The Reagan administration, owner of enough surplus dairy products to fill a train stretching from Washington, D.C., to New York City, said yesterday it would ask Congress to approve a plan to discourage dairy production by reducing price supports.
The proposal, which would give the secretary of agriculture sole authority to set price-support levels, drew quick fire from the dairy lobby and its supporters on Capitol Hill.
"It's laughable and ludicrous for them to think Congress is going to give any secretary of agriculture complete and total authority to set price supports," said Rep. Tom Harkin (D-Iowa), chairman of the House dairy subcommittee. "We've never done that."
Agriculture Secretary John R. Block said that unless the support levels Congress enacted last year changed, the administration would be forced to spend $6 billion between now and 1985 in adding to its record stockpile of 2 billion pounds of dairy products.
Block said he anticipated that lowering the current price-support level of $13.10 per hundredweight to $12 as of next Jan. 1, would eliminate the overproduction problem.
But his projections ran into heavy skepticism from dairymen, who made clear that they suspected they were being set up for a kill.
"I just don't believe the $12 figure," said Patrick B. Healy, longtime secretary of the National Milk Producers Federation, the leading dairy lobby. "If we give them total discretion, then the pressure in the administration from the Office of Management and the Budget and elsewhere to get rid of the whole price support system would be so great that the $12 would disappear faster than a snowflake in July."
Healy acknowledged, however, that the current price-support system is too costly for taxpayers and causes runaway overproduction.
This year, the government will buy about 9 percent of the nation's milk production, and the $1.9 billion price for those purchases represents a subsidy to dairymen that far outstrips those enjoyed by other farmers.
So the dairymen have come up with their own bill, which Harkin is expected to introduce later this week. It would establish a price system that, Harkin said, would cut by two-thirds the government's annual expenditure on surplus dairy products.
However, their plan also would allow dairymen to set up a board to dispose of supluses as it sees fit, and the administration is opposed to that.
Block also said yesterday that the two-tier price plan envisioned by Harkin and the dairy lobby would be cumbersome to administer.
The root of the dairy price-support problem, which has grown from a $46 million expenditure in the 1979 budget to $1.9 billion this year is that supply is growing faster than per capita demand, which has declined steadily for 15 years.
Normally, the marketplace corrects for such changes, but price-support levels have been high enough for the past three years to make it worthwhile for farmers to continue producing milk.
Block also announced steps to whittle away at the government's surplus inventory by allowing the Commodity Credit Corporation to donate more of its surplus cheese, butter and nonfat dry milk to needy people in this country and abroad.
While Block was firing the opening round of a new battle over dairy price supports, a bipartisan group of congressmen calling themselves the Farm Crisis Group introduced a bill calling for more federal aid to farmers.
"Business as usual just will not do when farm income is down 60 percent and bankruptcy has reached a near 50-year high," said Rep. Thomas A. Daschle (D-S.D.), who introduced a bill proposing direct federal payments to farmers who idle 5 percent of their normal acreage this year.