Mr Mencshelyi says world grain stocks are starting to run out while supplies are shrinking, creating the greatest crisis in 50 years and threatening to curtail the emerging biofuels industry.

"On the one hand you've got the biofuels industry pushing grain prices higher, but on the other, questions are being asked about where the focus should be — energy or feeding the populations?" he said.

"There is evidence in North America that there will be reduced corn plantings for biofuels to be replaced by mainstream food crops.

"But the questions need answering because declining food stocks and higher prices also will affect meat and dairy."

While consumers might be aghast at food price rises, it was CBH's view that the world was feeding itself too cheaply, Mr Mencshelyi said.

"Higher feed prices for producers should translate to higher prices for consumers," he said.

"Either producers get the right price or, for example, consumers don't get milk.

"Bread and meat also are so cheap and I think that by Christmas this year they will cost more."

SOURCE: Extract from Farm Weekly, WA, October 11 issue.