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June 2002 DEIP Update: The Dairy Export Incentive Program (DEIP) will soon conclude its current year, as the program runs on a July 1 - June 30 fiscal year schedule. A final reallocation of cheese, as reported on May 28, has been completed and nonfat dry milk (NFDM) most likely will not see any reallocation. May DEIP activity revolved around the reallocation of unshipped portions of previous awards for cheese. This reallocation of cheese was fulfilled in three awards by the month's end. Two bids were awarded for a total of 175 metric tons (MT) of mozzarella and the other bid awarded 290 MT of Monterey Jack. The average bonuses paid were $707.14/MT ($0.3208/lb.) for the first two bids, and $740.00/MT ($0.3357/lb.) for the third. All this reallocated cheese is earmarked for the Carribean, and Central or South America. By comparison, the original awards for this cheese included an average bonus of $590.00 MT ($0.2676/lb.). It appears there will not be a reallocation of any of the nonfat dry milk (NFDM) that had been previously awarded but went unshipped. The April update of DEIP activity reported that only 5,752 MT possibly could have been eligible for reallocation. There is no public report telling which awards have already shipped, but the time necessary to re-invite and reallocate bids makes it unlikely that any activity will occur before the end of this fiscal year. The program also includes butter, but market conditions have not warranted an export incentive for butter. The tables below summarize the allocation and awarding of the products included in the DEIP for 2001-2002. Table 1. DEIP Tonnage Allocations and Percentage Awarded,
The language of the 2002 farm bill includes authorization for DEIP through September 2007. The program uses a bid process to determine awards to be paid to exporters of certain dairy products. The awards, usually paid per MT of product exported, compensate the exporter for the difference between the costs to procure the domestic product and the payment that will be received from the importing country. Total DEIP tonnage is subject to limitations under the World Trade Organization's (WTO) agreements on domestic subsidization. In the farm bill, Congress authorized the program to the full extent of these WTO limits. The United States has been at the WTO limit since fiscal year 2000, so the DEIP quantity allocations for FY 2003 will remain the same as FY 2002: cheese at 3,030 MT; butterfat at 21,097 MT; and nonfat dry milk at 68,201 MT. ### Posted June 10, 2002 |
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