BETTING ON AGRI-BOOM

A year ago, the farm sector was being touted as one of the hottest segments of the economy.

The ethanol boom, fuelled by the rising cost of oil, was pushing grain prices to levels previously thought unimaginable. Combined with the rise of a growing middle class in India and China that was consuming more protein in the form of grain-fed beef and chicken, the agriculture boom looked permanent.

But then the recession hit. Oil prices plummeted, the demand for ethanol crashed, meat consumption dipped and a bumper global wheat crop pushed grain prices down more than 50 per cent.

So is there a future in agriculture? Sprott Resources CEO Kevin Bambrough is betting on it. He believes emerging markets will lead the recovery from the recession, and when things improve in those countries, their appetite for meat will drive a jump in demand for feed grains.

He also believes climate change will place increasing pressure on water resources. Since agriculture requires a great deal of water, and it's cheaper for China to import grain than to divert water from industrial uses, grain prices could be driven up.