Price liberalization « North Korean Economy Watch

Archive for the ‘Price liberalization’ Category

South Korean Products Popular

Tuesday, September 4th, 2007

Daily NK
Han Young Jin
9/4/2007

Distribution with “Korea” Trademark…”Rice Cookers Popular”

In the North Korean jangmadang (market), South Korean products are drawing huge popularity among citizens and are publicly being sold, relayed an internal source on the 30th.

The source said, “In the Pyongyang, Shinuiju, Hamheung, Chungjin, and other large-scale jangmadangs, South Korean products with the “Made in Korea” label is fairly popular among wealthy people.”

In the past, South Korean products were secretly sold in the North Korean market. When selling South Korean products, we sold them after removing the product label, “Made in Korea.” However, recently, only products with the label are recognized as South Korean products of good quality and sold at a high price.

The source added, “‘Made in Korea’ lends credibility to the people. Without this, people do not believe that the product is a Korean-made good. The label has to be there because Chinese products are disguised as South Korean goods.”

The South Korean product which is most sold in North Korea is the electric rice-cooker (Cuckoo), instantaneous water heaters, cosmetics, aromatics, computers, toothpaste, medical goods and a variety of sweets. Also, North Korean citizens have a lot of confidence in South Korean medicine. South Korean-made medicine or sweets are not discarded even after the expiration date.

He said, “Because Chinese-made products are no good, people who have money usually used Japanese products. In the place where Japanese products became rare, Korean-made products are now occupying that place.”

In Dandong, China, Kim Chi Duk (pseudonym), who is engaging in North Korea-Chinese trade met with the reporter and retorted, “Currently in Chosun (North Korea), Japanese-made products are still counted as number 1. Then there are South Korean-made products, then Chinese-made products. Poor people, even when the quality is lower, use Chinese-made products and those with money use South Korean products or Japanese-made products. What is the issue if one is buying with his or her money?”

He said, “Those with some amount of money use at least one or two South Korean products.”

The source relayed, “Currently in the Shinuiju market, South Korean toothpaste is 5,000 won (USD1.85), 1 set of aromatics (machinery and 2 bottles of gas) is 30,000 won (USD11.1), and one pack of Time cigarettes (tax-exempt) 3,000 won.” However, “Time,” a kind of South Korean cigarettes are counterfeit goods made in China, so is offered at a cheaper price than their domestic price.

Mr. Kim said, “Those who trade in North Korea request for South Korean-made goods, but I do not know whether they plan to export them or to use them. The authorities do not allow American-made goods, but is there anyone who doesn’t like the dollar? If it is not a big issue, they use everything.”

Posted in Civil society, Clothing, Computing/IT, Cosmetics, General markets (FMR: Farmers Market), International trade, Price liberalization, South Korea | Comments Closed

Increase in Homeless Families, Escalating Costs in Rice

Sunday, September 2nd, 2007

Daily NK
Yang Jung A
9/2/2007

HRW “irregularities and corruption provoked by governmental officials”

Recently, there has been an increase in kotjebi (homeless) families squandering around the vicinities of jangmadang (markets).

After interviewing 12 North Korean merchants who frequently travel in and out of North Korea as well as defectors, Kay Seok, a North Korea researcher for Human Rights Watch (HRW) revealed in an interview with Radio Free Asia on 29th, “Currently, the cost of food in North Korea is continuing to rise” and commented, “People are selling their homes to obtain food and as a result there has been an increase in kotjebi families.”

Seok said, “According to defectors, the number of street dwellers has increased as of the end of last year and beginning of this year” and explained, “If you compare these times, you can see more people do loitering around the city markets after the spring hardship. However, there are many people who have become kotjebi after selling their homes to buy food.”

Comparing the times of the hunger period in the 90s she said, “At the time, there were many kotjebi children having become orphans after their parents had died and hence, homelessness was directed at children” and asserted, “However, today there is an increase of homeless families who beg around jangmadang or steal goods during the day and then sleep in the same areas at night. These trends indicate that a large number of people are once again experiencing hardship as a result of hunger.”

She revealed, “As of early this year, the cost of food has steadily increased. According to various locations, costs have increased significantly in some areas” and “At present, 1kg of rice costs 1,000~1,200won at jangmadang. About this time last year, rice sold for 700~800won.”

Likewise, in August the DailyNK made reports indicating that the cost of rice had escalated to 1,200~1,300won (USD3.8~4.1) along the border regions and even 1,500won inner land.

Ms. Seok added, “The cost of rice is affected by various factors such as the distance in delivery and farms. Also, the closer you get to the border, the more rice is available from China.”

Regarding the cause in escalating rice costs she said, “Overall, agriculture and production decreased due to the flood last year. The fact that South Korea suspended its rice assistance following North Korea’s nuclear experiment also would have had a significant impact” and “Even this year, floods occurred in the agricultural regions and as a result, it is unlikely that prices will fall despite the harvest period in September and Oct.”

As for the reasons causing North Korea’s incessant food crisis Ms. Seok said, “Causes are the discrepancies in the North Korean government’s policies as well as irregularities and corruption by governmental officials.”

Posted in Agriculture, General markets (FMR: Farmers Market), Price liberalization, Real estate | Comments Closed

Great Review of ‘Famine in North Korea’

Sunday, August 26th, 2007

For several months I have been meaning to post a review of Stephen Haggard and Marcus Noland’s book, Famine in North Korea, but for thousands of reasons it was always pushed back.

Stephen Haggard and Marcus Noland wrote the definitive book on the DPRK’s Arduous March, and it is required reading for any serious North Korea watcher.

Now…Joshua at One Free Korea has written the definitive review of the book, so I will just put links to his posts: Part One, Part Two, Part Three.

Posted in 1990s Famine, 2002 Economic reforms, Agriculture, Arduous March, Banking, Black markets, Economic reform, Finance, General markets (FMR: Farmers Market), International Aid, International trade, Price liberalization | Comments Closed

Food Crisis Tough But Better Than Before

Tuesday, August 21st, 2007

Daily NK
Kwon Jeong Hyun
8/21/2007

Escalating Rice Costs 1,900!!

As the month of August began, North Korea saw a sudden jump in its rice costs. While 1kg of rice reached a peak of 1,960won (around US$6.03) in Shinuiju, entering the second week of August, prices seemed to have stabilized around the 1,500won marker.

Due to the damages incurred from the recent flooding in North Korea, the cost of rice was something expected. In the second week of August, the DailyNK reported on the flood situation and the consequent price fluctuations. The following report will indicate the damages from the flood and food situation as well as the course of rice costs.

We discovered from a telephone conversation with Ahn Geum Soon (pseudyonm, 37) on the 10th, a trader who sells clothes in Shinuiju, North Pyongan that the cost of rice had suddenly escalated to 1,900won per kilo dropping back to 1,500won within a 10 day period.

Ahn said, “Even people who trade secretly in private or at Jangmadang (markets) are finding it hard to obtain rice as there simply isn’t enough going around” and informed, “There are some people who are already stocking up on rice as rumors suggest that the costs will go up a little more. These people are the ones to raise the prices.”

Regarding the cause in escalating rice costs, Ahn said, “I’m not sure. According to rumors, people with money are the ones hoarding the rice, but no one is really sure of the reason.”

“Some people are going through tough times with the sudden rise in rice costs but no one is dying of starvation. People who can’t afford rice eat corn. Even if the cost of corn rises, its only 500won” said Ahn and added, “Nonetheless, there are the occasional beggars living in the country and the city who die of hunger, but this is no different to the past.”

Kim Il Yong (pseudonym, 36) who lives in Taecheon, North Pyongan informed a reporter on the 11th, “Currently, the cost of rice is about 1,500won per kilo. There was a great difference in prices within a period of 10 days.”

Kim responded, “Some say that the costs are rising as South Korea and other foreign countries are not supporting us with rice, while others say that that prices are rising as there is not enough rice going around. I’m not sure what is going on.”

He continued, “There are rumors that rice prices will reach 2,000won. Nevertheless, there won’t be any cases where people die of hunger. Like we will reach that stage when potatoes have been picked and are being sold at Jangmadang and the corn harvest has begun.”

Kim who has relatives living in the Hamheung said in response to the claim by a South Korean support organization that 300 people have died of starvation, “Hamheung is comparatively a large city. Rumors would quickly spread if people were dying of starvation. 300 people can’t be dying of starvation.” He said, “My sister in-laws younger brother went to Hamheung 3 days ago. He said he hadn’t heard of any rumors of people dying of hunger.”

Another source in North Korea said in a conversation with a reporter on the 11th, “Up to a month ago, rice cost 850won per kilo” and commented, “There are a lot of coal mines at Dukcheon. It is known as a region where you can make money. Rations are distributed by the employer to the people who work at the mines and so it’s not so hard for them.”

Then he added, “It was a little tough in June as the employers stopped distributing rations for a while.”

Posted in Agriculture, Agriculture statistics, Clothing, General markets (FMR: Farmers Market), Price liberalization | Comments Closed

Price of Rice and Inflation

Sunday, August 19th, 2007

Korea Times
Andrei Lankov
8/19/2007

Sometimes even Stalinist propaganda tells the truth. When the North Korean newspapers occasionally told grossly exaggerated horror stories about South Korean inflation, they stressed that nothing like that could possibly happen in North Korea. This was the case indeed. For nearly half a century, from the late 1950s to the late 1980s retail prices in North Korea remained essentially unchanged. One kilogram of rice cost 0.08 won in 1960. It was still the same price in 1990.

This was possible because almost nothing was actually “sold’’ in North Korea. Communist states often rationed goods distributed through retail trade, but in most cases it was only a handful of most prestigious goods that were subjected to rationing _ like, say, cars. North Korea went much further: by the early 1970s, retail trade in the North ceased to exist, being completely replaced by an elaborate public distribution system. Rations depended on a type of work performed, but also on one’s position within a complicated hierarchy of social groups, as well as one’s place of residence (inhabitants of major cities, and Pyongyang in particular, enjoyed much better rations than those in the countryside).

There were some markets, of course, barely tolerated by the government. But until the late 1980s markets were small, with their trade volume being almost negligible. It seems that most people were reasonably satisfied with what they could get from the state distribution system _ of course, it helped that they knew next to nothing about the situation in other countries, so they could not compare.

The situation began to change around 1990 when the old distribution system collapsed under the pressure of an economic crisis. From 1993-94 there were increasing problems with rations, and from around 1996 rations pretty much stopped altogether. Some food was still distributed in major urban centers, but even there the distributed amount was so meager that nobody could survive on rations alone. A large-scale famine ensued, with at least half to one million dead (the oft-cited figure of three million victims seems to be an exaggeration).

People turned to trade and handicrafts, and with this arrival of a market economy inflation became a North Korean phenomenon as well. Even in the 1980s market prices exceeded the official prices in the state shops. By the mid-1990s, the difference was much greater. In theory, rice still cost 0.08 a kilo, but by 2000 its price on the market reached 45-50 won. Official wages remained unchanged, however, so around 2001 the average salary was approximately 20 times less than the income necessary for physical survival. People had no choice but to augment their income.

The government understood that there was no way to restore the old system: a decade of economic crisis had undermined the basic machinery of distribution and obviously the system was beyond repair. Thus, in 2002 the much trumpeted “July 1 Reforms” were introduced.

It’s difficult to describe these measures as “reforms”–the government simply gave official recognition to the situation which had existed for quite a few years.

The distribution system (long defunct) was curtailed. There was a dramatic increase in the retail prices of basic goods and services _ obviously in an attempt to approximate the prices of the market. Thus, that one-kilo of rice which cost 0.08 won since July cost 44 won.

Wages increased as well. Obviously, the wage increase was not even, and some groups have gained _ or lost _ more than others. It was estimated that the average increase in wages has been approximately 2500 percent (that is, 25 times). At the same time, prices have increased 3000-4000 percent (that is, 30-40 times). This necessitated the issue of 1000 won bills _ the largest denomination in North Korean financial history since the 1959 currency reform. Later, 5000 won bills were issued as well.

But the measures had another effect. The increase in salaries meant that the market was instantly flooded with cash. Needless to say, the only outcome could be inflation. Some people speculated that this was the intention of the Pyongyang leaders who hoped to kick-start the economy in such a way. Perhaps. But I would not be surprised if in 15 or 20 years down the track we learn from interviews and talks with the planners of this reform that they did not really expect inflation. Pyongyang economic managers have not had much exposure to market theory, and are sometimes very naive in their understanding of these questions.

Indeed, by October 2002 the market price of rice had increased to 120 won per kilo. In 2003, the price doubled to 250-300 won, and now it is about 1000 won. Inflation has become a part of North Korean life.

What will happen next? Will the North Korean leaders manage to stabilize the situation, or will a new wave of economic crisis wipe out the entire North Korean system? We do not know yet. But it is clear that there is no return to old days when a kilo of rice could be had for 0.08 won _ that is, if you were lucky enough to live in an area where they distributed grain rations in rice, not in maize.

Posted in 1990s Famine, 2002 Economic reforms, Agriculture, Arduous March, Black markets, Economic reform, Fiscal & monetary policy, General markets (FMR: Farmers Market), International trade, Price liberalization, Public Distribiution System (PDS) | Comments Closed

More DPRK market (jangmadang) footage

Thursday, August 9th, 2007

Again, while trapsing through the jungle of YouTube videos on North Korea, I stumbled on this clip shown on Japanese television which was secretly recorded in a North Korean market. Since my Japanese ranges from rusty to nonexistent, I do not know where it is.

What does this clip teach us? That some North Koreans are becomming more sophisticated shoppers/ consumers–looking to the outside world to get a sense of what’s fashionable. Chinese entrepreneurs are hard at work building brand loyalty for western companies that are not yet aiming for the DPRK market. Chinese knockoffs of Nike, the North Face (mislabeled “the Nice Face”), and fake designer apparel are all on display. I imagine no North Korean citizen expects to ever see these goods in the local Public Distribution Office.

Japanese narration highlights (thanks, Tony):

Are the North Koreans familiar with these western brands? Some are familiar and others are not so sophisticated.
These items sell really fast. You can buy a Rolex Watch (knock off) for 800 Yen (appx. $8 or appx 2,400 North Korean Won).
The narrator contrasts lifestyles. He compares shoppers that can afford these market goods with others in the same village who cannot.

Posted in Advertising, China, Civil society, Clothing, Cosmetics, Economic reform, General markets (FMR: Farmers Market), International trade, Price liberalization | Comments Closed

Illegal Prostitution Occurring in Massage Parlors and Bathhouses

Tuesday, August 7th, 2007

Daily NK
Han Young Jin
8/7/2007

Defector Choi Young Lim [pseudonym] who entered South Korea this past January was a “broker” in North Korea who would receive money from defectors and deliver it to family members in North Korea. He was exposed while mediating money and arrested but was released after giving bribes.

Choi said, “Previously, even with just evidence that there was a connection to a South Korean, you were dragged to a political prison camp and your family members were exiled. However nowadays, even if it is exposed that a defector who entered South Korea sent money, the family members aren’t severely punished.”

“These days, even if there is evidence that you received wired money, unless there is hard evidence of ties to the National Intelligence Service in South Korea the national security agents just impose a fine and release you,” he said.

According to Choi the fine is around the range of USD $2000.

Most of the foreign currency that enters North Korea these days is done through wired transfers from defectors in South Korea to family members. The money that Korean defectors send to family in the North undergoes a 20-30% processing fee and is finally delivered to the individual. The process is from the defector in South Korea through Chinese exchange broker to North Korean broker.

If USD $100 is sent from South Korea, the brokers share $30 and the remaining $70 is delivered to the family.

Until the mid-1990s, regardless of reason, North Korean authorities would take any monetary matter related to South Korea and punish them as “spies”. However, as the number of defectors concentrated in the North and South of Hamkyung increased after the food crisis, a uniform punishment became difficult to impose.

Choi said, “Even the National Security Agency doesn’t consider receiving money from family in South Korea as a spy activity. If they punish everyone, there is a side effect that even their own personal connections will be made adversaries. Thus, they can’t touch this issue.”

The emergence of taxis targeting large city wealthy classes

Trader Hwang Sang Do [pseudonym] who had traveled Chongjin, Hamheung and Shinuiju to collect trade items to export to China entered the South Korea this March.

Hwang introduced a variety of daily activity that he experienced in North Korea. “Even in Hamheung and Chongjin, taxis are operated. The base fare is around 3,000 won. Some cars have the mark that says, ‘taxi’ but some operate as passenger cars without such marks,” he said.

In the North Korean black market 1kg of gasoline (North Korea ordinarily uses kg) costs around 2,000 won. Hwang says, “There are drivers who solicit customers in front of the Chongjin Station or Hamheung Square Station. There aren’t many customers so when veering outside of central city, they receive the round trip fare.” The customers are mainly trade workers, overseas Chinese emigrants or the wealthy class.

It is known that taxi drivers refurbish used taxis or passengers cars that come in from China, then register it as an institution or business entity and start business activity. As there was an order earlier this year to remove all Japanese cars within 3 years, most of the cars that are on the street are manufactured in China.

Massage Parlors, Skincare Salons – Prostitution Secretly Going On

In large cities of North Korea, motels, massage parlors and skincare salons have been established and prostitution has been going on secretly.

Trade worker Hwang says, “There has been an increase of places in Hamheung motels that also function as saunas or skincare salons. A Chinese style massage at a massage parlor is 10,000 won (around US$3.4) per 60 minutes and there is instantaneous prostitution with female masseuse.” It is told that prostitution goes on for about 20,000 – 30,000 won.

With North Korean bathhouses, a service culture to put women at the forefront has taken place. The owners here use jargons such as “selling a bed” or “selling flowers” to feel out a customer’s intention for prostitution. There are cases where women find private homes to prostitute themselves. Hwang says that because it is easy to make money through prostitution, there has been an increase of female prostitutes.

Previously, if prostitution was exposed, you would be sentenced to forced labor. Even now, the authorities ban prostitution. However, the reality is that related entities have secretly been increasing.

On the other hand, there have been several luxury restaurants that opened in Wonsan and Hamheung. These places have implemented the Chinese service system, so the interior facilities are luxurious and female employees greet customers with a “Welcome” at the door.

Previously, only overseas Chinese emigrants or Chinese businessmen invested in such restaurants but recently, there are many cases where North Korean residents open large restaurants as well. Hwang says that as the Chinese restaurant culture that competes with taste and service infiltrated North Korea, North Korea has been undergoing a huge transformation to gain customers through service.

A service concept to “treat the customer as a king” has been emerging different from 1990s.

Posted in Automobiles, Banking, Black markets, Civil society, Cosmetics, Finance, Fiscal & monetary policy, Gasoline, Price liberalization, Transportation | Comments Closed

Most S. Korean companies in N. Korean complex plan more spending, survey shows

Monday, August 6th, 2007

Yonhap
8/6/2007

Most South Korean companies operating at an inter-Korean industrial zone in North Korea plan to increase their facility investment there, a survey showed Monday.

The survey, conducted by the Korea Federation of Small and Medium Business, found that 87.8 percent, or 19 out of 24 companies operating at the North Korean border city of Kaesong, said they plan to boost investment levels.

South Korea began building the industrial park, located just 70 kilometers north of Seoul, in 2003 on a trial basis with the hope of creating a model for an eventual reunification of the Korean Peninsula. Currently, 26 South Korean plants employ about 16,000 North Korean workers who produce garments, kitchenware and a number of other goods.

If the industrial zone becomes fully operational by 2012, more than 350,000 North Korean workers will work there, according to the South’s Unification Ministry.

Last week, officials from the Koreas agreed to increase the minimum salary of North Korean workers at the Kaesong industrial complex by five percent to US$52.50 a month, marking the first pay raise since the complex’s launch.

The industrial park is one of the prominent symbols of inter-Korean reconciliation efforts following a landmark summit in 2000 between then South Korean President Kim Dae-jung and North Korean leader Kim Jong-il.

Posted in Economic reform, Foreign direct investment, Kaesong Industrial Complex (KIC), Price liberalization, Special Economic Zones (Established before 2013) | Comments Closed

No Changes to the Cost of Rice And Corn at Jangmadang

Friday, July 20th, 2007

Daily NK
Kim Min Se
7/20/2007

A newsletter published on the 18th by “Good Friends” a North Korean aid organization claimed that “On average 10 people die of starvation throughout North Korea.”

However well informed North Korea defectors and North Korean tradesmen who travel to China refute the organization’s claim and argue, “It would be difficult for that to happen.”

The organization published in its newsletter, “Since the end of June, starvation has been occurring in each province throughout North Korea” and informed, “The number of people dying in North Pyongan, Yangkang, Jagang, South and North Hamkyung continues to rise everyday.”

In particular, Good Friends stated, “In South and North Hamkyung, about 10 people are dying of starvation in each city and province” and “On the whole, the people dying are aged 40~65 years.”

“Though the cause behind the deaths is different for each person, most of the complications are related to malnutrition” informed Good Friends. They added, “A mass famine has not yet begun, however authorities and people feel the threat of the situation” stressing the urgency of North Korea’s food crisis.

An affiliate of Good Friends said, “Presently, only 20,000 tons of South Korea’s food aid is offered (to North Korea)” and commented, “This rate of aid is too slow in saving the lives of the dying people.”

However, there are criticisms against this claim. Some argue that Good Friends had excessively inflated North Korea’s food crisis.

Choi Young Il (pseudonym) questioned this claim by Good Friends after a telephone conversation with his family in North Korea on the 16th. He said, “Even up to two days ago, I spoke to my family on the phone but they didn’t mention anything about a food crisis.”

Moreover, Choi said, “Alleging that about 10 people on average are dying in the cities and province of South and North Hamkyung is no different to saying that nearly 400 people are dying throughout the whole region of South and North Hamkyung every day” and added, “In that case, this is similar to the early period of mass starvation in the early 90s.”

“Only looking at North Hamkyung, most of the people living in the border regions live off illegal trade through China and though they may not be living well, I was aware that they got by without having to eat porridge” Choi said and remarked, “I don’t believe the claim that 10 people are dying of starvation every day.”

On the same day, Hwang Myung Kil (pseudonym) a North Korean citizen who came to Yanji to visit his relatives in China said in a telephone conversation with a reporter, “I cannot believe the rumor that people are starving to death around the border areas of the Tumen River” and commented, “I haven’t even heard stories of more people starving to death in the mines and they live in masses around Musan.”

Hwang said, “Even amongst the people in Musan, there are only a small number of people who live off corn for three meals a day… Nowadays, people look for quality rather than quantity.” Further, he said “Though life is tough, people have found their own way of survival. It’s not to the point of starvation.”

If according to Good Friends, 10 people are dying on average due to starvation, this situation would indicate signs similar to the mass starvation in the early 90s. However, the cost of rice claimed by Good Friends clashes with their claim.

When North Korea faced their mass crisis in the mid-90s, the cost of corn rose dramatically. In October 1995, 1kg of corn cost 16won, but this doubled to 30won. However, there has not been much change to the cost of food in North Korea.

According to a recent survey by the DailyNK on the cost of goods in North Korea’s Jangmadang (markets), 1kg of corn rice at Hoiryeong markets sells for 450won and 1kg of rice produced in North Korea costs 900won.

More importantly is the cost of cigarettes. A packet of Sunbong, a North Korean brand of cigarettes sells for 1,000won and “Cat” cigarettes for 1,300won. The cost of a kilo of rice is still cheaper than a packet of cigarettes.

If North Korea’s starvation was on the brink of a massive food shortage, then it is expected that the cost of rice and corn would escalate dramatically as an onset to the crisis.

On the other hand, Kim Il Joo (pseudonym) a Chinese tradesman and expert on North Korean markets said, “I can’t say that North Korea’s food situation is smooth, but I don’t think it will get any worse than this.” Kim said “Now you can eat new potatoes and soon new corn will be available on the markets” and added, “Then, I think we will be able to get through another year.”

Deaths from hunger rise across N. Korea: civic group
Yonhap
7/18/2007

A growing number of people have died of starvation across North Korea since late last month, a South Korean civic group working to defend rights of North Koreans said Wednesday.

“Famine-driven deaths began to occur across North Korea in late June,” Good Friends said in a commentary carried in its weekly newsletter. “In some cities and counties in the provinces of North Pyongan, Ranggang, Jagang and South and North Hamkyong, the number of deaths is on the increase daily.”

In North Hamkyong Province, a daily average of ten people, mostly those aged between 40 and 65, died of starvation, the group added.

“The leading cause of death varied for each case, but most people are dying of famine-driven malnutrition and its complications,” the commentary said.

The price of rice rose steadily this month, with North Korea facing a crisis of massive deaths from hunger, it said.

The group then called on the Seoul government and the international community to send more emergency food aid to help North Koreans, especially through the just-reconnected cross-border railways.

In mid-May, the two Koreas conducted the historic test of the railways, reconnected for the first time since the 1950-53 Korean War. But it remains unclear when regular train service might start.

Posted in Agriculture, Arduous March, Good Friends, Price liberalization | Comments Closed

The North Korean Rice Price Narrowly Increased after the Spring Shortage

Thursday, July 12th, 2007

Daily NK
Kim Young Jin
7/12/2007

The North Korean jangmadang’s (market) rice price has narrowly increased after the spring shortage season.

As a result of DailyNK’s investigation of price levels in Northern cities of North Korea at the end of June and beginning of July, the price of North Korean rice is 900 won per kilogram which has increased 80 won compared to its price at the end of March.

At the jangmadang in Shinuiju, North Pyongan, the price of rice, compared to three months ago, has been sold at a 120 won higher price at 980 won. North Korea’s spring shortage season is around March to May before the barley harvest, after the passage of spring.

The reason why the price of rice has shown a narrow upward tendency of 100 won domestically is that along with the effects of the spring shortage season, the nationwide “farm supporting combat” was implemented last May. During the farm supporting period, the jangmadang was closed out, so it became difficult to obtain rice.

Further, with the delay in South Korea’s support of 40,000 tons of rice to North Korea, the increase in the price of rice seems to have been fueled. The price of South Korean rice, compared to the end of March, increased over 150 won. South Korean rice was sold at the increased price of 1,100 in the Shinuiju region.

Along with the increase in the price of rice, the exchange rate seems to show a slight increase as well. In Hoiryeong, it increased by 50 won, compared to the end of March, according to the basis of 3,100 won per dollar. The Chinese Yuan was sold at a 390 won line, having increased 20 won.

Besides this, the staple of North Korea’s lower-class, corn, compared to the end of March, increased by approximately 80 won to 450 won per kilogram. With the rise in the price of rice, the demand for corn as a substitute ration seems to have increased as a result. Frozen pollack, which cost 4,000 won per one, went down to 3,500 won.

Chinese-made shoes, compared to March, is being sold for 7,000 won per pair, having decreased around 5,000 won. In addition, the price of Chinese industrial products as a whole is showing a decline.

Due to North Korean merchants who received goods through Korean-Chinese peddlers in the past going over to China themselves and obtaining goods through dumping, the drop in prices has been continuing.

Pork (2,300 won per kg) or cabbage (300 won per kg) and the price of other vegetables, compared to the end of March, declined by 200 won. In the case of fruits, the price of apples skyrocketed by 1,400 won from three months ago to 2,900 won per kilogram.

Also, among North Korean cigarettes, a product with the brand “Dog” recently surfaced. The price is the same as “Sunbong” at 1,000 won. The representative foreign brand “Craven (called ‘Cat’ in North Korea)” narrowly declined to 1,300 won.

Cost of DPRK grains up as lean season continues
Institute for Far Eastern Studies (IFES)
NK Brief No. 07-7-16-1
7/16/007

The results of a general survey of market prices in the northern region of North Korea carried out by the “Daily NK” show that grain prices continue to rise. The survey, taken from the end of June to the beginning of July, showed that the price per kilogram of domestic rice was 900 Won, 80 Won higher than at the end of March. Sinuiju market prices have risen 120 Won over the last three months, with rice now selling for 980 Won per kilogram.

The ‘lean season’ in North Korea runs from the spring and lasts 3 to 5 months into the summer until barley crops are ready for harvesting. The rise in rice costs by around 100 Won appears to be due to a combination of factors, one being the influence of the lean season, and another being the mobilization of city residents to farming communities to help with harvesting. During harvesting season, markets are closed as workers are sent to the fields, making it difficult to purchase rice. In addition, the decision by Seoul to delay delivery of 400 thousand tons of aid has further aggravated the situation. The price of South Korean rice in the North has also risen, up 150 Won since March in some areas, and up as much as 250 Won in Sinuiju, where a kilogram of ROK rice sells for 1,100.

The rising cost of rice is fueling demand for substitute grains, causing their prices to rise as well. Corn, a staple food for low-income DPRK families, has risen 80 Won since March, to now sell for 450 Won per kilogram. In addition to rising grain prices, currency exchange rates also appear to be on the rise. In the city of Hyeryung, one USD is worth 3,100 Won, 50 Won more than in March. The Chinese Yuan has risen 20 Won, and now trades for 390 Won.

On the other hand, the prices of some goods in the markets are falling. In particular, Chinese goods are becoming more available, thus lowering costs. Chinese shoes have fallen to 7,000 Won, 5,000 Won less than the price in March. Previously, goods were brought into the country only through Chinese-Korean cross-border traders, but now North Korean vendors have direct access to Chinese goods being ‘dumped’ in the North, causing their prices to continue to decline.

Posted in Advertising, Economic reform, General markets (FMR: Farmers Market), International trade, Price liberalization, Tobacco, Trade Statistics | Comments Closed

North Korean Economy Watch