Europe Upset over USDA Export Allocation Move

EU claims USDA action is response to added subsidies announced earlier in 2009.

Late last week, USDA announced allocations under the agency's Dairy Export Incentive Program for July 2008 through the June 2009 period. The program helps U.S. dairy exporters meet prevailing world prices and encourages development of international export markets in areas where U.S. dairy products aren't competitive due to subsidized dairy products from other countries, according to the USDA announcement.

"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 earlier this year," says Ag Secretary Tom 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 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.

Reaction in Europe over the program was swift as Europe's farm chief commented Monday that the USDA had blamed EU policy for the decision to introduce the export subsidies. According to a Reuters report, EU Ag Commissioner Mariann Fischer Boel said she didn't like to see that the US had used Europe's "restatement of export subsidies" as an "excuse" to make it's Dairy Export Incentive Program move.

The EU reinstated export subsidies on a series of dairy products including butter, cheese and skimmed milk powder, to help exporters compete in a depressed world market.

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