THE ADMINISTRATION'S drive to restrain the budget will mean, among other things, slightly higher food prices next year. Ideologically, the budget cuts are an attempt to return to individuals the things that people do best individually. But farm and food policy provides another warning that in practice it isn't always quite that clear and simple.
Secretary of Agriculture John Block announced a few days ago that he intends to tell wheat farmers not to plant 15 percent of their acreage in the coming season. That's the standard mechanism for holding down wheat production. Holding down production next year might seem to you--if you didn't know anything about farm prices--a very odd thing to do. After all, the Soviets have apparently had another poor harvest that will force them once again to buy abroad on a very big scale. The Indian monsoon was abnormally short, damaging the crops and probably requiring India to import grain again. Altogether, it looks like a big year ahead for American grain exports.
But American wheat farmers are now bringing in a huge crop--a record by a substantial margin. The Agriculture Department fears that if this enormous harvest is followed by another large one next year, the price of wheat will fall heavily. And the Office of Management and Budget knows that if it falls below a certain level, called the target price, the government has to make income-support payments to farmers. In deference to its spending limits the OMB wishes to avoid making such payments, and that is why Mr. Block is--in the face of strong worldwide export demand--holding down the amount of land to be planted in wheat.
It has little to do with individualism and less to do with free markets. Mr. Block had to choose between government intervention that would raise costs to consumers and government intervention that would raise costs to the government.
In either case, the government would have acted to protect farmers' incomes. But Mr. Block's decision will mean prices a little higher at the grocery store a year or two from now than they otherwise might have been. It will mean federal spending a little lower than it would have been. And it will mean less wheat than the farmers could have produced. If he had decided the other way, it would have resulted in higher taxes, lower food prices, and a larger stock of grain reserves as a buffer against bad harvests here and abroad in the years ahead. Cutting the budget does not always save money for the American public--or result in more bread for the world.