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DEIP Update, January 2005: Program Remains Quiet There has been no activity in the Dairy Export Incentive Program (DEIP) since September, when product allocations for the fiscal year were announced by the U.S. Department of Agriculture (USDA). The allocations are 68,201 metric tons (MT) of nonfat dry milk (NFDM), 3,030 MT of cheese, and 21,097 MT of butterfat. All amounts are the same as allocations from recent years.Through DEIP, USDA introduces selected U.S. dairy products to new export markets. This is accomplished by compensating exporters for additional costs to procure and deliver domestic products to foreign ports. However, this fiscal year's market conditions have not warranted DEIP activity, as noted in a recent USDA press release. There is little immediate call for using DEIP to remove product from the U.S. supply, since export volumes of NFDM, cheese and butter were up 101%, 32% and 20%, respectively, July through October 2004 compared to the same period last year. DEIP can also be used to strengthen domestic price levels by reducing local supply. However, this fiscal year, these prices have remained comparatively strong. From July through December 2004, the monthly product prices of NFDM, cheese and butter that were used by USDA to establish minimum prices for farm milk averaged, respectively, 6.1%, 7.5% and 49.8% higher than during the same period in 2003.
Posted January 10, 2005
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