Top 10 Agriculture Stocks to Beat Inflation and Feed the World
Agriculture stocks are benefiting from some huge trends. That’s why I’m sharing some of the best investing opportunities today. Below, you’ll find a list of the top farming stocks, along with other players in the ag industry…
Top Agriculture Stocks
Agriculture can include farming, equipment, livestock, fertilizers and much more. These stocks cover most of these bases…
- Archer-Daniels-Midland (NYSE: ADM)
- Bunge Limited (NYSE: BG)
- Caterpillar (NYSE: CAT)
- Deere & Company (NYSE: DE)
- Scotts Miracle-Gro (NYSE: SMG)
- Gladstone Land (Nasdaq: LAND)
- Calavo Growers (Nasdaq: CVGW)
- Mosaic (NYSE: MOS)
- Nutrien (NYSE: NTR)
- China Green Agriculture (NYSE: CGA)
I’ve included some company highlights below. But first, let’s look at two big trends pushing agriculture stocks to new highs…
1. Inflation Pushes Agriculture Stocks Higher
In the short-term, inflation is starting to pick up. Government spending and central bank easing is helping to weaken the U.S. dollar and prop up commodity prices. According to Quantitative Expert Nicholas Vardy…
Inflation expectations priced into the U.S. bond market have already climbed to their highest level in eight years. Real assets like commodities tend to thrive in inflationary environments.
If you’re holding cash, your purchasing power is dropping at a faster rate. To protect from this loss, you can invest in inflation-proof companies. The ones that can pass along their increasing costs to customers. And when it comes to food, people need to eat… no matter what the rest of the market is doing.
2. Population Growth and Food Demand
The world’s population is up roughly 300% in the last century. And this means more mouths to feed. As a result, agriculture stocks continue to climb.
On top of that, more people around the world are moving up to the middle class. They have higher discretionary income and can buy higher cost food products. For example, meat consumption in China has soared to new highs.
Raising chickens, pigs and cattle requires even more grains. To keep up with this growing demand – and stay competitive – ag companies have become more tech savvy and efficient. Let’s look at some highlights below…
Ag Company Highlights
Archer-Daniels-Midland and Bunge Limited
Archer-Daniels-Midland is one of the largest agriculture companies in the world. It sources, transports, processes and distributes many products. And corn processing is one of its largest businesses. It converts corn into bioproducts, starches and sweeteners.
Archer-Daniels-Midland is vertically integrated. It uses huge grain elevators, transportation networks and port operations around the world. This is to buy, store, clean and transport agricultural commodities. This scale helps it manage costs to stay competitive.
Bunge Limited is a smaller agriculture stock, but it’s similar in many ways. The company is also vertically integrated. It’s an international soybean exporter and it’s involved in food processing, grain trading and fertilizers.
Caterpillar and Deere & Company
Both of these companies build and sell large equipment. They’re leaders in agriculture machines and also provide for other industries. For example, there’s design overlap with construction machinery. And Caterpillar is more of a prominent brand in that industry.
On the ag side, you’ll find multitask machines that move bales, clean stalls, mix feed and more. There are many choices for loaders, excavators and harvesting equipment. The goal is to help agriculture producers improve productivity.
An important highlight with these companies is automation. John Deere and Caterpillar continue to develop autonomous machines. This saves time and they’re also collecting more data. This helps farmers make better decisions and can improve crop yields.
In the 1800s, Scotts started as a premium U.S. seed company. It’s had a long history and has transitioned into more of a lawn and garden company. Today, it provides a wide range of gardening and pest control products.
Scotts Miracle-Gro has also been expanding into hydroponics and owns Hawthorne Gardening Company. This business serves growers of all sizes, from commercial cultivators to home hobbyists. And this makes it a unique agriculture stock to consider buying.
Gladstone Land is a real estate investment trust (REIT). It’s a farmland company that has a growing portfolio of properties. You’ll find many of them in California and Florida, but it also has properties in 10 other states.
Another benefit to Gladstone’s structure is its requirement to pay dividends. This is standard for REITs. And a few of the other agriculture stocks on this list pay dividends. That’s always good to consider before investing.
Calavo Growers is one of the smaller players on this list. It comes with a little more risk, but the same is true for upside potential. The company packages and distributes avocados. And since avocados have seen a spike in demand, this has helped the company grow.
Calavo Growers also has a business segment that creates, markets and distributes healthy fresh foods. This includes fresh-cut fruit and vegetables, as well as some other prepared foods. As more consumers shift towards healthier food, this bodes well for the company.
Mosaic and Nutrien
As we produce higher yielding crops, we suck more nutrients out of the soil. To lessen the impact, farmers can rotate crops. Although even then, that’s not enough. That’s where companies like Mosaic and Nutrien come in…
These companies mine potash and provide other crop inputs. They’re some of the largest fertilizer companies in the world. And they can continue to push higher costs along to their customers. This makes them some of the best agriculture stocks around.
China Green Agriculture
China Green Agriculture gives direct exposure to China’s market. As mentioned, demand for meat is climbing in the country. That’s because more of its population is moving up into the middle class. This and the growing population are powerful trends to profit on.
China Green Agriculture develops different fertilizers and agricultural products. Although, it’s a really small company compared to others on this list. So, it will likely come with more volatility. So, if you’re looking for a riskier position to play agriculture, this could be it.
Final Thoughts and More Opportunities
The agriculture stocks above cover many areas of the ag industry. Buying into a basket of these companies might help protect you against inflation. In the short-term, there’s volatility. But long-term, they’re trending up.
Another area I’m watching closely is timber and lumber. Recently, we’ve seen a spike in prices and here are some of the top lumber stocks to consider.
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About Brian Kehm
Brian Kehm double majored in finance and accounting at Iowa State University. After graduating, he went to work for a cryptocurrency company in Beijing. Upon returning to the U.S., he started working with financial publishers and also passed the CFA exams. When Brian isn’t researching and sharing ideas online, you can usually find him rock climbing or exploring the great outdoors.