A Crop of ETFs for Growing Appetites

The global demand for food is rising and companies that help farmers improve crop yields could continue to see strong growth

Alex Bryan 5 November, 2012 | 6:00AM Hortense Bioy, CFA

There is no question about it: global food consumption is growing. By 2050 the world's population is projected to reach 9 billion, up from 7 billion today. The world will need to figure out a way to feed these new mouths. On top of that, diets are improving and an increasing portion of the harvest will be converted into biofuels, which means agricultural output will likely need to double by 2050 in order to meet demand.

Farmers will need to improve crop yields to meet demand because most of the world's arable land is already in use. While advances in technology will likely make this challenge more manageable, companies on the cutting edge of the agriculture industry, such as Monsanto (MON), Potash Corporation of Saskatchewan (POT), and Deere (DE), already provide solutions to help farmers improve their yields.

Commodity Prices and Weather Worries

Agricultural commodity prices have a significant impact on the performance of most agri-businesses because their customers' income and demand for inputs, such as tractors, fertiliser and seeds, are often dictated by these  prices. Yet, commodity prices do not tell the whole story.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
iShares Agribusiness ETF USD Acc26.09 USD1.64

About Author

Alex Bryan  is an ETF analyst with Morningstar.

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