By Neil George
The United Nation’s Food and Agriculture Organization (FAO) tracks the supply of and demand for food. And during the past few years, the globe’s hungry have surged in number by a multiple of more than 10 times — from 100 million to an estimated 1.02 billion. This jump means that, with the globe’s population at more than 6.9 billion, around one in six are starved.
But the FAO has an answer. Foreign direct investment (FDI) focused just on food and agricultural production has been soaring more than 300% in just the past several tracked and reported years. Yet the major buildup of investment dollars is just seed capital, as the FAO sees that the world should be expanding that amount over 1,400% just to begin addressing supply and demand inequalities in the markets.
And the heads of the big agriculture technology companies, as well as food producers, are right in step with the FAO, as corporate chieftains are making their call for the world to further embrace GMO (Genetically Modified Organism) technology for expanding food markets. As the head of India-based Jain Irrigation, Anil Jain, stated — it’s not charity, it’s business.
From an investor’s standpoint, supply and demand imbalances are driving food prices higher, as evidenced by the FAO global food index consistently outpacing the U.S. Consumer Price Index (CPI) with a rise of 138% in just the past decade alone.
So, from drought-tolerant seeds to high-performance crops better able to deal with insects and weed threats, the market for GMO products is increasing and continues to be an appetizing investment for your own portfolio.
There are two companies that you should focus upon first to allow the food market to be to truly bountiful for your portfolio.
The first is Bayer (BAYZF), which I’ve been following and recommending for as far back as 2003. Since then, the stock of this major agricultural tech and pharmaceutical company has delivered a return in excess of 328%, and it’s far from done.
Far from just its signature aspirin, the company’s agricultural production and protection products, along with the rest of its core mix, continues to pile on the revenue gains year in and year out — even in the recessions and booms and busts of the past many years.
The second company is a hometown favorite of mine, Saint Louis-based Monsanto (MON). This prime GMO development specialist keeps rolling out what the world needs in seeds and support products to make even the most challenged farms boost production.
Again — going back over the years since I first began to recommend this one more than a decade ago — the company’s shares have delivered returns in excess of 796%. And while some pundits were concerned a few years ago about the company’s strategic shift away from bulk chemicals and towards higher value-added GMO products, the past year alone has seen gains of over 32.9% for investors in the world’s GMO seed leader.
Neil George, a contributor to Eagle Daily Investor, is the former editor of Personal Finance and has written for investment journals in the United States, Germany and other countries.