Want your wealth to grow? Then, own something that grows. U.S. exports of agricultural products this year to September were almost $62 billion. That represents a 22% increase over same period in 2006, and more than the entire year of 2004. How many industries are experiencing that type of growth? International agricultural trade for U.S., exports plus imports, was almost $115 billion, a 16% increase over 2006. Little wonder those involved in Agri-Foods are prospering. That growth is driven by income growth in China and other nations. How about more people? 70 million will be added annually to world's population, and China will grow 16 million a year. Higher incomes and more people are driving up prices and prosperity in Agri-Food sector. As chart shows, prices of Agri-Food commodities are doing far better than the equity markets, and helping Agri-Food investments.
Regardless of what Federal Reserve, Bank of Canada, or any central bank does with interest rates, people are going to eat. Consumers in China and Russia will be buying food tomorrow, whatever happens to interest rates. Almost humorous is buzz over such matters, and other trivia. Why worry about mortgage mess? Let others chase their tails in financial stocks. Why be impacted by whether WaMu pays a dividend or lays of workers? None of those events have anything to due with global demand growth for Agri-Foods. When one discovers a structural investment opportunity such as Agri-Foods, investing gets a lot easier. We know not whether WaMu will exist five years from now nor care, but we do know spending by Chinese consumers on Agri-Foods will be a larger.
AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View, a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review a recent issue write to firstname.lastname@example.org.