The European Commission released a detailed report today (7 April) that says gradually raising quotas in coming years will allow the EU's dairy industry to expand sustainably.

However, an abrupt expansion of production quotas (earmarked for abolition in 2015) would so expose some weaker dairy companies to tough competition that they could collapse.

The paper was drafted by the Institut d'Economie Industrielle, in Toulouse, southern France, and follows a speech by EU agriculture Commissioner Mariann Fischer-Boel also recommending steady expansion.

"From an efficiency viewpoint the 'hard landing' scenarios benefit low cost (competitive) producers, but the costs of adjustment, such as exit costs, might be higher," said the report.