Secretary of Agriculture Bob Bergland said yesterday he wants to change federal milk price support programs to prevent a sharp increase in dairy product prices this fall.
Dairy farmers are already collecting $1 billion in federal subsidies this year -- twice as much as the Carter administration estimated they would get, Bergland said.
Despite sagging demand for dairy products, the dairymen will get another automatic price increase unless the milk subsidy rules are changed, Bergland added.
"There is very skimpy justification for adjusting price supports based on the merits, politics aside," Bergland said in a luncheon meeting with a group of reporters.
The agriculture secretary said he is to meet next week with dairy and consumer groups to try to work out an agreement to avoid further hikes in prices.
Bergland said he hopes the session will produce a consensus on changes in price supports that will protect farmers' incomes without costing consumers money.
Federal law currently requires the government to buy milk or milk products and hold them off the market to keep prices up. An amendment pushed through Congress by dairy interests required the government price to be adjusted twice a year for inflation.
Under the requirement, the subsidy was increased by 7.6 percent in April and the Agriculture Department projects another boost of at least 5 percent this fall.
Because the government price becomes a floor for other dairy prices, the price of everything made from milk has increased sharply this year.
Bergland said he believes that dairy farmers recognize the dangers of the price support system becoming "overloaded" at the expense of consumers.
He conceded, however, that it may be difficult to persuade Congress to rewrite the politically popular program in an election year.
Last spring the Office of Management and Budget suggested trimming the milk subsidies by $130 million, to help balance the budget and fight inflation by holding down the price of milk, butter and cheese.
The cut was canceled shortly before the Wisconsin presidential primary, reportedly at the urging of Vice President Mondale of Minnesota, an important dairy state.
Yesterday Bergland suggested removing the legal requirement that dairy price supports be adjusted twice a year on a fixed formula. He said the department should have some flexibility to determine support levels. The agriculture chief said he favors eliminating the big increase scheduled for this fall, but not rolling back milk prices to last year's level.