North Korean Economy Watch

UNFAO
4/21/2005

North Korea (DPRK) is applying knowledge gained from a forestry project on sustainable development of upland water catchments and use of marginal agricultural land to help reduce soil erosion, protect natural resources and increase agricultural output in the country, FAO said today.

“In a country that largely depends on agriculture for self-sufficiency and has seen its agricultural production devastated by floods and droughts in the recent past, an integrated and participatory approach to watershed management is essential,” said Thomas Hofer, an FAO forestry expert.

“Applying watershed management throughout the country, planting trees in the uplands and developing integrated approaches to the use of natural resources will help diminish soil degradation and the dangers of downstream sedimentation,” Hofer said.

Trees help retain water in the soil, preventing water from flowing downstream all at once during heavy rains and keep moisture in the soil during low rainfall. Their roots also cling to the soil, making it more difficult for soil to erode.

Forests, soil erosion and agricultural output

Soil erosion and sedimentation from floods and droughts between 1994 and 2000 have caused massive destruction and reduced the country’s agricultural output in the last decade. In 1995 and 1996 alone, 16 percent of its arable land was damaged by floods The floods also destroyed irrigation and transportation infrastructure as well as 30 out of 90 tree nurseries.

To compensate for the drop in agricultural output, forests have been extensively exploited and converted into agricultural land on steep slopes of marginal lands, which are vulnerable to soil erosion. Forests were also felled for fuelwood and to earn foreign currency from the sale of forest products.

As a consequence, one quarter of North Korea’s non-agricultural land on hills and mountains is bare today.

Tree nurseries and training

To put an end to this vicious cycle and offset the progressively diminishing forest quality and agricultural output, in 2001 FAO launched at the request of the government a watershed management project to reverse degradation of upland resources by addressing the decline of natural forest cover.

FAO has also helped the government to analyze the situation of upland resources, to collect data on forest land degradation and to identify measures to conserve and develop forest and other natural resources. It has rehabilitated damaged nurseries and established new ones for reforestation. Two small-scale pilot and demonstration sites for long-term management of watersheds have been established and country people have been trained to apply their newly-gained knowledge from the sites for replication elsewhere.

Based on the experience of the project, North Korea is now developing a watershed management plan for the Taedong River, which flows through the capital, Pyongyang.

“By applying elsewhere what we have learned from the pilot sites, we hope to see sustainable use of natural resources and greater agricultural output in the country,” Hofer said.

UNFAO
11/23/2004

Despite its best harvest in ten years, the Democratic People’s Republic of Korea (DPRK) will post another substantial food deficit in 2005 and require external aid to support more than a quarter of its 23.7 million people, two United Nations agencies said today.

A report by the Food and Agriculture Organization (FAO) and the World Food Programme (WFP) projected domestic cereals availability in the 2004/05 marketing year (November-October) at 4.24 million tonnes, including milled rice and potatoes – a 2.4 per cent increase on 2003/04.

However, it warns that insufficient production, a deficient diet, lower incomes and rising prices mean that 6.4 million vulnerable North Koreans – most of them children, women and the elderly – will need food assistance totaling 500,000 tonnes next year.

Good weather improves 2003 harvest

The 2004 rice paddy harvest was estimated at 2.37 million tonnes, up from 2.24 million tonnes in 2003, thanks primarily to favourable weather, a low incidence of crop pests and diseases, and improved irrigation in the country’s cereal belt. Maize output was unchanged at 1.73 million tonnes.

Forecasting total cereal needs for 2004/05 at 5.13 million tonnes, the UN agencies projected an import requirement of almost 900,000 tonnes. Given anticipated concessional and commercial imports of 400,000 tonnes, the residual gap will be about 500,000 tonnes.

Most of the 16 million people receiving subsidized cereals from the government-run Public Distribution System (PDS) averaging 300 grams per person per day – half a survival ration – cannot make ends meet. They turn to more expensive private markets yet “they are still not able to cover their basic energy requirements,” FAO and WFP said.

Despite good harvest, external food aid needed

The report, which followed a joint assessment mission by the Rome-based food agencies in September and October, says, “the continuing national shortage is still a problem” so “external food aid is in part seen within the context of overall domestic availability.”

It also noted that, increasingly, “the most critical problem for poor households is their lack of access to basic and nutritious food because of declining purchasing power.” As a result, assistance to the food-insecure population “should now be determined more by their household food gap than the national food gap in cereal production.”

“A balanced diet is out of reach for all but a few PDS-dependent households,” the report says. “The situation remains particularly precarious for children in kindergartens, nurseries, orphanages and primary schools, pregnant and nursing women, and elderly people.”

Price of food on new private markets up dramatically

While the prices of state-subsidized rice and maize rationed through the PDS have remained low and stable (at 44 and 24 won a kilo, respectively), prices in private markets have risen dramatically since the introduction of economic reforms in mid-2002.

Last month, rice cost as much as 600 won a kilo in such markets – almost 30 per cent of a typical monthly wage – compared to the 2003 average of 120 won; maize was 320 won a kilo, up from last year’s peak of 110 won. In September, one Euro bought 1600 won on the parallel market.

“The ability of low-income families to obtain food from the market is severely restricted due to their deteriorating purchasing power affected by under- or unemployment and sharp rises in food prices in the market,” according to the report.

An unintended consequence of reform has been the problem of higher food prices, which has been compounded by widespread and steep cuts in already meagre wage earnings as ailing enterprises in predominantly industrial DPRK shed labour.
Food rations meet just half a person’s minimum needs

The typical wage earner’s family now spends one-third of its monthly income on PDS rations that meet only half its minimum caloric needs. Another one-third is spent on non-food essentials – rent, heating and clothing. The remainder is insufficient to purchase enough food in private markets to meet the rest of the family’s very basic needs.

Much of the population, consuming very little protein, fat or micronutrients, suffers from critical dietary deficiencies. Fresh vegetables and fruit are either scarce or very expensive outside of the July-September period.

Traditional coping mechanisms such as animal husbandry, the cultivation of household gardens and hillside plots, the gathering of wild foods and transfers from relatives in the countryside, afford some relief to hard-pressed urban residents. Small-scale income-generating activities, notably petty trade and services, allowed under an easing of restrictions on private and semi-private enterprise are other sources of much needed income.

Better farm machinery and improved soil fertility needed

To deal with the chronic, structural food deficit, the FAO/WFP report recommended that the international community enter into a dialogue with the DPRK government toward the eventual mobilization of the economic, financial, and other resources needed to promote sustainable production and overall food security.

The report also proposed examination of investment projects on soil fertility and better farm machinery to allow further expansion of the country’s double-cropped area.

WFP has provided the DPRK with almost four million tonnes of food assistance, valued at $1.3 billion, since 1995.

UNFAO
10/26/2001

The Democratic People’s Republic of Korea is likely to record its best harvest for six years, but with domestic food production still well below consumption requirements, the country will again need substantial external assistance in 2002, two United Nations agencies said today.

Favourable weather during the main growing season, bigger budgetary allocations for agriculture, greater use of farm machinery and increased supplies of donated fertiliser should enable DPRK to produce some 3.54 million tonnes of cereals in 2001/02 (including rice in milled terms and potatoes in cereal equivalent (2001/02), up 38 percent on the previous year’s harvest and its highest output since 1995/96, according to a report by the UN Food and Agriculture Organization (FAO) and the World Food Programme (WFP).

Relatively good and well-distributed rainfall from mid-June to end-August benefited the main 2001 crops, overcoming the adverse effects of a prolonged spring drought, experts from the Rome-based agencies who undertook an assessment mission to the country from 25 September to 5 October concluded.

Rice production was forecast to reach 1.34 million tonnes (milled basis) in 2001, 22 percent more than last year, and the maize harvest projected to rise by 42 percent to 1.48 million tonnes.

The overall 3.54 million tonne estimate for 2001/02 includes yet-to-be-planted winter/spring wheat, barley and potato crops that in recent years accounted for 10-15 per cent of the country’s annual output. “The production estimate may need to be revised once the harvest outcome of these crops is known,” the FAO/WFP report noted.

But it pointed out that in addition to perennial droughts and floods, critical shortages of fertiliser, agro-chemicals and farm machinery persist, and there is little scope for expanding the cultivable area beyond its present level of some two million hectares.

Notwithstanding the significant recovery this year, “domestic production will fall well below the minimum food needs and the country will again have to depend on substantial external food assistance next year as its capacity to import commercially remains highly constrained,” the report said.

Estimating total cereal utilization needs in 2001/02 at 5.01 million tonnes, it therefore projected a deficit of 1.47 million tonnes (down from 2.2 million tonnes in 2000/01). “With commercial imports anticipated at 100,000 tonnes, 1.37 million tonnes will need to be covered by food aid and concessional food imports.”

On the basis of vulnerability assessments the report recommended that about 610,000 tonnes of food aid, including 525,000 tonnes of cereals and 85,000 tonnes of other food items be mobilised for population groups deemed to be most at risk: small children, pregnant and nursing women, and the elderly – especially in urban areas. It said bilateral aid and concessional food imports should meet the balance.

“The uncovered deficit is large and must be viewed very seriously. It needs to be emphasised that unless the international community responds positively and substantially, millions of people of DPR Korea, including large number of children, old people, pregnant women and lactating mothers will face hunger over prolonged periods with severe consequences for their health and welfare,” the joint report says.

“The crucial food aid safety net needs to be maintained until sustainable food security is achieved through the recovery of the economy and the rehabilitation of the agriculture sector, for which substantial international assistance will be needed,” the report concluded.

UNFAO
6/30/1997

The UN Food and Agriculture Organization (FAO) has launched an international appeal for the supply of about 50 000 tons of fertiliser to North Korea. The fertiliser should be distributed to farmers for rice cultivation for an area of over 500 000 hectares, FAO said today.

Through the delivery of fertiliser within the next six weeks and by latest 25 July for the present planting season, rice production could be increased by about
370 000 tons or 24 percent, according to FAO. The delivery would be co-ordinated and monitored by FAO.

This would ensure a total rice supply for around 60 days. The costs are estimated at $11 million. In comparison, $11 million would cover the costs of only 36 000 tons of rice for the minimum food needs of the population.

Without international assistance North Korea will face “an important fertiliser gap” this year, FAO said. In 1996 only up to 30 percent of the country’s fertiliser needs were covered.

An FAO/World Food Programme (WFP) mission to North Korea reported recently that food rations are running out. Food rations have been only 100 to 200 grams per person per day since early this year, compared to a minimum requirement of 450 grams. Malnutrition has become chronic and life-threatening.

UNFAO
12/6/1996

North Korea approaches 1997 in a far worse position than 1996 and still needs large scale amounts of international food assistance just to meet its minimum food needs, two UN agencies reported Friday.

“Two successive years of floods have undoubtedly set back agriculture and have significantly compounded underlying food production problems in the country”, said the report issued by the UN Food and Agriculture Organization (FAO) and the UN World Food Programme (WFP).

Besides the floods, “economic problems have manifested themselves in falling productivity and output in the agriculture sector”, said the report, which was based on a recent visit to the country by representatives of the two agencies.

The FAO/WFP mission to North Korea also reported that domestic production of fertilizers and imports of essential items — like fuel and spare parts — have fallen drastically in recent years. Food production in North Korea is constrained by geography, land availability, climate and continuous cultivation, which has seriously depleted soils.

“The balance in agriculture can easily be upset by natural calamities, such as the floods in the last two years”, the agencies said. North Korea “can simply not produce enough food grains to meet demand and has a growing dependence on imports”.

The agencies reported that Pyongyang, lacking foreign exchange, burdened with huge international debts and having virtually no access to credit, last year resorted to “desperate measures,” such as bartering badly needed raw materials for grain to cope with the food emergency.

The mission reported that up to half of the country’s 1996 maize harvest and almost all of the potato harvest were consumed early, in August and September, due to severe food shortages. Borrowing part of this year’s harvest in advance means the country has merely deferred the food problem to 1997, the agencies reported.

Overall domestic production of milled rice and maize available for use in this marketing year amounts to 2.8 million tons, 2.3 million tons short of minimum needs.

The critical period will come from July to September next year, the agencies reported. “Only if adequate food assistance is mobilized before the onset of this period, will further hardship in the population be averted”, they said.