This is lettering. The design is by Robert & Barbara Flynn (see credits on Discogs) who often used hand lettering on their covers.
Update! In 2021, Sam Beldsoe released Ulrich Planer’s Lazy Daisy, which appears to be directly related to this lettering, so may have been inspired by this cover (or some other historical source that may have inspired the cover).
Confirmed by Ulrich in the comments here.
