DEIP

Today, May 22, 2009 at: http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2009/05/0178.xml

“Agriculture Secretary Tom Vilsack today announced allocations under USDA's Dairy Export Incentive Program (DEIP) for the July 2008 through June 30, 2009 period, as allowed under the rules of the World Trade Organization. The program helps U.S. dairy exporters meet prevailing world prices and encourages the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.”

Under DEIP the U.S. Department of Agriculture pays cash to exporters as bonuses, allowing them to sell some U.S. dairy products at prices lower than the exporter's costs of acquiring them.

Nonfat dry milk (NFDM) will be the lead export under the DEIP program.

According to the latest data, NFDM is $0.8275 per pound in the West, skim milk powder (SMP) in Europe is $0.9922 per pound, and in Oceania the price for SMP is $0.9072. Go over the numbers very carefully and think about the so-called purpose of DEIP. There is something wrong with this picture.

Now, a side effect of DEIP is the lowering of world prices because the dumping by the U.S. on the world market naturally has to lower price. Since we live in a global economy,few people in dairy should applaud this move. Of course, National Milk Producers Federation is praising the move – no surprise there.