The July rise in wheat prices, the fastest in 51 years, indicates that shortages in agriculture are coming, Jim Rogers, chairman of Rogers Holdings, told CNBC.com Tuesday.
"Anybody who's got potentially good agriculture land and good weather" is likely to emerge a winner out of this situation because prices of nearly all agricultural commodities are set for steep rises, Rogers said.
"Prices aren't high enough and most people don't believe it," he said. "Unless prices are high you're not going to attract people in the business. Eventually people will go into farming again but it's going to take a while."
Shortages in agriculture are likely to add to problems created by governments who printed money to spend their way out of the financial crisis, according to Rogers.
"It's all happening at a time when governments are printing more money… it's a very dangerous situation," he said.
If there was any asset I would like to own over a five year period besides gold, it would probably be agriculture commodities. However, like gold, I do think agriculture prices are not about to skyrocket to all time highs. They could, but I just don't think the probabilities are in their favor. In the intermediate term (six to 18 months) I think gold and agriculture prices will be lower but there is no way I would put money on that bet. In fact, even though I think that, I would want to own gold currently because the possible alternative is gold goes parabolic.
Jim Rogers has been an agriculture bull for at least five years. He has been mostly right though did not see agriculture prices getting killed in late 2008 with all other commodities. I think we are in a similar situation now and it seems we are following a similar playbook to 2008 in the way the commodities are spiking right as the economy seems to be slowing. Oil going above 140 in the summer of 2008 helped add a final bullet to the head of the consumer.
Finally, there is not much money printing occurring. Only reserves being built.