Parity price

A parity price is used to measure the current price of a product in terms of a baseline average price. The baseline price is derived from a time period that is designated as the starting point for the comparison, such as the preceding ten-year period. If the current price is lower than the parity price and the item being sold is a commodity (such as an agricultural product), it is possible that the federal government will issue subsidies to bring the net price back up to the parity price. By taking this action, the government hopes to keep commodity producers from being driven out of the market.