DECATUR, Ill. (TheStreet) — Agriculture and fair competition have had a strained relationship.
Price-fixing scandals, such as the lysine conspiracy, have marred the industry. (Lysine is a vital component of livestock feed and the subject of the new movie "The Informant.")
Regardless, the industry is growing in appeal as the world’s population expands, straining food production. More food is needed from less space as cities grow, claiming more farm land. Companies such as Archer Daniels Midland(ADM) is a big source of food, and its shares will benefit as a result. Archer Daniels has risen 37% over the past year, compared with a decline for the benchmark S&P 500 Index. Archer Daniels’ growth potential is all but guaranteed.
Still, not all food producers have risen quite like Archer Daniels. Bunge(BG) and Corn Products International(CPO) declined during the past year, while The Andersons(ANDE) is little changed. Some of the biggest players in the industry, such as Cargill, are closely held.
Global population growth stands at 1.1% a year, which doesn’t sound like much, but in reality means there will be 77 million more people every year, taxing an already stretched food supply and leaving a huge hole to fill by food producers. Food isn’t a complex industry to understand: Everyone needs it, and it’s all basically the same.
That last point gives the industry most of its character. Commodities, be they corn, grain or lysine, require hedging, which is a huge task. Archer Daniels, for example, has nearly $2 billion in derivative contracts to help guard against a decrease in price or other events that could affect profits, such as foreign-exchange risk.
Eat me and you'll blow chunks!By Jim Jelter, MarketWatch
SAN FRANCISCO (MarketWatch) — Safeway Inc. announced Thursday a major, nine-state recall of salmonella-tainted ground beef sold between June 6 and July 14.
Safeway (SWY) , the giant grocery store chain based in Pleasanton, Calif., said the recall involved 825,769 pounds, or nearly 43 tons, of meat that the company said "may be linked to an outbreak of Salmonellosis."
The U.S. Department of Agriculture said the meat was processed at a Beef Packers Inc. meat-packing plant in Fresno, Calif., and sold in Arizona, California, Colorado, Hawaii, Nebraska, Nevada, New Mexico, South Dakota, and Wyoming.
Beef Packers is a subsidiary of privately-held Cargill, one of the world’s biggest food producers and marketers, with sales last year of $120 billion.
