Is there a way to invest in food related industry to recoup market inefficiency

[Hydrogen]

With food prices still on the rise. Many of us would enjoy some way to recoup rising food liability costs, lost to increasing market inefficiency.

We need not look far to see oil companies like shell and exxon reaping record all time profits off of rising oil costs. While it is difficult to find a good entry point into stocks, bonds or investments. Which would translate into consistent gains that are able to offset losses caused by market inefficiency. The general trend for oil stocks has been in an upwards direction, due to rising fossil fuel prices.

Old time stock investors typically recommend stocks like campbell can foods during times of inflation and recession. Based on a principle of consumers spending less on food as purchasing power declines. Leading to greater consumption of microwave dinners, canned foods and cost effective rations.



Image link:  https://i.ibb.co/ww4jv2m/campbell.jpg

Above we see the traditional investment wisdom of buying canned food stocks prior to eras of inflation or recession might be true.

As disposable income of consumers shrinks due to rising food and gas prices, more of us are forced to resort to microwave or canned food dinners. This drives demand, translating to higher profits and higher stock prices on average.

However, it could be a little late to be buying campbells foods.

Do we have better options? What is a good investment strategy to recoup losses attributable to rising food costs?

[Cuenta Alternativa]

What is a good investment strategy to recoup losses attributable to rising food costs?

The best strategy is not to focus on just one thing, such as which stock to buy to compensate for rising food costs. Apart from buying shares it would be a good idea to try to earn more. Some jobs have raised wages by about the same percentage as inflation or even more, although most have not. But focusing on earning more rather than just investing seems like a better idea.

Regarding stocks in the food related industry, there are several that are a safe bet in the long term, such as Pepsico (which is not only focused on beverages) or MCD. One is a dividend king and the other is on its way to becoming one, that have not stopped paying dividends and raising them annually as a minimum, while at the same time they have given a great return to their investors as for stock price.

They are not a good healthy eating option, though, but I see global demand for their products only growing.

[mk4]

Not 100% sure (just thinking on the top of my head), but you're probably better off buying farm/agriculture stocks than buying food business stocks. The only one I know is Farmland Partners Inc ($FPI) — which I personally don't own, so just dyor.

[Die_empty]

I don't think there is any recession-proof industry because the global economy is like a system that is interconnected and interrelated. In my country canned food is expensive and people are also discouraged from using them because of its health implications. Growing your food if you have the time might be a good economic strategy. It might not be a bad investment to get a few plots of farmland and grow some crops you spend money on. You will be surprised that the cost of buying food might reduce. Many people in my country are engaging in substance farming and it is really helping them cut costs.

[Solosanz]

I read few articles where majority of Americans are depends on microwave and canned foods [1] [2] but if foods price always increase and it force Americans to buy canned foods, but why Campbell Soup's stock price isn't always increase? Based on the graph if you've bought the stock since 1997-1998 and you've hold it until now, your portfolio is currently in unrealized losses. So investing in foods stock doesn't combating against inflation.



[1] https://grist.org/article/americans-eat-more-processed-food-than-well-anyone/
[2] https://www.cancentral.com/media/news/new-research-confirms-americans-depend-canned-fruits-and-vegetables

[mk4]

I read few articles where majority of Americans are depends on microwave and canned foods [1] [2] but if foods price always increase and it force Americans to buy canned foods, but why Campbell Soup's stock price isn't always increase?

Simply because it's not that simple. Food increase means people gets priced out of some food — and at the same time, price of ingredients of these food companies increase as well.

[Tytanowy Janusz]

Simply because it's not that simple. Food increase means people gets priced out of some food — and at the same time, price of ingredients of these food companies increase as well.

Investing in food companies is considered as a good place to store walth during hard inflationary times. Both producers and retailers. Mainly because, during hard times you can postpone the purchase of a TV set, car, house or trip until next year or two but you can't put off buying food until next year. So food companies should have the lowest income decrease compared to other sectors if not increase due to smart management.

Food related companies worth to do research (food producers, food reselers, agricultural chemicals):

TYSON FOODS
WILMAR INTL
YARA INTERNATIONAL
GOLDEN AGRI-RES
ARCHER-DANIELS-MIDLAND COMPANY
BUNGE LIMITED

Reits investing in farmlands are also a good option but most of them are overvalued.

[retreat]

-snip-

Food related companies worth to do research (food producers, food reselers, agricultural chemicals):

TYSON FOODS
WILMAR INTL
YARA INTERNATIONAL
GOLDEN AGRI-RES
ARCHER-DANIELS-MIDLAND COMPANY
BUNGE LIMITED

Reits investing in farmlands are also a good option but most of them are overvalued.

Investing in a company like Wilmar International is very attractive, especially for the long term, because this company is a leader in agriculture in Asia and Unilever is one of Wilmar's regular customers and continuously uses Wilmar's products. However, even though Wilmar International has attractive investment prospects, there are several things that need to be considered from this company, especially the problems surrounding its founder Martua Sitorus. Cases such as deforestation, human rights abuses, and environmental damage are some of the problems that are often faced by Wilmar International. And in particular Martua Sitorus the founder of Wilmar Internasional, several of his staff have been named as suspects due to the export of crude palm oil in Indonesia. Also, Wilmar's image in its place of origin in Indonesia is also not very good, because the company often has disputes with the community due to illegal land grabs. So investing in a company like Wilmar International is very attractive in the long run, but it's important to note that these companies are often in conflict with communities and governments which can affect their shares price.

[Aanuoluwatofunmi]

Isn't it better that we increase the rate at which we ayrr involved in agricultural practices and started farming to help generate a sustainable economy that will be affordable by everyone with the food commodity items in the market always available, this will increase the economy, income rate, reduced unemployment, increase GDP, and boost up the financial economy when the food items becomes an affordable circumstance in boosting the economy inefficiency.

[Tytanowy Janusz]

Investing in a company like Wilmar International is very attractive, especially for the long term, because this company is a leader in agriculture in Asia and Unilever is one of Wilmar's regular customers and continuously uses Wilmar's products. However, even though Wilmar International has attractive investment prospects, there are several things that need to be considered from this company, especially the problems surrounding its founder Martua Sitorus. Cases such as deforestation, human rights abuses, and environmental damage are some of the problems that are often faced by Wilmar International. And in particular Martua Sitorus the founder of Wilmar Internasional, several of his staff have been named as suspects due to the export of crude palm oil in Indonesia. Also, Wilmar's image in its place of origin in Indonesia is also not very good, because the company often has disputes with the community due to illegal land grabs. So investing in a company like Wilmar International is very attractive in the long run, but it's important to note that these companies are often in conflict with communities and governments which can affect their shares price.

Ohh. Thank you very much. I pick all this companies because of strong fundamental data (good p/e p/bv etc) diversification across many jurisdictions and market position in relation to competition. I didn't know that the company is so badly seen by the locals. How bad it is, in your opinion, in terms of impacting on expected future income? Is your knowledge based on research or direct experiences with the company or local communities?

[passwordnow]

So if it's related to stocks, aside from the agricultural stocks then how about buying those manufacturer's stock? I guess until the war ends between Ukraine and Russia, most of the ingredients in the food industry will hide in the shadow of that war for their reasoning of shortage and increase in prices. One traditional way that I can think of is to acres or hectares of land and be the one to make those crops and be the source of food although this won't be easy and will take a lot of time.

[Hydrogen]

Isn't it better that we increase the rate at which we ayrr involved in agricultural practices and started farming to help generate a sustainable economy that will be affordable by everyone with the food commodity items in the market

Yes. Although, I think such a transition could take years. It takes time for people to learn, adapt and change. It may have taken more than 10 years for sailors to accept the explanation of citrus fruit being a legitimate treatment for scurvy. Perhaps people of today are smarter and more adaptable. Accepting fruit as a treatment for scurvy might only take 3 years today, partially due to the world being more connected through smartphones and the internet.

Agriculture requires space and a good climate. We need good options for those who lack the space and climate to engage in agro.

Years ago, there was an investor who bought, consolidated and centralized the world's supply of cacao beans. Which are used to make chocolate. Then raised the price to give himself a nice profit. This was before Martin Shkreli did something similar with pharmaceutical products. I was trying to think of a similarly effective method of investment to offset rising food costs. I guess put and call options might also be a good method for those who are good commodity traders. But that isn't an option available to everyone. So, I'm still trying to think of a good method but not much is coming to mind, unfortunately.

[franky1]

With food prices still on the rise. Many of us would enjoy some way to recoup rising food liability costs, lost to increasing market inefficiency.

...
As disposable income of consumers shrinks due to rising food and gas prices, more of us are forced to resort to microwave or canned food dinners. This drives demand, translating to higher profits and higher stock prices on average.

However, it could be a little late to be buying campbells foods.

Do we have better options? What is a good investment strategy to recoup losses attributable to rising food costs?

in the UK i have seen how the whole sale market have increased their cost vs price multiplier. and then the retailers do the same
meaning they make alot of profits

yet at the farmers side. their costs have not moved up much at all
it doesnt cost much diesel for a farmer to walk across a field and open a gate for cows to move to another grazing field

here in the UK buying directly from a farmers own shop has not increased as much as buying end-processed and packaged food at a retailer has increased.

you can see that buying 500g of diced (processed) meat in a retailer costs more then fresh unprocessed meat from the farmer
also that retailers meat is pumped full of excess brine where when heated it evaporates and releases the fluid to end up with only 250g-300g of actual meat, thus being bad value for true weight

i can get better quality meat from a farmer than i can from a retailer, meat that holds better weight when cooking

same goes for carrots, peas, potato's and such,

for ~ £6 i can make a beef and vegetable soup/stew with enough servings to fill 8tincans
meaning £0.75 a serving
however buying a meat and vegetable soup in a supermarket is £1.50

same goes for ready meals
if you look at the small thin slices of meat. the few spoonfuls of mixed veg.

but then look at the cost of "making your own" from scratch. you can make better portions of better ingredients by getting the raw ingredients

in short you can make 2x buy buying smart your own food
if you then want to make profit. you can then sell homemade food to neighbours/relatives that are disabled(the demand community for such ready to eat produce), at a far cheaper rate for them than using uber-eats./ready meal purchases. where you can still make a profit by offering it less than the retail rate/fast food delivery rate

[hugeblack]

Diversification of investments is the best case, so that the markets do not act in the way that we think about and thus leave 20% of the surplus of your investments for speculative or incomprehensible investments, and from them you can invest 7% of them in the shares of canned foods, although I do not expect people to behave like this unless gas prices rise crazy Because it is true that the microwave has happened better, but individuals will try to cook in large quantities or think about alternative solutions to the gas.

[Freddie Boyer]

When making investment decisions, one should attempt to understand the factors that will impact your investment. One way to do this is by looking at the correlation of food commodity price and the S&P 500.  In general, food commodity prices and the S&P 500 are negatively correlated, meaning that when food commodity prices are high, stock prices typically fall.

if  invested in an asset that was positively correlated with food commodities, then you would see a higher return as compared to investing in an asset that is negatively correlated with food commodities.

[Husires]

A while ago I heard about investing in copper, lithium and aluminum stocks due to the increased demand for them. Instead of investing in canned foods, which may not be ideal, invest in the minerals related to them because you can keep them for a longer period than the period of their name food companies, which may collapse unlike metals.


I would choose to invest in bitcoin after all.

[el kaka22]

I highly suggest looking into companies that have vertical farming closer to big cities. Believe it or not but they are getting more famous in my nation, there was a "farm" that was built for about 1.5-2 million dollars, and it provides food with 5% size of a regular farm would have. Imagine doing the same amount of crops in 5% of the land size requirement, plus the costs are 80% down as well, which means that it would be basically the most profitable thing ever.

Have dozen of these all around the big cities and suddenly prices start to go down a bit on food, and regular farmers would be in trouble and everyone would start replicating the success, I guarantee you.

[Gyfts]

in the UK i have seen how the whole sale market have increased their cost vs price multiplier. and then the retailers do the same
meaning they make alot of profits

yet at the farmers side. their costs have not moved up much at all
it doesnt cost much diesel for a farmer to walk across a field and open a gate for cows to move to another grazing field

Labor shortage and energy prices could force the end retailer's operating cost to increase. Say for a manufacture of consumer goods -- even if the raw materials don't increase in price, if the price to sell the good increases, then they're forced to pass on the cost of goods to the consumer. (Price to sell could include shipping cost, price to put the product together, marketing, etc.)

It's why this concept of "corporate greed" existing is so ridiculous. It's as if there is industry wide collusion in every sector to collectively raise prices on consumers when the reality is operating costs increased dramatically even if raw materials cost don't necessarily increase.