Aid group says N.Korea rice price hits record high

SEOUL - North Korea's rice price has hit a record high due to the delayed arrival of Chinese aid and a campaign to procure food for the military, a Seoul-based welfare group said Wednesday.

The market price fell to 1,500 won (S$1.72) per kg after the regime released grain to celebrate the January 8 birthday of Kim Jong-Un, the youngest son of leader Kim Jong-Il, said Good Friends.

But the price soared to a record high of 3,200 won (just under one dollar at the official exchange rate) on January 19 in Pyongyang after the regime started collecting rice and corn for its 1.2 million-member military, according to the group, which has contacts in the North.

The delayed arrival of food aid from China, Pyongyang's sole major ally, has also aggravated food shortages this winter, it said in its newsletter.

Good Friends quoted an unidentified communist party official as saying: "We had no other choice but to collect food for military supplies... because our scheme to bring in food from China went wrong."

The regime, which fosters an intense personality cult around its founding family, hands out food and gifts to people on key holidays such as the leader's birthday.

Kim Jong-Il, 68, is known to be accelerating the transfer of power to his son after suffering a stroke in 2008.

Aid groups have warned that the North's chronic food shortages will worsen this year as international donations dwindle, in part due to irritation over the regime's missile and nuclear programmes.

South Korea used to ship 400,000 tons of rice a year to its northern neighbour. The shipments ended in 2008 as relations worsened.

The regime carried out limited reforms to the state-directed economy in 2002 but rolled them back three years later, clamping down sporadically on private markets which had sprung up after the state's distribution system broke down.

A currency revaluation last November was part of the clampdown. But it backfired disastrously, fuelling food shortages and sparking rare unrest. The North was forced to suspend its campaign against free markets.

(Source: http://news.asiaone.com/News/Latest%2BNews/Asia/Story/A1Story20110126-260476.html)