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Dairy Export Incentive Program (DEIP) Update
October 2001

The new year for the Dairy Export Incentive Program (DEIP) began on July 1, 2001. This program provides funds to exporters of dairy products to offset the difference between the net cost of the product and the usually lower price received for that product in the international market. The products covered include cheese, nonfat dry milk (NFDM) and butterfat. Bids are presented to the Foreign Agricultural Service (FAS) branch of the U.S. Department of Agriculture (USDA) for a contracted total bonus for a specified amount of the product.

The tonnage allocation for each product was specified on August 2, 2001. (See Table 1.) These allocations were released more than a month after the trading year began due to uncertainty in the international market over the past summer. The amounts for 2001-2002 are the same as the previous year.

Table 1. DEIP Tonnage Allocations, by Product, 2001-2002

PRODUCTALLOCATION
Nonfat Dry Milk68,201 MT
Cheese3,030 MT
Butterfat21,097 MT


Bidding begins when USDA releases an invitation for bids for a specific product. The invitation for cheese was released on August 9. Within a week, those bids had been filled. As of October 22, the invitations for bids for NFDM and butterfat had not been released. (See Table 2 for the DEIP activity to date.)

Table 2. DEIP Activity Through October 22, 2001
PRODUCTALLOCATIONDESTINATIONAMOUNTBONUS/MT$/pound
Nonfat Dry Milk68,201 MT
-
000
Cheese 3,030 MT    
-Mozzerella Carrib/Cent& S America2,230$590$0.2676
-Monterey Jack Carrib/Cent& S America500$590$0.2676
-Varietal Carrib/Cent& S America300$590$0.2676
Butterfat21,097 MT
-
0 00

In further activity, FAS amended the rules governing the fulfillment of these contracts. All bids awarded but not yet shipped by March 31, 2002, will be voided. The remaining tonnage will be rebid under a new invitation to be released on May 1, 2002. This change will allow product to be delivered up to the end of the current DEIP year, which is June 30, 2002. Another change affects the port designation to be made in future DEIP offers or applications.

For more information, contact the International Policy or Economic Analysis groups at IDFA.

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