The parity price refers to a calculated value for agricultural commodities, which is determined by taking the adjusted base price of the commodity on a specific date and multiplying it by the parity index on that same date. This price aims to ensure that farmers receive fair compensation relative to the prices of goods and services they need to purchase.
The concept of parity price is primarily used in agricultural law and economic policy. It plays a crucial role in determining the financial viability of farming operations and influences government programs designed to support farmers. Users may encounter this term in contexts related to agricultural subsidies, price supports, and market regulations. Legal forms related to agricultural contracts or subsidy applications may also reference parity price calculations.
Here are a couple of examples of abatement:
For example, if the adjusted base price of corn is $3.50 per bushel and the parity index is 1.2 on a given date, the parity price would be $4.20 per bushel (3.50 x 1.2). This price helps ensure that farmers can maintain their purchasing power.
(hypothetical example) If a farmer is considering selling wheat, they would calculate the parity price to determine if the market price is fair compared to their costs.
One key statute relevant to parity price is the Agricultural Adjustment Act, which outlines various support mechanisms for farmers, including price parity measures. Specific provisions can be found in 7 USCS § 1301, which defines the terms and calculations related to parity pricing.
| Term | Definition | Difference |
|---|---|---|
| Market Price | The current price at which a commodity is bought and sold. | Market price fluctuates based on supply and demand, while parity price is a calculated value aimed at ensuring fair compensation. |
| Base Price | The initial price of a commodity before adjustments. | Base price is a component of the parity price calculation, which also includes the parity index. |
If you are a farmer or involved in agricultural production, understanding parity price can help you make informed decisions about selling your products. You may want to calculate the parity price for your commodities to ensure you are receiving fair compensation. Consider using US Legal Forms' templates for agricultural contracts or subsidy applications to navigate this process effectively. If your situation is complex, consulting with a legal professional may be beneficial.
Browse our library of 85,000+ state-specific legal templates.
The parity price is a calculated value that ensures farmers receive fair compensation for their commodities based on adjusted prices and indices.