BUDGET PACT CUTS U.S. FARM FUNDS 1.25 BILLION DLRS U.S. House and Senate budget negotiators agreed as part of an overall budget accord reached yesterday, to cut 1.25 billion dlrs from fiscal 1988 spending on agricultural programs, Congressional sources told Reuters. The agreed cut in farm programs is a compromise between 1.4 billion sought by the Senate and one billion by the House. The negotiators also agreed to cut 1.6 billion from the farm budget in fiscal 1989 and 2.45 billion in 1990, for a total of 5.3 billion in saving over three years, sources said. The agreement presents the House and Senate Agriculture committees with difficult choices on how to make changes in agriculture programs that achieve the budget savings targets without jeopardizing popular support payments, senior Congressional aides told Reuters. Some farm state lawmakers already are manuevering to find the budget savings. Rep. Dan Glickman, D-Kan., Chairman of the House grains subcommittee, has introduced a bill which would freeze wheat and corn loan rates for the 1988 crop at the current 2.28 dlrs and 1.92 dlrs respectively, saying it would save 500 mln dlrs. House Agriculture Committee chairman Kika De la Garza has said the committee will consider the Glickman proposal. But Congressional sources said the proposal is unlikely to be approved because of opposition from Republican lawmakers and a strong stance by Agriculture Secretary Richard Lyng, who said freezing loan rates would send the wrong signal to other major grain export competitors and would not achieve the budget savings Glickman claims. Another area where Glickman and other have said budget savings might be made is to increase acreage reduction program, ARP, levels for wheat and corn. However, on this issue also Lyng has taken a strong stand within the Reagan administration, arguing that the 1988 crop wheat acreage reduction should be left at 27.5 pct and not 30 pct as sought by the Office of Management and Budget, OMB. Most commodity lobbyists expect Lyng to prevail. Congressional sources said the only way to achieve significant budget cuts through ARP increases would be to boost the 1988 corn ARP. But one informed Congressional source said singling-out corn for an ARP increase would would be seen as unfair to one commodity. Congressional sources said the areas where Congress is most likely to eventually look for budget savings are some tightening of the payment limitation rules, and possible adoption of a 0/92 program for the 1988 crops of major grains. Those changes would achieve a portion of the 1.25 billion but not enough, they said. Ultimately, Congressional sources said the agriculture committees may be forced to apply an across-the-board cut on all Commodity Credit Corp. payments to farmers, including price support loans and deficiency payments, similar to the Gramm-Rudman-Hollings budget cut applied in fiscal 1986. This idea has been suggested by the American Farm Bureau Federation, AFBF, as the fairest approach for all commodities.