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TeachMeFinance.com - explain Parity price Parity price The term 'Parity price ' as it applies to the area of agriculture can be defined as ' A measurement of the purchasing power of a unit of a particular commodity. Originally, parity was the price per bushel, bale, pound, or hundredweight that would be necessary for a unit of a commodity today to buy the same quantity of other goods (from a standard list) that the commodity could have purchased in the 1910-14 base period. Under permanent law, prices of some commodities would be supported at 50 to 90% of parity through direct government purchases or nonrecourse loans. In 1948, the parity price formula was revised to make parity prices dependent on the relationship of farm and nonfarm prices during the most recent 10-year period for nonbasic commodities. Basic commodities, including wheat, corn, rice, peanuts, and cotton use the higher of the historical or the new formula'. Previous 5 Terms: Parent Parent company Parhelion parietal parine Next 5 Terms: Parity ratio paroemiology parsec Parshall Flume (Improved Venturi Flume) Part A (Hospital Insurance) About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005-2011 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional medical, legal or financial advice. Information presented at TeachMeFinance.com is provided on an "AS-IS" basis. Please read the disclaimer for details.