The deal, brokered by a Chinese company, was signed in June with five North Korean trading firms, an official for the cooperative said, though it still needs approval from Seoul's Unification Ministry, which oversees inter-Korean affairs.

Under the terms, North Korea would swap 240 products -including its signature ginseng and blueberry liquors, crackers, candies, teas and health supplements - for 167 tons of sugar from the South, said Oh Hyun-kyung, the cooperative official.

"The North wanted sugar as they were having difficulty importing raw materials due to sanctions and the coronavirus pandemic," Oh told Reuters, saying shipments could begin later this month.

Oh said Korea Kaesong Koryo Insam Trading Corporation, a North Korean firm specializing in ginseng and health products, was one of the parties in the deal.

Unification Minister Lee In-young had suggested before taking office late last month that bartering South Korean food and medicines for North Korean liquor and mineral water could be a first step toward normalizing exchanges.

South Korea is pushing to restart inter-Korean cooperation without breaching international sanctions banning financial transactions with North Korea, imposed over its nuclear and missile programs.

South Korea on Thursday approved plans to donate $10 million to fund U.N. World Food Program (WFP) efforts to aid North Korean children and women.

"The decision would be a starting point for our plans to consistently pursue humanitarian cooperation without linking it to political and military issues," Lee said.

Seoul has bankrolled various WFP and U.N. Children's Fund projects in the North in recent years.