Between 1948 and 1954 North Korea abstained from a collectivization drive for political (to avoid alienating South Koreans farmers who the Korean Workers’ Party saw as potential supporters for a communist-driven unification) and military (the Korean War) reasons. Perhaps because of this, the prices of consumer commodities remained relatively stable – prior to the winter of 1954-55, state shops sold rice for 40 wons/kilo and traders sold it for between 40 and 50 wons/kilo. For an average worker earning between 1000 and 1500 wons per month, complementing the rations with purchases from the market was difficult but still manageable.
However, the North Korean state faced its first major agricultural crisis in the winter of 1954. Although a bad harvest was at the root, the situation was made worse by the state’s catastrophic errors.
Alongside the direction of economic planning, this food shortage had far-reaching ramifications that manifested in North Korea’s relationship with China and the Soviet Union and Kim Il Sung’s consolidation of power. This is a crucial stage in North Korea’s formation that deserves greater attention.
Here is a short chronology of the events that transpired around that pivotal winter.
from Balazs Szalontai, Kim Il Sung in the Khrushchev Era. Washington, D.C: Woodrow Wilson Center Press, 2005. Chapter 3: Crisis and Confrontation.
April: Total number of agricultural cooperatives stand at 800
July 30: Soviet Union assesses that the DPRK will fulfill its three-year plan (post-war reconstruction efforts) on schedule
Summer: Rainy season is reported to be shorter and colder than usual
September/October: Decree 133 exempts North Hamgyeong Province from compulsory delivery of grain after adverse weather conditions result in a bad harvest. Choe Chang-ik leads a commission to improve and alleviate living conditions in this province by distributing 65,000 metric tons of rice
October 21: Government decree 21 prohibits private grain trade to eliminate speculation in rice prices
November: Choe Chang-ik is dismissed as minister of finance and the plenum of the KWP CC is resolved to accelerate collectivization. Kim Il Sung justifies this sudden change by claiming that the 3 million metric tons of grain met the goal of the 1954 plan.
End of 1954: number of type II and III cooperatives surpasses 9000
January: North Korea launches a campaign to convince industrial workers to renounce one daily ration card per month – massive shortages of rice in the market. Despite these conditions, the grain crop target for 1955 is set at 4 million metric tons.
February: A kilogram of rice costs between 400 and 460 won on the black market, above the income of everyday people
February 12: North Korea institutes a fixed tax for cooperatives to motivate surplus production. However, farmers who are not part of cooperatives are still taxed in percentage of their production.
March 5: Government decree 24 reiterates decree 21 prohibiting private grain trade
Spring: Rice disappears from the market and especially in rural villages
March 21: Deputy Premier Choe Chang-ik asks the Hungarian ambassador whether he thinks the pace of the reconstruction efforts was too rapid, revealing a level of doubt among some members of the upper echelons of government.
April 1: Kim Il Sung calls for the party to study the theory and principles of Marxism-Leninism by linking them with specific realities of Korea
April 6-11: Grain shipments begin arriving from the Soviet Union and China. China delivers 15000 metric tons of grain in the first half of April.
Early April – May: USSR and PRC send 45,000 metric tons of grain to North Korea
April – June: USSR and PRC send 24,000 metric tons of flour and 130,000 metric tons of agricultural products – in return, North Korea is to cancel the economic programs that Moscow believes are responsible for the breakdown
April 12: A Soviet counselor reports that the 1954 crop yield was actually 2.3 million metric tons and not 3 million as Kim Il Sung reported. To make up the loss of grain income to urban areas, the state begins to collect up to 50% of the harvest from rural areas, far exceeding the 23-27% established by law. The Soviets see Kim Il Sung’s cult of personality as the primary source of the errors in economic planning.
April 26: Nodong Sinmun publishes an article, admitting the existence of the food crisis for the first time
May 10: Hungarian diplomats report on the inability of villagers to purchase rice. Since early April, a Hungarian hospital in Sariwon reported 20 death by starvation
June 21: Government decree 58 rescinds the ban on private markets
June 28: Government decree 57 dedicates 1 billion won on the construction of irrigation systems and increasing production of chemical fertilizers by 25,000 metric tons. In addition, agricultural tax is reduced and debts owed by poor peasants are cancelled. Demobilized troops are sent to rural areas as additional labor
July 1: Farmers begin selling grains in the market without restrictions
July 4: the leadership mobilizes officials for a two-week period of agricultural and reconstruction work
July 20: Government decree 66 slashes retail prices for nearly 300 products by 11 to 66 percent to assist urban consumers
August 1: Choe Chang-ik dismissed as the minister of state control and replaced by a Kim Il Sung-loyalist.
August 13: Government decree 71 reduces workers’ income tax by 30%
mid-August: Rice prices fall to 190-200 wons/kilo
December 2-3: Central Committee plenum decides to increase investment in agriculture by 3.2 billion wons (at the expense of heavy industrialization) and discourages the recruitment of industrial laborers from the agricultural sector. Agricultural sector taxes as reduced and many industrialization projects slow down.
December 28 1955: Kim Il Sung delivers the Chuch’e Speech
End of 1955: number of cooperates stand at 12,132 (49% of all peasant households)
- Economic “corrections” do not always translate to political reform.
- Political openness is critical to better economic decision-making.
- Motivation is a pivotal driver of production and the market system encourages greater productivity.
More on the historical roots of the agricultural crisis later.