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DEIP Update: USDA Fills Powder, Cheese Initial Allocations in First Week The Dairy Export Incentive Program (DEIP) was very active in its first week after the U.S. Department of Agriculture (USDA) launched the DEIP 2002-03 fiscal year. After waiting more than two months to make the official allocation announcement, USDA invited and awarded in one week all the tonnage that USDA has allocated so far for nonfat dry milk (NFDM) and cheese.Announced on September 13, USDA’s initial allocations made available 25% of the total tonnage of NFDM, cheese and butterfat allowable under the limits of U.S. agreements during the World Trade Organization’s Uruguay Round. USDA announced the partial allocations as: 17,050 metric tons (MT) of NFDM, 5,274 MT of butterfat and 757 MT of cheese. On September 17, USDA issued invitations for bids on NFDM and cheese. The invitations define the destination countries, bid and payment processes, product specifications and other requirements. By September 20, USDA had awarded all of the allocated amounts for NFDM and cheese. There was no DEIP invitation on butterfat. The cheese allocation was filled in five awards that will send 44 MT of mozzarella to the African region and 713 MT of cheddar, Monterey Jack and mozzarella to the Caribbean region. The average award was for $783.92/MT, or $0.3556 per pound. The bonus paid compensates the exporter for costs to procure and deliver products to a foreign port. These bonuses vary with the difference between the U.S. domestic purchase cost and the competing world market prices. The NFDM allocation was filled in three awards. These awards will send 2000 MT to Asia and the former Soviet Union and 15,050 MT to the Caribbean region. The majority of the tonnage going to the Caribbean was awarded in a single bid by Dairy Farmers of America, which will send 12,050 MT to this region. This one contract represents more than 70% of the announced allocation for NFDM. The average award for the total NFDM amount was 606.13/MT, or $0.2749/lb. Deducting this average bonus amount from the West ‘mostly’ price range (as published in USDA’s Dairy Market News for the week of September 16-20, 2002) leaves a net price of about $0.63/lb. By comparison, NFDM prices from Europe and Oceania ranged from $0.5216/lb. to $0.5897/lb. in early September (latest data available from Dairy Market News.)
Posted September 23, 2002
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