The European Court of Auditors has expressed dissatisfaction that the EU's butter subsidies, introduced in 1969 as a temporary measure, have become permanent even though milk quotas were adopted in 1984.

In its annual review, the Court calls on the European Commission to reduce the costs of disposal measures and to consider structural measures to encourage demand for non-subsidised butter or limit its supply.

The Commission should revise the present tendering procedures and aid should be " progressively reduced and concentrated only on quality non-imported butter-fats used for products where it is likely that additional demand will in fact be created," says the report.

At present only 65% of available butter in the EU is sold at market prices. The remainder is subsidised for use in processed food, for direct consumption by consumers and for sale to institutions and non-profit organisations.

Altogether 500,000 tonnes of butter are involved, costing the equivalent of £360m annually.

By Alan Osborn