North Korean Economy Watch

Accroding to the Daily NK:

The 8th issue of Rimjingang, the periodical written by North Korean underground journalists, sheds light on North Korea’s private livestock industry.

One article, “Livestock Industry Developing from Private Means of Living into Private Enterprise,” describes how pig farming has developed during and since the famine period. It explains how, under the functioning planned economy, the “livestock industry” amounted to each household unit raising pigs to sell on the side, but now the planned economy is little more than a distant memory and the livestock sector has been specialized and systematized into sectors; breeding, butchery, distribution and sale.

That is why in North Korean markets 90% of goods are Chinese, but 100% of pigs and pork is North Korean.

Under the planned economy, roughly 20% of people in rural areas privately raised pigs and sold them to state meat procurement stores for two kilograms of corn per kilo of meat, the report notes. But from the mid 1980s, procurement stores bought them for cash, so competition grew and eventually the stores had to close due to increasing prices and their own lack of ready cash. Since the 1990s, distribution has stopped and more than 50% of people have started raising pigs in more specialized ways, it adds.

The report goes on to explain that during the March of Tribulation people figured out that their salaries, even when received, represented a mere tiny fraction of the labor value they could realize by trading illegally in the jangmadang. Many were unwilling to put up with it.

“Going through the March of Tribulation, the profit motive through the market has opened the door to new food lives which the Leader cannot open with his slogan, ‘reform food lives with meat,’” the report asserts. “Now, since a powerful supply and demand system has been spontaneously established, anybody can afford to eat meat as long as they can earn money.”

“’Leave us alone!’ is the real voice of the people of Chosun,” the report concludes, adding that the phenomenon of the Chosun pig farming industry implies the clear potential to develop modern industry in North Korea.

The 8th edition of Rimjingang was published in Korean on June 30th.

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The All-North Korean Pig Farming Sector
Daily NK
Yoo Gwan Hee
7/10/2010

According to the Daily NK:

Food price in North Korea at the end of spring held steady against food prices in March, and worries about an impending famine proved unfounded.

The Daily NK has looked at market food prices in Pyongyang, Shinuiju, and Chongjin over the first week of July. Everywhere, rice cost about 500 won while corn cost about 400 won. Compared to food prices in March, during the period when food is traditionally in the shortest supply, rice prices were much the same, whereas corn prices had risen by 50 percent.

A source inside North Korea explained, “Since the redenomination, some people have dropped from ‘middle income’ to ‘poor.’ As a result, demand for corn has increased, and that is the reason why corn prices have gone up. Some people still eat rice; however, many of those who used to eat rice are now feeding their families on corn.”

“Because of the planting battle, market hours were made shorter, but the market is running smoothly and food prices are stabilizing.”

However, the source conceded that the food security of senior citizens with no family support and homeless children seems to be very bad. The source said some of these people are indeed dying of malnutrition and disease, though not outright starvation.

So, while the food supply situation in North Korea is not in unusually poor shape, it seems that the aftereffects of last year’s redenomination are still taking effect,

Corn prices have increased by almost 100 won on average in the last month, and flour prices have also increased by about 200 won.

However, the price of fuels such as gasoline and diesel either remained the same or decreased slightly. Gasoline remains at 900 won, which is a hundred won less than it was in May. Diesel remains at 400 won, which is 200 hundred won less than it was.

Since last year, North Korea has been pursuing various construction projects as part of its goal of building a strong and prosperous state by 2012. It is possible that fuel heading for construction sites is finding its way into the markets.

Here is the data in JPG format!

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Market Prices Holding Firm
Daily NK
http://www.dailynk.com/english/read.php?cataId=nk01500&num=6568
Yang Jung A
7/7/2010
 

According to the Daily NK:

A report by aid organization Good Friends stating that widespread starvation is happening again in North Korea has been vehemently denied by inside sources.

In the June report, Good Friends, citing its own sources, asserted that the Chosun Workers’ Party had dispatched an investigation team to each area of the country following the June 7th Supreme People’s Assembly meeting, and that the teams had found up to two hundred people dead in each district of South Hamkyong Province.

According to Good Friends, “The first report from South Hamkyong reached the central party on June 18th, saying that for the four months from March to June in Hamheung, Heungnam and Sinpo, 100 or so people had died of starvation.”

However, a Daily NK source from Hoiryeong who recently visited Chongjin in North Hamkyong Province was incredulous when informed of the report, saying, “Who told you that? I have heard nothing about so many people dying of starvation in either Hoiryeong or Chongjin.”

Another source from Yangkang Province who said he visits Heochon County in South Hamkyong regularly said, “Although it is hard to live in South Hamkyong, people who made it through the ‘March of Tribulation’ know very well how to survive. There are newly harvested potatoes, and if you are really struggling then you can always eat herbs.”

NK Intellectuals Society (NKIS), a leading defector organization, agrees that the report is false, saying, “We have checked the report of widespread starvation in South Hamkyong with a resident of Danchon, and he has confirmed that no such thing has happened. Some elderly people with immune systems weakened by spring food shortages have died of disease, but that number is not more than ten or twenty in Danchon.”

Good Friends has tended to warn of impending mass starvation almost every year, but inside informants and the South Korean authorities often assert otherwise.

In a separate report, Good Friends also recently claimed that there was to be no more public distribution as of late last month, and that market transactions had been fully liberalized to allow the people to look after themselves.

The so-called “May 26th Measure”, Rev. Bomryun of Good Friends said at the time, was “reluctantly done as a result of a lack of the anticipated food aid from China after Kim Jong Il’s visit,” and claimed, “This time, the starvation cannot be dealt with over a short period of time, and might result in a larger number of deaths like in the mid-1990s.”

However, the actual existence of the May 26th Measure has not been proven, and markets in Sinuiju, Pyongyang, Hyesan and other main cities remain open from 10 AM to 6 PM as normal.

Won Sae Hoon, South Korea’s National Intelligence Service chief, also testified before the National Assembly’s Intelligence Committee last Thursday that North Korea probably has enough food overall to survive, saying, “This year, North Korea seems to have more than 4.3 million tons of grain, including its own production and imports, and food supply difficulties can be managed.”

Read the full story here:
Starvation Report Rejected by Sources
Daily NK
Shin Joo Hyun
7/2/2010

According to the Daily NK:

The gap between the rich and poor in North Korea is growing as the number of people trying to sell their family home to buy food expands in the aftermath of last November’s currency reforms, according to a source from inside the country.

The source from South Pyongan Province told The Daily NK on Thursday, “An increasing number of homes are being sold to buy food, and now it seems like about two out of every ten people around here have lost their home.”

According to the source, the rich buy up the houses, demolish them and build new ones to sell for a profit. Those who have amassed dollars or Chinese Yuan from trading are now turning to the housing market.

Even in Pyongyang, where the public distribution system continues to function, there are homeless people on the street, according to the source, who added, “When I was in Pyongyang, there were homeless people sleeping in the subway in large numbers.”

The source went on, “People’s lives are very difficult. There are even some who rely on digging up 5kg of wormwood, walking three hours to sell it, and only getting 100 won per kg.”

Currently, 1kg of rice sells for 400 to 500 won in Pyongyang, and 500 to 600 won in other areas.

The source also explained, “While public distribution still functions in Pyongyang, there are strict restrictions on movement, and even with our salaries we can’t buy food because there is too little.”

Since the economy is so bad, the crime rate is also going up, he added, “There are now more and more pick pocketing cases, and these days, they not only use small knives to steal purses, but even tweezers to pick stuff from pockets.”

The source’s assertion that there was public distribution until mid-June contradicts the claim of one NGO, which said that on May 26 the authorities ordered each area to look out for its own food supply. The source, when asked about the decree, said he was unaware of its existence.

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Life Even Tough in Pyongyang
Daily NK
Kim So Yeol
7/2/2010

According to the Daily NK:

North Korea designates three days between June 25 and 27 as “days of struggle against imperialism and the U.S.” and holds several events including meetings between Korean War veterans and younger generations, screenings of war movies, showing war-related propaganda, special lectures by aged veterans and so on.

Meanwhile, the authorities categorize Korean War veterans into two groups.

The first group consists of those who have earned the title “Hero of the Republic,” recipients of the first and second grade “Hardworking Medal” or first grade “Flag Medal”.

They receive 800g of rice per day and 120 won per month.

In the second group, there are recipients of the second and third grade “Flag Medal” and “Military Meritorious Service Medal.” They are given 600g of grain and 60 won.

They are special seats for wounded soldiers on trains, buses and in other public places. Campaigns to help veterans’ families are common.

However, the veteran-friendly atmosphere has also been much reduced since the late 1990s.

To aged veterans and families of fallen soldiers, the authorities used to present home appliances such as Daedonggang televisions, clothes, traditional clothes for women and such like, calling them “gifts from the General.” But the scale and quality of such gifts has been trimmed a lot in recent years, now amounting to little more than ginseng liquor and a few roots of ginseng or another traditional supplement. However, they still receive these gifts.

And, at least for a veteran living in Pyongyang, the authorities serve a bowl of cold noodles in Okryukwan, a famous restaurant, every anniversary of victory in the Korean War. In rural areas, veterans have stopped waiting for help and have taken to cultivating mountainous fields to make ends meet.

Read the ful story here:
The Lives of North Korean Veterans
Daily NK
Min Cho Hee
6/24/2010

According to the Washington Post:

Because North Korea operates in secrecy and isolation, outside observers rely on informants and accounts from defectors. In this case, experts agree that the food shortage is dire. Several analysts who monitor and travel to North Korea agree that in recent weeks, Pyongyang has abandoned almost all rules about who can spend money and when. That would seem to indicate that Kim — who once equated free-market trading with “egotism” and a collapse of social order — now wants to rehabilitate markets that were damaged months earlier.

As of May 26, the government no longer forces markets to close at 6 or 7 p.m., has dropped the rule restricting customers to women older than 40 and has lifted a ban on certain goods being sold. One city official in the city of Pyungsung informed the Good Friends humanitarian group that the living standard had “drastically decreased since the currency exchange, and the government cannot provide distribution so they have to bring the market back up.”

Read the full article here.

IFES has also reported this move.

It should be noted that both of these reports cite this Good Friends report:

Blanket Permission to Open Markets “Everyone can do business”
Authorization of public market is included at the core of the 5.26 Party directives. The North Korean authorities decided to allow everyone to have access to markets and overturned their original plan to close down the general market and exercise strong control over market. They announced that there will be no time restrictions, product control or age limitation. In reality, they allowed Democratic Women’s Union’s weekly prohibition from market operation during official work so people can work at market regardless of Democratic Women’s Union hours. Their only condition was to participate in labor mobilization. Pyungsung City, which suffered the most since last year’s decision to prohibit general market, is now allowed to open business and cancel other market regulations. A city official described the background on allowing of the market, “The living standard drastically decreased since the currency exchange and the government cannot provide distribution so they have to bring market back up.” He added, “There are increasing deaths from starvation so opening market is a reasonable resolution. Death due to starvation has gone out of control.” However, although the market doors are open wide, products are not being distributed and there is no cash flow. Market has shrunk that a businessman who used to make 3,000 won a day is barely making 200-300 won a day.

Good Friends is a valuable source of information but their reports should be taken with a grain of salt.

Institute for Far Eastern Studies (IFES)
NK Brief No. 10-06-17-1
6/17/2010
 
As North Korea’s food shortages worsen and reports of starvation continue to grow, the Workers’ Party of Korea have acknowledged the failure of the central food ration program. Since the end of May, the Party has permitted the operation of 24-hour markets, and the regime has ordered the people of the North to provide for themselves.

The human rights organization Good Friends reported this move on June 14. According to Good Friends, the Workers’ Party organization and guidance bureau handed down an order on May 26 titled ‘Relating to Korea’s Current Food Situation’ that allowed markets to stay open and ordered North Koreans to purchase their own food. This order, recognizing that the food shortages in the North have continued to worsen over the last six months, since the failed attempts at currency reform, acknowledged the difficulty of providing government food rations. It calls on those who were receiving rations to now feed themselves, while also calling on the Party, Cabinet, security forces and other relevant government agencies to come up with necessary countermeasures. Now, authorities officially allow the 24-hour operation of markets, something that most had already tacitly permitted, and encourage individuals, even those not working in trading companies, to actively import goods from China.

It has been reported that government food rations to all regions and all classes of society, even to those in Pyongyang, were suspended in April. The last distribution of food was a 20-day supply provided to each North Korean on April 15, the anniversary of the birth of Kim Il Sung. Because of the difficulty of travelling to markets, the suspension of rations caused many in farming communities to starve to death. When Kim Jong Il’s recent visit to China failed to secure expected food aid, the Workers’ Party had no choice but to hand down the ‘May 26 Party Decree’. While the suspension of rations has considerably extended the economic independence of North Korean people, the regime has significantly stepped up other forms of control over society. Public security officers have begun confiscating knives, saws and other potential weapons over 9 centimeters long in an effort to stem murder and other violent crimes. Additionally, state security officials are cracking down on forcefully resettling some residents of the age most likely to defect, while sending to prison those thought to have contacted relatives in South Korea.

According to Daily NK, North Korean security officials are pushing trading companies to continue trading with China, while calling on Chinese businesses to provide food aid. It also appears that North Korean customs inspections along the Tumen River have been considerably eased, and there is no real attempt to identify the origin or intended use of food imported from China. Sinheung Trading Company has asked Chinese partners investing in the North to send flour, corn and other foodstuffs. The Sinheung Trading Company is operated by the Ministry of State Security, and is responsible for earning the ministry foreign capital. It appears that food acquisition is now a matter of national security, as North Korea is expecting South Korea and the rest of the international community to economically isolate the country.

According ot the Daily NK:

People working for North Korean enterprises overseas are concerned by their poor financial performance and excessive requests for remittances since the Cheonan incident and Kim Jong Il’s visit to China.

Cheong is one such businessman. In his 50s now, he has been residing in Shenyang since the early 2000s working on exports of North Korean mineral resources. He has won recognition from home for his efforts, but nowadays he is growing more anxious and says he has lost his composure.

Upon meeting with The Daily NK’s correspondent, who arranged the meeting in the guise of a businessman, Cheong said frankly that life is exceedingly hard at the moment.

“Even though the General (Kim Jong Il) visited China, there were no clear promises of Chinese aid or investment in North Korea,” Cheong says. “Therefore, the authorities are requesting more foreign investment and that money be given to the country in order to get past the situation.”

According to him, the authorities have threatened to merge export offices that do not perform to expectations. He says he plans to avoid this by first gathering around $2,000 to remit to Pyongyang, and then visiting the North Korean capital to check on the domestic situation next month.

He says that the failure of the currency redenomination has affected the credit worthiness of North Korea. China-based traders are anxious about the situation as the number of foreign investments and sales has deteriorated this year.

“Since the route for seafood exports to South Chosun has been blocked, we have been instructed to sell it all in China,” he adds. “Although the quality is quite good, we have to have dumping sales in order to find immediate ways to sell it. Therefore, profits are reduced and we have to compensate for the loss. It is terrible.”

He says he has thought about going back to the North, but his wife bitterly opposes it for their son’s education. She was surprised by Cheong’s thought, he says, since the couple had even devised a method to bring their daughter, who is still in Pyongyang, to China.

He explains, “Even those who are known as old hands and who are seen as very skilled in foreign currency earning business look worried about the need for ‘loyalty funds.’ They are eager to make contacts in powerful positions by whatever means necessary, because background and supporters can be decisive in your life.”

One example, Kang, who is in charge of importing light industrial products in Beijing, dropped by Shenyang on his way to meetings with other branch managers. He became a well-known trader after he made good money supplying air conditioners to the Mansudae Assembly Hall and fabric to the military authorities.

His business is stable because he is known as a “Kim Jong Nam person”, i.e. a close associate of Kim Jong Il’s first son, and his life is also stable; he resides in a luxurious apartment in Beijing and his son is studying in the U.K.

However, even he has grown concerned lately, he says. “Decrees demanding increased ‘loyalty funds’ have been constantly handed down,” he explains. “The amount they request has increased by two or three times. It is awful.”

North Korean traders residing in Shenyang generally agree that, in Kang’s words, “In order to survive overseas, Kim Jong Eun is now a lifeline. When chiefs of foreign offices go to Pyongyang, they busy themselves trying to find invisible backers (i.e. Kim Jong Eun) to give a few thousand dollars to.”

Read the full story here:
North Korean Traders Feeling Pinch
Daily NK
Jung Kwon Ho and Shin Joo Hyun
6/16/2010

According to the AFP:

North Korea has completely cut off state food rations after China failed to supply the impoverished communist country with extra cereals, a welfare group said Monday.

The ruling communist party announced in a directive on May 26 that there would be no state rations for a while, said South Korea’s Good Friends group which has contacts in the North.

People were authorised to buy food supplies through private markets, it said, adding the directive was due to delayed shipments of food from China.

“The directive was unavoidable” because China failed to send the aid which had been anticipated after leader Kim Jong-Il’s trip to Beijing in early May, group president Pomnyun, who uses just one name, told reporters.

Private markets are now open around the clock across the North, he said.

The North suffered famine in the mid-1990s which killed hundreds of thousands and it still grapples with severe food shortages. The UN children’s fund estimates one third of children are stunted by malnutrition.

The state food distribution system collapsed during the famine. Free markets sprang up and were condoned for a time.

Since 2005 the regime has been reasserting its grip on the economy, with controls or outright bans on the private markets.

A currency revaluation last November, designed to flush out entrepreneurs’ savings, backfired disastrously, fuelling food shortages as market trading dried up and sparking rare outbreaks of unrest.

The North was forced to suspend its campaign to curb the private markets.

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N.Korea completely cuts off state rations: aid group
AFP
6/14/2010

The New York Times published a lengthy article on the DPRK’s currency reform effort launched last year.  Excerpts below:

Like many North Koreans, the construction worker lived in penury. His state employer had not paid him for so long that he had forgotten his salary. Indeed, he paid his boss to be listed as a dummy worker so that he could leave his work site. Then he and his wife could scrape out a living selling small bags of detergent on the black market.

It hardly seemed that life could get worse. And then, one Saturday afternoon last November, his sister burst into his apartment in Chongjin with shocking news: the North Korean government had decided to drastically devalue the nation’s currency. The family’s life savings, about $1,560, had been reduced to about $30.

Last month the construction worker sat in a safe house in this bustling northern Chinese city, lamenting years of useless sacrifice. Vegetables for his parents, his wife’s asthma medicine, the navy track suit his 15-year-old daughter craved — all were forsworn on the theory that, even in North Korea, the future was worth saving for.

“Ai!” he exclaimed, cursing between sobs. “How we worked to save that money! Thinking about it makes me go crazy.”

North Koreans are used to struggle and heartbreak. But the Nov. 30 currency devaluation, apparently an attempt to prop up a foundering state-run economy, was for some the worst disaster since a famine that killed hundreds of thousands in the mid-1990s.

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