The Reagan administration is considering a dramatic new device for dealing with the deep recession in the Farm Belt: if farmers will agree to grow less grain next year, the government will give them quantities of surplus grain from its overflowing storage bins to sell instead.
In effect, the idea that Agriculture Secretary John R. Block is floating is deferral of a part of a year's harvest. A sizable part of the nation's cropland would be taken out of production, prices presumably would go up, and government grain stocks and price support costs -- which are now busting the budget -- would come down.
The new twist on the old idea of production set-asides is symptomatic of the desperation both the administration and farm groups have begun to feel as current policies fail to revive the grain states.
Administration and congressional farm leaders agree that the situation has become so acute that only drastic action will work. The federal farm budget is reeling, Block's "voluntary" crop reduction program hasn't worked and net farm income is at its lowest point in 50 years.
Block's plan is aimed at bolstering prices by cutting the huge stocks that have depressed markets while at the same time limiting federal spending on crop loan and subsidy programs.
Before the bumper 1982 crop year, the Department of Agriculture estimated farm programs would cost around $4 billion. The actual cost will be at least $12 billion, with the prospect of similar or greater outlays next year unless production is curbed or markets improve.
"We've got to think more boldly and innovatively and get out of this jam," said William G. Lesher, assistant secretary of agriculture for economics. "We think our payment-in-kind idea has a lot of appeal and merit. The main issue is finding a way to operate a simple and efficient program."
Record harvests of wheat, corn, soybeans and other basic commodities in 1981 and 1982, combined with worldwide recession, slack demand and a strengthened dollar that have impaired U.S. exports, are causing American storage facilities to overflow.
Lesher noted that current USDA forecasts, assuming continued high production and good weather, indicate that world grain carryover stocks in October, 1983, will be about 251 million metric tons, with roughly 60 percent of that in the United States.
More details of the administration plan are expected to be outlined this week at a Senate Agriculture subcommittee hearing called by Sen. Thad Cochran (R-Miss.), who also will hear testimony from farm organizations on how to deal with the crisis.
"I really do think that in many areas we are in a farm depression," Cochran said last week, "with the potential that it will not get better next year. . . . Action has to be taken and it has to be taken soon. The important thing is that there is a recognition within the administration that something needs to be done."
Republican Cochran and Sen. Walter D. Huddleston (Ky.), ranking Democrat on the Agriculture Committee, introduced a bill Friday that combines parts of the administration's grain-swap with other features aimed at bolstering prices and cutting surpluses.
The payment-in-kind (PIK) scheme surfaced late last month when Secretary Block briefed members of Congress on it. Finding more than passing interest, he put his staff to work on the fine print.
As outlined by Block, and distilled to its simplest form, PIK would work this way: a farmer who agreed not to plant, say, half of the acreage he harvested in 1982 would be given access to federally held grain roughly in the amount he would have grown.
That in turn would reduce federal surpluses, which have a depressing effect on market prices, and it would cut USDA outlays by eliminating the need for loaning the farmer more money on his 1983 crop. The farmer could use his federal grain for livestock feed or sell it.
Block's broad-brush description of the plan has drawn mixed reviews. Farmer and commodity groups are calling it "innovative" and "intriguing" but await more details before they take a stand. Some legislators are openly derisive and predict hard going in Congress.
Rep. Tom Daschle (D-S.D.), leader of a farm-state bloc that tried without success earlier this year to push a "farm crisis act" through Congress, said Friday that the USDA plan is "too much of a welfare program . . . there's an ominous tone to the whole thing -- incredibly ironic that an administration that talks cuts everywhere else would come up with something like this."
"As I talk to farm-state members here, there's not a lot of support for the PIK program," Daschle said. "There are not many farmers who are willing to set aside 100 percent of their land. They want to farm. Farm implement dealers and suppliers in many rural communities could be adversely affected by this idea."
Lesher said that, while important details remain to be worked out, care would be taken to assure that idled land would not be concentrated in certain areas, in order to avoid the sort of economic shock that worries Daschle.
Nevertheless, Daschle said, he and others in the House "definitely" will be considering a 1983 version of their crisis act, because "I think you're going to see incredible attrition on the farms of this country in the next six months. I've never seen more paranoia among farmers than in the last couple months."
Cochran, for his part, said that sentiment on Capitol Hill is running high for decisive action on the farm issue early next year. "Time is very important," he said, "but I hope the signal we're sending now is that it's a bipartisan problem -- not a Republican and not a Democratic problem. It's an American problem. The elections are over. Let's quit the gamesmanship."