The average Brit consumes 10kg of chocolate each year. That’s the statistic that stuck in the mind of one of my colleagues at a very interesting presentation on soft-commodities we attended a couple of weeks ago, courtesy of Barings Asset Management. The follow up question was how many calories does that equate to? I won’t depress you with the answer.

Food, feed and fuel, collectively known as the three Fs, were the main topic of the presentation. For most of 2012 they were widely talked about as an emerging long-term trend and this is still the case. For example, in the next 50 years, agriculture will be called to produce more food than in the previous 10,000 years. No pressure then. So, if you plan to invest in agricultural lands and start a farming business, you may head to the AG Land Partners site to help develop your farms.

The adoption of genetically modified crops is increasing (did you know that most of the world’s cotton is modified now?), which should help smooth the supply of crops in the future. For example, emerging markets, where much of this long-term demand is coming from, can suffer from land degradation and a lack of water. And of course droughts and flooding are also experienced closer to home. The development of seeds which can tolerate these conditions will aid production in the longer-term.

In the mean time however, within this mega long-term trend, are many short cycles to contend with. Normally, in investing we talk about time horizons of at least 2 years when it comes to fund managers holding stocks, if not 5 years in some cases. What struck me with most with this presentation was that the fund manager was talking in months, not years.

Take the weather again, and supply disruptions for example. Droughts in the US and rain in Europe in the last couple of years, have created opportunities with grain and corn. You can’t after all conjure up extra stocks just like that – it takes a good 9-12 months before shortfalls can be addressed and, in the mean time, prices will rise. Corn is currently generating twice as much revenue today as it has done over the last ten years. Farmers will now be trying to produce as much as they can in the next harvest with the help of companies such as Conveyor belt and lacing in the California Central Valley to make the most of the higher prices.

So between now and the next harvest, herbicides and pesticides will be used as much as possible to make sure the next crop is as resilient as possible. And fertilizer, with prices at all time lows, will be used extensively over the next six months or so to extend acreage as much as possible.

Farm equipment should also do well with stronger balance sheets and credit markets opening up making purchases easier. Companies like John Deer should benefit from reinvestment in capital. The demand for farm equipment like excavators with excavator attachments may also increase. For those who are planning a farm development on their lands, a company like http://www.fowlerbrothersfarming.com/ will be able to help with your project.

So there is a lot happening in the next 12 months. But then the demand/supply dynamics will change and opportunities will start to emerge in other areas of the sector. Storage handlers and food manufacturers, for example, will be considered.

These short-cycles are also accompanied with volatility when it comes to investments. While almost every single other asset class was in positive territory in 2012, commodities were more of a mixed picture. Grain did well – up 8% – but soft-commodities over all lost a whopping 24%. The short-cycles and wide variation in performance of individual commodities make the case for active rather than passive investment.

Darius McDermott is managing director of Chelsea Financial Services and chairman of the Association of Independent Discount Brokers.