World food prices reached their highest level ever recorded in January and are set to keep rising for months, the UN food agency said last week (see here), warning that the hardest-hit countries could face turmoil.
Investing in the agriculture sector can help capitalize farms and fertilizer producers, increase food supplies and generate some pretty hefty profits in the process. If your portfolio does not have exposure to the agriculture sector, what are you waiting for?
In its latest survey, the Food and Agriculture Organization said its index, which monitors monthly price changes for a variety of staples, averaged 231 points in January — the highest level since records began in 1990.
This is driven by increasing demand from developing nations with growing populations and also from severe weather conditions in agricultural areas of China, Russia and elsewhere. Lastly, it is being driven by quantitative easing and inflationary policies by governments and central banks worldwide. This confluence of forces has pushed food prices to record highs and the prices are likely to continue much higher, a theme repeatedly warned by legendary investor Jim Rogers over the past few years.
Agriculture Investment Options
The first and most widely known method is using the PowerShares DB Commodity Index Tracking Fund (NYSE: DBA). However, it is my least favorite option. First off, the fund has underperformed other methods discussed below. But there are also moral and ethical implications to investing in this fund. It is based on the Deutsche Bank Liquid Commodity Index
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Kelly Hu Michelle Rodriguez Mena Suvari Georgina Grenville Michelle Trachtenberg
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