Agriculture Education

Those that follow my work will know I have been bullish on commodities since 2002. In 2003 I held a seminar in London together with respected global investor Jim Rogers where I explained why I was allocating a huge part of my wealth to commodities.

My view has not changed; this still is a commodity bull marketplace and those that don’t have an exposure to commodities are missing out. Just before I address the present situation I was re reading Hot Commodities by Jim Rogers where he states “Warning There will be setbacks, I can’t promise a stairway to heaven. No bull marketplace in any asset has ever gone straight up”

Quite a few forget that all Bull markets have set backs, the stockmarket did not go up in a straight line between 1982 to 2000 it had numerous set backs, but it was a bull marketplace. If we say this bull market began in 2000 and a typical bull marketplace lasts 18 to 20 years then we still have some time to go.

The problem with traders and investors is they tend to have short memories and a tendency to focus on recent data.  Let me give you an example: Monsanto (NYSE:MON) 1 the worlds leading seed gives is up over 473% in the last 5 years, agreed it is down around 40% over the last 12 months – but the trend remains up.

Most investors based in Europe and the USA forget how modest a part of the world we are, and the true growth is coming from China,India and other developing economies. Lets face it the UK, Europe and the USA have had their finest years, they have had their years of growth and consumption, its now time for other countries to lead.

Regardless of what your nationality is and where you live everybody consumes agricultural and soft commodities and will continue to do so. As the global population continues to grow and living standards increase in developing economies so does calories consumed.  Forget about all they hype about a lot more cars, TVs, fridges I am talking about the developing economies trading up from just rice to maybe rice and pork or rice and chicken.

I would guess that 95% of those reading this do not own any agricultural commodities, I see 1000’s of financial advisors and fund managers investing their clients funds in the stockmarket, property, bonds but when it comes to commodities bar a couple of specialise funds, its unheard of to have a holding in commodities. I often hear commodities are “risky” these are the same people that invest in shares which could I remind you are far riskier than commodities, shares go to zero, no commodity has ever gone to zero.

For the last 30 years or so those leaving colleges and universities have aspired to go and work in the service sector and the financial sector as these areas have boomed and supplied the best working conditions and salaries.  Not many folks have left to go in to farming but that could now change.  I see the service sector declining for the next 10 to 15 years, we do not want so several banks, insurance firms, travel companies, restaurants or retailers. These businesses undoubtedly in Europe and USA will have a decade of contraction where as farming will be in expansion mode.

So how do you get an exposure?

The easiest way is still exchange traded funds, you can purchase these via a stockbroker and they can be placed in a pension/SIPP or held in a normal account. Owning the ETFS outright means your no subject to margin calls or leverage.  ETFS Agriculture (LSE:AGAP) and ETFS Softs (LSE:AIGS) would give you a good exposure. Livestock over the longer term ought to also benefit ETFS Livestock (LSE:AIGL)

If you’re willing take a little a lot more risk then investing in agricultural based companies is another angle. I suggest the EFT Marketplace Vectors Agribusiness (NYSE:MOO which has great range of firms involved in fertilizer including  Potash Corp, Syngenta, Archer Daniels Midland, Deere, Monsanto and Yara Intl.