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DEIP Update, May 2003: USDA Outlines its "Cautious Approach" to Butterfat The U.S. Department of Agriculture (USDA) will "continue to proceed carefully" in its use of the Dairy Export Incentive Program's (DEIP) allocations of butterfat, according to a recent letter from USDA Under Secretary for Farm and Foreign Agricultural Services J.B. Penn. The letter was in response to a January 28 letter from IDFA to USDA that expressed IDFA's "serious concerns" about the use of DEIP subsidies for butter and subsequent impacts on the butter market."USDA has adopted a cautious approach to the U.S. butterfat market, due to the volatility of butterfat prices and our aversion to allowing DEIP to undermine the U.S. consumer market for butterfat," wrote Penn. In its January letter, IDFA outlined how DEIP butter allocations in the short term could decrease the long-term availability of domestic butter. In his response, Penn specified that the majority of butterfat allocated through DEIP to date was not fresh butter. "You will be pleased to know that only 4 percent or 200 tons of [allocated butter] was fresh butter. The other 96% of the tonnage was butteroil/anhydrous milk fat," stated Penn in the letter. For the first time since 2000, USDA invited bids for butterfat under DEIP on February 25; those 5,000 metric tons (MT) (of the allowable 13,186 MT of butterfat for fiscal year 2003) were quickly awarded. To review last month's DEIP report on those awards, click here. Posted May 5, 2003
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