Farmers are paying more for supplies to grow their crops and they're passing those rising costs onto consumers. The Wall Street Journal reports that farmers paid 65% more for fertilizer in April 2008. Fuel, the second-fastest rising cost, is up 43%. And seed prices have risen 30%. But you can hedge your rising food costs by investing in companies that profit from rising fertilizer prices.

Farmers say too much market power is concentrated in the hands of a small group of companies in the U.S., Canada and Russia that dominate global production of potash and phosphate. Phosphate is up 174% from $365 last year to $1,000 a ton. The price of a ton of potash is up 204% from $230 to $700. Thanks to a rise in natural gas prices, the price of Urea, a nitrogen fertilizer, has doubled to $600 a ton.

Should you hedge your rising food prices by buying stock in Potash and seed suppliers? Potash Corp. (NYSE: POT) and Mosaic Corp. (NYSE: MOS) have benefited from the rising price of Potash. And Monsanto Co. (NYSE: MON) is the biggest seed company out there. They have benefited in the past year -- with stock prices up 202%, 279%, and 103% respectively. But will they keep rising?

Potash Corp. of Saskatchewan, Inc. (NYSE: POT) shares are soaring today after competitor Mosaic Co. (NYSE: MOS) reported a third-quarter adjusted profit of 99 cents per share, beating analysts' expectations of 95 cents per share. MOS benefited from a global boom in the agricultural sector, which should certainly also be good news for POT. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on POT.

After hitting a one-year low of $54.93 last March, the stock has hit a new one-year high today. POT opened this morning at $173.01. So far today the stock has hit a low of $171.11 and a high of $175.46. As of 12:20, POT is trading at $173.90, up $6.23 (3.7%). The chart for POT bullish but deteriorating.

For a bullish hedged play on this stock, I would consider a May bull-put credit spread below the $130 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just six weeks as long as POT is above $130 at May expiration. POT would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.

POT hasn't been below $130 since January and has shown support around $154 recently. This trade could be risky if the company's earnings (due out on 4/24) disappoint, but even if that happens, that position could be protected by support the stock might find around $150 from it's 50-day moving average.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in POT or MOS.