Why A World Food Crisis Is Coming If Asia Doesn’t Slow Down

Eclectica’s Hugh Hendry has warned that the world faces further commodity price rises and a potential food shortage if Asian economic growth continues unchecked. In a discussion on Newsnight yesterday, the hedge fund manager said the effect of years of underinvestment in agriculture and rapid population growth are now being keenly felt. ‘Asia is putting on fantastic economic growth and if China or Asia does not have a great recession, we will have pressure on the food supply,’ he said.‘For 30 years, the price of agriculture has collapsed it fell by 90% in real terms so we haven’t invested in the sector. As a world society, we are now acutely vulnerable in the business of feeding ourselves because we have not spent enough and organised the production of agriculture in a manner that is appropriate.’Another danger, he says, is that crop yields in China decrease with the Chinese authorities refusing to overpay for potash to produce the fertiliser it needs. The price of potash, which is closely controlled by a small number of producing countries, including Russia, Canada and Belarus, has soared fourfold over the past decade.

‘They [the Chinese authorities] are aggrieved and stop consuming and risk an absolute collapse in their yields,’ he says. ‘China does have a vulnerability in feeding itself.’ He added that this is likely to see China to continue buying up tracts of land and resources in Africa.

via Hugh Hendry Explains Why A World Food Crisis Is Coming If Asia Doesn’t Slow Down

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