LONDON (Reuters) - The world needs genetically modified crops both to increase food yields and minimize the environmental impact of farming, Britain’s top science academy said on Wednesday.

The Royal Society said in a report the world faced a “grand challenge” to feed another 2.3 billion people by 2050 and at the same time limit the environmental impact of the farm sector.

The world will have to increase food output by 70 percent and invest $83 billion annually in developing countries by mid-century, the U.N.’s Food and Agricultural Organization said earlier this month.

“The problem is such an acute one, doing that sustainably without eroding soil, overusing fertilizers is an enormous challenge,” said the chair of the Royal Society report, Cambridge University’s David Baulcombe.

“There isn’t a lot more land to use,” he told Reuters. “And from the point of expense and using fossil fuels, we want to use less fertilizer.”

“The food supply problem is likely to come to a head 10, 20, 30 years from now,” he said, adding this didn’t leave much time given the research lead time to develop new crops.

The answer would be a range of approaches from hi-tech genetically modified crops to low-tech management approaches such as sowing grass around maize to divert pests, as well as preserving the diversity of natural, wild crop varieties.

Farming indirectly, including deforestation, accounts for a third of greenhouse gases, say scientists, underlining the problem of increasing production simply by clearing more land or using more fertilizers, the biggest source of a powerful greenhouse gas nitrous oxide.

RESEARCH

Britain had to invest an extra 50 ($82.13 million) to 100 million pounds annually in research to boost innovation in a sector which had lost allure following food over-supply in Europe, the report said.

A combination of changing diets, growing population, demand for farmland for biofuels and high energy prices have stoked food prices and renewed interest in agriculture.

Wednesday’s report invoked the successes of the Green Revolution of the 1960s, but aimed for a more sustainable approach. That revolution had more than doubled food output over 30 years but had also degraded soils in some cases.

The world must develop over the next 16 years through genetic modification and conventional breeding varieties of crops resistant to disease, drought, salinity, heat and toxic heavy metals, the report said.

Progress in DNA-sequencing had made more plant genes available for engineering, improving the predictability of results in a “second generation” GM approach. “We’re looking at a different base than 10 years ago,” said Baulcombe.

A combination of the food crisis and the global economic downturn has pushed more than 1 billion people into hunger in 2009, U.N. agencies said last week, confirming a grim forecast released earlier this year.

The Pressure group Greenpeace said GM crops were a costly distraction from tackling hunger through fighting poverty and helping smallholders in developing countries sell their product.

“Poverty and hunger are the same thing,” said Marco Contiero, Greenpeace’s European GM policy director, who pointed out that the world already produced enough to feed itself, if that were shared fairly and there was less waste.