Famine fears for North Korea

By Jon Herskovitz

SEOUL (Reuters) - The chances of famine in North Korea have increased in line with the soaring price of rice on global markets, a Washington-based institute said on Wednesday.

"The country is in its most precarious situation since the end of the famine a decade ago," said a paper from the Peterson Institute for International Economics.

A jump in prices for foodstuffs has hit many poor nations this year and sparked riots in parts of Africa and Asia. Export restrictions by leading suppliers have fuelled insecurity and market speculation has also pushed prices higher.

The head of a new United Nations task force set up to ensure a coordinated international response to the food crisis said malnutrition was more likely than outright famine in most countries, at least in the near future.

"People, particularly those on the lowest incomes, will be eating less and less well," John Holmes told a news conference in Geneva. "I don't think that in the very short term we are talking about starvation and famine."

Egyptian President Hosni Mubarak proposed a 30 percent increase in the salaries of public sector employees to help cover the increasing cost of food while China urged local authorities to "strictly control" grain exports.

A proposal by Japan to limit restrictions on exports of food got a "cool response" on Wednesday, especially from developing countries, the chairman of the World Trade Organization's (WTO) farm talks, New Zealand's Crawford Falconer, said.

Japan, the world's third biggest food importer, was joined by Switzerland in proposing limits to restrictions on food exports after moves by several countries to ban or tax exports.

RELIED HEAVILY

Even in a time of good harvests North Korea finds itself about 20 percent short of what it needs for foodstuffs, Stephan Haggard, co-author of the Peterson Institute paper, said.

The secretive nation has grown more dependent on rice imported from neighboring China since a famine in the late 1990s that experts estimate killed at least 1 million people.

North Korea has in the past relied heavily on aid from China, South Korea and U.N. aid agencies to fill the gap.

But the new conservative government in South Korea has said it will tie aid to progress its neighbor makes in giving up development of nuclear weapons, on which Pyongyang is stalling.

China has its own problems keeping runaway grain prices under control, which means it cannot afford to be as generous this year, analysts say.

On Wednesday, China's commerce ministry reaffirmed government curbs on grain exports and urged local authorities to increase reserves of grains, meat and cooking oils to ensure supplies and keep food prices in check.