If you are shaking you head as you walk down the food aisles in your favourite grocery store; wondering how you are going to be able to feed your family, get ready, the cost of food is expected to rise.

Bill Barbour who is the investment manager at the DWS Global Agribusiness Fund, a $1.6 billion fund from Deutsche Bank says that ag-flation is why food prices and rising and he anticipates that the cost of food will increase by 50 per cent over the next five years.

Ag-flation, Barbour says is “the sudden and irreversible upward momentum in food prices which is going to change the world as we know it.”

In Australia milk and dairy prices are leaping ahead and wheat prices are at an all-time high. Australia is not the only country where prices are on the rise; in China pork prices are up 90 per cent, in Britain food prices are growing at their fastest in a decade, in Mexico a sudden lift in the cost of flour for tortillas caused a riot a few months ago.

Why are food prices rising? A combination of factors is behind the increase in the cost of one of most basic needs. There is drought in Australia and drought reduces supply while demand remains the same or even rises.

Another major factor is or the developments around climate change, such as the new limitations on land use and the push (especially in the US) to replace petrol with biofuels.

Biofuels quotas, for example, drive up the price of corn and this pushes up the price of beef. Higher milk prices drive up the costs of butter and cheese for example.

The biggest driver of high food prices is the growing appetites of the peoples in China and India with combined populations of over 2 billion are gradually moving from a vegetarian diet to a meat based on, similar to our North American diet.

US investment guru Jim Rogers — who correctly called the "hard commodities" boom of recent years — now says "soft" commodities will shine. He says: "There are three billion people in Asia and they're not going to lose their appetite because we've got new problems in the US."

Who is benefiting from the increase in food prices, not consumers that is certain? Farmers the larger farms may be able to survive conditions such as drought and keep supplying the market but the smaller farms are threatened.

International investors are buying farms and see dollar signs in their future. Investors in the stock markets are looking at a mixed picture, for example, food manufacturers, such as Goodman Fielder, have not managed to exploit the higher price of grain. On the other hand "pure play" soft commodity companies have been big winners.

The share price of beef held by the Australian Agricultural Company, which has land holdings the size of Scotland, has jumped by about a third since the start of the year, Grain companies, such as the Australian Wheat Board, are having a very strong year despite internal scandals.

Bill Barbour has raised $14 million from local investors in less than a year. And he says "Higher food prices are inevitable all over the world; we're in a sweet spot.”