“Investing in agriculture today will be like investing in the oil sector in 2001-2002,” writes Mark McLornan in the May issue of Marc Faber’s Gloom Boom & Doom Report. McLornan runs a fund that invests in farmland. Some of his on-the-ground observations confirm many of the things I’ve been telling my readers for the past several years.

As for likening agriculture today to oil in 2001-2002, an investor’s pulse quickens. We all know the great run oil stocks had as the price of oil sprinted from under $30 to a peak of $143 per barrel. Investors made hundreds-of-percent gains – even thousands-of-percent gains. What most investors forget is that oil prices halved from 2000 to the bottom in 2001, just before the great run-up. The same sort of setup seems to be happening today in the agriculture sector. Most ag commodities fell more than 50% after hitting their June 2008

Everybody knows there is some kind of food crisis. Grocery prices are painful. Wal-Mart has rationed rice purchases. Mexico has had tortilla riots due to corn prices. Rice riots have occurred Asia. China introduced laws prohibiting conversion of human food crops to fuel.

However, who would have predicted a 5 standard deviation price move for an index of 60 foods, or a 16 standard deviation move in rice prices. No, that is not a typo. Bloomberg today reported a UN Food Crisis study and related price charts revealing this food Black Swan.

At the core of the definition of Black Swan is an unpredictable and unexpected price move that is way off the chart in terms of standard deviations from the mean.

Since 3 standard deviations theoretically encompasses 99.7% of all observations, 5 to 16 standard deviations is a shocker.

We’ll have to rely on businesses and