This article was published in the 20 June 2011 edition of the newspaper Professional Adviser HK.

The need for food at affordable prices has always been a vital concern. It has often triggered immigration, revolution and war. Global food costs advancing to an all-time high last February - according to the measures of the United Nation's Food and Agriculture Organization (FAO) - served as a catalyst to the Tunisian revolution.

Not only people with limited resources in Tunisia, but also in Egypt, subsequently toppled their autocratic leaders in a move provoked in part by their governments' inability to curb excessive food prices. Understandably, a small change in prices influence people's behaviour in countries where food prices account for up to 50% of consumer price indexes.

Short-term factors explain the recent spike in prices. A drought last summer in Russia caused its authorities to ban grain exports. Elsewhere, bad weather ruined crops in Canada and Australia, whereas Chinese rice production was hurt by floods.

In the short run, prices are mainly subject to supply disruptions. But the challenge caused by long-term demographics is more alarming. According to the FAO, world food production needs to increase by 70% by 2050 in order to meet demand from the world's population, which is projected to rise by over 30% by then.

Consequently, the means to pursue another Green Revolution are indispensable to increase agricultural yields and to appease Malthusian fears. The first Green Revolution of the late 1960's and 1970's enabled world food supply to increase threefold, thanks to crossbred crops, better fertilizers and higher degrees of mechanization.

Today, for the first time since the first Green Revolution, growth of crop yields has slowed to an inferior rate than population growth. While yields of wheat crops, for example, grew at 3% annually between 1961 and 1990 and to 0.5% between 1990 and 2007, the average population growth during these periods was 1.8% and 1.4%, respectively. As the recent special report on "feeding the world" by The Economist states, worldwide use of fertilizers and other inputs may have been scaled back in recent years, which would explain the slowdown. Farmers favouring quality such as more nutritious crops at the expense of quantity is part of the story. Also, farmers may find value in satisfying demand for organic foods.

These factors are among the ones causing food prices to be in a secular uptrend. But to curb price increases, US Agriculture Secretary, Tom Vilsack, recently summarized the actions that must be implemented: "We need a concerted effort by the private sector, governments and multilateral institutions to increase transparency and market information, increase agricultural productivity and facilitate trade."

Various avenues are available to investors who want to take part in the increase in agricultural productivity. By financing operations in various agricultural fields, investors contribute to transforming our lives across the globe, as well as our eating habits. Investments in the industrialization of farming inputs, for example, helped double cereal production in Asia between 1970 and 1995, saving the Indian sub-continent from mass starvation, as the population increased from 670m to 1,180m.

Today, further investments are needed in three distinct areas to increase farming productivity.

First, there is still room for improvements in farm inputs. More efficient machinery, innovative seeds, products combating pests and diseases, as well as further developments in the field of cost-effective fertilizers in the three main fertilizer categories - nitrogen, phosphate and potash - will allow for smaller production costs, increased yields and lower food prices.

Second, contributing - by way of providing access to capital - to the expansion of advanced farming management techniques helps bring about economies of scale and increased efficiency in food production and significant reduction in wastage. As the farming industry is still very fragmented worldwide, sustaining best practices in farming improves yields, raises the quality of farmland, cuts inputs and lowers overall costs.

Third, the links between producers and consumers can also be improved to a large extent. Many companies active in efficient distribution, logistical services, origination, storage and transportation make for attractive investment opportunities. Specifically, companies with good growth prospects include processors of farmed goods (including toxin removal) and those involved in food preservation and consistency. Other areas of interest to investors include food testing, organic waste recycling, rural services and product traceability.

The dream of eradicating starvation may one day come true. To help in this endeavour, investors can stand up and decide to finance the companies that are best positioned to supply solutions for meeting the challenge of growing demand. In addition to achieving a moral satisfaction, they may actually expect a compelling financial return as well.