This was the number of people on this planet as of early
By the time you read this number, however, itwill be completely
out of date. Hundreds of people are added to the world population
every single minute.
By 2050, roughly 9 billion people will live on the planet, about
30% more than today.
And every member of this growing population needs food to
So, the big question for us today is: How do we, income
investors, take advantage of a growing demand for food?
We could buy food producers such as
Dean Foods (
, but it yields 0%. Meat processor
isn't much better, yielding a scant 2%.
I think the most compelling opportunity comes from a
little-known niche of master limited partnerships (MLPs) thatyield
up to 9%. These rare MLPs don't have anything to do with gas and
oil pipelines like most limited partnerships. Instead, they produce
and sell a good that's never been more important -- fertilizer.
Population growth drives fertilizer demand. Every year, 75
million more people must be fed. At the same time, people in
emerging nations are also eating more meat, which increases demand
for grains. Today, roughly 35% of the world grain harvest was fed
In the United States, nitrogen fertilizer -- the fertilizer of
choice for corn -- is in the sweetspot . This year, U.S. farmers
dedicated the most acreage to corn since 1937, according to the
U.S. Department of Agriculture.
Drought is also playing a role in increasing demand. The recent
drought in the United States was the worst since 1956. Its effect
on U.S. fertilizer demand next year is generally seen as positive.
Analysts note that corn prices are extremely high and expected to
remain elevated into 2013, thanks to the drought. As a result,
fertilizer use will be high in the year ahead.
Not all analysts are optimistic. Some argue that because a
significant number of corn farmers earned lower income in 2012 and
their fields are still parched, farmers will restrict 2013 planting
and buy less fertilizer.
But nitrogen fertilizer companies themselves -- such as
Rentech Nitrogen Partners (
-- arebullish . Rentech'sCEO says he "expects the drought to have a
favorable impact on nitrogen prices and demand for the remainder of
2012 and 2013."
Thepartnership 's location in Illinois, the heart of corn
country, also provides a key strategic advantage. Trucks canload
directly at the Rentechfacility and apply the fertilizer at the
critical time in the growing cycle. Combine that with a solid yield
of close to 9%, and you start to understand why theshares have
soared -- nearly doubling in the past year.
In the long term, the partnership is poised to benefit from
increasing demand for nitrogen fertilizer.
Action to Take -- >
One more note for when you're looking into MLPs like Rentech
Because these partnerships can throw off unrelated
businesstaxable income , which is taxable even in a tax-sheltered
account, the units are best held outside a tax-deferred
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