UPDATE 3-Biofuels major driver of food price rise-World Bank

(Adds industry comment)

By Lesley Wroughton

WASHINGTON, July 28 (Reuters) - Large increases in biofuels production in the United States and Europe are the main reason behind the steep rise in global food prices, a top World Bank economist said in research published on Monday.

World Bank economist Don Mitchell concluded that biofuels and related low grain inventories, speculative activity, and food export bans pushed prices up by 70 percent to 75 percent.

The remaining price rise reflected a weaker U.S. dollar, higher energy costs and related rises in fertilizer and transport costs, he wrote.

An unfinished version of the research that surfaced in news stories sparked a heated debate earlier in July, with trade groups for the ethanol industry calling the 75 percent figure "a stretch" and others saying it confirmed the dangers of current biofuels policies.

The findings by Mitchell, a widely respected agricultural economist, are controversial because they goes beyond most other estimates for the impact of biofuels on rising food prices.

Still, his findings correspond somewhat with the International Monetary Fund, which estimated in May that biofuels accounted for 70 percent of the increase in maize prices and 40 percent in soybean prices.

The Bush Administration, on the other hand, has estimated that biofuel production pushed food prices higher by 2 percent to 3 percent. Hoping to wean the country off foreign oil, Washington has boosted incentives and mandates for alternative fuels made from food crop.