The administration's "free market" farm policy underwent another adjustment yesterday as Agriculture Secretary John R. Block announced a program that would reduce the 1982 wheat crop and increase prices that farmers receive.
Block said he decided to try cutting the 1982 acreage by 15 percent because of this year's record harvest and depressed prices, even though he philosophically opposes such government market manipulation.
The move to hold down the 1982 crop also has direct implications for the administration's effort to hold down federal spending.
The burgeoning 1981 crop may cost the Treasury an estimated $400 million in target prices -- direct payments to farmers rather than the loans provided in the price-support program. Continued high production next year, along with low prices and a probable increase in the target price rate, could cost the Treasury far more than $400 million.
The administration has opposed the target-price concept, but Block also indicated at a press conference yesterday that he and the White House have abandoned that effort. The pending House and Senate farm bills would continue target prices and raise the level of payments, which are based on production costs.
Block also held open the possibility that he may propose a similar acreage reduction later with 1982 corn, although he stressed that a decision has not been made. The present crop is expected to be the second largest in U.S. history, and prices this year have remained relatively low.
"Wheat supplies in the United States are 14 percent above last year. The carryover next June is expected to exceed 1 billion bushels, the highest level since 1977-1978. The reduced acreage program will strengthen prices by reducing the 1982-1983 marketing year supplies," Block said.
The administration's professed adherence to a free market farm policy, reducing government participation in support programs as much as possible, has been dampened considerably by the reality of declining farm income, rising production costs and record or near-record commodity crops.
Block acknowledged that as recently as two weeks ago he was publicly opposing any move to reduce the 1982 wheat acreage. He said that "low prices changed my mind, as much as anything."
He said the voluntary wheat acreage reduction will be contingent on congressional approval of authority to carry out such a program. The Senate is expected to take up the farm bill shortly after its return from recess next week.
The administration, meanwhile, has drawn up a substitute measure closely resembling the package that it advanced with little success earlier this year as the House and Senate agriculture committees began consideration of legislation renewing basic farm programs for another four years.
The new bill signifies two other major changes in the White House's earlier insistence on free-market agriculture. Block said yesterday that the administration will go along with whatever Congress decides on price supports for peanuts and sugar.
The administration had proposed phasing out the peanut support program and did not back a sugar support program. In an effort to win passage of his budget and tax reduction proposals, President Reagan bowed to southern legislators and agreed to go along with them on peanuts and sugar.