Latin America, especially the southern cone nations, has very favorable conditions for producing biofuels, two U.N. bodies said in a report released Tuesday.

The Food and Agriculture Organization (FAO) and the Economic Commission for Latin America and the Caribbean (Eclac) said that Brazil, Bolivia, Argentina, Colombia, Paraguay and Uruguay are in the best shape to produce ethanol fuel from sugarcane and corn.

Brazil, Argentina, Peru, Colombia and Bolivia have a lot of potential to produce biodiesel because they enjoy extensive soy and palm oil industries.

In order to counteract the possible negative effect, these governments will have to strengthen coordination in agriculture, energy, environment, trade, finance and tax sectors, said Jose Luis Machinea, Eclac's secretary general.

However, Central American and Caribbean nations are not in good shape to trade biofuel because of a shortage of agricultural land and because their diet is based on corn.

The report, which was released after a request from Brazilian President Luiz Inacio da Silva, also said cost prices of bioenergy production in Brazil are half amount in the European Union and a third in the United States.

"It is important for politicians to design policies which promote and secure the profitability of bioenergy, ensure the benefits reach rural areas, and promote the food stability in the most vulnerable sectors," the report said.

Source: Xinhua