If you are a small investor interested in the farming industry, it used to be that you could get into a diversified portfolio only with a great deal of work and preparation. Unlike hedge fund investing or prime brokerage, a small private investor has to perform research independently, and often pay for the privilege. If you are a small investor and want exposure to the entire farming industry, consider BARN, the Global X Farming electronic trading fund (ETF).
BARN invests in companies that are directly responsible for producing the food, clothing, and bio-fuel used all over the world. This is a perpetually-growing industry, due to factors such as population growth, rising incomes in third-world countries, and increasing demand for food. BARN offers instant exposure to agriculture companies worldwide, focused on firms that are involved in agriculture products, livestock, and farm equipment-related manufacturing.
Growth in agriculture is driven by demand. Experts predict record high prices, adjusted for inflation, in the next decade for commodities such as wheat, coarse grains, sugar and vegetable oils. Average meat prices are also predicted to exceed price peaks in the decade that ended in 2006, due in part to lower supplies, higher demand and rising feed costs. As the world begins to pull out of its economic malaise, the consumption of meats relative to cereals is expected to increase, especially in developing nations. Although oil prices fluctuate, their long-term trajectory is higher, putting a floor under bio-fuel prices. Corn and other grains will certainly benefit over the next twenty years.
The urbanization of the third world is leading to increased demand for agricultural products, and the trend is destined to accelerate. Emerging markets drive consumption due to higher incomes and populations – these countries have twice the birth rate of that seen in the OECD countries. Think of it: Indian grain demand would have to increase by 84 percent to reach per capita parity with China. Furthermore, diets in emerging nations will broaden and diversify as income increases. This will put increased demand pressure on livestock and packaged food. Livestock consumption growth will require a concomitant growth in feed crops. The demand for dairy products, especially cheese, will grow significantly in the next two decades. Growth is also being seen in the manufacture of farm equipment in nations like China, Brazil, Russia, Indonesia and India.
The BARN ETF gives investors the ability to profit in many different ways from the explosive growth in agricultural demand. If you are looking for a cost effective, diversified portfolio in this sector, take a closer look at BARN.