A quick comment on the reported change of the North Korean constitution (back in April): I don’t have access to the revised version as of now (or a working VPN from Seoul…). But judging by the reporting by outlets like Hankyoreh (here), this seems like a quite important confirmation that changes in the economic governance system of enterprises in North Korea continues and is still seen as a priority by the state:
The publication of the full text of North Korea’s constitution, which was amended back in April, reveals that language about the “Taean Work System,” its traditional party-centric method of managing the economy, has been replaced by language about the “Responsible Management System for Socialist Corporations,” which increases the autonomy of managers at production sites and introduces market elements. This creates a constitutional basis for Kim Jong-un’s reform-oriented approach to the economy. The amended constitution also adds an expression about the chairperson of the State Affairs Commission “representing the state,” which effectively constitutes a formal declaration that Kim Jong-un, as chair of the State Affairs Commission, is the “head of the state.” The constitution was amended during the first session of North Korea’s 14th Supreme People’s Assembly, on Apr. 11, but the full text wasn’t released to the outside world until now.The full text of all 171 articles of North Korea’s revised “socialist constitution” was released on Naenara, a North Korean foreign propaganda outlet, on July 11.
Article 33 of the constitution says that “the state shall execute the Responsible Management System for Socialist Corporations in economic management while ensuring the correct use of economic spaces such as production costs, prices, and profitability.” This replaces language in the previous version of the constitution that read, “The state shall execute a self-supporting accounting system in line with the demands of the Taean Work System while ensuring the correct use of economic spaces such as production costs, prices, and profitability.” The key change here is a shift in the state’s economic management method from the Taean Work System to the Responsible Management System for Socialist Corporations. The constitutional amendment also adds language to Article 33 about “decisively increasing the role of the cabinet” in the management of the economy.
In short, because these bureaucratic processes often stall. Kim Jong-un’s first few years in power saw a virtual flurry of new frameworks introduced for economic governance, most of them enshrining and institutionalizing rules and practices that had already been in place in much of the country for a while. Still, government recognition for these practices really matters, because at the very least, it indicates they won’t be curtailed or rolled back for a while. But this flurry appears to have ceased from around 2016 or so, or at least decreased in intensity and scope. Some have argued that some in the government may not have seen the results they anticipated on economic growth, and therefore turned their attention elsewhere. Including a strong reference to enterprise management autonomy may not indicate a change per se, but at the very least, it confirms that the broad strokes of the changes that have already happened seem to still be generally embraced by the government.
Looking at the latest figures from Daily NK’s market price data index, there are a few interesting developments to note.
First, rice prices have gone up quite a bit over the past few weeks. This in itself not dramatic or unusual. After all, rices prices tend to climb during the lean season closest to the next harvest, between May and September (roughly). But if the climb continues, that could be the markets finally catching up to the supply shortages. (Though, as I’ve written about numerous times, we can’t read the calm of the market prices as a refutal of the food shortage claims. It’s more complicated than that.)
Average market price in North Korea, late June 2018–2019. Source: Daily NK.
As the graph shows, the latest price observation (June 25, 2019) is slightly higher than the closest equivalent from last year (June 26, 2018). It’s not by very much – a price difference of 227 won isn’t what I would call significant – but still, prices may continue to climb from now and onward. We just don’t know.
More significant and interesting, however, is that prices have climbed by quite a bit and quite quickly over the last couple of months. On April 30th, Daily NK reported an average market price of 4070 won per kg. On June 25, 2019, that same price was 5140. That’s an increase of 26 percent in less two months.
In the grand scheme of things, it’s not a massively high price. But the quick increase is notable, and it’ll be important to keep an eye on the future price trajectory to see if it’s part of a longer trend.
Average rice prices on markets in three North Korean cities, July 2017–late June, 2019. Data source: Daily NK.
Note that the price hump to the left is from September 2017, and prices tend to be higher later in the fall.
Second, corn prices have also climbed during the same period. Corn, it can reasonably be assumed, is an inferior substitute good for rice – in other words, its less popular cousin. When rice gets more expensive, people should logically buy more corn. Corn prices have also climbed in the past few weeks, but not to historically significant highs.
Average corn prices on markets in three North Korean cities, July 2017–late June, 2019. Data source: Daily NK.
Third, pork prices have declined quite steeply over the last two months. Not to historical lows, at least not yet, but still.
Average price of pork, three North Korean cities, late June 2018–2019. Data source: Daily NK.
If one wanted to fit this into a broader narrative of food shortages, here’s how it could be done: if people need to spend more of their income on staple foods such as rice, they have less to spend on more luxurious foods such as pork. Subsequently, prices should decline.
Fourth, gas prices, too, have dropped, and very steeply, over the past few weeks. This price drop is most likely caused by seasonal factors (which makes sense given the summer weather), since the same drop occurred last year too. But it could also be that China has increased supply with the improvement of relations with North Korea. In any case, it does look like gas prices are back in their normal range, and a drop this steep over time certainly makes things easier for a wide range of economic sectors in the country.
Average gas price, three North Korean cities: July 2017–late June, 2019. Data source: Daily NK.
In sum, the higher rice price may be part of a longer-term trend, and it shouldn’t be surprising if the seasonally normal increase of the summer and fall months ends up being higher than usual. As of now, it’s not a dramatic increase, but for those many North Korean consumers already living on thin margins, it may be quite problematic.
“A massive renewable energy power plant was built to deal with the chronic lack of electricity in North Pyongan Province,” a source in North Pyongan Province told Daily NK. “The power plant now supplies Sinuiju and other areas of the province.”
Meari, a North Korean propaganda outlet, published an article on June 2 entitled “The Construction of a Renewable Energy Power Plant that Produces 1,000 kW by the North Pyongan Province Electricity Department.”
The article states that a “renewable energy power plant was built on around a 300 square meter lot on the lower part of the Yalu River” and that “The Electricity Department built around 3,600 solar panels, electricity transformers, and electric cables to ensure the continued, self-sufficient supply of electricity.”
The source told Daily NK that the Workers’ Party of Korea (WPK) and government officials in North Pyongan Province made the decision to embark on the construction of the new power plant. Officials emphasized the use of renewable energy and new ways to supply electricity to the province.
A separate source in North Pyongan Province said that the decision to move forward with the project led to the construction of an “electricity base” with wind power and solar panels in the Sinuiju area.
“They are now moving forward with expanding the existing infrastructure by four-fold,” he said.
The Rodong Sinmun published an article on March 20 entitled “Let’s Imitate Them [North Pyongan Province’s Electricity Department] and Widely Develop and Use Renewable Energy.” The article states that the Electricity Department in North Pyongan Province “recently constructed a massive renewable energy power plant that is supplying electricity to important areas in Sinuiju and the local people.”
Renewable energy power plant built for Sinuiju modernization plans
Mun Dong Hui
I suppose the headline for this post might count as clickbait in our field, but I couldn’t help it… Daily NK:
North Korean workers in China facing visa denials or restrictions on their sojourn periods are being forced to return home, according to an affected source in China.
A North Korean trader in Liaoning Province recently told Daily NK by phone that Chinese authorities are demanding that all North Korean workers return home.
“I do business in Liaoning Province. China is making a big fuss and ordering us out [of the country] and now my Chinese visa has almost expired. But few North Koreans actually care about their visa status in China. China telling us to leave and it’s making me really angry and annoyed,” he said.
“A lot of people are returning home. This happened in the past, but this time is different. I asked a North Korean customs official and he said that half of the North Koreans in Dandong have left. That’s a huge number of people. Those who remain are worried about their status here. People who work in China generally have debts to pay back. I sometimes wonder if China is trying to destroy North Korea.”
He also spoke about his own precarious situation.
“I’ve brought over many workers myself into China. Each of them gave me 500 dollars and I found them work in factories run jointly with China. They’re all 500 dollars in debt. They can’t repay this money, so they’re worried about returning home. They could get beaten up or even die if they can’t repay their debts,” he said.
“I haven’t been able to contribute enough to the [regime’s] loyalty fund either. Returning home would be a death sentence. I’d rather die here (in China) before my body returns home.”
North Korean trader in China expresses concerns about his own precarious situation
Ha Yoon Ah
North Korean state media highlighted worsening water shortages in one of the country’s major rice-producing regions on Wednesday, raising worries about possible harm to this year’s harvest.
“Not a few areas in the South Hwanghae Province are now facing serious water shortage caused by a combination of various factors,” the Rodong Sinmun, the official newspaper of the North’s ruling party, said in an article.
The paper said that the water reservoirs in some areas of the province are falling below normal levels, making it hard for farmers to plant rice in their paddies as scheduled.
The North’s official Korean Central News Agency also reported that the drought is hindering rice-planting efforts in South Hwanghae Province, expecting that precipitation will likely stay low until mid-June.
Hwanghae Province is known as one of the largest rice-producing areas for North Korea. The apparently ongoing drought in North Korea is feared to aggravate the already strained food supply in the impoverished state.
N. Korean media highlight drought in major rice-producing province
Perhaps this wouldn’t be a problem if farmers worked for themselves to a greater extent, rather than primarily to fill the state quota…
Daily NK reports:
A farmer at a potato farm in Yanggang Province was recently sent to a forced labor camp for stealing seeds meant for planting, a Daily NK source reported on June 3. The incident provides a glimpse into the difficulties faced during the potato planting season in May.
The farm, a major producer of potatoes located in Taehongdan County, Ryanggang Province, is in an area where locals plant potato seeds for a two-week period starting in early May to ensure the seeds are planted on time. Potatoes in North Korea are important because they can replace rice and wheat and are the major source of calories for some parts of Ryanggang Province.
North Korean farmers refrain from removing the germinal disk from potato seeds and plant potatoes whole to increase yields. The state-run publication Rodong Sinmun recently reported that potato production reached record levels last year.
“There have been many cases where farmers have stolen potato seeds during the ‘potato planting battle’ period,” a source in Ryanggang Province told Daily NK. “The authorities made an example out of two farmers who stole seeds by sending them to a disciplinary labor center for six months.”
At larger farms in Taehongdan County, farmers use trackers to plant whole potatoes. Farmers working on smaller farms, however, plant the potatoes themselves. The potatoes need to be planted 4-5 centimeters apart, but farmers frequently do not follow this rule. Instead, they plant the potatoes farther apart and then hide the potato seeds that are leftover underground to take home later.
“Farm managers have worried constantly about this issue, so they have told farmers that stealing seeds is tantamount to destroying the Party’s agricultural policies,” said the source.
Poorer farmers, however, are faced with hunger during the planting season so they steal potato seeds regardless of these warnings and even sell the seeds in local markets, the source said.
Taehung-dan is, of course, the site for Kim Jong-il’s famous speech on the “potato revolution“.
North Korean farmers sent to labor camp for stealing potato seeds
Kim Yoo Jin
South Korea on Tuesday sent a pledged donation of US$8 million to U.N. agencies to support their efforts to provide assistance to North Korean women and children in need, the unification ministry said.
Last week, the Seoul government endorsed the donation plan for the World Food Programme (WFP) and the U.N. Children’s Fund (UNICEF) for their projects to support the nutrition of children and pregnant women in North Korea and address their health problems.
Of the total, $4.5 million was allocated to the WFP and the remainder to UNICEF.
The money was remitted to the agencies Tuesday afternoon, according to the unification ministry.
A ministry official said earlier in the day that it will take more time before the money will be actually spent on the agencies’ projects in North Korea, adding that they are working on reducing the time before its implementation in consideration of the urgent need of many North Korean people.
Seoul wires promised money to U.N. agencies for N.K. projects
The market factor in North Korea’s current food crisis* sometimes seems unclear. Some have talked about the market compensating for what the state doesn’t provide in the event of a food shortage. But the WFP’s methodology should cover for that. They don’t only calculate collective farms yields specifically, but arable land and production in general. Their estimates may (it’s not entirely clear) be based on data for total farmland available provided by the state, and there are some types of plots that wouldn’t be covered in that case. But WFP uses satellite imagery to verify official information on production figures (see p. 5 of their rapid food security assessment for North Korea).
We don’t know how big a proportion of the total amount of food produced in North Korea is sold on the markets, and how much is distributed through state and semi-state channels such as enterprises and factories, which are sometimes partially operated privately. In any case, when they measure total harvests, this likely, at the very least, includes most sources for the food that’s sold on markets. So a drop in total production still means lower market supply.
So why are markets still so important to understand food security, and why is it a problem that WFP cannot access them freely? Rest assured, this is not for a lack of trying. From pp. 6–8 (my emphasis added):
The assessment team also experienced challenges in accessing markets and acquiring market-related data. However, the team was not able to visit farmers’ markets during the field visit. While authorization was granted at national level to visit farmer’s markets, county authorities informed that they were not able to receive any foreign delegation on the day. Market visits are highly recommended to fill this information gap in future assessments. Finally, the team could only gather limited information on people’s incomes and expenditures during the household surveys.
Again, WFP’s conclusions are still highly relevant and meaningful. But as they themselves recognize, markets are crucial for understanding the microeconomic conditions on the ground in North Korea.
The most important reason, perhaps, is that distribution of food is just as important as food production for food security. As Amartya Sen has shown, food security is often more about who has an “entitlement” to food than about precisely how much food is around. This is where North Korea’s markets come in. Total production is an important metric to be sure, but to really understand how food is distributed, and who gets to eat, we have to also understand precisely how the markets work. We need to understand who uses them and how much they’re able to buy. Prices tell us something about overall supply (though as I have argued, probably not the full story).
Especially in a country like North Korea, where access to food and sustenance is a political matter, distribution (or entitlements) is more than total food production for food security. The markets are a crucial mechanism for distribution in North Korea. As long as WFP isn’t allowed to survey them, and to do more extensive household surveys freely in the country, we won’t truly know what food security looks like.
*We still don’t know that there is a crisis at hand, although the food situation appears very poor.
Following the recent publication of a UN report stating that North Korea’s food situation is critical and is set to worsen, sources in the country say that efforts for agricultural preparation are facing obstacles in some regional areas.
The DPRK Rapid Food Security Assessment was published by the World Food Program and Food and Agricultural Organization of the United Nations on May 3, and expressed concern that North Korea could face severe food shortages within the next ten years due to climate change, sanctions and other issues.
“May is the most important month because it is the period that determines whether the year’s harvest will end in success or failure. There’s a lack of workers for planting and this has led to alarm amongst officials,”a South Pyongan Province-based source told Daily NK. “Officials in the major west coast farming areas of Pyongwon, Sukchon and Mundok are concerned about labor shortages.”
North Korea conducts national agricultural support campaigns every spring and mobilizes students, office workers and housewives into the fields. This year, however, the country is facing a labor shortage of more than 50%, according to the source.
“Mobilization orders state that people have to prepare their own food to eat out in the fields,” he said. “Concerns have been raised that there’s a lot of people who can’t do that because there’s no food.”
The North Korean authorities are emphasizing the need to increase rice production and the importance of agriculture through state-run media as the planting season begins, but mobilizing workers into the fields will be difficult due to the country’s poor economic situation.
Concerns have also been raised that laborers will refuse to work in the fields because they are already involved in manure collection activities, construction projects and other labor-intensive work for the state.
Daily NK recently reported that even one of Kim Jong Un’s banner projects, the Samjiyon modernization effort, is facing labor-related difficulties.
The authorities have even created “emergency measures committees” to identify ways to forcibly mobilize residents onto the fields.
“Labor departments in provincial agriculture business committees have formed emergency measures committees to deal with the lack of workers recruited from factories and schools,” said a separate source in South Pyongan Province. “Schools and factories are being investigated and will face legal action if they fail to provide the proper quotas of labor.”
Some parts of the country are faced with issues in agricultural planting stemming from insufficient supplies of farming materials and fertilizer.
“Farmers should have ensured the soil didn’t freeze by creating special seedbeds and covering them with vinyl film. They failed to do so because there was a lack of vinyl film available this year and seeds didn’t grow properly because of the cold,” she said, adding that “they also lacked manure and fertilizer.”
South Pyongan Province faces severe food security crisis
Mun Dong Hui
Analysts say there is no doubt that the ultimate blame for the humanitarian crisis rests with Pyongyang, which has spent hugely on nuclear advances and other military projects while neglecting the welfare of ordinary citizens.
“Other than the most basic of subsistence agriculture, there is no agricultural sector in the world that can survive without oil-based inputs,” said Hazel Smith, a professor in Korean studies at the SOAS University of London.
Smith argues North Korea can feed its citizens only if it can access oil and natural gas — to fuel farm machinery, power processing and storage facilities, used in irrigation and to transport crops and food.
A United Nations report issued Friday showed more than 10 million people do not have enough food to last until the next harvest. Last year’s crop was the worst in a decade, it said, and was buffeted by dry spells, heat waves and flooding.
But it also found that “limited supplies of agricultural inputs, such as fuel, fertilizer and spare parts have had significant adverse impact.”
The Food and Agriculture Organization and World Food Program spelled out “the unintended impact of sanctions on agricultural production,” most obviously “the importation of certain items that are necessary for agricultural production.”