The European Commission (EC) announced last month that export subsidies to dairy products would be set at zero. The announcement followed a decision by the EU's dairy management committee to eliminate export subsidies to butter and cheese. Export subsidies to other dairy products have already been eliminated.

Export subsidies vary in amount, depending on the market price of the commodity. In 2005, when world prices were low, EU export subsidies to dairy products were estimated at between 1.1 to 1.5 billion euros.

However, market prices for diary products are currently at record highs. The decision to scrap export subsidies is "mainly the result of the extraordinary conditions on internal market and the world market," said the EC in a statement.

The EC also said that the legal status allowing for export subsidies to dairy products remains unchanged, and so they could be reinstated in the future.

Export subsidies to other agricultural commodities, such as cereals and meat products, remain in place. The EU has said it will eliminate all export subsidies by 2013 as part a multilateral trade deal at the World Trade Organization, although that hinges on concessions by other countries.