Rice Aid to be Sent to North Korea This Month

As the government has decide to spend 167.6 billion won from the inter-Korean cooperation fund on food aid to North Korea, the first batch of rice is likely to be sent to the North this month.

According to the exchange and cooperation committee under the Defense Ministry, the 167.6 billion won includes the price of 40 tons of rice produced in South Korea (according to the international rice price, $265 per one ton of rice), transportation costs, and demurrage of ships carrying rice at a North Korean port.

In the calculation of the rice price, the international price, which is a fifth of the price that the government pays when it purchases harvested grains, is applied. The subsequent loss of 600 billion won will be treated in special accounts for grain management in the government`s budget.

The food aid will be treated as a loan to North Korea. It will carry an annual interest rate of 1 percent and is scheduled to be paid back to Seoul within 20 years.

The exchange and cooperation committee also decided to provide 895 million won from its fund for the 7th round of family reunions at Mt. Geumgang, which will last 6 days from June 27.

Seung-Ryun Kim srkim@donga.com