North Korean Economy Watch

You can download an English-language PDF of the letter here (copied directly from Rodong Sinmun). The bold/underlining was added by me as I read the article. Here is coverage by KCNA.

The speech does not really refer to any “paradigm-changes” in agricultural policy. As usual the emphasis is on raising output by increasing technology inputs and fortifying ideological strength. That being said, the letter does refer to a new policy intended to improve land management:

The subworkteam management system created by the President is an excellent form of production organization and a superior method of management, in that it encourages farmers to take part in production and management as befitting masters with the feeling of attachment to the collective economy. Its advantages have clearly been proved through practice.

By operating the system efficiently as required by the developing reality, the agricultural sector should bring the sense of responsibility and creative zeal of farmers into full play. It should give farmers clear-cut tasks related with soil management, farming operations and production plan and review their results in time and in a substantial way, thus encouraging them all to work in a responsible manner with consciousness and high enthusiasm as befitting masters. Recently a measure has been taken to introduce a field-responsibility-system within the framework of the subworkteam management system so as to inspire farmers with enthusiasm for production. By applying the system correctly in conformity with their actual conditions, cooperative farms should make it prove effective in agricultural production.

I am not the most qualified person to divine meaning from official pronouncements (particularly from the English translation) but this does seem to indicate that efforts have been made to introduce a new “field-responsibility-system”. This appears to be a change in the measurements by which members if a work team are evaluated. Rather than being rewarded for simple output quotas, there are now measurements for soil management and farming operations–coupled with timely and accurate measurement by work team leaders. There is no specific mention of reducing the number of individuals in a work team or other supposed policies associated with the nebulous 6.28 measures.

Interestingly in the very next paragraph, Kim Jong-un highlights one of the most persistent problems in socialist economics: poor labor incentives. He correctly notes that equal distributions to the workers irrespective of effort and quality will create unmotivated workers and production will fall. He notes that hard/effective work should be rewarded:

What is important in operating the subworkteam management system is to strictly abide by the socialist principle of distribution. Equalitarianism in distribution has nothing to do with the socialist principle of distribution and has a harmful effect of diminishing farmers’ enthusiasm for production. Subworkteams should assess the daily work-points of their members accurately and in good time according to the quantity and quality of the work they have done. And they should, as required by the socialist principle of distribution, share out their grain yields to their members mainly in kind according to their work-points after counting out the amounts set by the state. The state should define reasonable amounts of grains for compulsory delivery on the basis of accurate calculation of the country’s demand for grains, interests of farmers and their demands for living, thereby ensuring that they make redoubled efforts with confidence.

This, however, is basically a restatement of official policy. The state gets first claim on the output, the farmers fight for the leftovers….

Here is coverage in the Daily NK.

Institute for far Eastern Studies (IFES)
2014-1-3

North Korea concluded that despite international economic sanctions, its economic revitalization policy of 2013 was delivered as planned.

A report on the comprehensive evaluation of North Korean economy was featured in the Choson Sinbo, pro-North Korean newspaper based in Japan, on December 24. It pointed out that although DPRK-US relations worsened and resulted in tougher measures, “it provided the opportunity to mobilize the potential of the national economy.”

It reported that to be ready for a potential war, the farming process at cooperative farms was carried out early from the beginning of the year. In light industry and food industry, “stabilization of people’s lives” was championed as the main slogan in the drive to normalize raw material acquisition and production.

The news also reported, “factories, enterprises and cooperative farms are provided with conditions to conduct independent business activities,” and “economic management method was improved based on the principles that firmly adhere to the socialist economic system and the working mass as the owners of production activities to ensure the roles and responsibilities.”

In other words, the reinforcement of self-supporting system and introduction of a new method of operating a separate garden as a component of cooperative farms resulted in improved production and a 5 to 10 percent increase in the grain harvest per unit against the previous year.

In particular, the news emphasized that “this year is considered as the year of construction,” and boasted the construction of high-rise apartments and various cultural and sports facilities including horse riding tracks and water parks. Especially, Masikryong Ski Resort in Gangwon Province was announced to have gathered national and international attention.

Furthermore, the news recaptured the new policy of parallel “economic construction and nuclear arms development” announced in March 2013 and reported that “despite the hostile forces that concluded that the policy of parallel development was ‘infeasible’, the people are witnessing and feeling the changes taking place in the capital city through the new policy of parallel development that strengthened national defense with reduced cost to fully exert all efforts to rehabilitate the economy.”

In addition, the news also reported on the 13 economic development zones (EDZs) and analyzed that the EDZ policy “laid the foundation for foreign economic development that incorporated the changes in the international situation.”

Meanwhile, the Korean Central News Agency (KCNA) reported on December 28 that an enlarged meeting for the plenary of the Cabinet was recently opened to discuss the issues of resolving the food crisis through improved agricultural production and new agricultural sector tasks for 2014. This is rare for a Cabinet plenary meeting to be held exclusively to discuss the agricultural issue, as all economic issues are normally handles at this meeting.

According to Yonhap:

North Korea’s grain production is expected to rise slightly this year, a report said Friday, possibly higher than initially estimated.

According to the report from South Korea’s Rural Development Administration (RDA), the North’s overall grain production in the 2013-2014 harvest year is expected to reach 4.81 million tons, up 3 percent from 4.68 million tons tallied in the 2012-2013 period.

The rise comes partly from an increase in rice output, which is estimated to gain 2.9 percent on-year to 2.1 million tons.

The figure has a gap with an earlier estimate from the U.N. Food and Agriculture Organization (FAO), which forecast the communist state’s rice output to reach 1.7 million tons this year, slightly better than the annual average of 1.6 million tons.

“The weather in North Korea this year had been more favorable to the growth of crops (than last year) as the average temperature between May and September came to 19.9 degrees Celsius, 0.3 degrees higher than that of last year, while the country’s overall precipitation also rose 7.5 percent on-year to 1,001.5mm over the cited period,” the RDA said in its report.

The report said the North’s corn output was also expected to have gained 1.7 percent on-year to 1.76 million tons this year. The FAO earlier forecast the North’s corn output to reach 2.3 million tons.

North Korea suffers from chronic food shortages with the average amount of rice and corn consumed by the people said to be only half of the daily consumption recommended by the United Nations.

Read the previous post on the UN food assessment report here.

Read the full story here:
Report says N. Korea’s grain production likely to grow this year
Yonhap
2013-12-27

Institute for Far Eastern Studies (IFES)
2013-12-27

In an effort to restore the mood of economic development following the ‘terror politics’ created from the execution of Jang Song Thaek, North Korean state media is beginning to emphasize “construction of a powerful economy” and “improvement of people’s lives” once again.

Rodong Shinmun reported on December 19, 2013 that all fields reached their production plans for the year, describing (on page 3) exemplary cases of various party organizations that upheld the legacies of Kim Jong Il and “displayed best practices that actively contributed to improving people’s lives.”

In one article (“Advancement in Science and Technology Is the Lifeline of Constructing a Powerful Economy and Improving People’s Lives”) the importance of science and technology was emphasized. It claimed, “breakthrough in science and technology is the best way to achieve a miracle and innovation in production while protecting the dignity of the nation in the era of knowledge economy.”

Korean Central Television, Korean Central Broadcasting, and Pyongyang Broadcasting encouraged its people to realize “new miracle, new record” in the production fields emphasizing the goals of the Kim Jong Un regime, “construction of economic powerhouse,” and “construction of civilized socialist nation.”

In addition, the military was presented with modern fishing boats. Kim Jong Un’s gift to the military may be interpreted as a display of interest in improving the welfare of soldiers. Kim Jong Un was reported to have made an on-site inspection at the “8.25 Fishery” military unit and expressed interest in the welfare of the soldiers.

Kim Jong Un is also continuing to commend “best citizens” as he delivered letters of appreciation to recognize those that displayed exceptional performance at the construction sites of Sepho Tableland and the residential complex for Kim Il Sung University (KISU) faculty members.

In the Kim Jong Un era, state media is continuing to emphasize the achievements in the construction sectors, calling these times a “new heyday of juche construction.” It listed last year’s construction achievements: completion of Changjon Street, People’s Theatre, Pyongyang Children’s Department Store, Rungra People’s Pleasure Park, People’s Outdoor Skating Rink, Pyongyang Folk Park, and Ryugyong Health Complex.

In addition, it boasted that Munsu Water Park was “miraculously” completed in only nine months. Other achievements were listed: War Memorial, Mirim Riding Club, Ryugyong Dental Hospital, Okryu Children’s Hospital, Unha Scientists Street, and KISU faculty apartment complex.

North Korea is propagating these achievements, heralding the Kim Jong Un era as the “glory days of construction” to promote his accomplishments and consolidate his power base.

During his own period of succession, Kim Jong Il sought the support of the masses by emphasizing construction of Changgwang and Munsu Streets and landmarks such as Juche Tower, Kaeson Mun (Gate of Triumphant Return), and Pyongyang Maternity Hospital.

Read the full report here (PDF). Previous reports here.

According to the UN WFP/FAO Press Release (on Thanksgiving day!):

ROME/PYONGYANG – A nationwide assessment by two United Nations agencies shows an increase in staple food production in the Democratic People’s Republic of Korea (DPRK) for the third year running.

The report, however, notes that although rates of child malnutrition have steadily declined over the past 10 years, rates of stunting caused by malnutrition during the first 1,000 days of a child’s life remain high and micronutrient deficiencies are of particular concern.

The joint Crop and Food Security Assessment Mission to the DPRK by the Food and Agriculture Organization (FAO) and World Food Programme (WFP) visited all nine agricultural provinces in late September and early October around the main annual cereal harvest.

Total food production is estimated at about 5.03 million metric tons (including milled rice) in 2013, which is about a 5 percent increase over the previous year. Despite the improved harvest, the food security situation is still unsatisfactory with 84 percent of households having borderline or poor food consumption.

The mission observed immense logistical challenges for the public food distribution system and expressed concerns about the timeliness and consistency of distributions. Markets and informal mechanisms of bartering and other forms of exchange are believed to be of increasing importance for access to food by families, particularly in urban areas.

“Despite continued improvement in agricultural production, the food system in the DPRK remains highly vulnerable to shocks and serious shortages exist particularly in the production of protein-rich foods,” said Kisan Gunjal, FAO economist and co-leader of the mission. “In the interest of increased protein consumption and to reverse the downward trend of soybean production, the price paid to farmers for soybean should be increased.”

Since 1998, WFP in partnership with the government has produced blended fortified foods and nutritious biscuits for children and pregnant or nursing women. WFP has recommended a shift to a new product – Rice Soya Milk Blend – for children in nurseries to reduce stunting and wasting.

“Improving the diversity and quality of food provided through the child institution system is essential to improving children’s nutrition,” said WFP DPRK Country Director Dierk Stegen. “We want to produce Rice Soya Milk Blend but can only do so if we receive sufficient donor support.”

Despite a small reduction in the area planted, overall crop production in 2013/14 is estimated to increase due to generally favourable weather conditions that resulted in a higher rice crop.

The aggregate production from cooperative farms, plots on sloping land and household gardens estimated by the mission includes the 2013 main season harvest and the forecast for 2014 early season crops. Unusually early and heavy rains in July and early August compromised maize and soybean yields but had little effect on paddy.

The report estimated cereal import requirements at 340,000 metric tons for the 2013/14 marketing year (November/October). Assuming the official import target of 300,000 metric tons of cereals is met, there remains an uncovered food deficit of 40,000 metric tons for the current marketing year.

While this food gap is the narrowest in many years, it needs to be bridged either through additional purchases by the government and/or international support to avoid increased undernourishment during the current marketing year.

To improve food security and nutrition, the report recommends national and international support for sustainable farming practices, better price and market incentives for farmers and improvements in farm mechanization.

In nutrition, the report recommends that efforts should go toward improving dietary diversity and feeding practices for young children and women through strategies such as behavioural change, market reform and encouraging livestock and fish production; strengthening treatment of severe and moderate acute malnutrition; and better hygiene and sanitation practices.

ADDITIONAL INFORATION:

1. Here is a follow up report in 38 North by Randall Ireson.

2. Here is coverage in the Wall Street Journal and Assocaited Press.

3. High-Resolution photographs from DPRK can be downloaded here.

According to Yonhap:

North Korea’s crop imports from China more than doubled to hit a yearly high in September, data showed Wednesday.

According to the data compiled by Kwon Tae-jin, a senior researcher at the Korea Rural Economic Institute, North Korea imported 67,208 tons of grains and legumes such as flour, rice, corn and bean in September from its neighboring country, compared with 26,804 tons a month earlier.

The surge was attributed mainly to Pyongyang’s increased imports of corn. The impoverished nation bought a total of 50,613 tons of corn last month, nearly nine times the amount imported the previous month, the data showed.

“The big increase in imports would either mean that Pyongyang is running out of its stock amid the regime’s efforts to increase the ration to people since this spring or that it is try to stabilize market prices,” Kwon said.

“Factoring in the forecast of good harvests for the autumn, the North is expected to enjoy a relatively stable supply of crops at least for the rest of the year,” he added.

Read the full story here:
N. Korea’s crop imports from China hit annual high in Sept.
Yonhap
2013-10-30

According to KCNA (2013-10-28):

Agreements on Cooperation between Governments of DPRK, Mongolia Signed

Pyongyang, October 28 (KCNA) — An agreement on cooperation in the fields of industry and agriculture and an agreement on cooperation in the fields of culture, sports and tourism were signed here on Monday between the governments of the DPRK and Mongolia.

Present there from the DPRK side were Kim Yong Nam, president of the Presidium of the DPRK Supreme People’s Assembly, Pak Ui Chun, minister of Foreign Affairs, Ri Ryong Nam, minister of Foreign Trade, Kim Jong Suk, chairwoman of the Korean Committee for Cultural Relations with Foreign Countries, Pak Kil Yon, vice-minister of Foreign Affairs, Kwak Il Ryong, vice-minister of Land and Maritime Transport, Hong Kyu, DPRK ambassador to Mongolia, Jong Song Chan, vice general director of the General Bureau of Software Industry of the DPRK, and officials concerned.

Present from the Mongolian side were Mongolian President Tsakhiagiin Elbegdorj, Luvsanvandan Bold, minister of Foreign Affairs and Trade, Manibadrakh Ganbold, Mongolian ambassador to the DPRK, Khaltmaa Battulga, minister of Industry and Agriculture, Tsagaandari Enkhtuvshin, secretary general of the National Security Council, Tserendejid Byambajav, chief of the General Staff of the Armed Forces, Khabshai Erjan, vice-minister of Road Transport, Lundeg Purevsuren, national security and foreign policy advisor to the President, Amgalanbaatar Ganbaatar, advisor for mass liaison and mass policy to the President, Pureb Altangerel, secretary of state for the Ministry of Culture, Sports and Tourism, officials concerned and staff members of the Mongolian embassy here.

The agreement on cooperation in the fields of industry and agriculture was inked by Ri Ryong Nam, minister of Foreign Trade, and Khaltmaa Battulga, minister of Industry and Agriculture, and the agreement on cooperation in the fields of culture, sports and tourism by Kim Jong Suk, chairwoman of the Korean Committee for Cultural Relations with Foreign Countries, and Luvsanvandan Bold, minister of Foreign Affairs and Trade, on behalf of the governments of the DPRK and Mongolia.

Meanwhile, the 2013-2015 plan for exchange in the IT field between the General Bureau of Software Industry of the DPRK and the IT, Post and Telecommunication Bureau of Mongolia was signed.

According to Yonhap, the DPRK’s food imports increased over the summer:

North Korea’s crop imports from China rose 16.5 percent in August from the previous month, data showed Tuesday, indicating stability in food supply for people in the impoverished nation.

According to the data compiled by Kwon Tae-jin, a researcher at the Korea Rural Economic Institute, North Korea imported 26,804 tons of grains such as flour, rice, corn and bean in August from its neighboring country, compared with 22,988 tons a month earlier.

The North spent a total of US$15.4 million to buy the crops that month, the largest monthly spending for the year, the data showed.

August also marked the seventh consecutive month that the North’s crop imports topped 20,000 tons.

“Since February, the North has imported more than 20,000 tons of crops per month from its strongest ally,” Kwon said.

“Factoring in the forecast of good harvests for the autumn thanks to good weather conditions, the North is expected to enjoy a relatively stable supply of crops at least for the rest of the year,” he added.

Meanwhile, North Korea’s fertilizer imports from China totaled 183,639 tons in the January-August period, down 27.1 percent from the same period a year earlier, according to the data.

North Korea’s domestic food production is also apparently higher. According to Yonhap:

North Korea’s grain harvest is expected to grow about 8 percent this year from 2012 thanks to relatively favorable weather conditions, a source with the knowledge of food situation in the communist nation said Wednesday.

The North is estimated to produce as much as 5.3 million tons of grains this year, a 7.7 percent increase from 4.92 million tons last year, the source said on the condition of anonymity.

This year’s estimated grain harvest roughly meets with the North’s annual demand of 5.4 million tons. The annual demand was calculated by South Korea’s state-run Korea Rural Economic Institute.

“Grain harvest in North Korea this year is much better than last year because there were no big natural disasters, except for heavy rains in July this year,” the source said.

Despite the positive assessments of the DPRK’s food supply, the UN warns more food assistance is needed. According to Yonhap:

North Korea remains one of the 34 countries in the world that require external assistance to properly feed their people, a media report said Friday.

The Voice of America said the October issue of Crop Prospects and Food Situation by the Food and Agriculture Organization (FAO) estimated that there will be some 2.8 million “vulnerable” people in the communist country needing assistance until this year’s fall harvest.

The Washington-based media outlet said that judging by official estimates tallied by the United Nations organization, Pyongyang’s spring cereal harvest for 2013, mainly winter, wheat and barley, fell shy of the initial forecast, and that this is the main reason for the current shortage.

The country had reported improved harvests in the fall of 2012.

The U.N. agency also said people in the country are experiencing “widespread lack of access” to food caused in part by past floods.

The latest findings added that overall conditions in the North have not changed vis-a-vis July when the last food situation report was released.

At the time, the North was the only country in East Asia to be placed on the list requiring external aid. Others on the list of the 34 countries were in Africa and Central Asia.

The FAO, meanwhile, estimated that the North has been able to secure 328,000 tons of various grain from November of 2012 to early last month. This is equal to 65 percent of the 507,000 tons of grain Pyongyang needs to properly feed its population.

Read the full stories here:
N. Korea’s crop imports from China up 16 pct in Aug.
Yonhap
2013-10-1

N. Korea’s grain harvest seen improving: source
Yonhap
2013-10-2

N. Korea needs external aid to feed its people: report
Yonhap
2013-10-4

Institute for Far Eastern Studies (IFES)
2013-9-12

After North Korea’s launch of a long-range rocket in December 2012 and third nuclear test in February 2013, China endorsed UN sanctions against North Korea. Consequently, North Korea appears to be increasing its economic cooperation with Mongolia and Russia.

On September 6, the 7th annual Northeast Asia joint high-level forum was held in Changchun (Jilin Province), China. Ku Bon Tae of the DPRK Ministry of Trade is reported to have been present and to have delivered a presentation on North Korea’s recent economic cooperation activities.

Ku stated, “Currently, cooperation between North Korea and Mongolia is making positive progress,” and “the international freight transport coordination issue and Mongolian corporate investments, telecommunications and other cooperation issues at the Rason Special Economic Zone are at the final stages of agreement.”

He added, “We hope more Northeast Asian nations will actively take part in the Rason Special Economic Zone.”

In May, a Mongolian oil company HB Oil JSC acquired 20 percent stake in North Korea’s state-run Sungri oil refinery. In July, the two countries signed an agreement on information and communication cooperation and exchanges. In addition, Mongolian experts in the field of livestock are said to be involved in North Korea’s Sepho tableland (Gangwon Province) reclamation project, which seeks to create a large stockbreeding complex.

As for economic cooperation with Russia, the Khassan–Rajin railway — part of an international container rail transport line connecting Russia and North Korea and linking Northeast Asia to Europe — has its opening ceremony scheduled for this month after having received extensive reconstruction. Russia also has a long-term lease on Rajin Port’s pier No. 3. Russia has been renovating the pier, and renovations are expected to be completed by the end of this year.

North Korea and Russia plan to develop Khassan–Rajin rail line and Rajin Port in order to transport cargo from Asia to Europe: as containers arrive at Rajin Port, they are moved to the Khassan-Rajin railway and then transferred to the Trans-Siberian Railway (TSR), headed for Europe.

Ku further added, “After the projects are completely finished friendly cooperation between Russia and North Korea and international transport pathway will be opened connecting Asia to Europe through the development of economic and trade relations between the two countries.”

In Ku’s speech, the public economic cooperation with regards to China was covered briefly, and exclude the recent progress made. He commented only on the establishment of Joint Management Committees in Rason and Hwanggeumpyeong economic zones and that banks of the two countries are in the process of negotiating the usage of Chinese renminbi as the currency of trade.

Ku emphasized, “As with our past, our Republic hopes to promote independence, peace and friendship between Northeast Asian countries in the future, based on our foreign policy and will make every effort to further develop and expand this friendly cooperative relationship.”

The 9th China–Northeast Asia Expo opening ceremony was also held (in Changchun) on the same day as the forum. Political and business leaders from China, South and North Korea, Russia, Japan, and Mongolia were present at the event.

Here is a recent article in KCNA on economic advancements. I post as a reference to what the North Koreans are most proud of when it comes to economic management.

DPRK Directs Efforts to Developing Economy

Pyongyang, August 16 (KCNA) — Marshal Kim Jong Un, in the 2013 New Year Address, set the building of a strong economy as a key issue in accomplishing the cause of building a thriving socialist nation.

In response to his New Year Address, the people in the Democratic People’s Republic of Korea have made fresh upsurge in all economic sectors in the spirit of the “Masikryong Speed”.

Readjustment of the West Sea Barrage-Sinchon-Kangryong and Ongjin waterways was finished in ten days, while more than 1,000 hectares of fruit field has come into being in Pukchong County, South Hamgyong Province.

The Pyongyang Essential Foodstuff Factory and the Phyongsong Synthetic Leather Factory have become streamlined and the Vitamin C Factory and the Turf Research Center of the State Academy of Science were newly built on a modern basis.

Lots of industrial establishments across the country finished the first half-yearly assignments ahead of schedule.

The country’s science witnessed big achievements during the first half of the year.

The 10th national sci-tech presentation and show in the field of nano-technology and national sci-tech presentation in the field of mining industry took place, and an IT presentation was held on the occasion of the 50th anniversary of the Central Agency for Information of Science and Technology.

More than 140,000 hectares of land were afforested, 590 kilometers of roads repaired and 2,100 kilometers of riversides improved.

The Victorious Fatherland Liberation War Museum was newly built in a wonderful way on the occasion of the 60th anniversary of the Korean people’s victory in the Fatherland Liberation War (June 1950-July 1953).

The Rungna People’s Sports Park and Pyongyang International Football School were also built in Pyongyang.

A wave of innovations have been registered in building the Masik Pass Ski Resort, the reclamation project of the Sepho Tableland, the expansion project of the Kosan Fruit Farm and the construction of the second-stage Huichon Power Station.

The same is true with the construction sites of apartment houses for scientists, children’s hospital, dental hospital, Munsu Wading Pool and Mirim Riding Club.

All these projects are carried on as part of the efforts for implementing the plan of Kim Jong Un on turning the country into an economic giant.