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Asia's Other Crisis

by Stephan Haggard, University of California, San Diego
and Marcus Noland, Peterson Institute for International Economics

Op-ed in Newsweek
May 17, 2008

© Newsweek

A devastating disaster hits a longstanding Asian dictatorship. The crisis is compounded by failed economic policies and conflicts with neighbors. The world stands ready to help, but the regime dithers and aid goes undelivered. Even information on the catastrophe is scarce thanks to a media blackout, government propaganda, and denial.

This story applies, of course, to Burma. But North Korea is also headed toward widespread food shortages and famine. Hunger-related deaths are nearly inevitable, on a scale that could rival Burma's.

Most of the food consumed in North Korea today is produced locally, but since 2005, harvests have been shrinking due to retrograde policies, adverse weather and a fertilizer shortage. The fertilizer is normally supplied gratis by Seoul but was cut in 2006 in response to Pyongyang's missile and nuclear tests. Aid, likewise, has dwindled as donors have soured on North Korean behavior. Global price rises have squeezed North Korea's ability to import. With grain supplies declining, the margins between minimum needs and supply are down to 100,000 metric tons—enough to last less than two weeks.

We believe the United Nations has unwittingly contributed to this budding crisis by crying wolf in the past. The Food and Agriculture Organization and the World Food Program (WFP) build their estimates on the assumption that North Koreans need at least 460 grams of grain a day to survive, a figure that we find is inflated by about 20 percent. Adjusted for historical consumption patterns in the country and the actual role of grain in the North Korean diet, which is supplemented by potatoes, beans, and other vegetables, one sees that the WFP has consistently overestimated the urgency of the food shortages there. Right now, the WFP says North Korea is short by about 1.67 million metric tons, which would mean famine conditions. Our estimate of the shortage—100,000 tons—means the real crisis is about to begin. The UN system's repeated invocations of a much larger gap have lulled people into a sense that North Korea is always short, and have obscured the actual conditions.

The truth is revealed by local food prices, which have nearly tripled in the last year, rising faster than local inflation and world prices. The average North Korean's monthly salary is worth roughly three kilos of rice—a couple of days' supply for a family of four. Yet the government has backed away from reform and intensified state controls, cracking down on private markets that are the key source of food and seizing grain harvests.

The anticipated provision of 500,000 metric tons of grain by the United States as part of the nuclear deal would be welcome but won't solve the problem: Because US aid must be sourced domestically and transported on US vehicles, it will take months to arrive. This makes the behavior of China, South Korea, and Japan critical. In the short run, China must remove its export taxes and quotas on food to North Korea. Japan sits on 1.5 million metric tons of rice, which could be used for relief—if the United States agrees not to enforce a bilateral treaty restricting its use. Despite its current bad relations with the North, South Korea could use the UN system as a conduit for aid.

But these actions would only be a bandage: Without fertilizer, North Korea's next harvest is likely to shrink further, carrying the crisis into 2009.

North Korea's food problem, now in its second decade, presents a difficult set of choices. The ruthlessness of the regime and the numbing repetitiveness of its food shortages make it difficult to mobilize assistance. Some have even argued that Washington should offer nothing until the North comes clean on its nuclear programs.

The long-run solution is to revitalize North Korea's industrial economy, which would give it the export earnings to import grain. This solution presupposes progress on the nuclear issue. But in the short run, absent vigorous action by South Korea, China, and Japan—the three countries capable of delivering help fast—hunger will likely claim innocent victims once more.


Book: Witness to Transformation: Refugee Insights into North Korea January 2011

Peterson Perspective: North Korea's Immunity to Outside Pressure: Part I December 12, 2012

Policy Brief 10-1: The Winter of Their Discontent: Pyongyang Attacks the Market January 2010

Working Paper 10-2: Economic Crime and Punishment in North Korea March 2010

Paper: FTAs and the Future of US-Korean Trade Relations November 2009

Paper: Implementing the KORUS FTA: Key Challenges and Policy Proposals February 2008

Policy Brief 08-6: North Korea on the Precipice of Famine May 2008

Policy Brief 07-7: The Korea-US Free Trade Agreement: A Summary Assessment August 2007

Policy Brief 06-4: Negotiating the Korea–United States Free Trade Agreement June 2006

Working Paper 07-7: North Korea’s External Economic Relations August 2007

Book: Avoiding the Apocalypse: The Future of the Two Koreas June 2000

Book: Free Trade Between Korea and the United States? April 2001

Working Paper 08-4: Migration Experiences of North Korean Refugees: Survey Evidence from China March 2008