Dairy Trade Protectionism: Dairy protection fight ends in ‘draw’
November 2nd, 2009
A 50% rebound in dairy product prices from their lows may achieve what diplomacy failed to – taking the wind out of export subsidies for farmers in the US and Europe. Trade Minister Tim Groser says “It has taken the heat out of the issue. There’s an uneasy equilibrium with the Americans and the Europeans. It’s a draw – nobody won.” The European Commission last week cut export refunds for butter, whole milk powder and skimmed milk powder, citing rapidly rising world prices.
Fonterra’s 17th online auction of milk powder kicks off this week, with the potential for a fourth straight month of price gains from October’s 13-month high. Since last month’s sale, prices at a United Dairy Farmers milk auction in Northern Ireland have jumped 18%. Groser says milk subsidies are still “stuck in the mud, but thank God international dairy prices have risen.” He says a “very strange paradox” faces NZ with the worst downturn in 70 years and yet “the opportunities have never been better.”
The Malaysia FTA may lay the groundwork for a broader accord with southeast Asia, adding to the agreement with China and potentially one with Hong Kong. Then, there’s open access to Aust, where Treasury secretary Ken Henry is heralding an era of unparalleled growth. The battle for hearts and minds in Europe will take longer. France has unveiled a huge aid package for farmers, blaming the crisis in the primary sector on “a lack of European and global regulation.”
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