Collective farm work units in North Hamgyong Province are being hounded by creditors after failing to pay back loans they used to buy needed materials and equipment, Daily NK has learned.

Collective farms in North Korea typically face limited supplies of seeds, vinyl plastic, pesticides, and fuel needed for farming. Work units at these farms commonly borrow money from private creditors to purchase these necessary materials and equipment. They then pay back the debts with the money they earn from the fall harvest.

Work units at collective farms in and around Chongjin, a major city in the province, planned to do just that. Daily NK sources reported, however, that many work units in the area had to sell most of their harvest to the state and now have little left to sell in the markets to pay off the debts.

“Creditors have been meeting with the heads of work units and work unit accountants to get their money back, but many of them haven’t been paid back yet,” a source told Daily NK on Feb. 12.

Some money-lenders reportedly visit the work units each day to demand their money, but end up returning home empty-handed.

Some work units at a farms in the Chongam District of Chongjin are so much in debt they are reportedly unable to pay back the principle of the loans received from creditors (these loans were around KPW 500,000 per person).

“Farms in Chongam District are faced with a situation where individual work units borrowed money from several different creditors. Because they have no crops to sell they have been unable to pay back most of their debts,” a source told Daily NK.

“Creditors head to the houses of the work unit leaders and accountants almost everyday to demand repayment,” he added.

Daily NK sources pointed out that work units failing to repay loans will face difficulties obtaining loans for next year’s harvest.

“The work units know that failure to repay the loans means that the interest on the loans will only increase. They’re in a bind, however, because they have no choice but to sell a portion of their crops to the state,” a source explained.

Work units facing a debt crisis initially tried to turn away their creditors by telling them that they would pay back the loans next year; money-lenders, however, are in an uproar because the work units have been unable to provide them with any collateral.

“The creditors know it’s illegal to take strong action against the work unit leaders and accountants because they would face legal punishment,” a source explained.

“So, instead, they’re just stewing in anger,” he added.

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