EC orders Italy to begin collecting back fines on milk

Fines on production quotas could cost farmers 1.4 billion euros

EC orders Italy to begin collecting back fines on milk

Brussels, July 17 - The European Commission ordered Italy Wednesday to start collecting fines that may be worth more than 1.4 billion euros on milk producers and have been accumulating for more than a decade. The EC, which has been pressuring Italy to meet its trade commitments, has claimed that Italian dairy farmers have exceeded European production quotas. The EC claims that between 1995 and 2009, Italian farmers committed quota violations worth an estimated 1.42 billion euros in fines that are still largely uncollected. The EC also accuses Italy of still having no measures in place to collect fines from farmers who exceeded their quotas, despite the EC's repeated requests. Sums due must be directed to state coffers to prevent Italian taxpayers from shouldering the consequences, the EC has said, equating the fines with an illegal government subsidy. It is time for Italian authorities to take action "to recover the incompatible aid plus interest due," the EC said Wednesday. An Italian law that approved deferred payment on milk produced between 1995 and 2002 was rejected by the EC. Such deferrals give producers government "aid equivalent to an interest-free loan that no provision in competition may justify". The EC has also warned that stricter Italian enforcement of EC penalties is important to prevent unfair competition for other European and Italian dairy farmers who respected their quotas or paid fines. The European milk-quota system was instituted in 1984, when EU predecessor the European Economic Community (EEC) decided to control milk production in order to reduce inventory and stockpiling costs due to surplus production. The high cost of warehousing surplus butter and powdered milk weighed particularly on central and northern European partners in the EEC. The European Council of Ministers has determined that the milk-quota-system will end in 2015.

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