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North Korea’s largest fertilizer plant reportedly shut down

Wednesday, November 6th, 2019

By Benjamin Katzeff Silberstein

Fertilizer production is one area where UN sanctions appear to have rather dire unintended consequences. Daily NK reports:

Daily NK reported in February of this year that production at the complex was gradually falling.

UN sanctions and the ensuing ban on the import of oil, a key ingredient in chemical fertilizers, may have also been a factor in the factory’s closure, the source added.

FAILING TO MEET DEMAND

North Korea’s fertilizer production is currently meeting only one third of the country’s total demand. North Korea uses a total of 1.55 million tons of chemical fertilizer per year but only produces about 500,000 tons, Daily NK sources said.

North Korea relies predominantly on imported fertilizer. Farm workers reportedly prefer the fertilizer from the Hungnam Fertilizer Complex because it is superior in quality than fertilizer imported from China. The military was given priority for fertilizer produced at the complex.

The shortage of fertilizer is adversely affecting agricultural production, particularly given that this year’s production of fertilizer has fallen far short of demand, Daily NK sources said.

“Collective farms have had an overall poorer harvest this year compared to the last,” said one of the sources. “Farmers are blaming the lack of fertilizer for the poor harvest.”

UN SANCTIONS HAMPER PRODUCTION

North Korean authorities have made various attempts to normalize fertilizer production. For example, the authorities have installed large ammonia synthesis facilities and introduced 4,000 horsepower compression engines to help increase fertilizer production, Daily NK sources confirmed.

The import of a wide range of machinery and raw materials is banned under UN sanctions, however. Some North Korea observers argue that the ban on these imports only make it harder for North Korea to improve its agricultural production by itself.

“North Korea needs a dependable supply of coal, oil and electricity, and a total revamp of its fertilizer manufacturing facilities to normalize fertilizer production. None of this is possible due to UN sanctions,” a former North Korean agricultural official familiar with fertilizer production in the country told Daily NK. “If the Hungnam Fertilizer Complex remains nonoperational, it is highly likely next year’s agricultural production will be adversely affected.”

WORKERS REASSIGNED TO OTHER PROJECTS

Daily NK sources also reported that some 70% of the workers at the Hungnam Fertilizer Complex were sent to construction sites throughout the country after the complex shutdown. These construction sites included the Wonsan-Kalma Coastal Tourist Zone, the Hamhung-Wonsan highway, and the Tanchon Power Plant. Some workers were even sent to the fields to farm.

“The Hungnam Fertilizer Complex employed more than 10,000 workers. Lots of workers complained after they were sent to do other work following the shutdown,” one of the sources told Daily NK. “Many people wanted to work at the complex because it gave employees a stable supply of rations. That’s all in the past now.”

Article source:
N. Korea’s largest fertilizer complex no longer operational 
Jang Seul Gi
Daily NK
2019-11-06

Note that the article confirms that rations are (at least in this case and most likely usually, if at all) distributed by enterprises as remuneration rather than through PDS centers.

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Rice prices up in North Korea, market price data says. How bad is it?

Friday, August 2nd, 2019

By Benjamin Katzeff Silberstein

Asia Press reports that rice prices have “skyrocketed” in North Korea this month:

The price of domestic rice, which stood at roughly 4,500 won (about 0.53 USD) per kilogram for most of the year, began to rise in July, surpassing 5,500 won (about 0.65 USD) per kilogram by the end of the month.

Multiple reporting partners living in the northern regions of the country were asked to investigate the reason behind the rise in the price of rice.

A reporting partner living in a city in Hamgyong Province explained, “The rice merchants say that, ‘domestic rice is scarce, so it is only a matter of time before it runs out’. The rise in price will likely continue from after the next harvest until the end of the year.”

Still, rice is not disappearing from the markets. Imported Chinese rice is sold at stable prices across all markets.

Most of this Chinese rice, however, is old and was harvested some time ago. The North Korean government, though, continues to import the low-quality, cheap Chinese rice, favoring ‘quantity over quality’.

Domestically produced North Korean rice, on the other hand, is not old and sticky. Due to its higher popularity, it is generally 5% more expensive than Chinese rice. This slight price difference was very stable and had remained unchanged over the last 20 years.

The cause of the domestic rice’s scarcity and subsequent rise in price is presumed to be the effects of last year’s heat wave and drought on production.

A rise from 4,500 won to 5,500 in only a few weeks is indeed quite noteworthy and potentially alarming. But what does context tell us?

I know very little about where in the country Asia Press sources its price data from, but I suspect it’s primarily or perhaps even only North Hamgyong province. It does seem like this steep price rise may be a somewhat localized phenomenon. Looking at the Daily NK price data gives us a little bit of a clue. It hasn’t been updated since July 23rd, so it may be that it will catch up and register similar shifts later on. But looking at the numbers for the past few weeks, prices in Hyesan have increased much more than in Pyongyang and Sinuiju.

So this might, for various reasons, be a localized phenomenon.

It should also be noted that prices usually rise during the summer months, as the next harvest draws closer, and storage runs lower and lower. Prices last summer around this time were much lower than present, but in 2017, they were significantly higher. So I would caution against drawing any hard conclusions as of now, and hopefully the next report by Daily NK will tell us more.

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Farmers in North Korea sent to labor camps for stealing potato seeds

Tuesday, June 11th, 2019

Benjamin Katzeff Silberstein

Perhaps this wouldn’t be a problem if farmers worked for themselves to a greater extent, rather than primarily to fill the state quota…

Daily NK reports:

A farmer at a potato farm in Yanggang Province was recently sent to a forced labor camp for stealing seeds meant for planting, a Daily NK source reported on June 3. The incident provides a glimpse into the difficulties faced during the potato planting season  in May.

The farm, a major producer of potatoes located in Taehongdan County, Ryanggang Province, is in an area where locals plant potato seeds for a two-week period starting in early May to ensure the seeds are planted on time. Potatoes in North Korea are important because they can replace rice and wheat and are the major source of calories for some parts of Ryanggang Province.

North Korean farmers refrain from removing the germinal disk from potato seeds and plant potatoes whole to increase yields. The state-run publication Rodong Sinmun recently reported that potato production reached record levels last year.

“There have been many cases where farmers have stolen potato seeds during the ‘potato planting battle’ period,” a source in Ryanggang Province told Daily NK. “The authorities made an example out of two farmers who stole seeds by sending them to a disciplinary labor center for six months.”

At larger farms in Taehongdan County, farmers use trackers to plant whole potatoes. Farmers working on smaller farms, however, plant the potatoes themselves. The potatoes need to be planted 4-5 centimeters apart, but farmers frequently do not follow this rule. Instead, they plant the potatoes farther apart and then hide the potato seeds that are leftover underground to take home later.

“Farm managers have worried constantly about this issue, so they have told farmers that stealing seeds is tantamount to destroying the Party’s agricultural policies,” said the source.

Poorer farmers, however, are faced with hunger during the planting season so they steal potato seeds regardless of these warnings and even sell the seeds in local markets, the source said.

Taehung-dan is, of course, the site for Kim Jong-il’s famous speech on the “potato revolution“.

Full article:
North Korean farmers sent to labor camp for stealing potato seeds
Kim Yoo Jin
Daily NK
2019-06-11

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North Korean media reports drought impacts on rice harvest

Wednesday, June 5th, 2019

Benjamin Katzeff Silberstein

Yonhap:

North Korean state media highlighted worsening water shortages in one of the country’s major rice-producing regions on Wednesday, raising worries about possible harm to this year’s harvest.

“Not a few areas in the South Hwanghae Province are now facing serious water shortage caused by a combination of various factors,” the Rodong Sinmun, the official newspaper of the North’s ruling party, said in an article.

The paper said that the water reservoirs in some areas of the province are falling below normal levels, making it hard for farmers to plant rice in their paddies as scheduled.

The North’s official Korean Central News Agency also reported that the drought is hindering rice-planting efforts in South Hwanghae Province, expecting that precipitation will likely stay low until mid-June.

Hwanghae Province is known as one of the largest rice-producing areas for North Korea. The apparently ongoing drought in North Korea is feared to aggravate the already strained food supply in the impoverished state.

Article source:
N. Korean media highlight drought in major rice-producing province
Yonhap News
2019-06-05

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Famine, Amartya Sen, and the Markets of North Korea

Monday, May 20th, 2019

By Benjamin Katzeff Silberstein

The market factor in North Korea’s current food crisis* sometimes seems unclear. Some have talked about the market compensating for what the state doesn’t provide in the event of a food shortage. But the WFP’s methodology should cover for that. They don’t only calculate collective farms yields specifically, but arable land and production in general. Their estimates may (it’s not entirely clear) be based on data for total farmland available provided by the state, and there are some types of plots that wouldn’t be covered in that case. But WFP uses satellite imagery to verify official information on production figures (see p. 5 of their rapid food security assessment for North Korea).

We don’t know how big a proportion of the total amount of food produced in North Korea is sold on the markets, and how much is distributed through state and semi-state channels such as enterprises and factories, which are sometimes partially operated privately. In any case, when they measure total harvests, this likely, at the very least, includes most sources for the food that’s sold on markets. So a drop in total production still means lower market supply.

So why are markets still so important to understand food security, and why is it a problem that WFP cannot access them freely? Rest assured, this is not for a lack of trying. From pp. 6–8 (my emphasis added):

The assessment team also experienced challenges in accessing markets and acquiring market-related data. However, the team was not able to visit farmers’ markets during the field visit. While authorization was granted at national level to visit farmer’s markets, county authorities informed that they were not able to receive any foreign delegation on the day. Market visits are highly recommended to fill this information gap in future assessments. Finally, the team could only gather limited information on people’s incomes and expenditures during the household surveys.

Again, WFP’s conclusions are still highly relevant and meaningful. But as they themselves recognize, markets are crucial for understanding the microeconomic conditions on the ground in North Korea.

The most important reason, perhaps, is that distribution of food is just as important as food production for food security. As Amartya Sen has shown, food security is often more about who has an “entitlement” to food than about precisely how much food is around. This is where North Korea’s markets come in. Total production is an important metric to be sure, but to really understand how food is distributed, and who gets to eat, we have to also understand precisely how the markets work. We need to understand who uses them and how much they’re able to buy. Prices tell us something about overall supply (though as I have argued, probably not the full story).

Especially in a country like North Korea, where access to food and sustenance is a political matter, distribution (or entitlements) is more than total food production for food security. The markets are a crucial mechanism for distribution in North Korea. As long as WFP isn’t allowed to survey them, and to do more extensive household surveys freely in the country, we won’t truly know what food security looks like.

 

*We still don’t know that there is a crisis at hand, although the food situation appears very poor.

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Food crisis looming in South Pyongan, according to Daily NK

Thursday, May 16th, 2019

Benjamin Katzeff Silberstein

Following the recent publication of a UN report stating that North Korea’s food situation is critical and is set to worsen, sources in the country say that efforts for agricultural preparation are facing obstacles in some regional areas.

The DPRK Rapid Food Security Assessment was published by the World Food Program and Food and Agricultural Organization of the United Nations on May 3, and expressed concern that North Korea could face severe food shortages within the next ten years due to climate change, sanctions and other issues.

“May is the most important month because it is the period that determines whether the year’s harvest will end in success or failure. There’s a lack of workers for planting and this has led to alarm amongst officials,”a South Pyongan Province-based source told Daily NK. “Officials in the major west coast farming areas of Pyongwon, Sukchon and Mundok are concerned about labor shortages.”

North Korea conducts national agricultural support campaigns every spring and mobilizes students, office workers and housewives into the fields. This year, however, the country is facing a labor shortage of more than 50%, according to the source.

“Mobilization orders state that people have to prepare their own food to eat out in the fields,” he said. “Concerns have been raised that there’s a lot of people who can’t do that because there’s no food.”

The North Korean authorities are emphasizing the need to increase rice production and the importance of agriculture through state-run media as the planting season begins, but mobilizing workers into the fields will be difficult due to the country’s poor economic situation.

Concerns have also been raised that laborers will refuse to work in the fields because they are already involved in manure collection activities, construction projects and other labor-intensive work for the state.

Daily NK recently reported that even one of Kim Jong Un’s banner projects, the Samjiyon modernization effort, is facing labor-related difficulties.

The authorities have even created “emergency measures committees” to identify ways to forcibly mobilize residents onto the fields.

“Labor departments in provincial agriculture business committees have formed emergency measures committees to deal with the lack of workers recruited from factories and schools,” said a separate source in South Pyongan Province. “Schools and factories are being investigated and will face legal action if they fail to provide the proper quotas of labor.”

Some parts of the country are faced with issues in agricultural planting stemming from insufficient supplies of farming materials and fertilizer.

“Farmers should have ensured the soil didn’t freeze by creating special seedbeds and covering them with vinyl film. They failed to do so because there was a lack of vinyl film available this year and seeds didn’t grow properly because of the cold,” she said, adding that “they also lacked manure and fertilizer.”

Source:
South Pyongan Province faces severe food security crisis
Mun Dong Hui
Daily NK
2019-05-16

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Washington Post on sanctions and North Korea’s food crisis

Wednesday, May 8th, 2019

Benjamin Katzeff Silberstein

A few interesting snippets from this Washington Post report:

Analysts say there is no doubt that the ultimate blame for the humanitarian crisis rests with Pyongyang, which has spent hugely on nuclear advances and other military projects while neglecting the welfare of ordinary citizens.

[…]

“Other than the most basic of subsistence agriculture, there is no agricultural sector in the world that can survive without oil-based inputs,” said Hazel Smith, a professor in Korean studies at the SOAS University of London.

Smith argues North Korea can feed its citizens only if it can access oil and natural gas — to fuel farm machinery, power processing and storage facilities, used in irrigation and to transport crops and food.

A United Nations report issued Friday showed more than 10 million people do not have enough food to last until the next harvest. Last year’s crop was the worst in a decade, it said, and was buffeted by dry spells, heat waves and flooding.

But it also found that “limited supplies of agricultural inputs, such as fuel, fertilizer and spare parts have had significant adverse impact.”

The Food and Agriculture Organization and World Food Program spelled out “the unintended impact of sanctions on agricultural production,” most obviously “the importation of certain items that are necessary for agricultural production.”

Article source:

North Korea is facing a food crisis. ‘Maximum pressure’ by the U.S. may make it worse.
Simon Denyer
Washington Post
2019-05-08

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Taxes increase on some North Korean markets

Friday, May 3rd, 2019

By Benjamin Katzeff Silberstein

This sort of news is very interesting, particularly in context: I’ve heard from people who deal with North Korean firms that some of them have received orders to tighten up their accounting, and report their assets to the state in greater detail. Taken together, these snippets of information suggest an overall difficult economic situation, though not desperate or in crisis-mode, where the state is taking more and more measures to drive in cash from the public.

Daily NK:

Sales fees levied on private distributors have risen in some areas of North Korea. The fees are managed by North Korea’s collection agency and essentially provide a source of tax revenue for the state. Private distributors are expressing discontent over the changes as many are suffering under the country’s already poor economic conditions.

“The authorities recently began demanding outrageous and unfair selling fees from private distributors,” said a South Pyongan Province-based source on April 25. “Collection offices (i.e. tax offices) attached to local people’s committees are required to pay varying fees depending on the product, and the number of fees have been doubled.”

These de facto tax offices were established in each city and county as part of the July 1 Economic Management Improvement Measure in 2003 and are managed by the Ministry of Financial Administration. The offices collect fees for land use, market stalls, and various other reasons.

“The authorities are demanding a huge amount of fees to gain control over and restrict the activities of private business people who live in Pyongsong but bring in products from Sinuiju, Rajin-Sonbong, Nampo and Hyesan,” said a separate source in South Pyongan Province.

“Soybean oil sellers, for example, had to pay 3% of their income before, but now have to pay twice that amount.”

The skyrocketing fees are likely due to the fall in tax revenue arising from the economic difficulties the country is facing.

“The government increased the fees they were collecting just as incomes fell among private business people,” she said. “The authorities are simply taking money from the people to make it seem like the state is self-sufficient.”

North Korean authorities have made the fee system more sophisticated while raising fees as part of efforts to generate more income for the regime.

Article source:
North Korea doubles de facto sales tax levied on distributors in some areas
Mun Dong Hui
Daily NK
2019-05-03

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Why the market and state sectors cannot be fully separated in North Korea (and what it tells us about price stability)

Friday, April 19th, 2019

Anecdotal but highly valuable observations from inside North Korea suggest that the market economy is taking a hit from the overall decrease in economic activity in the state sector. None of this is surprising, and it makes perfect sense. As workers at factories and state enterprises either get paid less or not at all, their purchasing power drops. Fewer people can spend less money on the markets, leading to an overall depression of economic activity. Reports Daily NK:

Following news that most state-run factories in Pyongyang and other major cities have suspended operations, North Korean sources report that the number of merchants in some areas of the country have fallen drastically. This situation is reportedly due to decreased purchasing power among ordinary North Koreans on the back of the country’s economic stagnation.

“Before international sanctions, there were around 1,000 to 2,000 merchants, including those selling their wares outside the market, but now I only see around 100,” a South Pyongan Province-based source told the Daily NK on April 10. “Even those remaining merchants are just barely holding on. Some of them went to other places to do business but had to return because their efforts met with no success.”

“Only half of the market officials that once collected market fees are visible now,” said the source. “The officials face physical harm by the merchants when they try to collect the fees, so they avoid being out in the open.”

The source also reported that “Merchants have to sell 15 kilograms or more of food per day to pay the market fees. They aren’t selling even one kilogram a day” and that “Merchants are asking themselves rhetorically whether they’re just selling wares at the market to pay the fees.”

An investigation by the Daily NK has found that there has been little change to the number of active merchants in Pyongyang, Sinuiju, Hyesan, Pyongsong, Chongjin, Hamhung and other major cities. Small markets, however, appear to be facing a decrease in merchants.

The source said that economic stagnation has impacted North Korea’s poor classes, including those living in agricultural areas.

“The factories are shut down so people can’t get paid, and this means that no one is heading out to the markets,” said the source. “The international sanctions are so bad that there’s no work left. People don’t have money to buy anything.”

This all gets at a problem with analyzing North Korea’s economic situation based on price stability. Simple analysis of supply and demand holds that if overall availability of food goes down, prices go up. They haven’t in North Korea.

But what if people just don’t have money to spend on food if prices go up? Then, market suppliers couldn’t really raise prices much, because they’d already be pretty much at the highest level at which people are willing to purchase food (also known as the “reservation price”). It’s also important to remember that cash, according to a lot of anecdotal observations – and suggested by the state of the exchange rate – is generally rather scarcely available in North Korea, as the government seems to have contracted the money supply quite significantly over the past few years.

This is what I suspect is part of what’s going on the markets in North Korea, and some may have looked much too simplistically at food and currency market prices for a long time. Price stability doesn’t necessarily mean a lack of problems in the economy.

Article source here:
Drastic fall in market merchant numbers in some areas of North Korea
Mun Dong Hui
Daily NK
2019-04-18

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North Korea trying to acquire South Korean seeds, RFA reports

Monday, April 15th, 2019

Benjamin Katzeff Silberstein

North Korean authorities are trying to procure higher-yield South Korean rice seeds to cope with chronic food shortages. But instead of simply asking Seoul for the seeds, which are not subject to economic sanctions, Pyongyang’s trade representatives are attempting to bring them in via China, posing difficulties with Chinese customs inspections, sources say.

“I was asked by a North Korean trade worker in China to get South Korean rice seeds, but there’s no easy way to bring seeds from Korea into China, so I am not sure what to do,” said a source in a Chinese border city.

The source said relatives living in South Korea have already procured 30 kilograms of the seeds and are ready to ship them.

“But I have to go through a very complicated process to bring the seeds here, so I am hesitant about the whole thing,” said the source, adding, “Plant seeds, especially those for agricultural products have a meticulous customs inspection that takes forever to get through.”

Other products from South Korea can be brought into China with relative ease, according to the source.

“Merchants who do the China-South Korea run by ferry can usually bring whatever they want into China but most of them avoid anything having to do with farming, because clearing customs is so difficult,” said the source.

In recent years, farming conglomerates worldwide have vigorously defended their intellectual property rights for engineered seeds. Seoul, however, doesn’t mind if merchants take the rice seeds out of the country.

“It isn’t too difficult to pass South Korean customs, but [merchants] have to report the seeds to Chinese maritime customs. Then they have to pay high tariffs and go through a strict quarantine,” the source said.

“If they try to smuggle them (into China) to avoid the hassle, they face [the possibility of] heavy fines and criminal punishment,” said the source.

“I am pretty certain that North Korean authorities are ordering their trade workers in China to find South Korean seeds. They aren’t really asking for a lot of them. I think they will conduct experiments on the seeds to see if they are suitable for North Korea’s soil and weather,” said the source.

A second source, from a Chinese border city, noted that North Korea was able to bring beech seeds from Ulleung-do, a South Korean island east of the Korean peninsula, but wondered why Pyongyang is trying to get Southern rice seeds in such a roundabout way.

“They can have these kinds of plant seeds easily if they just ask the South Korean government, especially now that North and South Korea are trying to be friendly with each other,” the source said, adding, “It is hard to understand why they are being so secretive.”

Article source:

North Korea Tries to Secretly Get South Korean Rice Seeds Using Traders in China
Joonho Kim and Jae Wan Noh
Radio Free Asia
2019-04-15

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