Archive for the ‘General markets (FMR: Farmers Market)’ Category

North Korean food prices after the floods

Wednesday, September 28th, 2016

By Benjamin Katzeff Silberstein

A recent report by Radio Free Asia/Asia Press (and recapped below by Yonhap) claimed that food prices had doubled in northern North Korea as a result of the floods last month:

Food prices in North Korea’s northeastern region, which has been hit by devastating floods, have doubled due to the slow pace of recovery and poor distribution networks, U.S.-based media Radio Free Asia (RFA) reported Thursday.

Citing a report by Japanese media outlet Asia Press, the RFA said the country’s northern cities of Hoeryong and Namyang are experiencing a spike in rice and corn prices which soared to 8,000 won (US$7.24) and 2,000 won per kilogram, respectively, from 4,300 won and 1,000 won before the worst-ever floods in decades. The flooding caused severe property damage with many people being reported dead or missing.

The Japanese media said there is a likelihood that other commodity prices will likely soar following rice.

Jiro Ishimaru, who heads the Osaka office of Japan’s Asia Press, told the RFA that rice prices rose rapidly as the transportation situation in the flood-damaged area is very serious, with the railroads and overland routes being almost blocked. The official said the lack of transportation means is leading to poor distribution of food and commodities.

Ishimaru, in addition, warned that water shortage and sanitary problems will also follow due to a shortage of personnel equipment needed to speed up recovery.

Full article here:
Food prices in N. Korea’s flood damaged area doubles: report
Yonhap News

According to DailyNK, the government has therefore started implementing price controls to keep the market prices for food from skyrocketing:

북한 당국이 ‘60년 만의 대재앙’ 수해 피해를 입은 함경북도 지역의 물가 안정을 위해 총력을 기울이고 있는 것으로 전해졌다. 인민보안성(경찰) 인력을 동원해 쌀 사재기와 가격 인상을 통제하면서 내부 안정화를 꾀하고 있다고 소식통이 알려왔다.

함경북도 소식통은 27일 데일리NK와의 통화에서 “현재 쌀 가격 등이 큰물 피해 이전과 거의 차이가 없다”면서 “보안원과 순찰대가 출동해서 쌀 사재기 및 가격을 올리는 행위 등을 강력하게 막았다”고 전했다.

소식통은 이어 “(수해가 일어나고 얼마 되지 않아) 어떤 장사꾼은 1킬로(kg)에 5000원, 5300원하던 쌀을 8000원에 팔려고 하기도 했다”면서 “하지만 보안원들의 통제 때문에 눈치만 보다가 그렇게 하지 못했다”고 설명했다.

그러면서 소식통은 “회령시의 경우 한때는 쌀 가격이 6000원까지 폭등하기는 했으나 지금은 5000원 대로 하락했다”면서 “돼지고기 가격도 1kg에 13000원 등 원래 가격과 같다. 물가가 전반적으로 차분하다(안정돼 있다)”고 덧붙였다.

Full article:
North Korea making efforts for price stability in flood damaged areas…”Don’t raise rice prices”
Kang Mi-jin
Daily NK

Yonhap offers a summary of the article in English:

North Korea is going all out in blocking the cornering and the skyrocketing of rice prices in its flood-devastated northeastern areas, a Seoul-based news outlet specializing in the North reported Wednesday.

This summer, six areas in North Hamkyong Province in the North were devastated by heavy rains accompanied by Typhoon Lionrock, with the United Nations having estimated that 138 North Koreans were killed and 400 others are missing by the floods, with about 20,000 houses destroyed.

“Security agents and patrolmen are strongly cracking down on activities of cornering rice and raising rice prices (in flooded areas),” the Daily NK quoted a source from the North’s North Hamkyong Province as saying.

Therefore, there’s no big difference in rice price before and after the worst-ever flood hit the region, the source said.

“A merchant was trying to sell 1 kilogram of rice at 8,000 won shortly after heavy rains flooded the area, but was unable to do so due to strict control by security agents,” the source said.

Rice price once soared to 6,000 won from 5,000 won per kilogram before the floods, and now remains at the 5,000 won level, according to the source, adding that pork prices also showed no noticeable change, selling at 13,000 won per kilogram as before.

“Prices in the deluged areas are stable, in general,” the source said.

Full article:
N.K. strongly controls prices in flood-stricken areas
Yonhap News

Several things are worth noting here. First, historically, it is common for food prices to rise as a result of seasonal flooding in North Korea. After the severe floods in 2012, rice prices shot up from 4866 won/kg in July to 6533 won/kg in late September. Second, the rise in prices reported by RFA/Asia Press might have been a temporary shock. The DailyNK price graph, last updated in early September, shows very moderate increases in prices after the floods hit in late August. Perhaps prices stabilized quickly as supply did (i.e., deliveries coming in from other areas; this is only speculative though). Third, price controls are difficult to maintain under pressure. Had there been a massive pressure for prices to go up due to drastically decreased supply, it is hard to see that the government would have been able to effectively keep market prices at a certain level across the board. I will try to keep this post continuously updated as market price information gets updated.


Book review recommendation: Philip Park’s Rebuilding North Korea’s Economy

Tuesday, September 20th, 2016

By Benjamin Katzeff Silberstein

It is unfortunate that books published in South Korea are often difficult for reader’s in the United States and Europe to get a hold of without waiting out the very long waiting times for online purchases or library orders. Readers of this blog may well be familiar with Kyungnam University professor Philip H. Park’s work on the institutional side of the North Korean economy. One of professor Park’s books on the North Korean economy was recently translated into English and published under the name of Rebuilding North Korea’s Economy. Sadly I have not yet personally been able to read the book for reasons stated at the beginning of this post, but a review in Daily NK summarizes some of the core arguments:

“Rebuilding North Korea’s Economy” is a detailed history of the evolution of North Korea’s economic institutions. It is a newly published English translation of the original Korean work. The author is a professor of political science and diplomacy at Kyungnam University. The book details how a series of crises stimulated a procession of changes in North Korea’s economic strategy. Each new strategy reacted to and attempted to amend the problems created by its predecessor. However, each policy also sowed the seeds for future crisis by creating new inefficiencies.

The Argument
Phillip Park’s central contribution is to correct a common misconception about marketization and the decentralization of North Korea’s economy. Park argues that North Korea did not begin its process of marketization with the July 1st Measures in 2002 – as is commonly believed. Instead, he presents evidence that North Korea actually started spinning the gears of this process much earlier, most significantly with the adoption of the Ryonhapkiopso System (Complex Industrial System) in 1986. In theory, this economic approach allowed limited market mechanisms and practical planning to replace more ideological economic initiatives. The system’s implementation was largely a response to stagnated growth and the impending collapse of one of North Korea’s key sponsor states, the Soviet Union. Aside from inefficiency, North Korea’s principal economic problem has always been striking a balance between sectors while also pursuing self-sufficiency. The Complex Industrial System aimed to address that problem.
The author uses North Korean economic journals as his primary sources. He admits that separating the useful information from the propaganda was a laborious task. So, while the information does need to be taken with a grain of salt, we can still learn a lot about the state of North Korea’s economy by observing how academic discussions and policy recommendations have evolved over time. The book does a good job contrasting policy dialogues with the results of subsequent implementations (or lack thereof). The book’s sources help dispel the myth that North Korea’s political economy is purely monolithic. Indeed, through the book, we witness key players – academics and officials alike – arguing over milestone policies.
One note of caution: Park dives headfirst into the North Korean understanding of economics. Yes, this means a heavy dose of Marxist concepts and five-syllable jargon. But those with a rudimentary understanding of socialist politics know that seemingly obscure theoretical points are sometimes used to justify sweeping changes. In particular, changes to North Korea’s economic institutions are often motivated by theoretical assumptions about how to best transition to a fully communist state. This is actually one of the book’s major charms. After we digest the dense vocabulary, we are presented with a reasonable framework for understanding the decision making of one of the world’s most opaque and incomprehensible dynasties. That in itself is a laudable achievement.
Let’s address a few downsides. Considering that the original Korean work was published a few years ago, it would have been nice to get an expanded forward with some new observations on Kim Jong Un’s performance as an economic manager. Also, abbreviations and technical jargon are used thoroughly in the book. A glossary of terms would have been a handy reference.
Although Park’s main argument may seem technical at first glance, the repercussions of this work are vast. The most immediate and profound impact is that it forces us to reconsider the history, nature, and trajectory of North Korea’s economic transformation. Marketization is typically described as a bottom-up process of slowly expanding black market activity. But Park gives us a reason to think that the picture is slightly more nuanced. It gives us a view into the thinking of North Korean economic planners. Readers are prompted to think more deeply about how institutions shape incentives in North Korea, and how these institutions have changed over time.
Full article here:
Light and shadow: A review of ‘Rebuilding North Korea’s Economy’
Daily NK

North Korea’s smallest market?

Thursday, August 11th, 2016

Sometime between 2015-5-25 and 2016-6-27 a new candidate for what may be North Korea’s smallest formal market (시장) was built in remote Komsan-ri, Hyesan City, on the Chinese border.


The Market is approximately 17m x 12m and consists of a central table and possible vending space around the perimeter.

There may be a smaller formal market somewhere in the DPRK, but I can’t think of one at the moment.

Here are some other recent changes that have taken place in Hyesan (new customs office, orphanages, renovated railway line progress (to Samjiyon) and some renovated train stations.


Is North Korea’s food situation really getting worse? The markets don’t think so.

Friday, July 22nd, 2016

By Benjamin Katzeff Silberstein

Since early 2016, the Food and Agriculture Organization of the UN (FAO) has been sounding the alarm bells on North Korea’s food situation. In an interview a few weeks ago with Voice of America’s Korean-language edition, FAO-official Christina Cosiet said that this years’ harvest would be the worst one in four years. One question, dealt with before by this blog, is how bad this really is. After all, the past few years seem to have been abnormally good in a long-run perspective.

But another obvious question is: why do market prices in North Korea tell the opposite story about food supply?

Prices for both rice and foreign currency (US-dollars) have remained remarkably stable for a situation where people should be expecting a worse-than-usual harvest. It is important to bear in mind that prices are largely seasonal and tend to increase in September and October. But unless prices somehow skyrocket in a couple of months, things do not look that bad.

There seem to be two possibilities here: either official production and food supply through the public distribution system simply does not matter that much, because shortages are easily offset by private production and/or imports. Or, the FAO projections simply do not capture North Korean food production as a whole.

For an overview of food prices in the last few years, consider the following graph (click here for larger version):


Graph 1: Prices for rice and foreign currency, in North Korean won. Prices are expressed in averages of local prices in Pyongyang, Sinuiju and Hyesan. Data source: DailyNK market prices.

As this graph shows, both the exchange rate and rice prices have remained relatively stabile over the past few years. Thus far, this summer has been no exception. The following graph shows exchange rates and rice prices from the spring of 2015 till July 2016 (click here for larger version):


Graph 2: Prices for rice and foreign currency, April 2015–July 2016, in North Korean won. Prices are expressed in averages of local prices in Pyongyang, Sinuiju and Hyesan. Data source: DailyNK market prices

This does not look like the behavior of a nervous market where supply is declining at a drastic rate. Of course, a number of caveats are in order: again, prices are likely to rise through September and October, as they have in the past. Moreover, markets may react to any harvest declines at a later point in time, as they become more apparent.

Even so, it seems inconceivable that market prices would remain so stable if North Korea was experiencing a steep dive in food production. After all, farmers would be able to see signs fairly early on, and their information would presumably spread through the market as a whole. In short, it is logically unthinkable that markets simply would not react to an unusually poor harvest.

This all begs the question of how much market prices tend to correlate with the FAO:s harvest figures overall. The short answer appears to be: not much. The graph below (click here for larger version) shows the average prices for rice and foreign exchange per year on the North Korean market since 2011, and harvest figures drawn from reports by the FAO and the World Food Program (WFP). (See the end of this post for a more detailed explanation of the underlying calculations.)*


Graph 3: Yearly average market prices for rice and US-dollar (in North Korean won), and FAO food production figures. Data source: DailyNK market prices

As this graph shows, there is generally fairly little correlation between market prices and harvests as calculated by the FAO. Harvests climbed between 2009 and 2015, while market prices climbed and and flattened out from 2012, around the time of Kim Jong-il’s death. Exchange rates and rice prices unsurprisingly move in tandem, but appear little impacted by production figures as reported by the FAO.

It is possible that prices react in a delayed manner to harvests, and that the price stabilization on the market is a result of increased harvests over time. But the consistent trend over several years, with prices going up as harvest figures do, is an unlikely one. Again, it is also difficult to imagine market prices not reacting relatively quickly to noticeable decreases in food production.

So what does all this mean?

It is difficult to draw any certain conclusions. But at the very least, these numbers suggest that the FAO food production projections are not telling the full story about overall food supply in North Korea. Moreover, market signals are telling us that food supply right now is far from as bad as the FAO’s latest claims of lowered production would have it. Rather, prices seem normal and even slightly more stabile than in some previous years with better harvests. In short, the narrative that this year’s harvest is exceptionally poor seems an unlikely one.


*A note on graph 3:

 For market prices per year, I calculated an average price from all observations in a given year. The DailyNK price data is reported for three cities separately: Pyongyang, Sinuiju and Hyesan. I have used an average of these three cities for each data observation as the base for calculating yearly averages. This is a somewhat tricky way of measuring, as the amount of data observations, as well as their timing, sometimes varies from year to year. The steep decline in 2009–2010 is primarily caused by the currency denomination, and should not be taken for a real increase in supply.

The FAO food production figures are not reported by calendar year, but published in the fall and projected for the following year. Since these figures best indicate available supply for the year after they are reported, I have assigned them to the year following the reporting year. That is, the figure for 2014 comes from the WFP-estimate for 2013/2014, and so on and so forth.


New market construction and renovation in North Korea

Thursday, May 19th, 2016


Pictured Above (Google Earth, 2016-2-2): Construction of what I believe to be a new market in Nampho.

I have identified a few other smaller examples in this Radio Free Asia article.


New figures on markets in North Korea

Sunday, December 27th, 2015

By Benjamin Katzeff Silberstein

The last few months have seen quite the trickle of quantitative estimates on North Korea’s markets. A while back, South Korean intelligence said North Korea has 380 markets in total. Curtis Melvin counts them to 406. And then, a few days ago, Professor Lim Eul-chul of Kyungnam University put them at 750 (including street vendors).

It is unclear whether this is another intelligence branch or institution speaking, but what Yonhap terms “South Korea’s intelligence authorities” today claims that there are 306 markets. They also estimate that 1.8 million people use them every day, although those numbers are probably guesstimates more than anything else. Even though survey studies can say a lot about how often people use markets on average, it would seem almost impossible to weight these properly by region given the variation.

The report also includes a count of markets in each province:

By region, South Pyongan Province is home to the largest markets with 37, followed by South Hamgyong Province with 36 and North Pyongan Province with 34. North Korea’s capital of Pyongyang has 23 markets, the authorities said, without elaborating on how they obtained the information.

It is difficult to know what is meant by “markets” here: in other words, whether street markets are included or only formal ones. In any case, it isn’t particularly surprising that South Pyongan Province comes out as number one: the province has a major advantage for market trade in that it is close to Pyongyang. Traders that don’t have entry permits to Pyongyang can come and sell their goods to Pyongyang citizens who only live a relatively short bus ride away, or to other traders that will ship the goods for sale there.

Read the full article here:
S. Korea says up to 1.8 mln N. Koreans use markets per day 
Yonhap News


Number of market stalls grows in Kim Jong-un era

Monday, December 21st, 2015

According to the Daily NK:

The number of markets and stalls across North Korea has been increasing at a faster pace since Kim Jong Un came into power, as unlike his father Kim Jong Il, the young Kim has left market activities mostly untouched by regulations. This has given people more room to improve their livelihoods and tame their disgruntlement towards the leadership.

For some years now, the state has not placed heavy restrictions on market activity, resulting in a jump in the number of stalls across all marketplaces, sources from within North Korea have told Daily NK. The relaxed environment has prompted many people to start selling at the market, leading to a gradual expansion in operations.

The number of stalls at markets in South Hamgyong, South Pyongan, Yanggang, and Kangwon Provinces has swelled significantly, according to multiple sources in each of these areas. In the case of Hyesan in Yanggang Province, the stall count across five markets has gone from 6,326 in 2012 to 7,627 this year, posting a rough 20 percent increase.

Deoksan Market, located in the Okjeon District of South Pyongan Province’s Pyongsong City, saw stall numbers jump from anywhere between 3,000 to 4,000 over the same period, recently reaching 13,510; a stall tally at Munhwa Market in South Pyongan Province revealed that stands there blossomed from around 700 to 800 a few years ago to a current total of 2,560.

With the rise of new stalls at the Bukchong market in South Hamgyong Province, rice stalls have been set off into a separate section. Some 350 vendors as of now are just selling rice, according to a number of sources. The Wonsan Market in Kangwon Province has also gone from around 3,000-4,000 vendors to 5,700, recording a steady expansion.

The loose grip on the markets ties back to better profits for the state, as it is able to collect stall operation fees from vendors. Struggling to secure state funds on the trade front, relaxing market regulations and collecting money for its coffers become a more attractive option for the leadership, sources explained.

More specifically, average market fees collected from vendors at the Hyesan General Market in Yanggang Province add up to over 4 million KPW [463 USD] a day. In a one-month period, this amount reaches over 100 million KPW, which is worth 20,000 tons of rice according to current rates. Given there are five markets in Hyesan City, the total income produced just from these fees would be worth roughly 100,000 tons of rice, according to reports from sources.

This markedly more relaxed market environment has given people more breathing room, alleviating some of the strong sentiments residents had against the leadership after going through a failed currency reform back in 2009. The changes have also given people a greater belief in self-provision, watering down their reliance on the state along with their loyalty as well, sources have explained.

Running a business at the market is now considered a right rather than an illicit activity, marking a stark change in attitude among the public from some years ago.

I have also contributed satellite imagery to RFA of various new markets that have been built in the Kim Jong-un era.

Read the full story here:
Swelling markets shift perceptions
Daily NK
Kang Mi Jin


750 markets in North Korea, one scholar says

Monday, December 21st, 2015

By Benjamin Katzeff Silberstein

UPI reports that Lim Eul-chul of Kyungnam University puts the number of North Korean “gray” markets at 750. This number includes “alley vendors”, according to Lim, presumably another term for street markets:

There are now more than 750 “gray markets” in North Korea and one million people now make up the country’s consumer elite, a South Korean analyst said Tuesday.

Lim Eul-chul of the Institute for Far Eastern Studies at Kyungnam University said at a seminar for South Korean lawmakers grassroots enterprises in North Korea have increased, and businesses are diversifying.

“North Korean authorities also are involved in the markets,” Lim said.

On average, a North Korean city, county or region has an average of two marketplaces, bringing the national total to 500. If alley vendors are included in the tally, the total is 750, Lim said.

In larger cities like Chongjin, near the China border, there are about 12,000 vendor stalls and one city in South Pyongan Province is home to a marketplace that is more than 1 mile across, the analyst said.

The North Korean regime is an active participant in the unofficial marketplaces that began developing after the collapse of the state’s distribution system. Authorities enjoy a monopoly over the mobile phone market and related services, Lim said.

Other sought-after products in North Korean marketplaces include South Korea-made products that are smuggled into the country, as well as pizza and burgers.

It is unclear exactly how these numbers have been compiled. Lim appears to be using a very wide definition for what to count as a market. South Korean intelligence has previously put the number of markets at 380, while Curtis Melvin counts them to 406.

Read the full article:
More than 700 North Korea ‘gray’ marketplaces have emerged, analyst says
Elizabeth Shim


The limits of agriculture reform in North Korea

Friday, December 18th, 2015

By Benjamin Katzeff Silberstein 

Agricultural reforms in North Korea became a hot topic of discussion almost right away when Kim Jong-un took power in 2011. Only a number of months into his tenure, news began to come out of the country about attempts at agricultural reforms. It is unclear when (or even if) the June 28th Measures were finally extended to the whole country.

At the very least, three years in, it seems beyond reasonable doubt that North Korean agriculture has undergone major changes. These have been aimed at boosting production by creating better incentives for farmers to produce and sell more of their output to the state rather than diverting it to the market. The most important aspects of these reforms are the decreased size of work teams and new rules that let farmers keep 30 percent of their production plus any surplus above production targets, while the state takes the remaining 70.

These changes have been met with optimism among some. However, no one really knows exactly what impact these reforms have had. North Korean agriculture may be faring better than it used to – although this is also doubtful – but even so, it is too simplistic to assume that government reforms in agricultural management are doing all the work. As long as North Korea’s agriculture continues to be centrally planned by the state, there will be limits to how much better it can get no matter what reforms the state implements.

To see why, consider some of the news that have been coming out of North Korea in the past few months, as reported by Daily NK. In late November, the online daily reported that in despite by multilateral aid organizations, North Korea had seen relatively good harvests this year. However, the increased harvests, according to people inside the country, were not caused by changes in the agricultural management system of state-operated collective farms.

Rather, the North Koreans interviewed for the story claimed that private plot farmers had been better able to protect their crops from adverse weather impacts by using water pumps and other equipment. Even though trends like these alone probably have a limited impact, this shows that many circumstances other than state management matter.

A few weeks later, Daily NK published another interview carrying a similar message. According to sources inside the country, harvests from collective farms have declined, while private plot production has gone up (author’s emphasis added):

The amount of food harvested this year from the collective farms has “once again fallen short of expectations,” he said, adding that the farmers who work on them have criticized the orders coming down from the authorities, saying that “if we do things the way they want us to, it’s not going to work.”

Although the regime has forced people to mobilize, the source asserted that farm yields are not increasing. So, then, “the best thing to do would be to further divide the land up among individuals,” he posited.

Our source wondered if individual farms were not more successful because each person tending them personally grew and watered their plants. Currently, farmers must follow directives regarding the amount of water they can use on collective farms. He warned that if the system is not completely overhauled, crop yields will fail to improve.

In other words: as is so often the case, management orders from above often do not align with the reality on the ground.

One should be careful not to draw too many general conclusions based on individual interviews, but this is a well known general problem in all planned economies. Even with the best intentions, the state can never be fully informed about conditions and resources on the ground in an entire society.

This is one of the many reasons why economic central planning falters. We have seen this, too, with Kim Jong-un’s forestry policies. The state gives orders that have unintended consequences on the ground, because information is lacking. No central planning team can be fully informed about the reality prevailing throughout the system. The information problem becomes particularly dire in authoritarian dictatorships like North Korea, where people at the lower end of hierarchies often have strong incentives not to speak up about implementation problems when orders come from the top.

Ultimately, no matter what management reforms the North Korean regime implements, the country’s economic system remains the basic stumbling block. As long as central planning continues to be the ambition of economic and agricultural policies, there will be a limit to the success that agricultural policies can reach. We may expect to see agricultural reforms continuing, but as long as the system remains, they can hardly be revolutionary.


A 2014 visit to Rajin’s old marketplace

Wednesday, December 2nd, 2015

National Unification Broadcasting (국민통일방송) published this video of the old Rajin Marketplace (filmed in Spring of 2014).

Since filming, the North Koreans have opened a new marketplace to replace this one. Here is a satellite image I published with RFA showing the old market and the new:


The old marketplace is inside the yellow box on the left. The new market is inside the yellow box on the right.