Additional Factors
Agricultural land that has water is becoming a hot commodity in its own right. Some predict such land may be very valuable in the future, fueling a rush to invest in farmland. Commodity guru Jim Rogers has already predicted agriculture will be one of the greatest industries over the next 20 years.

The rising cost of raw materials to harvest crops puts pressure on the price. From labor, equipment and transportation to marketing, the costs add up.

Another reason food prices may stay elevated longer than expected is that land ordinarily used to grow food is being turned over to biofuel production. Clean energy laws and increased interest in green technology are leading to the greater use of biofuels such as ethanol as sources of energy.

So what is a person to do? You have to eat. But there is a way to hedge your grocery bill with ETFs. Agricultural ETFs come in a variety of shapes, sizes and structures. Fortunately, advisors have more and more choices of how to combat inflation and perhaps profit at the commodity level via companies tied to this industry.

Futures-Based ETFs
Futures-based agriculture ETFs attempt to reflect the performance of the underlying commodity or basket of commodities by purchasing futures contracts. Additionally, ETFs that hold futures contracts have uninvested cash, which is usually placed in government bonds. The interest is used to cover any expenses of the ETF. A majority of the futures contracts traded on the exchange floor are settled or swapped for cash before the expiration date.

ETFs that own futures contracts always roll those contracts forward; they never take delivery. Contracts in ETFs are sold to someone who will take delivery of the commodity in exchange for a contract that has a date that's further out. But depending on the makeup of the commodity's futures curve, rolling futures contracts may create profit or loss for the ETF. That's because commodity markets are always in a state of backwardation or contango. Contango is when the futures price is higher than the spot price. Backwardation is when the futures price is lower than the spot price.

PowerShares DB Agriculture Fund (NYSE Arca: DBA)
Teucrium Corn (NYSE Arca: CORN)

Equities-Based ETFs
Equities-based agriculture-related ETFs try to reflect the performance of agricultural commodities producers. The financial performance of the companies could be leveraged to the underlying commodity, as well as other factors that affect the profitability of production. Consequently, the ETFs may not mimic the performance of the underlying commodity. Equities don't give pure price exposure, but they do allow you to capitalize on better profit margins as a result of rising prices.

Jefferies | TR/J CRB Global Agriculture Equity Index Fund (NYSE Arca: CRBA)
PowerShares Global Agriculture Portfolio (NYSE Arca: PAGG)
IndexIQ Agribusiness Small Cap ETF (NYSE Arca: CROP)
Market Vectors-Agribusiness ETF (NYSE Arca: MOO)

ETNs
Agriculture-related exchange-traded notes (ETNs) are non-interest-paying debt instruments. An ETN's price will try to reflect price changes in the underlying commodity index. ETNs are debt instruments backed by the full faith and credit of the issuer. They follow an underlying index or product, and anyone can buy them. Since they are debt, if the issuer goes bankrupt, you become another creditor and you'll have to get in line. ETNs also have maturity dates.