KTG Energie flagged the potential for farmers to grow crops for both food and energy use even as pressure mounted over the production of biofuels, given the elevated prices of grains.

The German-based group, which turns crops into electricity, said that it would lift the use of second-crops, planted after summer harvest, in its generators, which create power from burning gas created from breaking down plant matter.

The group already sourced 60% of its biomass requirements from millet and Sudan grass, which are "particularly well suited" as these so-called "intercrops".

The increased use of these follow-on sowings "opens up new earnings potential" for farmers too, said the company, which is controlled by farm operator KTG Agrar.

"They can first cultivate grain for the production of food. After the summer harvest, intercrops are sown and harvested just before the first frost and then delivered to us," Thomas Berger, the KTG Energie chief executive said.

"The result is healthy food and clean energy from the same field."

Second crops have historically been more common in the US and in particularly South America, where the follow-on crop of corn, after soybeans, is believed by some commentators to have surpassed production from the main corn harvest in 2011-12. 

'Not in competition with food'

KTG's comments come amid an enhanced debate on the morality of growing energy crops, given the succession of weather setbacks to farmers from Kansas to Krasnodar which have sent prices of the likes of corn and soybeans to record highs, and lifted values of major food grains such as wheat too.

The European Commission on Monday revealed plans to cap at 5% the proportion of crop-based fuels which can be used to meet the bloc's gasoline and diesel needs.

The commission said that its "message for post-2020 is that our clear preference is biofuels produced from non-food feedstocks, like waste or agricultural residues such as straw".

"These new types of biofuels are not in competition with food, nor do they require additional land."

The United Nations Food and Agriculture Organization has also urged limitations on biofuels.

Acquisition plans

KTG Energie said that its operating model could be transferred to rival operators' biogas plants.

Indeed, the group was considering boosting its capacity "not only through organic growth, but also through takeovers".

The comments came as the company said that, even without acquisitions, its expansion in generating capacity looked set to beat by at least 10 megawatts (MW) a previous target of 50MW by the end of 2015.

The group's flotation in June "has strengthened our financial foundation even further, which will allow us to expand our production capacity more quickly than originally planned".

Profits fall

KTG unveiled sales up 51% at E8.9m in the first half of 2012, although earnings fell by some two-thirds to E0.1m, depressed by one-off costs including those of the IPO.

Capacity additions would see improvements in both sales and earnings in the second half of the year.

In Frankfurt, shares in the group touched E14.85 on Tuesday, their highest since flotation, before retreating to close at E14.68, a gain of 0.2% on the day.