Export subsidies cease with immediate effect
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- 15 June 2007
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The EU decided on Thursday to abolish restitutions on all dairy products, a move which means that export subsidies will cease some years earlier than planned.
"We're not surprised about this decision, but it obviously means a considerable loss for us. We're left with one choice, which is to increase prices immediately," says Arla Foods' Vice CEO Andreas Lundby.
The decision to do away with export subsidies was taken by the EU's Dairy Management Committee on Thursday afternoon on the backdrop of a shortage of dairy products in world markets. Australia has been hit by drought and South America by floods while demand is increasing in Asia. The situation has resulted in a strong rise in world market prices over the past two-three months.
"Even so, the trend in prices doesn't make up for the loss of export subsidies. As a result, price rises in the market will occur over the next two to four weeks," says Andreas Lundby who adds that although Arla Foods has not yet decided to raise prices, this is bound to happen before long.
It is Arla Foods' export of butter and cheese outside the EU which will be directly affected by this EU decision. The export subsidies for milk powder was already abolished in late January this year. The Danish dairy industry received DKK 472 million in export subsidies in 2006. This year, export subsidies will total approx. DKK 110 million says the Danish Dairy Board.
Arla Foods is an international dairy company owned by 9,700 farmers from Denmark, Sweden, the UK, Germany, Belgium, Luxembourg and the Netherlands. Arla Foods is one of the leading players in the international dairy arena with well-known brands like Arla®, Lurpak®, Puck® and Castello®. Arla Foods is focused on providing good dairy nourishment from sustainable farming and operations and is also the world's largest manufacturer of organic dairy products.