If production is greater than that which can be sold at a specified percentage of the parity price, the government agrees to purchase the excess, generally through purchase agreements with farmers or nonrecourse loan programs. Under these loan programs, the government pays a set price to farmers as a loan for crops that are placed in storage.
Farmers can pay off the loan in full by turning the crop over to the government.
For nearly half a century, debate raged over the wisdom of parity support. Many people have opposed such support because of the high cost. This program aimed at reducing the available stocks of grains, rice and cotton, strengthening market prices, and lowering government storage costs. Under PIK, farmers were paid in government-owned farm commodities for reducing crop acreage. PIK succeeded in idling about 25 percent of American cropland.