Cowed by the Dairymen

American dairy farmers, it seems, have been extraordinarily successful at milking the Treasury as well as their herds. Although the total number of dairy cows has gone steadily up since 1979 and milk output has swollen accordingly, the Government's generosity makes it profitable for farmers to produce still more. One unhappy result: the Government is holding almost 17 billion lbs. of surplus "milk equivalent"--mounds of milk, butter and cheese--in warehouses and caves around the country under a price-support program that cost taxpayers $2.5 billion in fiscal 1983.

Last week the House approved a radical approach to the problem. By a vote of 325 to 91, it passed a bill that would for the first time pay dairy farmers not to produce milk. In the past, such "paid diversions" have been offered to grain and cotton farmers. The bill provides for payments to farmers of $10 for each 100 lbs. of milk (about 12 gal.) not produced, up to 30% of their average annual output. The price-support level for milk--the price at which the Government agrees to buy up surpluses--would be trimmed immediately from $13.10 per 100 lbs. to $12.60.

The vote was a stunning defeat for an odd alliance of consumer advocates, the meat industry and the Administration, lobby. Consumer groups charged that the program to pay farmers for not producing was a giveaway to the dairy interests, fueled in part by the industry's campaign contributions to Congressmen. The meat industry feared that dairy farmers would cut production by slaughtering their older cows for beef, creating a glut of meat that would depress prices. And the Reagan forces contend that over a four-year period the new approach will cost the Government $500 million more than the bill they favored.

The Administration, however, could hardly cast all of the blame on Congress. Agriculture Secretary John Block last month endorsed the plan to pay farmers for cutting their output. The Senate passed the bill. Then the Administration changed its mind, arguing that Congress had reneged on a promise to freeze price supports for other crops. Said Republican Senator Rudy Boschwitz of Minnesota, who backed the plan: "Apparently, when you make a deal with the Secretary, it does not mean as much as it once did."

Since the Administration has been on both sides of the issue, it is hard to predict whether Reagan will sign the bill once the House and Senate have ironed out their small differences. Either way, the real test will come in 1985, when Congress is scheduled to do a comprehensive overhaul of all farm-price programs. Then it will be seen who has more clout, the milk lobby or the milk consumers. This file is automatically generated by a robot program, so viewer discretion is required.