* DPRK Economy & Food Production - A perspective by Peter Wilson, Secretary of the NZ DPRK Society

http://www.fao.org/giews/english/shortnews/20150203DPRK.pdf

http://documents.wfp.org/stellent/groups/public/documents/ena/wfp261353.pdf

Peter Wilson  has visited North Korea three times in his professional capacity as an agriculturalist. He has spent time on around 15 farm cooperatives in South Pyongan, North Pyongan and North Hwanghae Provinces. This paper reflects his perspective on the economy, agriculture and food production. It is based on discussions and observations made during the field visits, discussions with officials in Pyongyang and available statistical data.

 NOTE.  This paper was prepared early 2009. Some data is now out of date. The situation regarding clean water supply has deteriorated. Stunting and malnourishment of children continues.

(1)        Economy

DPRK has a low per capita GDP – 17% of the World average. The US Central Intelligence agency (CIA) estimates that the 2007 GDP was US$1,700  and ranks the country at 189 out of 229 countries. This puts DPRK amongst the bottom five countries in Asia - in the same cohort as Laos, Burma, Cambodia and Bangladesh.

Table 1.           Per Capita GDP

Source: CIA World Fact Book

Such a low per capita GDP suggests a situation of abject poverty. This a picture is  reinforced by  common media themes of a mysterious reclusive nation where the government would rather spend money on missiles and nuclear warheads than buy food for a population where millions are suffering from extreme starvation.

A Third World Country ?

If the country is indeed a poverty-stricken, underdeveloped nation, we would expect to find this supported by poor quality of life statistics. Strangely, unlike the other low GDP Asian nations, a poor quality of life is not reflected by the statistics.

Life Expectancy

At 72.2 years, DPRK life expectancy is almost six years above the world average figure of 66.3. Compared with the other poor Asian countries, life expectancy is  nine to ten years better than Bangladesh, Burma and Cambodia, and nearly 16 years better than Laos. This infers a much better standard of living conditions  and nutrition in DPRK.

Source Figures: CIA World Fact Book estimates for 2007

Infant Mortality

The worldwide average figure for infant mortality is 42 deaths per 1,000 births. The  CIA-estimated 2007  rate for North Korea is half this at 22.  By contrast with the other low per capita GDP Asian nations, this is 60% lower than Cambodia, Burma and Bangladesh and 74% lower than Bangladesh.

Source Figures: CIA World Fact Book estimates for 2007

This relatively low infant mortality rate could not be achieved without a comparatively higher standard of education, medical services, clean water supply and general hygiene.

Access to Improved Water Supply

Poor access to clean drinking water is a distinguishing feature of developing Third World countries. UNICEF data shows that DPRK has First World access to clean water – better even than in South Korea.

 tp://www.unicef.org/statistics/index_countrystats.html     (2004 datum)

TV Ownership

In poor countries, few families can afford a TV set. Available figures indicate that DPRK TV ownership is seven or eight times greater than the other Asian countries with a comparable GDP.

Source Figures:  CIA World Fact Book 2003.

 The writer believes that TV ownership is in fact much higher than reflected by these figures. The impression gained from a field trip to farm cooperatives and visiting family homes in 2007 was that about 50% of rural families have a TV set, and ownership is undoubtedly higher in the urban areas.

An Enigma

From the foregoing it is clear that living standards in DPRK are much higher than found in other Asian economies with a comparable per capita GDP.

How can this enigma be explained?

From 1954 through to the 1970s DPRK’s economic performance was comparable to, and sometimes outperformed, South Korea[i]. This started to change during the late 1970s when South Korea began to benefit from exporting and participating in the global economy. Meanwhile the DPRK economy, bound to the Soviet Union, started to slow down.

Since the late 1970s, South Korea’s economy has continued to grow whereas the DPRK economy growth rate has slowed down or stagnated. With the demise of the Soviet Union DPRK was left high and dry in 1990.  Tim Beal[ii] describes this  as “awful, with irrevocable effects on the DPRK.”  In November 1990, Russia forced “the DPRK to sign an accord that trade would be conducted henceforth in hard currency and at world prices. The effect of this was catastrophic and Russian –DPRK trade plummeted.” 

Dependant upon preferential trade within the Soviet block DPRK was suddenly without export markets and without  access to supplies of oil, fertiliser and grain.

Under an economy operating within and supported by the USSR block,  high levels of education and living standards were achieved.  When the Soviet economy collapsed, DPRK became “collateral damage.”  Today, comparatively high standards in the health, education and some transport infrastructure persist, but the economy has stagnated.

Hence the enigma - a curious mix of First World social standards and a Third World Economy. 

Left to its own devices DPRK would in time have developed new markets. Hostile attitudes in the West, aggravated by USA policies and UN imposed sanctions,  have not allowed this to happen. The two most visible manifestations of this situation have been energy and food.

Energy. The USSR acknowledged the need for energy and in 1985 agreed to provide three light water reactors to generate electricity but support for these ceased in 1990. DPRK attempts to follow through and develop nuclear electricity generation have been thwarted by a US belief that the true agenda is development of a nuclear armament capability.[iii]

DPRK claims that their only reason for working towards a nuclear weapons is as a defence against a US nuclear threat and that their over-riding need is electricity. Sadly, this issue is preventing progress on formally ending the Korean War, reunification of the peninsular, normalisation of international relations and restoration of the North Korean economy.

As long as this situation applies, the DPRK will continue to be reliant on food aid.

(2)        Food Production and Imports

Some commentators claim that food is short in North Korea because the socialist system does not work. To the contrary, the writer’s field observations and FAO crop yield  data suggest that agricultural production is efficient.

 Furthermore, the  distribution system, and the markets do work well. The system is not the reason for food shortages. It is not true, as some commentators have claimed, that the food distribution system was not working in the late 1990’s. What is true is that the system had inadequate food to distribute.

The educational standard and technical ability of DPRK’s farm cooperative workers are remarkably high. As a result, within constraints of input supply,  optimum if not maximum use is made of all arable land.

The problem is that there is not enough arable land to fully feed the country’s 23 million population. North Korea never has been and never will be able to fully feed the population. Given the available arable land and the limited growing season, it is a physical impossibility.

Historically, shortfalls of food were met by importations from the USSR. Available FAO statistics show that over the past 35 years DPRK has on average produced 82% of its cereal requirements and imported 18%.

Until the mid 1990’s, high cereal yields (mostly rice and corn, but also wheat, barley, millet, and sorghum) were achieved with extensive use of imported fertiliser. Without the preferential trade conditions experienced during the USSR era and restricted by sanctions, DPRK has not been able to import fertiliser and the necessary quantities of grain to top up the food supply.

In the following graph it can be seen that both fertiliser and cereal production trended upwards from 1970 until the early 1990s. When the ability to import fertiliser ceased, the result was an immediate drop in cereal production. 

Source: Source:  Earth Trends website quoting from: Food and Agriculture Organization of the United Nations (FAO). 2006.  FAOSTAT Online Statistical Service.  Rome: FAO.

The effect a drop in fertiliser supply had can be seen in the Per Capita Food Production Index published by FAO. Food production can be seen to have slowly increased over a twenty year period from 1970, peaking in 1990, dropping during the ‘90s and since recovering, but still only equating mid 1970’s levels. Production was adversely effected by extreme weather events during the late 1990s, but this was a complicating factor, not the main cause.

 Source:  Earth Trends website quoting from: Food and Agriculture Organization of the United Nations (FAO). 2006. FAOSTAT Online Statistical Service.  Rome: FAO.

Explanation: The food production per capita index presents net food production (after deductions for seed and animal feed) of a country's agricultural sector per person relative to the base period 1999-2001. The food production per capita index covers all edible agricultural products that contain nutrients.

Food Supply

Despite a weak economy, North Korea has managed to continue to pay for food imports since the collapse of the USSR, albeit at a slightly reduced rate.

Table 2.           Average Annual Cereal Imports

As shown in following graph,  food aid has partially offset  the shortfall since 1994, but total supply still falls short of the production levels achieved during the 1980s and early 1990s.

Source: Source:  Earth Trends website quoting from: Food and Agriculture Organization of the United Nations (FAO). 2006.  FAOSTAT Online Statistical Service.  Rome: FAO.

In the early 1990’s the DPRK government was faced with a dilemma. There was a desperate need to import food. But, just like the fertiliser, there was no money to pay for it.

The strategy adopted was to target sources of food aid including bilateral aid agencies, international NGOs and UN agencies. World Food programme (WFP) commenced operations in 1995 and by 2005 had provided some US$1.7 billion of food commodities.

To strengthen the case to justify food aid, the adverse effects of floods and droughts were overstated.

The number of deaths were also over-stated. Estimates of the numbers of deaths during the 1990s vary enormously from tens of thousands up to four million. While it is possible that some tens of thousands died there is no evidence to support claims  of millions. In 1997 the writer travelled quite extensively in South Pyongan, North Pyongan and North Hwanghae provinces and spoke to many ordinary citizens as well as officials. Half a day each was spent on around 12 different farm cooperatives. During this time nobody spoken to had experienced any unusual deaths in their communities. Death rates were normal amongst both the aged and the very young. One would have expected death rates of both young and old to be up during a time of severe famine. Data supplied (somewhat reluctantly) by the authorities in Pyongyang at that time backed up the field observations. . It was the writer’s conclusion that if there were any excessive deaths, they would have numbered in the hundreds or thousands, certainly not the in the millions.[iii]

This is not to deny that food was in short supply. It was. But the scarcity was not at starvation levels, as is borne out by available life expectancy and mortality statistics.

Mortality Rates. UNICEF data shows that crude death rates declined during the 1980s and then rose again from about 1990 onwards. The crude death rate does not show a huge jump though the middle ‘90s when there was supposed to be famine. although it has continued to rise since that time which is probably a reflection of poor  nutrition.

The infant mortality rate rose from a low of 32 per thousand live births to 42 per thousand live births around 1990 and has remained at that level ever since. Once again, contrary to what might have been expected, there was no dramatic  rise in infant mortality during the mid 1990s.

Source: Earth Trends website quoting from the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. 2007.

Current Situation

DPRK continues to need aid for fertiliser and for about 20% of its total food supply. This will continue until such time as a peace agreement ending the state of war can be signed and all sanctions dropped and a productive functioning economy can be developed.

It is the writer's opinion that objections to DPRK joining the World Bank and the Asian Development Bank should be withdrawn so as to allow access to multilateral finance to fund agricultural inputs and rebuild the shattered economy. With a functioning economy and unimpeded access to the world trading markets, DPRK would then be able to generate enough income to purchase necessary agricultural inputs and top up the food supply.

Conclusion

DPRK exhibits a curious mix of First World standards and a Third World economy. This enigma is explained by the fact that the country traded with, and was to a degree supported by, the USSR economic block up until 1990. When this relationship ceased, the economy disintegrated to that of an under-developed nation, but the high (First World) quality of life standards largely remain.

DPRK agriculture is highly productive but there is not enough arable land to produce all of the food needed to feed the population. The country has been, and always will be dependant on imports of 15 – 20% of annual cereal grain needs.

As a part of the wider USSR economic block, DPRK was able to develop faster than the ROK during the 1950s and 1960s, but this started to falter in the 1970s. When the USSR finally collapsed in 1990, all of DPRK’s trade linkages also collapsed and the country was no longer able to import cheap fuel, fertiliser and cereals. This was a double whammy because the fuel was needed to plough the fields and fertiliser was  necessary to achieve the high cereal production yields. With no fertiliser, food production plummeted. Production was also adversely affected to some degree by abnormal weather patterns.

Unable to pay for  needed food imports, DPRK adopted a strategy of targeting food aid. In order to make the case for food aid, the adverse effect of floods and droughts and also death rates were over-stated.

DPRK will remain dependant upon food aid until such time as sanctions are ceased, international trade can be developed and an economy developed which can afford to pay for adequate fertiliser and food imports.

[i] Hwang, Eui Gak. The Korean economies: a comparison of the North and South. Oxford University Press, 1993.

[ii] Beal, Tim. North Korea – The Struggle against American Power.  Pluto Press 2005.

[iii] It is not the purpose of this paper to deal with the energy issue, a detailed discussion on this can be found in Tim Beal’s book.

 [iii]   In a research paper, Lee Suk of the Korea Institute for National Unification dismisses estimates of 2-3 million death toll as unrealistic. He has done several estimates.

His low estimates of  starvation deaths between 1996 to 2000 are in the  25,000 to 69,000 range, while his maximum range is between 250,000 and 1.2 million..

'NK Death Tolls 'Exaggerated''. Korea Times, 21 March 2004,