Afghanistan poppy production could skyrocket due to spike in prices, drought

Afghanistan poppy farmers see 'cash bonanza' due to price spike, says United Nations, forewarning of increased planting of the opium-producing crop that pads insurgents' wallets.

By , Staff writer

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    A village Mullah walks through a poppy field on April 27, 2010 in the Maiwand District of Kandahar Province, Afghanistan.
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Monitors are warning that 2011 may see a surge in Afghanistan’s poppy production as high prices at the farm gate, coupled with a crippling drought that has ravaged wheat production, provide powerful incentives for farmers to grow the outlawed crop.

While poppy provides Afghan farmers some security net from war and drought, money from the trafficking helps finance insurgents and fuel corruption inside the government. The colorful plant's sap is used to make narcotics such as opium and heroin.

Afghan farmers planted the same amount of poppy in 2010 as the previous year, but the United Nations raised concerns this week that rising poppy prices will push up production in 2011. The farm-gate price of dry opium jumped 164 percent in 2010.

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“We cannot continue business as usual,” Yuri Fedotov, executive director of the UN Office on Drugs and Crime (UNODC), said in a statement accompanying the Jan. 20 release of his office’s 2010 opium survey. “If this cash bonanza lasts, it could effectively reverse the hard-won gains of recent years.”

Prices spike, but only in Afghanistan

Cultivation of poppy has fallen by a third since the highpoint of 2007, driven partly by declining prices from 2005 to 2009. Those years also saw international spending to boost licit agriculture and markets, changes in the security landscape, as well as a temporary – and controversial – spike in eradication efforts in 2006 and 2007. As such, Afghanistan's share of the global opium supply dropped to 80 percent in 2009 from 90 percent in 2008.

The falling prices ended last year, as traffickers paid more at the farm gate for poppy due to a blight that sent yields tumbling by 49 percent. Yet the sale price of opiates on the other side of Afghanistan’s borders did not jump nearly as much.

“This could indicate that traffickers’ revenues are down,” the UNODC report found.

Not everyone seems to agree. Afghanistan’s deputy counter-narcotics minister, Mohammad Ebrahim Azhar, has claimed that insurgents earned $602 million in 2010 from the trade, up from $430 the previous year, according to Pajhwok Afghan News.

Nobody really knows how much the insurgents make on the drug trade, says Pierre-Arnaud Chouvy, author of “Opium: Uncovering the politics of the poppy,” from Harvard University Press. A 2009 Congressional report pointed out miscalculations in UNODC figures, with US intelligence estimating poppy revenues at $70 million a year.

It is plausible that farm-gate prices – but not cross-border prices – rose rapidly.

“It takes time for the price of opiates outside Afghanistan to increase, and the farm-gate price hike is never completely passed at the wholesale or retail market,” says Mr. Chouvy. Sales from stockpiles could also have curbed price rises, he adds.

Ongoing drought is incentive to plant poppy

But if the price differential is partly a time lag, this year could be a feast for traffickers, especially if farmers rush to grow poppy this winter, bringing the farm-gate prices down with rising supply.

And farmers may do just that. First, the currently high farm-gate prices make the crop more attractive. Drought conditions are an added incentive, warns Mr. Azhar.

“When farmers buy water or when they bring water from somewhere else, it is very expensive for them and they do not make good profit to grow legitimate crops,” he said, according to a Noor TV translation from BBC Monitoring.

Poppy not only fetches higher prices, but requires less water than many crops.

“Opium production is largely resorted to as a way to cope with food insecurity,” says Chouvy. Poor wheat yields spur greater poppy cultivation in the winter, which is what may be happening now. “Less wheat means more opium both because opium is needed to buy wheat and because the price of wheat rises and requires more opium to pay for it.”

These variables are all constantly in flux, however, complicating both predictions and short-term responses.

One solution: raise wages

Mr. Fedotov with the UNODC urged the international community to continue investing in alternative livelihood programs as well as efforts to improve security and fight corruption.

While Chouvy emphasizes that the problem requires decades of effort, he says some near-term approaches include raising employment and wages, which puts competitive pressure on the labor-intensive cultivation of poppy.

“The best way to kill poppy is to put laborers into other jobs,” agrees Allison Brown, an agricultural expert in Afghanistan.

She adds that poppy is not a no-brainer for farmers, whose decisions can be shifted by seasonal and market dynamics. “If poppy were such a sure-fire cash earner then Afghans would be growing it all year round. They don’t because lots of other crops make more money in the summer.”

(Editor's note: The original version of this article incorrectly described the poppy plant.)

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