I’m bullish on agriculture.

I first turned bullish in 2005 when I realized the ethanol boom would consume a third of the U.S. annual corn crop. As I investigated this story, I realized global population growth, rising prosperity in Asia and around the world, shortages of arable land and clean water… and a bull market in commodities… would send agriculture prices through the roof.

I visited grain elevators in the Canadian prairies. I met with executives from agribusiness giants like the Saskatchewan Wheat Pool. I watched tractors rake the $100 million corn pile at one of Iowa’s largest ethanol plants. I saw Chinese scientists clone cows from behind a glass window at one of America’s top life-science laboratories. I’ve inseminated hogs, interviewed America’s top grain traders, and climbed aboard moving railroad grain hoppers.

Three years later, it’s clear I was right. Wheat and soybeans are at all-time highs. Corn is near a 50-year high. Canadian fertilizer stock Potash Corp. is up 500%. Farm-equipment maker AGCO is up 200%. Crop genetics and chemicals company Monsanto is up 300%.

I see terms like “ag-inflation” and “food crisis” in magazine articles and newspaper columns every day.

Food has incited riots in Mexico, Yemen, India, and Burkina Faso… and boycotts in Italy and Argentina. The Kremlin forced suppliers to freeze the price of milk and bread in Russia. Thailand, Ecuador, Benin, Senegal, Egypt, Argentina, and Venezuela have also capped food prices. Zambia, Ethiopia, and Pakistan have suspended food exports. Jordan, Ethiopia, Malaysia, and Pakistan are stockpiling major foods. Turkey, Mongolia, Indonesia, and Morocco have cut import tariffs. And Egypt, Jordan, and Oman have increased food subsidies.

As encouraging as the situation is, I believe this trend is just getting started. Food price controls make shortages much worse and demand for food much greater. It’s a bit like trying to put out a forest fire with gasoline.

Take Argentina, for example. Argentina is the world’s largest per-capita consumer of beef and the world’s fourth-largest exporter. When beef prices rose 26% in the first few months of 2006, the Argentine people started complaining.

So the government banned exports of beef. The increased supply caused prices to fall. Now I imagine Argentinean demand for beef is higher than it’s ever been before – because prices are so cheap. Meanwhile, if you’re a farmer in Argentina, I bet cattle farming is the last business you’d want to enter. With prices so low, you won’t be able to make a profit.

So now people eat even more beef, and farmers produce less. Newspaper reports from Argentina say beef prices have risen 15% in the last few days. Price controls, subsidies, and export bans always have the same effect: They make prices go even higher. With all the government intervention in the food markets right now, I see huge price rises in the future.

After the government lifted price controls in 1947 following the Second World War, corn futures hit the inflation-adjusted equivalent of $26.03 per bushel. Soybeans sold for $37.86 per bushel and wheat for $29.25 per bushel.

Currently, corn trades for $5.54 a bushel. Soybeans go for $15.28 a bushel, and wheat $11.06 a bushel. I believe crop prices will reach 1947-level highs again at some point over the next two decades.

Grain markets are a little frothy right now, but the long-term argument is solid. If you’d like to invest in grains, PowerShares has a sugar, corn, soybean, and wheat ETF (DBA). In October, iPath created JJA, traded on the NYSE. It tracks corn, wheat, soybeans, sugar, coffee, cotton, and soybean oil. Elements has come out with an instrument that tracks the 20 commodities in the Rogers International Commodities Index (RJA). Finally, market Vectors has an ETF of agribusiness stocks (MOO).