EU Export Refunds Likely to Depress Market and Slow Recovery

Mr Wickham said the EU had made a commitment to abolish export refunds in the context of the Doha Trade Round and this latest announcement by the Commission underlined the importance of the conclusion of the Round.

19/01/09 Fonterra, the world’s largest dairy exporter, has expressed concern at the European Union decision to reintroduce export refunds for its producers – saying that the move could further depress dairy commodity prices and slow the recovery.

Fonterra’s Managing Director GlobalTrade, Kelvin Wickham said the sharp decline in international dairy prices over the past year was impacting producers globally, not just in the EU. Any regional subsidies or intervention had the potential to distort the market and signals to milk producers.

“We are deeply disappointed by the news from the EU that it will reinstitute export refunds. We do acknowledge the considerable pressure on producers with lower prices and the credit crunch”.

“However, any move to subsidise producers there with export refunds by the EU will put pressure on the world market at a time that is already difficult for dairy exporters everywhere and will potentially delay recovery of the market to more sustainable price levels,” Mr Wickham said.

He said it would be important to wait and see how the EU utilised the available mechanisms.

Mr Wickham said the EU had made a commitment to abolish export refunds in the context of the Doha Trade Round and this latest announcement by the Commission underlined the importance of the conclusion of the Round.