Biofuels 'have caused 75% food price hike'

Biofuels have caused world food prices to go up by 75 per cent, according to a World Bank report.

A newspaper has seen the figure in a confidential World Bank report which contradicts US government claims that using plants to produce fuel contributes less than 3 per cent to food prices.

According to the newspaper, sources believe the analysis - carried out by a respected economist at the global financial body - has not been published to avoid embarrassing US President George Bush.

The leaked study reportedly concludes that income growth in developing countries was not a major factor in food price rises, while successive droughts in Australia had only a marginal impact.

Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

Biofuels - derived from crops such as corn, rapeseed, palm and soya - as an alternative to petrol and diesel were seen as the environmentally-friendly solution to global warming and rising fuel prices.

The high-profile international issue is due to be discussed by G8 members next week in Japan.

The report also comes ahead of the Government releasing its own report on the impact of biofuels by Professor Ed Gallagher, head of the Renewable Fuels Agency.

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