Food Prices Dropping on Yuan Stability

Despite it being the spring shortage season, the price of grain in North Korea’s markets is actually falling and the food security status of the average citizen is relatively good.

And this is despite the fact that the chairman of North Korea’s legislature, Choi Tae Bok, recently called for food aid on a trip to London, telling government officials there, “Due to the harshest winter in 60 years and last year’s poor harvest, the next two months are a crisis time.”

Choi was referring to the time when the rice gathered in the fall has almost all been eaten, and June, when the first potatoes can be harvested, has yet to come. Those with little choice tend to survive this period on whatever they have, often substituting in vegetables and edible wild plants for grains.

However, the price of rice in North Korea’s markets seems to be taking the urgency out of Choi’s public call for assistance, given that while Choi has flown all the way to Europe in pursuit of aid, the price of rice in the market is actually falling. On March 28th, the day Choi arrived, the price was 1,800 won, a colossal decline in comparison with the price at the end of January, which reached a momentary high of 3,000 won.

The decline since then has been steady; from 3,000 won to 2,000 won last month, and even as low as 1,600 won at the turn of April.

In North Korea’s case, declining food prices are closely related to declining exchange rates, which have also been stable since mid-February. Where one Yuan was worth 520 won at the beginning of this year, it is now worth just 400 won.

According to one domestic source who sells clothes in the market, “It looks like the price of rice will be 1,500 won by the middle of this month. There are sufficient supplies of rice in the market, so as long as you have money you can buy it anytime.”

However, the picture is not perfect, because the people’s purchasing power is still not what it was and, in particular, those in the poorest classes struggle under high rates of interest on loans of money or food, making it hard to secure the supplies they need to survive.

Kwon Tae Jin, Vice-Director of the Korean Economic Research Institute said that currency is the key, explaining, “The price of food in North Korea is linked to foreign currencies like the dollar and Yuan. If the Yuan exchange rate is stable, the price of food will fall and stabilize.”

Kwon continued, “In the short term, it might be that smuggled food and stocks siphoned off from military bases could be flooding the market. The overall food situation is not bad, but, in the markets, it may be that the fall in food prices is temporary.”