"The idea is that the production of biofuels will take place in degraded lands to avoid competition with food production," Agriculture Minister Ismael Benavides told the Andina state news agency.

Benavides and Peru`s Environmental Minister Antonio Brack agreed to restrict the cultivation of crops destined for biofuels on land currently used to produce food.

Clearing of forested land for biofuel production will also be prohibited.

Last month, President Alan Garcia blamed rising food prices on the global push to convert cropland to the production of alternative fuels like ethanol.

Garcia`s poll ratings have dipped in recent months, and many Peruvians say they are upset by rising food prices.

Copyright 2008 Associated Press