IWC SAYS EFFECT OF LOWER SUPPORT PRICES LIMITED Efforts by governments to control wheat surpluses by cutting support prices have met with only partial success, the International Wheat Council (IWC) says in its latest monthly report. Faster results could be achieved by a policy of reducing both price and areas, as employed in the United States, the IWC says in a survey of support prices in the five main wheat exporters - Argentina, Australia, Canada, the EC and the U.S. In some countries, for example Australia and Argentina, which are highly dependent on wheat shipments for export income, there may be problems in reducing production. A policy of cutting wheat production could lead to unemployment, with job prospects outside agriculture limited. Alternative crops may offer inferior returns which could then lead to lost export revenue and balance of payments problems. The IWC outlines three courses of action open to governments in wheat exporting countries. They could continue to support prices in the hope that when the world economy improves demand for wheat will rise and surpluses wil be reduced or eliminated. Alternatively, support could be limited to wheat which could be easily sold, without needing to be stored for a long period. This option may prove to be the most politically unattractive and would result in many producers abandoning wheat production, the report said. The third option would be for governments to distinguish between the commercial and social aspects of agriculture, possibly varying support prices according to farm size or overall production. The IWC review covers support prices in the major exporting countries since 1982. At some time during that period all the producers cut support prices in response to growing surpluses. These changes did not always result in lower export subsidies as on several occasions currency fluctuations more than offset lower prices in the domestic currency. For example between 1985/86 and 1986/87 the EC intervention price for bread wheat fell from 209.30 to 179.44 European currency units (Ecus). It dollar terms, the currency in which most export transactions are denominated, the intervention price however rose to 193 dlrs from 168. The high cost of supporting farm prices has put a strain on national exchequers and some governments are now searching for ways to cut expenditure, the report says. The proportion of world wheat output produced by the five major exporters declined in the period covered by the survey from 40 pct in 1982 to 35 pct in 1987. This was partly due to increased production in China and India. The period saw an upward trend in yields, although this was countered in the Argentina, the U.S. And Australia by lower acreages. In Argentina a reduction in the sown area of about 20 per cent was put down to low prices causing producers to switch to other enterprises, particularly livestock while lower U.S. Acreages are attributed to official incentives.