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Last Updated: Wednesday, 18 August, 2004, 10:26 GMT 11:26 UK
N Korea food prices 'rocket'
South Korean workers from Korea Red Cross prepare aid supply kits for North Korea in Seoul
Millions of North Koreans rely on food aid
Changes in North Korea's economy have led to spiralling food prices which many people cannot afford, according to the World Food Programme.

"As the economy shifts from a planned economy to a more market-based economy, there are winners and losers," Richard Ragan, WFP director in Pyongyang, said.

He said that a new class of people now needed food assistance.

Impoverished North Korea remains deadlocked with its neighbours and the US over its nuclear programme.

Australia's Foreign Minister, Alexander Downer, is currently in the isolated nation, to urge it to renounce nuclear weapons.

Australian Foreign Minister Alexander Downer and other delegates in Pyongyang ,  18/08/04
Australia's foreign minister has made a rare trip to Pyongyang

Mr Downer said he had asked North Korean officials to remain involved in six-nation talks on the controversial nuclear programme, after concerns that Pyongyang may pull out of preparatory meetings for the next round of negotiations.

"I've been, on arriving here, concerned that the six-part talks process was stalling, and I hope that we've been able to add some substantial momentum to that process," Mr Downer said.

Earlier this week he promised Pyongyang "substantial" benefits in aid and investment if it ended its nuclear activities.

Market economy

The economy in North Korea, which for years has been beleaguered by natural disasters and Stalinist planning, is now facing a new set of challenges, Mr Ragan said.

The country's public distribution system was only providing a fraction of the food that North Koreans need to live on, he told a press briefing in Beijing.

He said the situation was driving economic, market-oriented reforms in the Stalinist country, because people were being forced to sell goods to eke out a living.

"Physically you see more wealth in Pyongyang, more stores, more restaurants, more automobiles... people seem to have more liquid capital," he said. "People are trading... and you see things which indicate that people have some disposable income," he said.

"The bad news is that prices of food around the country are going up, and salaries are staying pretty static."

We're finding a new group of vulnerable people... who can't afford (the) prices
Richard Ragan, World Food Programme

The price of essential items has risen sharply in recent months.

The cost of rice has doubled from this time last year, rising from 130 won ($0.92) per kilo to 700 won ($5.00), Mr Ragan said.

"We're finding a new group of vulnerable people, such as factory workers without land, a new at-risk population who can't afford (the) prices," Mr Ragan said.

And he said that despite the market reforms, North Korea remained "a chronically food deficient country".

"We're going to be in this situation for a long time," he added.

Mr Ragan said that children were even being left at orphanages for a few months at a time, because their parents could not afford to feed them.

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05 Aug 04  |  Asia-Pacific
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24 Jul 04  |  Asia-Pacific

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