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Asia Crisis

US agency to buy mostly corn for N.Korea

* U.S. food aid to be predominately corn

* Corn will be milled into flour, not fed to livestock

* USAID to buy 50,000 tonnes per month through mid-2009

(Adds details, background)

By Lisa Shumaker

CHICAGO, July 2 (Reuters) - The U.S. government plans to ship mainly corn to North Korea during the next year to ease food shortages at a cost of $300 million to $350 million, including shipping, Jon Brause, USAID's expert on North Korea, told Reuters in an interview on Wednesday.

The U.S. Agency for International Development will buy about 50,000 tonnes of food a month through mid-2009. The corn will be milled into corn flour, not fed to livestock, he said.

North Korea is facing a food shortage due to flooding last year, higher commodity prices and political wrangling with major donor South Korea. Famines a decade ago killed an estimated 1 million people, experts have said.

"Government rations have almost been reduced to zero over the last few months," said Brause, who was part of a U.S. delegation to North Korea. "If there isn't an augmentation of the food supply, you're going to see some problems. Their harvest isn't until the fall."

In May, the United States said it would provide 500,000 tonnes of food aid to North Korea to fight food shortages, with most of the food distributed by the World Food Program (WFP).

About 400,000 of the 500,000 tonnes will be bulk grain, predominantly corn with some wheat, Brause said. The remaining 100,000 tonnes will be vegetable oils, pulses, and corn-soy blends for children.

"Corn is a major staple food for people," Brause said. "Corn is something they are very familiar with. We feel corn is less attractive for diversion. It's less likely to be stolen and that's one of our major concerns. We think corn is the best probably."

The first ship carrying U.S. aid arrived on June 29 with 37,270 tonnes of white wheat. About 24,000 tonnes of corn is en route. On Wednesday, the U.S. government said it wanted to buy another 50,000 tonnes of corn for North Korea.

"We want the commodities to flow in on a regular schedule, about 50,000 tonnes a month," he said. "We're going to do our best to adhere to that."

NO NUCLEAR CONNECTION

This is the first time since 2005 that the United States has sent food aid to North Korea.

The recent arrival of U.S. wheat and Wednesday's corn tender are not connected with North Korea's decision in late June to hand over a long-delayed account of its nuclear activities, Brause said.

"It is completely unrelated. This isn't related to the nuclear program at all," Brause said.

And the food aid could have been sent to North Korea even if the Bush administration had not said it would act to remove North Korea from its list of state sponsors of terrorism in 45 days, as well as lift sanctions under the Trading with the Enemy Act.

"The answer on trade sanctions is they never impact humanitarian programs," he said.

Efforts to send food aid began in October but were stalled by North Korea refusing to agree to greater monitoring and access to the food distribution, Brause said.

The United States has given North Korea about 1.9 million tonnes of food valued at $700 million from 1995 to 2005. The food was mainly donated in the late 1990s when famine swept the country. (Reporting by Lisa Shumaker; Editing by Marguerita Choy)

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