GENERAL FARM PROGRAM 549 



payment certificate, the difference between the free market price and an income 

 parity value of the crop. This parity payment certificate will be given to the 

 farmers by the first buyer of a product when the farmer sells his product. It is 

 immediately redeemable at full face value. 



In order to follow closely and clearly, the illustration to follow of the use and 

 the working of the parity certificate plan, it will be necessary to get clearly in 

 mind the following assumptions : 



1. A thoroughly modernized parity income formula must be in force so that 

 parity prices of all products will be held in a fair balanced relationship ; so that 

 the parity price of no produce will be significantly out of line with the general 

 parity level, and finally so that the given product parity will reflect its recent 

 costs and demand changes. 



2. At the beginning of each marketing year the Government would need to 

 estimate for each parity-benefited product the total production, total domestic 

 requirements, and the export surplus ; and to declare the percentage that will 

 be used domestically and the percentage to be exported. 



3. Parity support under this two-price system would probably not be needed 

 for all farm products but only for the main and especially the export surplus 

 products. The price of most minor crops that are sold only on the domestic 

 market would tend to rise to the general level of parity-administered crops through 

 intercrop competition. For handling seasonal surpluses in such minor crops, 

 marketing agreements should be authorized for use and used if the growers vote 

 to use them. Parity payments should be made only for the domestic portion of 

 all farm products and the export portion should be sold at world levels without 

 any parity support. 



4. No dual price structure can be made to work unless each product and close 

 substitutes for each are protected from imports to the extent of the parity price. 

 Therefore, in the illustrations to follow it is assumed that each product is to be 

 protected by adequate measures to the extent of the additions to market prices 

 by parity payments on domestic consumption. 



5. The basic current price of all benefited commodities would be the purchase 

 price of the commodity, the declared parity benefit payment being a flat, fixed 

 payment above the current price. This differential. payment above the current 

 market price would be announced at the beginning of the market year. Thus 

 all the market forces of supply and demand would be in constant play on the 

 price of the parity-benefited product, and support price would rise and fall around 

 parity with each current change of the market price. The diffei'ential parity 

 payment would always float up and down on market price. The differential pay- 

 ment could be changed, as changes in market price carried the total support 

 price significantly above or below parity. 



6. Finally, sales from producer direct to consumer would not require special 

 attention. Prices paid on such sales would necesarily be about equal to the cur- 

 rent price plus parity benefits. Otherwise, the producing farmer would not make 

 such sales. 



The instruments by which a two-price support is to be implemented are two 

 certificates issued by local agents of the Government (probaly the local bank) to 

 the first buyer of a farm product. One is a parity supporting certificate which 

 is to he the sole ofiicial authorization for all transfers, sales, storage, export, or 

 of parity-benefited products in the United States. The first buyer of products 

 would pay full parity differential price for these parity supporting certificates 

 and sell them with the product at full face value when he sold his purchased 

 product. In essence these parity supporting certificates would be licenses to 

 handle these parity-benefited products in domestic markets. Each successive 

 buyer of the product would buy and sell the certificates with the product and 

 receive full face value for the certificate. 



The other or second certificate is a parity payment certificate which serves as 

 a means of paying the farmer his parity payment. The two certificates will 

 always be issued jointly and the parity payment certificate will come attached 

 to the parity supporting certificate free of any extra charge when the supporting 

 certificate is issued. The face value of the parity payment certificate is to be 

 the total parity payment due the farmer on the authorized proportion of the sale 

 for domestic consumption. 



The function and use of the parity supporting certificate as a means of policing 

 the product in domestic channel movements and uses will be examined first. The 

 use of the attached parity payment certiflcate (which is detached and given to 

 the farmer at the time of purchase) will be discussed later. 



