Food- where to invest

[imoldernu]

So every problem offers an opportunity. What is your thinking on what area of commodities (food commodities) may increase the most? Where to invest?

Between Avian Flu, the western states drought, the swine disease (PEDV), and the problems faced by the beef industry and of course the depleted fishing industry... what parts of the market will increase to cover the reduced supply of these major food sources?

Soylent green is not an option.

[ERD50]

Lab grown food.

World's first lab-grown burger is eaten in London - BBC News

- ERD50

[splitwdw]

Aquaculture? Hydroponics? A friend suggested I do some reading on both industries. Both have some major drawbacks like waste, energy consumption or power failure but I keep looking at the improvements that are coming.
Fishing for Solid Returns: A Few Keys to Successful Investments in Aquaculture | AquaSol, Inc.

[imoldernu]

Bit off more than I can chew in this subject. ERD50's link included a source that discusses food supply through the year 2050 and beyond. "World Agriculture"
http://www.fao.org/docrep/016/ap106e/ap106e.pdf
Reading material for several hours, but in general, projects world land use and population growth. Enough to make your head swim with numbers that make what we have and do in the US seem almost superflous.
The general projection is that there will be enough land and food, but that shifts in population in different parts of the globe and calories consumed will be marked different from what we see today.

The single caveat is the absence of global catastrophes... war, disease, pestilence. So much for long term. Short term, maybe another story. My guess woud be too early to look at emerging technology for supplementing or replacing the shortages we face today, but longer term, certainly

What started my speculation was the current news headlines about the spread of the avian flu, and the expected rise in chicken and egg prices. Hearing the 30 million hens have been euthanized doesn't really register as much as hearing that one of the three largest poultry farms has been shut down. In egg laying birds alone (estimate 300million) the current estimated number of euthanized birds ranges from 33 million to 60 million. This does not include other birds, such as turkeys. The other part of this is the unseen ripple effect on other foods that contain eggs... so not just the breakfast food. Prices are already rising up to 20%.

Since food represents about 7% of the US family's expense, increases are not as obvious as in other countries... ie. Russian spends 33% of the family income on food at home...China, 21%, and Egypt 44%. Imports and exports work into US markets, so changes may be greater than might be expected when just looking at the US consumption.

The subject of prices is not without contrarians, evidence this Forbes article, thet basically suggests that the market is being artificially manipulated, for short term gain.
Why Bubble Prices In Beef, Poultry And Pork Will Collapse, And How To Profit - Forbes

Whether the media overplays things like the "swine flu" (currently believed to be under control) and the effect of water shortages on California foods... still to be determined... is another major question.

Maybe the idea of "investing" is a little premature.

There is definitely one major area that is not in dispute, and that is the changes in futures markets. Inevitably, balanced on the thin edge of expectations... weather, production anomolies, and industry experts reflect in futures trading. As good as the information may be, no guarantees.

We live in the middle of the Illinois corn belt. Contracts are being signed every day for corn and soybean futures. The prudent farmer has little to lose but the prices will change by the minute over the period betwen now and fall harvest. Not just on the basis of the expected crop, but on the status of each and every part of the food and fuel chain.

Backing longer term technologies is much different than investing in agriculture. Too complicated for me.

Anyone here understand futures well enough to shed light on food as an investment?

[MichaelB]

Quote:

Originally Posted by imoldernu So every problem offers an opportunity. What is your thinking on what area of commodities (food commodities) may increase the most? Where to invest? Between Avian Flu, the western states drought, the swine disease (PEDV), and the problems faced by the beef industry and of course the depleted fishing industry... what parts of the market will increase to cover the reduced supply of these major food sources? Soylent green is not an option.

Venezuelan Beaver Cheese.

[imoldernu]

Quote:

Originally Posted by MichaelB Venezuelan Beaver Cheese.

Afraid not... it's a wholly owned private corporation.

[harley]

I think the best investment would be a chest freezer and shopping the sales.

[Theseus]

Being employed in one or another segment of the food biz from before I got out of high school until retirement last year, an oft-repeated axiom regarding the stability of businesses based on staples was 'everyone's gotta eat.' Worked for me... As far as investments; made a nice bit of change on employee purchase when the business was growing, not so much when things were slow. Paying attention to the merger/acquisition activity of the mega brands is what can pay off for the investor. Incremental gains are made through operational efficiency, with bigger payouts from new technology that can reduce energy consumption and/or labor requirements. Bigger players can utilize the latter more readily, which can make for interesting bidding wars - preventing someone else from gaining an advantage has value too.

[Sunset]

POT.
not the smoking kind, but potash used in fertilizer production, the world cannot support the amount of food needed to grow without it. The need will increase as populations increase, and its needed by every country.

I own a small holding of this as my thoughts a few years ago had been along this line.

[Rick_Head]

POT, AGU, MOS, SQM,

or any of these: https://www.grainscanada.gc.ca/licen...greees-eng.htm

[eta2020]

Water

[Totoro]

Poultry will be a growth market for a while, except in western countries.

It's cheap compared to other (meat) protein sources, very few religions oppose it and many countries still have a while to go in 'catching up' eating more protein.

Whether someone (and who / which company) will become rich as a consequence, I don't know.

Anything else I wouldn't know. People will eat no doubt, what they'll eat and who profits from it, another question. General mills, unilever, p&g and their brethren may be a pretty safe bet though in terms of capital preservation. Also no big upsides to be expected on the other hand.

[target2019]

XLP - SPDR Select Sector Fund - Consumer Staples Stock
Spread the risk out. Many of the companies are involved in food. Sector does well in a recession.

[Totoro]

Thanks for that ticker, will check it out.

I'm considering shifting my individiual stock portfolio to companies resistant to drops when markets go sour and/or interest rates rise.

Consumer staples, tobacco seems indeed the way to go. Maybe dollar stores.

[Edit] Big tobacco seems to be included in XLP, as well as costco and such. Neat ticker for a relatively low expense rate (0.15%)

[John Galt III]

Quote:

Originally Posted by eta2020 Water

+1. I hope it does not happen, but if municipalities allow water to be privatized, seems like the gouge potential is enormous.

[eta2020]

Quote:

Originally Posted by Totoro Thanks for that ticker, will check it out. I'm considering shifting my individiual stock portfolio to companies resistant to drops when markets go sour and/or interest rates rise. Consumer staples, tobacco seems indeed the way to go. Maybe dollar stores. [Edit] Big tobacco seems to be included in XLP, as well as costco and such. Neat ticker for a relatively low expense rate (0.15%)

VDC from Vanguard is better due to lower fees.

[target2019]

I would look at E/R, yield, # of holdings, volume, AUM.
If trades are free, that is a large factor if you DCA.

[target2019]

Quote:

Originally Posted by Totoro Thanks for that ticker, will check it out. I'm considering shifting my individiual stock portfolio to companies resistant to drops when markets go sour and/or interest rates rise. Consumer staples, tobacco seems indeed the way to go. Maybe dollar stores. [Edit] Big tobacco seems to be included in XLP, as well as costco and such. Neat ticker for a relatively low expense rate (0.15%)

Are you familiar with this information at Fidelity?

Sectors & Industries - Business Cycle

I've used the ideas from the table "Sector Performance by Business Cycle Phase" in a portfolio, as a guide to allocation of new money.

There are quite a few interesting reads on various web pages in that area of the Fidelity site.

For your thought,

Quote:

I'm considering shifting my individual stock portfolio to companies resistant to drops when markets go sour and/or interest rates rise.

the table reinforces your ideas.

I have similar interest, and purchased Utilities and Energy at lower valuations (in the wrong cycle). Now I am on the hunt for Consumer Staples. ETF or individual companies?

XLP Consumer Staples Select Sect. SPDR (ETF)
ADM Archer Daniels Midland Company
TJX TJX Companies Inc
PG The Procter & Gamble Company
PPC Pilgrim's Pride Corporation
WMT Wal-Mart Stores, Inc.
KSS Kohl's Corporation
K Kellogg Company

That is a grab bag of companies, I know. Much simpler to pick an ETF or the whole market!

[Totoro]

Hadn't seen the Fidelity information yet, thanks!

I'm quite strongly biased towards tobacco right now (hardly "food", but included in consumer staples). Have some PM.

Telcos, utilities and energy aren't much convincing to me given the underlying technology shifts (e.g. high cost bandwidth auctions, renewable energy), no more business as usual there it seems (across cycles).

Healthcare in aggregate may be smart, individual it looks dangerous. Fortunes ebb and flow pretty quickly it seems. So yes, consumer staples it is then ..

I did buy some stock in a chicken farm in the Ukraine (MHPC), which is more of a contrarian opinion on Ukraine than chicken per se.

[Theseus]

As far as commodities fowl, fin & fur aren't likely to ever be replaced. Although the occasional petri dish substitute is paraded as being 'the answer' to not-quite apocalyptic food shortages, the majority of appetites will continue to vote with their wallets, and providers will continue find a way to get a piece of the action. Portions will shrink in response to price and health related dietary concerns. Mega food wants to stay 'mega' and will pursue larger markets (read that as global), while trying to grow the existing consumer base with convenience in preparation being a key driver. Ethnic variations in food will mirror the changing demographics of the US marketplace.

As I noted earlier, paying attention to mergers and acquisitions can be beneficial to the investor. Last years attempted acquisition of PF by HSH failed only because TSN stipulated it when acquiring HSH. Sensing there was a perceived worth in PF that got away as the bigger fish circled each other, I added PF to my portfolio - it has done nicely since the failed coup. Food stocks seem to generally lend themselves nicely to buy & hold, but it sure is rewarding to pick them up when low. I don't generally care to discuss or pay attention to individual stock picks as it lends to timing and can be self-serving, but I offer this up as an example of the M&A activity that can provide opportunities.