North Korean Economy Watch

According to the Daily NK:

The new issue of NK In and Out (NKeconWatch is unable to find this publication on line) includes information about North Korea’s recent jangmadang (markets) developments, stating that “memory cards for digital cameras and even USB flash drive sticks can be bought easily in the jangmadang of major cities these days.”

The journal explained that most of the memory cards are under 1GB and although there are various types of memory cards, they are sold for ten to fifty thousand North Korean Won on average (approx. 3,400 to 17,200 South Korean Won, 3 to 16 USD). Demand for memory cards has been increasing due to the popularity of digital cameras and computers.

Recently there have been individuals that operate photo businesses at photo studios or state-operated shops in the downtown areas of cities. It is known that most of these individuals use digital cameras imported from China rather than film cameras.

The journal clarified that digital pictures can also be easily printed because certain trade organizations, broadcasting companies, convenience stores, or provincial computer centers have set up technology shops providing services to print pictures or produce music CDs.

Notably, a third of middle school students in large border cities own MP3 players and two to three students per class have personal computers at home. It is presumed that many more people own MP3 players or computers in major cities such as Pyongyang.

Below is some recent price information.  Click on the image below to view full size.

The UN World Food Program has announced a new emergency relief measure in the DPRK.  The WFP claims to need more than 1.5 million tons food for North Korea and $503 million to maintain adequate operations until November 2009—$60 million of it now.  Below are highlights from the UNWFP and various media outlets:

According to the WFP:

The immediate negative impact on food security was confirmed by a comprehensive “Rapid Food Security Assessment” conducted jointly by WFP and the Food and Agricultural Organization (FAO) in June. More than three quarters of all households had reduced their food intake, over half were eating only two meals per day and more malnourished and ill children were being admitted to hospitals and institutions.

“All in all, operations are progressing well and we have been able to expand assistance to reach over 4 million hungry and vulnerable North Koreans.”

WFP is deploying 59 international staff members to support the new programme. More than 20 of them will be working in six newly-established field offices to monitor and track food distributions – and for the first time ever, the international staff will include Korean-speakers, in accordance with the new agreement between WFP and the DPRK government.

WFP monitors have already visited county warehouses and beneficiary institutions in 125 of the 131 targeted counties and have accounted for all WFP food assistance distributed so far.

As an aside, “two meals a day” is a scientifically meaningless measure.  At the bare minimum, it would be far more helpful to detail the number of calories the mean/median North Korean consumes per day along with the total necessary calories needed to maintain health.

The Christian Science Monitor printed a few more details: 

Citizens eligible for food rations have seen their allocation cut from 500 grams a day to 150 grams, Banbury reported. Few North Koreans eat meat except on major national holidays when the government distributes it, he added.

What are the roles of South Korea, USA and China in all this?

South Korea
South Korea, which provided more than half the North’s food aid last year, has suspended shipments of food and fertiliser this year in a tougher policy towards Pyongyang from new President Lee Myung-bak.(Financial Times)

On Tuesday, [South Korean] Unification Ministry spokesman Kim Ho-nyeon said Seoul is still considering the appeal and will make a decision based on its assessment of the North’s food situation while monitoring “various situations.” He did not elaborate.(AP via the Herald Tribue)

US
The US promised in May to donate 400,000 tonnes of food aid to North Korea through the WFP and a further 100,000 tonnes through private US organisations. That would nearly double the amount donated last year by China, which has in past said its relationship with Pyongyang was as close as “lips and teeth”. (Financial Times)

China
China is North Korea’s leading source of food and fuel aid. But difficulties in obtaining food export licenses from China have hampered the WFP’s efforts to procure food to be sent to North Korea as well as to Myanmar, the agency said, adding it was in talks with Chinese officials. It has asked the Chinese government to allow the agency to buy 50,000 tons of cereals and export it to their operations in either country. (AP via the Herald Tribune)

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-22-1
8/22/2008

As the international community’s food aid to North Korea falls short of North Korean citizens’ expectations, previously falling rice prices have begun to rise again in August, according to ‘Good Friends’, a South Korean organization working for human rights in the DPRK.

In a recent issue (no. 189) of the group’s newsletter, “North Korea Today”, it was reported that “the amount of outside food [North Korean] authorities had promised did not come in, and at the same time, the rumor that not even smuggled rice from China had been able to come in since August spread among traders, raising the price 200-300 [DPRK] Won per day” for a kilogram of rice.

Last May, the price of rice had risen to 4000 won per kilogram, but began to fall as news of food aid from the United States emerged, bottoming out at 2300-2400 won last month. It has now risen back to between 2900-3050 won.

The newsletter reports that the reason prices are climbing is that in June, North Korean authorities were spreading the word that plenty of food would be coming in from the United States and other overseas donors, but in July, when expectations were not met, concern grew that supplies would run out. This led traders to horde stocks, driving prices up.

According to a North Korean document acquired by ‘Good Friends’ titled “Statistics on 2008 Lean Season Farmer Starvation”, as many as twenty to thirty people per farm died of hunger during the spring lean season (April-June). The document listed the cause of death simply ‘death from disease’, with no reference to what particular disease had befallen the victims, but ‘Good Friends’ reports that North Korean medical officials are saying the cause of death was malnutrition.

It also reports that at the Taesungri Farm, visited on several occasions by both Kim Il Sung and Kim Jong Il, poor harvests last year meant that the government was only able to provide two months worth of rations, leading to an increase in deaths during the lean season. In July, as small amounts of the year’s first crop began to be distributed, there were no deaths, but as August rolled around, people again began to die one or two at a time.

The most authoritative map of North Korea on Google Earth
Download it here

This map covers North Korea’s agriculture, aviation, cultural locations, markets, manufacturing facilities, railroad, energy infrastructure, politics, sports venues, military establishments, religious facilities, leisure destinations, and national parks. It is continually expanding and undergoing revisions. This is the eleventh version.

Additions include: Mt. Paegun’s Ryonghung Temple and resort homes, Pyongyang’s Chongryu Restaurant, Swiss Development Agency (former UNDP office), Iranian Embassy, White Tiger Art Studio, KITC Store, Kumgangsan Store, Pyongyang Fried Chicken Restaurant, Kilju’s Pulp Factory (Paper), Kim Chaek Steel Mill, Chongjin Munitions Factory, Poogin Coal Mine, Ryongwun-ri cooperative farm, Thonggun Pavilion (Uiju), Chinju Temple (Yongbyon), Kim il Sung Revolutionary Museum (Pyongsong), Hamhung Zoo, Rajin electrified perimeter fence, Pyongsong market (North Korea’s largest), Sakju Recreation Center, Hoeryong Maternity Hospital, Sariwon Suwon reservoir (alleged site of US massacre), Sinpyong Resting Place, 700 Ridges Pavilion, Academy of Science, Hamhung Museum of the Revolutionary Activities of Comrade Kim Il Sung, South Hamgyong House of Culture, Hamhung Royal Villa, Pork Chop Hill, and Pyongyang’s Olympic torch route. Additional thanks go to Martyn Williams for expanding the electricity grid, particularly in Samjiyon, and various others who have contributed time improving this project since its launch.

Disclaimer: I cannot vouch for the authenticity of many locations since I have not seen or been to them, but great efforts have been made to check for authenticity. These efforts include pouring over books, maps, conducting interviews, and keeping up with other peoples’ discoveries. In many cases, I have posted sources, though not for all. This is a thorough compilation of lots of material, but I will leave it up to the reader to make up their own minds as to what they see. I cannot catch everything and I welcome contributions.  Additionally, this file is getting large and may take some time to load.

United Methodist Church: Kentucky Annual Conference
Dr. Bill Moore
7/31/2008

Dr. Bill Moore, the pastor of Southern Hills United Methodist Church in Lexington, was in North Korea May 14-29.  The son of United Methodist missionaries, he is a member of a humanitarian aid group called Christian Friends of Korea.  He offers a perspective on a deepening crisis.

I traveled to North Korea during the last two weeks of May as a member of a six-person delegation from a non-government organization (NGO) called Christian Friends of Korea. We flew into the capital city of Pyong Yang to confirm the arrival and proper distribution of donated goods, to deliver donors lists and greetings, and to build relationships and trust. The Board of Directors for this group, of which I am a member, is composed of former missionaries to Korea, the children of missionaries, and others with a concern to relieve the suffering and hardships of the people of this grim Communist dictatorship called the Democratic People’s Republic of Korea.  It is often hard to see the suffering faces of the 23 million North Koreans hidden behind the headlines of international diplomatic struggle and nuclear intrigue.  Famine, floods (two devastating events in 2007), and mismanagement have left the nation in economic ruin. Christian Friends of Korea (CFK) has been quietly working in the DPRK for 13 years, meeting some of the most basic needs of thousands of people struggling with the life-threatening, but curable disease of tuberculosis. CFK’s efforts to show love and compassion to people who continue to endure food shortages, poverty, disease, and oppression are building trust and chipping away at long-standing hostility.   
 
North Korea is a beautiful place in May.  Everything had greened up nicely.  The cottonwood trees had deposited wind-blown piles of downy fluff in the roadways, blanketing the bushes and spider webs.  The guest house on the banks of the Taedong River near Pyong Yang where our Christian Friends of Korea Team stayed for most of the visit had a dense backdrop of vegetation, populated by ring neck pheasant, which appeared unfazed by the foreigners nearby and sounded off regularly.  The acacia trees were in full bloom.

As we moved through the countryside, the workers on the collective farms were transplanting rice plants into the paddy fields.  This is a critical phase of life in the north, and everyone is expected to take part.  Backs bent, barefooted workers move slowly across the fields.  On the mud dikes of the water-filled paddies there are often patriotic slogans on placards, revolutionary red flags flying, and even sound trucks playing inspirational songs.  This idyllic picture of a worker’s paradise belies a truth that is not readily apparent.  The coming fall harvest, which is vital to a nation where one-third of the people suffer from malnutrition, is already in jeopardy.  Previous large shipments of fertilizer from South Korea have been withheld this year for political reasons.  China has pledged to fill the gap, but nothing has arrived yet.  Aid workers from other countries told us that the potato crop is already stunted, and predicted that the rice crop will be twenty-five percent less this year.  Even in years of good harvests, North Korea still falls about 1 million metric tons short of food, out of an estimated 5 million tons needed.    This year the shortfall is expected to exceed 1.6 million metric tons.  For those receiving rations, the daily government ration of grain per person was reduced from 250 grams to 150 grams in June.  Uncertain food aid, coupled with poor food security (effective agricultural production) means an increase among the populace in susceptibility to disease, particularly tuberculosis, which afflicts an estimated five percent of the North Korean people.  In fact, since last year, the registered cases of TB have risen from 52,000 to 100,000 cases.

This was the backdrop for our journey to the Democratic People’s Republic of Korea as an NGO working to provide medicine (specifically tuberculosis treatment drugs), medical equipment, farm machinery, vehicles, construction materials and food for the people of the DPRK.  The needs are real, and the urgency is intensifying. The Chinese character for “crisis” is composed of two other characters: “danger” and “opportunity.” As we traveled to fourteen different medical facilities, we could see that there is a “dangerous opportunity’ to make a difference in this land, and bring hope to many lives.

Our team was a diverse, ecumenical mix of six people.  Our Executive Director, Heidi Linton, grew up in Alaska, married into a famous Presbyterian missionary family, and has effectively immersed herself in the work of Christian Friends of Korea for the last 13 years.  By her indomitable spirit, genuine integrity, and meticulous attention to detail for providing aid and assistance, she has endeared herself to the North Korean leaders assigned to us through the Ministry of Public Health and forged a working relationship which is highly effective.  Dr. John Somerville, retired Presbyterian missionary, was our official Korean speaker on the trip.  A Harvard graduate in Asian studies, Dr. Somerville spent many years teaching in South Korea, and has visited the north on 10 previous visits.  Paul Moffett, a pastor at Lighthouse Christian Center in Puyallup, WA, is the great-grandson of pioneer Presbyterian missionary Samuel Moffett, who came to Pyong Yang in 1905.  Lee Wheeler is an agricultural engineer from Hesston, KS, representing the Mennonite Central Committee, a CFK partner.  He is a greenhouse expert who has also made 10 trips to the DPRK.   Terry Smith, Heidi’s able assistant, came from Memphis, TN and now lives in Black Mountain (headquarters of CFK).  I rounded out the team.  I’m the son of United Methodist missionaries, James and Margaret Moore.  My grandfather, Dr. Stanley Martin, was a Canadian Presbyterian medical missionary in China and Korea.  I grew up in Seoul, South Korea.

Our purpose in traveling to North Korea for Christian Friends of Korea was to make a “confirming” visit, checking to make sure that the supplies and equipment (more than three million dollars worth sent since January) had been properly received, inventoried and distributed; to present lists of donors to the facility directors; and to build relationships and trust with everyone with whom we had contact.  We were accompanied at all times by young government officials who were both personable and efficient, and escorted us to every location.  They shared with us a passion and concern for the welfare of their people.  Part of this work was to visit two warehouse locations to make sure supplies were moving out to the facilities.  This is important also to make way for incoming shipping containers.  It is noteworthy that our North Korean counterparts in the Ministry of Public Health value the aid assistance of CFK and a similar NGO so much that they actually built a spacious warehouse just for receiving shipments to be distributed to CFK ministry sites.  A forklift sent by CFK donors was in use there. The other main task of confirming was to visit the actual facilities, interview directors, staff, and patients, and assess the priorities and needs of each place.  These visits were the heart of our schedule.

A typical trip to one of the hospitals or TB rest homes began with a convoy of vehicles traveling to the locations scheduled for the day.  The road surface usually began with paved roads of varying quality that soon gave way to a washboard gravel road, a muddy track snaking up into the hills, or even a rocky stream bed that had to be forded.  Once we arrived, we were greeted by the director, doctors, nurses, and various local officials.  We would be seated around a table with refreshments provided for the visitors (strawberries, peanuts, tea), introductions would be made, the donor list presented in Korean with an explanation, and Heidi Linton would begin the process of inquiry.  What is the current situation in this place?  How many TB patients are there?   How did the devastating floods of 2007 affect the facility and patients?  What are your priorities here?  Is there enough food for the patients?  Local Communist party officials who attended the meetings were visibly uncomfortable about discussions of flood damage or food shortages.  Furtive glances were sometimes exchanged before hospital staff would answer such questions.  The stock answer: “The government provides us with food.” 

Questions would be asked about the arrival of vitamins, health kits, bedding, laundry soap, Pedialyte, doctor’s kits, hospital beds, and TB medicine.  Food shipments of canned meat, soy beans and dry vegetable soup mix were checked on.  A list of donors was presented to the directors at each location.  New equipment was sometimes delivered, including new electronic microscopes and a “Lab in a Suitcase,” a sophisticated package of diagnostic equipment to identify infected TB patients.  Some sites had cargo tri-motorcycles to transport supplies slated for delivery.  A new kind of greenhouse, which does not require an additional heat source even in frigid temperatures, was offered at each place.  A tour of the facilities meant a chance to meet the patients, to inquire about their health, and to offer best wishes and prayers for swift recovery.  Outside, the greenhouses, which are so important for supplementing meager government rations, would be inspected. Walking tractors and bicycles provided by CFK were noted.

One of the highlights of the journey was to see the wonderful progress that has been made in the construction of modern surgical facilities at both the North Hwangae TB Hospital in Sariwon and the South Hwangae TB Hospital in Haeju.  The surgical suites, built with the expertise and direction of CFK Technical Teams, feature new anti-microbial tile on the walls, non-skid floor tiles, power conditioners and new electrical wiring, heating/AC, lighting, and new surgical equipment and supplies enabling more complicated procedures and greatly improved surgical outcomes.  One patient, who had been brought to Sariwon for an operation from a TB rest home, remarked when he saw the gleaming facility, “I feel like I am cured already!”  The result of the renovations is stronger confidence among patients that healing will occur, and the number of patients willing to undergo surgery has tripled.  Because of the sterile conditions, post-operative infection has been greatly reduced.  Eighty percent of the patients used to have post-op infections.  Now it is down to 1 in 5 patients.  We also saw the preparations for a similar renovation at the Kaesong Provincial Pediatric Hospital (serving 144,000 children) where the surgery area has been stripped to the bare stones in preparation for the $200,000 make-over made possible by a CFK donor.  In earlier days this was a Methodist mission hospital, visited by my grandfather who installed x-ray equipment there in the early 1920’s.  At Hwangju TB Rest Home construction is under way to build new facilities that will house150 or more patients.  The buildings will replace two others that were destroyed in last year’s floods.  They need a roof right away, followed by windows and doors.  This is a critical need, and participation from United Methodist Churches would be most welcome in raising funds for this vital construction need.

While there are very encouraging signs of progress at CFK projects, there are specific needs that must be immediately addressed.  There is an expected shortfall in TB medicine, especially in terms of DOTS (Directly Observed Treatment Short Course) drugs which, when given under supervision, are very effective.  Because of a loss of funding by the World Health Organization, CFK is being asked to provide 12,000 treatments in our regions (North and South Hwanghae and Kaesong) which will cost in excess of $245,000.  In response to the deepening food crisis, two 40-foot containers of canned meat will be shipped before the end of the year in a joint effort with the Mennonite Central Committee, who generously provides $500,000 worth of this commodity to CFK projects annually.

Everywhere the CFK Team went on this confirming visit there were expressions of gratitude.  When one director was asked what further assistance he needed for his facility, he exclaimed, “You have already sent a lot!”  Heidi Linton responded that God in His love had provided these things.  The director’s response: “Please send thanks to our Christian friends in America.”

You might be asking: what does the work of Christian Friends of Korea have to do with The United Methodist Church?  It is difficult to do any kind of Christian ministry in North Korea since traditional denominational mission work is not allowed, but an effort through a non-government organization makes it possible.  When needs are critical, we must find mission partners wherever we can.  The mission of CFK also addresses two of the priorities coming out of General Conference: engaging ministry with the poor (preventing starvation) and making the world malaria free, AIDS-free, and tuberculosis free.  Here’s a piece of good news—the US government is in the process of shipping a total of 500,000 tons of food to North Korea as a result of some movement in the nuclear negotiations.  The United Nations World Food Program will distribute 400,000 tons throughout the DPRK.  As a part of this initiative, on June 30 it was announced that the U.S. Agency for International Development’s (USAID) office of Food for Peace will work with 5 aid agencies to distribute 100,000 metric tons of food to 550,000 people at risk, mostly children, elderly and nursing mothers, in two North Korean provinces.  The agencies involved in this effort are World Vision, Mercy Corps, Global Resource Services, Samaritan’s Purse, and Christian Friends of Korea.

Daily NK
Lee Sung Jin
7/31/2008

As the circulation of the Chinese Yuan in the North Korean markets increases, it is suggested that the value of the North Korean won will continue to fall.

A source from North Korea said in a phone conversation with the Daily NK on the 29th, “In the jangmadang nowadays, there is nothing one cannot buy with Chinese currency. There is no longer even the need to convert into our own money (the North Korean won).”

The source added, “In Chosun (North Korea) nowadays, one can buy a kilogram of rice anywhere for 5 Yuan. Merchants, in particular, like the Chinese currency.”

According to the source, direct transactions in the PRC’s currency began in the fall of last year. In a significant part of the border regions (in North Hamkyung, Yangkang, Jagang Provinces, and Shinuiju) 50 and 100 Yuan notes began to circulate, usually in residential deals and in the sales of furniture and electronic goods.

However, since the first half of this year, with the rapid rise in general food prices in the country, the source elaborated that 5, 10, and 20 Yuan notes began to appear in the purchase of daily necessities in public markets.

According to the Daily NK’s research, the exchange rate for one Yuan in North Korea at the end of June was 435 won in Pyongyang, 440 won in Wonsan, 435 won in Shinuiju, 430 won in Hamheung, 450 won in Hoiryeong, and 445 won in Chongjin. When compared to the Daily NK’s research last December, it can be seen that the value of the North Korean won has declined 5 to 20 won in each region.

The source added, “In Hoiryeong, and other border cities, the price of a kilogram of rice being equivalent to 5 Yuan is engrained in the people’s minds.”

He explained, “Among ordinary citizens, the fact that a yardstick for the price of food is changing to the Yuan symbolizes “disobedience” towards our (North Korean) currency. With the devaluing of the North Korean currency, people are flocking to the dollar or to the Yuan.”

Additionally, the source noted, “Average citizens do not know the market exchange rate of the Yuan, which is constantly changing, so the merchants believe that they can gain from dealing in the Yuan.”

He explained, “Until now, only money changers in the border region had Chinese money and in major cities of the southern provinces, the merchants usually dealt in the dollar or in the euro. However, nowadays, with those in the southern regions trading frequently with China, the Yuan is often exchanged for the dollar in the border area.”

One source in Yangkang Province said in a phone conversation with the Daily NK on the 28th, “Smugglers have also played a big role in the growth of Yuan exchange. These days, people in their 20s carry several tens of Yuan to gain acceptance.”

The source explained, “It is a trend among the wives of officials to deal in the Yuan in the jangmadang even when they have North Korean currency. Using Chinese money is seen as a symbol of a person’s wealth and power.”

He added, “People in the border region try not to carry around North Korean money if they can. Even until just a few years ago, only the rich had access to the Yuan, but these days everyone is trying to get a hold of the Chinese currency.”

Finally, the source predicted, “As long as the state fails to resume normal food distribution and the state-operated stores do not sell products, the Yuan will soon take over as the standard currency for all transactions.”

Update 3: The second shipment of US food aid has arrived in North Korea.  Also, DPRK has suffered terrible rains in August.  Story here and here. 

UPDATE 2: The Daily NK reports some good news on the DPRKs food production:

With the stabilization of food prices in North Korea, which had skyrocketed during the first half of the year, the potato harvest which began at the end of June has been lifting the food burden of the citizens.

A source from North Korea said in a conversation with the Daily NK on the 26th, “In the border regions of North Hamkyung Province the first round of harvesting was successful. Accordingly, the price of new potatoes has fallen below 300 won since mid-July.”

The source added, “In the market in Hyesan, Yangkang Province, potatoes cost 280 won per kilogram. Newly-harvested barley has also been appearing; it’s a huge help to the civilians.”

Until the first week of June, the jangmadang price of potatoes in North Korea was 300 won in Pyongyang, 400 won in Hoiryeong, and 450 won in Chongjin per kilogram.

Regarding the price of rice and corn, the source continued, “In the North Hamkyung and Yangang Provinces, the price of rice is 2,200~2,400 won (per kg) and the price of corn 1,200~1,400 won. Originally, during the collective farm’s harvest distribution in December, 4kg of potato was equivalent to 1kg of corn, so the prices of rice and corn are not actually any more expensive now.”

UPDATE 1: Here (link) are the results of the UN World Food Program/FAO June DPRK survey. Some highlights:

The RFSA covered 53 counties in eight provinces (Ryanggang, North Hamgyong, South Hamgyong, Kangwon, North Hwanghae, South Hwanghae, South Phyongan, Pyongyang). Experts visited hundreds of households, child institutions and hospitals across the country in the most comprehensive assessment on food and nutrition conducted in DPRK since 2004. Key findings indicate:

1. Food availability, accessibility and utilization have deteriorated sharply since 2007.
2. Close to three quarters of the households have reduced their food intake.
3. More malnourished and ill children are being admitted to hospitals and institutions.
4. Diarrhoea caused by increased consumption of wild foods was one of the leading causes of malnutrition amongst children under five.

The experts found that the majority of the families surveyed have cut out protein from their diet, and are living on cereals and vegetables alone. Food prices have soared — rice now costs almost three times more than a year ago, and maize has quadrupled. Heavy reliance on support from relatives as a means of coping with food shortages is widespread in areas such as North Hamgyong Province, one of the worst affected regions.

Donors to WFP’s current programme in DPRK include the United States (US$60 million), Republic of Korea (US$20 million), Russian Federation (US$8 million), Switzerland (US$6.6 million), Germany (US$3.4 million), Australia (US$4.2 million), UN CERF (US$2.3 million, for CERF see: http://ochaonline.un.org), Multilateral funds (US$1.9 million), Cuba and Italy (US$1.5 million each), Canada, Denmark, Ireland, Luxembourg and Norway (US$1 million each), Finland (US$737,000), Turkey (US$150,000), Greece (US$ 45,000) and private donors (US$17,000).

ORIGINAL POST: North Korea’s food crisis has been out of the headlines since US food aid arrived a couple of weeks ago followed by the destruction of the Yongbyon cooling tower, six-party talks progress, ASEAN non-aggression treaty, and Kumgang shooting incident.  But now that the UN World Food Program is preparing operations, the crisis is back in the news.  From the Wahsington Post:

The main U.N. aid agency in North Korea, the World Food Program, will resume emergency operations there in the next two weeks to help feed more than 5 million people over the next 15 months at a cost of $500 million, said Jean-Pierre de Margerie, the agency’s country director in Pyongyang.

“The situation is indeed very serious,” de Margerie said at a news conference in Beijing.

The resumption of emergency operations, which were scaled back in 2005 on a request from the North Korean government, was decided after a U.N. survey last month showed the most severe and widespread hunger among North Koreans in a decade. The survey was taken after the Pyongyang government, in an unusual gesture, officially acknowledged a growing hunger crisis and appealed for international aid.

and

[…] the United States recently pledged to give North Korea 500,000 tons of food over the next six months, most of which will be distributed by the World Food Program as part of its emergency effort. De Margerie said the first delivery, 37,000 tons of wheat, arrived in a North Korean port two weeks ago, and more shiploads are expected soon.

In contrast to past practice, the North Korean government has been willing to allow U.N. aid workers more leeway to monitor delivery of the new food supplies, de Margerie said. Similarly supple oversight rules were negotiated by the United States as a condition for its 500,000-ton donation.

The ballooning food crisis began mainly because of flooding last summer that damaged fields, leading to insufficient crops and soaring food prices. At the same time, de Margerie said, imports dropped dramatically this spring, particularly from South Korea and China.

This exacerbated a perennial shortfall of around 20 percent, or 1.6 million tons, in the amount of food needed to adequately nourish North Korea’s 23 million inhabitants. As a result, prices of such staples as rice, eggs and corn doubled, tripled and even quadrupled, de Margerie said.

Now, de Margerie said, resumption of emergency operations will aim at getting food to between 5 million and 6 million people by September, which is considered a critical period because this autumn’s crops will not have entered the government-run distribution system. Quick donations of about $20 million are needed to get the new program running swiftly, he added.

And where are these funds going to come from.  Well, New Zealand has made public its intentions to fund the effort:

New Zealand will provide half a million dollars to the United Nations to help North Korea which is facing a food shortage.

New Zealand previously gave $500,000 via the Red Cross after last year’s floods.

New Zealand established diplomatic relations with North Korea in 2001.

According to Yonhap:

The areas undergoing the crisis include the Hamgyong and Ryanggang provinces, the site said, adding that the World Food Programme plans to launch a new project to address the food needs in these northeastern regions. 

Read the full stories here:
U.N.: Millions Hungry in North Korea
Washington Post Foreign Service
Edward Cody
7/30/2008

NZ to give aid to North Korea
National Business Review
6/29/2008

Northeastern NK in serious food crisis: UN Web site
Yonhap
7/26/2008

North Korea’s agricultural and food markets suffer from a number of permanent constraints that prevent their efficient operation.  Rail transport is slow and/or unreliable, internal travel restrictions for “ordinary” merchants, and poor road conditions limit the distance food can travel before it goes bad.  Restrictions on communications and lack of a futures market makes it difficult to know how much food is available in each location, or what is expected to be available in each location.  This leads to hoarding, volatile prices, and a mismatch between local supply and demand.  Compounding these basic problems is a poor business environment characterized by collective farming practices, corruption, bribery, poor property rights protection, poor contract enforcement, and ex-post expropriation of profits.  Given these constraints, it is amazing agricultural and food markets work at all. 

In addition to these factors, the DPRK’s food markets suffered a number of adverse supply shocks this year from flooding, China’s restrictions on food exports, and a decrease in expected food aid from China, South Korea, and the US (See the effects on prices in this chart by Noland/Haggard/Weeks here). The arrival of food aid has since brought some of these prices down.

This week, the Daily NK reports on two other causes of price increases in the DPRK: Anti-corruption campaigns and restrictions on farming private plots.

Anti Corruption campaigns (more here and here)

He reported that “From March to late April, for almost 40 days, inspections were undertaken nationally. In Hwanghae Province, the inspection groups under the Central Court came down and confiscated food which the cadres in farms had embezzled. In some cases, they confiscated 500-1000kg of rice and grains from cadres’ households by searching with metal sticks in their backyard.”

The Director of the Ministry of Administration of the Chosun (North Korea) Workers’ Party Jang Sung Taek and his inspection group went to Shinuiju and inspected persons in charge of trading.

No. 112 Land System

The No. 112 land system operates whereby the authorities offer a certain width of fallow lands, which are different by grade of food distribution amount, to national public servants and clerical workers, given in order to make them solve their food problem by farming instead of relying on distribution. Ishimaru explained that “However, the new Kim Young Il cabinet abrogated this system and banned them from planting seeds on those fields.” 

Read the full story here:
Intensive Inspections in March and April a Direct Reason for Rise in Food Prices
Daily NK 
Kim So Yeol
7/4/2008  

Institute for Far Eastern Studies (IFES) 
NK Brief No. 08-6-26-1
6/26/2008

One kilogram of rice in North Korea, the price of which shot up to as much as 4,500 DPRK won last month, has reportedly fallen in price this month by up to 2000 won.

According to a North Korean source, on June 10, one kilogram of rice was selling for between 2,500 & [] 2,700 across the country, quoting prices from cities such as Horyong and Chongjin (North Hamgyong Province), Wonsan (Kangwon Province), Sinuiju (North Pyongan Province), Kangye (Changang Province), Kangso (South Pyongan Province), and Haeju (South Hwangae Province). The source explained, “as soon as rice prices skyrocketed, smuggling in the border region picked up and permission to export 100,000 tons [of grain] came from the Chinese government, and as this occurred, the import food eased a little.”

The source also said that spreading news of food aid from the United States was also an important factor in the falling grain prices.

However, the source stressed, “While the price is falling, food prices are still more than three times what they were last year, so citizens with no money have a hard time feeding themselves…in agricultural regions with no money, famine is spreading regardless of falling grain prices.”

It was also reported that on June 11, a shipment of corn arrived at Chongjin Port (North Hamgyong Province) and distribution to workers has begun, while on the 12th, polished rice, corn, and other grains entered Heungnam Port (South Hamgyong Province) was distribution began the next day. Corn was priced at 800 won per kilogram, easier to purchase than the 1,200 & [] 1,300 won prices found in markets, but more than two times as expensive as market prices at this time last year.

Good Friends, an organization working to aid North Korean people, reported in its newsletter, “Between the end of June and beginning of July, workers in Pyongyang will receive 2 kg of polished rice, 7 kg of milled corn, and 5kg of Southeast Asian rice, for a total of 14 kilograms of rations per person…in the areas surrounding Pyongyang many people cannot work due to starvation,” and they had a hard time swallowing news of these rations.

According to CNN:

A U.S. ship has arrived at a North Korean port carrying 38,000 tons of food aid to be distributed to some of the millions living in hunger, U.N. sources said Sunday.

The delivery is part of a new deal signed by U.S., U.N., and North Korean officials and others, which gives outsiders — including the U.N. World Food Program — much greater access to the country.

From the New York Times:

The ship’s visit and the North Korean agreement to invite an additional 50 international relief experts from the World Food Program, as well as a consortium of U.S. relief agencies, followed recent progress in six-nation talks on ending the North’s nuclear weapons programs.

For years, North Korea has guarded its people from contact with outside aid workers. The WFP, the largest international aid group operating in North Korea, currently has only 10 international personnel based in North Korea.

After sailing for several weeks from the U.S. west coast, the American-flagged M/V Baltimore arrived in Nampo, the North’s main port near Pyongyang, the North Korean capital, on Sunday evening.

On Monday, it began unloading half of its cargo of 37,000 tons of U.S.-grown wheat, Risley said. The ship will discharge the other half of its cargo at Hungnam and Chongjin, ports on the North’s eastern coast.

The shipment is the first installment of 500,000 tons in promised U.S. aid that will be distributed by the WFP and U.S. aid groups, such as Mercy Corps.

Before the ship’s arrival, North Korea agreed on Friday to allow the WFP to deploy the largest number of international workers since it began operations there in 1996 amid a famine that eventually killed an estimated 2 million North Koreans.

Until now, the WFP has had access to only 50 of the North’s 200 counties, distributing its aid through nurseries, schools, hospitals and orphanages. Under the new agreement, the agency will have access to 128 counties, including the remote and traditionally deprived northeast region and some counties never before accessible to humanitarian agencies.

The wheat shipment arrived just days after North Korea delivered a long-delayed nuclear declaration.

Meanwhile, the North rejected a South Korean offer to ship 50,000 tons of corn, the Seoul government said on Monday.

From the Associated Press: 

Sunday’s wheat shipment will be enough for the WFP to expand its operations to feed more than 5 million people, up from 1.2 million people now getting international aid.

On the supply side, anticipation of this aid, plus Russian aid, and increased Chinese grain exports could be behind recent reports that grain prices are falling in North Korea’s markets. 

Read the full articles here:
Seoul offers corn aid to Pyongyang
Yonhap
6/30/2008

Food aid reaches North Korea
CNN
6/29/2008

U.S. Food Aid Arrives in North Korea
New York Times
Choe Sang-Hun
7/1/2008

UN: US food aid arrives in North Korea
Associated Press
Burt Herman
6/30/2008