5 Stocks for Food Inflation

These companies will thrive as prices of meats, grains and dairy rise this year.

People have to eat. As the economy recovers, expect demand for food to grow and prices of meats, grains and dairy to rise. Goldman Sachs named food inflation one of its top nine investing themes for 2010. The agricultural sector will benefit broadly from this trend, and we have identified five stocks that will thrive in such an environment.

Let’s break it down by the numbers. The U.S. Department of Agriculture forecasts that food prices will rise 2.5% to 3.5% this year, up from a 1.8% increase in 2009. Several factors will put pressure on food prices. Producers of cattle, dairy cows, hogs and poultry cut their output in 2009 because of high feed prices. That, in turn, reduced the supply of meat and dairy products. At the same time, a growing number of people around the world, particularly in fast-growing emerging nations, such as China and India, are consuming more protein. Add to the mix the ethanol industry’s heavy reliance on corn, the main source of animal feed.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Contributing Editor, Kiplinger's Personal Finance