When choosing what to invest in, people often forget about the agricultural companies. Agriculture is extremely important, since people need to eat to survive. Some crops are also used in other ways, such as the use of corn ethanol in gasoline. Even when other stocks aren't doing too well, certain agricultural stocks flourish. One particular type of stock to consider investing in is stock in fertilizer companies.
Why Fertilizer Companies may be a Good Investment
Fertilizers work to increase the growth of crops by providing essential nutrients. They help farmers grow their crops better. So why invest in fertilizer companies?
- Incomes are rising and the middle class is growing. It is important to look outside of the scope of just the United States. In other countries, such as India and China, incomes are starting to rise and the population of middle class people are increasing. These people want, and are now able to afford, more protein. In order to feed the animals that produce that protein, it is necessary to have more grain to feed the animals. As a result, more fertilizer is needed to grow the crops.
- Populations are increasing. The population of the world is increasing in general. In order to feed the growing population, more staple crops are needed.
- There is less land to farm on. As populations grow and the commercial and residential development of farmland increases, farmers are left with less land to grow their crops on. In order to grow enough crops to accommodate the growing population, farmers must improve the land they have. This is done by using fertilizers. Even if a farmer chooses to save some money and skip their fertilizer purchase one year, they will not be able to put off the purchase forever. They will need to buy the fertilizer the following year.
- There is increased use of ethanol in gasoline. Corn is a staple crop that requires the use of a lot of fertilizer. Corn is not only used as a food, but corn ethanol has also gained popularity in fuel as an oxygenate.
- Prices of staple crops are high. Since staple crops are high in demand, their prices are high. This is not a good thing for consumers at the supermarket, but can be good for investors. High prices of crops means the manufacturers earn more. This is good news for fertilizer companies, as it makes their share prices go up.
For more information about the benefits and uses of fertilizer, contact a company such as T and N Inc.