The world's population has been steadily growing and is expected to reach almost 10 billion people by 2050. Despite the setback of 2009, the world economy expands at a rate of about 5% per year. Rising population and expanding economies especially in China and India lead to improved diets, with a greater intake of meat products.

High oil prices, increasing concerns about carbon emissions and the push use more alternative fuels has led to the boom in alternative energy sources using crop plants as the source. These biofuels are produced from sugar cane, corn, oil palm, soybeans, sawgrass, and other plants.  This new demand for crops tends to raise the price of crops.  Though scientists are still looking at the feasibility of biofuels as an adequate replacement for fossil fuels, production costs and waste byproducts may or may not make crops a useable substitute.  Nevertheless, these studies along with population growth make the need for increased farming productivity all the more important.

Of the earth's 57 million square miles of land, approximately 8 million square miles are currently useable as farmland. However, this land is being lost at the rate of about 39,000 square miles a year.

To increase the yield of these crops from the ever decreasing amount of agricultural lands requires more use of fertilizers.  Potash is a key ingredient in fertilizers that enhances water retention of plants, increases crop yields and plants' disease resistance. Potash has three main uses: fertilizer, livestock feed supplements and industrial processes. 95% of world's potash is used in fertilizers, while the rest is used for feed supplements and industrial production.

Why POT?

In 2005, Canada was the largest producer of potash with almost one-fourth of the world share followed by Russia and Belarus. The most significant reserve of Canada's potash is located in the province of Saskatchewan and controlled by the Potash Corporation of Saskatchewan, stock symbol, POT.  Potash Corporation is an integrated fertilizer and related industrial and feed products company.  The company is well capitalized, well managed, and with the growth in the need for more effective farming resources, the company will surely benefit.  There are other companies with related products you may want to reasearch. They are Agrium Inc., The Mosaic Company, Western Potash Corp, and Athabasca Potash Inc.

It is not my place nor may desire to advise anyone on any stock or mutual fund purchase. Rather, since I purchased shares of POT today for a traditional IRA, I provide my rationale for doing so. Let's see how it does for the next 20 years.