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DEIP Update, June 2004: Program Approaches Close of Its Calm Fiscal Year The U.S. Department of Agriculture's (USDA) Dairy Export Incentive Program (DEIP) is nearing the end of its 2004 fiscal year on June 30 with an extended spell of inactivity. Under the program, USDA pays a bonus to exporters as compensation for costs of procuring and transporting domestic nonfat dry milk (NFDM), cheese and butterfat to overseas customers. This year's program concluded its awards of NFDM and cheese about six month ago; those actions included just three allocations and 19 transactions. For comparison, there were 31 transactions in FY03. Although USDA did allocate more than 15.5 million pounds of butterfat, the agency never invited bids on that allocation.In FY04, the average award for NFDM was about 9.4 million pounds and for cheese over 2.2 million pounds. Looking back at the entire FY04, there were two short periods of activity that were sandwiched between months of calm. The DEIP year officially began on July 1, but the program remained dormant until mid-August, when USDA announced the tonnage limits (which are set by U.S. obligations under the World Trade Organization) and initial allocations for each DEIP product. At the same time, USDA invited bids on the first NFDM allocation, which was closed out in less than a week. The next burst of activity happened four months later, near the end of December, when USDA invited bids for the remaining NFDM and cheese. Bids for both products were filled by mid-January. From that date, the program's only potential activity could occur on butterfat. To date, USDA has not invited any bids on the initial allocated portion of butterfat, nor allocated any additional tonnage. Current market conditions make it highly unlikely that additional activity will transpire before the DEIP year officially closes on June 30.
through June 17, 2004
The total of USDA bonus money was $5.4 million. About $4.5 million was spent on NFDM, paying an average bonus of $65.97 per metric ton (MT) or $0.0299 per pound. The balance of $934,000 went for cheese. The average cheese bonus was $308.17/MT, or $0.1398 per pound.
Posted June 21, 2004
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