Rising opium prices threaten campaign against Afghan drug production – UN

Rising opium prices may encourage farmers in Afghanistan to plant more of the narcotic crop, the United Nations Office on Drugs and Crime (UNODC) said in a survey released today, warning that the higher prices could reverse recent gains in the fight against drug production in the Asian country.

The 2010 Afghanistan Opium Survey says that the soaring prices are the result of market speculation that there will be shortages because of the opium blight that reduced production by half last year, and ongoing military operations which have created uncertainty among opium farmers regarding future cultivation.

“There is cause for concern. The market responded to the steep drop in opium production with an equally dramatic jump in the market price to more than double 2009 levels,” said Yury Fedotov, the Executive Director of UNODC.

“We cannot continue business as usual,” he said, noting that the prices were rising again after a steady decline from 2005 to 2009. “If this cash bonanza lasts, it could effectively reverse the hard-won gains of recent years.”

The cause of the decline in production was a naturally occurring plant disease that ravaged the crop in Afghanistan’s major opium poppy-growing provinces of Helmand and Kandahar.

Poppy-growing households have seen a cash windfall. In 2010, the average farm-gate price of dry opium at harvest time was $169 per kilogram – a 164 per cent increase over 2009, when the price was $64 per kilo.

Despite the drop in production, the gross income per hectare of opium cultivated increased by 36 per cent to $4,900. The average annual income of opium-growing households in 2009 was 17 per cent higher than for households that had stopped opium cultivation.

However, the dramatic opium price increases at the local level did not translate into similar price increases in neighbouring countries, according to the UNODC report. Afghan traffickers are heavily involved in shipping opiates – morphine and heroin – abroad, notably to Iran and Pakistan, and to a lesser extent, Central Asia.

As a result of falling production and stable cross-border prices, funding from the opium economy to Afghan criminal groups halved in 2010. The total value of exported opium and heroin was $1.4 billion, compared with $2.9 billion in 2009 – a 50 per cent drop. The gross export value in 2010 amounted to 11 per cent of gross domestic product (GDP), compared to 26 per cent in 2009.

On the positive side, rural development has encouraged the cultivation of licit crops, and this year, a distinct correlation was seen between the provision of agricultural assistance and a drop in opium cultivation.

Giving farmers access to markets also helped them shift away from opium poppy cultivation. In villages located close to agricultural markets, farmers planted less poppy crop than in those that had no access to markets.

“We encourage donors and the Afghan community to continue to invest in alternative livelihood programmes and increase market access for farmers. But security, stability and an environment free of corruption remain the key elements to making such initiatives effective and sustainable,” said Mr. Fedotov.