The world is on the brink of a serious food crisis,
according to the well-known financial speculator and commodity
bull Jim Rogers.
Decades of failure by governments to invest in farming
during an era of low prices had led the world with insufficient
capacity to deal with a likely surge in demand for commodities
from both households and investors, Rogers said.
Im worried about the worlds agricultural
situation, he told Emerging Markets. The
world is on a knife-edge. We could have gigantic food problems
Commodity prices will rise whatever happens to the global
economy, Rogers believes. If the recovery kicks in, then demand
for basic foods will rise. On the other hand, if the economy
fails to recover and governments ratchet up quantitative
easing, the extra liquidity will end up in real assets such as
There are shortages of farmers developing, because
farming has been such a horrible business for 30 years. If
things are going to get worse, then prices are going to go
higher, he said. The main reason [for that] is a
shortage of investment for 30 years.
Rogers is an outspoken advocate of agriculture investments
and founded his own index, the Rogers International Commodity
Index. He is involved in two farmland investment trusts.
His comments come in the wake of mounting concern that a
surge in food prices could lead to shortages in the developing
Meat prices are at 20-year highs while lamb has hit a
37-year peak. The price of wheat one of the most
essential foodstuffs is hovering at a two-year high
while sugar and coffee have also posted long-term records.
Seven people were killed and almost 300 people injured
violence in Maputo last month after the Mozambique government
raised bread prices by 30%. The United Nations Food and
Agriculture organization (FAO) last month warned that
unexpected price hikes were a major threat to food
security and recommended further work to address their
root causes, although it played down fears of an impending
world food crisis.
Rogerss comments come as the World Bank plans to use
this weeks meeting to highlight its concerns over rising
food prices. Last month it said that volatility in food prices
has been a key factor behind a rising tide of large-scale
farmland purchases in the developing world.
It said many other governments had been caught unprepared by
the increase in demand and made deals with outside investors
without first clearly recognising existing rights.
Rogers, author of the investment book Gift to My Children,
said politicians who blamed speculative investors for making
money out of higher commodity prices would simply deter
Agricultural prices are going to go up a great deal
because of terrible fundamentals over the past 30 years. We
even have a shortage of farmers.
Politicians will blame the evil speculators, but they
had better kiss investors feet. Without someone investing
and driving up prices, we will soon have no food at any