The notion that the increased interest and demand for Potash means that we’re facing a massive food shortage is too dramatic, says Eclectica’s lively hedge fund manager, Hugh Hendry.Hendry was on BBC Newsnight to discuss what everyone’s talking about now that BHP Billiton is in a battle to takeover Potash corporation of Saskatchewan, the world’s largest fertiliser company – whether or not the spike in fertiliser demand implies about an future food shortage.
Hendry, who is calmer than usual – perhaps because he’s with two women, says slow down. Asia’s experiencing fantastic economic growth, he says, and during their prosperity, their diet is changing.
In the future, their changing diets might put pressure on the food supply, he says, if it’s left unchecked, if China or the rest of Asia doesn’t have a recession.
But worry that there will be a shortage of Potash, fertiliser, which shot up to $1,000 per ton recently, is a result of an irrational fear that there will be a food shortage, because China will experience a recession. (Here’s more on why Hendry is shorting China.)
The guest who’s on BBC’s newsnight with Hendry also offers little condolence. She says that China’s land has been and will be able to get on for sometime without much fertiliser.
Chinese consumption of Potash is 35% less than we use in Western agriculture — for now, she says.
But the more they demand of their land, the more fertiliser it will need.
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