It seems like we can’t go more than a few minutes these days without hearing about how the world is ending in one way or another, be it oil prices climbing through the roof or shortages of food reaching America. Many people would have you cower in your home, barricade your doors, and prepare for the end of the world, but I want to show you some ideas on how you can actually use these events to prosper.

In part one we will examine the current food “shortage” effecting everything from corn to soy, and how you can use these shortages to strategically invest for short and long term gains.

The Situation

Various factors around the world are causing the price of food to sky rocket, with some items rising in cost over 60% in the last year alone and with an overall increase in food cost of rising about 4% per year according to the Consumer Price Index 2007 with a real increase to consumers of 17-46% across the board when you count in other factors tacked on by groceries stores such as higher shipping cost, increased labor costs, etc. Although some factors that are causing price increases are temporary, many like ethanol production, reduced farm land, and population increase are here to stay.

As more and more news of rising food costs, shortages of rice, wheat, corn, and soy have hit the wires, more and more people are beginning to look towards the future and stock pile their food items, causing an even greater shortage of the very food items they are worried will run short.

How To Gain

While the world is running around convinced we will all die of starvation because of the rice prices, you can stand to the side, eagerly watching, learning, and when the time is right, gaining from the disarray left in the wake of all the panic. All it takes is a little pre-planing, and you’ll be set.

This opportunity proves positive for both the conservative investor and the ambitious investor. On the conservative side, 4% growth rate (projected between 3.5% and 4.5% for 200 can provide a very nice return rate in a relatively save way that is nearly double what many government bonds and bank CD’s are offering these days. On the ambitious side, taking a gamble on the continued rise of rice, corn, or even vegetable oil is likely to pay gains far in excess of a mutual fund or 401k, and offers a far greater security blanket than any stock market investment.

You can start investing in the food market with just a little money every time you go shopping, or you can ensure bigger gains by investing larger sums and going direct to producers/distributors.

To Get Started

First you are going to need someplace to store your investment. Unlike stocks, bonds, and CD’s, you can’t really put a bushel of corn in the bank. The amount of space is going to depend entirely on what it is you are buying, caviar is going to require less space per dollar than rice. Remember that renting storage space is going to eat into your profits, so it’s best to use only the space you have.

Second you need to pick one or more items you plan to invest in, some top choices right now might be Rice, Corn, Wheat, and Soy Vegetable oil. Dried products are going to be the easiest to store, and frozen or perishable items should be avoided unless you see a short term gain potential and have sufficient space to store them.

Third and most importantly you need to keep your stash secret, if the world does end, you don’t want your door being the first one thugs come knocking on to get food.

Some Hypothetical Examples

1. Lets say that you have an area in your garage that is 5′ x 10′ which you plan to use for your stock pile, and your planning to purchase Basmati rice which is currently selling in 20# bags for $15.62 at the local Sam’s club. Now based on a rough estimate from the bag we just bought, this will take up about .75 cubic feet in your storage area, so you can fit in about 400 bags floor to ceiling. That’s a total investment of $6,248.00 before tax (here we don’t have food tax). If rice continues to rise as it has at 62% per year, then you could potentially have nearly $16,398 worth of rice in only two years. Of course you would have to sell it under market value to get people to buy it, but you have the potential to rake in profits well over 100% in only 2 years.

2. This time lets examine something a little more stable, say Vegetable Oil. In December of 2006 when I was running my catering business, a 1.25 gallon jug of Wesson Vegetable oil was running for just under $6.00. Had I purchased lets say 100 jugs, and kept them properly stored, those jugs today would be worth about $988.00. I might not be able to find an active market for Vegetable Oil on Craig’s List yet, but I could have used that oil in my business saving me a cost of $388 this year.

In Conclusion

While the world is panicked and convinced that we will all starve to death, keep your head cool, and you can easily take a little investment and make profit.

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