Monsanto Company (MON), Deere & Company (DE): Bet the Farm With These Companies

In the most recent quarter of its fiscal year, Mosaic Co (NYSE:MOS) reported operating earnings of $419 million on net sales of $2.2 billion. Both were up slightly from last year. Mosaic’s potash mines operated at 78% of capacity during the quarter. Operating rates are expected to increase in the next quarter on the back of stronger demand from China and India.

In looking forward, Mosaic just entered into a joint venture with Saudi Arabian Mining, or Ma’aden, to develop a $7 billion phosphate mine. Mosaic will have a 25% interest. The mine is located in northern Saudi Arabia and will be in production in late 2016 with an annual capacity of 3.5 million tonnes. Global demand for phosphates is increasing by 1.5 million tonnes a year and this joint venture is closer to the Asian market. This will allow Mosaic’s mines in North America to focus on serving the growing demand in its home market. The project provides added growth for Mosaic, especially considering that Ma’aden is looking to expand. Mosaic couldn’t ask for a better partner than with Ma’aden.

There are some that say fertilizer isn’t necessary in farming. For farmers to continue planting the same crops without rotating, fertilizer is necessary to replace plant nutrients. Farmers plant to make money and they will plant the crop that will make them the most money. The fact of the matter is that there’s 7 billion people on the planet that need to be fed and less land to grow on.

Foolish assessment

The global food story is not going to change. The rise of Asia and Latin America will require more food and better technology to grow crops more efficiently. These three companies are poised to benefit from the increased demand for global crops.

Mark Yagalla has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Bet the Farm With These Companies originally appeared on Fool.com and is written by Mark Yagalla.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.