By Cho Meeyoung
SEOUL, March 14 (Reuters) - South Korea said on Friday it would supply rice on credit to hunger-stricken North Korea up to 2005, starting with 432,000 tonnes this year.
The decision mixes market economics, domestic politics and high-stakes diplomacy. South Korea runs a rice surplus and farmers, a vocal lobby force, are eager to offload it.
Tensions have escalated on the peninsula over North Korea's suspected nuclear ambitions. While rice shipments to the North are not new, the timing of Friday's announcement fits a pattern of seeking to ease those tensions.
"At a humanitarian level, (South Korea) has decided to proceed with sending about three million pouches of rice per annum to North Korea,'' said an agriculture ministry statement.
Three million pouches of rice equates to 432,000 tonnes. A pouch is a Korean measurement.
"This year South Korea will send three million pouches of rice to North Korea,'' a senior agriculture ministry official in charge of the rice told Reuters.
"We will also send rice to the North in 2004 and 2005, though the amount of rice has not been decided,'' he said, adding the plan did not mean regular rice supply to North Korea.
Last year, South Korea supplied 400,000 tonnes of rice on long-term credit to North Korea and in 2000 it sent 300,000 tonnes of rice and 200,000 tonnes of corn on credit.
South Korea has no plans to send other grains such as corn and wheat to North Korea, the senior ministry official added.
SENSITIVE GRAIN
Rice supplies to the North are politically sensitive as the two Koreas have remained technically at war since 1953.
South Korea will establish high-level official talks between the two Koreas to ease severe food shortages in North Korea and help the North develop its agriculture industry, the agriculture ministry statement said.
The statement was issued after Agriculture Minister Kim Young-jin had briefed new President Roh Moo-hyun, who has said he would continue predecessor Kim Dae-jung's "Sunshine Policy'' of engaging the North.
"Conditions and details of the rice supply will be decided later though it will be very similar to last year's supply to the North,'' the agriculture ministry official said.
Under last year's rice supply, Pyongyang was obliged to pay over a period of 20 years starting in 10 years time at an interest rate of one percent.
Droughts, floods and tropical storms have exacerbated agricultural and industrial problems in North Korea since the U.N. World Food Programme (WFP), the world's largest food aid agency, launched its first emergency operation there in 1995.
On the other hand, South Korea forecast rice stockpiles to rise to around 1.7 million tonnes at the end of the crop year in October, up from almost 1.5 million tonnes in October 2002.
Farmers have been asking the government to slash surpluses by making regular shipments to hunger-stricken North Korea.