Wednesday, July 18, 2012

Jim Rogers Says Midwest Drought Nothing Compared to Real Agricultural Threat

Billionaire investor and commodity expert Jim Rogers has been talking about the real risk in relationship to agriculture for some time, and he recently said in an interview that that current effects of the drought in the Midwest portion of the United States will pale in comparison to what is soon to happen in the global farming community.

What Rogers says is the extraordinary risk is the rising demand for food and the dropping ability of farmers around the world to meet that demand.

The problem is, according to Rogers, that the average age of farmers in the U.S., for example, is 58. And there are relatively few young farmers coming up the pipeline to replace these veterans as they age and drop out of the market.

Rogers said this concerning the issue to Business Insider:

"The world faces serious problems in agriculture. We are facing shortages of everything. The inventories are near historic lows so any problem will have an immediate, profound effect. We are facing a shortage of farmers so any problems will turn into even bigger."

For those who may think large farming corporations can step in and take over the operations would be wrong, as you still must have someone that can run the place, which takes a lot of training and experience. Farms aren't run like factories in that way. Farmers must be experts in a wide variety of areas that will affect his farm. That takes time to accomplish; something the world and its growing population won't wait for.

Because of this, Rogers sees agriculture as one of the best sectors to invest in, as the price of food will continue to move up as shortages grow. He sees agriculture in a bull market for many years into the future.

Rogers has put his money wear his mouth is, buying up farmland in Australia with other investors.

He sees that as a key place to start farm acquisitions because of the proximity to Asian markets.

Other than that, Rogers has invested in agriculture mostly via futures.

There are many ancillary business that will benefit from the rise in food prices, including equipment makers and suppliers of fertilizers.

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