US farm policy on hold until '85, Block says

After butting heads with the dairy industry, fighting to freeze price supports, and instituting the nation's most expensive farm program, John Block is taking a political breather this year.

The agriculture secretary simply hopes to hold the line in 1984.

''We're not going to get much done in this year - an election year,'' he said during an exclusive interview. ''Anyone (who is) interested in farm policy has to look . . . in 1985. It's just the handwriting on the wall.''

Of course, 1985 is the year of the omnibus farm bill - a quadrennial slugfest in which Congress tries to piece together a coherent agricultural policy out of the divergent demands of competing farm interests. Some observers say the '85 round will be especially crucial, since the last omnibus farm bill, in 1981, is generally viewed as a failure.

Holding the line until that round, however, may not be easy, as the secretary found out recently.

Repeatedly, Mr. Block has urged farmers to sign up for this year's acreage-reduction programs. In fact, 10 days ago he extended the sign-up deadline from Feb. 24 to March 16 - reversing a stand he had taken earlier.

The reason? A wheat surplus that just won't go away.

Last year, the drought and the payment-in-kind program drew down huge surpluses of major commodities. But for a variety of reasons, wheat was largely unaffected.

So, when Block fashioned acreage-reduction programs this year, he called for a stiff cut in wheat. Corn farmers, for example, have to cut their acreage only 10 percent to receive government price-support benefits, which currently exceed the market price. But the set-aside for wheat farmers is 30 percent.

Unfortunately, neither program is sure to limit overproduction, economists say.

If normal growing conditions prevail, the corn set-aside will barely make a dent in this year's production, says Terry Francl, agricultural economist with Continental Bank in Chicago. Even with all corn farmers participating, the reduction might be 5 percent, since farmers will set aside their worst-producing acres and try to boost yields on the other 90 percent.

A high sign-up in wheat could have a greater impact, but its stiff 30 percent set-aside and payment restrictions have discouraged participation. Block acknowledged that without the extension, the sign-up probably would have been a disappointing 25 to 30 percent of the nation's wheat farmers. He has slightly sweetened the wheat pot and hopes to get a 50- to 70-percent sign-up.

Even with high participation, the cuts by themselves will not appreciably boost wheat prices, says Ross Korves, a research economist with the American Farm Bureau Federation. Because half the US wheat crop is exported, prices depend on the world wheat market, which is currently glutted.

In some ways, Block is peddling a contradiction.

While urging farmers to sign up for the set-aside programs, he and other officials at the US Department of Agriculture have suggested that acreage-reduction programs don't work in the long run.

Peanuts, for example, may have been hurt by rigid controls, they say. From 1930 to 1980, US production barely moved from 1.1 million harvested acres to 1.4 million. At the same time, soybean acreage zoomed from 1.1 million to about 68 million with no production controls.

But Block says this year's programs are not a contradiction but a step forward in the ''evolutionary change'' of agricultural policy. Controls on peanuts, cotton, and even tobacco have been relaxed, he says.

''We want to keep the evolution in progress, but it should not be a precipitous change,'' he says. Much depends on world growing conditions, the strength of the dollar (which is currently depressing US exports), and economic recovery abroad.

''If everything stayed static, it would not take more than probably three years or so to get back into trouble in terms of supplies (of major commodities) ,'' he says. ''However, the fact is that not everything is going to stay the same. . . . I think we've bottomed out, in other words, in terms of exports of farm products.

''I look for our exports to expand - probably not at the rate of the '70s, though.''

He says he is still trying this year to freeze 1985 target prices. A target price is a government income guarantee to farmers. But Block's hopes clearly rest with an '85 farm bill.

He's encouraged that all sectors of the agriculture industry are debating. ''There's going to be a terrible collision when they all come together. But that is healthy. . . . We'll get a more balanced bill.''