SPECIAL REPORT - FAO/WFP CROP AND FOOD SUPPLY ASSESSMENT MISSION TO THE DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA - 22 DECEMBER 1995

OVERVIEW

An FAO/WFP Crop and Food Supply Assessment Mission visited the Democratic People's Republic of Korea between 9 and 16 December, to assess 1995 crop production and estimate cereal import and food aid requirements for 1996. The Mission held lengthy d iscussions with various Government agencies, in particular those responsible for agriculture, state planning and economics and finance. Discussions were also held with representatives of other UN bodies. In addition, field visits were made to North Pyongan and South Hwanghae provinces, which are key agricultural areas, to assess (ex-post) the flood damage to agricultural areas, harvested crops and required remedial measures.

Between 30 July and 18 August, this year, an average of 300mm of rain across the country, coupled with high tidal waves caused flooding, which seriously affected agricultural production. As a result, rice and maize production fell sharply. In addit ion to agricultural losses, significant damage occurred to the irrigation network, transport, property and the infrastructure generally. The floods came at a critical time in the crop cycle that allowed very little opportunity for recovery in the a ftermath of the floods. There was also effectively no opportunity to replant, given the short duration of the agricultural season in the country.

There is little doubt that the floods this year were extremely serious and caused extensive damage to agriculture and infrastructure. However, it must be recognized that the floods made an already and rapidly deteriorating food supply situation muc h worse, rather than caused the situation in the first place. It was estimated by the Mission, that Korea DPR would have carried a substantial food deficit this year notwithstanding the floods. There are two important factors that contribute to thi s, a stagnating agriculture, exasperated by the declining economic situation of the country . Only a small proportion, one fifth or 2 million hectares, of the country's land area can be cultivated, which severely limits its scope to feed a growing population. The problems of limited land are further compounded by declining soil fertility, due to monoculture and intensive farming and climatic conditions, which constrain cropping systems and rotations.

Given these constraints, the only option open to the country in the past, to produce more food, has been heavily intensive agriculture, based on scientific and well coordinated methods and high inputs of chemicals, machinery and irrigation. The emp hasis, in other words, has been on maximizing the quantity of crops produced per hectare, instead of expansion of areas planted. The country enjoyed assured economic ties with the former Soviet Union, China and other Eastern European countries up t o 1990 and a large part of its input requirements or shortfalls in cereal production used to be covered through a preferential system of trading and economic co-operation with these countries, mainly the former U.S.S.R.. However, the break-up of th e U.S.S.R. and a rapidly changing world in the 1990s, has effectively left the country isolated economically, with little capacity to pay for requirements, inputs and food, in the international market. The problem of food imports especially, exacer bated in the last two years by high international grain prices and the inability of China, a key supplier, to export large quantities of grain to the country, as it itself suffered reduced harvests which necessitated large imports, notably in 1995. In brief, therefore, a declining economy, low foreign exchange reserves, a large and persistent trade deficit and a difficult credit position, together mean that the country has serious problems in maintaining agricultural production, productivity and food supply, resulting from the failure to supply agriculture with required (imported) inputs to maintain intensive production. This has been compounded by the reduced ability to import larger quantities of food grain commercially to meet a gr owing food deficit.

Declining agricultural production has certainly manifest itself in the revision of the food rationing system by the Government and net drawdown of stocks. Previously, there was a rather cumbersome rationing system that involved 9 levels, ranging fr om 900 grams/day of cereals for heavy industrial workers to 100 grams/day for children in kindergarten. Presently a three level system operates, with age being the determining factor. Seventy five percent of the daily calorie intake under the ratio n is expected from cereals, of which about two-thirds would be rice and one-third maize. Even this reduced level of food intake has not been sustained and the Government now accepts a reduced average daily intake requirement of 2 131 kcals and has revised the cereal composition of the rations to 60 percent rice and 40 percent maize.

Based on this reduced level of calorie intake, the Mission estimates a requirement of some 3.69 million tons of food grain in 1996, to meet human consumption alone. The per caput yearly consumption of rice and maize would be 100 Kg and 67 Kg respec tively, giving a total of 167 kg of cereals. In addition the government would need cereals for feed and industrial uses, though past levels can not obviously be sustained in an emergency situation and need to be reduced. The total grain requirement s for 1996 are therefore estimated at 5.99 million tons. With floods this year, the amount available from domestic production is estimated at 4.1 million tons, which together with planned imports and food aid, already received or programmed, will r aise total food availability to 4.8 million tons in 1996, leaving an overall shortfall of some 1.16 million tons.

The Democratic People's Republic of Korea faces a grave food supply problem, aggravated by large reductions in output over the past two years due to adverse weather. There is a need for both emergency and project and programme food assistance as we ll as for international support for the rehabilitation of the agriculture sector to raise domestic food production to more normal levels. Emergency food assistance is especially needed for the farming community, who have no established access to th e Public Food Distribution System, in addition to young children and pregnant and nursing mothers. So far there has been very limited response by donors to providing emergency assistance. Only urgent mobilization of food assistance would avert furt her hardship and possible starvation in the months ahead.

Food production in 1995

Only some 20 percent of Korea DPR can be cultivated, where the majority of the population live. The rest comprises mountainous areas, which offer extremely limited scope for agricultural expansion. Total arable land amounts to some 2 million hectar es, though only some 1.43 million hectares is suitable for cereal and other food grain production, of which approximately 80 percent is irrigated. Of the rest approximately 300 000 hectares is under fruit cultivation, and the remaining 270 000 hect ares predominantly under mulberry trees for sericulture.

Important features of agriculture in the country are, (1) the extremely limited scope for expanding cultivable area to enhance food production, (2) declining soil fertility due to monoculture and intensive farming techniques and (3) climatic condit ions which do not permit more than one cropping season per year, on account of the limited number of frost free days, estimated at 165-180 days. There are two options available for area expansion open to the Government, which have currently been de veloped to a limited extent. These include (a) the reclamation of tidal areas, which would add a total of 300 000 hectares, if completed, for paddy production and (b) terracing in mountainous areas, for which the target is 200 000 hectares, for mai ze production. Despite the recognized necessity of bringing these lands into cultivation, the costs involved are high and little progress has been made so far.

The limited potential for expanding domestic food production through area expansion, coupled with the drive for self sufficiency have, hitherto, meant that the Government has laid heavy stress on four aspects in modernizing agriculture. These are, irrigation (some 1 700 artificial reservoirs and 40 000 km of canals), mechanization (5-6 tractors per 100 ha), intensive use of chemicals and electrification. In addition the system of crop husbandry aims to be extremely intensive and relies heavi ly on the philosophy of individual plant care, from seed to harvest.

Although the aim is to provide the technically optimum dose of fertilizer, it is clear that the objective has not been met for several years, if at all. On average, and in normal circumstances, the application ratio of optimum N, P, K is 100:100:50 , using Urea, Super-Phosphate and Potassium Chloride fertilizers. In 1989, an optimal year, it is reported that the average quantity of fertilizer applied to cereal crops was approximately one ton per hectare. which dropped to 750 kg/ha in 1994 and 500 kg/ha in 1995. The figure for 1995 appears to be consistent with the domestic availability of Urea and Phosphoric fertilizers for cereal crops, which were given as 350 000 tons and 240 000 tons respectively. Although Potassium fertilizers were previously imported, presently the only source is as a by product of domestic cement production.

The economic problems involving, low foreign exchange reserves, a large and persistent trade deficit and low credit worthiness, in recent years, have meant that the country has serious problems in maintaining agricultural production (productivity) and food supply. These factors have contributed to failure to supply agriculture with required (imported) inputs to maintain intensive production and a reduced ability to import larger quantities of food grain commercially to meet a growing food de ficit. In 1989, considered an optimum year, production of paddy and maize was estimated at 8.1 million tons, though by 1993 this had fallen to 6.64 million tons, a year before adverse weather affected cereal production in 1994 and 1995. Therefore, during the period 1989-93 productivity and overall cereal production declined by some 18 percent and can de-facto be attributed to structural problems in agriculture. In both 1994 and 1995, the underlying and continuing decline in agricultural prod uction was further compounded by hail storms and floods respectively, which exacerbated an already serious problem. Therefore, as Government figures of production losses in 1995 would certainly incorporate an element of structural decline, it is ne cessary to assess the level of production under a without and with flood scenario, in order to have a more reasonable understanding of the level of damage. In order to do this the following assumptions and factors have been used by the Mission:

- The average annual rate of decline in production between 1989 and 1993, taken to be structurally induced, was approximately 3 percent for paddy and 6 percent for maize.

- Production in agriculture is declining at an increasing rate as more and more macro economic problems filter into the agriculture sector.

- Using 1993 as the base year (1994 was also weather affected), and assuming an increasing rate of structural decline in agriculture, in the two year period between 1993 and 1995, the production of paddy is assumed to have decreased by 10 percent and maize 15 percent, i.e. the annual rate plus a factor for an increasing rate of decline. In this way the production of paddy and maize in 1995, under normal weather scenario would have been some 3.1 million tons and 2.7 million tons respectivel y.

- The area of paddy under cultivation is taken to be 650 000 hectares, (including reclaimed tidal areas) and maize 700 000 hectares, including hill terraced areas.

- The official figures of flood area damage were adjusted to arrive at the Mission's estimate of area lost of paddy and maize. The adjustment factor is based on discussion , field visits and an analysis of the areas (river deltas) where the princ ipal effects of floods were felt. Based on this adjustment, the area of total loss in paddy was calculated to be 106 900 hectares and maize 94 700 hectares.

- The loss of production of paddy and maize with floods in 1995, therefore, is calculated on Mission estimates of area affected by floods and expected yield in 1995. This loss has been deducted from the normal weather scenario production to arriv e at the domestic level of cereals available this year.

Based on this analysis, it is estimated that the shortfall in production, of paddy and maize, that can be attributed to underlying problems in agriculture is estimated at 820 000 tons and to the floods 890 000 tons, giving a total of 1.7 million to ns. The Mission's estimate of cereal production in 1995 and its comparison with production in 1993 and 1989 are shown in Table 1.

Table 1: Food Cereal Production 1989, 1993 and 1995

Crop198919931995 1/
Production
(000 tons)		Yield
(kg/ha)		Production
(000 tons)		Yield
(kg/ha)		Production
(000 tons)		Yield
(kg/ha)
Paddy3 9006 0003 4405 3002 5803 969
Maize4 2006 0003 2004 6002 3503 357
Total/Average8 1006 0006 6404 9504 9303 663

1/ Mission estimate.

Source: Office of the Agricultural Commission and Mission estimates.

Supply and demand analysis

In the Democratic People's Republic of Korea, trading is entirely under state control and prices for production and consumption goods are fixed by the Price Fixation Committee, which depends directly on the People's Central Committee. Prices, howev er, have a purely accounting role, and do not reflect supply and demand conditions. The quantitative rationing system is the tool which permits the Government to adjust supply and demand. In determining national demand, a distinction must be made b etween the farm and non-farm population.

Norms have been defined for the basic consumption needs in grams per day, with cereals normally providing 75 percent of daily calorie intake. These norms have been established for various population groups, initially determined according to their w ork activity. The original ration system had nine levels, the highest providing 900 grams of cereals per day, for coal miners, workers in heavy industry etc and the lowest level providing 100 grams, for children in kindergarten. However, for some t ime the Government has not been able to provide rations according to the system and, at present, it is operating a 3-level system with the age of the person being the determining factor. Cereals are assumed to provide 75 percent of the total calori e intake, with the remaining 25 percent expected from fish, meat, vegetables, fruit, fats and oil etc. Seventy percent of the cereal ration is expected from rice and 30 percent maize and the rations are distributed twice a month. Even though the Go vernment has set higher targets, it now accepts a reduced average daily intake requirement of 2 131 kcal, across the population.

Moreover, although the Government's initial objective was to provide 70 percent of the requirement in rice and 30 percent in maize, it has now changed the ratio to 60 percent rice and 40 percent maize. Based on the revision, the per caput yearly co nsumption of rice and maize would be 100 Kg and 67 Kg respectively, giving a total of 167 Kg of cereals.

The Mission's calculation for total grain requirement for the food year 1996 is, therefore, 3.69 million tons for human consumption, 1.4 million tons for animal feed and 900 000 tons for other uses, giving a total of 5.99 million tons.

As indicated earlier, food production has continuously declined since 1989. Whereas in 1989, per caput availability of food grains from domestic production was 345 kg, it was 272 kg in 1993 and only 222 kg in 1994, the year in which a hailstorm cau sed widespread damage to production.

At the beginning of 1990, Government was reportedly holding some 4 million tons in food grain stock. In an attempt to adhere to its obligations under the rationing system, Government in the years thereafter has heavily drawn upon this stock, to mak e up the shortfall from domestic production, and it would appear that Government has been able to run the rationing system more or less at the established level. However, due to economic problems in the 1990s, it has been unable to replenish stocks through imports. Consequently, the volume of stock has continually declined and run down to a negligible level at the beginning of the 1995 marketing year.

The national cereal supply situation for 1996 is shown in Table 2 below.

Table 2: Cereal supply/demand balance sheet ('000 tons)

Total Availability4 077
- 1995 Production4 077
- Stock Drawdown-
Total Utilisation5 988
- Food Use3 688
- Feed Use1 400
- Other Use900
1996 Import Requirement1 911
- Commercial Imports Planned700
- Food Aid Received56
Uncovered import Requirement1 155
of which:
- Emergency food aid16
- Project food aid35
- Programme food aid1 104

Food Aid Needs

There is a serious food supply problem in Korea DPR, and part of this can be attributed to inherent problems in the sector and part to the crop losses by floods in 1995. Given these two dimensions to the current problems of food supply in the count ry, there is a need for both emergency and project and programme food assistance as well as support for the rehabilitation of the agriculture sector to raise production to more normal levels. So far there has been very limited response by donors to emergency assistance. Various independent assessments of the situation in the country, ie by WFP, the IFRC and UN/DHA, indicate that malnutrition can be expected to increase in 1996, unless substantial food aid is provided. The leanest period will be August-September next year, when the reduced remnants of the 1995 harvest will have been consumed.

Those most at risk are young children and pregnant and nursing women, estimated at 2.1 million and 0.45 million respectively. Immediate attention also needs to be focussed on the farming population, as they lost grain stocks and have no established access to the Public Food Distribution System. The target populations, for emergency assistance, are principally located in Chagang, North Pyongan and North Hwanghae provinces, which were most affected by floods.

The emergency operation jointly approved by FAO and WFP in October 1995, following an earlier UN Inter-Agency Mission in September, required a total 20 250 tons of rice and 675 tons of vegetable oil to meet the consumption needs of 500 000 flood af fected people for three months. Only 5 140 tons have been delivered, which leaves a balance of 15 110 tons of rice and 675 tons of oil which should be supplied urgently.

As there is also urgent need to rehabilitate agriculture, damaged by the floods and further expand arable land through reclamation, project food aid should be considered. Almost ideal baseline conditions exist in Korea DPR for food-for-work. The co untry's principle of "juche" or self-reliance means that the mass mobilization of the population to undertake community work projects is guaranteed. In order to inject food aid into rural areas, to promote agricultural production, FFW could be used to repair the damaged dykes and infrastructure caused by the floods, to terrace hillsides to expand the area under cultivation and to increase the amount of arable land through tidal reclamation projects. An FFW project involving 12.5 million mand ays per annum would require 25 000 tons of wheat/maize plus some quantities of canned fish or equivalent. Further, project aid should be considered for vulnerable group feeding as malnutrition is expected to increase in 1996.

The Government requires substantial quantities of cereals for its Public Distribution System. Thus far only 8 000 tons of rice, financed by Switzerland, has been committed. Considerable scope exists, therefore, for donors to assist Korea DPR with b alance of payment support through the provision of programme food assistance for distribution through the PDS. Up to 1.2 million tons of food aid could be used in this manner. Cheaper cereals, maize, maize meal, wheat and wheat flour should be supp lied. The relevant national authorities have accepted that this is necessary. Arrangements would need to be discussed between donors and the government on the utilisation of the sales proceeds which would be generated in local currency. Conditional ity, should include the progressive increase of the sale price so as to support a reduction in the subsidy on the domestically procured grain which is the mainstay of the PDS.

Medium and longer term measures

Even under normal growing conditions Korea DPR has serious problems in attaining the food production level necessary to guarantee the appropriate food supply to its population. Taking into account the limiting factors outlined above, an objective b ased on self-sufficiency is very unlikely to be economically sustainable, given limited land, an increasing population and demand for improved diet. There may therefore be the need for government to re-consider its agricultural policy and to take c ertain medium and long term measures to improve domestic agriculture and food security.

The present poor crop diversification and the absence of rotational schemes on a large scale have negatively affected soil fertility and constrained agricultural productivity. Government may consider to move from the present monoculture of paddy an d maize to a more diversified crop production and for a better integration of agriculture and livestock farming.

In discussion with the relevant Government authorities, four areas of possible assistance were identified by the Mission:

- The identification and delivery of early varieties and short-maturing maize seed to obtain two maize crops.

- Technical advice on the establishment of rotation schemes including the provision of green manure, in particular leguminous crops, and the supply of the most suitable leguminous seed.

- Technical advice on the most suitable sugarbeet variety for the country's growing conditions and supply of the respective seed.

- Technical advice on mulberry cultivation with a view to further sericulture development.

International support in the implementation of the above measures will go a long way in reversing the production trends and improving the food security of the country.