Evening star., 1948-12-26
Parity, Price Support
Debate Seen Certain
By New Congress
By Robert Z. Geiser
Associated Press Stoff Writer


What sort of a farm price sup
port program would be fair to both
the farmer and the city dweller?
Ever since World War I, Congress
has been trying to find one. The
issue Is sure to be debated again
soon after the new Congress meets
in January.
Farmers are beginning to fear
that, when the present price sup
port program ends in 1850, their
income will drop too abruptly.
Many city-dwellers, who have to
buy the food the farmer raises, be-
lieve the Government price support
program has tended to keep food
prices high. Some want the price
support program stopped.
Fair" Price Problem.
The problem Is to find a method
for guaranteeing or insuring the
farmer a fair" price for his crops
without keeping the cost of food too
high for the city-dweller.
The Government has attempted to
do this in various ways: Outright
subsidies have been paid. There
have been production control pro-
grams, marketing agreements, ex-
port subsidies and loan programs
Then the price support program was
tried. 1t is still in effect.
,;e+e n
method to determine a fair" price
at which crops should be supported,
came up, in 1888, with the parity"
plan. 1t was included in the Agri-
cultural Adjustment Act that year.
The economists adopted a base
period from August, 1909. to July,
1914, in which they believed prices
for most farm products were more
stable than in other years for which
records were kept.
How 1t Figures.
Parity was figured this way:
First an index was made of the
prices the farm family had to pay
in the base period for 180 articles
needed for family living and to op-
crate a farm and the cost of taxes
and interest. These we're national
average prices.
Next an index was made of the
prices farmers received for their
products in the base period. These
were national averages also.
Each index was given the same
numerical value-100.
On January 15 1947, the prices of
the 180 articles in the index Of
things the farmers have to buy
stood at 215. This means the prices
of these 18O articles had gone up
lis points since 1909-1914.
In the 1909-1914 period wheat
averaged 1874 cents bushel. There
fore, the parity price for wheat on
January Is, 1947, would be 1874 null
tiplied by 2.15 or $1.90 a bushel.
This $1.90 would buy the farmer
the same proportion Of the 180 arti-
cles in the index in January, 1947,
as he was able to buy with 1874 cents
in 1909-1914.
Ratio May Be Established.
The parity prices for any group
of crops may be added together on
any date, and a parity ratio may be
established. This shows whether the
farmer, on any date, is making more
or less return on his crops. expressed
in terms of goods-not money-than
farmers did in the yardstick period
Of 1909-19
Congress has guaranteed the
farmer in various ways since 1888,
that he will receive the parity price
or near it for some crops he raises.
If the market price doesn't equal the
parity price, the Government stands
ready to make up the difference.
The parity formula attempts to
tie crop prices to the farmers cost
of living. If the prices of the things
he has to buy go up, so do the sup
port prices. If the farmers costs go
down, so do support prices.
The parity formula was modern
ized' by the Eightieth Congress in
1913. The 1909-1914 base period still
is used; but in addition, the average
prices paid and received by farmers
in the 10-year period preceding the
date for which a parity price is
being set, also are taken into con-
ciIorotiop