Volume 11 Number 3 Autumn 1999
BACKGROUND
North Korea has been experiencing
an acute food crisis due to a series of natural disasters and the
lack of agricultural resources. In response, the international community
including South Korea has provided aid to help resolve the chronic
food shortages. However, there is a suspicion that North Korea has
appropriated the aid for military purposes.
South
Korea was asked to help North Korea's agricultural development,
by providing agricultural resources such as fertilizer to ease the
aggravating food shortages there. In response, the South Korean
government set a policy which would provide the North with aid for
agricultural development as well as for humanitarian purposes. In
a ceremony commemorating the founding of Korea Broadcasting System
(KBS), held on March 3, 1999, President Kim Dae-jung stated that
the fertilizer aid to the North should be discussed at the governmental
level based on the principle of reciprocity. He added, however,
that a small amount of fertilizer for humanitarian purposes would
be delivered to the North through the Red Cross.
Fertilizer
was chosen as a form of aid because it was believed that it could
contribute greatly to increase agricultural productivity. During
the 1970s and 80s, North Korea's agriculture experienced great success
as a result of high-density planting and extensive use of fertilizers.
The methods proved to be detrimental, however, to the natural balance
of the soil and subsequently brought about negative side-effects
such as a deterioration in soil fertility. It has now become almost
impossible to restore the devastated soil in the short term. Furthermore,
it would be very impractical for North Korea to pursue a fundamental
solution to its agricultural problems without addressing the immediate
problem of its hunger-stricken people. North Korea has recently
transformed its uniform maize priority cropping system, prevalent
throughout much of the country, to growing more potatoes and to
diversifying the types of crops grown.
International
organizations have suggested that North Korea decrease planting
density and use less fertilizer in order to restore soil balance.
Following that advice is a positive step for the North from a long-term
perspective. The reality of the present food crisis, however, gives
North Korea no choice but to use more fertilizer in order to increase
food production. One does not have to perform a complicated mathematical
analysis to understand the economic importance of fertilizers to
North Korea. If North Korea were currently using less than 20% of
the amount of fertilizer needed, the increased use of fertilizer
could bring about an instant and effective outcome whose economic
benefits would outweigh those of other inputs. This explains why
the North desperately wants fertilizer aid.
THE NEED FOR FERTILIZER AID TO THE NORTH
In return for fertilizer aid to
the North, the South Korean government expected cooperation, such
as creation of exchange centers, where North Koreans and South Koreans
could mail and receive letters from one another, and a reunion center
for separated families. The North, on the other hand, refused to
cooperate. Furthermore, agricultural cooperation between South and
North Korea came to a halt because the North refused to abide by
the principle of reciprocity and insisted on unilateral aid from
the South.
What is more, there
is no sign that the North Korean food crisis will improve this year.
Although the level of food production increased in 1998 compared
to that of the previous year, it is still not high enough to guarantee
sufficient food for the North Korean people to survive, if one takes
into account the amount of fodder needed for animals, seeds, and
the natural diminution of agricultural return. Consequently, the
North Korean people will continue to suffer from famine unless North
Korea procures an adequate supply fertilizer in 1999.
Almost
half of the nutrients needed for growing crops must be provided
during the early stage of planting through application of base manure,
and with the farming season approaching, the need for fertilizer
aid can no longer be postponed. The active farming season in North
Korea usually begins at the end of April. Considering the time needed
for distribution of fertilizer, fertilizer aid to North Korea should
be received by mid-April. Without North Korea's formal request,
however, direct fertilizer aid by the South Korean government can
hardly be justified. Instead, the South Korean government opted
to provide North Korea with fertilizers through the South Korean
Red Cross, in the form of unconditional humanitarian aid.
On
March 10, the South Korean government and the ruling party decided
to provide fertilizer aid to North Korea through the South Korean
Red Cross as well as to support the World Food Programme (WFP) in
its efforts to help North Korea's agricultural development and resolve
its food crisis. As a first step, 50 thousand tons1) of fertilizer was scheduled to be sent to North
Korea through the South Korean Red Cross before the end of April.
The delivery procedure was to be decided jointly by the South and
North Korean Red Cross. In a special press conference on March 11,
the South Korean Red Cross appealed to the public, to donate funds
to be used towards the purchase of fertilizer for the North. The
Red Cross also appealed to the South Korean government to provide
the North with fertilizer aid in the form of nation-wide humanitarian
aid. In response to the campaign, held March 15 to June 15, the
South delivered a total of 55 thousand tons of fertilizer aid (worth
about 17.2 billion dollars) to the North as of last March. 29.
The South Korean government promised
to provide the North with 200 thousand tons of fertilizer (worth
about 50 billion dollars) based the so-called "inside agreement"
on June 3, in Beijing, and delivered 100 thousand tons (worth about
25 billion dollars) to the North in June, 1999. The shipment included
45 thousand tons of compound fertilizer, 32 thousand tons of urea,
10 thousand tons of ammonium sulfate, and 13 thousand tons of fused
phosphate.
Fertilizer Production in the North2)
During the 1940s, North Korea produced 480 thousand tons of fertilizers a year. Since then, the North has increased its production of fertilizers through expanding or constructing plants such as Hungnam Factory (350 thousand tons of ammonium nitrate lime, 400 thousand tons of ammonium sulfate, 180 thousand tons of urea, 400 thousand tons of super phosphate, etc.), lime nitrogen fertilizer plant in Sunchon (expanded from Sambo chemical plant in 1967), The phosphate plant in Haeju refinery (expanded in 1971, 1975, and 1980), Nampo refinery (expanded in 1954, 1958, 1962, and 1984), and Chongnyun and Chongsu chemical factories. By the 1960s, North Korea had moved ahead the South in fertilizer productivity. (see table 1)
Fertilizers produced in North Korea,
however, have a relatively low concentration of active ingredients.
They are so inefficient that the South had already stopped producing
many of them. Nevertheless, the North produces nitrogenous fertilizers
such as lime nitrogen (contains 19% nitrogen), super phosphate (29%
phosphoric acid), ammonium nitrate (19% nitrogen), and ammonium
chloride (25% nitrogen). Compared with urea (46% nitrogen) produced
in the South, the concentration of nitrogenous ingredient in nitrogen-based
fertilizers of the North is less than half that of the South. Moreover,
the technology used to produce fertilizer in the North is out of
date and the facilities producing compound fertilizer are few. As
a result, it was not until 1990 that the North was able to produce
potassium-based fertilizers.
It
is reported that the North produced a total of 4.28 million tons
of chemical fertilizers in 1995; 650 thousand tons of urea, 400
thousand tons of ammonium sulfate, 350 thousand tons of ammonium
nitrate lime, 370 thousand tons of lime nitrogen, 1.4 million tons
of super phosphate, 400 thousand tons of fused phosphate, 510 thousand
tons of potassium, and 200 thousand tons of ammonium chloride, etc.
The specific breakdown of chemical fertilizers produced by the North
includes 1.73 million tons of nitrogen, 1.78 million tons of phosphorus,
and 170 thousand tons of potash. However, it is estimated that the
real production of fertilizers will be 3.68 million tons because
of worn-out facilities, and in terms of ingredient concentration,
it will only total one million tons, half of that produced in the
South. Because of the lack of equipment as well as
resource and energy constraints, North Korea stopped operating Namhung
Youth Factory and Aoji chemical plant for nitrogen-based fertilizers.
Moreover, only part of Hungnam Factory is now in operation.3)
Although Hungnam
fertilizer cooperative plant once produced ammonia with coal as
its main raw material, it stopped production it because of the damages
incurred in the last flood. Furthermore, because of the dearth and
the expense of electricity, those fertilizer plants made almost
no profit.
If the
North would increase its supply of electricity and replace coal
with bunker C oil, it could produce more nitrogen-based fertilizer.4)
The North's
capacity to produce nitrogen-based fertilizer amounts to a total
of 400 thousand tons (in terms of ingredient); 216 thousand tons
in Namhung plant, 141 thousand tons in Hungnam, and 34.5 thousand
tons in Aoji. In actuality, only 37 thousand tons of nitrogenous
fertilizer and 10 thousand tons of phosphate were produced in 1998.
The North has recently encouraged
farmers to produce and use, their own fertilizers such as liquid
fertilizer, manure fertilizer, soil-mixed organic fertilizer, peat,
to make up for the shortage in chemical fertilizers. It is estimated
that the North could produce 50 thousand tons of complex microbial
fertilizer and soil-mixed organic fertilizer per year. This is a
type of organic fertilizer made up of humus soil sprinkled with
urine to which urea is added and fermented at 40‘® for a week. Complex
microbial fertilizer, on the other hand, is created with useful
microbes extracted from the soil and fermented with various organic
materials such as straw, chaff, sawdust, charcoal, and agricultural
or fishery wastes. Last year, Chongryun--General Association of
Korean Residents in Japan, a pro-Pyongyang organization--helped
the North construct about 100 complex microbial fertilizer plants.
This year the North launched a project for self-produced fertilizer
as a national business in order to overcome chemical fertilizer
shortages. Thus, the North Korean authority has assigned targets
for fertilizer production to plants in urban areas, state farms
and cooperative farms as well as to individual farms.
MEETING THE DEMAND FOR FERTILIZER
Demand for Fertilizer
In the North, it is the cooperative
farms that decide how much fertilizer should be used. In other words,
the cooperative farms make their preliminary estimate on how much
fertilizer is needed at farms before the planting season and submit
a report to the county farm management committee. The county farm
management committee then reports it to the province rural economic
management committee. In the final stage, the Ministry of Food Administration
decides on the total amount of annual fertilizer needed, based on
the province rural economic management committee's report. The Ministry
of Food Administration makes its decision taking into account the
production levels of fertilizer plants and the amount of fertilizer
imported. Furthermore, the Ministry of Food Administration gives
production orders to each fertilizer plant, as well as overseeing
the distribution of fertilizer. The fertilizer is usually first
distributed to the Ministry of Food Administration, the province
rural economic management committees, and the county farm management
committees before it is distributed to the cooperative farms. Generally,
they are responsible for transporting the allotted fertilizer to
their own farms.
In the 1980s,
the North experienced a severe imbalance among the three major ingredients
of fertilizers in terms of their NPK ratio; using nitrogen as a
standard (1.0), the NPK ratio of nitrogen (N), phosphorus (P), and
potash (K) was 1.0 : 0.22 : 0.11. On the other hand, NPK ration
among the three ingredients in the South was 1.0 : 0.46 : 0.50.
While the average amount of fertilization in the North
was 343.5kg/ha, that in the South was 363.9kg/ha from 1982 till
1987.5)
According
to a report made by the North, the amount of fertilizer used in
terms of real weight had increased from 260 (131kg/ha) in 1949,
to 215 (113kg/ha) in 1956, to 307 (160kg/ha) in 1960, to 599 (300kg/ha)
in 1963, and to 982 thousand tons (492kg/ha) in 1969. The report
by the United Nations states that fertilizer use in the North had
reached 819 thousand tons on the average during the period from
1989 till 1991 (in terms of ingredients). The amount
estimated by the United Nations is close to that recently consumed
in the South, which is 1 million tons.6) Given
the current adverse economic conditions of the North, the amount
of fertilizer use estimated by the U.N. seems rather unrealistic.
The level of chemical fertilizer use
in the North was similar to that of the South until the 1980s. During
the 1990s, however, the North Korean economy began to stagnate,
and the chemical fertilizer consumption in the North has become
much less than that in the South. The South estimated that the average
consumption of fertilizer (in terms of output) in the North from
1992 till 1994 was 1.437 million tons, 70% of South Korea's level
of consumption of 2.4 million tons. However, if converted in terms
of ingredients, the North's chemical fertilizer consumption would
be far below the level of the South. In other words, the amount
of 1.437 million tons would be 400 thousand tons in terms of ingredient,
only 40% of South's level of consumption of one million tons (27.7%
of the average real weight, based on the fertilizers produced in
the North.)
Since the gross area
under cultivation in the North has been estimated to be 1.47 million
hectares in 1999; 580,000 of rice, 600,000 of maize, 100,000 of
barley and wheat, 100,000 of pulse, 40,000 of potatoes, and 50,000
of miscellaneous cereal grains, it needs at least 400 thousand tons
of chemical fertilizer to cultivate those crops (in terms of ingredients).
(See Table 2)
If it converted
into urea, fused phosphate, and potassium chloride, produced in
the South, in terms of real weight, the North needs a total of 1.12
million tons of those fertilizers to cultivate those crops ; 445
thousand tons of urea, 500 thousand tons of fused phosphate, and
170 thousand tons of potassium chloride. Furthermore, it would take
at least an additional 500 thousand tons (1.6 million tons in terms
of real weight) if one were to take into account fertilizer for
vegetables, fruits, and mulberries.
Supply of Fertilizer
In 1998, the total supply of fertilizer
was 124 thousand tons (in terms of active ingredients); 47 thousand
tons from self-produced fertilizer and 77 thousand tons from imports
or aid (see table 3). Compared with 193 thousand tons in 1997 and
200 thousand tons in 1996, the fertilizer supply in 1998 was far
less.
In 1998, the
International Fund for Agricultural Development (IFAD) provided
the North with 57 thousand tons (real weight) in the form of urea
and compound fertilizers, which was totally used up in the IFAD
project in the North. IFAD used about 35 thousand tons (real weight)
of fertilizer for the double-cropping program on 70 thousand hectares,
and used the rest of it for more fertile farmlands.7)
Therefore, in 1998 only 98 thousand
tons of chemical fertilizer (in terms of real weight) was supplied
to be used for a land area of 1.8 million ha, excluding the area
under the IFAD project. Under normal conditions, the amount of 98
thousand tons would be appropriate for 300 thousand ha of farmland.
Thus, only 17% of the actual amount of fertilizer needed was supplied
for almost all the farmlands.
Most
fertilizer that the North obtained from abroad in 1998 was imported
from, or provided by China, except international organization's
aid. In 1998 China exported a total of 63,014 tons of fertilizer
to the North (worth about 10.9 million dollars; 44,101 tons of nitrogen,
18,811 tons of compound fertilizer, 100 tons of phosphates, and
2 tons of kalium, etc.), 35% of the amount exported in 1997. China
provided the North with fertilizer through various trade channels,
such as 16,582 tons through general trade, 13,467 tons through border
trade, 10,000 tons through the processing trade, and 20,000 tons
of nitrogen-based fertilizer through grant-type aid. In comparison,
the South supplied the North with 3,300 tons of fertilizer in 1998.
The North produced 298 thousand tons
of ammonium sulfate, 79 thousand tons of super phosphate, and 27
thousand tons of potassium chloride. In addition, it has a plan
to import 300 thousand tons of fertilizer: 280 thousand tons of
ammonium sulfate, 10 thousand tons of super phosphate, and 5 thousand
tons of potassium chloride. Thus, the North is supposed to have
a total of 163 thousand tons of fertilizer in terms of ingredients:
133 thousand tons of nitrogen, 16 thousand tons of phosphates, 14
thousand tons of potash, and etc. However, 100 thousand tons of
fertilizer (44 thousand tons in terms of active ingredient concentration)
which the South provided following the June 3 "inside agreement"
was not included. Therefore, if domestic production, commercial
import, international aid, and South Korean aid were included in
the account, it would total 210 thousand tons of fertilizer (in
terms of ingredient concentration). The amount is 50% of the total
fertilizer needed for all cultivation and a 67% increase, compared
to the 124 thousand tons of fertilizer supplied in 1998.
REVIEWING THE POSSIBILITY OF FERTILIZER AID
TO THE NORTH
In 1998, fertilizer production capability in the South was 4.788 million tons, the supply being 4.09 million tons and the demand, 3.88 million tons. The South, therefore, holds 210 thousand tons of fertilizer in stock (see table 4). Domestic fertilizer production was 3.55 million tons and the amount of import for the production of compound fertilizer was 310 thousand tons of fertilizer (270 thousand tons of urea, 20 thousand tons of fused phosphate, and 20 thousand tons of the others). The total demand for fertilizer was 3.88 million tons (1.82 million tons for agricultural, 220 thousand tons for industrial use, 600 thousand tons for raw materials, and 1.23 million tons for export). Since the demand in 1998 decreased by 400~500 thousand tons compared to that of the previous year, the South utilized only 78% of the domestic fertilizer production capability.
The fertilizer demand for domestic
use as well as for export is expected to be 4.3~4.4 million tons,
excluding that earmarked for fertilizer aid to the North. The current
level of domestic fertilizer production is 4.588 million tons, which
is less than the 4.788 million tons produced in 1998. This shortfall
resulted from the closure of the Jinhae Chemical Plant, with a production
capacity of 300 thousand tons. In its stead, Dongbu Hannong Chemical
Company was established in 1999, but it has a production capacity
of only 100 thousand tons.
This
year, if the South fully utilizes domestic fertilizer plants and
imports 300 thousand tons of fertilizer needed to produce compound
fertilizer, the supply in the South is expected to be 4.89 million
tons. Then, the South could hold an extra 500~600 thousand tons
of fertilizer in reserve, after deducting 4.3~4.4 million tons for
export and domestic use. Furthermore, if the South properly regulates
imports for compound fertilizer and exports of domestic fertilizer,
it could secure more fertilizer than expected.
There
are several technical issues to be considered when providing fertilizer
aid. First, since 65~70% of the demand for agricultural fertilizer
is concentrated during the first half of the year, the South must
consider the time element in providing fertilizer to the North.
Considering the domestic productivity of fertilizer and the demand,
the South's provision of 100~150 thousand tons of fertilizer to
the North by the end of June is a possibility. Furthermore, even
if the provision were to be postponed until the end of this year,
an increase in fertilizer aid would not negatively affect the domestic
fertilizer market of the South. Secondly, compound fertilizer and
urea seem the most appropriate form of aid to the North. The South
already has an experience. It exported 5 thousand tons of urea and
compound fertilizer to the North between July of 1997 and September
of 1998, and received a positive response. Consequently, there seems
to be no technical problem with the current project of fertilizer
aid to the North at present.
THE PROJECTED IMPACT OF FERTILIZER AID
In order to evaluate the economic efficiency of the fertilizer aid, one should first consider how much fertilizer contributes to the total production of each crops. Since the fertilizer contribution in quantity depends on each crop, soil, and climate, it is very difficult to evaluate it precisely. Thus, the estimation projected in this paper is based on the statistics of international organizations or opinions of experts in domestic agriculture, based on the assumption that the fertilizer aid to the North will be used in normal soil.
Assuming 100 thousand tons of fertilizer
to be provided to the North is consist of compound fertilizer and
urea fertilizer. The effect in quantity will be as shown in Table
5. given that 50 thousands tons are to be used for rice and maize
cultivation, respectively. It may be possible to produce a total
of 2.18 thousand tons of food with 100 thousand tons of fertilizer
aid; 88 thousand tons of rice and 1.3 million tons of maize, which
could feed 1.3 million North Korean people for a year. Considering
WFP's plan to provide the North with 533.5 thousand tons of food
this year, one can easily appreciate the tremendous effect that
fertilizer aid has.
Recently,
North Korea has been experiencing a serious shortage in chemical
fertilizer, one of the most important factors showing food production.
North Korea needs 500 thousand tons of chemical fertilizer for a
year and needs at least 400 thousand tons of chemical fertilizer
to cultivate food crops. In 1998, it produced 47 thousand tons,
and the total supply of fertilizer was only 124 thousand tons including
77 thousand tons from imports or aid. Yet, since the fertilizer
from aid is limited to designated areas, some cooperative farms
don't receive any support. This means that only 17% of the actual
amount of fertilizer needed was supplied for almost all the farmlands.
This year, Hungnam Factory and Namhung
Youth Factory began producing chemical fertilizer again. In addition,
aid from the international community including South Korea will
be also increased. As a result, about 230 thousand tons of fertilizer
will be supplied. Therefore, it is expected that the food shortages
of North Korea will be lessened owing to this increased fertilizer
supply.
<notes>
- Figures in this paper are in metric measurements.
- Chemical fertilizers, even when they are the
same brands, contain varying concentrations of major ingredients
depending on manufacturing methods. For instance, even though
one container of urea or ammonium sulfate weighs 20kg in terms
of real weight, urea contains 46% nitrogen which weighs 9.2kg
in terms of ingredient, ammonium sulfate contains 20% nitrogen
which weighs 4.2kg. Therefore, one container of urea equals
more than two containers of ammonium sulfate in terms of efficiency
of fertilizer. Consequently, the "active ingredient,"
as a standard unit, is frequently used to indicate real efficiency
of fertilizer. In this paper, the term "active ingredient"
is used to compare the real ingredients of fertilizer.
- Hungnam Factory, established in Hamhung city,
South Hamkyong province in 1927, has produced fertilizer since
1930. It was once ranked second in the world in terms of productivity,
producing 480 thousand tons of ammonium sulfate a year. It began
producing calcium cyanamide in 1936 and expanded to produce
ammonium chloride and ammonium phosphate in 1941. (The Korea
Fertilizer Industrial Co., LTD, Korea's fertilizer
history of thirty years, 1994.) In 1991,
it became the largest plant in the North, through expansion
of its ammonia compound plant and its urea plant in 1968. It
can produce a total of 1.33 million tons of fertilizer a year;
180 thousand tons of urea, 400 thousand tons of ammonium sulfate,
350 thousand tons of ammonium nitrate lime, 400 thousand tons
of super phosphate, etc. (Production and
Consumption of the Agricultural Resources in North Korea, by Choi Se-kyun, Korean Rural Economic Institute,
1995)
- International organizations have estimated that
it would cost 50 million dollars to improve electric facilities.
- Similarly, the Ministry of Unification estimated
that the amount of fertilizer used in the South was 283kg/ha
in 1982 and 281kg/ha in 1984, while that in the North was 240kg/ha
in 1982 and 253kg/ha in 1984.
- Fertilizer consumption in North Korea, during
1989~1991, was 652 thousand tons of nitrogen, 157 thousand tons
of phosphorus, and 10 thousand tons of potash. United Nation,
Statistical Yearbook for Asia and the Pacific, 1991, 1993.
- The 57 thousand tons of fertilizer provided
by IFAD would total 26 thousand tons, if based on concentration
of ingredients. The fertilizer provided by IFAD was mainly used
for the class I (good) and class II (moderate) paddy and maize
land type.
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