The United Nations announced yesterday (Wednesday) that an additional $20 billion would be needed each year to combat global hunger.

On the second day of a three-day summit hosted by the U.N.’s Food and Agriculture Organization in Rome, leaders from 40 nations and representatives from 183 countries met to address the growing world food shortage.

“We must focus on the underlying causes: years of neglect of the agricultural sector and the lack of investment in increasing productivity,” U.N. President Ban Ki-Moon told reporters, Bloomberg News reported. “The price of oil has contributed significantly in the price rise of food. There is no doubt about that it affected the cost of transportation.”

The summit has been contentious, as leading biofuel producers such as the United States and Brazil have tried to deflect criticism that ethanol derived from corn and sugar is also driving up food prices, The Wall Street Journal reported.

“We don’t have clear evidence on the trade-off between agriculture products and biofuels,” Ban said, but there is an “urgent need to establish an international consensus and agreed policy guidelines.”

Meanwhile, less-developed countries that have set limits on exports such as rice, in order to feed their own populations, were fighting off calls for more free trade.

“We shall renew our efforts to further improve the environment and establish a fair and equitable order for international agricultural trade and protect the initiatives of farmers for production in developing countries,” Sun Zhengcai, China’s agricultural minister told state-run news agency Xinhua.

Ban laid the blame squarely on the rising cost of grains, which have increased dramatically over the past two years. The U.N. estimates that if countries do not act to stem growing global hunger, more than 800 million people could soon not have enough to eat.

The Global Ag Boom

When asked about the causes for the massive run-up in food prices, “experts” listed many of the same catalysts that have been discussed at the U.N. summit:

• Rising fuel costs.
• The use of certain foods - such as corn - for the creation of biofuels that are being developed to combat global warming.
• Rising populations.
• Growing demand from emerging economies - particularly China and India.
• Floods and droughts that are being blamed on ongoing climate changes.

But two causes aren’t on that list and they should be. The first is subprime mortgage crisis, which caused the U.S. Federal Reserve to go on one of the most aggressive rate-slashing campaigns in its history. The second is a greenback that’s been made weaker with each cut of the Federal Funds rate. Both are part and parcel of inflation.

Unfortunately for all the starving folks abroad, these rate reductions are highly inflationary. They continue to force the greenback ever lower, while at the same time boosting the price of dollar-denominated commodities such as oil.

The answer is a growing global interest in agriculture, both planting more crops and devising heartier, disease-resistant crops through the use of biotechnology.

Long-term, that global “Ag Boom” is the answer to the current food crisis. It’s also how you can offset the rising costs on the consumer side of your personal ledger by ramping up profits from this very same trend on the investment side of your own ledger.

To invest in the commodities boom, look at these two exchange-traded funds (ETFs):

• Van Eck recently launched its Market Vectors Agribusiness ETF (MOO), a fund that really reflects the breadth of the agriculture sector, apportioning its holdings across such sectors as chemicals (34%), agri-product operations (33%), equipment (24%), livestock operations (6%), and ethanol/bio-diesel (2%).

• The Deutsche Bank AG (DB) managed Power Shares Agricultural Fund (DBA) is intended to reflect the performance of commodities in the agricultural sector - soybeans (31%), wheat (28%), corn (23%), and sugar (16%).

Or if you believe that biofuels – and other forms of alternative energy sources – will be an inevitable part of the global future, consider the following “green” ETF: The PowerShares WilderHill Clean Energy (PBW), one of the better-quality funds that focus on “clean” technology as determined by the WilderHill Clean Energy Index.

Source: U.N. Calls for Increased Cooperation to Fight Growing Global Food Crisis