2003 reform: cap reform based on an agreement reached in luxembourg on 26 june 2003, reinforcing the process begun in 1992 (mcsharry reform), and confirmed in 1999 (agenda 2000 reform), which aimed to reduce price support and compensate for this reduction by direct income aid. the 2003 reform introduced the decoupling of aid and conditionality while reinforcing rural development assistance. special report no 14/2009 – Have the management instruments applied to the market in milk and milk products achieved their main objectives? 8 i. milk production is of major importance in the european union’s agricultural economy. more than one million producers supply 148 million tonnes of milk annually with an approximate value of 41 000 million euro at the farm gate. the milk processing sector employs around 400 000 people and generates turnover of 120 000 million euro. milk fat and proteins are put to use in the production of cheese, butter and drinking milk. ii. the eu has put in place a dairy policy which aims essentially to achieve equilibrium on the milk market, stabilise prices, ensure a fair standard of living for producers and improve their competitiveness. the milk cmo, which has been in existence since 1968, has been profoundly influenced by the introduction of milk quotas in 1984. the 2003 reform continued the agenda 2000 programme and marked the beginning of sector liberalisation by weakening the price support mechanism and introducing direct income support. the health check in 2008 confirmed that liberalisation of the milk sector would continue with quotas to be dismantled by 2015. total expenditure for the milk sector rose from 2 750 million euro in 2005 to around 4 500 million euro in 2007. this figure includes an estimated amount for direct aid, which has been integrated in the single farm payment. iii. the court's audit considered how effectively the commission manages the market for milk and milk products with reference to the main objectives of eu dairy policy. summary iv. with regard to market equilibrium, the court concludes that milk quotas have imposed strict limitations on production but that their level proved to be too high for a long period of time compared to the market's capacity to absorb the surpluses. the community had to finance surplus industrial production (butter and powder). for a long time, the community delivery quota had been very marginally exceeded, but since 2004, there has been consistent under-usage of the quota. in the 2007/2008 marketing year the under-usage was the equivalent of 1 % of total quota for the eu-27. the current quota regime no longer really represents a restriction on production except in a small number of member states. measures to aid disposal which aimed at encouraging consumption of milk fat (butter) or milk proteins (milk powder) on the european market have played only a minor role in the last few years. v. as for the objective of stabilising prices, the court finds that the nominal milk producer price varied little during the 1984–2006 period compared with the period before the introduction of quotas. 
8 i. mjölk har en mycket viktig plats i europeiska unionens jordbruksekonomi. mer än en miljon jordbruksföretag levererar årligen 148 miljoner ton mjölk till ett värde av 41 miljarder euro. sektorn för mjölkförädling sysselsätter runt 400 000 personer och har en omsättning på 120 miljarder euro. mjölkfett och mjölkproteiner används vid tillverkning av ost, smör och konsumtionsmjölk. ii. eu för en mjölkpolitik som framför allt syftar till att nå jämvikt på marknaden, stabilisera priserna, tillförsäkra producenterna en skälig levnadsstandard och förbättra deras konkurrenskraft. den gemensamma organisationen av marknaden för mjölk, som har funnits sedan 1968, genomgick en radikal förändring när systemet med mjölkkvoter infördes 1984. i linje med agenda 2000 innebar reformen 2003 att liberaliseringen av sektorn påbörjades genom att prisstödsmekanis-men försvagades och direkt inkomststöd infördes.