Agriculture ETFs For Everyone

By Sham Gad | June 15, 2011 AAA

The best investment candidates are often those supported by a simple, yet compelling thesis. From there, an investor's goal is to ensure he or she pays a good price for the right to own that privilege. After that, the investor has to be able to exercise patience. Together, these conditions significantly increase the likelihood of a positive investment outcome.

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A Simple Thesis
It's a rather straightforward argument that as time passes, populations expand. More so, the emerging part of the world is moving up in the world by becoming more urbanized. These predictions are no secret to anyone. Just look at the history of the United States as it industrialized over the past two centuries. As people urbanize, the need for resources grows tremendously. More cities and better diets increases the demand for copper, steel and agriculture. To me, food is the single most essential resource for society. And the creation of food begins in the soil and on the farm.

A Little Piece of Everything
Rather than trying to pick what company will benefit the most from this long-term demand growth in agriculture, most investors would be benefit by simply owning the Market Vectors Agribusiness ETF (NYSE:MOO). This exchange-traded fund gives investors a little piece of everything along the food chain. It's two biggest holdings are Deere (NYSE:DE) and Potash Corp (NYSE:POT). Deere is one of the world's largest producers of agricultural equipment, providing the necessary tools to turn raw land in agricultural producing land. Potash as the largest fertilizer company in the world, provides the essential ingredients for crop production. In addition, MOO also includes names like seed company Monsanto (NYSE:MON) and grain storage company Archer Daniels Midland (NYSE:ADM). Both of these businesses also provide vital products and services to the global agricultural market.

The Bottom Line
In short, MOO provides great exposure to all facets of the global agricultural market. Whatever turn the economy takes, the demand for food may be the most certain aspect of an otherwise uncertain global economy. Whether its farming equipment, seeds or nutrients, the world simply can not function without agriculture. (For related reading, also take a look at 5 Agriculture Stocks To Grow With.)

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