In a recent article we talked some on the launching of an index by Jim Rogers and Macquarie, based in Australia, which will track the food consumption of the Chinese people.

It's different in that it tracks the actual consumption, rather than the projected harvest, which most commodity indices track.

This time around, I want to talk more in depth as to why agricultural commodities in general will be one of the greatest investment opportunities in our lifetime.

Jim Rogers says he thinks he'll make more on agriculture commodities than he did on metals, and that's saying a lot.

Like any market, commodity prices are based upon supply and demand. And the perfect storm of circumstances and events have led the agricultural commodities to be poised for a long term bull run.

We'll look at all of this, but let's start off with the first reason why, and go on from there.

From about 48 years ago (1961), arable land around the world has declined. At that time there were close to double the amount of land used for growing crops as there is used today.

Even when you take into account improved production, you can't make up for that amount of lost land.

A number of important crop inventories are near their lowest levels in 40 years. So at the same time there is increased demand, produce storage is way down.

Major crops like corn, wheat, soybeans, cotton, coffee and sugar are all participating in those low inventories.

No one really needs to be told about the increasing population in the world, which has blossomed by over 1.1 billion since 1974.
 
Even if food consumption and wage levels and opportunities had remained the same, this would have put significant pressure on food supplies.

Here's another one of those obvious realities, and it is and will make a huge impact on food demand in the very near future; the growing middle classes of China and India, and to a lesser extent, surrounding Asian countries.

Together these people with more income will demand meat and other agricultural goods, which will, again, have a dramatic effect on supply and demand, and ultimately - prices.

Just take meat alone in connection with the Chinese consumer. Since just 1985, the individual consumer in China has increased their meat consumption by almost three times than then. That's not going to decline, but increase.

So taking just the area of growing beef, let's look at what that costs in terms of the amount of grain needed to create a pound of meat in cattle.

It takes an approximate 17 pounds of grain to grow a pound of beef. So you add that to the increasing demand for meat, and you must follow that to the increasing demand for grains to produce that beef.

And we're just talking beef here.

So you can see that demand all around will pressure food demand and prices up without a doubt. 

Now you can see why the agricultural commodities market will be a terrific place to invest in for the next 10 to 20 years. This will be a long term bull agricultural run, and it has been extended, rather than hurt, by the temporary economic slowdown.

We may have one of the most profitable investing circumstances we'll see in our lifetimes, and it's not the hyped up, shouted out fad like the dotcom bomb, where most of it was manufactured and not based on reality.

Food needs and wants are based on reality, and that can't be conjured up or conjured away by hype. It's real, it's on us, and it'll make those prepared for, and willing to invest in it - fortunes.

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