President Carter will call in representatives of the meat-packing and food industries in an effort to prod them into lowering prices to bring about a reduction in supermarket prices, officials announced yesterday.
Carter decided on the session at the urging of anti-inflation chief Alfred E. Kahn after a government probe showed food processors and distributors were not trimming their prices to reflect the recent drop in farm prices.
Carter told an audience in Baltimore yesterday that middlemen and retailers were "profiting excessively" by continuing to increase their markups even though agricultural prices have been declining for three months.
Kahn said in a statement that while farm prices have fallen at a 17.3 percent annual rate between April and June, retail food prices have soared at a 7 percent pace during the same period.
"It is time for the American consumers to begin to realize the full benefit of decreased prices at the farm level," Kahn asserted. "I am calling on all meat packers, food processors and retailers to do so promptly."
The action constituted the most visible step Carter has taken under his 10-month-old guidelines program to use the power of his office to try to influence price behavior that the administration regards as inflationary.
Previously, the president has limited his direct involvement to telephoning executives of individual companies that may have violated the standards. This is the first time Carter has called in an entire group.
Kahn told a press conference earlier that officials also were concerned about the markups being taken by several major oil refiners, but he gave no hint of a similar meeting with the president.
The White House gave no date for the session with the food industry leaders. The decision apparently was made late yesterday, after Carter's criticism of retailers drew cheers in Baltimore.
There already were some indications this week that Carter's "jawboning" session may get some results. The Agriculture Department predicted Monday that meat prices should fall later this year because of high pork production.
Kahn also issued a veiled threat to the United Auto Workers that the White House may employ economic sanctions if the union breaches the 7 percent wage guideline as UAW leaders have vowed.
The anti-inflation chief noted during his press conference that the auto industry is not totally independent of the government" and is "not in a position" to risk the administration's wrath.
However, Kahn conceded it still is too early to say what specific measures the White House might invoke if the UAW flouts the standards. He said officials "haven't reached any decisions" on how to deal with the case.
The developments came as the White House, Attempting to buy time for consultations with business and labor formally delayed any decisions on changes in the wage-price guidelines and instead asked for comment on various "options."
In an unusual move, the Council on Wage and Price Stability published a series of "issues" facing policymakers for the second year of the program, and asked for comments from the public on various alternatives by Sept, 5.
In the only hint of any firm decision, the council said it plans to measure the price standard over a two-year period instead of one, so that companies which restrained prices more than they had to this year could have more leeway next year.
However, except for that general proposal, the document merely listed the various options that policymakers are considering, with a discussion of prop and cons.Insiders said no decision have been made.
The administration had hope to unveil specific proposals by now for the program's second year, which begins Oct. 1, but Carter's recent Cabinet shakeup and other factors have delayed that until September.
Among the major options the administration raised yesterday were:
The possibility of easing the present 7 percent wage guideline by allowing workers a cumulative 15.5 percent pay increase for this year and next combined -- a move that effectively would make next year's pay standard a maximum of 8 percent.
Whether to tighten the way cost-of-living adjustments are figured. Current regulations call for computing all such COLAS as if inflation were 6 percent.Planners fear this might allow excessive increases.
How to treat workers who are not covered by cost-of-living clauses. Strategists have been concerned that the guidelines are giving an unfair advantage to those covered by escalator clauses -- primarily those in unions.
Whether to alter the current price standard, which requires firms to hold price increases to an average a half percentage-point below that of a 1976-77 base period, with a maximum boost of 9.5 percent.
Whether to narrow the list of products exempted from the price guidelines. Under the current program, most crude and raw materials, including oil and farm products, are excluded.
How to change the current "profit margin" exception, which allows firms which have trouble following the regular guideline to comply with the program by agreeing to hold their markups in line with those of the previous three years.
The document also contained a lukewarm defense of the impact of the wage-price program, asserting that the guidelines "have worked as well as could have been expected" in the face of soaring food and energy prices.
Kahn told reporters that despite some outside criticism of the guidelines plan, he was "absolutely persuaded" that inflation would have been worse without it. He said the standards helped keep food and energy price rises from spreading.