Food prices are on the rise, and as economies recover, population grows, and emerging countries grow their middle class, the macroeconomic trends point to a continued rise in prices. If you want to see the effect this has on people, just take a look at one of the drivers of revolt in the Middle East: rising food costs.
Investors who want some exposure to higher food prices have a few ways to play the trend. Three companies that provide seeds, fertilizer, and equipment to farmers are an excellent way to get in the game.
Food giant Monsanto provides the lifeblood for farmers around the world. Its seeds and herbicides make farmers more productive with the land they have by increasing yield. And the company has a research and development pipeline for higher-yielding soybeans and higher-yielding, herbicide-tolerant wheat.
If there's one certainty about a growing population worldwide, it's that we will need more food from less land. And that's right up Monsanto's alley.
Speaking of getting more food from less land, Mosaic provides the plant food to make that happen. Mosaic provides phosphate and potash fertilizers to farmers to increase yield.
And financial results are improving as demand increases. In the most recent quarter, sales were up 28%, gross margin improved 10% to 39%, while volume and prices improved in both phosphate and potash. Additionally, Potash
If there's one thing I learned growing up in the middle of Midwest farm country, it's that farmers like to buy new toys when profits are up. That means new tractors, combines, tillers and any number of products John Deere sells. The faster and more efficient John Deere can help a farmer be the more money farmers can make. Another stock in the same vein is CNH Global
Foolish bottom line
Adding some exposure to rising food prices is a good way for investors to play economic trends and diversify their portfolio. There are lots of companies that will struggle if food prices rise, but these three will be left counting cash at the end of the day.
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