Margins in tillage and the production of arable crops have been at historically low levels for some time, but the amount of land being devoted to biofuels globally will mean that basic food crops will become more scarce, leading to an increase in grain prices, according to IFA president Padraig Walshe.

While this will be good news for tillage farmers, the expected rise in the price of grain will affect feed prices for livestock farmers.

"The tillage sector is where the margins will be in the future. I think it will increase margins at farm level in that sector but it is likely to have a negative effect on the beef sector margins of livestock farmers as grain prices go up.

I think the scenario in the future will be farmers selling off more livestock and ploughing their land.

It's a trend that is just beginning to start, " he said.

In the past 20 years, 150,000 hectares of land worldwide have moved away from grain and tillage production and it is expected that much of the agricultural land that is currently not in use will be dedicated to the biofuel industry.

"There are 150,000 less hectares of land being devoted to grain production. We don't have too much set-aside in Ireland but there are large areas of land in France and England that are not currently being used. I think you will see them come on stream, " he said.

While Walshe believes the emergency of biofuels is one of the most positive developments in world agriculture, he does not see a future for its large-scale development in Ireland.

"We don't have the farm sizes or the climate to really produce in an efficient way. But if other countries are devoting their resources to it then it does bode well for our produce. The whole thing is an excellent development but the margins involved in it so far would not justify us producing more in the area, " he said.