New figures released by agriculture minister Mary Coughlan in the Dail last week showed a substantial increase in the quantity of biofuels grown in Ireland over the past year, as incentives for farmers and biofuel producers have come into effect, but production is still behind the targets set out in the government's Ministerial Taskforce on Bioenergy's action plan.

In a written Dail answer, Coughlan said domestic rape seed acreage had increased from 12,350 acres in 2006 to 18,500 acres in 2007. A further 1,900 acres of willow and micanthus were planted in 2007.

However, this 50% year-on-year increase in oil seed growth still falls drastically short of the expansion that will be necessary if Ireland is to reach the government's target of replacing 5.75% of diesel oil use with biofuels in 2009. This target would entail turning over 180,000 hectares (around 72,000 acres) of tillage to the growing of biofuel crops, according to Teagasc, the agricultural development agency.

"The latest increase is just a drop in the ocean, and if we were to increase domestic production to reach these targets it would create a lot of other problems like the extra land needed for crop rotation, " said Teagasc researcher Bernard Rice. He has predicted that the government's future target of 10% diesel reduction by 2010 will cost "several hundred million euro per annum, either in excise relief or in increased fuel prices".

Coughlan said new incentives, including a national energy crops payment of 80 per hectare, would boost fuel crop cultivation, and that this would be paid as a top-up to the premium available under the EU's Energy Crops scheme.

Rape is currently selling for around 220 per tonne in Ireland due to increased oil prices, but unprecedented global demand for wheat means farmers have a much greater incentive to grow cereal crops, according to IFA president Padraig Walshe.

"A grant in itself isn't enough to encourage farmers to grow biofuels and there has to be joined-up thinking in government in terms of guaranteeing a market for the produce such as stimulating demand from producers, " he said. Walshe said the German government's policy, whereby power stations guarantee above-market payments to producers of renewable power, should be looked at here.

In Ireland, 25 biofuel blenders across the state receive excise relief on biofuel production and Revenue figures released to the Sunday Tribune show they have enjoyed 7m excise relief since September 2005, with 5m of that figure claimed in 2007 alone.

Rice said there were originally 100 applicants for the scheme which should be expanded if Ireland is to avoid importing biofuels to meet diesel replacement targets. Brazil and Malaysia are the main exporters of ethanol and palm oil.

"If we have to import biofuels we'll end up paying excise duties and that will cost the exchequer between 200m and 250m a year for the quantity they need to meet targets, " said Rice.

Meanwhile the global increase in biofuel crops produced last year as oil prices soared has affected on food prices as more land was turned to biofuel cultivation. Food producer Batchelors said this had forced it to increase its charges to wholesalers and retailers for some of its products.

"Rising input costs in 2007 are being driven by the combination of heatwaves in Europe and the US, and wet weather and flash floods in northeast Europe. In addition, the increase in the production of biofuels has seen crop switching in response to surging international oil prices, " said Kieran Rumley, Batchelors' marketing director.