DEIP Update: A Busy November for the Dairy Export Incentive Program

The Foreign Agriculture Service (FAS) of the U.S. Department of Agriculture (USDA) issued the invitation for offers for nonfat dry milk (NFDM) on November 2, 2001. These invitations solicited bids from exporters to offset the difference between the cost of procuring and delivering domestic NFDM and the actual market price received for that powdered milk. Under the Dairy Export Incentive Program (DEIP), accepted bids become a bonus paid per metric ton of product shipped.

In August 2001, USDA announced the total tonnage allocation available to receive a DEIP bonus. (See Table 1 below for these amounts.) The cheese allocation has already been filled. No invitation has been released yet for bids to export butter.

As of November 20, FAS had accepted 22 bids for NFDM. These bids total more than 4,150 metric tons of NFDM at a combined bonus of just over $1 million. To date, the average bonus award has been $242 per metric ton, or about $0.11 per pound. Further information about the NFDM awards are presented in Table 2.

As a point of reference, the midpoints of the range prices for NFDM from Oceania and Europe were $0.8845 and $0.8278, respectively. European dairy products have been trading at a slight discount since the outbreak of Foot-and-Mouth Disease. The U.S. average price for NFDM in the week of November 10th was $0.9385 per pound. ###