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Export incentives for dairy products

Agriculture Secretary Tom Vilsack has begun implementing provisions of the Dairy Export Incentive Program, partly in response to the reintroduction of direct export subsidies by the European Union earlier this year.

Vilsack announced the allocations under the program for the July 2008 through June 30, 2009 period. The allocations, which are allowed under World Trade Organization rules, are designed to help U.S. dairy exporters meet prevailing world prices in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.

“These allocations illustrate our continued support for the U.S. dairy industry, which has seen its international market shares erode, in part, due to the reintroduction of direct export subsidies by the European Union,” said Vilsack.

“The Obama administration remains strongly committed to the pledge by the Leaders of the Group of Twenty to refrain from protectionist measures. Our measured response is fully consistent with our WTO commitments, and we will make every attempt to minimize the impact on non-subsidizing foreign suppliers.”

The chairmen of the House and Senate Agriculture Committees said they support the administration’s efforts to help dairy farmers, who are experiencing some of the lowest milk prices in decades.

“It is clear that with prices as low as they are today, the U.S. dairy industry is struggling and federal action needs to be taken,” said Iowa’s Sen. Tom Harkin. “A decline in overseas sales – caused partially by a direct export subsidy reintroduced by the European Union – has hurt our dairy producers here at home.”

House Agriculture Committee Chairman Collin C. Peterson also expressed his appreciation for Agriculture Secretary Tom Vilsack’s decision to use the Dairy Export Incentive Program to assist U.S. dairy farmers who are suffering from record low prices.

The Dairy Export Incentive Program allocations of 68,201 metric tons of nonfat dry milk; 21,097 metric tons of butterfat; 3,030 metric tons of various cheeses and 34 metric tons of other dairy products, as well as individual product and country allocations will be made available through Invitations for Offers. Country and region quantities may be limited by the invitation.

Administered by USDA’s Foreign Agricultural Service, the program was reauthorized by the Food, Conservation, and Energy Act of 2008. As part of its World Trade Organization commitments resulting from the Uruguay Round Agreement on Agriculture, the United States has established annual export subsidy ceilings by commodity with respect to maximum permitted quantities and maximum budgetary expenditures.

More information about this program, including the announcement of Invitations for Offers, is available at or by calling FAS’s Credit Programs Division, Office of Trade Programs, at (202) 720-3224 or (202) 720-6211.

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