North Korean Economy Watch

According to the Daily NK:

Along with restaurants selling food such as pizza and hamburgers, a growing number of cafes are sprouting up across North Korea, breaking out of Pyongyang where they were once concentrated. Major cities in other provinces have seen an increase in relatively affluent and young people who are willing to splurge on coffee and western dishes, Daily NK has learned.

“In the areas around Hamheung Station square a lot of coffee and tea houses as well as hamburger shops have popped up,” a source in South Hamkyung Province told Daily NK on Thursday. “Around the intersection and marketplace, where there’s a lot of foot traffic, state companies under the Party and military have opened coffee and hamburgers joints to pull in more money.”

She added, “The coffee is imported from China and Italy. They’re drawing a lot of attention because they not only have hot teas but also all kinds of fruit juices and even an ice shaving machine for hotter days.” The places are becoming popular among donju [new affluent middle class], college students, and young people, as popular “hang out” venues.

“They also have drip coffee and Americanos that South Koreans love so much. They serve it in a 200ml cup right on the spot, and it’s roughly 12,000 KPW [1.48 USD] for one coffee,” she said. “In the case of ordinary residents, they’re unfamiliar with the taste, so many choose hot tea, which is only about half the cost, or they go with cold fruit juices as well.”

An increasing number of people are willing to pay for coffee and drinks, despite them being over double the price of an average laborers’ monthly wage. Such establishments are spreading in large cities such as Nampo, Pyongsong in South Pyongan Province, Chongjin in North Hamkyung Province, and Wonsan in Kangwon Province. Most of these cities are home to foreign currency-earning trading companies, according to the source.

“Restaurants and stands affiliated with trading companies tasked with earning foreign currency sell hamburgers, pizza, waffles and other processed foods made with ready-made mixes,” the source said. “Other restaurants that claim to be more upscale sell omurice [Japanese omelette stuffed with fried rice], curry, yakisoba [stir-fried noodles], and other varieties of Japanese dishes.”

She explained that while the prices at these coffee shops and hamburger establishments may be more than five times that of an average establishment, “more people are showing a tendency to splurge once or twice a month.” When cadres from the Central Party make business trips to areas outside of Pyongyang, provincial officials even escort them to these eateries as a form as hospitality.

This greater variety of cuisine has been welcomed by many, with people from affluent classes to young college students saying they are learning more about the world through various foods, according to the source. However, she did add some are not so pleased about tastes with which they are unfamiliar and the attending hefty price tags.

Read the full story here:
Cafe culture thrives from extra time and cash
Daily NK
Choi Song Min
2015-5-22

Institute for Far Eatern Studies (IFES)
2015-5-21

“Currently, North Korea is not just addressing the issue of food quantity but is raising food quality as well,” the Chosun Sinbo reported on May 13, 2015 in an editorial entitled ‘The Sepho Plateau Ranches’ (Sepho dungpan mokjang). The Chosun Sinbo editorial made this argument and revealed that due to the food quality issue, “North Korea is pushing forward the development of the Sepho Plateau Ranches until the anniversary of the Party’s founding. These ranches are located throughout Kangwon province, the regional center of animal husbandry that produces North Korea’s edible meat, in the counties of Ichon, Pyonggang and Sepho.”

In reference to the food quantity issue, the editorial said, “The UN Food and Agriculture Organization (FAO) is reporting that North Korea will be food self-sufficient within three to four years […] When you think about the difficult food situation during the time of the ‘Arduous March,’ one cannot help but be moved.”

Regarding these ranches spread over three counties, the newspaper reported, “The site of Chosun University in Japan is approximately 7 chongbo [about 70,000 m2] in area, while these ranches are over 50,000 chongbo [496 km2], more than 7,000 times more vast […] Last year North Korea and the Mongolian People’s Republic reached an agreement in which the Mongolian People’s Republic will offer North Korea assistance in livestock farming technology as well as 10,000 livestock animals for free.” This agreement will contribute not just to the Sepho Plateau Ranches but to the overall development of North Korea’s livestock industry.

The newspaper also revealed North Korean society’s overall progress. “Although we do not have expertise in satellites, we can easily guess as to the technological significance of a successful satellite launch. In addition, the fishing industry, led by the People’s Army, has also had success in recent years and is filling the people’s tables with food,” the Chosun Sinbo reported.

It recalled the words of Kim Jong Un’s 2015 New Year’s address, in which he vowed to “solve the people’s food issues through the three axes of agriculture, livestock and fisheries and raise the standard of living to the next level.” It also pointed out that Kim Il Sung had said, “Let’s work so that everyone can wear silk clothes and eat meat soup in tile-roofed houses.”

Meanwhile, North Korea plans to cultivate Sepho tableland (the flat and expansive land of Kangwon province’s Sepho, Pyonggang and Ichon counties) and build a large-scale animal husbandry complex, creating hundreds of square kilometers of pastures and vegetable plots, hundreds of cattle sheds, over 20 livestock product processing plants and more than 1,000 employee residences.

As the people’s standard of living improves, North Koreans are also placing greater importance on things like technology, health and environmental-friendliness. At the ‘18th Pyongyang Spring International Product Exhibition,’ which opened on May 11, 2015, health products such as medicine sold better than ever. In addition, high-tech products such as energy-saving products and environmentally-friendly diesel engines exceeded the number of everyday products at the expo. Previously, North Korea primarily exhibited traditional products like ginseng, sea cucumber, and honey; but due to the emphasis on domestic technological development, businesses displaying domestic technological products are becoming more common.

According to the Daily NK:

Rice prices in North Korea’s North Hamkyung and Yangkang Provinces have dropped despite general stability in market prices around the country. This is largely due to an influx of rice from Russia, offsetting regular price increases that come during the spring when grains fall short in supply.

“Rice sold for about 5,000 KPW [0.63 USD] per kg in Onsong County at the beginning of March, but recently that has dipped to about 4,200 KPW [0.53 USD],” a source in North Hamkyung Province told Daily NK on Wednesday. A source in Yangkang province confirmed a similar trend, saying, “The price of rice has been continually dropping in Hyesan Market, recently falling to the 4,000 KPW [0.5 USD] mark.”

Public demand for rice usually surges in April, and expectations were the cost would jump due to a clampdown on border movements this month that would block smuggled supplies. However, the supply from Russia has reversed these projections, multiple sources confirmed.

“Ships that can hold over 10,000 tons are carrying in wheat or rice from Russia through the harbors of Chongjin and Rasun,” the North Hamkyung source said. “These grains go to the military first, but then are flowing into the markets through back channels.”

He added that the North has been emphasizing relations with Russia more than with China this year, spurring a surge in trade as well as the dispatch of more workers to Russia to pull in foreign currency. This same source also reported multiple sightings –not only by him but but a host of residents–of shipments of oil and grains coming into the North from Russia.

Fluctuations in rice prices have not yet been confirmed in provinces other than the two cited above. Markets in Pyongyang and North Pyongan Province’s Sinuiju have held rice prices at the 5,000 KPW [0.63 USD] level as of mid-April, according to research by Daily NK. This is likely due to the added time it takes to transport rice to the inner areas of the country from the borders.

Both sources blamed power shortages for the delay, exacerbated by state crackdowns preventing traveling peddlers selling goods out of their trucks from entering the markets to do business. While this has contributed to the sluggish supply inland in the very short-term, prices are expected to level out soon.

Read the full story here:
Russian Supply Drives Down Rice Prices
Daily NK
Lee Sang Yong
2015-4-17

Institute for Far Eastern Studies (IFES)

According to Yonhap:

South Korea, together with the U.N. Food and Agriculture Organization (FAO), plans to help develop fish farms in North Korea as an aid to the impoverished state, the government said on March 17.

According to the Ministry of Oceans and Fisheries, the Korea Maritime Institute will soon sign an agreement with the FAO to launch a joint study on the fish-raising industry in the North.

The two parties will study climate conditions in North Korea and find the best species for farming, and based on the outcome of the study, South Korea and the FAO will raise a 30 billion won (US$26.5 million) fund to help build new fish farms in the North, the ministry said.

The aid, however, will likely be delivered by the FAO as Pyongyang continues to be at odds with Seoul over its nuclear program.

Inter-Korean dialogue has nearly come to a halt after the North’s third nuclear test in early 2013. The communist state continues to blast daily threats and slander against the South’s Park Geun-hye government.

South Korea’s National Red Cross had offered to send 25 tons of powdered milk for the malnourished children of North Korea last month, but Pyongyang quickly rejected the offer.

North Korea is believed to have suffered a chronic shortage of food since the late 1990s. The country continues to depend heavily on international handouts to feed a large portion of its population of 24 million, accepting nearly $20 million worth of international aid in the first half of 2014 alone.

You can read the whole story here:
S. Korea to help develop fish farms in N. Korea
Yonhap
2015-3-17

According to KCNA (2015-2-10):

The Mangyongdae Kyonghung Foodstuff Factory was newly built and went operational with due ceremony on Tuesday.

Officials and employees of the Kyonghung Guidance Bureau built its splendid building by their own efforts, automated raw material feeding and put overall production processes on a CNC, germ-free and dust-free basis thanks to the help of teachers and researchers of Pyongyang University of Mechanical Engineering.

The updating of the factory helps successfully carry out the last instructions of leader Kim Jong Il, who worked heart and soul to provide greater quantities of tasty and nutritious foodstuff to the people and consolidate the Juche character and independence of the foodstuff industry.

A message of thanks of the Central Committee of the Workers’ Party of Korea was conveyed to the officials and employees of the bureau at the commissioning ceremony.

Present there were An Jong Su, department director of the C.C., the WPK, officials of the bureau and units under it and officials and employees of the factory.

At the end of the ceremony the participants looked round the factory.

Photos of the factory can be seen here on Uriminzokkiri.

On February 3, 2015, the UNFAO recently published the DPRK “Outlook for Food Supply and Demand 2014/15“.

Here are the highlights:

1. After increasing markedly for three consecutive years, food production remained stagnant in 2014 with the aggregate output put at 5.94 million tonnes (including cereals, soybeans and potatoes in cereal equivalent). This figure comprises the official estimate of the 2014 main harvest and forecast for the 2015 early crops from cooperative farms, as well as FAO projections of production from sloping land and household gardens.

2. Paddy production dropped by about 10 percent due to reduced irrigation water availability, following low precipitation in the winter and dry spells during the 2014 main season. However, this decline was compensated by a significant increase in maize output, as a result of mass mobilization of people to water maize plants.

3. Production of the 2014/15 early season potatoes and minor wheat and barley crops, to be harvested from next June, is forecast to fall considerably.

4. The total utilization needs for the 2014/15 marketing year (November/October) are set by FAO at 5.49 million tonnes of cereal equivalent and the cereal import requirement is estimated at 407 000 tonnes. The Government is expected to import 300 000 tonnes of cereals, leaving an uncovered deficit of 107 000 tonnes for the current marketing year. This gap is larger than in 2013/14 partly as a result of revised post-harvest losses.

5. With a stagnant harvest in 2014, the food security situation in 2014/15 is likely to remain similar to that of the previous marketing year, with most households estimated to have borderline and poor food consumption rates.

The report listed these statistics that I thought were worth highlighting:

The marginal increase (0.3  percent) in the 2014/15 food production follows three consecutive years of strong growth at 4.4 percent in 2011/12, 8.7 percent in 2012/13 and 3.5 percent in 2013/14. However, at the forecast level, production remains above the past five-years average.

Andrei Lankov takes an optimistic view of this report in his article for Radio Free Asia and in the Carnegie Moscow Center. He credits implementation of the 6.28 Measures.

Marcus Noland commented on technical aspects of the report (such as the fact that the assessment was made without direct access to the country).

Scott Snyder commented on some of the political economy around the reports findings in Forbes. He asks why the UNFAO was not allowed into the DPRK, and notes that Russia has become the DPRK’s largest food donor.

The Daily NK has also noted the stability of food prices in late 2014 and early 2015.

Institute for Far Eastern Studies (IFES)

This year marked the end of a three-year mourning period for Kim Jong Il’s death. To solidify Kim Jong Un’s rule, North Korea is urging for economic advancement and emphasizing economic prosperity and people’s happiness.

The Rodong Sinmun, the mouthpiece of the Workers’ Party of Korea (WPK), increased its economy related news content from December 17. The entire December 22nd edition featured news on economic development: the front page headline read, “Let Us Seize All the Battle Goals of This Year”; news highlighted the achievements of the country’s cement factories, thermal power plants, insulation factories, cooperative farms, mines, and other front-line industries. In addition, pages two and four introduced economic development plans about fisheries and medical supplies. It also featured news touting rural villages’ ability to resolve vegetable shortages by growing vegetables rather than lawn in yards and by planting persimmon trees in villages.

The December 20th edition featured news of Kim Jong Un’s field guidance to Kim Jong Suk Pyongyang Textile Factory — his first since the end of the three-year mourning period for his father. The factory is named after Kim Jong Un’s grandmother and is one of the DPRK’s major textile factories. Kim stressed the problem with production of school uniforms and said, “The Party will fully take charge of the issue of school uniforms, shoes, school supplies, and school bags.”

Prime Minister Pak Pong Ju’s visit to the Orangchon Power Station No. 2 in North Hamgyong Province was also reported. This power station is significant in terms legacy. It began with Kim Il Sung’s order to resolve the power shortage problem in the North Hamgyong region. Power Station No. 1 was completed in 2007 during Kim Jong Il’s era. Power Station No. 2 was completed during Kim Jong Un’s regime.

The reason for the increased emphasis on economic issues is likely the desire to earn public support and improve public sentiment toward Kim Jong Un for resolving the country’s economic problems.

Meanwhile, the Voice of Russia reported that DPRK’s grain production increased this year against the previous year, recording 5.71 million tons. The Russian news agency ITAR-TASS also reported this news, quoting a DPRK official from the Ministry of Procurement and Food Administration: “Despite the drought that we had this year, grain yield increased by 50,000 tons from last year at 5.71 million tons.”

This is the first official report released by DPRK authorities on yearly crop yield. It suggests that North Korea’s good harvest of last year continued with a good harvest this year.

Success in the agricultural sector is likely to lessen the burden of chronic food shortage, and Kim Jong Un’s various agricultural reforms are expected to gather momentum including “Punjo” farming management system, which involves the handing out of small plots of land, or “pojon,” to small sub-groups or sub-workteams, usually comprising a family unit.

UPDATE 5 (2015-7-10): According to IFES:

Despite Drought Last Year, Food Production Increased Due to Field Responsibility System

North Korea experienced its biggest drought in 100 years last year. However, North Korea claims that this did not affect its food production. North Korean authorities are claiming the main factor behind the increased food production is the will of farmers to produce more after the expansion of the “field management system,” or pojon tamdangje.

In an interview with the weekly newspaper, Tongil Sinbo, Chi Myong Su, director of the Agricultural Research Institute of the Academy of Agricultural Sciences of the DPRK commented, “the effectiveness of field management system (pojon) from cooperative farm production unit system (bunjo) is noticeable and succeeded in increasing grain production despite the adverse weather conditions.”

The field management system under the bunjo management system or the subworkteam management system divides the work unit consisting of 10-25 people into smaller units of 3-5 people, responsible for farming a smaller unit of a field. This is a measure to increase the “responsibility and ownership of farmers.”

From the July 1st Economic Management Improvement Measures enforced in 2002, the autonomy of cooperative farms and enterprises expanded. The “field management system” was piloted from early 2004 in Suan, North Hwanghae Province and Hoeryong, North Hamgyong Province, but was suspended soon afterward. However, this system is reported to have been implemented widely after the first National Conference of Subworkteam Leaders in the Agricultural Sector was held in Pyongyang in February 2014.

Economic principles behind the field responsibility system are stated as, “under the sub-work team structure, a smaller subworkteam consisting of 2 to 3 families or 3 to 4 people depending on the scale and means of production, is responsible for a specific field or plot (pojon) from planting to harvest stage to inspire farmers with enthusiasm for production by distributing the shares of production in accordance with the output of production planning.”

The newspaper added, “Despite the adverse weather conditions last year, the high grain yield was possible due to implementation of scientific farming methods and field management system to increase enthusiasm of farmers,” and “based on this experience, many cooperative farms across the country will expand subworkteam management system to field management system.”

Director Chi stated, “Since the field management system was implemented, farmers’ labor capacity increased to 95 percent. The planting time for corn and rice that took 20 to 30 days in the past is shortened to 10 to 15 days. In the autumn season, grain threshing that took 50 days is now only taking 10 days. This is changing the farming landscape.”

In addition, the distribution shares for farmers increased as well as the state’s procurement last year. This is attributed to “socialist distribution principles that distributed grains produced to farmers in-kind based on their efforts after excluding a specified amount of grain procured by the state.”

He added, “There are quite a number of farming households that received several decades worth of distribution after a year of farming. There is an increasing number of families with growing patriotism to increase the amount of grain procurement to the state.”

UPDATE 4 (2015-2-6): Media sources report that North Korea experienced a surprisingly good harvest in 2014.

According to the Voice of America:

The GS&J Institute released a report based on statistics from the U.N.’s World Food Programme and Food and Agriculture Organization. Dr. Gwon Tae-jin, who spearheaded the research, wrote that the North harvested 4.98 million tons of crops in 2014.

The FAO recently announced that the North harvested about 5.94 million tons of raw crops last year. The figure from the GS&J Institute is based on how much would be left after processing the raw crops for consumption.

Gwon explained that while the figure is lower than the previous estimate because of the drought in spring, the autumn harvest made up for the lackluster yield earlier in the year.

The report indicated North Korea’s crop harvest plunged from 4.05 million tons in 1995 to 2.57 million tons in 2001. However, the food security situation has improved since 2004, staying around 4 million tons in most years.

In 2011, the figure rose to 4.22 million tons, and when Kim Jong Un became the country’s leader in 2012, it rose to 4.45 million tons. The next year, it was 4.84 million tons.

Gwon said Pyongyang’s efforts to draw manpower to farming and prioritize the distribution of fertilizer and other materials for agriculture is the main reason behind the hike in crop harvest. He added that the new policy of letting farmers freely use a certain percentage of the harvest had also helped the productivity.

In a telephone interview with VOA, Gwon said, “North Korea, which overcame difficulty with international aid in the early 2000s, is now in the process of overcoming another difficulty through its own efforts, rather than aid.”

Despite the slight improvement, however, the North Korean government is not able to meet the minimum needed for food security.

In 2007, when the crop yield was low, Pyongyang was able to feed its people through imports and international aid. From 2008 on, the country has experienced food shortages because of a decline in international aid.

The latest report forecast crop distribution in the North to be lacking by some 80,000 tons, when totaling its crop harvest, imports and international aid.

I have not been able to locate the original UN or GS&J reports (VOA-you should site your statistics, or even better, link to them).

The increase in agricultural production occurred at the same time as a nation-wide drought. Could this be the effectiveness of the 6.28 Measures?

Read the full story here:
Report: N. Korea’s 2014 Harvest Best Since Mid-’90s
Voice of America
2015-2-6

UPDATE 3 (2014-12-20): According to the Pyongyang Times:

Nation set to secure enough water for farming

A long spell of severe drought that hit the country this year lowered the water level of reservoirs and reduced water sources for farming.

As part of the ongoing nationwide drive to meet the challenge and secure enough water for farming next year, cooperative farms in North Phyongan and South Hwanghae provinces are stepping up the repair and construction of reservoirs and waterways and their extension.

North Phyongan Province is focusing on the construction of reservoirs together with the reconstruction of Paengma-Cholsan and Amnokgang waterways.

Builders engaged in the reconstruction of Paengma-Cholsan and other waterways already rebuilt the waterway section in charge and are now laying stones over the surface of the banks.

The province is now carrying on the plans to build the reservoir at the Osong Cooperative Farm in Jongju till April and Hwangpho reservoir in Kwaksan County till June next year.

At the same time, it pushes ahead with the repair of 202 dams, about 600 pools, over 1 000 wells, some 90 tube wells and underground reservoirs to collect as much water as possible for the next year’s farming.

North Hwanghae Province is concentrating on the building of pumping stations to do safe farming by pumping up water from the Taedong River together with that of reservoirs.

After setting an ambitious goal to repair dozens of reservoirs, build dozens of more reservoirs, build and extend hundreds of kilometres of more waterways and construct more wells, tube wells and pumping stations on two stages till March next year, it is pushing forward with them in a planned manner.

Builders of Wangdang Reservoir No. 2 in Singye County are building earth dams successfully.

Songnim City is undertaking a project to draw water from the Taedong River into Inpho, Chongun and other ris. Notable achievements have been made in the building of foundations and waterways in a few days since it began.

The construction of pumping stations and waterways is under way in Hwangju County to draw water from the Taedong River into hundreds of hectares of paddy and dry fields of the Sunchon Cooperative Farm which was severely hit by drought this year and in Sariwon to use water of the Jaeryong River on the Migok Cooperative Farm.

UPDATE 2 (2014-11-7): According to the Daily NK:

Market rice prices have been dropping dramatically in recent days, the Daily NK has learned. Given reports of an unfavorable harvest due an absence of fertilizer and drought conditions early in the season, the news has come as a surprise to many residents. In turn, this has led to customary bouts of speculation and rumor.

“The price of rice has plunged to 4,500 KPW [0.54 USD] per kg in the markets,” a source in Pyongyang told the Daily NK on Thursday. “The harvest is underway and freshly harvested rice is pushing down prices.”

“This year, not only collective farms but also individuals planted a lot of rice,” he elaborated. “It seems like the rice from these private plots is now in the marketplace.”

As of mid-October, a kilo of rice was fetching 6,800 KPW [0.82 USD] in public markets, according to research conducted by the Daily NK in locations across North Korea. Later in the month it fell to 5,000 KPW [0.60 USD], and has now reached the 4,500 KPW [0.54 USD] mark.

“Rice is going for roughly 4,800 KPW [1.80 USD], and the price here continues to fall,” a source based in the isolated border city of Hyesan said. “People have been saying the harvest this year has not been that good, but there’s definitely a lot of rice in the markets now.”

The going rate for corn has also fallen in Hyesan, the source explained, dipping to 1,700 KPW [0.20 USD] in early September. The price of corn usually tracks that of rice.

Meanwhile, in Pyongyang residents eager to determine the cause of the sudden drop have been speculating “that rice from Russia has been brought in,” the source revealed. There have even been hard numbers floated in reference to the rumor. To wit, “The state requested 5,000 tons because of the bad harvest.”

The source in Hyesan explained that, as usual, “grain units” have been officially dispatched to oversee the distribution of the harvested rice, but that bribes are sufficient to keep them from regulating rice sold in markets.

The term “grain unit” refers to 20-30 members of the Worker and Peasant Red Guards, one of North Korea’s large reserve military forces consisting of men between the ages of 17 and 60 and some unmarried women, who set up checkpoints along main transportation routes in order to govern the movement of rice and corn harvested on collective farms and individual farm plots. However, this type of monitoring has long been an ineffective formality due to the prevalence of corruption.

Despite the brief spike surmised to stem from these factors, the fall in rice prices is not expected to last long. “There may be a lot of rice in the markets, but the harvest was bad so the supply will gradually decrease,” the source predicted. “Unless the state actively engages with the issue, prices will gradually climb back up to last month’s level.”

There is also the likelihood that vendors with rice in stock may decide not to bring out their supplies if the price stays low, hoping to stick it out and reap higher profits later. According to the source, “If this were to continue, the prices would continue to climb, potentially making things difficult for residents.”

Rice prices in the North tend to be affected by fluctuations in exchange rates, but more recently they have moved seemingly without regard for currency prices. Currently in Yangkang Province, 1 RMB [0.16 USD] trades for 1,350 KPW, a 50 KPW increase from September, yet the price of rice has actually fallen.

Read teh full story here:
Surprise Rice Price Fall on Harvest News
Daily NK
Lee Sang Yong
2014-11-7

UPDATE 1 (2014-10-12):  According to Yonhap:

North Korea’s rice production this year is expected to be about the same as last year, a U.N. report said Sunday, reinforcing forecasts that grain production will not fall despite a severe drought in the country.

Rice production this year is estimated at 1.9 million tons, the same level as last year, while maize and pork production are expected to increase slightly to 2.3 million and 114,000 tons, respectively, according to the October edition of Food Outlook, a biannual publication of the U.N. Food and Agriculture Organization (FAO).

In May, the FAO estimated the same production levels for North Korea, with the exception of pork, which was forecast at 113,000 tons.

With this year’s rice production, each North Korean is expected to eat 67.8 kilograms of rice between this fall and next summer, according to the report.

North Korea has long been a recipient of international food aid due to shortages caused by droughts, flooding and poor economic management.

However, the FAO representative in North Korea recently said in an interview that the country is projected to produce 6 million tons of grain this year and attain self-sufficiency in food within three to four years.

You can download the UNFAO report here (PDF).

Read the full story here:
N. Korea’s rice production to remain at same level as last year: U.N. report
Yonhap
2014-10-12

ORIGINAL POST (2014-7-25): According to the Daily NK:

Market rice prices in North Korea held steady throughout the “farming hardship period” in April and May; however, prices have recently started to rise. In towns near the border, including those in the provinces of Yangkang and North Hamkyung, rice has reached 6,000 KPW per kilo, inside sources report.

“From the end of last week, the cost of rice began to rise, reaching 6,000 KPW,” a source in North Hamkyung Province reported to Daily NK on the 25th. “All five of the markets in Hyesan, including Yunbong, Masan and Hyesan, have seen the same sudden leap.”

“People are used to small fluctuations in rice prices, but they don’t often see a quick 1,000 KPW increase,” she went on.

A source in Yangkang Province confirmed the increase. “Just a few days ago, rice was 5,000 KPW, so imagine my surprise when I went to buy it yesterday,” she said. “It seems that even the sellers don’t know why it happened.”

“They don’t need to be sure why prices have risen; simply, if one raises the price of her rice, the rest will follow suit,” she added.

The source went on to say that she examined conditions across the city on Daily NK’s behalf, checking markets in areas that could have been in a different condition. “Because miners are receiving their rations, I thought maybe prices around mines would be stabler,” she reported, “but in Masan, one of those areas, it was also 6,000 KPW.”

Last month, rice cost 4,300 KPW in Pyongyang, 4,500 KPW in Sinuiji and 5,050 KPW in Hyesan. Moreover, prices actually went down last week, to 4,250 KPW, 4,380 KPW and 4,800 KPW respectively. But now they have increased by 1,000 KPW within a week.

Daily NK sources speculate that the reason for the sharp increase is due to reduced distribution of rice and below-average yield of early new potatoes. Of course, April and May are called the “farming hardship period” for a reason; in other words, supply-side limitations could simply be filtering down to the retail market.

According to the source, local people are concerned that prices could rise to 7,000 KPW, the high point reached during the mourning period for Kim Jong Il at the start of 2012. However, others are less worried, saying, “Since fall is right in front of us, prices won’t rise any more.”

Although rice prices usually vary in accordance with fluctuations in currency exchange rates, recent ups and downs have not followed this pattern. Despite the fact that the North Korean Won is currently 30 KPW stronger per Chinese Yuan higher than it was last month, rice prices have sharply increased.

“In fifteen days, people will harvest barley and have corn that was planted earlier. So rice prices won’t go up any more,” the source in Yangkang Province said. However, the source in North Hamkyung Province voiced the concern that “flooding from the monsoon may influence yields of barley, corn and other grains.”

Analyzing the situation, Kwon Tae Jin of GS&J Institute said, “Rice is never abundant in Hyesan; it must have been affected by drought in eastern parts of China. Travel restrictions put in place to prevent the spread of diseases may have contributed to the increase as well.”

“Once the corn is harvested in August, prices will stabilize for a while. But a poor yield overall could cause them to start rising later,” he predicted.

Read the full story here:
Markets See Quick Spike in Rice Prices
Daily NK
Kang Mi Jin
2014-7-25

Institute for Far Eastern Studies (IFES)

It appears that North Korea has drastically increased Chinese grain imports in the months of July and August compared to the first half of 2014. Up until June, North Korea had imported a total of 58,387 tons of grain from China at nearly 10,000 tons per month. However, in July and August, North Korea imported 19,559 tons and 25,217 tons of grain, respectively. August showed the largest amount of grains imported per month so far this year, and the combined figures of July and August are equal to an astonishing 77 percent of the total amount of grains imported in the first six months of 2014.

The large increase in grain imports beginning in July is interpreted as an early move by North Korea to secure grain supplies for the winter after a double-crop harvest in June which failed to reach expected quantities, and a lackluster fall harvest compared to the previous year.

The grains North Korea has imported so far this year consist of flour (46.6 percent), rice (42.3 percent), and corn (8.9 percent), with flour and rice being the main imports. Compared to 2013, corn imports are down, but have been replaced by an increase in rice imports. Despite the sharp increase in grain imports during recent months, it appears that the overall food situation in North Korea has actually improved. North Korea imported a total of 103,163 tons of grain from January to August of 2014, a mere 59 percent of the 174,020 tons of grain imported during the same time period last year.

Chemical fertilizer imported from China up until August of this year has also decreased by an estimated 37 percent compared to the previous year, from 183,639 tons to 115,337 tons. This decrease in imported fertilizer is thought to be due to improvements made in fertilization equipment, leading to an overall higher rate of operation. It appears that the total amount of fertilizer used by North Korea this year should not differ greatly from the amount used last year, and fertilizer shortage is not expected to cause a major decrease in grain production.