Calderon said Mexico's ability to produce more grain was limited as many farmers abandoned their fields in recent years and fled to the United States to seek work, unable to compete in Mexico with subsidized farms in wealthier nations.

"For years, developing countries, in particular Mexico, faced the problem of very high subsidies in the United States and Europe, and this drove a lot of producers out of the competition in the Mexican countryside," Calderon said.

"This has meant that when we see this rise in world demand for food, the reaction from the supply side is not as fast," he told a news conference, flanked by Merkel.

Calderon criticized the use of food crops in biofuels, and Merkel said rich nations should have seen the crisis coming.

Protests have broken out in dozens of poor countries as low world wheat stocks and rice shortages drive price increases.

Mexico is eyeing a record 2008 corn crop for the second year in a row, Calderon said, but that has not shielded it from soaring prices which sparked street protests last year and are one of several factors fanning inflation.

A small tortilla industry group warned last week that the price of the corn patties could jump 40 percent in the weeks ahead in Mexico, where half the population lives on $5 a day or less, although no such move has been felt yet.

Calderon said his government was pumping money into boosting agricultural output and would also support the poor.

"We are going to multiply and intensify our actions to help the poorest people in Mexico with this sudden price increase."