North Korean Economy Watch

According to the Daily NK:

News of a cabinet reshuffle being slowly and indirectly revealed by the North Korean state media is generating interest in analytical circles.

On the 17th, Chosun Central News Agency, in the process of unveiling the newly completed Tongil Street Fitness Center, revealed that the Minister of Sport has been removed, with Ri Jong Moo being cited instead of former incumbent Park Myung Cheol.

This is the third such change revealed in recent days. On October 4th, former Minister of Agriculture Ri Kyung Sik was revealed to have been replaced by Hwang Min, while on the 15th it was Kim Jae Seong’s turn to replace former Minister for the Electronics Industry Han Gwang Bok.

All three of the incumbents had been in-post for a number of years, adding intrigue to the news. 71-year old Park was made Minister of Sport in 1998, while 66-year old Han had been covering the electronics industry brief since 2009. 64-year old Ri, meanwhile, was made Minister of Agriculture in 2003, relieved of his duties in 2009 and then returned to post in 2011.

Read the full story here:
Cabinet Reshuffle as 3 Ministers Replaced
Daily NK
Park Seong Guk
2012-10-18

We have all been watching whether the DPRK will implement economic policy adjustments that strengthen material incentives to farmers, workers and enterprise managers to increase production. I have cataloged many of these stories/articles/observations here.

Today the Daily NK offers a scenario as to why the DPRK has not implemented more generous agricultural production incentives:

A Hyesan-based source explained today, “Cooperative farm cadres are saying that none of the experimental farms will be given 30% of their production this year because it has become difficult to meet the target. They are saying that the harvest is not good and they need to feed the military as a matter of priority, so first they’ll guarantee the military rice then give the rest to the farmers.”

A Shinuiju source corroborated the story, saying that the authorities “haven’t said they are going to take all the production from the farms, but nobody actually thinks they are going to get very much. People who trusted the official words are feeling quite stupid, and nobody is working very hard.”

Back in July, each province designated a number of ‘model farms’ that were to be used to test the policy. These farms were supposed to receive their initial inputs of fertilizer and machinery from the state, and then be given 30% of their production in return.

“They are saying that the state does not have enough rice right now and that there is no choice but to give it to the military, so please try to understand,” the source said. “Farm workers, many of whom had been buoyed by talk of food distribution, are really disappointed, especially since prices are sky high in the market these days.”

Anyone who has taken a game theory class will note the presence of credible commitment problems and backwards induction.

If a game consist of two players (the state, farmers) operating in an environment where credible commitment is not attainable, one could argue that an outcome where the state promises to increase agricultural incomes yet farmers work less is the predictable result. Here is why: If at the beginning of the game the state says “we will raise your incomes if you produce more” and farmers respond by producing more, in the absence of credible commitment, at the end of the game the state can simply take all the increased production and pay no more. There is nothing to force the state to actually keep its word once the increased output has already been produced (assuming policy makers with short time horizons). Of course by utilizing backwards induction farmers realize this and do not increase production despite the promise of higher incomes. In the limit case, the DPRK announces economic policy adjustments, nobody believes them, and nobody moves to increase labor supply in the official sector of the peoples’ economy.

If the DPRK wants to offer effective policy adjustments that lead to real increases in output it must not only promise greater material incentives to workers and managers but it must do so in a believable way. Unfortunately there are no simple mechanisms to credibly bind the hands of the North Korean policy makers within the DPRK. In the absence of suitable constraints on state power (broadly defined), this means that reputation capital is even more important for achieving desired policy goals. This is why the decision to back-peddle on the 6.28 agricultural policies, if this is indeed what happened, is perhaps the most damaging move of all in terms of improving economic performance. Taking the North Korean government at its word (reputation capital), the farmers who increased effort in the fields (expecting a 30% ownership of their output in return) have instead given the state a free lunch. They will not be so inclined to increase output the next time the government comes knocking on their door offering dreams of a chicken in every pot.

If the DPRK government hopes to induce workers to increase labor supply through official channels, relying on nothing more than reputation, it is going to have to pay for failing to live up to its economic commitments in the past. In other words, it is going to have to slowly build up its reputation capital again by increasing the incomes of workers through a policy that is not likely to pay off for several years. It is only after workers again feel confident that the state will not back-peddle on the promise to let them retain 30% of their output that they will increase labor supply and output.

Read the full story here:
6.28 Agriculture Policy on the Back Foot
Daily NK
Lee Sang Yong
2012-10-12

Pictured above (Google Earth) is Changsong Town in North Pyongan Province.

There has been a lot of talk about economic reform in the DPRK in recent weeks (see here). One of the aspects of these reforms has been greater local/regional control over economic policies and outcomes.

On August 9, the Daily NK reported that Changsong is “again being put forward as a model for the spontaneous economic development of regional cities and counties as the regime works to foster a different mindset prior to impending economic changes”. According to the article:

On the 8th, Rodong Shinmun published an editorial entitled, ‘Let Our Country Be Prosperous in the Spirit of the Changsung Joint Session’ in an edition that also featured seven other related articles. The articles served as a timely reminder of the joint session of central cadres, their provincial counterparts and economic sector officials held on August 7th and 8th in Changsung County.

[…]

Utilizing the history lesson, Rodong Shinmun emphasized, “The fundamental essence of the Changsung Joint Session was increasing the role of the county in developing regional industry and agricultural accounting, and enhanced the people’s lives by the strength of our household itself.”

It went on, “In every city and district, we must resolve to decisively raise the productivity of our land to solve issues of food insecurity, and must thoroughly implement the Party’s agricultural revolution.”

On days prior, Rodong Shinmun, KCNA and other state-run media outlets also reported in various forms the idea that ‘all the counties in the country are going to follow the example of Changsung County.’ For example, on the 7th it introduced a new food processing plant in Changsung County itself.

Analyzing these moves, Kwon Tae Jin, a researcher with the Korea Rural Economic Institute told Daily NK, “When it comes to the agricultural sector, the county is at the center of everything. This is a way of passing the center’s role to the regions at a time when the center (the Ministry of Agriculture) cannot play its role properly.”

“The purpose of emphasizing the responsibility of the Cabinet and the counties at the same time is to readjust the system,” Kwon added, while the head of North Korea Strategy Center, Kim Kwang In added, “Since the center cannot do what it needs to, they want the regions to deal with survival.”

The move is also intended to raise the likelihood of the 6.28 Policy succeeding. In Kim’s words, “The regime is pushing regional self-reliance prior to the announcement of the new policy.”

I have previously written about the “Changsong Joint Conference” here.

Interestingly, this narrative paints the 6.28 policy as an effort to decentralize economic production because Pyongyang can no longer afford the old policies, yet for propaganda purposes, it is being portrayed as the continuation of a movement personally launched by Kim Il-sung 50 years ago!

Changsong has indeed seen a lot of recent construction. According to KCNA (2012-8-4):

County, Model in Local Economic Development

Pyongyang, August 4 (KCNA) — Changsong County, North Phyongan Province of the DPRK, has become a model in the development of local economy in the new century. Great changes have taken place in all aspects of production and construction in a matter of little over one year.

Local industrial factories have been placed on a modern and scientific basis to lay a firm foundation for reenergizing production and improving the standard of people’s living. The county seat has taken on a new appearance to suit the specific features of a county.

President Kim Il Sung provided field guidance of devotion to the county, once known as remote mountainous county, more than a hundred times in his lifetime with a noble intention to turn it into a model to be followed by all other counties.

There began a new history of mountains of treasures in the county under his care. As a result, the Changsong joint meeting of local party and economic officials was held in the county in August 1962.

Leader Kim Jong Il made sure that the spirit of the joint meeting was fully displayed generation after generation. He gave an instruction to the county to raise a new torch for effecting a dramatic turn in the local industry in November 2010.

The dear respected Marshal Kim Jong Un has led a drive to face-lift the county as required by the building of a thriving nation so that the year 2012, the 50th anniversary of the joint meeting, may shine as a proud year and a year of new changes in the development of local industry.

All local industrial establishments in the county have undergone dramatic changes as required by the new century in a matter of little over one year.

All production processes at the foodstuff factory ranging from feeding of raw materials to packing and forwarding have been automated and its overall processes sterilized to ensure high quality and hygienic safety of products.

Its textile mill has installed new type machines. Technological updating has made brisk headway at all industrial establishments in the county including paper, furniture and chemical and daily necessities factories.

There has sprung up a new food processing factory. All its processes computerized, the factory mass-produces processed meat and vegetables, varieties of soft drink, and confectionary.

A garment factory with big capacity has been built to meet the county’s need for school uniforms and solve the issue of clothing by itself.

The appearance of the county has changed beyond recognition.

The county erected a mosaic depicting the portraits of the smiling peerlessly great persons. The Changsong revolutionary museum and the county hall of culture have been successfully renovated as centers for the education in the revolutionary history and people’s cultural and emotional life.

The Changsong Restaurant and a noodle restaurant built with Korean style roofs in the center of the county seat add to the beautiful landscape of the township.

There sprang up the Undok Health Complex with all welfare and service facilities, a children’s hall, kindergarten and nursery.

The library, county people’s hospital, sanatorium, commercial and catering network, public buildings and dwelling houses have also been renovated as required by the new century.

A great success has been made in the land management.

The eye-opening changes in the county promise a socialist land of bliss where all varieties of consumer goods are mass-produced at the local industrial factories and the people enjoy happiness in their modern houses.

On 2012-8-7,  the KCTV evening news broadcast images of some of the new construction:

And on August 8, KCNA reported that Choe Yong-rim visited the town:

Senior DPRK Party and State Officials Visit Changsong County

Pyongyang, August 8 (KCNA) — Senior party and state officials including Choe Yong Rim and officials of party, ministries, national institutions and local party, power and economic bodies visited various places of Changsong County, North Phyongan Province on Wednesday on the occasion of the 50th anniversary of the Changsong joint conference of local party and economic officials.

Changsong County is associated with the leadership feats of President Kim Il Sung and leader Kim Jong Il who opened up a wide road of developing local economy and improving the people’s living standard by increasing the role of county as a regional base.

The participants laid bunches of flowers before the newly erected mosaic depicting portraits of smiling Kim Il Sung and Kim Jong Il and made bows to them.

At the Changsong Revolutionary Museum, they looked round historic relics showing the efforts made by the President and Kim Jong Il who ushered in a new history of mountains of treasures, while giving field guidance to the county.

They also went to local industrial factories in Changsong including Foodstuff Factory, Foodstuff Processing Factory, Furniture Factory, Paper Mill, Jute Bag Factory and Okpho Stockbreeding Farm.

They enjoyed a performance given by the art group of the county at its cultural hall.

Pictured above (Daily NK): The 2012 Won / US$1 exchange rate up to 2012-7-13.

According to data provided by the Daily NK, the won/dollar exchange rate fell (the won appreciated relative to the dollar) nearly 28.4% from 5,100W/US$1 in December 2011 (a high following Kim Jong-il’s death) to approximately 3,650W/US$1 in February 2012. Since February, however, the won has showed a steady depreciation and the exchange rate has risen 48%  to 5,400W/US$1 as of July 13.

So as I sit here eating breakfast I am wondering what caused these swings in the exchange rate?

Firstly, what was behind the dramatic fall in the exchange rate (and food prices) in January and Febraury? A simple answer may be a decrease in uncertainty and risk.  Following Kim Jong-il’s death, the DPRK did not repeat the mistakes made after the passing of Kim Il-sung.  For the most part markets remained open and “regular” activities of the state were highlighted in the domestic media and reported to contacts overseas. It is also possible that Chinese intervention, particularly in the form of food assistance and trade facilitation, could have played a role.

Secondly, does this mean that the increase in the exchange rate and food prices is a result of growing uncertainty? I am not convinced. It is beyond the scope of a blog post to tease this kind of information out, but here are some other things to think about: Economic uncertainty (pending policy changes, inflationary public finance), balance of trade (fall in net exports/rise in net imports, aid), capital flows (investment, aid, remittances), weather (drought/floods), “lean times” leading up to the fall harvest.

Some of these things matter more than others but it is important to keep in mind that the North Korean won is worth about as much today as it was when Kim Jong-il died. Since the won/US$ exchange rate is highly correlated with the price of rice (a fact that can be visually confirmed on the Daily NK web page) this means that food prices are also pretty high at the moment.

UPDATE 1 (2012-8-16): The Institute for Far Eastern Studies (IFES) has also posted a few words on this topic:

Rice Prices and Exchange Rate on the Rise
2012-8-16

Since Kim Jong Un’s ascent to power, the rice prices and exchange rates are on the rise. Despite Kim Jong Un’s proclaimed priority in elevating the quality of life for the North Korean people, uncertainty are prevalent in the country as Kim Jong Un has yet to meet the expectations of the people for economic revitalization or reform.

Compared to last year, the prices of rice last September that ranged 2,400 to 2,500 KPW per 1 kg, has jumped to 4,500 KPW in December right after the death of Kim Jong Il and exchange rates that averaged 2,800 to 3,000 KPW against one USD soared to 5,000 KPW. Although the prices have stabilized since then, the prices are climbing once again, as the price of rice in February at 3,100 KPW has gone up to 3,600 KPW/kg and exchange rate of 3,700 KPW per dollar jumped to 4,800 KPW in June.

In some places, the price of rice is reported to be above the 5,000 KPW range. According to Daily NK, an internet news outlet, the prices of rice in major cities like Pyongyang, Haesan, and Sinuiju has steadily increased for the last four months.

The price of rice in Pyongyang was 2,600 KPW/kg in April but it has slowly climbed to 3,000 KPW in June 5 to 4,900 KPW in end of June and is 5,300 KPW as of July 13. In Sinuiju and Haesan, the rice prices in April were around 2,600 to 2,700 KPW but soared to 4,300 to 5,000 KPW in July 13.

Exchange rates are also unstable as exchange rate to one US dollar that averaged 3,700 KPW in March soared to 4,200 KPW in April 25, 4,400 KPW in July 14 to 5,400 KPW by July 13.

Seasonal factors are also adding to the price fluctuations. May to August is normally a difficult time for North Korea with frequent famine. Combined with extreme drought conditions in June, accelerating inflation, and people’s rising apprehension about the economy, some rice wholesalers are not withholding the sales of rice.

The rising rice prices and exchange rate is expected to continue for the time being. Flood damages and other natural disasters and the trauma from the failure of last currency revaluation in November 2009 are factors adding to the price escalation.

This week Kim Jong-un made a guidance trip to the Ungok Area (운곡지구) Combined Stock Farm:

Pictured Above (Google Earth:  39.460931°, 125.762052°)

The visit itself did not strike me as very interesting (the animal farm has been around since at least 2002), but the mention of the “Ungok Area” did.

I have many North Korean maps which I have already transferred to Google Earth: A 1997 North Korean atlas (thanks Michael), a 1978 North Korean atlas (thanks Steve),  North Korean atlas software (thanks PSCORE), and a North Korean atlas published by the Chongryon in Japan (thanks Steve).  None of these sources mention the “Ungok Area”.

The only source I have that does mention the Ungok Area is from South Korea and was published in 2005. I used that source to map out the Ungok Area on Google Earth:

The Ungok Area (above in Green) composes nearly all of southern Anju and a small western portion of Sunchon City (Sinhung-ri). It is bordered on the west by Mundok County, on the south west by Sukchon County, on the south east by Sunchon County, and on the North by Kaechon and Anju Cities.

I am, however, unsure as to whether the Ungok Area has its own administrative apparatus or whether it is under the administration of Anju (and Sunchon?). Ungok does seem to be of particular interest to some group of North Korean policy makers.  Judging from satellite imagery it appears to receive a disproportionate quantity of resources aimed at rezoning farm land, reconstructing meat and vegetable farms, as well as building new homes. Looking at the area one is reminded of idealized versions of North Korean village life depicted in official publications. Even the other parts of Anju do not look as “neat and tidy” as the Ungok Area.

If any readers have access to better information than me (my Korean is not very good), I would appreciate knowing more. On a side note, these questions could also apply to Mundok County’s “Chongnam Area” which appears to have been granted many different administrative designations over the years.

On a final note, I plan on publishing all of this geographic data soon. I just need to sort out some politics and programming issues.

A couple of weeks ago, the South Korean Central Bank, the Bank of Korea, published its estimate of the size and composition of the North Korean economy in 2011. You can read the finings (PDF) here. I have posted this and many other estimates of the North Korean economy on my “DPRK economic statistics page“.

Here is coverage of the report in Bloomberg/Business Week:

Gross domestic product in the communist nation increased 0.8 percent in 2011 after a 0.5 percent decline in 2010, according to an estimate published by the Bank of Korea in Seoul. The nation’s economy has contracted during four of the last six years, the bank’s data show.

“The manufacturing sector declined, but the agricultural industry enjoyed better weather and more use of fertilizer,” the Bank of Korea said in an e-mailed statement.

North Korea is projected to keep growing under the new leader as its economic ties with China and Russia develop.

“Mineral exports to China and dollars brought in by North Korean workers sent to China and Russia would have driven the country’s GDP growth,” said Koh Yu Hwan, a professor of North Korean studies at Dongguk University in Seoul. “North Korea is expected to be economically stronger under Kim Jong Un as it continues to increase transactions with its allies.”

…

Kim Jong Un has waged a nationwide campaign to “bring about a turn in agriculture” and increase crop yields, according to a June 7 report carried by the official Korean Central News Agency. North Korea’s agriculture and fisheries sector expanded 5.3 percent in 2011 while manufacturing fell 3 percent, according to the BOK report.

North Korea’s nominal GDP totaled 32 trillion won ($28 billion) in 2011, compared with South Korea’s 1,237 trillion won, the BOK said. North Korea’s per capita income was 1.33 million won while South Korea’s was 25 million won, according to its estimates.

After adjusting for inflation, North Korea’s economy remained smaller at the end of 2011 than it had been in 2008, according to the Bank of Korea.

Here is more from Strategy Page:

The North Korean economy is undergoing changes. In fact, last year there was actually some growth, with GDP increasing .8 percent, versus a .5 percent decline in 2010. The North Korea GDP (about $28 billion, compared to $1,100 billion for South Korea). Thus even with a larger population, the average South Korean has 20 times more income as their northern counterparts. Moreover, income distribution is quite different in the north, where about two-thirds of the population is very poor and very hungry. The other third contains the well-fed ruling elite (whose lavish country estates can be seen via commercial satellite photos) and their supporters (secret police, military officers, bureaucrats) plus the semi-legal merchant class that has been allowed to develop over the last six years to avoid total economic collapse.
The economic decline in 2010, was the result of agricultural (floods) and industrial (massive power shortages) failure. But China came to the rescue by offering to set up mining operations in North Korea and buy billions of dollars-worth of minerals each year. China rebuilt railroads to handle the increased traffic from the remote North Korean mines. In addition, China offered legal jobs for North Koreans in China. The only catch was that the North Korean government took most of the pay. Similar deals have long been used with Russia but China offered far more jobs under more comfortable conditions. Competition for these jobs is fierce in North Korea and the government selects those deemed least likely to run away.

Last year North Korea bought more fertilizer for farmers and the weather was pretty good. That, plus the growing income from Chinese run mines and North Korean workers in China made up for the continuing declines in manufacturing. A good year on the farm is a big deal in North Korea, where farming and fishing are 23 percent of the economy (compared to under three percent in the south). But this year all of Korea is suffering from a record-breaking drought. This is hurting the north a lot more than the south. Although the monsoon (jangma) rains recenly arrived, a month late, the damage was already done in the north. Three months of very hot and very dry weather has seriously damaged crops. The rains will save some of them but at least a fifth of this year’s crops will be lost.

They should be studying Xiaogang Village! But instead they are studying Huaxi Village. Why? According to the Joong Ang Ilbo:

For the past six months, seven working-level North Korean officials have been staying at the Longxi International Hotel, located in a 72-story skyscraper in Huaxi Village, in China’s Jiangsu Province, a local government official told the JoongAng Ilbo in a telephone interview.

They’re allegedly trying to learn the secrets of Huaxi Village, known as China’s richest village but one that is still dedicated to socialism.

…

Huaxi Village is one of the richest places in China and a symbol of a model mixing socialism and capitalism. All the residents are shareholders of the local conglomerate and earn dividends at the end of every year according to its profitability.

“Roughly 20 North Koreans recently toured Huaxi Village,” a local resident told the JoongAng Ilbo. “The seven working-level North Korean officials have been staying in the village for six months learning how to manage a modern-style hotel.” Intriguingly, all seven are women.

The 328-meter (1,076-foot)-high Longxi International Hotel was completed last October and cost 3 billion yuan ($471 million). The five-star hotel has 800 rooms, including suites that go for 99,999 yuan per night.

“Officials from North Korea’s Foreign Ministry and the North Korean Embassy in Beijing also visited the village,” the resident said. “I’m not quite sure whether the women workers are from the ruling Workers’ Party, but they are mostly in their 20s.

“They have a great interest in learning about the dramatic growth of the village,” he continued. “They reportedly receive some kind of wages [from North Korea].”

Starting in 1978, the village’s residents actively participated in the reforms led by Deng Xiaoping. Wu Ren Bao, 84-year-old local secretary of the village, said in an interview with the JoongAng Ilbo in October 2011, “We accepted whatever was needed to make people rich and develop the village.”

Read the full story here:
Title
Joong Ang Ilbo
Chang Se-jeong, Jeong Yong-soo
2012-7-20

The Daily NK reports that food is now at record prices (5,oooW/kg) despite the food market operating under ‘normal’ operations. According to the article:

The price of rice has hit 5,000 North Korean Won/kg in the market in Hyesan, Yangkang Province. This is the first time that the psychologically significant price point has been reached under ‘normal’ market operations in the region.

A source from the city told Daily NK today, “The price was just 4,500 won as recently as the 5th, but this morning it reached 5,000 won. The prices of all other items are also on the rise, and as corn and rice prices rise in the midst of an already difficult food situation, many households are buying less food.”

Rice prices in other regions are rising too, other sources have informed Daily NK. Rice was selling for 4,500 won in Musan, North Hamkyung Province on the 5th, and had already exceeded 5,000 won in Muncheon, Kangwon Province on that same day.

Rice prices in North Korea tend to reflect the upward (or downward) trend in the exchange rate of the day, indicating the strong causal relationship between them. So it is no surprise that whereas the Chinese Yuan exchange rate was 800 to 1 on July 5th, it had risen to 810-820 won/Yuan by July 9th, and today reached 860 won/Yuan (July 10th).

Increasing exchange rates and rice prices will inevitably exert upward pressure on all prices, aggravating inflation. Naturally, people are complaining, “How are we meant to survive when rice is so expensive?” the source commented.

Prices rises are of course not the problem–they are a symptom of the problem: the DPRK has a poorly developed agricultural production and and distribution infrastructure. Although the North Korean people have shown great ingenuity at developing local coping mechanism do deal with adverse agriculture supply shocks (such as hoarding, making liquor, preserving food, cultivating private plots, and using cell phones to solve problems), they still lack access to crop insurance, futures markets, infrastructure, security of land and earnings, inflation, etc.

Read the full story here:
Rice Arrives Back at 5,000 Won
Daily NK
Kim So Yeol
2012-7-10

According to the Daily NK:

Despite the fact that North Korea is currently in a period of mass mobilization for the agricultural planting season, North Hamkyung Province Party authorities are also pursuing a number of construction projects in and around Chongjin.

One of the plans calls for the construction of apartments for 10,000 Chongjin families after the fashion of the Mansudae area of Pyongyang, but local Party cadres and ordinary civilians see it mostly as an attempt by Provincial Party Chief Secretary Oh Su Yong to publicly display his loyalty to the regime of Kim Jong Eun.

A source from the city explained the story to Daily NK on the 24th, saying, “Most students and laborers have been mobilized for the farming support battle, yet in the middle of that the provincial Party is ordering the construction of apartments with more than 15 floors for 10,000 households in the Pohang district of Chongjin.”

“They are simultaneously doing large scale repairs in Pohang Square, constructing a coastal road and Youth Park, doing work on Chongjin Port and on a waste water purifying facility for Sunam Stream,” he added.

The construction has been entrusted to the city’s major construction enterprises, including 5.16 Construction Company, Ranam Combined Coal Mining and 6.2 Port Construction Industry. However, these do not have the financial capacity to purchase all the materials and equipment required, meaning that responsibility for providing sufficient gravel, sand and other basic items is being passed in part onto the local population.

“Households are being assigned the task of providing certain amounts of sand and gravel to certain construction sites,” the source explained. “People’s unit heads are going house to house every night pushing people to do their bit.”

“This whole thing is the result of the Party chief secretary wanting to show off his loyalty,” the source concluded.

Read the full story here:
Chongjin Facing Impossible Battle
DNK
Choi Song Min
2012-5-25

Pictured above: South Hwanghae, the DPRK’s “rice bowl”

UPDATE 11 (2012-8-2): DPRK cuts official food rations. According to the Daily NK:

World Food Programme reports during the month of July, North Koreans received only half the amount of recommended food, rations have been reduced down to half what they should be 300 grams per day.

Between drought and flood damage, crops have suffered and the distribution system is failing to meet the needs of the people.

Due to unrelenting poor weather condition this past July, North Korean food rations per person, already at the minimum recommended amount, were cut in half.

United Nations affiliated organization, the World Food Programme (WFP) recorded that from July 1st until the 15th, food distribution in North Korea was 370 grams per person per day, but during the second half of the month rations were reduced to a mere 300 grams, revealed a Voice of America broadcast two days ago. The World Food Programme puts the recommended amount of food per day at 600 grams minimum.

According to a North Korean based-WFP local official, rations consist of 20-30% rice and 70-80% corn. During the summer, barley, potatoes, wheat and other crops are included in the distribution.

From January until March, rations were maintained at 395 grams per person, and in April they were increased to 400 grams. In May, rations were reverted back to 395 grams and June again saw a slump, down to 380 grams per person.

The WFP attributes the decline in rations to various natural disasters, such as drought and flooding have led to extensive damage of cropland across North Korea.

The WFP estimates these ration shortages will continue to be severe until harvest time arrives in November.

The flip side of this story is that North Koreans obtain the majority of their food from private and black markets.

The Daily NK tracks rice prices in the DPRK here.

Read the full story here:
WFP Reports July Rations Cut in Half at NK
Daily NK
Kim Tae-hong
2012-8-2

UPDATE 10 (2012-6-21): Although the drought was initially reported in North Hwanghae Province, the shortage of water is causing additional problems (electricity generation) in other parts of the country. According to the Daily NK:

The source believes that it is primarily the failure of the newly completed hydroelectric power station at Heecheon in Jagang Province to reach official expectations that is causing the problem. It has been known for some time that water levels behind the dam at Heecheon are insufficient to meet electricity generation targets.

However, there are other reasons for the current state of affairs, notably events for the 10t0th anniversary of the birth of Kim Il Sung and the period of mass mobilization for farming.

According to the source, “Because they wanted it for the April events, most of the electricity coming to Pyongyang went to the Mansudae and Central districts, while the places where most people actually live didn’t get regular supplies. Then in May they started sending most of it to cooperative farms in North Hwanghae Province for the mass farming mobilization.”

Currently, residential areas of the capital are receiving electricity two or three times a day for an hour or two at a time, meaning anything from three to five hours of power per day.

UPDATE 9 (2012-6-19): Yonhap reports that Seoul believes the drought’s effects on food production are not as serious as others claim:

Food shortages in North Korea do not seem to be as serious as expected while the country grapples with a months-long drought, Seoul’s foreign ministry said Tuesday, in a blunt assessment that contradicts warnings from United Nations agencies.

Poverty-stricken North Korea appears to face another bleak year with its farm industry hit by an unusually long drought, particularly in the western areas, the North’s state media recently reported, raising concern it could exacerbate its food shortages.

Asked whether South Korea will consider resuming its state food aid to the North if the drought further worsens, Foreign Ministry spokesman Cho Byung-jae replied, “Our general assessment is that (the North’s food situation) is not so serious as to fall into a level of crisis.”

“At present, no plan is in the offing with regard to government-level food assistance to North Korea,” Cho said.

Last week, U.N. agencies operating inside North Korea reported that millions of North Korean people are suffering from chronic food shortages and dire health care, appealing for the world to raise funds to provide food to the impoverished state.

The North’s Korean Central News Agency (KCNA) reported on Friday that the North’s key breadbasket areas including North Hwanghae Province have been hit by an unprecedented drought.

KCNA added that “crops are withering” due to the most serious drought in 60 years.

The North’s defiant launch of a long-range rocket in April blew up a Feb. 29 deal with the U.S. under which Pyongyang would freeze nuclear and missile tests in exchange for 240,000 tons of food aid.

New leader Kim Jong-un has stressed the importance of food production in the two personal statements he has made to the people this year. A bad harvest could deal a blow to his regime as he tries to consolidate his grip on power.

The North has relied on outside food aid to feed its population of 24 million since natural disasters and mismanagement devastated its economy in the mid-1990s.

South Korea halted its unconditional state aid to the North in 2008, by linking food aid to progress on Pyongyang’s nuclear dismantlement. But Seoul has continued to selectively approve humanitarian and medical assistance to Pyongyang from religious and private aid groups.

The DPRK has yet to formally request any food assistance following the announcement of the drought.

UPDATE 8 (2012-6-5): According to the Institute for Far Eastern Studies (IFES):

North Korea is reporting serious drought. North Korea has had over 40 days of dry weather (as of the end of May) and 40 percent of cropland was reportedly damaged from the drought. The west coastal areas were hit the hardest, allegedly the worst drought in fifty years, according the Hydro-meteorological Service of the DPRK. The month of June is also anticipated to be dry without much rainfall, which will likely worsen the already critical food shortage problem in North Korea.

The KCNA released an article on May 24 with a statement from Choe Hyon Su, department director of the Ministry of Agriculture: “West coastal and other areas excluding north mountain areas are suffering damages from forty days of dry weather until today (May 24), and 40 percent of our farmlands are experiencing damages from the drought.”

The extreme drought conditions are expected to intensify until June and cabbages, corn seedlings, and other grains are drying out in the parched and cracked fields. An all-people campaign to overcome the drought situation is currently on-going in the country. Bureaucrats and workers have been mobilized to irrigate farms and ordered to take other necessary measures to prevent further drought damage, state media reported.

In addition, the KCNA reported on May 26 that Choe Yong Rim,the Premier of the DPRK, visited Saenal Farm in Sinchon County and Oguk Co-op Farm in Anak County, South Hwanghae Province to survey the farming situation.

The premier reportedly “highlighted the importance of settling the food shortage in building a thriving nation and called on all officials and other agricultural workers to play their role as those responsible for the nation’s agricultural production.” He also stressed the “need to meet technological requirements for harrowing and winding up the rice-transplanting in [the] right season.”

Furthermore, Choson Sinbo reported on April 24 that North Korea is raising efforts to solve the food shortage problem through increasing fertilizer production and succeeded in “coal gasification,” which is North Korea’s own fertilizer production process.

The process converts coal from a solid to a gaseous state that is similar to natural gas, and can be converted to ammonia that is used to make fertilizer. North Korea has rich deposits of coal and would otherwise have to import natural gas for fertilizer production. However, Namhung Youth Chemical Complex succeeded in its coal gasification process, turning coal to hydrogen gas.

In addition, Hungnam Fertilizer Complex is reported to have succeeded in its brown coal gasification process. The fertilizer production goal for this year from these two facilities is set at 1 million tons, the news reported.

North Korea has widely publicized fertilizer produced by coal as “Juche fertilizer.” North Korea continues to endorse that fertilizer produced from the gasification of coal will serve as a major pillar in building a strong nation along with “Juche steel,” and “Juche textile.”

UPDATE 7 (2012-5-29): According to the Korea Herald:

In at least one area of South Pyongan Province where journalists from the Associated Press were allowed to visit, the sun-baked fields appeared parched and cracked, and farmers complained of extreme drought conditions. Deeply tanned men, and women in sun bonnets, worked over cabbages and corn seedlings. Farmers cupped individual seedlings as they poured water from blue buckets onto the parched red soil.

“I’ve been working at the farm for more than 30 years, but I have never experienced this kind of severe drought,” An Song Min, a farmer at the Tokhae Cooperative Farm in the Nampo area, told the AP.

It was not clear whether the conditions around Nampo were representative of a wider region. The U.N. Food and Agriculture Organization said it had not yet visited the affected regions to confirm the extent and severity of the reported drought.

North Korea has suffered chronic food shortages for the past two decades because of economic and agricultural mismanagement as well as natural disasters. A famine in the 1990s killed an estimated hundreds of thousands of people.

North Korea state media has publicized the drought but hasn’t asked for international handouts. The country’s past appeals for food aid have been met with some skepticism, however, amid worries that aid would be diverted to the military and Pyongyang elite without reaching the hungry.

You can see a satellite image of Tokhae Cooperative Farm here (Googler Earth:  38.786605°, 125.468135°).

UPDATE 6 (2012-5-27): According to Yonhap:

N. Korea steps up fight against drought

SEOUL, May 27 (Yonhap) — North Korea is stepping up its fight against drought as a prolonged dry spell in the rice-planting season could deal a blow to food production and negatively impact the rule of the its new young leader.

The impoverished nation’s main Rodong Sinmun newspaper, state television and other media outlets are urging citizens to utilize every possible source of water to irrigate rice paddies, while also offering advice on how to help other crops overcome drought.

Pyongyang’s Korean Central News Agency (KCNA) said Friday that western regions of the North have received little rain for a month since April 26. If no rain falls by the end of the month, it will be the driest May for most western regions of the nation since 1962, the agency said.

KCNA reported Saturday that many people have been mobilized across the nation to minimize damage from the drought and that the cabinet and the agriculture ministry are putting together emergency measures.

The North’s premier, Choe Yong-rim, visited farms in the western Hwanghae Province on Saturday to check the situation, KCNA said. Choe was quoted as urging farmers to finish rice planting successfully, saying resolving food problems is one of the country’s most important issues.

New leader Kim Jong-un has stressed the importance of food production in the two personal statements he has made to the people this year. A bad harvest could deal a blow to his regime as he tries to consolidate his grip on power.

The North has relied on outside food aid to feed its 24-million population since natural disasters and mismanagement devastated its economy in the mid-1990s.

UPDATE 5 (2012-5-26): According to KCNA:

Koreans Are Out to Fight Drought

Pyongyang, May 26 (KCNA) — Officials and working people across the country are all out to prevent damage by drought.

The Cabinet and the Ministry of Agriculture took emergency measures to prevent the drought-related damage and all sectors and units are meticulously carrying out organizational and political work to fight drought in a massive manner.

Rural areas are pushing ahead with the work to repair and readjust wells, pools and tube-wells, keep water-pumping and dry-field irrigation equipment in full-capacity operation and irrigate all fields with water collected through damming and digging of river-beds.

North Phyongan and Hwanghae provinces are making good use of existing irrigation system while watering the fields prone to drought damage after finishing the repair of pools, tube-wells, etc.

Jongju, Sariwon, Thaechon, Ryongchon, Pongsan and other cities and counties are concentrating labor power on watering the drought-hit fields of corn, potato, wheat and barley first.

Working people and supporters in South Hwanghae and Phyongan provinces are watering lots of fields every day.

Rural farms in Nampho City and Kangwon and South Hamgyong provinces are successfully watering fields by organizing labor forces to suit to their specific conditions and making an effective use of water resources.

The rural farms near Pyongyang are watering the fields through diverse methods including furrow and water-sprinkling irrigation systems after readjusting irrigation facilities.

All rural farms are frequently weeding and ploughing as required by technical regulations in order to keep soil moist, while applying amino acid compound fertilizer and humate good for resisting drought.

UPDATE 4 (2012-5-26): According to KCNA:

Drought Persists in DPRK

Pyongyang, May 26 (KCNA) — West coastal areas of the Democratic People’s Republic of Korea experience a long spell of dry weather. This is an abnormal phenomenon witnessed in the country in fifty years, according to a report of the Hydro-meteorological Service.

There have been few rainfalls for nearly 30 days in those areas since April 26.

Ri Kyong Ho (39), a farmer, saying,

“Only twenty days has passed since we transplanted humus-potted maize. Due to an unusual drought this year, maize is getting dry, as you can see here. We are doing our best to overcome this long spell of drought.”

Pang Sun Nyo (48), chief of Weather Forecast Office of the Hydro-meteorological Service, saying,

“Most areas of the country, especially the western areas, are in the grip of long drought.

There have been few rainfalls for 25 days since April 27. Although it rained a little, it was not enough to overcome drought.

Starting from April 30, the country experienced the highest daytime temperature. The temperature began to lower a little than an average year from mid-May but has gone up since May 18.

The average evaporation loss is 4 to 8 mm and the humidity of land 60 percent at present.

This abnormal weather phenomenon is mainly due to flow of dry and warm air current into the country from the continents on middle latitudes and the south, which prevents cold air current from the north to the south.

The drought is foreseen to persist until the end of May, affected by high air pressure from the south and East Sea of Korea.”

UPDATE 3 (2012-5-25): According to KCNA:

Long Drought in West Coastal Areas of DPRK

Pyongyang, May 25 (KCNA) — West coastal areas of the Democratic People’s Republic of Korea experience a long spell of dry weather. This is an abnormal phenomenon witnessed in the country in fifty years, according to a report of the Hydro-meteorological Service.

There have been few rainfalls for about 30 days since April 26.

In this period rainfall was registered 2 mm in Pyongyang, 5 mm in Haeju City, 4 mm in Phyongsong City, 1 mm in Sinuiju City and 0 mm in Sariwon City.

The average evaporation loss is 4 to 8 mm and the humidity of land 60 percent at present.

In case there is no rain until the end of this month, the precipitation of May in the west coastal areas would be registered as the lowest from 1962 downward.

The humidity of land stands at 55 percent and the drought is expected to get more serious.

An all-people campaign for overcoming drought is now going on in the country.

UPDATE 2 (2012-5-22): According to the Daily NK:

There is a growing volume of testimony to suggest that food insecurity in Hwanghae Province is now particularly bad, and in a significant number of areas has tipped over into starvation and death. Much of the evidence for this has been published since May 7th by ASIAPRESS, a Japanese group with video journalists working inside North Korea.

Example interviews published in Korean by ASIAPRESS include a woman in her 40s from South Hwanghae Province who claimed that for her the “situation is more difficult than during the ‘March of Tribulation’,” referring to the famine that killed many hundres of thousands of North Koreans in the 1990s.

“The food situation is worse than it was three years ago,” the woman went on. “The waiting room at the station in Sariwon in North Hwanghae Province is overflowing with beggar children, both boys and girls, younger and older.”

A man in his 30s from South Hwanghae Province also testified similarly, saying that “Malnutrition is getting more prevalent for farmers. The farming is going really badly.”

Another witness, from North Hamkyung Province but with experience of visiting Hwanghae, claimed, “I heard from a Hwanghae Province resident that people dead from starvation are appearing in Haeju every day. It is surprising that something like this can happen in the ‘rice region’; by this standard it seems that the situation in North Hamkyung is actually not that bad.”

ASIAPRESS believes the main causes of the extreme food insecurity in the region to be: ▲ decreased food production due to flooding; ▲ food procurement for Day of the Sun events in other areas, mostly Pyongyang; and additional ▲ market stagnation.

In other words, the testimonies obtained by ASIAPRESS suggest in particular that the authorities have been demanding excessive volumes of food from farms while failing to revive flooded farmland. In essence, food production has decreased but food procurement and removal to other regions has risen.

One farmer from South Hwanghae Province commented, “The floods last year washed away most of the fields in coastal areas. In early spring productivity was particularly bad, because rain hit when the flowers were blooming. In addition, productivity was reduced because we couldn’t get fertilizer and water supplies were dodgy because there was little electricity.”

Commenting on his organization’s major findings, Director Jiro Ishimaru concluded, “The cause of the food crisis in Hwanghae Province cannot be put down to an agricultural slump, but to the exploitation and excessive procurement of the authorities. The reason for the food crisis is man-made.”

UPDATE 1 (2012-5-21): According to KCNA:

Western Area Experiences Drought in DPRK

Pyongyang, May 21 (KCNA) — There has been few rainfalls in the western area of the Democratic People’s Republic of Korea since April 26.

Most parts of the country, except Ryanggang and Jagang provinces, witnessed a small amount of rainfalls on May 13-14, with no effect on the drought.

Starting from late April, the country experienced the highest daytime temperature. The temperature began to lower a little than an average year from mid-May but has gone up since May 18.

The high temperature has made the rate of overall soil humidity remain under 65 percent.

Water level of the country’s major irrigation reservoirs stands at 55.4 percent on an average. Water storage in Lake Kumsong in South Phyongan Province dropped even to 0.5 percent, in particular.

Affected by alternate high and low pressures, rainfalls are believed to be usual in springs in Korea.

But, in this spring cold air, which should have come towards the south, continues to stay in the north while the warm and dried air persistently come from continents on middle latitudes, causing a long-time drought in Korea.

Such an atmospheric phenomenon is said to last until early June only to cause drought.

ORIGINAL POST (2012-5-11): According to KCNA:

DPRK Experiences High-temperature Weather

Pyongyang, May 11 (KCNA) — The Democratic People’s Republic of Korea has been experiencing exceptionally high temperature weather.

From April 30 to May 9, daytime temperatures hit the record high, with 27 degrees Celsius in Pyongyang, 26.6 in Phyongsong, 27.4 in Sariwon, 26.7 in Haeju, 26.9 in Kaesong and 22. 2 in Nampho.

The high temperatures were believed to be caused by the increased high pressure in the sky above the southern area, which prevented the inflow of cold air from the north.

There have been few rainfalls in the western coastal area of the country.

Until mid-May, the country’s weather will be affected mainly by the high pressure in the southern area and in the Okhotsk.

Thereby, the daytime temperatures are forecast to be higher than the average ones in most parts of the country, except the eastern coastal area, with a small amount of precipitation.

Drought is likely to come to the western coastal area.