In his latest quarterly letter, GMO’s Jeremy Grantham has one-upped Jim Rogers in predicting how long this bull market in agriculture is going to last.
“It now appears that we are also about five years into a chronic global food crisis that is unlikely to fade for many decades, at least until the global population has considerably declined from its likely peak of over nine billion in 2050,” Grantham writes.
He cites a host of thoughtful, well researched reasons for his conclusion, including:
- Rising costs of fertilizer and fuel
- Increased meat consumption (which is heavier on grain usage) by an increasing global middle class
- Grain productivity increases hitting a “glass ceiling”
- Climate instability
If you read the newsletter, don’t sleep on Ben Inker’s excellent piece at the end. He mulls potential deteriorating conditions in the eurozone, comparing potential returns (or lack thereof) with those faced by exuberant investors in overheated markets. Inker’s thoughtful conclusion (SPOILER ALERT):
As conscientious investors, we obsess about all routes to capital impairment. But if you only had to choose one route on which to focus, across history, overvaluation has almost certainly been a much bigger driver of impairment than deteriorating fundamentals have been.