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USDA Makes Major Dairy Announcements The U.S. Department of Agriculture (USDA) made three major dairy announcements late last Friday: 1) USDA adjusted the Commodity Credit Corporation (CCC) purchase prices for nonfat dry milk (NFDM) and butter under the Dairy Price Support Program; 2) USDA imposed a safeguard duty on imports of American-type cheese; and 3) USDA announced additional tonnage allocations under the Dairy Export Incentive Program (DEIP).USDA will reduce the CCC purchase price for NFDM by $0.10 per pound, to $0.80 (80 cents), an action strongly supported by IDFA. At the same time, the purchase price for butter will increase by $0.1952 (19.52 cents) to $1.0500 per pound. These new CCC purchase prices take effect for butter and nonfat dry milk produced on or after November 15, 2002, or offered for sale to the government after November 29, 2002. USDA last changed CCC purchase prices in June 2001. Since then, IDFA has continued to advocate another tilt in the NFDM and butter purchase price, both to reduce government expenditures under the support program and to more closely reflect actual dairy market conditions. Under current law, USDA may make such a change up to two times per year. "With this adjustment, it will be less attractive to manufacture NFDM solely for sale to the government versus for manufacture into products demanded by the market," said IDFA Chief Economist and Director of Policy Analysis Bob Yonkers. "The government has been purchasing surplus NFDM in significant quantities since 1999, and currently holds in inventory more than 1.3 billion pounds. Prior to last week's announcement, USDA had forecast that it would need to buy an additional 660 million pounds of surplus NFDM in the current fiscal year (begun October 1). IDFA is grateful to USDA for making the adjustment and encourages members to join in sending thanks to Agriculture Secretary Ann Veneman for this positive action. For a sample letter of thanks, members can click here. USDA also announced the application of a volume-based safeguard to above-quota imports of American-type cheese. This new 16-cent/lb. duty is the maximum safeguard allowed under the rules established by the World Trade Organization (WTO), and expires on December 31, 2002. The effect of this is to raise the total duty on over-quota American-type cheese to 65 cents per pound, a 33% increase above the existing over-quota duty rate of 49 cents per pound. This new safeguard duty does not apply to product already en route to the United States. Finally, USDA also announced a second allocation for the current DEIP year, which began on July 1, 2002. This new allocation includes 25,576 metric tons of nonfat dry milk, 7,912 metric tons of butterfat, and 1,137 metric tons of various cheeses. USDA said it will announce further details this week, including product and country allocations. In mid-September, USDA announced an allocation equal to 25% of the maximum annual quantities allowed under the WTO. Last week's announcement brings the total allocated amount to 62.5% of the annual limit. Posted November 18, 2002
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