May 25 - Fonterra said the announcement today of Dairy Export Incentive Program (DEIP) subsidies for US dairy farmers was extremely disappointing at a time when the world dairy market is delicately balanced.
“This is bad news for the market and bad news for our farmers in New Zealand who compete internationally with no support or subsidies of any type,” said Fonterra’s Managing Director of Global Trade, Kelvin Wickham.
Mr Wickham said prices had been bouncing along the bottom in recent months and news of US export subsidies would create more uncertainty.
“Farmers all around the world are hurting with returns at current levels. But it’s vital that we don’t have subsidies and support programmes which distort the market and send the wrong price signals to farmers.”
He said the market had been going through a rebalancing phase, which was necessary following the supply response to record international dairy prices in late 2007.
“Restarting of export refunds by the US sends a very negative signal to the market and the global community. DEIP will only have a relatively small effect on US milk prices and US farmer incomes, but it’s extremely disappointing and potentially damaging to the world dairy market,” Mr Wickham said.