The Reagan administration yesterday wrapped up two international agricultural deals -- one allowing the Soviet Union to buy more U.S. wheat for its bread, the other preventing it from obtaining American butter.
In Vienna, U.S. Trade Representative William E. Brock and a Soviet delegation agreed to extend for one year the long-term agreement that permits the Russinas to purchase at least 6 million tons of American grain annually.
And in Washington the Department of Agriculture announced that it will sell 220 million pounds of surplus butter to the New Zealand Dairy Board, at a price of $155 million, with the provision that none of it be resold directly to the Soviets.
The seeming paradox of selling Moscow grains but denying it butter was rooted in an intense political struggle inside the administration, pitting free traders against those who have insisted on a hard line toward the Soviet Union.
A simple one-year extension of the five-year grain pact, due to expire on Sept. 30, and the butter deal with its caveats was seen as a way of mollifyi8ng both elements, within the administration -- USDA and Secretary John R. Block on one side, the State Department and Secretary Alexander M. Haig Jr. on the other.
Block said the two trade developments "made this one of our big days." He had been pushing hard in recent months to renew the grain-sales agreement and to get rid of the butter surplus before some of it began spoiling.
The butter agreement with the nongovernmental New Zealand trading organization means that the USDA will unload about half of its refrigerated surplus at a price that averages about 70 cents a pound -- a considerable loss from original prices that rnaged up to $1.55 per pound.
Under terms of the contract, none of the butter can go directly from New Zealand to the Russians, but New Zealand is not prevented from selling its own butter to Moscow or selling the U.S. butter to a third party, which could in turn sell it to the Soviet Union.
Although the butter sale to New Zealand has disgruntled some U.S. brokers who argued that they would have offered more than 70 cents per pound. Block said he felt the administration had chosen a safer middle road that would avoid "dumping" charges from U.S. trading partners. New Zealand apparently will resell the butter at world market prices -- 25 to 30 cents above the U.S. sale price.
While the House White placed a high priority on reducing the butter surplus, the one-year extension of the grain agreement may have longer-term significance for U.S. farmers, who were ambittered by the Carter administration's partial embargo on sales to the Soviets in January 1980 after their invasion of Afghanistan.
President Reagan's lifting of the embargo in April cleared the way for more grain slaes to Moscow and for opening negotiations to expend the long-term agreement, signed in 1976 to regularize Soviet purchases of wheat, corn, soybeans and other grains.
Block said in an interview yesterday that he and trade negotiator Brock agreed that a one-year extension was the best approach because "it was in the best interest of normalizing our trading relationship and not risking the danger of getting into an impasse over a long-term agreement."
The secretary said United States and Soviet negotiators have agreed to resume discussions in the fall toward a new multi-year accord. Other sources indicated that the simple extension would give the United States an opportunity to evaluate Moscow's political activities before entering into a longer agreement.
The current agreement requires the Soviets to buy a minimum of 6 million metric tons and a maximum of 8 million tons of grain annually. Purchases beyond that level could be made only after consultations with Washington. The Carter embargo restricted sales to 8 million tons.
Unfavorable weather in the Soviet Union this year his caused a sharp reduction in 1981 wheat crop forecasts and virtually assured that Moscow will be a major purchaser of grain in coming months. During the past month, reentering the U.S. market, the Russians have bought 850,000 tons of corn.