United States ethanol production is reportedly growing so quickly it could inflate corn prices and squeeze livestock producers, according to a US expert.

Ethanol is currently derived from food crops including sugar, wheat and corn.

A Reuters report last week said one-fifth of this year’s corn crop in the US would be used to produce ethanol for use in vehicles.

“In our rush to secure our energy security, we could easily neglect the fundamental need for food security,” Reuters quoted Dan Glickman, who was agriculture secretary during the Clinton administration, as telling a House of Representatives sub-committee on agriculture.

Glickman said US ethanol output could double to 10 billion gallons (around 13.8 billion litres) annually by 2010, pushing corn prices to record levels.

Similarly, the growth of biodiesel production could push up the cost of vegetable oils, according to US biodiesel producers Archer Daniels Midland and Imperium Renewables.

"I think there will be a crimp in vegetable oil supplies in three to five years," Imperium Renewables chief executive Martin Tobias told US news service CNET News.com.

Meanwhile in Australia, a new report by food and agribusiness bank Rabobank concludes that the future of biofuels in this country is bleak, despite these products taking off in Brazil, the US and other nations.

The report, Global Focus Report on Biofuels, found availability of cheap and plentiful feedstock would undermine the future competiveness of Australia’s agricultural sector.

“In Australia, it is unlikely that production of grains, oilseeds and sugar can be increased significantly enough to support the biofuel, human consumption, export and livestock markets,” report author Rabobank analyst Ingrid Richardson said.

“In order to be in the business in the long term, it will be essential for biofuel plants to ensure consistent access to low-priced feedstocks, in addition to offtake agreements for the biofuel that more than cover the cost of production.”

Richardson said a possible solution could lie in the production of biofuels from alternative, non-food sources such as cellulose.

But the report said although cellulosic raw material is derived from readily and cheaply available waste products, cellulosic ethanol production is not yet commercially viable on a large scale.

Similarly, biofuels could be produced from Australian mallee trees, according to various researchers.

Earlier this year, Curtin University scientist Dr Hongwei Wu said the oil mallee tree "blitzed" the competitors during an energy ratio test of biofuel production.

The mallee produced 41.7 times more energy than is used in its cultivation, providing a substantially higher return on energy investment than corn, canola and mustard, which have energy ratios ranging between 5.6 and 10.

Researchers from Monash University in Melbourne are already investigating how to convert the mallee tree into biodiesel.

Project leader Dr Damon Honnery said mallee wood could be super-heated to produce a vapour that could then be condensed into liquid to run diesel engines.

Honnery said the oil was not yet suitable for car engines as the filtering systems were too fine, and it had only been used in a test engine, but he believed appropriate refining process could be developed within the next 10 years.

In Southeast Asia, biodiesel is mostly made from palm oil, but often rainforest is cleared to make way for palm plantations, making the fuel's environmental credentials dubious.

However, petroleum supermajor BP is researching the biodiesel potential of jatropha, a non-edible oil-rich plant.

This drought-resistant crop can grow in marginal land, and may be able to yield much higher amounts of energy than many food crops already used for biofuels production.

A 1982 study exploring the potential of vegetable energy sources rated jatropha as one of the most efficient potential energy crops, second only to palm oil.

Crops such as jatropha and mallee can be planted in marginal land not suitable for long-term production of food crops, where they can not only produce fuel but also fight salinity and assist in soil remediation.