Archive for the ‘Food’ Category

North Korea’s food situation: worse, but maybe just back to normal

Thursday, April 28th, 2016

By Benjamin Katzeff Silberstein

Some days ago, the Food and Agriculture Organization (FAO) sounded the alarm bells on North Korean food production. The drought of last summer, among other factors, has caused North Korea’s food production to drop for the first time since 2010. (Recall that in the past years, both North Korean media outlets and some analysts touted Kim Jong-un’s agricultural reforms — the former claimed that food production was increasing despite the drought. It seems they spoke too soon).

Numbers like this, however, matter little without context. After all, five years is not a very long measurement period. Analysts like Marcus Noland have noted that the years following 2010 were probably exceptionally good. The current downturn might be best contextualized as a return to lower but more normal levels of food production.

How does the latest food production figure look in a larger context? The short answer is: not that bad, even though the downward trend is obviously problematic. Let us take a brief look at North Korean food production figures over the past few years. All following numbers show food production figures in milled cereal equivalent tons:

  • 2008/2009: 3.3
  • 2010/2011: 4.5
  • 2012/2013: 4.9
  • 2013/2014: 5.03
  • 2014/2015: 5.08
  • 2015/2016: 5.06

(Sources for all figures except the 2015/2016 figure can be found here, in a piece I wrote for 38 North late last year. It seems the calculation I made for 2015/2016 was off by 0.01 million tonnes.)

In other words, yes, the latest food production estimate represents a decrease, but it’s not that big. North Korean food production is still far larger than it’s been for most of the 2000s.

It is also interesting to note the striking variation in North Korean government food imports. Marcus Noland and Stephan Haggard wrote in Famine in North Korea that the government downsized food imports as a response to increasing aid flows. Whatever the rationale might be behind the regime’s food import policies, they tend to vary greatly from year to year. In 2012/2013, the country imported almost 400,000 tonnes of cereal. In the mid-2000s, imports were close to one million tonnes, and they dropped to under 300,000 tonnes in 2008/2009.  In 2011/2012, imports climbed to 700,000 tons.

For 2015/2016, FAO projects a gap of need versus production of 684,000 tonnes, but government imports stand at around 300,000 tonnes, a relatively low figure in a historical context. Thus, North Korea is left with an uncovered deficit of 384,000 tonnes. Presumably, this wouldn’t be prohibitively expensive to cover by doubling cereal imports. The economy seems far more healthy today than it was in 2011-2012, and still, it managed to import more than double its planned imports of 2015-2016.

All in all, North Korea’s food production appears to be far from sufficient or stable, but the situation does not appear acute in a historical context. Indeed, one could argue that it’s a matter of policy choices and priorities: the regime could choose to increase imports to offset the decline in production, but its funds are spent elsewhere. And, of course, more efficient agricultural policies overall would make North Korean agriculture and food markets far more resilient to weather variations.

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North Korean market condition since new international sanctions

Wednesday, March 23rd, 2016

Institute for Far Eastern Studies (IFES)

It has been almost two weeks since the enforcement of new sanctions imposed by the United Nations Security Council (UNSC), and so far North Korea’s domestic economy seems calm. Following the sanctions, North Korea has been preparing for the 7th Party Congress in May with its 70-day campaign (or ‘speed battle’). In order for the people to focus on the preparation, the government has reduced the business hours of markets and has begun controlling the street markets (i.e., ‘grasshopper’ markets).

In particular, it was expected that the sanctions would reduce the inflow of goods into the country which would then lead to a rapid rise in market prices and exchange rates, but so far the market prices appear to have remained relatively stable. According to the Daily NK, a South Korean online newspaper reporting on North Korea, 1kg of rice is selling for 5,100 KPW, 5,150 KPW, and 5,080 KPW in Pyongyang, Sinuiju, and Hyesan, respectively. These prices are relatively similar to the prices prior to when the sanctions were in full effect (i.e., 5,100 KPW in Pyongyang and Sinuiju, and 5,260 KPW in Hyesan).

The exchange rate appears no different. One US dollar exchanges for 8,150 KPW in Pyongyang, 8,200 KPW in Sinuiju, and 8,170 KPW in Hyesan. The rate has been only slightly reduced compared to the rate prior to when the sanctions were put in place (i.e., 8,200 KPW in Pyongyang, and 8,290 KPW in Sinuiju, and Hyesan).

The reason for the stability in the market and the exchange rate is because even though the market hours have been reduced due to the 70-day campaign, the markets actually are running better than before and in some regions the price has gone down for some goods, presumably because some of these items that were exported in large scale via China have been circulated in the North Korean domestic market.

Also, aside from the underground resources (i.e., minerals) — the sanctioned items that used to account for most of the exports — other goods are still sold accordingly, which helps in stabilizing the market. Furthermore, the improvement of the domestic market cannot be taken lightly when considering the stability of the markets. In other words, unless markets are completely closed, people in North Korea wouldn’t consider it an issue.

Meanwhile, despite the international community’s sanctions against the country, including that of the UN Security Council, North Korea is claiming overproduction in areas such as electrical power and minerals in the run-up to the Seventh Party Congress in May. The North Korean propaganda media ‘DPRK Today’ has mentioned about production and the country’s success in confronting the imposed sanctions.

More specifically, since the initiation of the 70-day campaign last month (February 23rd), in order to boost economic success, Namhung Youth Chemical Complex has reportedly turned out 60% more fertilizer; Pyongyang Railway Bureau increased the traffic by 40%; Ryongyang Mine increased its production of magnesite by 20%; and 2.8 Jiktong Youth Coal Mine produced 7,200t beyond its quota. In addition, Kim Jong Suk Textile Mill reportedly has seen more than 40 labors complete the plan for the first half of the year, while Baekdu Hero’s Youth Power Plant has reached 37,000m2 in dam construction. Previously on March 3rd, the Korean Central Broadcasting radio reported that many of the production targets for February in the national economy have been surpassed.

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Russian food donation to North Korea

Tuesday, March 1st, 2016

By Benjamin Katzeff Silberstein

The World Food Program (WFP) has announced that Russia has donated 4 million dollars worth of wheat to feed particularly vulnerable populations in North Korea. According to the WFP, the amount will contribute to feeding about 620,000 people for four months. I’ve pasted the WFP press statement below, but interested readers should also check out the Facebook post of the Russian Embassy in Pyongyang, which has pictures of the delivery ceremony. WFP’s statement:

PYONGYANG – A ship carrying wheat donated by the Russian Federation successfully delivered its cargo in the port of Nampo today. The wheat will help the United Nations World Food Programme (WFP) to meet the nutritional needs of more than 620,000 children and women for a period of four months.

“Russia takes an active part in WFP’s operations in general, and in particular in its activities in DPRK. We highly appreciate WFP’s efforts aimed at providing aid to the most vulnerable strata of the country’s population, including children and pregnant and nursing women. We know that the Koreans feel deep gratitude because of this timely and valuable help. We consider it important that Russian flour and wheat are used to produce nutritious cereals and biscuits in local factories,” said Alexander Matsegora, Russian Ambassador to the Democratic People’s Republic of Korea (DPRK).

The wheat will be used in locally-produced fortified biscuits and “cereal milk blend” – a specially designed flour fortified with essential micronutrients, which is used to make pancakes or bread.

“I would like to thank the Russian Government for this generous donation and its continued commitment. The Russian contribution is timely following a poor harvest after last year’s drought and comes at the end of the cold and harsh winter. WFP’s assistance is crucial to ensure young children grow into healthy adults by giving them the nutritious food they need,” said Darlene Tymo, WFP’s Representative and Country Director in DPRK.

The wheat was procured by WFP thanks to a contribution of USD 4 million from the Russian Federation. In the last five years, Russia has donated a total of USD 22 million to WFP in DPRK.

Almost a third of children under five in DPRK do not have enough diversity in their diet and are short for their age – a condition known as stunting. If children miss out on crucial vitamins and minerals in the first few years of their lives, it can affect long-term development and growth. WFP’s nutrition assistance helps to provide vital nutrients to children, as well as to pregnant and nursing mothers.

Full statement here:
Russian Contribution Support WFP Nutrition Assistance In DPRK
World Food Program
03-01-2016

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UN releases emergency funds to North Korea

Tuesday, February 2nd, 2016

By Benjamin Katzeff Silberstein 

From a press statement today by the United Nations Office for the Coordination of Humanitarian Affairs (OCHA):

UN EMERGENCY FUND RELEASES US$ 8 MILLION TO ASSIST MOST VULNERABLE WOMEN AND CHILDREN IN DPRK

(Bangkok, 2 February 2016)

United Nations Secretary-General Ban Ki-moon on 29 January 2016 released US$ 8 million from the UN Central Emergency Response Fund (CERF) for severely underfunded aid operations in the People’s Democratic Republic of Korea (DPRK). These funds will enable life-saving assistance for more than 2.2 million people most vulnerable and at risk of malnutrition.

The DPRK was one of nine countries to receive such grants within the overall $100 million allocation to underfunded emergencies. Undernutrition is a fundamental cause of maternal and child death and disease: in DPRK, chronic malnutrition (stunting) among under-five children is at 27.9 per cent, while 4 per cent of under-five children are acutely malnourished (wasting).

Around 70 per cent of the population, or 18 million people, are considered food insecure. Food production in the country is hampered by a lack of agricultural inputs and is highly vulnerable to shocks, particularly natural disasters. Due to drought in 2015, 11 per cent of the main harvest was lost.

Health service delivery, including reproductive health, remains inadequate, with many areas of the country not equipped with the facilities, equipment or medicines to meet people’s basic health needs. Under-five children and low-birth-weight newborns are vulnerable to life-threatening diseases, such as pneumonia and diarrhoea if they do not receive proper treatment or basic food, vitamins and micronutrients.

Full press statement available here.

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North Korea considers nuclear test a driving force of economic development

Thursday, January 21st, 2016

Institute for Far Eastern Studies (IFES)

Following North Korea’s self-proclaimed hydrogen bomb test on January 6, 2016, which highlighted the fact that North Korea is a nuclear-armed state, daily mass rallies have been held in order to stimulate economic development and cement national unity. The Korean Worker’s Party (KWP) mouthpiece Rodong Sinmun proudly announced on January 8th that the fourth nuclear test had been a ‘success’. It has been reported that mass rallies were held in North Phyongan Province, Jagang Province, Kangwon Province, North Hamgyong Province, Ryanggang Province, Rason City, and other regions as part of the effort to continue building a strong and prosperous nation.

Each of these mass rallies included discussions on how to develop the economy so as to “achieve a golden age through the building of a strong and prosperous nation.” The purpose behind these daily mass rallies can be interpreted as both taking advantage of the opportunity provided by the nuclear test to strengthen solidarity of the people while also paving the way to maximize economic productivity ahead of the upcoming 7th Party Congress that is scheduled for May.

In fact, the North Korean media is asserting that the recent nuclear test was a measure to deter war in order to bring about a domestic economic revival. A front page editorial in the Rodong Sinmun encouraged the nation, saying “We will go full-speed ahead to raise North Korea’s human dignity, vigor, and glory, which are already well-known in the international community. With the success of our hydrogen bomb test as the main driving force, we will show off the mighty power of our nation, and we must aggressively take on the struggle of improving the lives of the people and building an economically strong nation.”

The Chosun Sinbo, which is the mouthpiece of Chongryon (the General Association of Korean Residents in Japan) serving as the representative for North Korea in Japan, emphasized that, “We must have a powerful deterrent to endless warfare in order to have a peaceful environment that will enable us to build up our economy. Focusing all of our efforts on building an economically powerful nation and creating a new paradigm shift in which to develop our economy and improve the lives of the people is the most important task of this year.”

Meanwhile, North Korea’s propaganda outlets are stating that food processing plants and other sectors are producing a flood of globally competitive products. North Korea’s propaganda website aimed at the outside world (Chosun Today) stated on January 7th that “Recently, many North Korean food processing plants have been modernizing their manufacturing processes to produce foodstuffs that meet global quality standards, actively contributing to the improvement of the living standards of the Korean people.”

The Sonhung Food Processing Plant was introduced as a model case example. According to North Korean media, the foods produced at this plant are all globally competitive goods, and the best products of the country. Although the plant has only been in operation for 10 years, the media claims that current annual net operating profits per employee are a staggering 350 times higher than those of their first year of operation, and the plant is known for this remarkable record-setting achievement.

These formidable efforts also encompass the development of approximately 90 health products with high nutritional value over the past four years, including healthy danmuk. The news outlets also boasted that nine North Korean factories have received ISO 22000 (food safety management system) certifications.

In addition, 60 products were registered as ‘February 2nd products’, and not long ago five food products, including fruit bread, coffee sweetener, and healthy danmuk, received ‘December 15th quality medals’.

Supreme Leader Kim Jong Un’s New Year’s Address emphasized “improving the lives of the people” and encouraged various factories to achieve success. The propagation of these successes through the North Korean media outlets demonstrates Kim Jong Un’s intentions of inspiring loyalty from the people through intensive efforts to increase the quality of their diets.

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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.

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North Korean media continues promotion of domestic products

Friday, December 11th, 2015

Institute for Far Eastern Studies (IEFS)

North Korean media continues to promote the country’s domestic products and encourage North Koreans to buy them.

On November 29, 2015, much of North Korean media coverage was devoted to reporting on North Korea’s modern factories and encouraging North Koreans to purchase the products they produced.

Likewise, Korean Central Television (KCTV) aired a program on November 20, 2015 about the Mangyongdae Kyonghung Foodstuff Factory, describing it as “a place that produces an assortment of food products made by us and with our brand names.” The program went on to explain the factory’s products and latest facilities in detail for thirteen minutes.

North Korean media is not just promoting domestic food and daily commodities, but is actively promoting a variety of products, including heavy equipment like tractors.

On November 26, 2015, KCNA reported that the Kim Jong Tae Electric Locomotive Works has “achieved praiseworthy results producing and developing an ‘our-style’ subway train that meets the demands of the development era.”

The Rodong Sinmun is also participating in the promotion of domestic goods. It recently published an article entitled ‘Let’s Love Our Things and Honor Them’ in which it reported on North Korean-made goods such as tractors, cars, and bulldozers, and further warned that “If a country’s citizens rely on foreign powers and do not trust their own strength, eventually that country will fail.”

The article also praised a researcher who helped develop a type of ‘medicinal toothpaste’: “Through our strength and technology and with our raw materials, he developed an ‘our-style’ product.”

Furthermore, North Korea has claimed that all of the satellites the country has launched, including Kwangmyongsong-3 Unit 2 (carried by the long-range rocket ‘Unha-3’ and successfully launched into orbit in December 2012), were 100% composed of North Korean parts.

The Rodong Sinmun echoed this claim in an article on December 2, 2015: “There are many countries in the world that have their own satellites in space, but how many of those countries can honestly say that their satellites are 100% domestically-made?”

It added, “Mankind probably could not find an example of a successful satellite launch amidst such infernal sanctions, such harsh circumstances, such brutal and unfair challenges.”

In some sense, these reports can be interpreted as an attempt by the regime to stimulate the development of factory technology by increasing consumption of domestic products and to promote economic development by infusing energy into the industrial sector.

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A particularly good year for North Korean harvests? Not thanks to the state, says one citizen

Friday, November 27th, 2015

By Benjamin Katzeff Silberstein 

The flurry of divergent messages on North Korea’s food situation continues. While multilateral agencies have warned that this year’s food deficit might be particularly bad, news from inside North Korea tell a different story. The Daily NK reports that citizens speak of a particularly good harvest this year, despite the drought:

On the 24th, a Daily NK reporter spoke with a source in Yanggang Province, who informed us that although the Rodong Sinmun has been urging citizens and the nation on a daily basis to work hard to restore the damage that resulted from the tempestuous weather earlier in the year, so far there are no reports of lower-than-average rice harvest numbers.

An additional source in North Hamgyong Province reported the same trend in his region.

Small plot farmers have been particularly attentive to ensuring that their crops received adequate water supplies, with many using hand or motorized water pumps and water turbines for irrigation. “Some people are even saying that as a result of the careful attention paid by these farmers to protect their crops from the weather, this year’s rice harvest is looking better than average,” he said.

But it isn’t economic reforms by the state that is causing the bumper harvest, the article says. It’s hardly a shocker that people don’t trust the North Korean government too much:

However, the number of people working hard to ensure the success of the rice harvests on collective farms is dropping. This is in large part due to the fact that despite reassurances from the state that farmers will receive sizable allocations of the harvest for their own use, for the past several years this has not been the case.

After “repeated failures by the authorities to fulfill stated promises,” he asserted, farmers have concluded that it makes no difference to them personally whether the collective farms do well or not.

Read the full article:
Despite Mother Nature, a bumper year for rice harvest
Lee Sang Yong
DailyNK
11-26-2015

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The (Market) Forces of History in North Korea

Friday, October 30th, 2015

By Benjamin Katzeff Silberstein

The market is a common topic for debate in history. How did it impact the rise of the anti-slavery movement in the US and the UK? What impact did economic conditions have in the French Revolution? These questions are, and should be, asked in the current debate about North Korea’s socioeconomic development as well.

But despite the hope of many, the market might not simply be a story of growing individualism and disconnect from the power of the state. While such a trend may well be at work, it could also be the other way around.

This was recently illuminated through an interesting story by Reuters. In a visit to Pyongyang, they took a look at how markets and everyday business transaction function in North Korea at the moment. As they note, it is telling that a reporter from an international news agency can make transactions in the open, with a government minder by his side, at the black market rate. Business that previously had to be done in the shadows now happens in the open:

Shoppers openly slapped down large stacks of U.S. dollars at the cashier’s counter. They received change in dollars, Chinese yuan or North Korean won – at the black market rate. The same was true elsewhere in the capital: taxi drivers offered change for fares at black market rates, as did other shops and street stalls that Reuters visited.

The most obvious conclusion is that the state is adapting itself to the bottom-up development of the market. Indeed, this is the way the story is often told. In this narrative, the government is only reacting to developments and has long lost the economic policy initiative.

But one could also see a government that is confident enough to relax the rules. It just isn’t a certain fact that the state and the market are two opposing entities.

First, connections to the state still seem to be good for those wanting to trade on the market. For example, according to the surveys conducted by Stephan Haggard and Marcus Noland that laid the foundation for Witness to Transformation (2011)party membership is still considered one of the best ways to get ahead in North Korea (or at least it was at the time when the surveys were conducted). A somewhat similar trend can be discerned in survey results presented by Byung-Yeon Kim of Seoul National University at a conference at Johns Hopkins SAIS in late September this year. Kim’s results also indicate that there is a strong positive correlation between party membership and participation in both the formal and informal economy.

Second, the government is making money off of the market. DailyNK recently reported that the fees charged by state authorities for market stalls was raised. They also noted that regulations of the markets seemed to have gotten more detailed over the years. As noted in this report published by the U.S.-Korea Institute at SAIS, the space that the government allocates to markets has consistently increased in the past few years. Not only have official markets grown, many of them have also been renovated and given better building structures.

All in all, this paints a picture of a government that controls markets while allowing them more space to function. It is not clear that formerly black market activity happening in the open means that the market is gaining ground at the expense of the state. They may well be moving together. That is good news for those hoping for stability, but bad news for those banking on a market-induced revolution. Despite the hope of many that the market will cause the demise of the regime, the role of the market force in North Korea’s history is far from clear.

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Growth and Geography of Markets in North Korea

Tuesday, October 6th, 2015

By Benjamin Katzeff Silberstein

Some shameless self-promotion: the U.S.-Korea Institute at Johns Hopkins SAIS released a report yesterday where I (with the help of Curtis and others) study how North Korea’s formalized markets have grown over time, and how they are distributed geographically using satellite imagery from Google Earth. The report is available here. These are the main findings:

  • With a few exceptions, formalized markets have grown in North Korea over the past few years. In some cities, they have more than doubled, while other cities have seen only nominal or no changes. Only Pyongsong, the capital of South Pyong’an Province, has seen a significant decline in aggregate market space.
  • There exists only a weak correlation between population size and aggregate market space. The correlation between aggregate market space per capita and proximity to Pyongyang, a large driver for demand in the North Korean economy, is also relatively weak. 

The largest aggregate market space per capita can be found in cities in the southwestern part of the country. This suggests that trade on formal markets may be driven by other factors than those commonly assumed, such as sea route trade and agriculture.

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