Agriculture Secretary John R. Block said yesterday that the United States will sell Algeria up to 1 million metric tons of wheat in the first of a series of subsidized sales designed to offset what he termed unfair trade practices by competing agricultural nations.
Block, who earlier had conceded that the subsidies were "not good policy," said Algeria was targeted for the first sale because the European Economic Community (EEC) had displaced the United States as that country's chief supplier of wheat in the last five years.
The secretary said that since 1979 the U.S. share of the Algerian market has dropped from 41 percent to 16 percent while the EEC share went from 29 percent to 59 percent because of subsidies that undercut American prices.
Block said that this and forthcoming sales are intended to allow U.S. farmers to compete more effectively while "sending a message" to other agricultural exporting nations that it is time to reform world trading rules.
An EEC agricultural official in Washington, Durwent Renshaw, said it was "premature to give a detailed reaction . . . the secretary did not give many details. The program doesn't seem to be very well conceived. The only sure thing is that it will depress world prices."
Some U.S. legislators and export company officials have expressed similar criticisms of the subsidy program. But the Reagan administration, under strong pressure from farm-state lawmakers to demonstrate its seriousness about recapturing slumping export markets, has reluctantly gone ahead.
The administration agreed to the subsidy scheme as part of a deal forced by farm-state legislators in return for votes on a budget resolution in the Senate last month.
Sen. Edward Zorinsky (D-Neb.), one of the key players in the deal, was at Block's side yesterday as he announced the subsidized sale to Algeria.
Alluding to the pressure from Capitol Hill, Block noted that "the American farmer has lost 25 percent of his international markets in the last five years." That situation, he said, was "politically intolerable."
But he ranked the strong dollar and government programs that "have priced the American farmer out of the market" ahead of unfair trading practices as factors in the fall of export sales from a high of $44 billion in 1981 to a projected $33.5 billion this year.
Block also said the United States is prepared to spend "every penny" of the $2 billion allocated for the subsidies over the next three years. He indicated that future subsidized sales will aim at markets where U.S. commodities face unfair competition.
"We're not going to shoot everyone in sight," Block said. "We will target where we have been victimized."
"The export enhancement program is not one we would freely choose. It is a risky, yet necessary step," the agriculture secretary continued. "We see it as a counter to unfair trade practices in the present, and as an encouragement to trade talks in the future."
Block, who left for Europe for meetings with EEC officials after his announcement, said he was uncertain what their reaction would be, but he said:
"There is no question about it . . . they are very apprehensive about this program."
The mechanics of the subsidized sale were unclear.
Block said that it would operate through bids submitted by exporters. The winning bidder would buy wheat on the domestic market for resale to Algeria, and the Agriculture Department would use government-owned surplus wheat as payment to make up the difference between the exporter's cost and the sale price.
USDA officials indicated that Algeria would benefit either by receiving part of the surplus as a bonus for buying American wheat or by paying a lower price for the U.S. product than is now offered by the EEC.