The Mishna [ avoda Zara 35b] tells us that milk which was milked by an ‘Akum’ [Idol worshippers] , which a Jew did not observe being milked, may not be consumed, but that one may derive benefit from it.
The Gemara explains that we are concerned that some milk from a non kosher species might have been mixed with it
This is the basis for the Rabbinic requirement that the milking process should be supervised by an observant Jew, and milk which has been produced subject to this requirement in commonly known as “Chalav Yisrael.”
Milk produced not subject to this requirement is technically “Chalav Akum” and not kosher.
The Gemara [39b] rules that it is not necessary for the Jew to actually watch the milking process- so long as he is present (sitting down) while the milking is taking place, and able to get up and look at any time, we assume that the people involved will be afraid to mix anything non kosher into the milk in case he stands up and catches them doing so.
On this basis, inspectors for kosher milk to not actually have to watch the entire process, but just have to be present and able to see it when they wish to, so long as the producer are aware of their presence and its purpose.
Once we see from the Gemara that the Mishna’s requirement to ‘watch’ the milking process is not literal and that the important factor is that we are able to assume that the ‘Akum’ is afraid of being caught if he mixes anything non kosher in the milk, there is room to relax this requirement even further, and it is here that things get to be a little more ‘controversial.’
[ All Halacha blogs are summaries of my own learning and subject to further self-editing and user- correction- they are not psak halacha, unless specifically classified as such, and are for the purpose of study and discussion only]