The Carter administration announced major changes yesterday in government programs aimed at protecting farmers from the president's decision to restrict grain exports to the Soviet Union.
The Agriculture Department said it will immediately increase the loan payments it makes to farmers to store grain on their farms and keep it off the market while awaiting higher prices.
The administration also said it is considering paying farmers not to grow corn and wheat next year -- something that has not been done since the early 1970s.
Officials also indicated that Pakistan will probably be the first country to be given extra U.S. food under an expansion of the Food-for-Peace program aimed at using up the grain that ws to have been sold to the Russians. p
President Carter last Friday announced that he was stopping the sale of 17 million metric tons of grain to the Soviet Union in retaliation for its invasion of Afghanistan.
The new farm policy initiatives were announced late yesterday, in hope they would keep grain prices from plummeting when markets reopen today after a two-day trading halt ordered by government regulators.
The administration also took retaliatory actions against the Soviets in other areas. All had been announced or alluded to previously.
The amount of fish the Soviets are allowed to take in waters off Alaska was slashed from 435,000 metric tons a year to 75,000 tons. Secretary of Transportation Neil Goldschmidt ordered Coast Guard cutters and airplanes into the Bering Sea to enforce the new limit.
The number of flights the Soviet airline Aeroflot can make to the United States was cut to two a week by the Civil Aeronautics Board at the request of the State Department. The airline now has three U.S.-Soviet flights a week in the winter and four in the summer.
Plans for a new Soviet consulate in New York City and a new American consulate in Kiev were scrapped by the State Department. Seven American diplomats who were preparing to open the Kiev consulate were ordered home and 17 Soviet officials and their families in New York were told to "leave the country expeditiously."
New restrictions on agricultural exports to the Soviet Union were announced by the Commerce Department and additional limits on exports of high-technology products were promised.
Until now, nongrain foods could be sold to the Soviet Union if reported to the Commerce Department. In the future, special licenses will be required, and the Commerce Department says it is not issuing any of them.
Sales of computers and parts, machine tools and technical data will also be curbed, Commerce officials said.
Further restrictions on exports to the Soviets are expected to be announced today, not by the government but by the International Longshoremen's Association. The dock workers have called a 10 a.m. news conference and reportedly plan to refuse to handle cargoes going to or coming from the Soviet Union.
In anticipation of a longshoremen's boycott, the U.S. Department of Agriculture has prepared plans to aid grain exporters whose shipments to Russia are frozen at the docks.
USDA officials said the government will buy the grain, just as it plans to do with the 17 million tons of corn, wheat, soybeans and soy oil and meal whose sale was canceled by Carter.
Restricting grain exports will take more meat off the tables of Soviet consumers than any single action since World War II, White House press secretary Jody Powell said yesterday.
With no American grain to feed their cattle and hogs, "meat production in the Soviet Union will decline in the coming year to a greater extent than in any single year in recent history," Powell said.
Soviet planners were already facing a 6 or 7 percent cut in meat output because of other problems, he added, and will lose 13 or 14 percent more of their meat as a result of the president's action, he said.
The White House yesterday sent Secretary of Agriculture Bob Bergland to Iowa to explain Carter's moves to irate farmers who fear a serious loss of income.
Administration officials also were called to Capitol Hill to answer questions. The Senate international finance subcommittee and the House Agriculture Committee scheduled hearings for Jan. 22, the week Congress reconvenes.
Indications that the administration may be succeeding in mitigating the impact of the Soviet grain boycott on farmers came yesterday from the Canadian grain market. Grain prices on the Winnipeg exchange declined for the second day in a row, but did not drop the full limit permitted by exchange rules.
As outlined by administration officials at press briefings yesterday, the Carter farm policy changes have three goals.
The first is to prevent the grain the Soviets were to buy from flooding the market and knocking down farm prices in the short run. The government will buy up the Soviet contracts from about a dozen companies to keep the grain off the market.
The government's actions will protect the grain exporters from millions of dollars of losses. In return, administration officials said they expect the grain companies to help the government assure that the Soviets do not buy grain elsewhere in the world.
(Representatives of Canada, Australia, Argentina and the European Economic Community will meet with U.S. officials Friday or Saturday to discuss their participation in the boycott of sales to the Soviets.)
The second administration goal is protecting farm income for the next several months. That is the aim of the changes in the feed grain loan programs announced yesterday.
Effective immediately, the Agriculture Department raised the amount of money it will loan farmers who store grain on their farms. The loan rate for wheat was raised from $2.35 a bushel to $2.50 and the rate for corn was increased from $2 to $2.10.
In step with that change, the price at which grain can be released from the reserve program was increased from $3.29 a bushel to $3.75 a bushel for wheat and from $2.50 to $3.05 a bushel for corn. When prices reach those points farmers can take their grain out of the government program.
Also raised was the price at which the government can force farmers to take grain out of the loan program -- or face penalties. The "reserve call price" for corn was raised from $2.80 to $3.05 a bushel for corn and from $4.11 a bushel to $4.63 a bushel for wheat.
The government also said it will charge farmers no interest for the first year of their grain loans and will raise the amount it pays them for storing the grain from 25 cents a bushel to 26 1/2 cents.
All these steps are meant to make it more attractive for farmers to keep their corn and borrow against it from the government rather than sell it now for cash.
The loan programs are meant to keep off the market corn harvested last fall and wheat that will be harvested this spring. They will also apply to next fall's corn crop, USDA officials said.
To cut back future production -- the third goal -- administration officials are considering reviving the practice of paying farmers not to grow crops. A decision on that step will be made by March 1, so farmers can plan for the 1980 growing season, officials promised.
Future cutbacks in production are needed because the president's plan is to permanently reduce sales to the Soviet Union.
The steps to prop up farm prices are estimated to cost between $2.5 billion and $3 billion. The government will get some of that money back eventually when it sells the grain it buys from exporters.
As for the impact on the U.S. economy, inflation and the dollar, Charles E. Schultze, chairman of the president's Council of Economic Advisers, said, "The macro-economic impact is zilch."