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EU says Italy farmers must pay 1.4 billion euros in milk quota fines

BRUSSELS (Reuters) - The European Commission on Thursday ordered Italy to collect 1.4 billion euros (1.2 billion pounds) in fines from dairy companies for exceeding EU milk production limits over a period of 15 years, money the government has already paid to the bloc.

Workers prepare an area for the milking of water buffalo, used in the production of mozzarella cheese at a farm which had been deemed safe by Italian agricultural authorities, in the Campania region town of Caianello March 27, 2008. REUTERS/Stefano Renna/Agnfoto

The EU’s executive said its demand was intended to ensure that Italian taxpayers did not end up footing the bill.

“We are applying pressure to make sure that this money is returned to the Italian state, because they are the ones losing out,” Commission agriculture spokesman Roger Waite told a regular news briefing in Brussels.

“All other milk producers in Europe have followed the rules, so we cannot make an exception for some producers in Italy. If necessary, we will take the case to the European courts.”

The Commission gave the Italian authorities two months to respond.

The case centres on fines imposed on Italian dairies between 1995 and 2009 for exceeding strict annual EU production quotas, fixed under the bloc’s common agricultural policy (CAP).

The quota system was introduced in 1984 to limit chronic overproduction in Europe, which had resulted in the accumulation of unused “milk-lakes”. Producers that exceed their quotas are required to pay excess levies, currently fixed at about 28 euros per 100 kilos.

EU milk production quotas are to be abolished in 2015.

Many small Italian dairy producers have paid back what they owe under a national scheme to collect the fines in instalments.

But around 800 producers have mounted legal challenges against the fines, EU officials said, adding that they want the Italian authorities to use the courts to force the companies to pay up.

Reporting by Charlie Dunmore; editing by Jane Baird