World leaders will meet next week to discuss food prices in developing countries [AFP]

The report's author, a senior economist at the bank, said that contrary to claims by the United States government, increased demand from India and China had not been the cause of rising food prices.

"Rapid income growth in developing countries has not led to large increases in global grain consumption," the report said.

Rising food prices and the use of biofuels, which supporters claim are a greener alternative to using fossil fuel, will be discussed at a G8 summit in Japan next week.

The report estimated that compared with biofuels, higher energy and fertiliser prices had accounted for an increase of only 15 per cent in food prices.

The report said that droughts in Australia have also not had a significant impact on prices.

Biofuels push

It highlighted Europe and the US as being the biggest proponents for the greater use of biofuels, and therefore of having the greatest effect.

All petrol and diesel in Britain has had to include a biofuels component of at least 2.5 per cent since April this year.

In response to the report, Bruegel, a Brussels-based economic think tank, also attacked the use of the fuels.

It said that biofuels fail to contribute to energy security, do not achieve cheap cuts in emissions of greenhouse gases and trigger higher food prices worldwide.

On Friday, the European Union said it would continue to push ahead with plans to see biofuels account for at least 10 per cent of energy used by the bloc's huge transport sector by 2020.

Michael Mann, an EU spokesman, said: "If you don't have targets, you don't make progress [in combating climate change]."

Markets distorted

Friday's report said: "Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate."

It said that the drive for biofuels has distorted food markets by diverting grain away from food for fuel, encouraging farmers to set aside land for its production, and sparked financial speculation on grains.

But Brazil's transformation of sugar cane into fuel has not had such a dramatic impact, the report said.

Last week, Oxfam estimated that biofuels were responsible for driving 30 million people across the world into poverty.

Robert Vierhout, from the European bioethanol fuel association, disputed Oxfam's findings, saying there were undisputed environmental benefits to using the fuels and that they could be used "in a cost efficient way".

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