THE HAGUE, Netherlands (AP):

Brazil's president insisted yesterday that crops used for ethanol are not responsible for driving up food prices, and said Haiti, where food riots have erupted recently, could benefit from a biofuel industry.

Luiz Inacio Lula da Silva was speaking after meeting Dutch Prime Minister Jan Peter Balkenende at the start of a two-day state visit during which he hopes to boost Dutch investment in Brazil's biofuel industry.

Ministers from both countries were signing an agreement to intensify cooperation on biofuels Friday.

More profitable

While biofuels produced from plants like sugar cane are promoted as an environmentally friendly alternative to fossil fuels, they also have come under fire for elbowing out traditional food crops in developing countries because they are more profitable.

There also are fears that tracts of Brazil's rainforests could be felled to make way for biofuels or other crops because of the pressure to increase farmland.

The United Nations Food and Agriculture Organisation says world food prices have gone up by 45 per cent in the last nine months, and noted serious shortages of rice, wheat and corn. FAO Director-General Jacques Diouf said in India on Wednesday the demand for biofuels was one of several factors in the price surge.

Ethanol, the hope

Ethanol production "can be the hope for a development model for many countries, particularly in Africa, Latin America and Asia," Silva told reporters.

"Just look at Haiti today. We can see how many benefits we can take to Haiti if rich and emerging countries like Brazil can make partnerships to invest in third countries and produce (biofuels) there,'' he said.

Brazil, which claims to be the world's main producer of ethanol from sugar cane, wants ethanol included in a United States-European Union plan within the World Trade Organisation to cut import taxes on climate-friendly products such as solar panels and wind turbines.