This study provides the methodology to measure competitiveness and an assessment of the European dairy industry’s competitiveness and innovativeness. Several studies on competitiveness of industries are weakly theoretically founded, descriptive of nature or do not provide an overall assessment of all indicators used. This study provides an integrated and quantitative approach. The EU dairy industry competitiveness turned out to be weak. Policy projections show that modest improvements for the EU are possible by abolition of the quota system. A unique database on innovations in the dairy industry has been compiled. The number of innovation per firms’ size classes follows the production value and employment. Small firms are as innovative as large firms measured as innovation per billion turnove
