[Exclusive] Obtained Document on 'North Korea Grain Control'... "Signal of Kim Jong-un Regime Collapse"

"National Monopoly on All Grain Distribution" North Korea Directive Obtained
Restoration of Anti-Market Grain Sales System... Food Crisis Resolution Uncertain
North Korea Caught in 'Jangmadang Dilemma'... "Signal of Regime Collapse"

North Korean authorities have reportedly distributed guidelines to residents to control the 'jangmadang' (markets) and monopolize all grain transactions. The intention is to stabilize supply by controlling grains to address food shortages, but market control has disrupted food procurement, which is instead assessed to have worsened the food crisis.

On the 2nd, Asia Economy obtained a nine-page document titled "Strict Compliance with Legal Requirements in Grain Sales" through the Sand Research Institute, which contains North Korea's policy to monopolize grain distribution through grain sales offices. Although trends of North Korea strengthening food control have been detected since the end of last year, this is the first direct confirmation. The document is known to have been distributed, taught, and collected by the Ministry of People's Security in various regions.

North Korea often quotes the instructions of Chairman Kim Il-sung or National Defense Commission Chairman Kim Jong-il when educating residents or enhancing control. Kim Jong-il's directive was cited at the beginning of this document as well. However, unlike Kim Jong-il's instruction to "state control of grains but 'distribute' them," the current North Korean guideline indicates that authorities intend to sell grains to residents for money, which is interpreted as a sign of lacking ideological justification.

The document states, "The state will seize the grain policy and thoroughly implement a centralized management system for grains," and "grains can only be sold at grain sales offices or state-approved food supply offices authorized to sell grains." It continues, "Some city and county commercial service networks, pursuing only their unit's profit, illegally purchase grains without regard to state laws and recklessly sell them," and "these phenomena, whether large or small, disrupt the state's grain policy discipline and constitute illegal acts that hinder the construction of a strong economy."

The guideline for authorities to control individual transactions and directly sell grains signifies a change in the food supply system. Previously, grains were sold at state food supply offices at government-set prices, but supply was far too insufficient to curb soaring rice prices. Accordingly, the authorities intend to seize and distribute even the grains circulating in the market. The directive also includes orders to mobilize all grain sources outside state control. It commands to collect everything from farm production to grains individually stored by residents, stating, "All surplus grain sources must be fully mobilized."

Penalties for violating these guidelines are also specified. ▲Institutions, enterprises, or organizations outside grain policy offices purchasing, storing, transporting, or selling grains for sales purposes, ▲Selling grains to institutions, enterprises, or organizations not designated as sales targets at grain sales offices, or ▲Misusing funds generated from grain sales will be subject to criminal liability. According to Article 75 of the Administrative Punishment Law and Article 103 of the Criminal Law of the Democratic People's Republic of Korea, offenders are warned they may face unpaid labor punishment or labor training sentences (6 months to 1 year in labor training camps).

Choi Kyung-hee, head of the Sand Research Institute, said, "For the North Korean leadership, which wraps dictatorship in socialist ideology, 'food rationing' is like the last vestige of pride." She added, "For this reason, the existing food supply offices symbolizing the socialist rationing system have not been abolished but maintained, yet the intention to monopolize grain distribution through grain sales offices signals that the existing supply system is collapsing."

Nam Sung-wook, director of the Korea University Institute for Unification and Convergence Studies, said, "It appears to be an intention to prevent side effects such as monopolies and hoarding seen in the jangmadang and to control everything by the authorities," and "Ultimately, this policy will act as a means to find food outside the authorities' control." He also pointed out, "It is an anti-people policy where the leadership takes food from residents to save themselves amid the food crisis."

"Starvation due to worsening food crisis"... Even increasing rice imports is 'insufficient'

A scene from a play where North Korean defector youths share their experiences as "kkotjebi" (street children)

North Korea's food crisis worsened due to the COVID-19 aftermath, drought in spring last year, and summer floods. The new control card introduced by the Kim Jong-un regime aims to curb soaring grain purchase prices by cracking down on markets. However, this policy is assessed to have worsened the food crisis by shrinking the market. Restrictions on individual grain transactions disrupted food procurement through the jangmadang, and residents who sustained their livelihoods through the markets lost their income sources. Even if authorities sell rice cheaper than the market, residents have no money to buy it.

Multiple sources familiar with North Korea cited 'purchase restrictions' as a problem. One source explained, "Just because it is a grain sales office doesn't mean you can buy food unconditionally; you can buy about 5 kg per person at most once a month." Calculating one serving as 200g of rice, a family of four needs 800g per meal. Eating two meals a day requires 1.6 kg, or 48 kg per month. The 20 kg allocated for a family of four is far too little. Additional food must be bought at high prices, and existing food supply offices have long been short of grains and limited to soldiers and other designated groups.

North Korea began importing long-grain rice from China for the first time in October last year. Known as Annammi, this long-grain rice lacks stickiness and has a long shape, with a lower price compared to the short-grain rice preferred in Northeast Asia. According to detailed North Korea-China trade data from the Chinese General Administration of Customs, North Korea imported 88,000 tons of rice from January to April this year, including 46,771 tons in March alone. Total grain imports, including corn, reached 121,000 tons during this period. However, no matter how much imports from China increase, it seems insufficient to resolve the supply shortage.

Jangmadang that survived the 'Arduous March'... a 'dilemma' for the North Korean leadership

The scene of Jangmadang in Hyesan City, Yanggang Province, North Korea

The new control suggests that the jangmadang pose a 'dilemma' for North Korean authorities. While markets can alleviate inefficiencies inherent in the system, freely opening them risks dismantling the economic monopoly held by the leadership. The fact that 'information' flows through these markets is also a significant burden. The emergence of side effects such as hoarding in these markets signals that the authorities' control has already weakened. After more than three years of border and regional lockdowns due to COVID-19, continuing to suppress markets could provoke backlash.

The jangmadang are markets created by the people themselves when the rationing system collapsed during the 'Arduous March.' Although the concept of markets contradicts socialist ideology, unlike the Kim Jong-il era when jangmadang were suppressed, the Kim Jong-un regime has seen them become quite active. According to the Korea Institute for National Unification, as of November last year, there were 414 officially approved markets by North Korean authorities, with one market serving approximately 61,831 people. Including unofficial markets outside government control, the total is estimated to exceed 500.

The North Korean leadership has already failed to control the jangmadang. In 2005, Kim Jong-il introduced the 'grain monopoly system,' where all food traded in the market was controlled by the authorities and supplied at prices cheaper than the market, but grain prices instead rose. At that time, Kim Jong-il attempted economic reforms after the socialist rationing system collapsed during the Arduous March. However, nearly 20 years later, Kim Jong-un is repeating a failed policy, which some criticize as regression compared to the past.

Socialism failure, economic reform failure... a signal of 'regime collapse'?

Kim Jong-il, Chairman of the National Defense Commission of North Korea (left), and Kim Jong-un, then successor and Chairman of the State Affairs Commission, in 2010

The attempt to restore the grain monopoly system is widely assessed as likely to fail. Half of North Korea's current population belongs to the 'jangmadang generation,' equivalent to the MZ generation. Born in the 1990s when socialism collapsed, they never experienced proper rationing and grew up in the jangmadang. They have personally experienced that the authorities cannot take responsibility for the people and have even tasted capitalism. Lim Soo-ho, senior research fellow at the Institute for National Security Strategy, predicted, "Ultimately, they will have to significantly increase external imports, but foreign currency shortages make this difficult, and the black market is likely to expand again soon."

There are also views that losing ideological justification signals 'regime collapse.' The act of monopolizing grains and selling them to the people for money contradicts socialist ideology. In fact, the North Korean authorities gave ideological justification by citing Kim Jong-il's instructions in the obtained document. At the beginning, it states, "Great Leader Comrade Kim Jong-il instructed that the state must fully seize all grain sources in the country and establish strong discipline and order to distribute and consume according to the national grain policy system."

Choi Kyung-hee of the Sand Research Institute said, "The fact that they even brought in Kim Jong-il's instructions is proof that the new policy lacks justification," and questioned, "Socialism's basic ideology is that the state owns all means of production and distributes them equally, but selling grains to people for money is a capitalist element, isn't it?" She added, "The Kim Jong-un regime monopolizes everything from means of production to outcomes while exploiting only the labor needed in the production process," and analyzed, "Although rapid changes may not appear immediately, this is a sign that the regime is gradually collapsing."