USDA Announces 2009-10 Allocations for DEIP

Secretary of Agriculture Tom Vilsack announced last Monday initial allocations for the 2009-10 Dairy Export Incentive Program (DEIP). Citing eroding international markets and continuing European Union export subsidies, Vilsack called the program vital to the development and maintenance of export markets for U.S. dairy companies. 

Under DEIP, the U.S. Department of Agriculture provides export subsidies to commercial exporters for certain dairy products. This most recent allocation, which will run until June 30, 2010, includes subsidies for up to 68,201 metric tons of nonfat dry milk, 21,097 metric tons of butterfat and 3,030 metric tons of various cheeses. Remaining uncommitted allocations from the 2008-2009 DEIP year will be made available through new Invitations for Offers and will count against the 2009-2010 World Trade Organization (WTO) commitment levels. The announcement also identified global regions and specific countries for which exporters may receive DEIP subsidies.

Barely a week after USDA's newest allocation announcement, WTO members continue to voice their concern with revamped dairy subsidies from both the United States and the European Union. Both policy moves were flagged by WTO members, including China, New Zealand, Australia and Brazil, at a July 2 WTO Agricultural Committee Meeting. Echoing concerns they expressed in early June, the members called the reactivation of export subsides protectionist and illustrative of "very typical beggar-thy-neighbor behavior." Although they may be frowned upon by the international community, the EU and U.S. dairy export subsidies are within the boundaries of WTO commitments.

Congress Investigates Trade Impact of Climate Change Bill

The Senate Finance Committee last Wednesday heard testimony regarding the international trade implications of potential carbon emissions legislation. The House of Representatives recently passed a 1400 page bill that will impose a "cap and trade" system on U.S. emissions. The Senate has not yet considered climate change legislation and supporters of the proposal are many votes short of the 60 that will be needed to move the bill forward.

The hearing included witnesses from the Government Accountability Office (GAO), the Pew Center on Global Climate Change and Gary Horlick, an international trade lawyer. As has been the trend with the climate change bill, there were stark differences in opinion on the legislation's trade impact. IDFA will continue to work with Congress to assure that any climate change legislation balances greenhouse gas reductions with our nation's need for an abundant and affordable food supply.

Government Introduces 10-Digit Tariff Line for High-Polarity Refined Sugar

Sugar users now will have easier access to ready-to-use, ultra-refined sugar thanks to new U.S. tariff adjustments.

On July 1 the U.S. International Trade Commission revised Chapter 17 of the Harmonized Tariff Schedules of the United States to reflect a new 10-digit tariff line for the highest quality of refined sugar, known as sugar with 99.8 percent or higher polarity. This is a well-earned victory for IDFA and its members who over the past few months have teamed with major food manufacturing companies, the Sweetener Users Association (SUA) and other trade associations to draw attention to the food industry's urgent need for increased supplies of sugar.

With this newly implemented tariff line, ice cream and flavored milk processors will receive some additional help in ensuring adequate refined sugar supplies. Ultra-refined sugar is a product with a polarity level above 99.8 percent that can be readily used by IDFA members. This high-quality sugar was being overshadowed by imports of standard-grade refined sugar, whose polarity is 99.6%. Standard-grade sugar brought into the United States must be refined again before it meets American processing standards.

U.S. refining capacity has been lower than usual recently, due in large part to the industrial tragedy last year involving Imperial Refineries in Port Wentworth, Georgia. This reduced capacity, combined with decreased imports and shrinking sugar beet harvests, means that there is still a critical refined sugar shortage facing the U.S. sugar market even with the new 10-digit tariff line.

"We are extremely pleased with the addition of this new tariff line," said Clay Hough, IDFA senior group vice president. "However, IDFA will continue directing its efforts to increasing sugar tariff rate quotas so our members can source the adequate sugar supplies they need at reasonable market prices."