The administration's two-month-old program to subsidize U.S. farm exports by giving away surplus government commodities has produced no sales, but Agriculture Department officials say it's too early to pronounce it dead.
Under heavy pressure from farm-state members of Congress to beef up sagging farm exports, Agriculture Secretary John R. Block announced in May that up to $2 billion in government-owned surpluses would be used to bolster sales.
The announcement caused controversy when Block said that the subsidized sales, although contrary to the administration's trade policies, would be targeted on markets the United States had lost to its competitors' unfair trading practices.
The first subsidized sale was presented to Algeria, formerly a major buyer of U.S. wheat, but so far the Algerians have not responded with tender offers. Algeria now relies on the European Economic Community for much of its wheat, which is available at a lower cost because of the EEC's export subsidies.
The mix was complicated further by complaints from grain traders who were not pleased with the Algeria proposal and criticized the Agriculture Department for the way its subsidy-sale program was set up.
A second subsidized sale of wheat flour to Egypt -- another former major buyer of the U.S. product that now gets roughly 70 percent of its supplies from the EEC -- is in the works, but details are not final.
"The process is very much under way, but one thing that has slipped through the cracks in all this is that these offers are for a 12-month period," said Daniel G. Amstutz, undersecretary of agriculture for international affairs and commodity programs.
"We did not expect people to rush out and buy right away. We'd love for them to announce tenders five minutes after we offer one of these initiatives, but remember, this is a buyer's market for these products," Amstutz said.
He predicted that Egypt would announce a tender offer for wheat flour within the next few weeks, which likely will be the first test of the subsidy program. Paul Green, an official of the Millers National Federation, was in Cairo last week working on sale details.
"We're expecting some tenders fairly soon," Green said yesterday. "Buyers have reacted positively. This is a complicated program, but we think it will work for flour -- we've got to try to make it work."
Amstutz said the Agriculture Department will make more subsidized sale offers, targeting markets where the United States deems it faces unfair competition, but he declined to name countries or commodities that would be involved. "We don't want to be market manipulators," he said.
Although the administration resisted such a program for months, it bowed to Senate pressures last spring and agreed to go along in return for farm-state legislators' support of a compromise congressional budget resolution.
Block, calling the program "not good policy," said that surplus government-owned commodities would be given away as bonuses for buying American farm products. The U.S. products would be purchased here at U.S. prices, then offered at lower, competitive world prices with the surplus goods making up the cost difference.
Capitol Hill pressure for more action by the administration on farm exports has continued, however, and both the House and Senate Agriculture committees are writing variations on export-subsidy schemes into the farm bills they are preparing.
Most of the congressional concern stems from the deteriorating export picture, which has seen U.S. sales fall from a peak of $43.5 billion in 1981 to an estimated $33.5 billion this year. Export value for the first eight months of fiscal 1985 was down 13 percent from a year earlier, the Agriculture Department said last week.