Parity Is The Answer To America’s Agricultural Crisis

March 9th, 2017

Awake Goy

What Is Parity?

Parity is essentially a minimum wage for farmers. It guarantees that farmers at least make more than it costs to produce various crops. Despite the fact that the parity system is no longer being implemented, the USDA continues to collect data regarding the costs of productions and calculates what would be the fair cost of production for specific crops. The calculation process is rather simple; it basically takes into consideration the costs of production (seed, land, tractor, fuel, etc.) and divides by the number of bushels that can be produced for these costs. That, essentially, is the parity cost.Parity pricing is only a few short calculations away. Factoring in the above information along with commodity prices and purchasing power tied to a historical base period, a living wage, inflation, etc. parity pricing is achieved. In other words, a minimum or living wage for farmers is arrived through these calculations.

A Parity Economy In Todays World

Parity was first introduced during the period of the New Deal where the U.S. Federal Government guaranteed the purchase of storable crops like rice, corn, wheat, and oats at or very near parity prices which had the effect of creating a minimum wage or living wage for farmers.

Today, farmers are only paid a fraction of parity for their crops. Going back to the year 2014, the National Agricultural Statistics Service reported that, at best, farmers only received 46% of parity for certain crops. Many crops were much lower than this amount. As you can easily see, farmers are only being paid half (at best) of what they need to earn a living. As a result, a system of subsidies was introduced which forces farmers to live on the government dole but still barely living at all. It should also be noted that, because of the structure of most Big Ag operations, major industrial multi-national food corporations suck up most of the subsidies. In addition, this form of subsidization causes consumers to pay twice for their food; once at the marketplace and again at tax time.

Parity would, of course, ensure that farmers are able to make a living wage and that the most important aspect of a national economy and population is safeguarded but it would also go great lengths toward breaking up multi-national operations, reducing farm size, returning farms back to real farmers and families, and encouraging the production of clean, natural, non-GMO food if implemented properly. It will also move toward diversifying American agriculture which is trending more and more toward monoculture, quite a dangerous direction for the country and for the rest of the world.

But Wont Parity Increase Food Costs?

The answer to this question is somewhat more complicated. Some estimates suggest that food prices would rise up to about 15%. Others suggest the prices would end up being somewhere between current costs and organic costs. This is quite concerning considering inflation and the fact that food costs are already rising.

However, what these analysts forget to mention is that, as mentioned above, consumers are currently paying for their food twice; once at the market and again in food subsidies. They are paying twice because of the refusal of the market to ensure a living wage for farmers and because Wall Street is driving food prices up for the consumer but driving down prices well below parity for farmers.

That being said, parity pricing essentially eliminates the ability of Wall Street to manipulate and drive up the cost of food. During the period of 1942 and 1952, the commodity futures market in the United States essentially shut down due to parity pricing.

For instance, if there is a floor beyond which food prices cannot fall and a ceiling beyond which they cannot rise, the ability to gamble on the rise and fall of those prices is greatly diminished. In addition, a crackdown on commodity futures speculation would serve to eliminate any rise in prices. Thus, consumers would be paying about the same as they are now at the marketplace but farmers would be making a living wage. The living wage for farmers would then reduce the necessity of corporate farming and the reliance on Big Ag for agricultural products and bare subsistence level existence. It would also contribute to fewer GMOs and cleaner, local food.

There does, however, remain the question of a possible temporary price shock during the transition from subsidies to parity in the short period of time in which living wages are paid but while the last vestiges of commodity futures speculation continues. This price shock could be easily mitigated by a crackdown on those markets, banning and eliminating their ability to manipulate the prices of food. It would also be possible to temporarily continue a subsidy program redirected toward food companies that would be phased out as parity pricing comes into effect and as food speculation disappears.

The Economic Need For Parity

Parity pricing and agricultural policy in general effects more than farmers and even more than consumers as a whole. Income which flows into the various areas of the real economy wages, salaries, corporate and small business income, rental properties, and virtually everything else are generally balanced in stable ratios to each other. This, of course, makes sense and as technology changes and progress takes place these ratios change.

One simple example is that, to make a pencil, one needs wood, metal, and lead. The pencil requires the lumber industry which requires saws, trucks, and lumber yards which require metal saw blades and other machinery. All the workers require wages and each business exists for profit. All are connected.

Agriculture, however, is the base of the economy since it meets a basic need of humans to survive. People need to eat. Farmers produce food. Farmers need tools, tractors, trucks, labor, etc. The income that comes in to farms finds itself then being redistributed throughout the rest of the economy via both farm-related and nonfarm-related jobs.

But how can the rest of the economy operate when the base of that economy does not have enough money to survive and thus does not have enough money to pass on to the rest of the economy? Quite simply, it cant. This is because the ratio of payment and income still exist whether farmers get paid a living wage or not. If farmers are earning a living wage, however, that money will find itself working its way throughout the rest of the real economy.

As Kyle McCarthy wrote, When your food dollar goes to family farms it gets redistributed to labor, equipment and various other expenses and investments. When your dollar goes to Wall Street, it ends up in a Swiss bank account or up someones nose.

Parity would not only benefit farmers and create more small farms, it would also increase the number of non-farm jobs and serve to revitalize many rural economies and small towns.

The Necessary Implementation of Parity In The 21st Century

Back in the 1980s, when many might remember the Farm Aid concerts becoming a yearly occurrence, the American farming crisis was beginning to make itself known at a public level. The Savings and Loan disaster was also another blunt reminder of the fact that corporations and banks were killing off the small family farmer and replacing him with corporate farms.

In 2017, small farmers, beyond niche markets (organic, co-ops, etc.) are virtually non-existent while corporate behemoths control the majority of Americas food supply. As major international corporations continue to dominate American agriculture, eliminate the diversity of nature, introduce environmentally destructive and toxic genetically modified crops as well as douse every plant possible with as much herbicide and pesticide as possible, the situation seems daunting and hopeless.

But the situation is not hopeless and our current dilemma can be reversed by implementing parity pricing, a ban on GMO food, and a concerted effort to break up the major monopolies and corporate giants that are currently controlling the American food supply. The answers to our agricultural problem already exist and have been proven effective in the past. Its time to bring back parity.

Image: Natural Blaze, pixabay

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