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DEIP Update, June 16, 2003: USDA Fills Butter Export Allocation On June 9-10, the U.S. Department of Agriculture (USDA) awarded its remaining butter export contracts in its Dairy Export Incentive Program (DEIP); two awards closed out the balance of 3,125 metric tons (MT) from a May 19 bid invitation on 5,000 MT. That invitation brought the total DEIP allocation for butter this program year to 10,000 MT.The two recent awards will send anhydrous milkfat (a form of butter with a higher concentration of butterfat) to the Caribbean, Central and South American region. On June 9, 1,000 MT of anhydrous milkfat were awarded at an average bonus of $1,990/MT (about $0.90 per pound). Another 2,125 MT was awarded on June 10 for $1,965/MT (about $0.89 per pound). Through DEIP, exporters are paid a bonus to compensate their costs of procuring and shipping U.S dairy products to foreign ports. In prior announcements, USDA said it would subsidize up to 10,000 MT of milkfat on a butter-equivalent basis — a level that has now been reached. Due to World Trade Organization (WTO) agreements, USDA is limited on butter subsidized exports of up to 21,097 MT in the program year. As recent domestic butter prices have been stronger and with just two weeks remaining in the current program year, it is very likely that this will conclude DEIP activity for 2002-2003. WTO-level allocations were exhausted in March 2003 for the two other dairy products in DEIP: nonfat dry milk and cheese. Posted June 16, 2003
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