Keeping a Tighter Rein on Grain

"Over this past weekend we initiated a voluntary program to monitor grain exports."

Tucked into President Ford's economic speech, the statement failed to command much attention at first. Yet the new program, under which traders are asked to seek Department of Agriculture approval of all sales abroad exceeding 50,000 tons of grain at one shot or 100,000 tons in a week, set off a wave of international jitters even as it aimed at holding down prices at home.

By informally controlling grain exports, the Administration hopes to forestall such embarrassments as the "holding in abeyance" on Oct. 5 of $500 million worth of corn and wheat contracted for by the Soviet Union. Having too hastily assumed, on the basis of talks between Ambassador Anatoly Dobrynin and Agriculture Secretary Earl Butz in late September, that the Russians were interested only in "modest" purchases of a million tons or so, the White House was startled to learn early this month that between 5 million and 10 million tons of grain might soon be heading to the U.S.S.R. Ford promptly called in executives of the Continental Grain Co. and Cook Industries and persuaded them to hold back on their contracts to sell the Soviets a total of 3.4 million tons. Some of that grain ultimately may be shipped to Russia. Last week Treasury Secretary William Simon went to Moscow to discuss the matter.

Cook Industries President Edward Cook said he was told at the White House that halting the grain deal was a "political" gesture and "that if we didn't cancel the sale, Congress would impose [mandatory export] controls." The grain sale was held back on the eve of the Administration's economic proposals, and Ford was clearly not eager to have the inflationary specter of a large grain export dangling before the public--and the Democrats. The Republicans and the nation are still smarting from the "great grain robbery" of 1972, when the Soviets secretly bought up some 25% of America's wheat crop plus much corn.

Sizable grain exports would seem unwise in the light of this year's crop drop. Wheat growers are expected to produce a record of 1.8 billion bushels,--up 4% from last year, but they are the cheerful exception. Floods, drought and early fall frost have sharply reduced crops. The Agriculture Department, which raised the hopes of foreign buyers by grossly overestimating the size of the crop earlier this year, released its latest forecasts last week. The corn harvest may come to 4.7 billion bushels, down 16% from last year; and soybeans to 1.3 billion bushels, down 19%.

Different Noises. The export-monitoring scheme is designed to catch unforeseen or unusual purchases and is a form of anti-inflation insurance. In the farm belt there was some fear that the insult of price reduction would be added to the injury of crop losses, and American Farm Bureau President William Kuhfuss sent an angry wire to the White House: THE NEW REGULATIONS ARE A BETRAYAL OF THE AMERICAN FARMER WHO, IN THE FACE OF RISING COSTS, EXPANDED PRODUCTION ON THE ASSURANCE THAT THERE WOULD BE A FREE WORLD MARKET FOR THIS PRODUCTION. Yet many growers were more sympathetic. Said Illinois Farmer Earl Hintzsche: "Ford was looking out for his own country first--let's not forget we have a lot of hungry people here too."

As for the hungry in other lands, Butz assured a Senate committee that there would be no change in the U.S.'s basic export policies. Traditional paying customers like Italy and Japan (as well as countries receiving free or subsidized food as aid), could expect grain as usual.

Actually the U.S. for months has been quietly pressuring those traditional importers to cut down their orders.

The monitoring system may be a necessary expedient to cope with inflation and the crop falloff, but it raises the threat of formal export controls --and the possibility that other nations might retaliate by putting on their own controls, thus igniting a trade war. The leftist Lebanese daily Al Shaab said:

"America allows herself to cut off wheat shipments to countries with which contracts had been concluded ... but protests against oil producers because they raise the price of their crude." The London Daily Telegraph complained that farm prices in the U.S. would be falling while bills rose for foreign buyers. Said a Common Market official in Brussels:

"This is so far not a ban. But it is serious, and we will make far different noises if it becomes a ban."

Honest Mistake. Not a murmur on the entire matter appeared in the Soviet press--which is not surprising because the U.S.S.R. does not admit at home that it has to import grain. Still, Soviet officials privately expressed dismay. Unlike other nations that buy U.S.

grain, the Soviet Union has not documented for American authorities the exact amount of its domestic yields and import needs. The consensus in Washington was that the Russians had made an honest mistake in thinking their grain needs "modest," and that Butz's blunder in not pinning Dobrynin down on a firm figure had forced Ford into his quick hold order. As for the effects of his action on U.S.-Soviet trade detente, the verdict is clouded by the un certainties surrounding the Russians' efforts to gain most-favored-nation tariff status. Senator Henry M. Jackson and other congressional leaders have insisted that MFN status be denied unless the Russians allow free emigration of Jews.

A compromise under which the Soviets were to guarantee the passage of 60,000 Jews annually is on the verge of collapse, stalling the trade bill in Congress.

As a key aide to Henry Kissinger put it last week: "All bets are off until the two Henrys and the Soviets work out a deal."

--In wheat and soybeans, 36.7 bushels make a ton.

This file is automatically generated by a robot program, so viewer discretion is required.