Adrian Day, author of “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks,” spoke recently with IndexUniverse.com Managing Editor Olivier Ludwig about the global boom in commodities, now entering its second decade.

It didn’t take long for the discussion with Day, who also heads Maryland-based Adrian Day Asset Management, to turn to the potential of real shortages in a number of vital commodities. Day’s firm now owns ETFs such as the ETFS Physical Platinum ETF (NYSEArca: PPLT). But he wonders whether investment opportunity won’t soon morph into something else, as the scarcity of many resources comes into sharper focus in the coming years.

Ludwig: Why write a book on resources?

Day: I happen to think that resources are really the place to be right now, and I was asked to write an overview. But the more I researched, I must say, I became truly concerned that there could be actual shortages of many resources in the years ahead.

Ludwig: When might real shortages become apparent?

Day: I don’t know how you answer “when.” But I think we will be extremely fortunate if we don’t see significant strife over the next decade because of a shortage in resources. In agricultural commodities, we had a foretaste of it two years ago when there were wheat shortages and rice shortages.

Ludwig: When you talk about net importers of commodities, China is quite vulnerable, isn’t it?

Day: Absolutely. It wasn’t so long ago that China basically fed itself and didn’t import much in the way of imported foodstuffs. China’s fundamental problem is that they don’t have an excess of arable land. They also have a great shortage of water, and their water isn’t necessarily close to the arable land. And that arable land is increasingly being gobbled up for industry and cities and so on.

Ludwig: And this trend is only going to become stronger over time?

Day: Yes, I think so. I can’t think of any example of countries that have come this far along in the industrialization path and stopped. The Chinese people’s expectations are increasing. They’re moving to the cities. When we talk about disputes and riots, it’s easy to imagine, as I said, when it comes to shortages of agricultural commodities.

As you may know, China has bought up arable land in Tanzania, and I’m trying to imagine a picture in three or four years' time if there are food shortages or crop failures in Tanzania. Are the people going to stand at the docks waving goodbye when the Chinese ships load up before they go back to China? I don’t think so.

Ludwig: Your book is very much focused on China. There are plenty of other stories of rapidly developing countries on the planet, such as India or Brazil. Why the outsized focus on China?

Day: I think there are a number of reasons. One is that China is about 20 percent of the world’s population, so it is a more significant factor, even if all the developing countries are expanding at the same pace. And No. 2, most importantly, it’s further along in the process. India, in terms of per capita consumption, is about where China was 10 years ago. And thirdly, China produces far less of its own needs than, say, Brazil does. Fifteen years ago, China was pretty much self-sufficient, but as demand has expanded, it’s not able to ramp up production in the way that, say, Brazil could or even Russia could.

Ludwig: The third reason you just laid out—the fact that China’s no longer self-sufficient, could bode well for helping pull the industrialized world out its economic doldrums, no?

Day: Absolutely. For example, there’s no question that Brazil has been helped along significantly by demand from China for raw materials. That’s also what’s helped Indonesia. And it has potential to help a lot of countries that basically rely on resources. And if the political framework were right, it would do wonders for at least half of Africa.

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