Investing in Food as a Hedge Against Inflation

28 Mar

Global food prices are still on the rise and “agflation” is a big point of concern all around the world.  As a result, investors are increasingly looking to food and agriculture investments as a tool to safeguard their portfolios during these tumultuous times.

The United Nations Food and Agriculture Organization (UN FAO) reports that the Food Price Index, which measures prices of a basket of agricultural staples and commodities, has surpassed the 2008 food crisis levels and is now at its highest point ever.

Over the past year, there have been dramatic increases in the prices of wheat, maize, corn, soybeans, rice, sugar and cotton – fundamental commodities that people need for basic survival.

The effects of high food prices have been felt worldwide, particularly in the Middle East/North Africa and Asia.  According to the South China Morning Post, high food prices are greatly impacting Hong Kong because it imports nearly all of its food from the Chinese mainland.

Looking past the short-term volatility, many investors have identified the overall upwards trend in food and agricultural commodities.  Investing in both upstream and downstream companies along the entire food supply chain can be a smart way to profit from this global “agflation” trend.

According to major banks and agencies, this trend does not appear to be slowing any time soon. With an estimated 2 billion extra mouths to food, it is predicted that agricultural production will need to increase by 70% over the next 40 years to meet new demand.

This formidable growth in demand provides opportunities for investments across the spectrum – from agribusiness, seed technology, equipment manufacturers and food buyers and sellers to agricultural softs and commodities investments.

Read more of our blog posts about rising food prices and agriculture news


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