Hello. Welcome to Company Focus. My name is Aamer Nawid, analyst at Fat Profits. And today I'm going to taking a look at the situation with the rising cost of food and highlight a situation in which investors can actually benefit from the continuation of this trend.

Early this year, whilst everything was sort of developing in Japan and the Middle East, the United Nations Food & Agriculture organisation reported in February that its food price index had reached its highest level since its inception in 1990. Now over here, whilst we bemoan the rising cost of our weekly shopping, in other parts of the world the rising food price has more serious ramifications. In the Middle East, for example, not only was it corrupt governments and high levels of youth unemployment which caused the social unrest, high food prices also played their part.

One way in which investors can actually benefit from this is by using ETFs. The ETF I'm going to speak about today, the agriculture ETF - it's referred to as AIGA, which is its ticker symbol. It basically provides exposure to seven core soft commodity staples at a low cost and without the hassle of having to insure, store and transport vast amounts of grain. It basically tracks a Dow Jones, AIG sub-index, an agricultural index. And it behaves like an ordinary share. Investors can stick this in their ISAs or SIPPs, that sort of thing.

As you can see from this chart, it's performed very, very well recently. But that's not to say that this performance can't continue. You're going to get situations globally which cause temporary price spikes in food prices, like the situation in the Ivory Coast, the political instability there, the Australian floods, the drought in China. However, in the long term, upward trend in food prices is underpinned by structural changes which aren't going to reverse.

Now what exactly are these changes? Well, population growth is one. In another, different report, the United Nations report released early this week, it was a population report, it announced that they expect the 7 billionth human being to be born on Halloween of this year. The same report also suggested that the population globally will increase to 9.3 billion by the year 2050. So that's loads more mouths to feed on the planet.

In addition to that, you've got to look at the current population and what they're doing, particularly in the emerging world, where GDP per head is growing. Now these guys in the emerging or developing world are moving to meat-focused high-protein diets. And when you consider the fact that it takes 8 pounds of grain to create 1 pound of meat, it's of little surprise that the price of corn, which is demonstrated on this chart here, has been strong and is expected to continue that way.

Another factor is the use of food for fuel. Now corn figures here as well. Now the jury is truly out on whether biofuels are the solution to soaring energy costs. But the US, they're pretty adamant and they're pretty focused on actually reducing their dependency on oil. So I expect investment in biofuels to continue, whether it's corn-focused or soybean-focused biofuels, both play quite heavy parts. Between them they account for 50 per cent of this ETF. And I expect both prices to continue to remain strong. Here is the price of soybeans, which has also demonstrated significant strength over the past 12 months.

So the demand side of the equation is there for everyone to see. But the supply side is also quite compelling, not only are droughts and floods, supposed one-off events occurring on a more frequent basis, but the depletion of underground water reserves is a major concern when you consider that agriculture is the number-one consumer globally of fresh water. And in terms of arable land as well, as the urbanization process gains traction, more and more land is being given up, less available space for crop production.

So the supply side of the equation, the overall case for high food prices gets even more compelling.

Thanks for watching. Make sure you tune in again next time.