U.S. FARM POLICY has proven woefully inadequate in protecting both consumers and farmers in recent years, even as the costs of government programs have skyrocketed to almost $30 billion annually. Price supports for wheat doubled between 1984 and 1986, while the total number of farms dropped by over 120,000. The crunch has fallen hardest on smaller, independent farmers. The 29,000 large farms with sales of $500,000 or more--the corporate farmers--represented only 1.3 percent of the total number of farms in the United States in 1986, but received over 45 percent of net farm income, with nearly half of all farm income coming from the federal government.

Agriculture policy has also done little for the consumer. Food prices have risen steadily, although the value of commodities has remained constant or registered slight decreases. Jim Hightower, Texas Agriculture Commissioner, often notes that the value of wheat in a box of Wheaties has dropped from 3 cents to 2 cents since 1981, but the cost of the cereal has jumped 84 percent since then.

Farm support programs have failed to create the stability farmers and consumers need. They have also failed to stop the mass bankruptcies in the farm sector, though they may delay the day of reckoning for some. What these programs have done is underwrite the already-healthy profits of agribusiness companies--the processors, traders and input industries.

Ironically, the drought may do more for some family farmers than any helping hand from Uncle Sam. Reduced harvests will translate into higher commodity prices, and those prices may finally begin to approach the full cost of production for those lucky enough to harvest a crop. But here, too, family farmers are at a disadvantage. Crops placed in storage to secure loans from the Commodity Credit Corporation (CCC) are now being ordered released. Farmers, however, have only 30 days to raise the cash to pay off their loans in order to reclaim the grain. Failure to meet the 30-day deadline allows CCC to sell the grain to commercial warehousers and traders. This wholesale transfer of high-quality crops from the 1987 harvest--bought cheap and now worth much more--to multinationals and domestic corporations is robbing family farmers of the means to survive the poor harvests of this summer. The end result will be further concentration among the largest farms of both land and power, and billions of dollars in profits for grain traders.

The drought-relief bill passed by Congress will help, to be sure, but not much. It provides payments equalling two-thirds of the crop value for two-thirds of lost crops, which translates to roughly 44 percent of the income farmers would have received had the drought not occurred. Crop losses are estimated at $20 billion, while the cost of drought relief is estimated at $6 billion.

In addition to the financial implications of the drought for U.S. farmers, the nation's food supply itself is in some jeopardy. The Reagan administration's belief that exporting crops would spur growth in the farm sector led to the passage of the inappropriately titled Food Security Act of 1985, which provides subsidies to exporters to allow them to artificially deflate their prices on the world market. This emphasis on exports--supply-side agronomics--has reduced surpluses to dangerously low levels. Another poor harvest, whether as a result of natural or other means, would seriously endanger this nation's ability to feed itself. Already, our role in providing international food aid has been diminished because of reduced stocks. Not surprisingly, the export emphasis has benefited, for the most part, trading companies like Cargill and Continental. The family farmer's involvement in the export market most often amounts to selling grain to multinationals--the exporters that reap the majority of the benefits of government export subsidies.

By trying to control farm income instead of commodity prices, the government has set itself up as the buyer of last resort. By underwriting exports, it has aggravated an already poor situation by releasing surplus crops into the market, driving commodity prices down even further.

The solution, as dozens of farm groups argue, is simple: set commodity price floors above the cost of production. And the easiest way to do that is by fixing the CCC loan rate in Congress--which, in effect, establishes minimum commodity prices--to reflect the real average costs of production. This program should be coupled with a supply management program to target program benefits to family farmers, maintain abundant supplies for consumers and reduce the cost to government of storing wasteful surpluses. It is sometimes argued that supply management will hit the poor the hardest, but this need not be the case. The margin between what farmers get for their crops and what food processors and retailers charge for them has increased steadily throughout the 1980s. Higher commodity prices could be absorbed by these industries--which have enjoyed record profits for years--without increasing costs for consumers.

For reasons of national security, we also need to rebuild our reserves. But this should be done in a way that insulates commodity prices from the negative effect of surpluses. A government commitment to refrain from unloading reserves except in times of true need, as well as a prohibition on trading of reserves, should do the trick.

Finally, we need to declare a moratorium on farm foreclosures. In our nation's history, the family farm has been a cornerstone of progressive politics and economic innovations, not to mention a way of life most Americans would like to see preserved. Increased concentration of agricultural production in fewer corporate hands could leave us dangerously dependent on large growers whose actions are dictated by profit margins. We have both a moral obligation and a compelling self-interest in assisting those farmers who have found themselves victimized by megacorporate influence and undermined by government policies.