The price parity concept, which is a cornerstone of U.S. agricultural policy, was established by the

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The price parity concept was established by the Agricultural Adjustment Act of 1933, which was enacted during the Great Depression to support farm incomes by stabilizing agricultural prices. The act established price supports for basic commodities, including wheat, corn, cotton, and tobacco, and mandated that the government purchase surplus production to support prices. The price parity concept aimed to ensure that farmers received a fair return for their products by setting a target price that represented the purchasing power equivalent of commodity prices during a base period. The concept remains a central element of U.S. agricultural policy today.

The Price Parity Concept, Which Is a Cornerstone of U