Price Parity: An Outdated Farm Policy Tool?

Changes in the structure of agriculture and the distribution of income among producers make parity prices obsolete indicators of farmer well-being. The major shortcomings of the current parity price concept could be resolved by adjusting the parity price formula to reflect farm productivity gains, redefining base period prices, and treating interest in a different manner. Direct lump-sum payments, while avoiding the problems caused by price-enhancing policies, could increase the number of farms receiving income parity, especially in the lower commercial sales classes