Dairy farmers have responded enthusiastically to a new milk-surplus reduction program, but farmers' bids to put highly erodible cropland in a conservation reserve fell short of expectations, Agriculture Secretary Richard E. Lyng said yesterday.
Lyng said farmers have agreed to take about 950,000 cows out of production in the next 18 months, thereby cutting surpluses by roughly 12.2 billion pounds and bringing milk supply closer in line with demand.
But the secretary said he was "disappointed" in the response to the conservation reserve, a five-year program that had a goal of removing 5 million acres of the most erosive land from production this year.
Lyng said "unrealistically high" demands by farmers for compensation led the department to accept bids on only 839,000 acres. He and other USDA officials said they expect that a second round of bidding in May to bring lower bids and put more acreage into the long-term reserve.
The conservation reserve and the so-called dairy termination program were ordered by Congress in the 1985 farm bill. The Reagan administration supported the reserve, but opposed the dairy scheme, which will pay farmers to send their cows to slaughter or export them and to remain out of the milk business for at least five years.
Lyng also announced that the department will fulfill another part of the farm bill by purchasing an additional 400 million pounds of red meat to help offset the impact on other cattlemen from a surge of dairy cows into the slaughter market. Half of the new purchases will go to domestic feeding programs, the other half to exports.
Although the dairy program will cost more than $1.8 billion, financed in part by the government and in part by fees levied against dairy farmers, Lyng said it would achieve overall savings by reducing the surplus milk, butter and cheese that USDA will have to buy and store under the federal dairy support program.
Participation in the termination program was determined through bids from farmers, which ranged from $3.40 per hundredweight to more than $1,000. Lyng said the maximum bid accepted was $22.50 and that any farmer who bid below that would be entered in the program.
Some farmers with large herds and high production rates could receive payments of $1 million or more, according to Daniel L. Amstutz, undersecretary for international affairs and commodity programs.
Contrary to expectations, the most active bidding did not come from the milk-rich Upper Midwest and Great Lakes states. Alabama, Arkansas, Georgia and Idaho each will see production cuts of more than 20 percent. But the leading milk state, Wisconsin, will cut only 3.2 percent. New York and Minnesota, other leaders, will cut 4 and 9 percent, respectively.
Lyng also said he will not change USDA's controversial rule that cows and calves entered in the herd buyout be branded on the face for identification. Animal-rights groups, farmers and members of Congress have urged that less painful measures be used. But Lyng said there is no other process to identify the animals adequately for five years.
Bids accepted for the soil-conservation reserve ranged from $5 to $90 per acre, Lyng said, with the department expecting to pay owners of 10,307 farms $35 million as the 1986 installment on 10-year contracts to hold land from production. USDA also will pay half of a farmer's costs for planting grasses or trees to protect the land from erosion.
Lyng said the USDA used regional fair-rental prices as its standard for accepting bids. The highest per-acre payments will be in the Midwest, where farmland values and rents tend to be highest.
Leading entrants, by acres, were Colorado, 97,063; Minnesota, 79,008; Missouri, 49,375; Kansas, 47,437; Nebraska, 42,080; Iowa, 40,951; Georgia, 40,027, and Mississippi, 37,875.