The White House is considering a sharp break from 45 years of U.S. agriculture policy by curtailing farm "marketing orders" that allow growers to restrict the flow of certain fruits, nuts and specialty crops to market, according to administration officials.
Advocates of such a move say it would mean lower consumer prices and demonstrate President Reagan's commitment to free-market principles he has long espoused. But it is strongly opposed by Agriculture Secretary John R. Block and some of the nation's most powerful farm cooperatives and agricultural blocs.
Since the early days of the administration, marketing orders have been a flash point of internal debate, but this is the first time the issue has gone to Reagan as an overall policy question. The debate, which has reached Cabinet level, centers on whether Reagan should discard a longstanding government protection for farmers to show that the free market works better.
At issue are 11 federally approved marketing orders that allow farmers to determine who can grow the crops, how much they can ship and when. Affected by these restrictions are lemons and navel and valencia oranges from California and Arizona, tart cherries, almonds, walnuts, filberts, raisins, prunes, hops and spearmint oil.
In some cases, the entire crop is covered while, in others, the restrictions are limited to geographic areas.
These marketing orders became controversial in 1981 when tons of navel oranges were kept off the market and fed to cattle or left to rot as the result of quotas set each week by an industry-dominated panel that has the government's blessing.
Such marketing orders have been defended for years as a method to stabilize supplies and prices, but critics claim it is sophisticated price-fixing that interferes with free markets and results in higher costs to consumers.
One of the leading critics has been David A. Stockman, director of the Office of Management and Budget, whose staff sought unsuccessfully in the last two years to challenge marketing orders for specific crops. However, OMB has lost most of those internal battles to the Agriculture Department, which oversees the orders.
The broader issue will soon be coming to Reagan's attention. A series of options on marketing orders was debated recently at a meeting of the Cabinet Council on Food and Agriculture, and a "decision memo" is expected to reach the Oval Office within a week or so, administration officials said.
These officials said one option discussed would be to announce that OMB and Agriculture will no longer approve restrictions on who can grow and ship crops, as now exist in the 11 marketing orders. Without federal backing, it is expected that these restrictions would collapse and a freer market in these crops would prevail.
This option of dropping federal backing for marketing orders is backed by Stockman and other free-market advocates in the administration. They say it would be "decisive action" showing that Reagan is a believer in "economic freedom."
According to administration officials, dropping federal sanction of restrictive provisions in the 11 marketing orders would not require congressional approval. Other aspects of marketing orders governing grading, promotion and packaging of crops would be unaffected if Reagan took this option, officials said. In addition, some growers could voluntarily set their own quotas.
A second option discussed at the Cabinet council meeting would be to retain the existing system. This option is supported by Block and others who fear that curtailing market orders would set off a furor among powerful farm interests and possibly erode Reagan's political standing among farmers.
Administration sources said that the president will be offered both options and that it is not certain which he will choose. A third option--asking Congress to eliminate the restrictive marketing orders--is not expected to be pursued.
Marketing orders, established in 1937, were designed to bring stability to farm prices that plummeted during the Great Depression. The orders were also intended to keep all fruit from being picked and sold at once, creating gluts and shortages.
Today, 47 marketing orders are in effect for fruits, vegetables and specialty crops with a 1980 farm value of $4.7 billion, according to administration officials. Total U.S. production of all varieties of commercial fruits, vegetables and specialty crops was valued at $12.4 billion at the farm in 1980.
But only 11 of the 47 marketing orders, covering crops with a value of $1.7 billion in 1980, contain restrictions on who can grow and ship them. Thus, Reagan's decision would affect about 14 percent of U.S. production of these crops, officials said.
The restrictive marketing orders were first scrutinized by Vice President Bush's Task Force on Regulatory Relief, and the Department of Agriculture later did an economic study of them that led to new guidelines. But these made only minor changes, and Block has told growers that the administration has a commitment to the orders.
But Stockman and other free-market advocates are still pressing for change. Should Reagan withdraw federal support for restrictive provisions in the marketing orders, "It would be the most dramatic step in 20 or 30 years to roll back this whole pattern of government protection of agribusiness," said Fred L. Smith Jr., a lobbyist for the Council for a Competitive Economy, a private group promoting free-market principles.
Reagan would get some unusual allies if he curtailed the marketing orders. Some consumer groups would welcome the move, but it would be opposed by some powerful citrus cooperatives such as Sun kist.