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Source: ONE News
The European Union's decision to revive export subsidies is sending a shudder through New Zealand's dairy industry.
While full details are yet to emerge, it's understood the handouts will take effect from next week.
Trade Minister Tim Groser is worried and says it's a bad signal at such a crucial time for world trade talks. Groser is concerned the move will send a negative signal at a critical time for multilateral trade negotiations.
He says unsubsidised producers in New Zealand will now bear the cost of trade-distorting measures of others.
Federated Farmers vice president Frank Brenmuhl says the decision distorts world markets and indicates that very little thought has gone into dealing with the issues affecting diary products. He says the country's dairy farmers will be limited to the prices the EU is prepared to sell export products for on the world market.
Brenmuhl also says there has already been a huge dip in the value of dairy products.
Fonterra believes the EU's decision will have a detrimental affect the dairy industry worldwide.
Managing director of global trade, Kelvin Wickham, says the move could push dairy commodity prices down even further, and slow their recovery. He says Fonterra acknowledges the considerable pressure on producers with lower prices and the credit crunch.
But he says bringing back subsidies will put more pressure on markets when times are already tough. He says the EU's announcement underlines the importance of finishing off the Doha Trade Round.
