Koreas agree 500,000 ton food loan

The agreement coincides with ministerial level talks between the two Koreas

By Caroline Gluck in Seoul

The South Korean Government has announced that it will provide 500,000 tons of food grain in the form of a long-term loan to impoverished North Korea.

Famine has hit North Korean children particularly hard

The Unification Ministry said that the first food shipments would be made by early October and that an additional 100,000 tons of corn would be given as aid and donated through the United Nations World food Programme.

The announcement was made as ministerial level talks between officials from the two Koreas got underway on the southern resort island of Cheju.

The food shipments will be warmly welcomed by North Korea which is now facing a sixth consecutive year of food shortages.

Food loans

On Monday it made a renewed plea for food loans during economic talks in Seoul.

North Korea is desperate for food aid

North Korean officials said the country had lost more than 1.4 million tons of rice and other grains because of a severe new drought, and two recent typhoons.

The request followed warnings from international aid groups that North Korea was heading for a new food crisis.

The country's agriculture-based economy has suffered ever since the collapse of the Soviet union and recent natural disasters have made it dependent on international food aid to feed its population.

Famine deaths

Severe weather and mismanagement have ruined much of the North's agriculture

Some reports say as many as two million people may have died as a result of famine since 1995.

The South Korean government says it will buy 300,000 tons of Thai rice and 200,000 tons of Chinese corn for the north.

The food loan, worth around $100m, will carry an annual interest rate of 1% and is repayable over 20 years, with a 10 year grace period.

Officials say North Korea has promised that international observers will be allowed to monitor the distribution of food amid accusations that much of it has been diverted to feed the country's military, one of the largest armies in the world.