New Zealand dairy sector frowns on US subsidies

The New Zealand dairy sector is disappointed over the US' decision to subsidise its dairy exports.

 

The US had announced its Dairy Export Incentive Programme (DEIP) that will provide US dairy farmers with export incentives on 92,000 tonnes of dairy products.

 

It follows the EU's reintroduction of subsidies in January.

 

Tim Fulton, editor of NZ Farmers Weekly, questions what implications it will have for New Zealand's involvement in the P5 trade deal with the US, Brunei, Singapore and Chile.

 

P5 trade talks are yet to advance, but the US is keen to pick it up.

 

It is important to New Zealand's prospect to have a free trade environment that involves the US and the EU, so that New Zealand can maintain its stable dairy market commodity prices, Fulton said.

 

New Zealand Trade Minister Tim Grosser criticised the US move, saying it comes at a time when the sensitive commodities market is showing signs of stabilising. 

 

Export subsidy assistance will have little effect on income for US dairy farmers, and may even be counterproductive by creating uncertainty and depressing global dairy prices, Grosser said.

 

Unsubsidised producers such as New Zealand, will have to bear the cost of these trade-distorting measures, he added.

 

Similarly, Fonterra believes the subsidies and support programmes will distort the market and send the wrong price signals to farmers.

 

Grosser said he will discuss the matter with US Trade Representative Ron Kirk and US Secretary of Agriculture Tom Vilsack when they meet in early June.