The spiralling cost of food in Europe is set to bring an unexpected €1 billion bonanza for farmers in the developing world - thanks to an unspent EU budget normally reserved for grain mountains and wine lakes.

For the first year since the Common Agricultural Policy became a byword for costly handouts to European farmers, almost none of the money budgeted by Brussels for overproduction will be used to buy up unwanted crops.

With European farmers able to sell their produce at market rates and freed from the need of an EU safety net, Eurocrats were left scratching their heads over what to do with the money, amounting to €750 million (£594 million) this year and €250 million next year.

It could have been taken off the amount that member states pay into the EU in future years. Britain makes a net contribution of more than €4 billion, which could have been reduced by at least €50 million next year if the unused money for surplus crops was redistributed.

Instead, next week the European Commission will announce details of a plan to send the unspent cash to farmers in Africa and other impoverished parts of the world to help them to cope with food shortages.

The money will buy seeds, fertilisers and equipment designed to stimulate production in areas where the pressure to export - or grow crops for biofuels instead of food - has created local shortages and the risk of famine.

Mariann Fischer Boel, the EU Agriculture Commissioner, will announce the plan on Tuesday but may face opposition from some of the European countries that would have stood to gain a cashback benefit from the unspent budget, notably Germany, the EU's biggest contributor. However, the plan is understood to have widespread support among agricul-ture ministers, who will make the final decision.

Mrs Fischer Boel said: “There are those countries who are food exporters and can take advantage of food exports to improve the economy of their own country. But those who are net food importers are in serious trouble.

“Within the European Union, we will come forward ... with a package to make possible for the net food importing developing countries to get money for seeds and for fertilisers to improve their own production facilities.” A spokesman for the British Government said: “We have always been supportive in investing more in agricultural sectors in the developing world.”

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