North Korean Economy Watch

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-11-17-1
11-17-2008

North Korea’s capital city of Pyongyang appears to be getting a facelift. The (North) Korean Central Broadcasters has reported that a city beautification project is underway in Pyongyang.

An apartment-erecting crane is building a new skyscraper, while construction has been restarted on the 16-year old remains of the shell of the Ryukyung Hotel as large-scale construction equipment and barges crowd the river as piles of construction materials can be found at each construction site.

Pyongyang insiders report that efforts getting underway in this anniversary year marking 60 years since the founding of the country are part of an effort to make Pyongyang a completely new city by 2012, when the North will mark the 100th birthday of its eternal president, Kim Il Sung.

Pyongyang is being developed as a ‘showcase capital’ for international visitors to the poverty-stricken North, as the North Korean people refer to Pyongyang as the ‘capital of the revolution.’

Recently, South Korean representatives from organizations providing aid to the North have reported being been surrounded by new construction of hotels and other buildings and the refurbishment of older buildings such as the Pyongyang Grand Theater.

What is curious is that the origin of the capital needed for these large-scale construction projects appears to indicate growing investment from foreign enterprises. The Ryukyung Hotel construction is reportedly being supported by a United Arab Emirates (UAE) company.*

A South Korean entrepreneur recently in Pyongyang quoted a Pyongyang official as saying, “The Ryukyung Hotel will be complete within three years,” and that the Daedong River Hotel construction was almost in the finishing stages with the help of foreign investment.

In January of this year, the Egyptian wireless communications company Orascom announced it would invest 400 million USD in order to construct the North’s first wireless communications network.

Also, North Korea’s foreign trade appears to have grown this year, especially because, as energy demand has sharply increased, the North’s export of mined materials to China appears in early calculations to have expanded considerably.

* NKeconWatch: This is the first I have heard about a UAE firm.  Previously, discussion centered only around Orascom.

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-11-3-1
11/3/2008

The Daily NK has reported that the use of bicycles for business and transportation around the city of Pyongyang is becoming more and more commonplace, with 7 out of 10 households owning a bike, despite the fact that the cost of a bicycle in the capital city has doubled in the last twelve months alone.

According to North Korean defectors, until the early part of the 21st century, bicycles were the most sought-after purchases, with only 30~40 percent of families able to buy them.

According to a source in Pyongyang, “If you go to a [market] these days, you’d see that people who sell or purchase goods mostly use bicycles,” adding, “With the exception of those houses with extremely difficult situations, most households have a bike.”

The source explained that the growing use of bicycles is not due to improvements in the lives of the people, but rather, due to a shift in mentality. In the past, someone wishing to purchase a bike would first have to save up money for it, while today they think they can borrow the money, even at high interest rates, and then repay the loan through business profits.

The Daily NK explains, “With the ubiquity of [market] trading and the increase in business competition, bicycles have become must-have items.”

In Sinuiju, as well, bicycles have become a necessity for traders. A source there reported, “In farmlands that are distant from the [market], bicycles are an important means of linking to city markets. The merchants can triple or quadruple their profit, compared with those that don’t own bicycles.”

Most traders with bicycles take orders from those living in farming villages, fill the orders in city markets, then barter the items in the villages for vegetables and grains which they then turn around and sell in markets for a profit. Competition is stiff as traders follow price differences between the markets in order to squeeze out even a 100 won profit.

Read two recent stories on North Korea’s bicycle culture here:
70% of Households Use Bikes
Daily NK
Jung Kwon Ho
10/30/2008

People’s Safety Agency Targeting Women Cyclists
Daily NK
Jung Kwon Ho
11/6/2008

The Asia Sentinel offers an update on Pyonghwa Motors’ production and sales numbers:

Does it make economic sense to build or invest in a car factory for a country with 23 million people but fewer than 30,000 vehicles, a city where cars are so scarce that in the warmer months, traffic ladies swinging their stop signs act in place of electric lights, where hardly anybody knows how to drive? And why is Sun Mymung Moon, owner of an international business empire and a virulent anti-communist, investing in North Korea?

Pyeonghwa Motors invested around US$55 million to build the factory on a one-time rice paddy near the port city of Nampo, about 50 kilometers southwest of Pyongyang. In 2003, the JoongAng Daily quoted an executive from the Seoul-based Pyeonghwa, saying he expected the factory, with capacity to build 20,000 cars a year, to eventually turn a profit. However, a spokesman based in Seoul says Pyeonghwa has produced only 2,000 cars and pickup trucks in their first five years of operation.

How many cars have they actually sold? For North Korea, any statistics, much less accurate ones, are “very difficult to come by,” said Erik van Ingen Schenau, an Asian car analyst and author of the book “Automobiles Made in North Korea.” He quotes a French newspaper article that claims the factory sold around 400 vehicles, including SUVs, pickups, and sedans, in 2006.  He estimates the factory sold anyone from 400 to 1000 cars in 2007 and 2008, including the cars they exported to Mekong Auto, a Vietnam-based Moon company, and including the vehicles that they produced with the Shenyang-based China Brilliance. 

The Pyeonghwa factory produces cars with names such as Whistle, Cuckoo, and Three Thousand Li, which refers to the national territory of Korea, both North and South peppering the empty streets of Pyongyang, “You see these cars a lot, especially the Cuckoo,” said Simon Cockerell, general manager of Koryo Tours, one of the few western tour companies licensed to operate in North Korea. 

“It took drivers some getting used to because they were used to driving Japanese cars, with steering wheels on the right,” Cockerell said. 

Like most items produced in North Korea, the Pyeonghwa vehicles are not known for their quality. “They are probably nearly all hand-assembled, and based on a model from a factory in China that does not have a good reputation,” van Ingen Schenau said. “They make cars that no one is interested and in that they cannot export to Japan or South Korea. Maybe it is a prestige item to have a car factory in the country, but it does not seem to have worked out at the moment.”

The Whistle, based on the Fiat Siena, is one of the Pyeonghwa vehicles featured on billboards. It sits on a field next to a superimposed image of the Pyongyang Arch of Triumph. Built to commemorate Kim Il Sung and the Korean nation’s resistance to the Japanese occupation, the arch stands 60 meters tall, more than 10 meters taller than its model, the Arc de Triomphe in Paris. A boy stands next to the car one hand holding a trophy, while waving a hand, a smile on his face and a medal around his neck.  The billboard reads: “Whistle. A Strong and Beautiful Automobile.”

It is important to remember the target audience of the billboard. It is not only for the few thousand European tourists who visit the country for six days at a time, or the few hundred businessmen and embassy staff who live in one of the few foreigner hotels isolated from the city. The billboards also exist for the residents of Pyongyang, to show them that their country, despite the harm done to it by the entire capitalist world, is still able to go its own way and produce a strong and handsome car.

The full article can be found here:
North Korea in the Slow Lane
Asia Sentinel
Isaac Stone Fish  
10/31/2008

Although many would assume that North Korea’s economic isolation would insulate it from recent global financial instability, this does not appear to be the case.  According to the Wall Street Journal:

North Korea does little trade with the rest of the world — about $2 billion annually — and now it’s being hurt by lower prices paid by its biggest trading partner, China, according to report from a South Korean institute that specializes in North Korea research.

In recent weeks, the Chinese companies that buy North Korean ores and minerals like zinc, which are some of its biggest exports, have slashed the prices they’re willing to pay. That’s forced some North Korean mining firms to halt production and even produced a drop in the smuggling of ore and scrap, trade that’s illegal in the North but is believed to play an important role in supporting the impoverished country.

Lim Eul-chul, a professor at the Seoul-based Institute for Far Eastern Studies who wrote the report issued Thursday, said he learned about the commodity-trade problems from North Koreans doing business in China

“Chinese companies that are affected by global trends don’t want to pay as much as they used to for North Korean raw materials or resources,” Mr. Lim said. “Thus, North Korean merchants can’t make profits from trade.”

The price pressure exerted by Chinese traders on North Korean companies is in line with the broader drop in commodity prices in recent months. But it has imposed new burdens on North Korea in what is shaping up to be a terrible year there.

Official North Korean media have published reports saying the global financial crisis will ruin the U.S. and other industrial powers. But in the report, the Institute for Far Eastern Studies said “North Korean people are becoming very anxious over the possibility of the international economic crisis having a long-term impact.”

Below is the IFES report mentioned in the Wall Street Journal:

Global Financial Crisis hits DPRK economy by way of China 
NK Brief No. 08-10-29-1
10/29/2008

Contacts within North Korea are reporting that the North Korean people are becoming very anxious over the possibility of the international economic crisis having a long term impact as not only exports have dropped, but even cross-border smuggling is taking a hit.

Recently, as Chinese traders have more than halved the price of North Korea’s main export goods such as minerals and scrap iron, North Korea’s markets and even construction industry have felt the blow.

As North Korean state-run media outlets report the current financial crisis as the ruin of the United States and other capitalist world powers, they report as if North Korea were completed unaffected by it. On the 20th, the Rodong Sinmun emphasized that the the U.S.’ financial management system was ‘like a candle in the wind.’

However, it has been leaked that since last week, businesses in North Korea have been shutting their doors as a result of the financial crisis. In particular, the value of the North Korean Won has dropped sharply against the Chinese Yuan, and combined with Chinese traders’ reluctance to purchase North Korean goods and calls to lower prices, very little business is being conducted. This has led mines in Hyesan to halt exports of lead and zinc, and with the drop in legitimate exports, of course smuggling has dropped of, as well.

Furthermore, as raw materials from China are not being supplied, construction projects in the North are also grinding to a halt. 

(UPDATE) Barbara Demick reports in the Los Angeles Times:

Despite efforts to keep North Korea’s extreme poverty out of view, a glance around the countryside shows a population in distress. At the root of the problem is a chronic food shortage, the result of inflation, strained relations with neighboring countries and flooding in previous years.

Aid agencies say the level of hunger is not at the point it was in the 1990s, when it was defined as a famine, although they have found a few cases of children suffering from kwashiorkor, the swollen belly syndrome associated with malnutrition. Mostly what they are seeing is a kind of collective listlessness — the kind shown by the people on the streets of Nampo.

“Teachers report that children lack energy and are lagging in social and cognitive development,” reported a group of five U.S. humanitarian agencies in a summer assessment of the food situation. “Workers are unable to put in full days and take longer to complete tasks — which has implications for the success of the early and main harvests.”

Hospitals complained to aid workers of rising infant mortality and declining birth weights. They also said they were seeing 20% to 40% more patients with digestive disorders caused largely by poor nutrition.

The U.N. World Food Program reached similar conclusions. In a recent survey of 375 households, more than 70% were found to be supplementing their diet with weeds and grasses foraged from the countryside. Such wild foods are difficult to digest, especially for children and the elderly. The survey also determined that most adults had started skipping lunch, reducing their diet to two meals a day.

These are some of the same signs that augured the mid-1990s famine, which killed as many as 2 million people, 10% of the population.

“The current situation hasn’t reached the famine proportions that it did during the 1990s. Our hope and goal is to keep it from going over the precipice,” said Nancy Lindborg, president of Mercy Corps, one of the U.S. aid organizations working in North Korea. “You have a number of factors that have conspired to create a really tough food situation.”

In Pyongyang, the capital, residence in which is reserved for the most politically loyal North Koreans, plenty of food is available on sale. A grocery inside the Rakwon Department Store carries Froot Loops and frozen beef. At open-air markets, you can find mangoes, kiwis and pineapples

But the products are far too expensive for most North Koreans, whose official salaries are less than $1 a month — 60 to 75 cents monthly for the workers surveyed by the World Food Program. And the farther you get from Pyongyang, the poorer are the people.

Nampo is 25 miles southwest of the capital, on the Yellow Sea. It used to be a thriving port city, but nowadays its harbor is used mostly for shipments of humanitarian aid. On a weekday morning, many people sit along the sidewalk watching the few cars pass by. They appear to be unemployed or homeless.

North Koreans say that the food situation is improving and that a good harvest is expected this autumn, as a result of improved weather conditions. The last two years were disastrous because of heavy flooding.

“There was a problem before, but it is getting better. We expect a bumper harvest,” said Choe Jong Hun, an official of the Committee for Cultural Relations With Foreign Countries.

North Korea experts, however, are skeptical. “One good harvest is not really going to alter the picture,” said Stephan Haggard, a UC San Diego professor who has written widely on the North Korean famine.

The World Food Program and the U.S. aid organizations are providing food for the most vulnerable, including children and pregnant women. A U.S. ship carrying more than 27,000 tons of bulk corn and soy is slated to arrive in Nampo within days.

International agencies have been trying to raise money to expand their food aid to the general population. Many urban North Koreans are dependent on food rations, which have dwindled to 150 grams a day, or a little more than 5 ounces.

Even in Pyongyang, one can see signs of scarcity behind the facade of what is supposed to be a showcase capital. Foreign residents say they have seen homeless children in the last few months — a notable sight in a totalitarian country where nobody is supposed to wander away from their legal residence. (Los Angeles Times)

Read the full Wall Street Journal articles below:
North Korea Feels Effects of the Crisis
Wall Street Journal
Evan Ramstad and Sungha Park
10/31/2008

North Korean facade of self-sufficiency can’t hide signs of hunger
Los Angeles Times
Barbara Demick
11/2/2008

Nick Bonner, head of Koryo Tours and producer of three DPRK documentaries, will be in Washington Wednesday for a screening of his most recent film, Crossing the Line, at John’ s Hopkins University.  (NkeconWatch: I will be attending and I hope to see you there)

Event details:
Wednesday, October 29th at 6:00pm
Opening Reception at 5:30pm
Kenney Auditorium at Johns Hopkins University
1740 Massachusetts Ave., NW
Washington, D.C. 20036

Click here to register

You may order a copy of the film here

About the film
In 1962, a U.S. soldier guarding the DMZ deserted his unit, walked across the most heavily fortified border on earth and defected to North Korea. Crossing the Line, a documentary directed by Daniel Gordon and co-produced by Nicholas Bonner, goes inside North Korea to tell James Joseph Dresnok’s story for the first time. Allowed unprecedented access by North Korean authorities, the filmmakers reveal the full story of his defection, as well as the political intrigue and personal passions that have kept him behind the Cold War’s last frontier ever since.

UPDATE 3: Stephan Haggard and Marcus Noland chime in with “Famine in North Korea Redux”. 

UPDATE 2: IFES notes that Pyongyang is acknowledging the food shortage:

DPRK stressing unaided resolution to food crisis
Institute for Far Eastern Studies (IFES)
NK Brief No. 08-10-24-1
10/24/2008

On October 22, the North Korean Workers’ Party newspaper, Rodong Shinmun, reported on the international food crisis, and stressed, ‘The only things we can trust in the face of today’s severe food crisis are the efforts and self sacrifice of our blood, sweat, and tears,’ emphasizing an autonomous resolution to the food problem.

According to the paper, Kim Jong Il stated, “Today in our country, the agricultural problem is a very important problem that must be decisively resolved in order to build a strong and prosperous socialist nation.”

In particular, the paper stressed the urgency of the food problems, reporting, “Rice and food are of the utmost importance, like a lifeline to us,” while admitting that fertilizer, agricultural chemicals, fuel, and other essential items were in short supply, but adding, “the basis of agricultural production is not physical conditions, but determination.” By emphasizing that ‘determination’ would be key to solving the problem was a way of indirectly admitting that the government did not have the means to provide the supplies necessary to increase agricultural output.

The tone of the article conveys the idea that as the food crisis worsens around the world, international food aid to North Korea is being reduced, causing the worsening of the food crisis in the DPRK. It would appear that the government is trying to calm the people’s discontent by blaming outside influences, while at the same time mobilizing the efforts of North Korean farm workers.

While all of North Korea’s media sources have been repeatedly reporting the current global food crisis, they have emphasized that most others do not have rice to give, and those that do are not giving it, so that the North’s domestic food shortages need to be resolved by the North Koreans themselves.

UPDATE: Jess adds some great statistics in the comments. 

The Daily NK reports on the Ministry of Unification’s claims about the DPRK’s food situation.

ORIGINAL POST:We are getting some mixed messages on the state of the DPRK’s agricultural production and access to food….

Last month, IFES and the Daily NK reported that the DPRK was expecting a decent harvest this fall since the country’s farmlands were spared the seasonal flooding of the previous years:

A source involved in China-North Korea trade at a company in Shenyang was quoted on the 30th as saying, “[North Korean] rice traders are expecting this year’s food production to be considerably improved compared to last year,” and, “This year, with no large natural disasters, rice paddies and crop fields are doing well, and crop production will probably be much greater than last year.”

In a related matter, one North Korean insider reported, “With the [North Korean] food situation, no one is doing as well as the wholesalers,” and, “As the fall harvest season has come, traders have come by farms in each province and reported that rice and corn harvests are very good.”

The source went on to say, “This year, farming was not difficult, so as autumn passes, the market price of rice looks likely to fall. The price of corn will fall even faster, hitting the 1000 won per kilogram level by mid October.” In fact, by the end of this year’s fall harvest, the price of food is expected to return to pre-shock levels. Currently, rice is selling for 2200 won and corn for 1300 won per kilogram in North Korean markets. (IFES)

This week, however, the UN World Food Program sent the opposite signal, highlighting the acute food shortages they are seeing:

The UN food agency said Thursday that millions of North Koreans face a food crisis, but a South Korean official said that Seoul has not decided whether to respond to a request for food aid to the communist country.

“Some areas of the northeastern provinces in the country … have become extremely vulnerable, facing a situation of a humanitarian emergency,” Jean-Pierre de Margerie, the WFP’s country director for North Korea, said at a forum on North Korea.

Around 2.7 million people on North Korea’s west coast will also run out of food in October, the WFP said in a report released Tuesday.

The food shortages have forced many North Koreans to go to hills to collect wild food to complement their daily rations and reduce the number of meals per day to two, said de Margerie.

Asked if North Koreans face starvation, he said his agency hasn’t seen any evidence of starvation but said, “We have reached (a) very critical level and we shouldn’t wait for another starvation before ringing the alarm bells.”

The WFP also said the food shortages have especially affected urban households in areas with low industrial activity due to higher food prices, reductions in public food rations and lower employment.

Donor countries should back us up … Now is (the) time to act,” de Margerie said. (AP via New Zealand’s 3 News)

According to another report in the Times of London:

On Tuesday, WFP announced that some 2.7 million people on North Korea’s west coast will run out of food in October, and that, because of the worsening food situation, it was increasing from 1.9 million to 6.5 million the population which it seeks to help with food aid.

“Some areas of the north-eastern provinces in the country have become extremely vulnerable, facing a situation of a humanitarian emergency,” the organisation’s programme director for North Korea said. “We have reached a very critical level and we shouldn’t wait for another starvation before ringing the alarm bells.”

Additionally, UN’s point man on North Korean human rights, Vitit Muntarbhorn, has gone so far as to claim North Korea is clamping down on mobile phones and long distance telephone calls to prevent the spread of news about a worsening food crisis (Times of London). 

The South Korean Ministry of Unification, however, is publicly disputing the UNWFP’s numbers:

A South Korean official has disputed the U.N.’s assessment that millions of North Koreans are at risk of food shortages, saying Friday that the impoverished communist country does not appear to face a “serious” food emergency.

Unification Ministry spokesman Kim Ho-nyeon said that North Korea’s harvest this year is not bad, citing South Korean civic officials who recently visited the country.

“We believe that the North’s food condition is not in a serious crisis situation,” Kim told reporters, adding that the weather has been good and there were no heavy rains like the ones that devastated the North last year.

His comments came a day after the U.N. food agency said millions of North Koreans face a food crisis and called on donor countries, including South Korea, to provide urgent food aid.

From GPI:

For many entrepreneurs, North-Korea is a relatively unknown trade destination. For this reason, from 28 September to 4 October 2008, a Dutch economic delegation investigated the business climate in this country. You may download a short report of this unique mission here.  Because of its success, another mission will be organised in 2009.
  
The participants noticed trade and investments in several fields, including textile and garments, shipbuilding, agribusiness, logistics, mining, animation and Information Technology. The findings of the mission will be presented at the seminar “Doing business with North-Korea”, which will take place in The Hague in spring 2009. A videofilm about the tour will be shown as well.
  
If you are interested in business opportunities in North-Korea, or in joining a seminar or trade mission, please contact us for further details. It is also possible for us to give presentations at business seminars abroad, in order to present the findings of the Dutch mission in more detail.
 
With best regards,
Paul Tjia (sr. consultant ‘offshore sourcing’)
GPI Consultancy, P.O. Box 26151, 3002
ED Rotterdam, The Netherlands
E-mail: paul@gpic.nl
tel: +31-10-4254172 
fax: +31-10-4254317
Website: www.gpic.nl
report_dutch_trade_mission_to_north_korea.pdf

Korea Business Consultants has published their latest newsletter.  You may download it here.

Topics covered include:
Six Party Talk progress
South Korea/Russia gas deal
More factories opening in the DPRK
UN survey of DPRK population
Summit pledges
Pyongynag hosts autumn trade fair
KEPCO to Abandon NK Reactor Gear
Trust Company Handling DPRK’s Overseas Business
DPRK-Russia Railway Work Begins
ROK Opposition Calls for Renewed Cooperation with DPRK
ROK Delegation Leaves for DPRK
ROK Aid Workers Leave for DPRK
“ROK Makes US$27.6 Billion from DPRK Trade”
“Kaesong Output Tops US$400 Million”
DPRK, Kenya Set Up Diplomatic Ties
Medvedev Hails DPRK Anniversary
Claim to North Korean rock fame
International Film Festival Opens
Ginseng

UPDATE: According to Yonhap, the aid shipment has left Virginia:

The latest food aid from the United States to North Korea, comprised of 25,000 tons of corn and other grains, has made its departure from the U.S. state of Virginia, a U.S. radio station reported Saturday.

The Mary-Ann Hudson, a U.S. cargo vessel carrying 20,000 tons of corn and 5,000 tons of beans, left from Norfolk, Virginia, on Friday and is scheduled to arrive at North Korea’s western port of Nampo on Nov. 18, Radio Free Asia reported, citing a spokesperson of World Vision.

In June, the U.S. started shipping the first batch of some 500,000 tons of food aid, which it pledged to deliver to the North over a year-long period, through the World Food Programme (WFP).

Previous shipments were organized by the WFP, but the latest round is conducted jointly by relief organization World Vision and four other relief agencies, according to the spokesperson.

Since the late 1990s, when an estimated 1-3 million North Koreans starved to death, the North has prioritized its agricultural sector while accepting foreign aid to help feed its population of 23 million people. (Yonhap, Latest U.S. grain shipment to N.K. departs, 10-19-2008)

ORIGINAL POST: Press release from Mercy Corps (10/16/2008):

A fourth shipment of U.S. food aid for the Democratic People’s Republic of Korea sails this week to be distributed by five humanitarian agencies delivering urgent assistance to North Koreans suffering from severe food shortages. The commodities are scheduled to arrive before winter.

More than 894,000 of North Korea’s most vulnerable people – mainly children, pregnant and nursing mothers, and the elderly – will receive daily rations from this shipment of 25,060 metric tons of bulk corn and soy. The distributions are conducted in two North Korean provinces, led by Mercy Corps with World Vision as co-lead. Samaritan’s Purse, Global Resource Services and Christian Friends of Korea are the partner agencies.

“This new shipment of food will bring critical sustenance to many hungry people in North Korea,” said Nancy Lindborg, president of Mercy Corps. “We are very pleased with our success in getting food to needy people for the past few months, and are confident that efficient food distributions will continue into the winter.”

On arrival at the western port of Namp’o in the latter half of November, the food will be rationed to recipients through public distribution centers, orphanages, school, hospitals and nurseries in Chagang and North Pyongan Provinces. The program, funded by the U.S. Agency for International Development’s (USAID) office of Food for Peace, is the first U.S. food assistance program for North Korea since 2000.

“With North Korea’s people in a precarious situation facing low food stocks and the onset of a harsh winter, our primary concern is the country’s most vulnerable groups, children and mothers especially,” said George Ward, senior vice president of international programs for World Vision in the U.S. “We are moving urgently to ensure this assistance reaches those in most need at a critical time.”

The NGO partnership is on track to distribute 100,000 metric tons of the food aid during the year-long program, reaching 895,000 people, while the World Food Programme (WFP) is distributing another 400,000 metric tons in U.S. assistance. This week’s shipment is the first one entirely allotted for the NGO partnership to dispense.

The lack of food in North Korea became severe this year as floods devastated harvests, China erected barriers to food exports, and prices skyrocketed globally for staples such as rice and maize. In a June 2008 assessment, a team of experts from the partner agencies confirmed findings of food shortages and acute needs in North Korea. Malnourishment was prevalent, rations were reduced, and food stocks were dwindling. Separately, the WFP projected a shortage of 1.66 million metric tons of food, relative to the population’s needs.

The U.S. food assistance program includes clear provisions for monitoring distributions and conducting ongoing needs assessments. The partnership of humanitarian agencies has a staff of 16 based in the DPRK for the duration of the program to monitor activities continually and conduct random visits to distribution points.

Institute for Far Eastern Studies (IFES)
NK Brief No. 08-10-7-1
10/17/2008

It appears that many in North Korea are expecting an exceptionally large increase in this years’ harvest. According to a report issued on September 30 by Daily NK, a South Korean organization working for North Korean human rights, rice and corn market traders and those involved in food distribution are saying that grain harvests this year are significantly larger than last year, that by the end of the harvest season in November, North Korea’s food shortage crisis will be considerably eased, and that the price of rice will stabilize as well.

A source involved in China-North Korea trade at a company in Shenyang was quoted on the 30th as saying, “[North Korean] rice traders are expecting this year’s food production to be considerably improved compared to last year,” and, “This year, with no large natural disasters, rice paddies and crop fields are doing well, and crop production will probably be much greater than last year.”

In a related matter, one North Korean insider reported, “With the [North Korean] food situation, no one is doing as well as the wholesalers,” and, “As the fall harvest season has come, traders have come by farms in each province and reported that rice and corn harvests are very good.”

The source went on to say, “This year, farming was not difficult, so as autumn passes, the market price of rice looks likely to fall. The price of corn will fall even faster, hitting the 1000 won per kilogram level by mid October.” In fact, by the end of this year’s fall harvest, the price of food is expected to return to pre-shock levels. Currently, rice is selling for 2200 won and corn for 1300 won per kilogram in North Korean markets.

The reason harvests are expected to be more abundant this year is that the North has not suffered from flooding, as it had for the past several years in a row. Therefore, the government has called on the people to take care not to let any grain go to waste as harvesting is already in full swing in Hwanghae and South Pyungan provinces.

North Korean food wholesalers have become the suppliers of rice for markets since the government ceased to ration foodstuffs. They now contract with farms, paying in advance of harvest seasons so that the farms can use the funds to purchase fuel and other supplies necessary for preparing and transporting the food.

Because these traders personally visit the farms to predict harvests and set prices, the information is considered to be relatively accurate. These traders were also the first to predict the jump in prices earlier this year, warning of shortages even before last year’s fall harvest.