Legendary investor Jim Rogers has long been a fan of agricultural assets and companies along with a number of other hard assets. His hard-nose investing theory has payed off quite handsomely, as his name has become renown around the world and investors hang on his every word. Unfortunately, his words as of late paint a relatively gloomy picture for the overall agriculture industry, as he feels that it will soon fall on hard times [for more agriculture news and analysis subscribe to our free newsletter].
The first thing that Rogers points out, and has been pointing out for quite some time, is that the world is short-handed when it comes to farmers. “The average age of farmers in America is 58 years old. In Japan, the average age is 66. In Australia, it’s 58. Hundreds of thousands of Indian farmers commit suicide every year. It’s a disastrous business. In the U.K., the highest rate of suicide is in agriculture. It’s been a horrible business for 30 years. Prices have to go up – have go to up a lot – or we’re not going to have any food at any price” Rogers stated earlier in 2012.
The recent U.S. drought brought his comments back into the limelight as he pointed out that while this drought was very serious in nature, it is only the surface of much deeper-seeded issues that will need to be dealt with soon. As it currently stands, the agriculture industry is doomed unless something changes. Rogers feels that if more people do not turn to farming, prices will simply skyrocket and eventually hurt the consumers. It seems like spiking prices may be the only way to way to entice more people into farming, as Rogers has also noted on several occasions, more people study public relations in the U.S. than go into farming [see also Invest Like Jim Rogers With These Three Agriculture Stocks].
But just because things are looking dismal for the industry itself does not mean that there is not a great investment opportunity at hand. Below, we outline several options that have the potential to benefit from the coming pinch in the agriculture world.
- Market Vectors-Agribusiness ETF (MOO): This fund invests in a wide variety of agricultural companies, including Monsanto, Potash, and Deere. This fund could go both ways as far as performance is concerned; the lack of farmers and the supply glut could put a major pinch on the profits of these firms, but these companies may also be able to upcharge their products if food prices soar, allowing them to perform well.
- DB Agriculture Fund (DBA): This futures-based fund invests in a wide variety of agricultural contracts to give you an all-encompassing exposure to the ag world. If food prices are set to soar, DBA will likely be the best way to take advantage as the very commodities this product invests in will see a massive spike in price [see also Jim Rogers Says: Buy Commodities Now, Or You’ll Hate Yourself Later].
- Rogers Intl Commodity Agric ETN (RJA): Of course if all else fails you can simply invest in the ETN based on the Rogers International Commodity Index. The fund invests in a basket of 20 different futures contracts, with the biggest allocations currently dedicated to corn, wheat, and cotton.