New Zealand farmers and politicians on Sunday were disappointed with the United States' decision to reintroduce export subsidies on dairy products.

The U.S. move followed the European Union's reintroduction of export subsidies in January.

Dairy Companies Association of New Zealand chairman Malcolm Bailey said he was frustrated and disappointed with the move, which would undermine confidence in the global market.

It would hurt New Zealand farmers who "rely on the world market rather than subsidies for their incomes," he said.

The world dairy product market had shown some signs of recovery in recent weeks.

"At a time when the elimination of export subsidies remains on the negotiating table at the World Trade Organization (WTO) in Geneva, this is a lousy signal to the global trading system about U.S. intentions," Radio New Zealand quoted him as saying. "The New Zealand dairy industry deserves better than this."

New Zealand Trade Minister Tim Groser said the move was disappointing, a setback and damaging to world markets.

It was a short-sighted response, he said.

"Export subsidy assistance will have a relatively small effect on income for U.S. dairy farmers, and may even prove counterproductive by creating uncertainty and depressing international dairy market prices," he added.

Unsubsidized producers, like those from New Zealand, will bear the cost of these trade-distorting measures," he said, adding that the move sent a negative signal to other WTO members.

He hoped to discuss the issue with U.S. Trade Representative Ron Kirk and U.S. Secretary of Agriculture Tom Vilsack at the Cairns Group Ministerial meeting in Bali in early June.

New Zealand dairy product giant Fonterra's managing director of global trade, Kelvin Wickham, said it was bad news for the market and for New Zealand farmers who competed internationally.

(Xinhua News Agency May 24, 2009)