DEIP Update, August 2003: USDA Initiates New Dairy Export Year

On August 15, the U.S. Department of Agriculture (USDA) made its first announcement about the Dairy Export Incentive Program's (DEIP) new fiscal year, which officially began on July 1. For FY04, USDA made its initial product allocations of just over 50 million pounds (22,733 metric tons) of nonfat dry milk (NFDM), two million pounds (1,010 MT) of cheese, and 15.5 million pounds (7,032 MT) of butterfat. This means that these amounts are now available for USDA to begin (via invitations to bid) its DEIP award process. In addition, USDA immediately opened the bidding process for its allocated NFDM. The bids are for the compensation necessary for an exporter to procure and ship domestic dairy products to any of three specified regions of the world.

The allocations are one-third of the allowable tonnage limits set by the Uruguay Round of the World Trade Organization (WTO) for the United States. Last year (FY2003), USDA began this new strategy of making partial allocations in "tranches" — instead of allocating the entire WTO-allowed amount at the year's start — in order to better manage DEIP activity. In the August 15 announcement, USDA stated that the remaining tonnage will be announced in additional tranches in the 2003-04 DEIP year.

Posted August 18, 2003