As countries become more industrialized, their citizens consume more protein. Rising incomes enable consumers to move up the food chain and eat more grain-intensive foodstuffs, like milk, meat, and eggs. And that, says Dylan Grice, an analyst at Societe Generale, is exactly what we’re seeing in China.
The Chinese, on average, eat 117 pounds of meat per person per year. That’s up from just 55 pounds per person in 1995. Americans consume 210 pounds per capita per year.
It takes 16 pounds of grain to produce one pound of beef. So to supply China with enough meat for them to eat the same amount as we do would require an increase in worldwide grain production of 277 million tons! And the Chinese aren’t the only ones eating more protein. It’s happening all over the developing world.
That’s one of the reasons grain supplies are tight. And grain prices are already high and vulnerable to a correction.
We’ll be keeping readers of our new Sound Profits advisory posted on when it makes sense to buy grain or a grain-based ETF. Meanwhile, it’s a cinch that with prices high, farmers everywhere will be trying to grow more grain.
That’s where the investment opportunity is right now says Steve McDonald, a contributor to Sound Profits. Big profits lie ahead for companies that provide the wherewithal to do just that, especially fertilizer companies. (Steve’s latest fertilizer pick is up 14 percent since he since he recommended it in June.)