Food security is a “big theme” according to Credit Suisse, which outlined some of the potential winners and losers as a result of rising inflation.
Prices of food tend to stay higher for longer during times of inflation, with current prices being driven by supply chain disruptions, bans on exports from Russia and Bulgaria and rising energy costs.
Increased demand for land to offset carbon emissions, weather events, such as droughts in the US and a “poor” South American soybean harvest have also contributed to rising food costs, said Credit Suisse.
However, there are some industries and companies that will benefit from the rising costs, as producers and farmers look for alternative options to cut costs where possible.
Credit Suisse sees potash and nitrogen fertiliser producers as potential beneficiaries, as well as fertiliser alternatives such as seed coatings producer and FTSE 100 member Croda International.
Agricultural equipment manufacturers such as American companies AGCO and Deere should also benefit, alongside herbicide producers, genetically modified plant producers and vertical farmers.
Fish producers could benefit as it has similar amounts of protein to meat but more health benefits, with companies like Nomad and Mowi named by the broker.
Given the sunflower oil shortage, alternative forms could become increasingly popular, with palm oil being named the best alternative by Credit Suisse.
Grain processors and farmland REITs, such as Bunge and Gladstone Land could also benefit from higher prices.
On the downside, the broker highlights some of the possible sectors that could suffer as a result of inflation.
European food retailers that cannot pass on prices to consumers without losing market share to some of the discounts, such as Aldi and Lidl, would lose out due to being unable to compete on price with competitors.