Time to use one U.S. subsidy against another

Federated Farmers believes it maybe time to use a new US$243 million (NZ$367 million) American dairy subsidy, to end an even worse one, that being the Dairy Export Incentive Programme (DEIP) introduced in May.

“Given American dairy farmers bleated their way to export subsidies under DEIP, that position is untenable when their taxpayers are now buying dairy products under the Dairy Product Price Support Program (DPPSP),” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“At the very least for New Zealand’s dairy exporters, this is product that won’t enter export markets. We hope the New Zealand Government will use its full diplomatic skills to put pressure on the Obama administration for a swift end to DEIP.

“The American taxpayer is stumping up US$2,020 per tonne to buy skim milk powder, which is up $US300 on previous support levels and US$2,880 per tonne for block cheddar cheese, up $US400 on previous support levels.

“American dairy farmers cannot moan about export prices when US government is buying some 68,000 tonnes of skim milk powder and 34,000 tonnes of cheese.

“On top of that, the United States Department of Agriculture has ‘given away’ almost 91,000 tonnes of surplus skim milk powder to schools, food banks and other public programmes.

“To put that into perspective, the last GlobalDairyTrade event in July priced the whole milk powder that New Zealand predominantly exports at US$1,829 per tonne.

“Even the dinosaurs at the US National Milk Producers Federation were surprised at the new support levels. Federated Farmers view is that the US government should now take DEIP off the table if they intend to offer internal price support as well.

“It’s a worry that in the land of the free, farmers are being treated as if they were car manufacturers. The reality is that the US dairy industry needs to consolidate but these subsidies are only prolonging the ultimate day of reckoning.

“There is an outside risk that with the new subsidy that it might affect whole milk powder prices. This is by putting a glass ceiling on prices as skim milk and whole milk powder prices are relative to one another.

“Yet this cornucopia of US subsidies underscores why Federated Farmers is rightly wary of emission reductions applying to food production. Given New Zealand farms without subsidy, is it really conceivable that European and American farmers won’t receive subsidy support to meet any ‘climate change’ costs as well?” Mr McKenzie concluded.