North Korean Economy Watch

According to KBS:

The Voice of America reported on Wednesday that the World Food Program said North Korean authorities distributed 375 grams of food to every citizen in December.

A spokesman for the WFP quoted a North Korean government report saying that 200 grams of food were rationed per head in July through September. But it went on to explain that the amount increased to 355 grams in October, 365 grams in November and 375 grams in December.

The North Korean government cited the fall harvest as a reason for the increased food distribution. According to the WFP, the North Korean government aims to raise rations to 380 grams per head.

The WFP distributed 35-thousand-200 tons of food to three-point-one million North Korean people in December last year.

Read the full story here:

N. Korea Increases Citizens’ Food Rations
KBS
2012-01-05

The Financial Times indirectly brings up the impact of a basic economic lesson, the tragedy of the commons, in a recent story on the DPRK’s fisheries. According to the article:

Supply disruptions are a fact of life in doing business with North Korea. “They are always stopping work for different reasons, for the anniversaries of leaders’ birthdays or whatever,” said Sha Zhibiao, manager of a fish shop in Yanji, the biggest Chinese city near the north-eastern tip of North Korea.

The main transit point for the crabs is Hunchun, a bustling Chinese border town that is a few hours from the North Korean port of Rajin.

While the North Koreans queue for meagre state hand-outs of grain, the Chinese traders in Rajin eat at Chinese-run restaurants or cook for themselves with supplies they bring in.

Doing business with North Koreans is fraught with uncertainty, according to Lu Zhentie, Mr Gao’s partner. “We agree on a price and then at the last second if they find someone who will pay more they cancel the entire deal. We cannot trust them.”

Mr Lu said the North Korean fishermen operate individually – a sliver of private-sector enterprise in the state-run economy – and their crabs are sold in a grey market that local officials allow to exist. “We give them sometimes Rmb10,000 ($1,580) for a catch. Some have become rich, but I have no idea what they do with their money. Even those who are rich still wear clothes like this,” Mr Lu said, pointing at a tear in his trousers.

All three said that Chinese demand for North Korean crabs had boomed in recent years – and that the North Koreans were flirting with trouble in trying to satisfy it. Mr Lu pointed to small crabs in his tanks, saying that the North Koreans should have thrown these back into the sea to sustain their fishery. “If they keep taking all these out, I don’t know how much longer their resource will last,” Mr Lu said.

Although the bulk of the article deals with challenges to the DPRK business environment that result from a poor institutional environment  (unannounced policy changes and unenforceable contracts) towards the end of the article another important idea is indirectly introduced: The tragedy of the commons. The tragedy of the commons occurs when multiple individuals, acting independently and rationally, will ultimately deplete a common-pool resource, even when everyone knows that it is not in anyone’s long-term interest for this to happen.

In the past, over-fishing was probably not a problem in the DPRK as all activity was coordinated through the Ministry of Fisheries. If anything, incentives in the socialist economic system probably resulted in fishing at levels below the sustainability threshold.  Today, however, de-facto independent fishermen are able (and encouraged) to over-fish the DPRK’s waters so they can export their catch to earn hard currency. Over-fishing is probably not an outcome that anybody wants, however, in the absence of a credibly enforced fishing quota or private property rights in fisheries, rational individual fishermen (who are competing with each other) will be financially rewarded for catching more and increasingly smaller fish and crabs, because if they do not, the next guy (a competitor) will.

Read the full story here:
Crabs offer lifeline for North’s economy
Financial Times
2011-12-23

Institute for Far Eastern Studies (IFES)
2011-12-8

It has been two years since the implementation of North Korea’s currency revaluation and the South Korean government recently has presented an assessment of it, evaluating it as a complete failure, as exchange rates have skyrocketed and inflation set in.

It has been largely evaluated as having weakened the government control over the market and the people.

In the report released by South Korea’s Ministry of Unification (MOU), the prices of rice and exchange rates have returned previously to the level before the measure went into effect. The prices of rice per kg that cost between 20 to 40 KPW in December 2009 has jumped to 3,000 to 5,000 KPW as of November of this year, which is more than a 2,300 times increase.

The price of rice that went for 2,400 KPW early this October is believed to be close to 5,000 KWP currently.

The fluctuation of rice price is allegedly associated with preparation for next year’s celebration (i.e., of North Korea becoming a “strong and prosperous nation”). According to an anonymous North Korean government official, rice is being stockpiled to be released next year during the celebration period.

North Korea has self-proclaimed 2012, the centennial birthday of Kim Il Sung, as the first year of the “strong and prosperous nation.” While it may be ephemeral, it said it will normalize rice distribution for next year.

The exchange rate for KPW in December 2009 was 35 North Korean won to one USD; a year later, it soared to 2,000 won, and it is currently worth 3,800 won.

At the time of the currency revaluation, the usage of foreign currency was completely banned. This in return made the exchange rate spiral up. In February of this year, North Korea eventually abandoned this measure.

One Chinese yuan is also worth about 400 KPW, standing shoulder to shoulder with the value of the US dollar. About 300 markets that exist currently in North Korea are affected by the soaring exchange rate of the yuan, raising the prices of Chinese products on the market.

North Korea also has increased wages for the workers a hundred fold during the currency redenomination; but life for the people has become harder due to hyperinflation.

The average monthly salary of a North Korean worker is about 3,000 KPW; however, the monthly expenses for an average family of four hovers around 100,000 KPW.

The MOU has announced that the currency reform implemented by the North Korean government two years ago was intended to weaken the role of the markets, and regulate the new-rich, generate supplies of capital for the construction industry, and adjust the amount of domestic currency in circulation. In the end, the reevaluation ended up achieving the opposite.

At the time, the government prohibited sales of imported and industrial products on the market and promoted marketization of agricultural goods. But the people’s dependency on markets is as high as ever, leading to a relaxation of market regulation in February 2010.

The MOU also stated, “There is growing distrust of the government among North Koreans from the failed policy which in effect undermined the power of the government to control the market and the people.”

The Daily NK also reported some similar information:

The price of rice in North Hamkyung Province and other areas along the Sino-North Korean border has passed 5,000 won per kilo. This represents a rise of over 1,000 won in little over a fortnight, after similar reports came out two weeks ago asserting that the price had passed 4,000 won in late November.

Sources have independently reported that the 5,000 won mark has been passed in markets in the cities of Hoeryeong and Musan, both in North Hamkyung Province, and Hyesan in Yangkang Province. The exchange rate of the Chinese Yuan against the North Korean won has simultaneously jumped from the low 700s to 800 in Hyesan and over 1,000 in Musan and Hoeryeong.

Reporting the news, one Hoeryeong-based source told The Daily NK, “The price rises have left people living hand-to-mouth, and the endless government controls and crackdowns mean people have no idea what to do. The atmosphere in the jangmadang has gotten really ugly on rumors that prices are going to rise further.”

A source from Musan pointed out, “The Yuan seems to go up every day, and now that rice has passed 5,000 won a kilo people have no idea what they’re going to eat to survive.”

“We’ve already given up on the idea of eating rice cake for the Chinese New Year,” the trading source from Hyesan said, going on, “Chosun rice now costs 5,000 won a kilo while Chinese rice is 3,800 won. Wherever you go people are up in arms about it.”

Most locals blame the rapid rise in the cost of living on the strength of the Yuan against the North Korean won. In this way, the lack of confidence in the local currency promoted and enhanced by the 2009 currency redenomination seems to be having a direct effect on the price of rice.

“Everybody prefers to use Renminbi to Chosun money, so by the time you wake up in the morning the thing which has risen again is the price of the Yuan. Because the exchange rate is rising, it is inevitable that the price of rice goes up as well,” the source from Hyesan explained.”

Interestingly, according to the border region sources there is no great difference in the physical volume of rice in the market. However, because the Yuan has become the main currency for both the supply and demand sides of the market, prices have risen in accordance with the change in the exchange rate. The use of the Yuan as the medium of exchange between locals was already becoming institutionalized even before the recent rises.

The rapid price rises are also encouraging traders to try and obtain more locally-grown rice.

The source from Hyesan said, “Train stations in North Hamgyung and Hwanghae Provinces are in complete chaos when there is a train because of all the traders trying to bring in local rice, as well as the agents regulating them,” while the source from Musan said, “Many people are stocking up on food while they can because of reports that food prices will keep rising until next spring.”

Marcus Noland also blogged about the price of food and US$ exchange rate in the DPRK last week.

Read the full Daily NK story here:
Rice Tops Key 5,000 Won Mark
Daily NK
Lee Seok Young
2011-12-13

UPDATE (2011-12-13): According to Radio Free Asia (in Korean), the Chinese government has agree to provide the DPRK with new meteorological equipment.  According to the article:

중국 정부가 유엔 산하 기구를 통해 북한에 첨단 기상관측장비를 지원하기로 결정한 것으로 밝혀졌습니다.

정아름 기자가 보도합니다.

중국정부가 지난 12일 북한에 컴퓨터를 통해 기상관측 정보를 받아보는 자동기상 관측장비(Automatic Weather Systems) 4대를 지원 하겠다는 의사를 유엔 산하 세계기상기구에 전달했습니다.

세계기상기구는 13일 자유아시아방송(RFA)에 이번 지원의 정확한 시점과 지원대상지역은 정해지지 않은 상태이라고 전했습니다.

Here is the article translated by Google Translate.

Jospeh Bermudez recently wrote about the DPRK’s hydro meteorological service.

ORIGINAL POST: According to the Korea Times:

A meteorological expert called for international assistance for North Korea, saying it was lacking in up-to-date meteorological equipment.

The Radio Free Asia quoted Avinash Tyagi, director of the climate and water department of the World Meteorological Organization (WMO), who visited North Korea in mid-March, as saying “equipment and computers used for weather forecasting were in urgent need of replacement.”

Tyagi’s visit with two other colleagues was the first by a WMO team in eight years.

They were supposed to visit the North last November in light of severe flooding last summer, but the trip was postponed.

The floods cost many lives and left many homeless in Sinuiju near the border with China, drawing immediate international humanitarian assistance, including from the South.

The expert said new equipment would help improve the food situation in the country and encouraged the international community to help. He added of the 186 observatories scattered through the country, only 27 were connected to the international meteorology network. Even the equipment there was outdated, made in the 1970 and 80s.

Food shortages are a chronic problem for North Korea, and this has got worse in recent years, which prompted the regime to run an unprecedented campaign to call for food aid from other countries.

More on the DPRK’s 2011 food situation here.

Read the full story here:
N. Korea in need of new meteorological equipment
Korea Times
4/1/2011

Marcus Noland has crunched some numbers to some up with an approximate inflation rate for the DPRK won after it was renominated in November 2009. According to his post:

The chart above shows the trajectory of prices for rice, corn, and the US dollar since January 2010 (i.e. after the huge step-jump in real prices in December 2009 following the currency reform). A simple regression of the prices (technically their logarithmic values) against time suggests that since the beginning of 2010, inflation on an annualized basis has averaged 131 percent for rice and 138 percent for corn. The won has depreciated against the dollar at a 136 percent annualized rate. A monthly breakdown of price movements suggests that while remaining high, the rate of inflation has attenuated, declining in 2011 relative to 2010.

The co-movement of the blackmarket exchange rate and grain prices would be consistent with a small, open economy in which prices are roughly constant in hard currency terms, but are skyrocketing in terms of the rapidly depreciating domestic currency. In the extreme this could depict an economy that was effectively becoming dollarized.

He also refers to a recent report that prices have not fallen with the autumn harvest and that that the DPRK had suspended anthracite coal exports to China out of fear of domestic shortages.

In general I think the findings are plausible and I am glad that this number is finally out there for the public to reference.  I have just a couple of additional points of inquiry….

If the price and exchange rate data are from public sources, then they are probably geographically concentrated in the provinces that border China. Since there are significant barriers to arbitrage in the DPRK, I expect a large degree of regional price differentiation.  Hypothetically, what would be the effect on these findings of an increase in observations from the “southern” provinces (if that were possible)? If the data are not geographically concentrated and represent a national sample, what would we expect to see if these regressions were run for each province, and how would they compare to the aggregated findings?

A working paper in the making?

UPDATE: A comment from an individual who works with Mr. Noland:

Thanks for sharing this piece on post currency reform inflation. You raise some good points on the regionality of our pricing data. It is true that we don’t have a lot of observations from southern provinces, but it is not all northern either. We get our price data from a number of sources including, but not limited to, Daily NK Market Trends, NK Today reports, and various NGO publications. This gives us a good mixture of general country level price data as well as regional data from provinces such as Pyongyang, North & South Hamyung, North & South Pyongan, & Yanggang. Before the currency reform, we also had a good number of observation from southern areas including North Hwanghae & Gangwon.

Marcus Noland and Stephan Haggard analyzed regional price differences in a previous paper, as well as discussing other issues such as the possible tendency to increase data collection during times of distress and the possibility that organizations might cherry-pick the data that they release, all of which could affect the statistical analysis of this data.

See the paper here (PDF).

Their analysis found that regional price differences are less systematic than one might expect.

On a related note, Ask a Korean also recently translated another Korean article by Ju Song-ha which deals with food prices in the DPRK. You must read it.

UPDATE (2012-2-1): Karin Lee of the National Committee on North Korea wrote a great summary of the DPRK’s food situation in 2011:

In December 2010, North Korea began asking multiple countries for food aid. Its request to the U.S. came in early 2011, but it wasn’t until December 2011 that a deal seemed close, with the U.S. prepared to provide 240,000 metric tons (MTs) of assistance. Kim Jong Il died soon after this news hit the press, and details of the potential deal were never announced.

In the ideal world, Ronald Reagan’s “hungry child” knows no politics. But the case of North Korea is far from ideal. The U.S. government states it does not take politics into consideration when determining whether to provide aid to North Korea. Instead, the decision is based on three criteria: need in North Korea, competing demands for assistance, and the ability to monitor aid effectively. Yet these three criteria are subjective and tinged by politics.

In 2011 a succession of four assessment delegations (one by U.S. NGOs, one by the U.S. government, one by the EU and one by the UN) visited the DPRK. All found pretty much the same thing: widespread chronic malnutrition, especially among children and pregnant or lactating women, and cases of acute malnutrition. The UN confirmed the findings late last year, reporting chronic malnutrition in children under five in the areas visited — 33% overall, and 45% in the northern part of the country.

Some donors responded quickly. For example, shortly after its July assessment, the EU announced a 10 Million Euro donation. Following its own May assessment, however, the U.S. government was slow to make a commitment. Competing demands may have played a role. In July, the predicted famine in the Horn of Africa emerged, prompting a U.S. response of over $668 million in aid to “the worst food crisis in half a century.” While there was no public linkage between U.S. action on the African famine and inaction on North Korea, there could have been an impact.

But the two biggest factors shaping the U.S. government’s indecisiveness continued to be uncertainty about both the severity of the need and the ability to establish an adequate monitoring regime. At times, South Korean private and public actors questioned the extent of the North’s need. Early on, a lawmaker in South Korea asserted that North Korea already had stockpiled 1,000,000 metric tons of rice for its military. Human rights activist Ha Tae Keung argued that North Korea would use the aid contributed in 2011 to augment food distributions in 2012 in celebration of the 100th birthday of Kim Il Sung and North Korea’s status as a “strong and prosperous nation.” According to Yonhap, shortly after the U.N. released the above-noted figures, South Korean Unification Minister Yu Woo-Ik called the food situation in North Korea not “very serious.”

South Korea’s ambivalence about the extent of the food crisis was noted by Capitol Hill, exacerbating congressional reluctance to support food aid. A letter to Secretary Clinton sent shortly before the U.S. assessment trip in May began with Senators Lieberman, McCain, Webb and Kyl explaining they shared South Korean government suspicions that food aid would be stockpiled and requesting State to “rigorously” evaluate any DPRK request for aid. With the close ROK-U.S. relationship one of the administration’s most notable foreign policy accomplishments, such a warning may have carried some weight.

Monitoring is of equal, if not greater congressional concern. Since the 1990s U.S. NGOs and USAID have worked hard with DPRK counterparts to expand monitoring protocols, and conditions have consistently improved over time. In the 2008/2009 program, the first food program funded by the U.S. government since 2000, the DPRK agreed to provisions such as Korean-speaking monitors. The NGO portion of the program was fairly successful in implementing the monitoring protocol; when implementation of the WFP portion hit some bumps, USAID suspended shipments to WFP until issues could be resolved. The DPRK ended the program prematurely in March 2009 with 330,000 MT remaining.

In 2011 the Network for North Korean Human Rights and Democracy conducted a survey of recent defectors to examine “aid effectiveness” in the current era. Out of the 500 interviewees, 274 left the DPRK after 2010. However, only six were from provinces where NGOs had distributed aid in 2008/2009. Disturbingly, of the 106 people interviewees who had knowingly received food aid, 29 reported being forced to return food. Yet the report doesn’t state their home towns, or when the events took place. Unfortunately such incomplete data proves neither the effectiveness nor ineffectiveness of the most recent monitoring regime.

Some believe that adequate monitoring is impossible. The House version of the 2012 Agricultural Appropriations Act included an amendment prohibiting the use of Food for Peace or Title II funding for food aid to North Korea; the amendment was premised on this belief. However the final language signed into law in November called for “adequate monitoring,” not a prohibition on funding.

The U.S. response, nine months in the making, reflects the doubts outlined above and the politically challenging task of addressing them. It took months for the two governments to engage in substantive discussions on monitoring after the May trip. In December, the State Department called the promised nutritional assistance “easier to monitor” because items such as highly fortified foods and nutritional supplements are supposedly less desirable and therefore less likely to be diverted than rice. The reported offer of 240,000 MT– less than the 330,000 MT the DPRK requested – reflects the unconfirmed report that the U.S. identified vulnerable populations but not widespread disaster.

In early January, the DPRK responded. Rather than accepting the assistance that was under discussion, it called on the United States to provide rice and for the full amount, concluding “We will watch if the U.S. truly wants to build confidence.” While this statement has been interpreted positively by some as sign of the new Kim Jong Un regime’s willingness to talk, it also demonstrates a pervasive form of politicization – linkage. A “diplomatic source” in Seoul said the December decision on nutritional assistance was linked to a North Korean pledge to suspend its uranium enrichment program. Linkage can be difficult to avoid, and the long decision-making process in 2011 may have exacerbated the challenge. Although Special Representative Glyn Davies was quick to state that “there isn’t any linkage” between the discussion of nutritional assistance and dialogue on security issues, he acknowledged that the ability of the DPRK and US to work together cooperatively on food assistance would be interpreted as a signal regarding security issues. Meanwhile, the hungry child in North Korea is still hungry.

UPDATE 75 (2011-12-5): The ROK will donate US$5.65 million to N. Korea through the UN. According to Yonhap:

South Korea said Monday it will donate US$5.65 million (about 6.5 billion won) for humanitarian projects in North Korea through the U.N. body responsible for the rights of children.

The donation to the United Nations Children’s Fund, or UNICEF, will benefit about 1.46 million infants, children and pregnant women in North Korea, according to the Unification Ministry, which is in charge of relations with the North.

Seoul’s contribution will be used to provide vaccines and other medical supplies as well as to treat malnourished children next year, said the ministry.

There have been concerns that a third of all North Korean children under five are chronically malnourished and that many more children are at risk of slipping into acute stages of malnutrition unless targeted assistance is sustained.

“The decision is in line with the government’s basic stance of maintaining its pure humanitarian aid projects for vulnerable people regardless of political situation,” Unification Ministry spokesman Choi Boh-seon told reporters.

South Korea has been seeking flexibility in its policies toward the North to try to improve their strained relations over the North’s two deadly attacks on the South last year.

Despite the South’s softer stance, North Korea recently threatened to turn Seoul’s presidential office into “a sea of fire” in response to South Korea’s military maneuvers near the tense western sea border.

South Korea donated $20 million for humanitarian projects in North Korea through the UNICEF between 1996 and 2009.

Last month, the South also resumed some $6.94 million worth of medical aid to the impoverished communist country through the World Health Organization.

…

Separately, South Korea also decided to give 2.7 billion won ($2.3 million) to a foundation to help build emergency medical facilities in an industrial complex in the North Korean border city of Kaesong.

UPDATE 74 (2011-12-2): The Choson Ilbo reports that the DPRK’s food prices are rising after the 2011 fall harvest, however, the price increase is not due to a shortage of output, but rather political directives. According to the article:

The price of rice in North Korea is skyrocketing, contrary to received wisdom that it drops after the harvest season. According to a source on North Korea on Wednesday, the rice price has risen from 2,400 won a kg in early October to 5,000 won in late November.

North Korean workers earn only 3,000-4,000 won per month.

This unusual hike in rice price seems to be related to preparation of next year’s political propaganda projects.

A South Korean government official said, “It seems the North Korean government is not releasing rice harvested this year in order to save it up” for celebrations of regime founder Kim Il-sung’s centenary next year, when the North has vowed to become “a powerful and prosperous nation.”

UPDATE 73 (2011-11-24): According to the Daily NK, DPRK television is calling on people to conserve food:

With barely a month left until 2012, the year in which people were promised a radical lifestyle transformation to coincide with the North Korea’s rebirth as a ‘strong and prosperous nation’, programs calling upon people to conserve food are now being broadcast by Chosun Central TV and the fixed-line cable broadcaster ‘3rd Broadcast’.

Chosun Central TV is broadcasting the programs as part of ‘Socio-Culture and Lifestyle Time’, which begins directly after the news on Thursdays at 8:40pm. The majority of the content is apparently now about saving food.

A Yangkang Province source told The Daily NK on Wednesday, “Recently the head lecturer from Jang Cheol Gu Pyongyang Commercial University, Dr. Seo Young Il, has been appearing on the program both on television and the cable broadcasting system, talking about saving food.”

In one such program, Professor Seo apparently noted, “In these days of the military-first era there is a new culture blossoming, one which calls for a varied diet,” before encouraging citizens to eat potatoes and rice, wild vegetables and rice and kimchi and rice rather than white rice on its own, and then adding that bread and wheat flour noodles are better than rice for lunch and dinner.

It is understood that older programs with titles such as ‘A Balanced Diet is Excellent Preparation for Saving Food’ and ‘Cereals with Rice: Good for Your Health’ are also being rebroadcast, while watchers are being informed that thinking meat is required for a good diet is ‘incorrect’.

Whenever North Korea is on high alert or there is a directive to be handed down from Kim Jong Il, both of Chosun Central TV and the 3rd Broadcast are used to communicate with the public. For this reason, some North Korea watchers believe the recent food-saving campaign may reflect a particularly weak food situation in the country going into the winter.

According to the source, one recent program showed a cookery competition involving members of the Union of Democratic Women from Pyongyang’s Moranbong District. During which, one woman was filmed extolling the virtues of potato soup, saying “If we follow the words of The General and try eating potatoes as a staple food, there will be no problem.”

Read all previous posts on the DPRK’s food situation this year blow:

(more…)

Story 1 (Daily NK): Ministry strikes out currency swap (2011-12-1):

The Ministry of Unification has concluded that the currency redenomination implemented by the North Korean government two years ago was, as is already widely accepted, an utter failure in most regards.

According to the ministry, which revealed its assessment today, North Korea intended to use the currency redenomination to weaken the role of the markets, generate supplies of capital for the construction industry and adjust the amount of domestic currency in circulation, but ended up achieving the opposite.

Instead, the overall economy slowed, while markets have now made a comeback, recovering to their state they were in before the event.

The process was simple. Straight after the currency redenomination, the flow of commodities rapidly froze up due to contracting supply and weakening purchasing power. According to the Ministry of Unification, factories and enterprises that relied heavily on materials and capital from the market were fatally undermined. This immediately added to extant difficulties securing daily necessities, and forced the authorities to tolerate the markets once again. Commodity flows are still in the process of recovering.

But worse, the value of the domestic currency fell and people’s preference for US Dollars and Chinese Yuan deepened further, setting exchange rates and prices in a continuously increasing inflationary spiral.

This can be seen in the case of rice, a good proxy for overall economic conditions. In 2009, rice cost between 20 and 40won, but within a year had increased abruptly to approximately 1,500won, and as of November, 2011 was more than 3,000won. Despite the 100:1 ratio of the redenomination, prices have returned to their level before the currency redenomination.

The North Korean authorities even attempted to ban the use of foreign currency in January, 2010, causing various problems which resulted in the withdrawal of the plan in the following month. In December, 2009, a US Dollar was worth 35 North Korean won, but by a year later had soared to 2,000 won, and is currently worth 3,800 won.

The North Korean authorities said the currency redenomination would improve the lives of the people, but in truth because of hyperinflation people’s lives have actually gotten more difficult.

At the time of the currency redenomination, they emphasized care for the common worker, giving them wage increases and cash payments; a one-off bonus (500won per person) to laborers and an additional payment to farmers (150,000won per person). However, nominal wages subsequently increased 100 times, and with a lack of food, necessities and soaring inflation, made the people’s lives worse.

The average worker’s salary is now 3,000won, but the living expenses of a family of four are approximately 100,000 won per month.

In conclusion, an official from the Ministry of Unification declared, “As long as there is deepening popular distrust of the North Korean authorities, it looks like the power to implement future policy will weaken. The decisions made by the authorities that decreased the quality of people’s lives deepened the distrust.”

“The seizure of property, which in the short term alleviated polarization, ended up causing more poverty among the general population and had a relatively minor effect on the people who hold a lot of foreign currency.”

“North Korea tried to restore their socialist economy via the currency redenomination, but in reviewing the comments and perspectives of various North Korea experts and defectors we can see that the currency redenomination was an overall failure.”

That being said, he noted, “There is a limit to the ability of collective discontent to turn into collective political organizing.”

Story 2 (Yonhap): Botched currency reform destabilizes N.K. rice prices, exchange rates (2011-12-1):

North Korea’s currency reform has failed to stabilize rice prices and its currency while the nation still endures lack of food and supplies, Seoul’s Unification Ministry said Thursday.

The North carried out a massive currency reform two years ago to try to rein in galloping inflation, squash free market activities and tighten state control over the economy. The measures failed to halt massive inflation and worsened food shortages and public backlash.

The North Korean won was traded at 35 won to one U.S. dollar in markets right after the currency reform in late 2009. But one dollar was traded at around 3,800 won in November, up from around 2,000 won in 2010, according to the ministry.

The ministry, which handles inter-Korean affairs, also said rice prices have risen to pre-currency reform levels in a sign of food shortages in North Korea.

A kilogram of rice cost up to 40 won in 2009 before skyrocketing to about 3,000 won in November, the ministry said in an assessment of the North’s currency reform.

The dire assessment comes as the North is struggling to achieve its goal of building a prosperous nation by next year, the centennial of the birth of the country’s late founder, Kim Il-sung, the father of current leader Kim Jong-il.

The rice prices started to soar in Pyongyang on rumors that Kim failed to secure much aid during his trip to Russia in August, Good Friends, a Seoul-based private relief agency, said in September.

Rice is a key staple food for both South and North Koreans.

The botched currency reform is “expected to further deepen public distrust of the authorities and undermine their control on the people,” the ministry said in an assessment report.

Still, North Koreans are unlikely to display any collective action, because there is no organized political force, the ministry said.

Kim has been ruling the country with an iron fist, and tolerates no dissent.

There have been reports of growing discontent in the communist country over chronic food shortages and political oppression, though no organized opposition has emerged to challenge the leader.

Story 3 (Daily NK): Rice and Yuan zooming up in Ryanggang (2011-11-28):

The price of North Korean rice and the Yuan exchange rate have both reached post-2009 record levels in Yangkang Province, with domestic rice surpassing 4,000 won/kg and 1 Chinese Yuan selling for 720 North Korean won on November 28th.

Although a geographically remote location when seen from within North Korea, Yangkang Province act as a barometer for the situation in other areas because it stands alongside the capital Pyongyang and the Shinuiju-Dandong area as one of the most marketized, active trading locations of all.

Speaking with Daily NK today, a source from the province commented, “In the daytime on the 27th, the Yuan price, which had risen to 780 won, fell back to 720 won; however, the discomfort of the people is continual,” before adding, “Because of the rising exchange rate, the rice price also went up to 4,000 won.”

According to the source, as the price of North Korean rice hit 4,000 won/kg, that of Chinese rice also reached 3,200 won and sticky rice 5,000 won.

This means that the price of rice in Hyesan, the provincial capital, has now risen 500 won in two weeks, while the value of the North Korean won has depreciated by 120 won over a similar period.

The cause of the problem stems from a number of sources, but at the top of the list is a lack of faith in the North Korean won and the continual desire on the part of people who hold currency not to do so in domestic money.

As a result, the source said that traders are not selling their products, preferring instead to watch for changes, and with customers less likely to buy at such inflated prices, the overall effect is that trading volumes in the market have fallen drastically.

He explained, “There is even one rumor out there suggesting that by year’s end the price of the Yuan will have reached 1,000 won and that before long rice will have gone over 5,000 won. Rice traders are not selling their stock, saying that ‘if it gets more expensive, I’ll sell’, and so those citizens who are unable to get food together are looking pretty uneasy.’

Meanwhile, the new price records present a sense of cruel irony for a country about to commemorate the 2nd anniversary of the November 30th, 2009 currency redenomination.

“This is all the fault of the government, which organized the currency redenomination and destroyed the value of Chosun money,” the source agreed, complaining, “The price of everything is soaring, so the time has come where we can’t even buy blocks of tofu to eat.”

According to the Daily NK:

The overbearing presence of ‘grain patrols’ is being keenly felt in North Korea these days. Formed at the municipal level from People’s Safety Ministry agents and Worker and Peasant Red Guards from factories and other enterprises, these groups of 20-30 individuals are busy manning checkpoints on main transit routes in agricultural areas to thoroughly restrict the movement of grains from cooperative farms and private plots.

To transit grain legally in North Korea at this time of year, a permit must be sought from the relevent Rural Management Committees. Those who do not hold the required documentation are meant to face punishment, although many simply bribe their way out of trouble. The patrols, which arrive in August, usually disband at the end of November.

A Hwanghae Province source recently told one Daily NK reporter, “They are blocking roads day and night inspecting people and their carts. They do not allow the carrying of any kind of foodstuff and confiscate without condition the goods of those caught.”

The source added, “Even people mobilized for the fall harvest are getting body searched; they are really annoyed.”

Another source from Pyongyang also described the scene, saying, “Currently the grain patrols are focusing on regulating the movement of corn, and are carefully watching for harvested corn being taken into people’s homes. So, some people get together to rent a car and bribe the patrol to be able to get around.”

The source also agreed that a substantial number of market traders are bribing guards and taking this year’s rice and corn from farms to sell.

Read the full story here:
Return of the Grain Patrol
Daily NK
Lee Seok Young
2011-11-15

1. “Relying on One’s Strength: The Growth of the Private Agriculture in Borderland Areas of North Korea”
Andrei Lankov，Seok Hyang Kim ，Inok Kwa
PDF of the article here 

The two decades which followed the collapse of the communist bloc were a period of dramatic social and economic transformation in North Korea. The 1990-2010 period was a time when market economy re-emerged in North Korea where once could be seen as the most perfect example of the Stalinist economic model. The present article deals with one of the major areas of socioeconomic change which, so far, has not been the focus of previous studies. The topic is about the growth of private agricultural activities in North Korea after 1990. This growth constitutes a significant phenomenon which has important social consequences and also is important from a purely economic point of view: it seems that the spontaneous growth of private plots played a major role in the recent improvement of the food situation inside North Korea.

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3. Korea Sharing Movement anti-malarial program (Via Cancor)
Read a PDF of on the project here

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4. What is it like to teach at the Pyongyang University of Science and Technology (PUST)?
Find out from one instructor here. More on PUST here.

According to the Daily NK:

New information suggests that the price of rice across North Korea now stands at more than 3,000 won per kilo, the highest market price since the currency redenomination of November 2009.

A source from Yanggang Province told The Daily NK on Friday, “The price of a kilo of rice has finally hit 3,000 won, having been only 2,600 won at the start of October. The won has gone down against the Chinese Yuan too, with one Chinese Yuan worth 515 North Korean won.”

Yesterday, a source from Sinuiju revealed that the cost of rice there has also risen to 3,000 won a kilo, saying, “People are bewildered as to why the cost of food has gone up so much, even though even the corn harvest has been gathered.” Sinuiju is always among the cheapest place to buy rice in North Korea due to its proximity to the major Chinese trading city of Dandong.

The situation is particularly surprising because the arrival of the autumn harvest would ordinarily be expected to drive down grain prices, or at the very least hold them steady. However, this year has seen poor weather feed concerns over crop yields, leading to rising prices throughout August and September. The average price in July, 2,000 won, was 2,500 won by late August. The exchange rate for Chinese Yuan has also been rising.

Some are predicting that the price fluctuations will level off with the end of the autumn harvest, while others believe that prices will simply move with the exchange rate, meaning greater uncertainty.

Read the full story here:
Rice Price Spike Defying Expectations
Daily NK
Kang Mi Jin
2011-10-15