The dairy sector faces a period of significant changes. In addition to the enlargement of the European Union to new member states, the Luxembourg reform in June 2003 and the WTO international negotiations, more and more countries are in favor of milk quota removal. The objective of our works is to explore the impact of possible EU dairy policy reforms in this new context. More precisely, we analyse the effects of gradual and significant increases in European milk quotas on milk and dairy markets as well as on producers’ revenues and on EU economic welfare.