More on Ag Boom...

Sorry for my silence (the weather has been too good to spend time on my computer!).

Anyway, I read a very interesting article in The Economist. It argues that the recent increase in food prices is different than the previous ones! In the past food crises were local and typically caused by a disruption in the supply (droughts, political issues, etc.). But this time, the “main” cause has been the significant increase in demand (emerging countries, ethanol, etc.). The article continues that the only solution is to PRODUCE MORE, and more efficiently. And that is not easy. It takes time and investment. Means better agricultural machinery, better fertilizers and more research (e.g. GMO).

Therefore I am in favour of investing in the sector, although the prices have increased a lot recently.

Regarding the previous post, I noticed the wheat prices have dropped recently while other stuff like rice has been going up a lot (see image). Any idea why? In that sense, I like POT more than VT or any particular product. Fertilizers are needed for all products and all countries, so POT provides a kind of diversification.



Also a friend of mine who has studied Agricultural engineering highly recommends DEERE CO (NYSE: DE), as a healthy and well established company. More food requires more machinery (just like fertilizers)! If you are interested in DE I can research this more.

Of course, other safer, alternatives are agricultural ETFs like COW (in CND) or MOO (in USD).