SEOUL - CHILDREN in the North Korean capital will receive peanut candies as a new gift to mark the birthday of leader Kim Jong-Il this month, a pro-Pyongyang newspaper said on Tuesday.

The impoverished communist state usually hands out gift bags to residents to celebrate the birthday of Kim on February 16 and the birth anniversary of his late father and national founder Kim Il-Sung on April 15.

Choson Sinbo newspaper, published for ethnic Koreans in Japan, said peanut candies would be included in the gift bags of sweets and snacks for children thanks to a new candy production line in Pyongyang.

Liquor, fruit or necessities are offered to adults to mark the birthdays.

Lee Seung-Yong, a coordinator of Seoul-based aid group Good Friends, told Yonhap news agency the cash-strapped North often has to collect ingredients from its citizens to make the gift packages for them.

'The government distributes what it has collected, but even that can help the poorer people,' he was quoted as saying.

United Nations agencies said in December that about 40 per cent of North Koreans - an estimated 8.7 million people - would urgently need food aid in coming months because of an expected cereals deficit .

They said the shortages would be felt hardest by children, pregnant women and the elderly.

North Koreans are also short of manufactured goods because industry is crumbling.

South Korea's unification ministry estimates that only 20 to 30 per cent of factories are operating due to a lack of electricity and raw materials. -- AFP