This report examines the costs and benefits of the U.S. grain reserve policy over its first 3 years. The policy, instituted in 1977, consisted of the farmer-owned reserve (FOR), new rules for releasing CCC-owned grain, and an expanded loan program to help farmers finance construction of grain storage facilities. During the years studied, the policy provided over $1 billion in incentives and payments to expand the quantity of grain stored in the United States. In return, the United States obtained more buffer stocks, more storage facilities, more Government control of the Nation's grain, and somewhat higher grain prices as the reserve accumulated.