Economics

Is parity pricing enough? A critical analysis of parity pricing and the case for additional strategies

M. Howe, L. P. R. Palde, et al.

This paper dives into the challenging world of parity pricing and its impact on farm incomes in the U.S. The authors, including experts from Indiana University, critically evaluate whether the historical pricing model holds up in today's economy and suggest that it may be time for more innovative strategies to tackle the pressing issue of declining farm-gate prices.

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Playback language: English

Index

Abstract

This paper critically analyzes the efficacy of parity pricing as a solution to low farm-gate prices in the U.S. The authors challenge the assumption that parity pricing, based on the purchasing power of commodities in 1910–1914, would ensure fair farm incomes today. They examine income equality during the parity period, compare parity prices to farm-gate, terminal, and retail prices for twelve specialty crops, and show the temporal correspondence between the end of parity pricing and declines in farm income. The study concludes that parity pricing alone is insufficient to address the complex issues causing low farm-gate prices and advocates for additional strategies, including policy interventions and alternative market models.

Publisher

npj Sustainable Agriculture

Published On

Jul 01, 2024

Authors

Mecca Howe, Laxmi Prasanna R. Palde, Kassandra R. Leuthart, Nicholas J. Monroe, Oliver M. Allen, Kamila Czebotar, Kathleen M. Lich, Angela M. Babb, Daniel C. Knudsen

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