Reagan proposes giving farmers grain to cut yield

President Reagan, promising ''a market-led recovery'' of the depressed farm economy, proposed paying farmers with grain from bulging government stocks in exchange for agreements to produce less grain next year.

Mr. Reagan endorsed the proposal, developed over the last few weeks by Agriculture Secretary John R. Block, after what he termed ''extensive discussion of the challenges facing farmers'' with his Cabinet Council on Food and Agriculture. Mr. Block's plan will be presented to Congress.