March 23 (Bloomberg) -- On the day the European Union marks its 50th birthday, its farm commissioner said price and market support, for so long a cornerstone of EU integration, could soon be a thing of the past.

In 1957, the EU's founding treaty pledged to boost agricultural output and raise farmers' incomes, promises that would eventually lead to overproduction. Under international pressure to reduce farm spending and keen to pay out less money on price-management systems, the EU is now revamping the farm- support system around which its members rallied for so long.

``We have been spending half a billion euros ($665 billion) every year on distillation'' of surplus wine into vinegar and window-cleaner to keep prices from collapsing and farmers in business, European Agriculture Commissioner Mariann Fischer Boel told Italian farmers today in Taormina, Sicily. ``We have been spending only 14 million euros on promotion; this is wrong.''

From 2003, when EU leaders agreed not to cut farm spending before 2013, regulators began to revamp the bloc's systems of ``market management,'' first for tobacco, olive oil and cotton, then for sugar and now for fruit, vegetables and wine. Market management can include buying surpluses to sustain prices, granting export aid or setting quotas for production and export.

``We should look at many of our market instruments and ask whether they help or hinder competitiveness,'' Fischer Boel said. ``After 2013, we may have to ask ourselves whether their very existence is justified.''

Prices, Profits

Freer EU markets in products such as wine and cereals would have an impact on world prices and company profits. Cuts in subsidies and quotas for the closely managed European sugar market are affecting the margins of companies including Danisco A/S, which on March 20 blamed a 9.5 percent drop in third- quarter profit on reductions in EU export quotas.

Set-aside, a system of subsidies designed to limit excess farm production by paying farmers to stop using a portion of their land, also is a ``policy of the past,'' Fischer Boel said. ``I suggest we get rid of it.''

Production quotas for milk are ``strongly out of line with the modern common agricultural policy,'' she said. ``But we must discuss how to make a soft landing, and I will be willing to look into a slight increase in quotas between 2009 and 2013.''

To contact the reporter on this story: Adam Mitchell in Brussels at amitchell13@bloomberg.net

Last Updated: March 23, 2007 13:44 EDT