Sources told the RFA that the North Korean government’s order to cancel collective farm loans is causing a reluctance among wealthy lenders to issue new loans to farmers, a major funding blow that will hit the country this year to produce food. ability can be inhibited.
After the devastating 1994–1998 famine, North Korea’s cash-strapped government stopped subsidizing collective farms, instructing them to become self-sufficient. The loss of state funding prompted agricultural managers to take loans from wealthy North Koreans with the promise that after the harvest fell, they would repay them twice in the amount of the crop they borrowed.
Under this new system, farms were still obliged to produce enough food to meet state-mandated quotas, and as long as the crop went according to plan, both lenders and the state had to pay. was sufficient. A poor harvest in 2021 made both impossible.
But during a meeting of the ruling Korean Workers’ Party’s Central Committee in December, the country’s leader Kim Jong Un announced that North Korea would take special measures to cancel loans made to the state by collective farms, meaning they were Off the hook for the 2021 production quota.
This also indirectly meant that private loans were cancelled, as the whole point of waiving off farmers’ state loans was to allow them to return to farming with a clean slate in 2022. But this move seems to backfire, as lenders are no longer willing to provide capital to collective farms.
“It’s not like last year, when agricultural officials could go into the city and borrow 10,000 yuan [U.S. $1,577] From wealthy lenders,” a resident of Ryeongcheon County in the North-Western Province of North Pyongan told the RFA’s Korean service on condition of anonymity for security reasons.
“This year they just don’t want to lend 100 yuan, so all the agriculture officials are getting really worried,” said the source.
According to the source, after being ordered by Kim Jong Un in December, law enforcement officials threatened lenders that they could be branded as anti-social for engaging in capitalist activities.
Wealthy North Koreans who lent money to farmers may never be repaid, a source in Musan County in North Hamgyeong’s northeastern province told the RFA on condition of anonymity.
“They have money taken by the state-run collective farms with their eyes open. Even if they want to try to get it back, they fear they might be caught and punished as an example to others,” said another source.
“They are complaining that the loan cancellation measure is actually confiscation of state property,” said another source.
The policy could jeopardize a system that has been in place for decades, Seo Jae-pyong, general secretary of the Seoul-based Association of the North Korean Defectors, told RFA.
He used the local term for the 1994–1998 famine, saying, “Agriculture officials have been borrowing money from wealthy people every year as part of the party’s policy of self-reliance since the hard march of the 1990s.”
“They have established and built trust with wealthy lenders through loan transactions with them. This relationship of trust has been broken by the authorities, which will be a counterproductive factor for collective farms,” Seo said.
Another North Hamgyong resident told the RFA that the business class had all the money in North Korea.
“The country has no money. … There is no money in the fields to buy petrol, so they borrow money from the rich. They have to plow the fields, but they cannot drive tractors without gas, which they have to buy illegally,” said another North Hamgong resident.
The sudden cancellation of farm loans is causing confusion among agricultural managers this year as farms are still considered self-sufficient even though they are not getting funding, a resident of South Pyongan, north of the capital Pyongyang, told the RFA. .
“Agriculture officials are immediately going to rich lenders to ask them to lend money again this year. They say they will pay more than double that,” said the source in South Pyongan.
“If they refuse to lend, some officials are even offering to lend them agricultural land,” he said.
North Korea had canceled collective farm loans only once before – in the 1960s – under the rule of national founder Kim Il Sung, Kim Jong Un’s grandfather.
Translated by Claire Lee and Lizzin June. Written in English by Eugene Wong.