The dairy management committee, which brings together experts from the EU and member states, decided to reduce to zero all refunds on exports of butter and cheese, the last to go.

The decision must still be formally adopted but that process is only expected to take days, said Michael Mann, spokesman for EU Agriculture Commissioner Mariann Fischer Boel.

Dairy export subsidies have been progressively scrapped starting with skimmed milk powder in mid-2006.

This is partly the result of Common Agricultural Policy reforms but "mainly the result of extraordinary conditions on the internal market and the world market," the Commission said in a statement, a reference to higher world prices.

The export subsidies were introduced in 1968 to help EU producers sell on the global market where they were not competitive.

The subsidy was based on the difference between the world market price and the higher guaranteed price in the EU.

The mechanism has regularly been denounced by NGOs in the development field as a tool against the world's poorest farmers.

In 2005 the subsidies reached a record 1.14 billion euros (1.52 billion dollars at today's conversion rate) while world prices were low, said Mann.

Higher world prices have rendered the subsidies unnecessary, handily in line with EU farming reforms.

Technically speaking however, while the subsidies have been reduced to zero their legal basis remains and they could be reactivated in future.

The political decision to scrap the subsidies definitively could be part of major reforms expected in 2013.

The EU Commission has proposed to the World Trade Organisation to scrap all its farm export subsidies by 2013, if other countries, notably the United States, do the same.

Europe is already in the process of scrapping subsidies on sugar, as part of a sector reform.

Fruit and vegetable subsidies are next in line for the chop.

That would leave the subsidies on cereals, beef and pork, chicken and eggs and some processed foods, not to mention the wine sector, though Mann assured that all these together do not represent massive amounts.