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Reagan Signs Record Boost in Farm Subsidies

December 23, 1985

WASHINGTON (AP) _ President Reagan today signed into law a farm bill that is likely to boost federal subsidy spending to record levels while it tries to buffer farmers from the cost of restoring health to U.S. exports.

But despite reservations about the high spending and some provisions the administration regards as detrimental, Reagan said the legislation is ″on balance ... a step forward for American agriculture″ that will move farming closer to the ″market-oriented″ industry he has sought.

The president said the bill is ″moving away from the failed policies of the past″ and provides ″new hope for America’s hard-working farmers and our rural communities.″

″If things are not going well down on the farm, things cannot continue to go well in our cities and towns,″ he said in a ceremony in the State Dining Room at the White House, surrounded by farm-state lawmakers, Agriculture Department officials and farm lobbyists.

The president also signed a rescue package for the financially strained Farm Credit System, the $70 billion banking network that is the nation’s largest farm lender.

The president then went to the Agriculture Department to hold a brief closed-circuit television news conference with farm-state reporters in an effort to demonstrate concern for agriculture’s problems.

Reagan was asked how he could justify the farm bill’s estimated three-year cost of $52 billion when the administration had set a limit $2 billion lower.

″Because that is what is necessary, if we can do the job,″ Reagan replied, adding that his administration had spent a record amount on farm programs since taking office.

Also, he said, the extra spending will be ″necessary if we are to solve the farm problem in the right way″ by moving farmers to market-oriente d programs ″and less of a heavy hand of government.″

Senate Majority Leader Robert Dole of Kansas praised enactment of the two bills as ″essential first steps in restoring hope and confidence in rural America.″

He said, ″There’s no doubt there’s real trouble out there, but Congress shouldn’t throw money at the problem. We want the system to put its own house in order, and I believe this legislation wil help accomplish that goal.″

The farm bill reauthorizes for five years a long list of programs ranging from crop price supports and income subsidies to foreign famine relief efforts, food stamps and agricultural credit, research and extension programs.

At the heart of the bill are provisions lowering federal price supports for major commodities, including wheat, corn, rice, cotton and soybeans. The action is designed to make the crops more competitive in world trade and restore U.S. market share lost in recent years to an overvalued dollar and excessive support levels.

In a gesture of concern over the badly slumping farm economy, which has been hit particularly hard in the export-dependent Midwestern grain belt, the bill replaces income lost to lower price supports with income subsidies.

While the cost of the bill’s commodity sections has been estimated at $52 billion over the next three years, analysts say it is likely to go considerably higher - perhaps to $75 billion - and set new record for farm- program spending.

In addition to its crop programs, the bill makes several significant changes in current law.

It creates a new program aimed at cutting the milk industry’s persistent surplus production through subsidized buy-outs of entire dairy herds. Milk producers would be enticed to go out of business by selling their cows for slaughter or export in return for a government bonus payment.

The program would be paid for by an assessment on all dairy farmers. If it does not make a sufficient dent in overproduction, price supports would be cut in future years.

The bill also establishes new soil conservation programs deemed historic by environmentalists and farm groups. Federal farm program benefits would for the first time be tied to how farmers treat their highly erodible land, with those who break out new fragile ground for planting denied all subsidies. In addition, the government would pay farmers annual rental to idle as much as 45 million acres of their most erosion-prone crop land.

And the measure establishes new initiatives aimed at increasing exports and countering trade practices regarded by the United States as unfair. U.S. farm exports, the backbone of the nation’s international trade, have slipped more than 30 percent since 1980.

The farm credit legislation gives new powers to the Farm Credit Administration, the system’s federal regulators, and centralizes some of the loosely linked system’s finances to make aid more available to troubled member banks.

As a last resort, the bill would make federal financial help available if all the system’s own resources are used up.

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