With world dairy prices in free-fall administrators in the European Union and United States have reverted to export subsidy programs in a bid to offer some protection to their beleagued dairy industries.
But just how that will help world markets remains a mystery since it gives those with export product the ability to undercut prevailing market rates to guarantee sales preference, helping chase prices down even further.
New Zealand and Australia which together account for about 40pc of world export volumes can only be losers in this process since neither operate with the benefit of government underwriting.
A feature of the world market in the past few years has been the absence of significant stockpiles of dairy commodities in the EU and US and that has helped drive prices up as surging world demand had to be met from current production.
European Union Commissioner for Agriculture Mariann Fischer-Boel announced at the Green Week conference in Germany last week that export refunds for milk were to resume.
Farm lobby groups across Europe have been pressuring the Commission to reintroduce refunds for dairy products to help offset falling prices in internal dairy markets.
EU export refunds for dairy products were discontinued in June 2007 when dairy commodity prices soared.
They will be reintroduced for butter and skimmed milk powder (SMP) and all other dairy products including whole milk powder and cheese that were eligible in the past.
The subsidies will be available, commencing this week and intervention buying of butter and skimmed milk powder will also be kept open longer than usual to absorb more product.
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