Dear member,

Every year there is less arable land (ideal farming land), more people and more severe and unpredictable weather patterns in the world. These factors have made farming a difficult, but more profitable industry to be in lately and this trend has no end in sight.

Global population is exploding through the roof and the two most populous nations on earth, China and India, are becoming wealthier. This is going to drive demand for soft commodities such as wheat, grain, sugar and several other agricultural products in the years ahead.

Rising incomes in the developing world, along with rising inflation, have, without question, set the stage for a food crisis.

Where has all the Arable Land Gone?

Look around your community, or on your drive into town, and you're likely to see a green field or section of arable land being cleared for a larger highway system or a new urban dwelling. In February of 2011, when the most recent food crisis was peaking amidst record soft commodity costs, our Volume, Agricultural Profits to be Had, was published.

Below is an excerpt:

Urbanization and destruction of farmland is a major issue impacting the cost of global food prices. Roughly 25% of the globe is land, the rest is water. Of that 25% , only 3% of it is arable land. This 3% is being eroded year after year by expanding populations and urbanization. Unfortunately, arable climates are also highly sought after climates for people and millions have been migrating to such areas. This trend is continuing and is very scary because once farmland is destroyed, it is almost impossible to get back.

The globe's productive land is a constantly changing resource. Changing climate patterns, human interaction and intervention are always at work, shifting the boundaries of productive land. As this land disappears, the demand for farmable land and the valuable harvest it produces will increase.

We are not here to debate the impacts of global warming and whether it is real or not. The hottest decade ever recorded was the last decade. NASA, along with countless environmental groups, from dozens of countries, have confirmed this. The earth is getting warmer and the weather more extreme. This has created a damning effect on agriculture crops worldwide in the last few years.

This was not the last time our team spoke of the coming food crisis and our strong belief in the agriculture sector. In August 2011, Managing Director of PinnacleDigest.com, Aaron Hoddinott, published an article titled, "A Food Crisis is Imminent" in which he states:

The writing is already all over the wall for a pending food crisis; the west just hasn't seen it on a domestic level yet, but believe me, we will. It's time to get ahead of this trade.

Did You know wholesale food prices have doubled since 2004?

Did you know there has been a major global movement from many leading nations to acquire foreign farmland in an attempt to attain food security?

The world's population is now at 7 billion people. It has doubled since 1968.

40% of the world's population is under the age of 25. This is a very critical statistic as over the next 15 to 20 years, 2.8 billion people will be entering their peak earning years. Most of these 2.8 billion people (particularly in China and India) will grow up much richer than their parents as they are what we call 'the rising middle class in developing nations'. And with a rising middle class in developing nations, comes a demand for higher-end foods such as meats and dairy that we in the west take for granted. This will put a significant strain on world supply (it is already happening, we just haven't felt it YET). Couple that with the fact that the world is adding 80 million people per year to its population total (that's more than double the population of Canada) and a food crisis is imminent.

With Europe already in a recession and the US likely to slip into one before too long, investors should be reviewing human needs, not human wants. People die if we do not consume protein, vitamins and food. With 80 million new people coming into the world and arable land shrinking by the millions of acres every single year, food, and all things needed to sustain its supply, will continue to rise in price.

The price of grain hit a record this past summer as the US endured its most severe drought in 56 years. The price of corn and soybeans also surged to all-time records. Take a closer look at the long-term steady price increases of all things food related.

10 Year Food Price Index - Data Complied by the World Bank

chart source: ycharts.com

30 Year Commodity Agricultural Raw Materials Index Monthly Price

chart source: indexmundi.com

GMO's Jeremy Grantham is forecasting a severe and ongoing food crisis. As such, he recommends that investors structure portfolios with a focus on natural resource plays to maximize returns and prevent losses due to surging commodity and food prices and a spike in inflation.

What is the World Bank Group doing to combat this ongoing food crisis?

In 2012, the World Bank Group boosted agriculture and agriculture-related investment to a staggering $9.3 billion. For the World Bank Group, this was the highest investment in 20 years (in nominal terms).

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The Season

Tax-loss selling season is kicking into high-gear and should peak within two weeks. The TSX Venture is crumbling under the weight of selling. Many junior stocks are feeling the wrath of this selling-season and trading at 52 week lows and even multi-year lows.

Clean Seed Capital (CSX:TSXV), an agriculture technology company which we own shares in, who is also an advertiser on Pinnacle, has seen its share price hit a high of $0.40 this year and is now trading at $0.17. The company currently has a market-cap of roughly $3.8 million. Its No-Till planting system, comprised of individually patented technologies, took 5 years of development and roughly $6 million in R&D to create. The market is valuing the entire company at roughly 65% of the amount spent researching and developing its technology...

Clean Seed Capital is a company we have researched in-depth, visited its headquarters several times, met with management and studied the technology.

At this stage in Clean Seed's growth curve, the risk remains high from an investment perspective, but the company's No-Till planting system has proven to provide exceptional results. Earlier this year Clean Seed Capital received the results of the soil disturbance analysis conducted by the UBC Centre for Sustainable Food Systems (UBC Farm). The overall assessment of the Company's patented Smallholder/ Developing Nations No-Till seeding equipment was conducted by Dr. Andrew Riseman, Associate Professor and Academic Director of the UBC Farm. It was intended to independently assess the impact of this technology on soil disturbance based on the USDA Natural Resources Conservation Service guidelines. The objectives of the analysis were to determine:

1. Whether the Company's patented in-ground opener blade technology meets or exceeds the conservation tillage standard as outlined in the USDA Natural Resources Conservation Service (NRCS) National Handbook of Conservation Practice.

2. Whether the Company's Smallholder/Developing Nations equipment carrying the patented opener blades are in conformance with the standards outlined in the 2006/2009 NRCS Handbook of Conservation Practices and CCX Offset Project Protocol, namely through the verification of 30% or less soil disturbance.

In Clean Seed's announcement of this milestone, it stated:

The results concluded the Company's technology performed exceptionally well across all soil and cover crop conditions used in this trial and produced an exceptionally low percentage row disturbance value of 0.21%, a value below other no-till planters in the RUSLE2 soil tillage intensity assessment program (http://fargo.nserl.purdue.edu/rusle2_dataweb/RUSLE2_Index.htm). It also is in conformance with CCX Offset Project Protocols leaving an average undisturbed cover of 98% after planting.

CEO, Graeme Lempriere states, "The positive result of the soil disturbance analysis conducted by Dr. Andrew Riseman marks the completion of a milestone for Clean Seed Capital and validates our compliance with the USDA Natural Resources Conservation Service (NRCS) National Handbook of Conservation Practice. We are delighted with a 98% undisturbed soil surface result and look forward to working with UBC in the coming months on our large scale commercial equipment. We are proud to be in collaboration with the UBC Centre for Sustainable Food Systems (UBC Farm) and look forward to the next phase of our development."

Click here to read full news release.

In case you aren't aware of what No-till farming is, and why Clean Seed's patented No-till farming equipment is relevant, consider this:

The agriculture sector has entered an era where true conservation of the world's farmlands using sustainable agriculture methods is no longer an option, but a necessity. Global soil degradation has reached dangerous levels.

Industry analysts, governments as well as global food initiative organizations believe No-Till farming is at the heart of farmland preservation.

What is No-Till Farming?

To understand No-Till farming/planting and why it's desperately needed now more than ever, we must first explain tillage (or tillage farming). This is the way humans have been farming for the last several hundred years i.e. plowing a field. This age-old practice of turning the soil before planting a new crop is a leading cause of farmland degradation. Many farmers have already replaced plowing with No-Till farming.

Tillage farming (plowing) has worked for farmers, but isn't believed to be a sustainable way to farm and isn't the most cost effective. As the industry has become more educated on the subject, a worldwide movement to No-Till farming has developed and is gaining momentum rapidly. The reason for this shift is simple; tillage farming dries the soil before seeding, causes the soil to lose a lot of its nutrients and ability to store water (erodes soil), increases the amount of fertilizer and chemical runoff (a very dangerous problem developing in our environment), reduces organic matter in the soil, destroys soil aggregates, compacts soil, can attract harmful insects to the field and hurts yields for farmers over the long-term.

According to the GMO Quarterly Letter, written by Jeremy Grantham, the Co-Founder and Chief Investment Strategist of Grantham Mayo Van Otterloo, a Boston based investment firm with over $97 billion in assets under management, "global soil is eroding at a rate that is several times that of the natural replacement rate. It is probable, although not certain, that the U.S. is still losing ground. The world as a whole certainly is."

Jeremy Grantham is a legend in the investing world and has predicted several booms and busts in the past. He went on to state in his 15 page report titled 'Resource Limitations 2: Separating the Dangerous from the Merely Serious' that:

"The one piece of unequivocal good news [in respect to farming and soil] can be found in the growth of no-till farming. In no-till, the residue of the previous crop is left on the ground and new seeds are planted without plowing. This technique reduces erosion by about 80%, reduces fertilizer run-off, preserves moisture, improves the soil (and, quite possibly, the quality of the food), and reduces the emissions of heat trapping gasses."

In his report, Jeremy Grantham goes on to state "The growth of no-till has been very rapid in South America, rapid in the U.S. (which is now at 35%), and moderate in many other developed countries. But it is used on only about 5% of farms globally."

What isn't mentioned in Mr. Grantham's quotes is the increased regulation coming into the farming industry that has already mandated the use of conservation or No-Tillage practices in some regions.

Clean Seed Capital's patented No-Till planting system can deliver measurable financial and ecological benefits to the world of agriculture.

Clean Seed Capital has beefed up its management team in recent months as it plans to bring its patented No-Till equipment to the commercial market. Mr. Colin Rosengren, President of Rosengren Farms, has joined the company as Vice President, Agronomic Practice and Protocols.

Mr. Rosengren is a third generation zero tillage large scale commercial farmer who specializes in intercropping. He owns and operates Rosengren Farms, a modern, innovative and sustainable commercial farm located in South East Saskatchewan. Rosengren Farms is a pioneer of sustainable agricultural production practices and are at the leading edge of multiple inter cropping systems.

Clean Seed Capital (CSX:TSXV) is a stock we will be watching closely over the tax-loss selling season. Its main weakness, from an investment standpoint, in our view, is its lack of liquidity. It isn't a stock for traders. However, it is important to understand that roughly 46% of the company is owned by insiders and management. Considering that the company has 21.8 million shares outstanding, that leaves roughly 12 million shares for the public at the moment. The lack of volume at these current price levels isn't surprising considering the company went public just over a year ago at $0.30 per share. It currently trades for $0.17.

Clean Seed also completed and demonstrated its commercial equipment in late summer of this year. Click on the image below to watch the demonstration video for its patented technology.

The commercial equipment is now in Saskatchewan with the company's Vice President, Agronomic Practice and Protocols, Mr. Colin Rosengren in preparation for a marketing campaign in early 2013.

All the best with your investments,

PINNACLEDIGEST.COM