Surprise Rice Price Fall on Harvest News

Market rice prices have been dropping dramatically in recent days, the Daily NK has learned. Given reports of an unfavorable harvest due an absence of fertilizer and drought conditions early in the season, the news has come as a surprise to many residents. In turn, this has led to customary bouts of speculation and rumor.

The price of rice has plunged to 4,500 KPW
[0.54 USD] per kg in the markets,
a source in
Pyongyang told the Daily NK on Thursday.
“The harvest
is underway and freshly harvested rice is pushing down prices.”

This year, not only collective farms but also individuals planted a lot of rice, he elaborated. It seems like the rice from these private plots is now in the marketplace.” 

As of mid-October, a kilo of rice was fetching 6,800 KPW [0.82 USD] in public markets, according to research conducted by the Daily NK in locations across North Korea.
Later in the month it fell to 5,000 KPW [0.60 USD], and has now reached
the 4,500 KPW [0.54 USD] mark.

Rice is going for roughly 4,800 KPW
[1.80 USD], and the price here continues to fall,
a source
based in the isolated border city of Hyesan said.
“People have been saying the harvest this year
has not been that good
, but there
s definitely a lot of
rice in the markets now.
 

The going rate for corn has also fallen in Hyesan, the source explained, dipping to 1,700 KPW [0.20 USD] in early
September. The price of corn usually tracks that of rice.

Meanwhile, in Pyongyang residents eager to determine the cause of the sudden drop have been speculating “that rice from Russia has been brought in,” the source revealed. There have even been hard numbers floated in reference to the rumor. To wit, The state requested 5,000 tons because of the bad harvest.

The source in Hyesan explained that, as usual, grain units have been officially dispatched to oversee the distribution of the harvested rice, but that bribes are sufficient to keep them from regulating rice sold in markets.

The term “grain unit” refers to 20-30 members of the Worker and Peasant Red Guards, one of North Korea’s large reserve military forces consisting of men between the ages of 17 and 60 and some unmarried women, who set up checkpoints along main transportation
routes in order to govern the movement of rice and corn harvested on collective farms
and individual farm plots. However, this type of monitoring has long been an ineffective formality due to the prevalence of corruption.

Despite the brief spike surmised to stem from these factors, the fall in rice prices
is not expected to last long.
There may be a lot of
rice in the markets, but the harvest was bad so the supply will gradually
decrease,
 the source predicted. Unless
the state actively engages with the issue, prices will gradually climb back up to last month
s level.

There is also the likelihood that vendors with rice in stock may decide not to bring out their supplies if the price stays low, hoping to stick it out and reap higher profits later. According to the source, If this were to continue, the prices would continue to climb, potentially
making things difficult for residents
.”

Rice prices in the North tend to be affected by fluctuations in exchange rates, but more recently they have moved seemingly without regard for currency prices.
Currently in Yangkang Province, 1 RMB [0.16 USD] trades for 1,350 KPW, a 50 KPW
increase from September, yet the price of rice has actually fallen.

*All conversion rates, based on market trend information from inside North Korea compiled by Daily NK, are current as of November 6th, 2014 and available here.

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