Noting that other countries are showing no signs of reducing their export subsidies, USDA has announced the initial round of allocations under the Dairy Export Incentives Program for the period July 1 through June 30, 2010.

Agriculture Secretary Tom Vilsack said the allocations, which help U.S. dairy exporters meet subsidized prices in international export markets, will include amounts left over from 2008-2009 and new offerings from the 2009-2010 program.

“The United States has taken a measured approach in operating the DEIP that is fully consistent with our WTO commitments,” said Vilsack. “It appears, however, that our international markets continue to erode and the European Union has shown no indication that it will refrain from providing dairy export subsidies.

“We will continue to use this program in a responsible manner in support of U.S. dairy farmers,” the secretary added in a news release from the Agriculture Department. Of the 2008-2009 DEIP allocations announced in May 2009, 48,176 metric tons of nonfat dry milk; 19,235 metric tons of butterfat; and 2,878 metric tons of cheeses remain uncommitted. These balances will be made available through the issuance of new Invitations for Offers. Country and region quantities may be limited by the individual invitations.

Under U.S. World Trade Organization commitments, USDA is allowed to provide bonuses for dairy products on a July through June yearly basis 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. The balances being made available through the new Invitations for Offers will count against the 2009-2010 U.S. WTO commitment levels.

Administered by USDA’s Foreign Agricultural Service, the DEIP was reauthorized by the Food, Conservation, and Energy Act of 2008. Under 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.

Despite efforts by some organizations to reduce the size of the dairy herd, milk prices remain below the cost of production for many parts of the country. Farm groups said the USDA announcement will help stabilize prices.

More information about this program, including the announcement of Invitations for Offers, is available at http://www.fas.usda.gov/excredits/deip/deip-new.asp or by calling FAS's Credit Programs Division, Office of Trade Programs, at (202) 720-3224 or (202) 720-6211.

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