Food price inflation in Ireland has been running at almost 22% over the past six years as grain farmers across the world increasingly turn their lands over to cultivation of fuel crops such as rape seed for the production of biofuel and agrohols. The price of wheat, for example, a staple in the production of everything from beer and bread to ice-cream and even meat via feedstock is having a ballooning effect on food price inflation.

Across Europe, wheat prices have almost doubled from 130 to 237 per tonne this year, while recent notifications from North American agricultural authorities have predicted a 20% reduction in overall output as global demand soars in India and China.

Earlier this year the Irish Bread Bakers Association, made up of the four main manufacturers, said it expected an increase in flour prices by as much as 25%.

Six months later, the figure is more like 35%.

Droughts in places such as Australia, Ukraine and Argentina are a also affecting grain prices, while the wet summer closer to home has affected yields here.

"Biofuel production has just introduced a new source of competition into the raw materials necessary for the production of a range of food products from bread and beer to milling and dairy, " said Paul Kelly, director of Food and Drink Industry Ireland.

Kelly said the whole area of biofuels had to be looked at in terms of land use to give perspective on its effect on food prices.

"It's part of the law of unintentional consequences, " he said.

In the US, George Bush's plan to produce 35 billion gallons of non-fossil transport fuels by 2017 to reduce US oil dependency is affecting domestic grain production, and is also having a knock-on effect on beneficiaries of cheap American food aid because less wheat, maize and corn is produced for export.

In Ireland, Kelly expects that government incentives to grow rape seed will have an effect on the local grain economy.

"Farmers, like any business people, will produce what benefits them, " he said.

In France the politicallycharged issue of bread prices is raising awareness of the debate, as biofuels are seen as a cause for the rising price of a baguette. French commentators have been reminding their compatriots that, when bread became a serious political issue in France in the 1780s, it sparked a revolution.

Agricultural analysts in Britain and Ireland are anticipating a surge in animal feed prices this autumn as the wet summer has affected yields because of damaged crops and increased fungal infections.

Deloitte's agricultural analysts in Britain have suggested livestock producers face a 100% hike in grain-based animal feed costs, which will affect meat prices, while long-running droughts in Australia, Argentina and Ukraine are also bumping up grain prices.

Conversely Ireland's wet summer has had an inflationary impact on grain prices: rain-lashed crops are expected to yield poor harvests this week as farmers take advantage of the dry weather to bring in their crops.