Bullish On Agriculture
August 18, 2011 How many people will we need to feed in the next 35 years? 9,000,000,000. That’s a big number and a lot of hungry mouths. Despite our credit downgrades, gridlock in Washington, civil unrest around the world, natural disasters, and the remake of “Dirty Dancing,” this growing global population must be fed.
Just as unyielding as the sheer population numbers before us, there always will be critics of agriculture. My colleague Paul Rusnak takes on the latest attack in his Up Front column on page 6. These groups see agribusiness as “big is bad” polluters and exploiters of all things good in nature and society. Never mind the whole feeding the world thing — they don’t care. These groups will always be a thorn in our side no matter our outreach and PR efforts. All we can do is accept criticism when it is correct and continue to reach out to consumers in positive ways.
With so many negative headlines and attacks on agriculture that are embraced by the mainstream media, it is easy to get down. But, if you’re in ag, there is reason to be bullish. Jim Rogers is one of the world’s most renowned investors, and he predicts agriculture is the next bull market. He co-founded the Quantum Growth Fund, which returned a staggering 4,200% over a 10-year period for its investors, while the S&P gained only 47%.
Rogers feels so strongly he’s stopped buying gold, which is all the rage, and turned his attention to ag-related investments. “Agriculture prices are still, on a historic basis, extremely depressed,” he says “In my view, I’ll probably make more money in agriculture than in other things.”
And it’s not just Rogers who is bullish on agriculture. Leading hedge funds are investing in all things agriculture and snapping up farmland at a fast pace. Some of these financial wizards have called agriculture the “ultimate safe haven.”
The reason Rogers and others are so confident in bullish predictions about agriculture has everything to do with that big number I started my column with. There is a powerful demand for food, and food shortages are occurring across the globe. Food prices surged in 2007 and riots broke out in Egypt, Haiti, Cameroon, and Bangladesh.
As our population grows, people will be scrambling for food and sometimes even fighting for it. So the challenge for farmers is finding a way to feed this growing world on a shrinking base of arable land. To my “big is bad” friends: Sorry, some utopian world full of backyard communal gardens won’t get the job done.
The scenario in front of us is scary. But what are we to do; throw up our hands and park the John Deere? No, that’s not how farmers operate. Ag advocates have always pushed the “we feed and clothe the world” line so much so that it has become cliché. In fact, we’ve gotten so good at doing just that it has given the “big is bad” critics room to beat their drums. But, population is quickly catching up and outpacing our ability to produce. This presents extraordinary challenges, but also extraordinary opportunities for agriculture. Farmers will rise to the challenge, and in a time of dire need, will get the credit they rightly deserve. Let the critics critique and don’t lose sight of your crucial work.