The Rural Voice, 1985-09, Page 10PARITY
PIPEDREAM or SALVATION
Does parity really offer a practical solution to
inadequate farm returns or is it just another band-aid
solution?
At a time when the family
farm appears to be in greater
jeopardy than at any time
since the Dirty Thirties, farmers can't
be faulted for jumping on the band-
wagon that seems to offer economic
salvation. The 1985 "bandwagon" is
parity pricing: the latest buzzword in
agriculture. But does parity really of-
fer a practical solution to inadequate
farm returns or is it just another
band-aid solution touted by the
desperate?
Part of the problem with parity or
fair exchange value is that while
everyone's talking about the concept,
everyone defines it differently. Let's
take this basic definition from a U.S.
agricultural economics textbook: "A
parity price is one that will buy the
same quantity of products in some
future period as it does in some base
period." Or, if the price for two
bushels of corn purchased a pair of
farm coveralls in 1910, then in 1985
the returns from two bushels of corn
should still buy farm coveralls.
In fact, as pro -parity spokesman
Claude Giroux of Essex County
points out at parity information
nights, that's far from the case. In the
1940/50 era, about 1,400 bushels of
corn (selling at approximately
$1.36/bu.) could buy a $2,000 com-
bine. In 1983, the farmer had to sell
21,900 bushels of corn (worth ap-
proximately $2.96/bu.) to buy a com-
bine retailing at $65,000. Returns in
the farm sector haven't kept pace
with prices in other sectors of the
economy.
But parity is hardly a 1980s con-
cept. In October, 1939 the Ontario
Chamber of Agriculture (predecessor
to the Ontario Federation of
Agriculture) unanimously passed this
resolution which members hoped
would influence the government's
wartime program for agriculture:
"To enable farmers to do their
8 THE RURAL VOICE
by Alice Gibb
share (in the wartime effort) it is
essential that parity of prices be
established between agriculture and
other contributing industries, that is
to say, capital and labour employed
in agriculture shall receive renumera-
tion equivalent to that received by
other industries."
Canadian legislators have never us-
ed the word parity in farm support
programs but the situation was very
different south of the border. In
1933, the U.S. Congress passed the
Agricultural Adjustment Act, which
brought in non-recourse loans for
cotton and corn; the first loans were
made at 60 to 70 per cent of parity.
Now, in 1985, with the U.S. Farm
Bill up for amendment and the con-
cept of parity still on the books,
American farm activist groups have
stepped up their lobbying efforts to
bring parity back. The National
Organization of Raw Materials
(NORM), which now has many Cana-
dian supporters, is one of the main
organizations pushing for the return
to parity pricing.
In Ontario, parity pricing is receiv-
ing a good deal of attention at
farmers' meetings like last spring's
Masters of Our Destiny Conference
in London. Also, parity has gone on
the road; public information
In the 1940/50 era, about 1,400 bushels of corn
(selling at approximately $1.36/bu.) could buy a
$2,000 combine. In 1983, the farmer had to sell
21,900 bushels of corn (worth approximately
$2.96/bu.) to buy a combine retailing at $65,000.
Pro -parity spokesman
Claude Giroux, Essex County
As the U.S. moved towards a war-
time economy, there was more
pressure on Congress to establish
parity so that the purchasing power
of a certain unit of a commodity such
as corn would be kept as it was during
the so-called "best years of American
farming," 1910-1914. In 1942, Con-
gress passed acts to raise price sup-
ports to 90 per cent of parity for cer-
tain commodities; those supports
stayed in effect until 1952 when the
Korean War ended. In 1948,
however, Congress revised the parity
formula to use a ten-year moving
average instead of relying on that fix-
ed base index of 1910-1914. Included
in the parity legislation were produc-
tion quotas and restrictions on crops
— a fact that's sometimes forgotten.
meetings on the topic have been held
in Bruce, Grey, Perth, and Middlesex
counties. It was inevitable then, that
the Ontario Federation of Agriculture
would be pulled into the parity fray.
In June, OFA research manager
Cecil Bradley presented a parity
discussion paper to OFA directors.
At the meeting's end, directors nar-
rowly approved a resolution calling
on the OFA to direct its efforts to ob-
taining "a fair farm gate price for
each farm commodity."
Bradley had discovered that "there
are a number of notions afoot as to
what parity is." But while people
can't agree on exactly what parity is,
Bradley says that with some farrr.
operations, some communities, and
some commodities in desperate