Milk quotas should be scrapped, Mariann Fischer Boel, EU agriculture commissioner, told a European Dairy Association meeting this week.
Her comments offer the strongest signal yet that the Commission will propose to end the milk quota system as part of next year's dairy industry review.
"In my opinion, quotas do not sharpen competitiveness; they stifle it. They should go," Fischer Boel told delegates.
"The Single Farm Payment unties farmers' hands to produce what the market wants. Should we untie their hands but keep their feet tied up with production quotas? Surely this is inconsistent?"
Many in the European dairy industry agree with her views, believing quotas are losing their relevance.
They also cost the industry money. The European Commission said nine member states faced a collective fine of €377m for producing more milk than they were licenced to during the 2005/06 financial year.
But there is considerable debate over how and when milk quotas should be dropped. The current system, now 25 years old, is set to run until 2015.
Abolishing milk quotas is likely to help larger dairy producers and processors to expand, speeding up the consolidation trend within the sector, said a report by Siemen Van Berkum and delivered to the World Dairy Forum event last autumn.
The report also speculated that phasing quotas out as early as 2009 may help larger firms become more competitive, although this would further reduce milk prices paid to producers in the short term.
Fischer Boel said this week that milk quotas could be expanded before being phased out.
"A quota expansion could make sense. If we are planning to untie farmers' feet (to use my earlier metaphor), should we not first loosen the rope a little, to help them get used to the idea of full mobility?"