North Korea Monitor

Hyundai Economic Research Institute: Soaring Grain Prices May Lead To Unrest

with 4 comments

The Hyundai Economic Research Institute, via Chosun Ilbo, reports that they

[believe] that surging international grain prices may worsen North Korea’s food shortage and lead to other serious problems in the country. In a report released on Sunday, the Hyundai Economic Research Institute said, “Soaring international grain prices will further worsen North Korea’s food shortage and encourage more North Koreans to flee the country. This will very likely lay a big stumbling block to North Korea’s opening and create instability for Northeast Asia as well.”
If it is protracted, the upward rise of grain prices caused by short supply will have serious effects on global food security. This, in turn, may cause wide-spread starvation, produce more refugees, and cause regional armed clashes, the research institute said.
In order to attain food security, the research institute urged the South Korean government to enhance its food self-sufficiency and lay a stable foundation for food supply by strengthening cooperation with neighboring countries in cultivating food crops on undeveloped land. The institute also called on the government to seek strategic cooperation with North Korea in the agricultural sector.

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Written by nkmonitor

March 17, 2008 at 12:18 am

4 Responses

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  1. The Hyundai Economic Research Institute’s report does not seem to be exactly right. 1) North Korean agricultural sector is NOT linked to international grain markets; 2) Humanitarian aid from overseas does NOT necessarily need to be given in the form of top-quality grain; 3) North Korea is NOT going to “open up” even if the grain prices are low or humanitarian assistance is bountiful.

    On the contrary, the soaring grain prices may help North Korean become a net exporter of grain, raising the badly needed foreign exchange. If needed, a single directive from Pyongyang can make the whole country switching from rice and corn to potato and beans.

    LP

    Leonid Petrov

    March 18, 2008 at 12:59 pm

  2. Dr. Petrov,

    That’s an interesting perspective. I have a question though: Some (anecdotal) evidence seems to suggest that the public distribution system, especially in the border regions, is breaking down, and as this happens, the jangmadang are increasingly filling this gap. Imaginably, some of this food, especially up in the border areas, is imported from China. Assuming a large percentage of the food in that region is imported from China, wouldn’t that drive up prices in the region ? (Also, due to predicted food shortages locally-produced food prices will no doubt rise as well). And as those traders start accumulating power and money and coalesce together, is it possible that this could contribute to the formation of “fiefdoms” along the border area that are autonomous and able to resist the central government?

    I know there are a lot of assumptions in that.But, any thoughts?

    nkmonitor

    March 19, 2008 at 3:58 am

  3. Many interesting questions. I hope my answers are not completely wrong.

    >Some (anecdotal) evidence seems to suggest that the public distribution system, especially in the border regions, is breaking down…

    – Apparently, the PDS has been revitalized all across the country after 2003. It can break down again only if the government is collapsing or there is nothing to distribute. So far, these do not seem to be the case.

    > …and as this happens, the jangmadang are increasingly filling this gap.

    – This is why the “farmers’ markets” (jangmadang) were officially permitted in 2002-2003 virtually in every district and village. Moreover, after the 2005 crackdown on private selling activity, people still trade and speculate but discreetly, at night. The authorities know about that but seldom react.

    > Imaginably, some of this food, especially up in the border areas, is imported from China. Assuming a large percentage of the food in that region is imported from China, wouldn’t that drive up prices in the region ?

    – Food (and other goods) come from China as the result of barter (non-cash) deals with North Koreans. The food prices are growing, so the prices on the commodities which North Korea is exporting.

    >(Also, due to predicted food shortages locally-produced food prices will no doubt rise as well).

    – Yes, in jangmadangs the food prices rise and fall seasonally. But the prices on food sold through the PDS is likely to stay at the same level. PDS remains for the central government an important stabilizing factor which buys it time to look for survival paths.

    >And as those traders start accumulating power and money and coalesce together, is it possible that this could contribute to the formation of “fiefdoms” along the border area that are autonomous and able to resist the central government?

    – This process began in the early 2000s, when economic freedoms were hardly controlled from the centre. After 2005, when Pyongyang gained momentum, many of the freedoms associated with “7.1 economic measures” were curtailed. Recently, the government began to crack down on collective property on the means of production (trucks, buses, machinery) to undermine their ability to earn cash and barter.

    And, the most important, you cannot “resist the central government” in societies like North Korea unless you feel suicidal…

    LP

    Leonid Petrov

    March 21, 2008 at 4:19 am

  4. […] NK Monitor has asked many interesting questions. I hope my answers are not completely wrong. […]


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