Is it possible that some European countries are producing amounts of milk way above EU national quotas and smuggling the produce out of the country to avoid penalties?

This, at any rate is the claim of the German Farmers Union (DBV) which says it has been informed that Spain produced 20% over quota in 2001-02, equalling some 1.3 million tonnes of milk, and smuggled most of it over the Pyrenees mountains and into France. The DBV says that currently the Brussels anti-corruption bureau (OLAF) is investigating 52 people from dairies, trade and transport companies in France and Spain in connection with the scandal. Ironically, (unnamed) Spanish MEPs were calling last year in the national press for the dismantling of OLAF, claiming that its investigations were mainly only meddling in national matters!