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July 2002 DEIP
Update: The U.S. Department of Agriculture's (USDA) Dairy Export Incentive Program (DEIP) began its new fiscal year on July 1, 2002. DEIP follows the World Trade Organization (WTO) timeline, which operates under a fiscal year that begins on July 1 and ends on June 30. Under the U.S. commitments in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) and the WTO, the United States is limited in the amount of export subsidies that can be applied each year. Before USDA can accept bids for export subsidies under DEIP, it must announce the annual allocations available in terms of volume for each product. USDA has not yet officially announced the FY 2003 DEIP allocations, but the volume levels for nonfat dry milk, butter and cheese are spelled out very carefully under the GATT and enforced through the WTO. In the recent farm bill, Congress authorized the program to the full extent of these WTO limits. The United States has been at the WTO limit since fiscal year 2000, so the DEIP quantity allocations for FY 2003 will remain the same as FY 2002: cheese at 3,030 MT; butterfat at 21,097 MT; and nonfat dry milk at 68,201 MT. IDFA is particularly opposed to USDA inviting DEIP bids on butterfat, especially without a public comment period on the current market conditions. IDFA has asked USDA to resist calls for butter to be subsidized for export through DEIP, as IDFA believes this would create undue tightening of domestic butter markets, driving up prices for processors and manufacturers, and ultimately consumers. IDFA hopes to avoid a recurrence of the 1998 butter market turmoil, which occurred in large part from USDA's extensive use of DEIP subsidies on butter in the second half of 1997. ### Posted July 8, 2002 |
