The global population is estimated to have hit 7 billion this past October, with some demographers projecting further population growth of as much as 2 billion over the next 40 years. With all those mouths to feed, the global food supply faces numerous challenges to meet such daunting demand. Indeed, agricultural prices have spiked in recent years and the resulting food inflation has even sparked unrest in the developing world.

Emerging market demand has driven a substantial portion of food inflation. As these nations prosper in the global marketplace, their citizens enjoy higher incomes and their tastes have evolved accordingly, with more fresh vegetables, dairy products and meat incorporated into their diets. For example, according to data from the United Nations (UN), China’s per capita consumption of meat has risen by more than 90 percent over the past decade, while dairy consumption has nearly tripled. 

Since it takes about 10 pounds of corn and grain to produce a single pound of beef, growing protein demand is straining grain supply. Beyond mere food demand, the supply picture worsens because many developed- market nations use a substantial portion of their grain supply to produce ethanol as a fuel additive. In the US, about 40 percent of the national corn crop is diverted to produce ethanol each year, as mandated by the Renewable Fuel Standards program, which was created as part of the Energy Policy Act of 2005.

Meanwhile, the amount of arable land is on the decline. According to UN data, there was half an acre of arable land available for every person on earth in 1964. But due to development, pollution, population growth and a variety of other factors, that figure had dropped to 0.2 acres per capita by 2008. 

These factors are creating a booming business in agriculture, which is driving both growth and inflation in the sector. The price of farmland is on the rise, and there’s huge demand for the complex machinery required to irrigate and work the land, as well as the fertilizers and engineered seeds necessary to improve crop yields.

Market Vectors Agribusiness ETF (NYSE: MOO) offers exposure to the entire global agriculture story in a single exchange- traded fund (ETF). The fund’s holdings include everything from fertilizer and seed producers to equipment manufacturers and biofuel outfits. 

While more than 38 percent of the fund’s assets are allocated to the US, the fund is geographically diverse, with allocations to countries such as Canada, Brazil, China and Australia. In all, the fund’s reach includes 45 companies in 16 countries on four continents.

Among the ETF’s criteria for security selection, companies must derive at least 50 percent of their revenue from agribusiness to garner inclusion. While the minimum eligible market cap is $150 million, the fund skews toward large-cap names, which comprise about 82 percent of assets. 

The fund’s 0.56 percent annual expense ratio makes it one of the cheapest agricultural ETFs available. Market Vectors Global Agribusiness ETF offers investors the easiest way to capitalize on the long-term growth in food demand.