that, with corn prices rising, many farmers might exercise their option to ignore government help and take their chances on getting more money for grain in the markets.
The payments for idling corn fields were therefore introduced to entice more farmers. Farmers would get paid by the acre - 20 cents a bushel on their usual corn yield on that land, and 2 cents a pound on their normal cotton yield.
Initial reaction from key congressional leaders yesterday was negative. Talmadge said he was "deeply disappointed that the administration did not go far enough." Dole said it was a "clear signal" that the administration "really doesn't care."