The world will have an extra two billion mouths to feed in 30 years' time, a challenge biotechnology could help face, the report said. But as yet, little progress has been made.

Instead of improving the nutritional value of staple crops like rice and cassava, industry has developed four main GM varieties: cotton, maize, canola and soya, the FAO said.

The FAO said the poor were missing out because their staples were "orphan crops" not favored by the $3 billion a year spent by business on research into agricultural biotechnology.

"Other barriers that prevent the poor from accessing and fully benefiting from modern biotechnology include inadequate regulatory procedures, complex intellectual property issues, poorly functioning markets and seed delivery systems and weak domestic breeding capacity," FAO head Jacques Diouf said.

EU BLOCK

Six countries account for 99 percent of the total planted area of GM crops: Argentina, Brazil, Canada, China, South Africa and the United States. In many countries, food safety and environmental fears have held back the spread of GM.

The European Union has blocked new GM imports since 1998. Since then it has implemented tougher testing and monitoring regulations and is set to lift its moratorium later this week.

Biotech giant Monsanto announced earlier this month it had shelved plans to launch the first GM variety of wheat after a storm of opposition.

President Bush last year launched a trade suit against the EU, saying its stance was hurting U.S. exports and had also caused African countries to shun GM foods.

The FAO report said concerns about long-term effects genetic engineering could have on the environment were justified and GM crops needed to be carefully regulated to guard against such risks and gain the trust of consumers.

"Scientists generally agree that the transgenic crops currently being grown and the foods derived from them are safe to eat," said Diouf. "Although little is known about their long-term effects."

The report, The State of Food and Agriculture 2003-2004, said Chinese farmers growing insect-resistant cotton showed how developing countries could benefit from GM crops.

Four million small farmers in China grow the crop, which has improved yields 20 percent and reduced China's use of pesticides by one quarter, the FAO said.