CARRYING THE GRAIN Farmers and the U.S. shipping industry wage war on Capitol Hill over federal aid programs.
By - Craig C. Carter

(FORTUNE Magazine) – TWO POWERFUL LOBBIES, each accustomed to getting its way in Washington, are locked in fierce combat on Capitol Hill. Farmers want Uncle Sam to provide federal loans and other subsidies to help them export bumper grain crops. The maritime industry thinks that farm products exported with government assistance should be carried by American ships under what's known as the cargo preference rule, with the government paying shipping lines the difference between U.S. and foreign transportation charges. Because of high U.S. labor and shipbuilding costs, using American ships can double or triple the shipping bill. That, the farmers argue, would price even subsidized U.S. grain out of the market -- or impose budget-busting strains on the federal government and make it reluctant to underwrite farm exports. A proposed $536-million wheat and flour sale to Egypt and three other Third World countries brought the farmers and sailors toe to toe. After a federal court last winter upheld the maritime industry's claim that the grain had to travel in U.S. bottoms, as the phrase goes, Agriculture Secretary John Block abruptly killed the deal by suspending federal loans and loan guarantees. Block acted because under cargo preference, the Agriculture Department's costs could have more than tripled, to almost $70 million from $18 million. And the added money would have gone to ship operators, not farmers. With many farmers hollering bankruptcy and U.S. grain exports down about 25% from 1980, the farm lobby is mobilizing its vast grass-roots network to sink cargo preference. Says George Berg, assistant director of the 3.2-million- member American Farm Bureau Federation: ''Cargo preference is a thorn in our side.'' In June the Senate Agriculture Committee voted to exempt many commercial grain shipments from the cargo preference rule, and the House Agriculture Committee is ready to do the same. Don't count the mariners out. Struggling to keep their endangered industry afloat, they argue that a strong merchant marine is vital to U.S. security, and a peacetime subsidy is needed to allow U.S. ship operators to compete against low-cost foreign lines. Many legislators find this national-security argument persuasive. To bolster the case, three maritime political action committees handed out $2.5 million in the last election, a hefty war chest for a small industry. Caught between mountains of grain and the deep blue sea, lawmakers hope for a compromise before the matter comes to a vote. In the past Congressmen could vote for both agricultural and maritime subsidies, pleasing each side. This time, they'll make somebody sore.