EU slashes dairy subsidies, murmurs the US will follow

Talk across the Pacific could see the United States government review dairy subsidies just as European Union did late last week.

New Zealand’s Trade Minister Tim Groser welcomed news the EU had scrapped export subsidies for dairy products.

“In response to this market improvement, the European Union has been gradually scaling back its export subsidies since late October. The removal of remaining export subsidies sends an encouraging message to the international dairy market and I welcome that,” he said.

EU subsidies were introduced in January as global dairy prices plummeted.

The United States followed suit in May with a raft of initiatives introduced to shore up dairy farmer incomes.

In August, US dairy farmers received another boost to their incomes when the government fronted up with $US360 million, essentially fixing minimum dairy prices.

The US Department of Agriculture indicted it expected to spend more than $US1 billion on dairy subsidies during this year.

The EU decision to remove export subsidy refunds on butter and butter oil followed a rise in dairy commodity prices.

US dairy analysts are convinced there is more confidence in the dairy industry there.

Three rounds of a US-government sponsored dairy cow slaughter programme designed to reduce milk supply and push up prices was unlikely to be extended.

Western Illinois University agriculture department chairman Bill Bailey said production problems in Australia were also helping to support prices.

Fonterra’s globalDairyTrade online auction system for whole milkpowder has seen price increases of nearly 70% over the last four months to $US3437 a tonne.

The next online trading event is schedule for the early hours of December 2 (New Zealand time).