by Tim Whiteley
The world’s population is now more than 7 billion and continues to grow by 82 million a year. During the last half-century, the total number of people has more than doubled. Between 1960 and 2010, the world population rose from 3 billion to 6.8 billion. In other words, there has been more growth in the last 50 years than the previous 2 million years that humans have existed. Currently the rate of increase is 1.2 percent per year, which means we are on a trajectory to double again in 58 years.
The extreme growth in human population – now counted by an additional billion people every 12 to 13 years — is taxing the earth and its resources. Some of that growth may be relatively less damaging than others, but none of us are without an ecological footprint. Everybody needs basic resources but almost all of us aspire to utilise significantly more resources than are required by our basic needs. These needs and aspirations are multiplied by a factor of 7 billion, affecting the stability of the planet’s ecosphere, states the Population Media Centre.
Food Demand and Production
Putting food on the world’s tables is a serious business. The United Nations’ index of global food prices hit a record high recently. There have been riots over rising food prices in Algeria and Tunisia. In Sri Lanka, the army has started buying up vegetables from producers and selling them at low prices to ensure locals can get affordable meals. And prices in our own shops are reflecting a surge in world demand for essentials ranging from beef to wheat. British food costs rose by 5.5 percent in the year to November, according to the latest official inflation figures.
Some of this increase in prices reflects short-term shortages after poor harvests and the effect of commodity speculators. But there is also a longer-term trend of rising prices as consumers around the world want better, more protein-rich diets.
Investing in companies that help meet a growing demand for food and farming products could prove both ethical and fertile for investors. It takes 7 pounds of grain to make 1 pound of beef and 4 pounds of grain to produce 1 pound of pork. As the middle class in the emerging world gets richer, there is a greater demand for meat and hence for grain and feed. Similarly, higher wealth is boosting demand for agricultural products ranging from cotton to coffee. One option for investors is to join the speculators and try to profit directly from the growth in commodity prices, but this is risky. Many feel that following the agricultural theme by investing in shares of agricultural businesses is a better option than the unpredictable and volatile commodity futures markets.
Specialist investment funds are open to investors. These funds invest in companies worldwide that are linked to agriculture such as fertiliser producers and farm machinery manufacturers. Some also invest in firms that are further down the food chain, such as processors and even consumer food companies.
Farmers have to invest in higher-yielding seeds and use more machinery and fertiliser to boost production. One fund has a narrow focus on buying into companies that are directly involved with agriculture. Their fund price has returned an annualised 9.5 percent since 2007.
Some like a broader base, looking to invest “from field to fork”. This means the portfolio can include food processing companies and even some infrastructure investment. One fund’s price is up 17.7 percent for the year ending March 31, 2013.
Important Note – This article contains general information only and is not intended to be taken as specific financial, investment, or tax advice. A personal analysis should always be obtained.
Tim Whiteley of IFA International has over 25 years as an IFA, advising international investors and expatriates, both onshore UK, and offshore in Asia. With offices in Bangkok, and regular client visits to Pattaya, IFA specialises in wealth protection services, offshore trusts, QROPS UK pension transfers and QNUPS, creating tailor made investment solutions for individuals around the world.
IFA International does NOT provide discretionary portfolio management, securities advice, forex trading, or local brokerage/insurance products. The services that IFA International Group provides are for international investors and expatriates only and are not applicable to local nationals. This is NOT a solicitation to sell or market securities. Questions to the author can be directed to: firstname.lastname@example.org