North Korean Economy Watch

from the Joong Ang Daily:

After North Korea began a capitalist experiment by adopting economic reform measures in 2002, incentive payments have become common at communal farms, following the lead of factories in urban areas. After the North Koreans quickly grasped the essence of capitalism ― the more they work, the more they earn ― productivity at North Korean farms has increased, and some workers have become the rich in a famine-stricken country.

Paek Kun-su, a 72-year-old farmer at the Chilgol Farm near Pyongyang, met with the JoongAng Ilbo on May 14, during a trip to the North by a team from the newspaper, which was allowed to tour a large number of economic sites last month.

Chilgol Farm is one of North Korea’s representative state-run farms, the authorities there said. After Mr. Paek developed a new variety of rice that yields more with less fertilizer, he was given 15 million North Korean won ($100,000) as a bonus. That was an extravagantly large sum in the North, where a public servant with 30 years of service receives a monthly salary of 6,000 won. A North Korean worker at the Kaesong Industrial Complex receives about $60 a month, and even that is higher than the average salary in the North, so Mr. Paek’s windfall was worth about 160 times that figure.

Mr. Paek said his rice variety, called only “Number Six” in a bow to socialist realism, yielded more than 4 tons per acre in last year’s crop. He also stressed that the new rice variety requires less fertilizer than the ones it replaced and is resistant to attacks by insects. “It can be planted where the temperature is low,”Mr. Paek said. “It can be planted anywhere on the west coast of Korea and anywhere south of Kilju, North Hamgyong province, on the east coast.”

Those claims, however, may require some caution in accepting. For example, the average rice yield in the United States is estimated at about 3.5 tons per acre; the figure in Korea is 2.2 tons.

Mr. Paek said he introduced the new rice variety at a national science and technology fair on May 5. He was selected from more than 50,000 participants as the grand prize winner.

He said he was once a director at North Korea’s rice research institute, a part of the Academy of Science for Agriculture. During his career as a scientist, he said, he won six awards, including medals and a television set, but never a cash prize.

“I am very happy to contribute to increasing crop production in our country and helping resolve food shortages here,” he said, adding that he began developing the new strain of rice in the mid-1990s, after seeing large number of his countrymen dying of hunger.

Mr. Paek’s windfall is out of reach for almost all North Koreans, but many farmers do seem to enjoy better living conditions after the incentive payment system was established. At the Chongsan Cooperative Farm in South Pyongan province, Ko Myong-hee, a 46-year-old manager, said farmers there are living in stable conditions. The JoongAng Ilbo toured the farm on May 14.

Ms. Ko said the farm’s 600 workers produced 8,000 tons of rice in addition to other crops, vegetables and fruits. The farm has about 1,470 acres of rice paddies and 980 acres of fields and orchards. (The difference between that farm’s rice output and Mr. Paek’s claimed yields is startling.)

North Korean farms usually complete their harvest in October, and the government purchases the crops. Milled grains are purchased at 40 won per kilogram, and raw grain at 20 won per kilogram.

Ms. Ko said the Chongsan Cooperative Farm’s workers each received an average of 500,000 won in cash last year in addition to the food they consumed. The incentive payment translates to about 40,000 won per month, about eight times higher than the salary of a Pyongyang office worker. A factory worker in the North with high skills can earn as much as 20,000 won per month, including incentive payments.

“During the famine of the mid-1990s, production went down sharply, but we managed to survive,”Ms. Ko said. “Recently, we improved our crop varieties and the quality of farming land, and production went up after that.”

An official at the National Reconciliation Council, which arranged the visit, said farm villages had suffered relatively less from the severe famines of a decade ago. “Those who had relatives in farming villages received a lot of help from them back then,” he said.

With slowly improving farming conditions, North Korea began last month a revived campaign to mobilize the nation’s workers for agriculture. Another National Reconciliation Council official said a similar campaign last year was successful; “Students older than 12 years and other laborers were mobilized to support farms in this rice planting season,” he said.

North Korea has been living on foreign food aid for more than a decade, and the country is struggling to end its perennial food crisis. “We have high pride, and you can imagine how bad the situation used to be when we asked the international community to help us,” the National Reconciliation Council official said. “But we cannot live on foreign aid forever.”

The country focused on building irrigation waterways to improve farming conditions, officials said. During the JoongAng Ilbo’s visit to the Academy of Agricultural Science, it saw 2,600 researchers working to develop more productive and hardier seeds and more effective fertilizers. The seed improvement project largely focuses on rice and potatoes, the academy said.

“We aim to reach 8 million tons of annual food production by 2007,” a researcher at the academy said.

Ri Il-sop, the science exchange director at the academy, said rice farming in the North used to employ “dense planting” methods until recently, but a test of “thin planting” has been conducted with new varieties of seeds. “The test has been successful so far,” Mr. Ri said. “We can farm easily and save seed with the new methods.”

Another senior researcher at the academy, Pak Sok-ju, said providing information about land conditions and weather is also an important project of the academy. He said other necessary data include things such as the length of the planting season around the nation and the effects of fertilizer usage. “We are developing the program to find a new way of farming in the information age,” Mr. Pak said.

While the North Korean government has called such efforts “an agricultural war,” experts in South Korea said the famine-stricken country still had other crucial tasks at hand. An energy crisis and a shortage of farming tools and fertilizer are crushing burdens, they said, adding that mobilizing manpower and improving seed quality cannot alone resolve the underlying problems in keeping North Korea from being able to feed itself.