Currently, there are around seven billion people inhabiting our planet,
but that number is forecasted to rise to nine billion by 2040. With
populations rising in both developed and emerging markets,
producing enough food to feed the world's citizens is becoming a
paramount issue. To feed our expanding world, food output will have to
increase by roughly 70% over the next four decades just to keep up with
demand. While all the links along the agricultural food chain will see
robust long-term gains, a value opportunity could be had on the critical
first step of that chain. For investors, there's big money in dirt.
Value at the Bottom
While
most investors tend to focus on the sexier agricultural plays in GMO
seeds, high tech irrigation equipment and pesticides, the boring trio of
phosphate, nitrogen and potash could be the better long-term play.
Various constraints including the lack of available arable land, water
resources and infrastructure place serious pressures on the world's
ability to increase food production. While the various high tech seeds
and equipment will help push back the tide, the fertilizer sector is
poised to do most of the heavy lifting. (more)
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