Drop in Parity

To most Americans farm parity* is a meaningless phrase. But to farmers it is the measure of how their part of the economy is doing in comparison with the rest of the country. Last week the parity ratio sagged to 80, as low as it has been since World War II ended, showing that farmers are still in plenty of trouble. The drop of two points from January came because farm prices slipped while industrial prices continued to rise. Compared with a year earlier, farmers in February still were being paid 3% more for what they sold. But they were paying 5% more for what they bought.

This continuing cost-price squeeze on agriculture chilled but did not demolish the optimism that Agriculture Secretary Ezra Taft Benson has been displaying about farm prospects. Benson still insists that farmers stand to average somewhat higher prices and incomes than in 1956. Buttressing his opinion were some hopeful facts. Hog and cattle prices are better than last year; the broiler industry appears to be overcoming a surplus problem, and dairymen are producing and selling more than last year. The Government's price-depressing hoard of surplus wheat, cotton and corn is slowly being whittled away. And this year farmers are eligible for $1.2 billion in soil-bank payments.

On the other hand, Republican farm politicians, who see a congressional election coming up in 1958 with no Eisenhower on the ticket, feared that the downturn in parity indicated that the farm slump has still not hit bottom. They also saw a risk that null relatively good hog prices will stimulate an oversupply of pork in 1958, that a 4% increase in cattle now in feedlots will mean lower prices for quality steaks and roasts this fall, that current low prices for eggs (7 1/2 a dozen under last year at the farm) will continue, and that the price supports under dairy products (58 1/2 a lb., wholesale, for butter) will mean more surpluses.

If the parity ratio continues to fall, both sides believe that Benson may have to change his tune--and his policies.

*Parity is a formula for adjusting farm support prices according to the prices farmers have to pay for the things they buy (fertilizers, tractors, etc.). The aim is to give the farmer's dollar the same purchasing power it had in 1910-14. No other segment of the U.S. economy has the same Government guarantee. Parity prices are revised monthly by the Department of Agriculture.

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