North Korean Economy Watch

According to the UN World Food Program:

On the occasion of World Food Day (16 October), WFP has opened a new factory to produce nutritious biscuits in DPR Korea. Fortified foods, produced in 14 factories all over the country, are the backbone of WFP’s efforts to address undernutririon and fight hunger in the country for some 1.6 million women and children every month.

Speaking at the opening ceremony, Country Director Dierk Stegen said: “WFP is committed to fighting hunger worldwide. In DPRK, we work in close partnership with the government to reduce hunger and undernutrition in young children and their mothers by providing locally produced foods that are enriched with vitamins and minterals.”

Improved Efficiency

The Pyongsong Biscuit Production Line is replacing an existing biscuit factory in Haeju, as the equipment of that production line has become too old and too costly to replace. The Pyongsong Factory is strategically located, with a railway connection to Nampo port and easier access to nearby counties. The new factory will improve production efficiency, save transport costs and minimize the transport time of delivering the nutritious biscuits to 231,000 children at nurseries, kindergartens and schools in 12 counties.

Government Partnership

WFP and the Government of DPR Korea have been working together to produce nutritious foods enriched with vitamins and minerals in country since 1998. The Government contributes the factory infrastructure, staff support, and maintenance, utilities and overhead costs associated with the production, while WFP provides raw materials, spare parts, technical training and oversight of production and distribution.

Funding Needs

The Pyongson Biscuit Factory has the capacity to produce up to 294 metric tons of fortified biscuits every month – but this is dependent on contributions from donors. Currently, funding levels are such that production will cease at the end of February. For the next 12 months WFP needs to source US$80million to continue its work to provide assistance to the most vulnerable children and women in DPK Korea.

According to the UN WFP web page:

A new factory in Pyongson [sic] City brings to 14 the total number of facilities producing fortified foods for WFP programmes in DPR Korea.

On the occasion of World Food Day (16 October), WFP has opened a new factory to produce nutritious biscuits in DPR Korea. Fortified foods, produced in 14 factories all over the country, are the backbone of WFP’s efforts to address undernutririon and fight hunger in the country for some 1.6 million women and children every month.

Speaking at the opening ceremony, Country Director Dierk Stegen said: “WFP is committed to fighting hunger worldwide. In DPRK, we work in close partnership with the government to reduce hunger and undernutrition in young children and their mothers by providing locally produced foods that are enriched with vitamins and minterals.”

Improved Efficiency
The Pyongsong Biscuit Production Line is replacing an existing biscuit factory in Haeju, as the equipment of that production line has become too old and too costly to replace. The Pyongsong Factory is strategically located, with a railway connection to Nampo port and easier access to nearby counties. The new factory will improve production efficiency, save transport costs and minimize the transport time of delivering the nutritious biscuits to 231,000 children at nurseries, kindergartens and schools in 12 counties.

Government Partnership
WFP and the Government of DPR Korea have been working together to produce nutritious foods enriched with vitamins and minerals in country since 1998. The Government contributes the factory infrastructure, staff support, and maintenance, utilities and overhead costs associated with the production, while WFP provides raw materials, spare parts, technical training and oversight of production and distribution.

Funding Needs
The Pyongson Biscuit Factory has the capacity to produce up to 294 metric tons of fortified biscuits every month – but this is dependent on contributions from donors. Currently, funding levels are such that production will cease at the end of February. For the next 12 months WFP needs to source US$80million to continue its work to provide assistance to the most vulnerable children and women in DPK Korea.

Story submitted by Liu Xuerong, Head of Programme, WFP DPRK

According to Yonhap:

According to Rep. Yoon Sang-hyun of the ruling Saenuri Party, imports of luxury goods reached US$645.8 million last year, up sharply from an annual import average of around $300 million tallied under the current leader’s father Kim Jong-il.

…

Citing data provided by the government ahead of the parliamentary audit on the Ministry of Unification, the lawmaker said the isolationist country imported such non-essential goods as pets, feed for such animals, and various European and U.S.-made bath, sauna and maternity products.

The report also showed a noticeable rise in imports of expensive musical instruments, cosmetic goods, handbags, leather products, watches, and mid-sized sedans made in Japan and China.

“The products were given as gifts to key figures in North Korean society to ensure their loyalty to the regime,” Yoon said. He claimed that handing out such gifts contrasted with the hardships felt by ordinary people.

The United Nations Food and Agriculture Organization said earlier in the month that North Korea remains one of the 34 countries in the world that require external assistance to properly feed their people.

It estimated that some 2.8 million “vulnerable” people in the communist country needed outside assistance at least until this year’s fall harvest.

The Saenuri lawmaker said that imports of wine, liquor, consumer electronics, fur products and expensive watches led the growth last year.

Imports of alcoholic beverages surpassed the $30 million mark, with electronics and watches reaching $37 million and $8.2 million, respectively, for the whole of last year, he said.

Read the full story here:
N. Korea’s luxury goods imports surge under Kim Jong-un leadership
Yonhap
2013-10-14

According to Yonhap, the DPRK’s food imports increased over the summer:

North Korea’s crop imports from China rose 16.5 percent in August from the previous month, data showed Tuesday, indicating stability in food supply for people in the impoverished nation.

According to the data compiled by Kwon Tae-jin, a researcher at the Korea Rural Economic Institute, North Korea imported 26,804 tons of grains such as flour, rice, corn and bean in August from its neighboring country, compared with 22,988 tons a month earlier.

The North spent a total of US$15.4 million to buy the crops that month, the largest monthly spending for the year, the data showed.

August also marked the seventh consecutive month that the North’s crop imports topped 20,000 tons.

“Since February, the North has imported more than 20,000 tons of crops per month from its strongest ally,” Kwon said.

“Factoring in the forecast of good harvests for the autumn thanks to good weather conditions, the North is expected to enjoy a relatively stable supply of crops at least for the rest of the year,” he added.

Meanwhile, North Korea’s fertilizer imports from China totaled 183,639 tons in the January-August period, down 27.1 percent from the same period a year earlier, according to the data.

North Korea’s domestic food production is also apparently higher. According to Yonhap:

North Korea’s grain harvest is expected to grow about 8 percent this year from 2012 thanks to relatively favorable weather conditions, a source with the knowledge of food situation in the communist nation said Wednesday.

The North is estimated to produce as much as 5.3 million tons of grains this year, a 7.7 percent increase from 4.92 million tons last year, the source said on the condition of anonymity.

This year’s estimated grain harvest roughly meets with the North’s annual demand of 5.4 million tons. The annual demand was calculated by South Korea’s state-run Korea Rural Economic Institute.

“Grain harvest in North Korea this year is much better than last year because there were no big natural disasters, except for heavy rains in July this year,” the source said.

Despite the positive assessments of the DPRK’s food supply, the UN warns more food assistance is needed. According to Yonhap:

North Korea remains one of the 34 countries in the world that require external assistance to properly feed their people, a media report said Friday.

The Voice of America said the October issue of Crop Prospects and Food Situation by the Food and Agriculture Organization (FAO) estimated that there will be some 2.8 million “vulnerable” people in the communist country needing assistance until this year’s fall harvest.

The Washington-based media outlet said that judging by official estimates tallied by the United Nations organization, Pyongyang’s spring cereal harvest for 2013, mainly winter, wheat and barley, fell shy of the initial forecast, and that this is the main reason for the current shortage.

The country had reported improved harvests in the fall of 2012.

The U.N. agency also said people in the country are experiencing “widespread lack of access” to food caused in part by past floods.

The latest findings added that overall conditions in the North have not changed vis-a-vis July when the last food situation report was released.

At the time, the North was the only country in East Asia to be placed on the list requiring external aid. Others on the list of the 34 countries were in Africa and Central Asia.

The FAO, meanwhile, estimated that the North has been able to secure 328,000 tons of various grain from November of 2012 to early last month. This is equal to 65 percent of the 507,000 tons of grain Pyongyang needs to properly feed its population.

Read the full stories here:
N. Korea’s crop imports from China up 16 pct in Aug.
Yonhap
2013-10-1

N. Korea’s grain harvest seen improving: source
Yonhap
2013-10-2

N. Korea needs external aid to feed its people: report
Yonhap
2013-10-4

According to Yonahp (via Global Post):

Eight out of 10 North Korean people are suffering from food shortages this year, with nearly 20 percent of children younger than five severely malnourished, a report by the U.N. food body has said.

According to the quarterly report the World Food Program (WFP) published on its assistance project for the communist country, 81 percent out of 115 households there were found to be in the category of “poor food consumption” or fall in the category between having adequate and poor food consumption in the second quarter of this year.

Of the surveyed, 76 percent coped with the crisis either by relying on support from others or eating cheaper food. Some 14 percent reduced their portions with 3 percent skipping meals, the report showed.

Thanks to Pyongyang’s increased food rations and the international organization’s aid, things have improved from a year earlier when 87 percent of the people surveyed suffered from shortages, according to the report.

The WFP’s earlier report showed that the North Korean government is providing more food rations to its people in 2013 than the previous year despite a drop in overseas aid. In the communist country, 66 percent of the total population, or about 16 million people, receive state food rations.

The agency, however, said the situation “remains fragile,” with the frequency of protein consumption “very low and unlikely meeting requirements.”

The WFP also said its visit to 120 pediatric hospitals found that 17 percent of the children under the age of five admitted to suffering from acute malnutrition.

Of the children admitted to hospitals, some 88 percent suffered from diarrhea, followed by 82 percent showing symptoms of respiratory infections and 49 percent indigestion, the report showed.

The WFP said it reached 1.46 million beneficiaries each month during the second quarter of the year, distributing a total of 10,489 metric tons of food. It also conducted 764 rounds of field visits to ensure its assistance arrived and was utilized properly.

According to Yonhap (via Global Post):

North Korea’s food procurement effort has been inadequate to cover the expected shortfall for this year, a media report based on data provided by an international agriculture agency said Friday.

The quarterly report by the Food and Agriculture Organization of the United Nations showed Pyongyang has been able to secure 290,600 tons of various grains from abroad from November 2012 through June of this year, the Voice of America (VOA) said.

The Washington-based media outlet said the total is equal to just 57 percent of the 507,000 tons the North needs to secure by October to prevent a food shortage for its people.

The latest findings come a day after the World Food Program (WFP) claimed eight out of 10 North Koreans are suffering from food shortages this year, with nearly 20 percent of children younger than five severely malnourished.

The percentage of people suffering food shortages, however, fell from 87 percent tallied the year before, the WFP said.

Despite the risk of shortage, the North has been able to increase its daily food rations for its people in the first seven months of this year to 397 grams per person, up 14 grams from the year before.

North Korea watchers also said that with Pyongyang placing emphasis on strengthening its agricultural sector, there have been some improvements in food conditions in the country compared to the past.

As per usual, the articles provided neither the titles of the reports nor links. Many UN reports on the DPRK can be found on my DPRK Economic Statistics Page.

The UN is appealing for funding for its DPRK relief programs. According to Yonhap:

The United Nations on Thursday appealed for US$98 million from the international community to help North Koreans in need, saying its humanitarian projects there are drastically underfunded.

Of the overall funding requirement of $150 million for 2013, $98 million is still urgently needed for food and agricultural support, health and nutrition, water and sanitation, according to the global body.

“While the overall humanitarian situation has improved slightly over the last 12 months, the structural causes of people’s vulnerability persist,” U.N. Resident Coordinator Ghulam Isaczai said in an emailed statement. “External assistance continues to play a vital role in safeguarding the lives of millions whose food security, nutritional status and essential health needs would otherwise be seriously compromised.”

Around 16 million people of the 24 million population are chronically short on food, his office said.

For cereal alone, the cereal for the 2012-13 marketing year is estimated at 507,000 metric tons, with serious gaps remaining between recommended and actual nutrient intake, widely due also to a lack of dietary diversity, it said.

“Without sustained humanitarian support, the gains made the past 10 years in improving food security and the overall health and nutrition of the most vulnerable — children, pregnant and nursing mothers, and the elderly — could be quickly reversed,” said Isaczai.

He urged U.N. member states to draw a line between political and humanitarian issues, as efforts to denuclearize North Korea have been stalled for years.

“We hope that donors will respond quickly and generously to allow U.N. agencies to address the humanitarian situation,” he said. “Separating humanitarian needs from political issues is a prerequisite for a sustainable improvement in the condition of people.”

Read the full stories here:
80 pct of N. Koreans suffer food shortages: WFP
Yonahp (via Global Post)
2013-8-8

N. Korea food procurement effort inadequate to cover shortfalls: report
Yonhap (via Global Post)
2013-8-9

Pictured Above: The Hoeryong Food Avenue (Google Earth)

According to Radio Free Asia:

A shuttered special food court established by former North Korean leader Kim Jong Il as a showcase for “high quality dishes at reasonable prices” has reopened and is being allowed to operate independent of the government in a rare move seen by some as reflecting economic reforms.

The center in Hoeryong city in North Hamgyong province bordering China was closed several months after its opening in November 2010 because the management faced financial problems as it could not meet production costs based on food sold to the public at prices dictated by the authorities, sources said.

North Hamgyong authorities recently allowed the Hoeryong Special Food Court to reopen and operate on an “autonomous” basis under new economic management methods introduced last year by Kim Jong Il’s son, Kim Jong Un, who took over after his father’s death in December 2011, the sources told RFA’s Korean Service.

“In order to meet the demands of the New Economic Management System, [the ruling] Workers Party provincial offices allowed the restaurant owners at Hoeryong Special Food Court to operate on an autonomous management basis,” one source in North Hamgyeong province said.

But some observers said the authorities had no choice but to allow the food center to set prices on its own to keep the operations alive, adding that any reform excuse was just an eyewash.

North Korea raced to build the food court after Kim Jong Il proposed it during a visit to his mother’s home town in 2009. He directed government funding of U.S. $800,000 for the project, which was completed in November 2010.

When he inspected the food court a month later, he ordered that it serve people with “high quality dishes at reasonable prices,” asking it to follow in the footsteps of another food outlet, Okryu Restaurant, in Pyongyang.

Operating cost

The source in North Hamgyong province said that the Hoeryong Special Food Court tried to adjust its prices to keep in tandem with those of Okryu Restaurant but could not cope with operating costs.

“During the initial months of operations, the North Korean authorities [subsidized prices] but soon after, the restaurants lost support from the government, thus it went out of business,” another source in the province said.

Even though the authorities did not provide support, they continued to regulate the food prices to make them 75 percent cheaper than those of regular restaurants,” the source said. “Therefore, the owners were suffering from financial difficulties.”

Some sources complain that under the new management of the Hoeryong Special Food Court, food prices have shot up rapidly. In addition, food that is not on the menu is served.

For instance, a seafood specialty restaurant serves steak while a steak house offers noodles, one source complained.

“Before at Hoeryong restaurant, cold noodles were 1,000 North Korean won (about 17 cents), and one bottle of Korean distilled spirits was 800 won (about 10 cents), but after the owners got authority to manage independently, the price of cold noodles went up to 4,000 won (about 68 cents) and one bottle of Korean distilled spirits up to 2,000 won (about 34 cents).

Read the full story here:
Special North Korean Food Court Allowed to Operate Independently
Radio Free Asia
Sung Hui Moon
2013-8-16

According to Yonhap:

North Korea’s trade with China fell 6 percent on-year in the first six months of this year, apparently hit by Beijing’s tougher stance against Pyongyang’s nuclear program, a senior Seoul diplomat said Monday.

The North’s trade with China stood at US$2.95 billion in the January-June period, compared with $3.14 billion a year earlier, said the diplomat at the South Korean Embassy in Beijing.

Exports to China rose 6 percent to $1.36 billion, while imports declined 14 percent to $1.59 billion, the diplomat said on the condition of anonymity, citing official data.

“The drop in overall North Korea-China trade in the first six months of this year appears to be affected by tighter inspections by Chinese customs authorities,” the diplomat said.

North Korea’s imports of Chinese crude oil slipped 15 percent from a year ago to 250,000 tons during the six-month period, according to the data.

In particular, the North’s imports of food from China plunged 65 percent to 120,000 tons for the January-June period, the data showed.

Coal shipments from North Korea to China rose 18 percent to 8.33 million tons for the six-month period, despite falling coal prices, according to the data. Coal accounted for 54.8 percent of the North’s total exports to China during the period.

“With the Chinese economy expected to slow down in the second half of this year, China’s demand for North Korean coal is likely to decline,” the diplomat said.

China has become increasingly frustrated with North Korea, particularly after the North’s third nuclear test in February. Beijing voted in favor of sanctions by the U.N. Security Council to punish Pyongyang for conducting the nuclear test.

In May, the Bank of China closed accounts with North Korea’s Foreign Trade Bank, which was accused by the U.S. of helping finance the North’s nuclear weapons program.

Read the full story here:
N. Korea’s trade with China drops 6 pct in H1: diplomat
Yonahp
2013-8-12

According to the Daily NK:

The volume of food distributed under the North Korean Public Distribution System in the first half of 2013 increased when compared to 2012, Radio Free Asia (RFA) reported on the 6th.

According to North Korean submissions to the UN World Food Programme (WFP), the North Korean authorities provided 400g/day between January to May and 390g/day in June and July, a monthly average of 397g/day. This is a 14g increase on last year’s average of 383g/day.

According to the statistics, 66% of the total population of North Korea, around 16 million people, received state distribution of basic foodstuffs. Last year, 400g/day was achieved in April, the 100th anniversary of Kim Il Sung’s birth, but not in any other month.

Conversely, WFP reported that international food aid volumes to North Korea decreased in the first half of 2013. WFP began a new food aid operation for the country last month, but has since failed to reach half of its target support volume.

Last month, WFP supplied approximately 2900t of food to around 940,000 people, including more than 40,000 flood victims. This compares with 3400 tons of food to more than 1,310,000 people in the previous month.

Daily NK has reported on public food distribution on a number of occasions in 2013, noting in particular that the North Korean authorities distributed some stocks of rice ordinarily intended for wartime distribution.

Yonhap also covered the story.

Read the full article here:
PDS Distribution Volumes Rise in 2013
Daily NK
Jin Dong Hyuk
2013-8-7

UPDATE 1 (2013-7-29): DPRK imports of Chinese grain drop 8.4% in the first half of 2013. According to Yonhap:

North Korea’s imports of Chinese grain fell 8.4 percent on-year in the first half of 2013 mainly due to a better harvest last fall, a report said Monday.

The report by the Korea Rural Economic Institute (KREI) showed Pyongyang’s imports of flour, rice, corn and other grain products reaching 124,228 tons in the January-June period, compared with 135,648 tons a year earlier.

The state-run institute said that while the country imported more than 20,000 tons of grain on average from February onward, last year’s better harvest and overall improvements in food supply conditions led to the first-half decline.

“Overall, import numbers indicate supply and demand of grain is very stable in North Korea,” said Kwon Tae-jin, a research fellow at KREI who compiled the report.

He said besides grain, the communist country imported 139,161 tons of chemical fertilizers from China in the first half, a drop of 35 percent from 213,871 tons purchased in the same six-month period last year.

ORIGINAL POST (2013-7-29): DPRK imports of Chinese grain fall 14.2% in 2013. According to Yonhap (via Global Post):

Imports of Chinese grain by North Korea fell 14.2 percent on-year in the first five months of 2013 mainly due to a better harvest last fall, a report said Wednesday.

The findings by the Korea Rural Economic Institute (KREI) showed Pyongyang’s imports of flour, rice, corn and other grain products reaching 101,170 tons in the January-May period, down from 117,922 tons the year before.

The institute said numbers fell sharply in May when total grain imports stood at just 21,142 tons, which represents an 18 percent drop from the previous year and an 18.2 percent decrease from April. The communist country brought in 25,850 tons of grain from its neighbor in the preceding month and 25,788 tons in May of 2012.

Kwon Tae-jin, a research fellow at KREI who compiled the report, said the sizable drop in imports was probably caused by better grain output last year, which made it unnecessary for the country to buy the commodity from China.

“It can be a sign that things have improved,” he said. The researcher also speculated that the harvest of such produce as barley, wheat and potatoes, which grow in spring, may have been better than in the past.

The experts, who checked raw data provided by the Korea International Trade Association, said the North imported 42.7 percent more chemical fertilizers in the January-May period of this year vis-a-vis the same time period in 2012.

The country brought in 129,967 tons of fertilizer from China, compared to 91,096 tons the year before. Such an increase may exert a positive effect on farm output.

Kwon said that the spike in fertilizers is a sure sign that the North is giving top priority to pushing up agricultural output.

Related to the latest data, a government source hinted that North Korea’s emphasis on agriculture may be aimed at trying to strengthen the leadership of its new leader Kim Jong-un, who took power after the sudden death of his father Kim Jong-il in late 2011.

“Unlike other economic sectors that require time, agriculture is something that can generate results in a short period of time and have immediate impact on everyday lives,” the official who declined to be identified said.

Read the full story here:
N. Korea’s imports of Chinese grain fall 14.2 pct in 2013
Yonhap (via Global Post)
2013-7-3

According to Yonhap:

The United Nations has decided to provide North Korea with US$6 million in emergency aid by the end of this year, a report said Thursday, in a bid to relieve fund shortages at U.N. agencies operating in the isolated country.

The U.N. Office for the Coordination of Humanitarian Affairs (OCHA) told the Washington-based Voice of America that U.N. bodies operating in the North will receive this aid through a pool of reserve funding known as the Central Emergency Response Fund (CERF).

The CERF was established in 2006 to provide quick assistance to countries in severe humanitarian crises. Funded by donations from governments, the private sector, foundations and individuals, it already allocated $7 million to North Korea this January in an attempt to boost humanitarian efforts in neglected countries.

Under the new plan, the six U.N. agencies operating in North Korea will negotiate with the resident coordinator of the U.N. Development Programme in Pyongyang to come up with a detailed list of expenditures, the report said.

The announcement comes after five out of the 14 food processing factories in the impoverished country were reportedly shut down in June due to grain shortages, hurting ongoing efforts to nourish people in the communist country.

As of May, OCHA said it had received just over 17 percent of the $147 million needed to operate U.N. agencies in the North this year. In 2012, it allocated a total of $12.92 million from its CERF funding to North Korea.

Read the full story here:
U.N. to send US$6 mln in emergency aid to N. Korea
Yonhap
2013-7-18