{"id":4231,"date":"2019-06-07T11:22:42","date_gmt":"2019-06-07T02:22:42","guid":{"rendered":"http:\/\/www.01.asiapress.org\/rimjin-gang\/?p=4231"},"modified":"2019-06-13T13:44:03","modified_gmt":"2019-06-13T04:44:03","slug":"grain-prices-stable","status":"publish","type":"post","link":"https:\/\/www.02.asiapress.org\/rimjin-gang\/2019\/06\/recommendations\/grain-prices-stable\/","title":{"rendered":"The Rice Riddle: How Are Grain Prices Remaining Stable as N. Korea Faces a Humanitarian Crisis?"},"content":{"rendered":"
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Those most unfortunate are the farmers. The ones reaping the harvests are the ones who are starving. Photographed by ASIAPRESS<\/p><\/div>\n

North Korea is running out of food. The Kim Jong-un regime requested official assistance from U.N. agencies in February and the World Food Program (WFP) announced that the country will fall short by 1.37 million tons of food this year.<\/p>\n

The Moon Jae-in administration has decided to provide $8 million in humanitarian aid through U.N. agencies and is considering providing large-scale food aid bilaterally as well. Following the collapse of the Hanoi Summit in February, through to early May, when the regime test-fired short-range missiles, however, inter-Korean relations were totally frozen. To turn the tide, some members of South Korea\u2019s ruling party are now suggesting that food aid may be the key.<\/p>\n

Meanwhile, voices amongst opposition parties and the media are expressing the suspicion that the food shortage in the North is being exaggerated, pointing to figures that show the price of rice to be lower than it was last year.<\/p>\n

Related Article: \uff1cInside N. Korea\uff1e \u201cPeople are starving\u201d: South to Send Support...But Will Food Reach Those Most in Need?<\/a><\/strong><\/p>\n

\u25c6 The price of rice has in fact fallen<\/h2>\n

The ASIAPRESS North Korea reporting team, along with our reporting partners living in the North, conduct and release market price surveys 2-4 times per month with data from the northern provinces of Ryanggang, North Hamkyung, North Pyongan, and Pyongyang. The only entities known to conduct such investigations and surveys of price trends are the South Korea-based outlet, Daily NK, and ASIAPRESS.<\/p>\n

The main focus of our surveys are rice, corn, gasoline, and diesel fuel. In addition, we examine market exchange rates of North Korean won to Chinese yuan and U.S. dollars. Price trend data has been collected since May 2017 and is available for interested readers to browse.<\/p>\n

Latest Market Price Index Inside N.Korea>><\/a><\/strong><\/p>\n

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Graph of Recent Price Trends (ASIAPRESS)<\/p><\/div>\n

Common sense dictates that market prices are determined by the relationship between supply and demand. Using this logic, some in South Korea point to the stabilizing or falling market price of rice to claim that North Korea\u2019s food shortage is exaggerated. Those who make the claims believe that, if there truly was a shortage, the price of rise would have gone up.<\/p>\n

According to our survey, the price of white rice has floated between 4,200 and 5,500 won over the past year. Although it has fluctuated abruptly at times, it has generally been quite stable. This year, the price has stabilized further, sitting between 4,200 and 4,600 won, with rice cheaper than last year.
\n\u203bAt the end of May, the value of 1,000 South Korean won in North Korea was about 7,200 won.<\/p>\n

Meanwhile, our survey of cooperative farms found that, over the last year, temperatures were very high, with little rain, resulting in severe crop failures.<\/p>\n

So what can explain the stable price of rice?
\nNext page : Market prices are for Chinese rice...<\/strong><\/p>\n

\u25c6 Market prices are for Chinese rice<\/h2>\n

The market price of white rice is, in reality, based on the price of imported Chinese rice. Chinese rice, whether purchased with cash or with exports, naturally comes at a cost to import. When this cost is added to the merchants\u2019 cut, it forms the market price. The market prices for rice in North Korea\u2019s central and northern regions are listed in Chinese yuan, with prices over the last two years ranging from 3.2 to 3.6 Chinese yuan per kilogram.<\/p>\n

Most of the rice imported from China is old and from the previous harvest. Due to the popularity of the fresher, domestically produced rice, North Korean rice over the last 20 years has generally cost residents 5% more than Chinese rice.<\/p>\n

In other words, the price of rice in North Korean won is dependent much more on the current exchange rate to Chinese yuan than it is on actual fluctuations in demand and supply. Aside from momentary ups and downs, rice prices, in general, line up with the fluctuations in the exchange rate of the Chinese yuan, as shown in the above-mentioned price trend survey.<\/p>\n

Stable rice prices indicate that North Korean currency is quite stable too. This is surprising though as, due to the economic sanctions, North Korea\u2019s exports fell by about 90% during 2018. So how has the exchange rate of foreign currencies remained stable in spite of the significant drop in foreign currency imports? To understand that, we looked to the wisdom of economic experts.<\/p>\n

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(Reference photo) Chinese rice, mixed with domestically-produced rice, to be sold in larger quantities. When asked, the merchant gives a price in Chinese yuan. Photographed in a city along the northern border in October, 2013 (ASIAPRESS)<\/p><\/div>\n

\u25c6 Most people are living without the aid of state distributions<\/h2>\n

At present, the food distribution system in North Korea is close to collapse. Through the existing state system, only employees of the munition factories, some state enterprises, the party, the government administration, the police and other state security organs, and soldiers of the Korean People\u2019s Army receive rations.<\/p>\n

Even if an employee does receive rations, dependents such as wives and retired parents are not usually provided for. Indeed, it can be estimated that only about 20% of the population is provided for through the state distribution system.<\/p>\n

In recent years, more and more companies are giving salaries and food rations to workers through their own means and at their own discretion. As rice and corn given to employees is not supplied to businesses by the state, enterprises must acquire the food from markets. In other words, employees receive payment \u201cin-kind\u201d, rather than through the state distribution system. Many of the enterprises that practice this form of remuneration are joint ventures with China.<\/p>\n

So how do the majority of residents live without the help of the distribution system. Escaping state control, they must make cash on their own to buy food from the markets. The authorities, having lost control of food distribution, now set \u201cprice ceilings\u201d for goods at markets, but these decrees are just empty words.
\nNext page : So who is going hungry...<\/strong><\/p>\n

\u25c6 So who is going hungry?<\/h2>\n

For whom is the food situation most dire then? In May, we asked reporting partners living in North Korea.<\/p>\n

\u201cThere is no shortage of rice in the market, but ordinary people cannot afford it. Their private market activities are not going well. My income, as well, is only half of what it was 2 years ago. We are all barely making ends meet. The farmers have it worst though,\u201d said a reporting partner living in Hyesan, Ryanggang Province.<\/p>\n

In the words of a reporting partner living in North Hamkyung province, \u201cThere is rice and corn at every market. The ones who are starving right now are the farmers. It\u2019s hard for elderly households too due to the sluggish business. Laborers at mines and munitions factories haven\u2019t received rations once this year. The meals provided to the \u2018construction brigades\u2019 working on the building sites have become truly pathetic.\u201d<\/p>\n

Related article: \uff1cInside N. Korea\uff1e Signs of Starvation: Farmers Forced to Survive off of Potatoes as Regime\u2019s Unreasonable Quotas Leave Them with Nothing<\/a><\/strong><\/p>\n

Why are farmers starving? In North Korea, each cooperative farms is tasked with providing the state with a set amount of food to be used by the military and government. Farmers are only allowed to keep whatever crops they can produce extra.<\/p>\n

The government\u2019s quotas, however, are set far too high. Exploited by the state, farmers are now beginning to starve, as the little amount of food distributed to them after the last harvest runs out.<\/p>\n

Second only to farmers, stand the urban poor and workers in munitions factories- the 20% of the population who were subsisting off of the distributions provided to them by the state, which have now been cut off. There are also many ordinary soldiers who are suffering from malnourishment. At the markets, everyone is struggling, with their businesses restricted and failing.<\/p>\n

Related article: \uff1cN.Korea photo report\uff1eA Look at North Korea's Impoverished Rural Women (4) 'People are working just to be robbed' (Photo 5)<\/a><\/strong><\/p>\n

There is rice at the markets but the distribution system has grinded to a halt; meaning, essentially, that there is a lack of state-owned food. Rice at the markets is privately-owned, with 80% of the population relying upon a cash income to purchase it. So far, though, there has been little to no reporting in the media covering this gap.<\/p>\n

The Kim Jong-un regime typically distributes state-owned food first to the military, public security agencies, party, government agencies, construction workers, important enterprises, and Pyongyang citizens. These distributions are often leaked to markets, however, as struggling organizations and corrupt officials look for ways to make cash.<\/p>\n

The reality is that people are starving in North Korea. Now, aid must be provided first and foremost to those who need it most- such as those in rural areas. U.N. agencies and the South Korean government must demand access to cooperative farms in order to provide this assistance.<\/p>\n

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\uff1cRelated Article\uff1e<\/div>\n