Equity and commodity markets may be volatile these days, but the food and agriculture sector has remained strong despite economic anxiety.

The sector’s relative strength is largely due to robust demand, which will only increase as the world’s population continues to grow. In fact, a number of global organizations, including the United Nations, project the global population will reach 9 billion by 2050. In the short term, crop production has struggled to keep pace with demand, as the ranks of the middle class continue to swell in developing nations such as China, India and Brazil. That’s driving demand for staple foods, such as grains. In addition, greater wealth in some formerly agrarian economies has led to greater demand for diets rich in protein, which in turn puts further strain on the ability of food producers to accommodate demand.

The sector has also benefited from weather-related disruptions that have plagued some of the world’s food-producing regions. Indeed, severe droughts and wildfires in Texas, heavy rains in the American Midwest, and similar problems in Eastern Europe and Australia have served to push the prices of corn and other grains higher. And should climate change intensify, weather-related disruptions may grow even worse.

Although the weather events this year haven’t caused the same price spikes in agricultural commodities that we experienced last year, they have prompted China to release grain from its state stocks to help control prices. Additionally, India initiated a grain silo construction program to cushion against future price shocks. And with the yield of this year’s US corn crop in doubt, a significant spike in corn prices is still possible before the end of the year.

Although a spike in food prices is unlikely to have a great effect on the US–Americans only spend about 7 percent of their incomes on food–higher food prices have the potential to create serious problems in many parts of the world. In fact, high food prices may have sparked the recent social unrest in the Middle East, a region where as much as half of incomes are allocated to food spending. And with global food price inflation up more than 30 percent last month according to UN data, there are likely to be further problems with supply keeping up with demand.

In the US, the weather is likely to remain a problem for farmers. Much of the dramatic weather that recently disrupted production in Texas and the Midwest has been attributed to the effects of La Niña, which is thought to be caused by lower-than-normal temperatures in the Pacific Ocean. This weather pattern typically causes excessive rainfall during the planting season and insufficient rainfall during the growing season. Forecasts from both the US National Oceanic and Atmospheric Administration (NOAA) and Japan’s meteorological agency predict La Niña will continue causing problems well into 2012, potentially disrupting another planting cycle. If that does occur–and NOAA has a good track record of predicting these events–we can expect significant spikes in global grain prices in the not-too-distant future.

As a result of growing populations and potential weather disruptions, there are strong short-term and long-term factors driving higher global food prices.

We’ve been playing these trends with Market Vectors Agribusiness ETF (NYSE: MOO) since March 2010, and are currently sitting on an 11 percent gain for the fund.

Market Vectors Agribusiness ETF’s portfolio is constructed from the stocks of 45 companies, all of which make at least 50 percent of their total revenues from agri-products, agricultural equipment and chemicals, or the transportation of agri-products. In short, the fund offers exposure to all facets of the agriculture business. Top holdings Potash Corp of Saskatchewan (TSX: POT, NYSE: POT) and The Mosaic Company (NYSE: MOS) are mainstays of the fertilizer business, while Monsanto (NYSE: MON) and Syngenta (NYSE: SYT) are two of the world’s best-known seed and chemical outfits. Other holdings, such as Deere & Co (NYSE: DE) and Kubota Corp (Japan: 6326), are leading manufacturers of agricultural equipment, such as tractors and irrigation systems.

The fund’s annual expense ratio  is just 0.56 percent, a small price tag for such broad exposure to the sector. Consequently, it’s no wonder that it’s also one of the largest and most heavily traded agricultural funds available.

Agricultural commodity prices could soon push even higher. Continue purchasing Market Vectors Agribusiness ETF under 57.