Return to dairy subsidies a disappointment - Trade Minister

Federated Farmers and New Zealand's Trade Minister Tim Groser are unhappy about the US administration's decision to reintroduce dairy export subsidies. Photo / Dannevirke News

Federated Farmers is describing the US return to dairy subsidies as a potential catastrophe for New Zealand.

Spokesman Philip York says the American dairy lobby is more interested in protecting subsidies than in exporting on free market principles.

He says the fact that President Barack Obama caved in to their demands is a genuine shock.

Mr York says he honestly thought the age of pork barrel politics had passed.

He says the move takes the world to the edge of trade anarchy.

He wants Obama to explain why his administration is subsidising 92,000 tonnes of American dairy products destined for international markets.

Mr York says the precedent it sets is actually worse than the European Union's decision to go down the same path.

He says the US decision comes at a time when international dairy prices for dairy commodities had started to stabilise.

The Trade Minister is preparing to take on the US administration over its decision.

Tim Groser says he is disappointed.

He says it sends a very negative signal to members of the World Trade Organisation.

Mr Groser says whether the measures are legal or not misses the point.

He says the long term solution is clear.

He says the Doha Round needs to be completed in order to secure the elimination of agricultural export subsidies.

He says export subsidy assistance will have a relatively small effect on income for US dairy farmers.

Mr Groser says it may even prove counterproductive by creating uncertainty and depressing international dairy market prices.

He says unsubsidised producers will bear the cost of the trade-distorting measures.

- NEWSTALK ZB