Food prices will rise between 20-50% over the next decade,
says a new report jointly published by the U.N. and the OECD. The worldwide frenzy for biofuels and surging demand from emerging markets are to blame.
“Despite record crop planting, demand is even greater,” comments Chris Mayer, who just yesterday added another ag stock to the Mayer’s Special Situations portfolio. “In the last 12 months, the price of corn, for example, is up 60%.”
Yet despite the surge in production, grain supplies are declining rapidly:
“It’s not hard to see how agricultural prices could stay high and get higher,” says Chris. “After all, the surge in demand for biofuels is something that virtually did not exist five years ago. Now, all of a sudden, ethanol production eats up 20% of the U.S. corn crop.
“Either governments back off on their support of biofuels or the price of oil has to come down. Or 2 billion people in China and India have to stop eating. In my view, none of these things seems at all likely in the near term.”
“Despite record crop planting, demand is even greater,” comments Chris Mayer, who just yesterday added another ag stock to the Mayer’s Special Situations portfolio. “In the last 12 months, the price of corn, for example, is up 60%.”
Yet despite the surge in production, grain supplies are declining rapidly:
“It’s not hard to see how agricultural prices could stay high and get higher,” says Chris. “After all, the surge in demand for biofuels is something that virtually did not exist five years ago. Now, all of a sudden, ethanol production eats up 20% of the U.S. corn crop.
“Either governments back off on their support of biofuels or the price of oil has to come down. Or 2 billion people in China and India have to stop eating. In my view, none of these things seems at all likely in the near term.”
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