Brasilia - German Chancellor Angela Merkel on Wednesday called for cooperation on biofuels in a meeting with Brazilian President Luiz Inacio Lula da Silva in Brasilia, at the start of Merkel's first Latin American tour.

The German leader, who was met with military honours, called upon Brazil to continue to produce environmentally-friendly biofuels, but stressed that they have to be used "in a sustainable way" and cannot be produced to the detriment of the rainforest.

"Biofuels are a path to the replacement of fossil fuels," Merkel said.

Brazil is the world's second-largest producer of ethanol, after the United States, but produces its variant from sugar cane rather than the less energy-efficient corn used by the North American nation. Between them, the two countries produce more than 70 per cent of the world's ethanol.

An agreement for cooperation on renewable energy is at the centre of Merkel's trip to Brazil, but the Roman Catholic Church and environmental organizations have criticized the deal because it lacks sufficient emphasis on the situation of sugar cane plantation workers and on the protection of the rainforest.

Both Merkel and Lula are set to attend the European Union-Latin America and the Caribbean summit on Friday and Saturday in Lima. (dpa)