ABSTRACT
Food reserves and freer international trade in agricultural products are both substitutes and complements. The primary objective of food reserves is to reduce price instability. The Food and Agriculture Act of 1977 includes provisions that will limit the flexibility of the Secretary of Agriculture in disposing of reserves of wheat and feed grains owned by the Commodity Credit Corporation. The act mandated a farmer-held reserve program for wheat and a resale price of wheat equal to 150 percent of the current loan rate. The degree of price stability that can be achieved through a reserve policy. The degree of price stability that can be assured is a function of the policies of the major importers. If these policies are modified to permit reflection of changes in international prices to domestic producers and consumers, it will be possible to achieve a greater degree of stability through reserve policy.
