Monsanto’s Law Suits, GMO, Commodites and How You Can Profit
A recently published story by independent columnist Lynn Cohen-Cole recently, Monsanto Investigator in Illinois Laughs They Are Doing ‘Rural Cleansing’Â , reports that Monstanto has begun serving warrants on seed cleaners. Though not a well-known profession outside of farming, seed cleaners basically take left over plant material and seperate out the seeds for use in the next season. Because many of these seeds are patented GMO products, farmers are restricted by law from doing this without paying a licensing or royalty fee to the patent owner. Monsanto is targeting the seed cleaners as facilitators of illegal actions.
Whether what Monstanto is doing is ehtical, moral or legal is a discussion for another article.
These recent actions from Monsanto give some insight into the future of food production globally and how the retail cost of acquiring food may be affected. Monsanto is not alone in their actions, as any company who has patented a product is going to claim rights to its intellectural property.
As more small to mid-sized farms come under attack for patent violations, and there are various forms by which this can take place, the more control of food production will shift into the hands of mega food producing corporations.
As a result, we’re going to see more and more farms go under, as well as periphary businesses like seed cleaning. I am not calling for agricultural armageddon here, but the loss of several hundred farms (or the reduction of their revenues through licensing fees) that provide key commodities is going to have some effect on the price of these commodities.
Couple that with the fact that farmers can’t get lending to produce their crops, and you could have a potential blow-up of commodity prices for essential agro products like corn, wheat and soy. This will inevitably lead to higher food prices globally.
Commodity prices are deflated as of this writing. I don’t expect them to stay this low for too much longer. The trend for commodities, as observed by myself and many who i consider to be leading experts, including Jim Rogers, Marc Faber and Peter Schiff, suggests that commodities are a good long-term holding during this economic and financial crisis.
If you are a professional commodities investor, futures is the way for you to go. But those of us who want to reduce our risk, while still generating a nice profit, may want to look into an Exchange Traded Fund that can give us a little bit of protection.
Look into an ETF like the PowerShares DB Agriculture Fund (DBA) (chart)Â which holds equal amounts of corn, wheat, soy and sugar.Â It trades an average of 1 million shares per day and has been around since January 2007. It is trading at $21.52 today, off over 50% since it’s March 2008 high of $43.50.
In addition, you may want to invest in the companies that produce the agriculture, as they will accumulate a larger and larger piece of the pie. An ETF like the Market Vectors Agribusiness ETF (MOO) may be an excellent 0 – 5 year hold. MOO is trading at $29.82 today, off from its mid-2008 high of $66.20. With MOO, you’ll get exposure to the big players in the Food Producers sector, including the actual manufacturers of food and the companies responsible for the fertilization and equipment sub-sectors of farming. The fund holds over 40Â securities, with primary holdings that include Syngenta AG, Monsanto, Potash, and Archer Daniels.
Unfortunately there isn’t much that we as individual citizens can do for the farmers in this country that produce what we need the most. Monstanto (et. al.) has tons of resources and they will do whatever it is they need to do to maintain their superiority and increase market share. There are not many avenues to take in the econimic crisis we are currently struggling through, so finding gems within the rubble is all we have left. Perhaps we can protect some of our wealth and maybe even make a handsome profit.
*Investment Note: This information is for informational purposes only and should not be construed as investment advice. Understand the risks of these types of investments prior to purchasing any stock, fund or other financial instrument.
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Date: January 11th, 2009
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