Commission aims at preventing unwelcome slump in export volume EU increases subsidies to offset the strong euro After intensive lobbying by dairy traders and exporters, the EU Commission agreed at the end of last week to make big increases in export subsidies to offset the effects of the rising value of the euro. Most international dairy trading is carried out in US dollars and, since early May, the dollar has fallen 8%. This has made exporting dairy products from the EU totally unprofitable and has led to demands that export subsidies should be increased to maintain the competitive position of EU exporters. The EU has now agreed to increase the export subsidies on skim milk powder by 19%, on whole milk powder by 12%, on butter by 6% and on cheese by between 7% and 11%, according to destination. These increases will not necessarily mean EU exporters will gain any additional business but it is aimed at preventing an unwelcome slump in export volume. At the same time, Brussels is trying to reduce the costs of supporting the SMP market. Normal intervention buying was suspended in mid June and a tender system has been introduced for those wishing to sell surplus powder into public stocks. The first tender on June 27 accepted 6,700t at a price 1.5% below the normal intervention price and the second tender on July 11 increased this discount to 2.5% on 6,200 tonnes. This tender arrangement will only be temporary as, following one more tender in July and one in August, intervention for skim powder will then close as normal until March next year. By the autumn it is hoped that lower seasonal output will be more in line with market offtake and prices will be maintained without intervention support. {{CANNED GOODS }}