The report provides processors with an insight into the evolving sources and the potential costs of their supplies.
The build-up of high levels of agricultural products in 2004 is expected to continue to leave the cereal markets in a "fragile" situation over the next three years for producers, with pricing uncertainty as a consequence of the surplus.
The combined impact of high mandatory set-aside, the implementation of the single farm payment and moderate prospects for yield growth would serve to limit production growth.
"In the medium-term, there should be a gradual fall in stock levels supported by further, though moderate demand increases on the domestic market, more favourable conditions on world markets and the better integration of new member states into the single market," the Commission stated.
Under the current status quo policy total oilseed acreage, set-aside and fallow land would slightly increase, mainly at the expense of total cereal acreage. The largest amount of EU-25 cereal production in 2012 would be harvested in northern France, eastern England, northwestern Germany, western Poland and Hungary, the Commission forecasts.
regionally-differentiated analysis of the EU-25 agricultural sector in 2012 u
Meanwhile the EU's meat markets have returned to a more normal situation after the extreme market conditions of the past few years. The current situation in the beef market - where consumption is higher than domestic production - is expected to continue until 2012 period with a further increase in EU net imports.
The medium-term perspectives for the meat sector are positive for poultry and pig meat markets, while beef meat production is expected to decline as a consequence of the subsidy reform and strong competition in the world markets. Overall per capita meat consumption is projected to increase by 2.2 per cent by 2012.
Pig and poultry production and consumption are expected to keep growing over the medium term, though at a lower pace than in the 1990s. The projections do not take into account any of the possible impacts on production and consumption due to avian influenza.
The Commission forecasts that the total number of cattle in the 25 member states will decrease due to the quota-driven structural decline in dairy herd size. The decline will also result from the abandonment of beef meat production in the member states that have fully decoupled their cattle premiums.
In 2012, most of the EU's cattle herd would be located in the traditional dairy producing regions along the Atlantic bow and the North Sea coast and in south-eastern Germany and northern Italy, the Commission predicts.
The biggest suckler cow herds would be found in Ireland, in the French regions Pays de la Loire, Bourgogne, Limousin, Auvergne and Midi-Pyrenees and in the Spanish regions Castilla y Leon and Extremadura.
White meat production is expected to increase further, especially in Denmark, Spain, western Poland, northern Italy, in the French regions of Bretagne and Pays de la Loire and in the German regions of Weser-Ems and Münster.
In the dairy sector the Commission forecasts a decline in the production of butter and skimmed milk power over the medium term as more milk is used for cheese and other high value-added dairy products.
The medium-term projections should lead to a 12.8 per cent growth in EU-25 agricultural income between 2004 and 2012 in real terms.
The uncertainties in the forecast result from current negotiations through the Doha Development Round of trade negotiations and from the risks linked to animal disease such as avian influenza.