Plans to sell 100,000 tons of surplus American butter on the world market, where it would likely be purchased by the Soviet Union, have been stalled in the White House by concern over the political implications of the sale.
According to senior administration officials, Secretary of State Alexander M. Haig Jr. has stalled the sale by asking whether it would be sending a wrong signal to the Soviets, especially in the aftermath of President Reagan's controversial decision to lift the partial embargo on American grain sales to the U.S.S.R.
If the butter were sold on the world market, it would bring a price of about $1.05 a pound, barely half the American retail price, and substantially less than the government paid to acquire it under the dairy price support program. A sale of 100,000 tons would bring in about $50 million less than the government originally spent on the butter.
Interested lobbyists and foreign officials in Washington said yesterday that they thought the White House was nervous about possible public outcry over a butter sale that some would describe as a $50 million subsidy to the Soviet bloc by American taxpayers. But a White House official denied this, saying the foreign policy issue was the source of delay.
Officials at the Agriculture Department still hope to get the sale approved, perhaps in the next few days, informed sources said. The department is becoming worried about the hugh mountain of surplus American butter, which is growing at a rate of about 10 million pounds a week. "Of course, everyone realizes that all this butter is going to go bad," said an official in the office of the president's special trade representative.
Much of the butter now in storage is three years old, thought to be about the useful life of frozen butter. "No one knows what condition that butter is in," said a lawyer who represents an international butter broker. "It might be rancid."
Some industry sources say the country is running out of refrigerated storage space for surplus butter, though this is disputed. It is widely agreed in the industry that, without a foreign sale, the government has little hope of selling the surplus butter except as animal feed or for lard, at even bigger losses.
The government now owns nearly 200,000 tons of butter, for which it has to lease privately owned storage facilities. So a big foreign sale would not only earn money, it would reduce storage costs substantially.
One senior government official involved in the butter sale said a decision had been delayed partly because the Reagan administration still does not have an efficient system for resolving questions that involve several different departments of government. Such decisions have proven difficult to handle for the White House staff, this official said.
According to one official, the State Department is concerned that a sale of cheap butter that the Soviets could exploit would undermine the gesture it sought to make last month when a sale of inexpensive butter to Poland was announced in Washington.
That sale, announced during a visit here by Mieczyslaw Jagielski, deputy prime minister of Poland, was at prices about 33 percent below world market levels, and was intended to signal support for Poland in its current time of troubles.
The European Economic Community and New Zealand, the only suppliers of butter in international trade, are concerned that any sale from the U.S. butter mountain will disrupt the world price, which they have spent billions to maintain.