Heating fuel choice reflects economic stratification

[As Heard in North Korea]
Unification Media Group  |  2015-12-04 10:11

"As Heard in North Korea" articles contain the content of Unification Media Group [UMG] broadcasts into North Korea. UMG is a consortium created by Radio Free Chosun [RFC] and Open Radio for North Korea [ONK], shortwave radio stations targeting North Korea; The Daily NK, an internet periodical reporting on all aspects of North Korea; and OTV, an NGO-based internet television channel.

This is NK Market Trends, bringing you news about the North Korean economy every week, and today, we are accompanied by reporter Kang Mi Jin. But first, lets take a look at the markets performance over the past week. 

A kg of rice cost 4880 KPW in Pyongyang, 4800 KPW in Sinuiju, and 4750 KPW in Hyesan. A kg of corn kernels cost 1800 KPW in Pyongyang and Sinuiju, and 1900 KPW in Hyesan. The exchange rate was 8500 KPW to the dollar in Pyongyang, 8760 KPW in Sinuiju, and 8800 KPW in Hyesan. The exchange rate for the Chinese Renminbi was 1350 KPW per yuan in Pyongyang, 1320 KPW per yuan in Sinuiju, and 1310 KPW per yuan in Hyesan. A kg of pork cost 11,000 KPW in Pyongyang, 11,500 KPW in Sinuiju, and 10,600 KPW in Hyesan. A kg of gasoline cost 7400 KPW in Pyongyang, 7300 KPW in Sinuiju and Hyesan. A kg of diesel cost 5350 KPW in Pyongyang, 5200 KPW in Sinuiju, and 5250 KPW in Hyesan. This has been a rundown of the Weekly Marketplace Prices.

1. Weve heard that its snowing in certain parts of North Korea these days, which means that its time to find ways to bundle up and beat the winter cold. It also means that its time to turn on the heat at home. However, contrary to expectation, the price of wood and coal has actually dropped recently. To find out why well speak to reporter Kang Mi Jin, who first uncovered this story. Can you tell us a bit more about this unexpected development? 

Certainly. As residents have busily prepared for the winter season during the past two months, the price of winter goods has decreased, according to an inside source. Just 40 days ago at the start of October, firewood was selling for 185,000 KPW per cubic meter. Now, the same quantity sells for just 150,000 KPW. Thats a reduction of 35,000 inside a period of less than a month, which might be an unfortunate turn of events for the merchants, but its definitely a boon for the consumers. The price of rice in Hyesan is about 4800 KPW/kg right now. That means, with the savings resulting from the price reduction in wood, residents can purchase 7 kg of rice. There are plenty of residents who work hard all day long just to earn enough for a single kg of rice. So this price reduction certainly comes as good news for them. 

2. Wow, that is quite a steep drop. But that makes me wonder. Are the prices of other types of heating fuel - such as coal and charcoal briquettes - also dropping?    

In Yanggang Province, while the cost of wood has dropped a staggering amount, the cost of coal has either dropped a bit or remained stable compared to the previous month. Last month, coal was selling for 336,000 KPW per ton in Hyesan. Now the price is 330,000 KPW. So this was a very marginal drop indeed. Similar to coal, charcoal briquettes experienced a very modest to non-existent price change. Yanggang Province has ample forests but no coal mines, which explains why there was no major change in coal price there. However, when there are changes to the price of coal in coal producing places, that change will absolutely be reflected in the price of coal in Yanggang Province as well. 

The source explained that there are transportation costs to haul the coal via truck from the production sites to cities like Hyesan which have no local coal mines. But these costs dont change very much. The result is that coal prices in Hyesan usually only fluctuate when there are changes to the production process. So the price of coal and charcoal has remained pretty stable. The source also explained that in Yanggang Province the amount of families who heat their homes using charcoal briquettes is on the rise.    

3. Thats interesting. Seeing as Yanggang Province is a heavily forested region, it seems a bit unusual that people would take to charcoal like that. What might account for this?   

Id be happy to explain. So, a little bit ago we spoke with a resident in Yanggang Province who explained that people in the area were starting to use coal. Although it can be a bit messy when cooking and ash can fly all over the place, charcoal is simply cheaper than tinder, which explains why residents are using it to heat their home. Although the savings is meager, saving money in any way possible is extremely important for North Korean residents. When I lived in North Korea, I burned wood exclusively. But there were times when I went to relatives homes and they were using charcoal. If you dont properly grab the burnt briquettes with a pair of tongs, the brittle chunks can flake off and turn into dust. I remember thinking what a pain it was to clean up.   

Firewood, on the other hand, doesnt flake up and turn into dust. Its easier to tend to as well because it doesnt need to be replaced as often as charcoal. Finally, it doesnt make a mess in the kitchen. A relative  told me a funny observation about this. Her husband was a Party cadre, and he received bribes in the form of charcoal. Part of me was jealous of my friend for getting this coal for free, but I also kind of resented her for it. Blackmail is the thing that enables cadres to live fat and happy while the rest of the population has to struggle to make a living in order to earn enough to be able to bribe those cadres. When I remember times like this, my conviction that North Korea needs to become a more equitable society becomes even stronger.    

4. I couldnt agree more, especially when I hear stories like this that reveal how cadres live the easy life while ordinary folks are living hand to mouth. When you compare coal with firewood, is it safe to say that coal is more cost effective to use? 

Yes, thats right. As I said earlier, by looking at whether residents elect to use coal or wood as their tinder, we can know a lot about their lifestyle and socio-economic class. Its also possible to know about their work conditions. First of all, those with the means to afford it have a higher probability of selecting firewood to keep their house warm. If you calculate the price of the total amount of wood needed for the winter season, it comes out to about 5 cubic meters or 2 tons of coal. So the total cost of wood would be about 750,000 KPW (about US $90.70), and the total cost of coal would be about 660,000 KPW (about US $79.90). When I break down the prices like this, I think it becomes evident what kind of resident would buy the more expensive option. 

Those who use wood pay 90,000 KPW (~ US $10.90) more than those who pay for coal. This might not sound like a big difference, but for many North Korean residents who are forced to scrimp and save, this is a significant amount. That is why our source has alerted us that, as a generality, the well-off residents tend to use firewood.   

Furthermore, with the pre-split firewood, all you have to do is grab a couple handfuls and bring them in from storage. Its harder to use coal. First you need to cut the coal and then dry it out in the sun. After a few days, you have to carefully put that in storage. Then, when its time to heat the house, its quite a nuisance because you have to go back and forth from the storage to the stove. Compared to wood, using coal is a pain in the neck. 

5. Last time you explained a bit about how wood enters the marketplace, but Im curious how transportation networks bring coal to Pyongyang Province, which has no coal mines of its own.   

First of all, coal gets imported to North Hamgyongs Myongchon County. Then the merchants go to mines in Myongchon to purchase and load up with coal. Truckers rent out spots to merchants who ride along and pay to use the trucks to transport the coal. They will sometimes bring Yanggang Provinces specialty potatoes to sell at high prices in areas around the mine. They also use the potatoes to get a better deal on coal by including them in the exchange. Coal merchants typically gather together so they can split costs. This includes truck rental, trip fees, gas money. These costs are all reflected in the final price of the coal when the merchants bring it into Hyesan. Many of the coal merchants around the country engage in business in a similar manner to this.   

Weve heard that both merchants who operate their own trucks and those who rent space on a truck earn a significant profit. In their luckiest days, they purchase the coal at low prices and make money hand over fist. However, once they get to Hyesan, they have to set prices at market-determined rates. Usually, the coal merchants dont make the final sale to the consumers. Rather, they sell to middlemen who go around to villages and towns selling large amounts at a single time. 

6. Its sometimes said that overall North Koreans lives are improving, but there are still a good amount of people who still have a tough life. Im curious how people save up enough money to buy coal and firewood in bulk. 

Since coming to power, the Kim Jong Un regime has done very few market crackdowns. The result of this is that residents are able to make a much better living these days than they did in years past. However, there are still families that struggle to financially plan and save beyond the next meal. For these people, purchasing tinder in bulk is rather difficult. 

In these instances, the poorer residents tend to purchase wood or coal in smaller amounts. Its a bit less convenient, but they can get along well enough. At the market, there are vendors who sell wood for small bundles of 8 or 12. There are also vendors who sell charcoal by the brick, and our source indicates that there are indeed people who are so hard up for money that they need to buy a days worth of heating fuel in a time. 

But these small amounts are only available for purchase in city markets. In the countryside, its more common to buy a whole seasons worth in a single purchase. When I was in North Korea, after the fall harvest, I would go up into the mountains for a few days and collect firewood. Upon my return, I would make enough kimchi for the whole year. That way, when it was time to ring in the new year, I could rest at ease knowing that my family would be provided for during the frigid winter.   

I know that our North Korean listeners are putting a lot of thought and effort into preparing for the winter season. Compared to South Korea, its really cold up there, so I hope that you all can bundle up and stay warm. Until next time, Goodbye!

*Translated by Jonathan Corrado

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