Prospects of grain production, consumption and trade in North Korea

This research was conducted to address two important problems regarding grain production, consumption and trade in North Korean agriculture. The first was to analyze historic grain production and consumption. This analysis identified the primary reasons for low levels of grain production in North Korea and subsequent shortage of grain. The second was to forecast future production and consumption. Forecasting tools (ARMA Model) provide the analytic framework to estimate future production and consumption of grain in North Korea.;The production and yield of total grain, rice and maize were used to estimate time trends. Production and yield data were regressed on explanatory variables that included dummy variables to reflect different time periods. There was a clear break in the trend after 1986, at which time the productivity of total grain, rice and maize began to decline. This break in trend reflects persistent yield declines which indicates that the problems were structural and policy related rather than entirely to natural adversity (floods and droughts).;Land area, degree of mechanization and "good" weather years were important explanatory variables. Other variables such as use of chemical fertilizers, time trend, and areas under irrigation also were significant illustrative variables. Changes in grain demand looks similar to the trend of production since the government controlled the consumption by the Public Distribution System (PDS). Quantities of grain distributed were tied directly to the harvested quantities of production.;The projections until 2003 indicate that North Korea will continue to import grain since its grain production is not likely to catch up with grain consumption during this period. Particularly, the gap between production and consumption becomes wider as the years go by. Good performance of the general economy will be required to secure a foreign exchange critical for purchase of agricultural inputs like fertilizer and petroleum. Also, movement toward a market directed economy that reflects an incentive for farmers will be helpful for mitigating the widening gap between production and consumption.