On Monday May 25, the EU’s farm chief hit back on the US for introducing an export subsidy on dairy products last week. For Reuters story, click here. The US had blamed the EU’s own export subsidy as the reason for introducing the subsidy. According to the EU’s farm chief, Commissioner Mariann Fischer Boel,
"On the United States, I don't like to see that the Americans are using Europe's reinstatement of export subsidies as an excuse to go ahead in this direction. We did not introduce our export refunds until we had calculated the effect on the market ... and we have not covered the gap between the EU and international price.”According to the US, the move is
aimed to support the U.S. dairy industry, which had seen its international market shares erode, partly due to the EU's reintroduction of direct export subsidies.
At the same time the US dairy export subsidy is seen as potentially sparking a trade war with New Zealand. For New Zealand Herald story, click here. The subsidies, according to New Zealand’s Prime Minister John Key, will lead to further retaliation from the EU, which controls a much larger share of the dairy export market. New Zealand gave up agricultural subsidies twenty-five years ago and does not want to return to this system.
Finally, dairy farmers in France, Germany, and Belgium are staging demonstrations to return to the old fixed price system in the EU. For Times story, click here. In France, 12,000 farmers blocked access to 81 dairy plants through out France leading to looming cheese shortages. According to the Times,
the price of milk falling by 30 per cent in the past year, farmers stepped up pressure on the European Union’s agriculture ministers to reinstate policies that resulted in €16 billion (£14 billion) of aid a year for the Continent’s dairy industry.This is the first price fall dairy farmers have seen across the EU, since the EU went away from a fixed price system, and many do not see demonstrations lasting much longer. According to one source,
A lot of producers can’t hold out with these milk prices. Morale is very low.But because of these demonstrations, France, Germany, and Austria are calling for the EU to raise the export subsidies on dairy products and more intervention to prop up dairy prices.
For USDA press release on the Dairy Export Incentive Program, click here.
Posted: 05/26/09
