The Italian government has been told to secure a levy of EUR176m from its dairy producers after allowing them to flood the European Union (EU) market with 617,000 tonnes of excess milk in 2006/7.

The penalty was ordered by the European Commission under a system of national milk production quotas, to be scrapped by 2015. Other countries also exceeded their quotas - albeit at a much lower level that Italy - including Austria, Cyprus, Denmark, Germany, Luxembourg, and the Netherlands and must make smaller levies.

Announcing the charges, EU agriculture Commissioner Mariann Fischer Boel said because of recent EU agriculture reforms, food producers are effectively free to produce for the market and so these "quotas are increasingly an anachronism". She said proposals on scrapping them will come next month.