Agricultural funds offer food for thought

Following National Savings & Investments’ withdrawal of its index-linked and fixed-interest savings certificates last week, savers have been left in a somewhat tricky situation and now need to look at new ways to invest. Fortunately, there are various options recommended in this weekend’s papers – despite Merryn Somerset Webb’s comment in the FT Money that there is now “absolutely no way to earn a real return on cash without taking a certain amount of risk”. Somerset Webb championed the German property market in which residential prices have started to rise due to a loss of confidence in the euro, whilst other papers looked at investing in agricultural funds. Not only does this avoid having to actually travel to Berlin to buy a flat in person in order to escape the risk of leveraged funds, but also, as Jessica Bown pointed out in the Sunday Times, agricultural funds are a simple way to play the agricultural commodity markets.

Exchange traded funds have made it much easier for private investors to get exposure to commodities such as corn, wheat and sugar and as agricultural commodity prices are much lower than they were two years ago, Bown noted that now could be a good time to invest. The Saturday Telegraph also supported agriculture funds, stating that this sector has delivered positive returns over the past year, although Emma Wall did issue a note of caution with her warning that risk factors such as the weather can make such funds somewhat volatile.

The Guardian followed a similar train of thought in Patrick Collinson’s article which explained why experts believe that agriculture is the best place to make money in the next 10 years. With 50 million new mouths to feed every year, coupled with the diminishing quantity of arable land, the price pressure on agricultural products can only increase.

However, all this gambling on food prices is creating such price instability that, according to the World Development Movement, it’s having a devastating impact on third world farmers. As a result, if following in the footsteps of Anthony Ward and spending £658 million on cocoa beans pricks your conscience too much, have a look at Kathryn Cooper’s piece in the Sunday Times. In her article on how to beat inflation she suggests buying high-yielding stocks which will soon trade at a premium. Perhaps you don’t just want to focus on chocolate then.

Round-up from the rest of this weekend’s papers is as follows:

Charity                 0%

Credit cards        4%

Fraud/scams      3%

IFAs                     0%

Insurance            6%

Investment        34%

Mortgages          9%

Pensions              10%

Regulation          9%

Savings                 19%

Tax                         4%

Utilities                 2%