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Asia's rice crisis easing

Amid expectations of a record harvest, prices decline. Cambodia lifted its export ban this week.

By David MonteroCorrespondent of The Christian Science Monitor / May 31, 2008

PHNOM PENH, Cambodia

Asia's rice crisis, which has shaken governments and fomented social unrest, could be easing, as regional exporters announce bumper harvests and consider lifting export bans, developments that could inject badly need stocks back into world markets.

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In an announcement that garnered praise around the region, Prime Minister Hun Sen said on Tuesday that Cambodia would lift an export ban imposed in March and sell 1.6 million metric tons of rice held in its stocks after determining that it had enough rice to meet the country's demand.

The move by Cambodia – the first exporting country to lift its ban – signals that, thanks to good weather forecasts, bountiful harvests are on the horizon, experts say.

"We expect this year to be a very good harvest," says Ny Lyheng, managing director of the Federation of Cambodian Rice Millers Association in Phnom Pehn, the capital. Cambodia is expecting to harvest 6.8 million metric tons, up from 6.7 million metric tons last year.

Rice, the staple diet of half the world's population, has increased in price by 76 percent in Asia and many other parts of the world since December, a result of shortage concerns and regional export bans. But experts have been counseling that, as long as harvests do well this year in Asia – where three-quarters of exportable rice is grown – the crisis will ease.

That seems to be happening. Authorities in Vietnam – the world's second-largest producer - say they expect to be able to export 4.3 million metric tons. As a result, an export ban imposed in March is likely to be lifted by July, according to Bloomberg.

And Pakistan, the world's fifth-largest exporter, announced on May 16th that it has enough rice to meet domestic demand and would sell 1 million metric tons overseas.

"The markets needed some positive signs, and this is one of them," says Duncan Macintosh, spokesman for the International Rice Research Institute in the Philippines, referring to Cambodia's announcement. "The harvest has just gotten under way and there's a lot of rice reaching markets in Asia."