Parity, A Myth in Farming

Published on: 10:01AM Aug 13, 2008
Vance Ehmke

If I really want to wind up my prairie populist friends, all I’ve got to do is find some way to steer the conversation over to parity. It ranks right up there with other maddening subjects like abortion, hogs, homosexuality and, of course, communism.
We all know what parity is. It’s a ratio that compares prices farmers receive to prices paid or it’s an attempt to compare a farmer’s current purchasing power to their purchasing power during the l9l0 to l9l4 time period.
Who knows where parity prices are today. Usually, though, it’s a safe bet that they’re something like double or triple whatever the current market is. They’re always prices that are high enough that even the most hardened taxpayer will want to gush forth farm subsidies like the Niagara Falls.
Well, if that’s as far as you go in the discussion, I guess you could fairly conclude that we farmers are getting ripped off by consumers or Cargill or anybody else who’s intent on driving us off the land.
“But not so fast,” says Luther Tweeten. Luther was one of my most favorite ag economists who retired from Ohio State University several years back. The last Tweeten sighting was on a golf course in Palm Springs.
Anyway, he says we’ve also got to consider gains in productivity from improved farm inputs and management—things like better varieties and hybrids, fertilizers, pesticides, mechanized equipment and technologies that allow us to make more efficient use of moisture. Better rotations. Balanced rations. AI using top sires. The list is endless.
When you plug increased productivity into the equation from these things, Luther says the output from each unit of farm production resource even l0 years ago was right at 4 times higher when compared to the l9l0 to l9l4 time period.
Consequently, even though real prices for our wheat have dropped like a rock, the output from each unit of farm aggregate input is light years ahead of the l9l0 to l9l4 time period. In other words, we’ve way more than compensated by being more productive. Not only are we ahead of the game, but our farms are also bigger.
Look at wheat yields here in Kansas. During l9l0 to l9l4, Kansas wheat yields averaged just over l3 bu/acre. Our farm average on dryland wheat in the past two years averaged between 55 and 60 bu/acre.
Here’s another dimension to that. Back over l00 years ago when my great grandparents were farming here in Lane County, they said a man’s wealth was determined by how many sons he had. They weren’t kidding. How many acres could you get a horse-drawn plow over in a day?
Today with a 55-foot undercutter, one man can easily work 320 acres of summerfallow and still have time to get to town for the ballgame. With a l30-foot spray rig running at l0 mph, you can cover l30 acres in l hour!
Do I want to go back to the Golden Years of l9l0 to l9l4? Not on your life.
And finally, your words of wisdom for the day come from Rod Bentley of Gove KS: “Show me a man who’s worked hard all his life, and I’ll show you a man who has nothing to show for it.”