North Korean Economy Watch

According to the Daily NK:

As previously reported, the price of rice in North Korea, which declined in March, has started soaring again. But this rice price fluctuation looks different from those of previous years.

According to a source from North Hamkyung Province, rice in Hoiryeong market was between 450 and 500 won per kilogram until late June, but on July 13th it hit 750 won. Corn rice is also more than 400 won now.

At the same time, one Yuan is now worth 150 won.

Since the mid-2000s when the market economy started to spread, rice prices have risen during the spring poverty season in April and May. And then, in around late June, when potatoes and barley are harvested, prices stabilize, and then, in September, they decline in expectation of the harvest.

Therefore, traders in the jangmadang generally buy rice and other grains in November and December and then sell them in the jangmadang during April. Cadres also use that regular cycle of food price rises and falls to profit by buying rice late in the year and releasing it for a higher prices during the next spring. Therefore, poorer people also try to get rice and grain in winter time.

However, since the currency redenomination, the fluctuations have changed.

Immediately after the redenomination, the authorities released a measure shutting down the markets, so in January rice prices rose by around 60 times compared with before the redenomination. The markets have been open once again since February 5th, but food prices remained unstable through mid-March. That was because people did not buy grains until March, at which time demand promptly far outstripped supply.

In April this year, there was a limited amount of food distribution and some residents in some districts of Pyongyang received corn, which they were supposed to receive in May and June, in advance. Additionally, as a result of Kim Jong Il’s visit to China, rumor had it that a large amount of food would be delivered, so rice prices were relatively flat.

However, when the rumor turned out to be empty, a decree was handed down to lower units in May ordering food self-reliance at the local level. This only intensified anxiety about the food situation.

More serious problems may come in July and August, monsoon season. If the weather affects farming, anxiety about food for the last half of the year will grow. Make things worse, there was cold-weather damage to farming early this year, so a lost harvest is clearly going to be on people’s minds.

On this, one source said, “Food wholesalers predict that prices will go on rising until the harvest in August. And when rising food prices influence general products, big troubles can come, like they did in January of this year.”

 

Click image to see Hoeryong market prices.

Read the full story here:
Food Price Cycle Twisting in the Wind
Daily NK
Yoo Gwan Hee
7/13/2010