phr
Bluelighter
Market forces will always win in drugs war
Tom Coughlan
The Times
6.25.09
A 19 per cent drop in Afghan opium production has cheered the international community after a succession of record harvests since 2001.
However, self-congratulation on the part of the West should be tempered by an acknowledgement that elementary market forces were as significant a factor in the reduction as the billions poured into counter-narcotics programmes in the country.
Afghanistan’s drug industry has become a victim of its own success. Last year it probably outproduced world demand for heroin by about 30 per cent. Hence, the price of opium for Afghan farmers has been falling since a peak in 2004.
At the same time global food prices — in particular for wheat — reached unprecedented highs during 2007-08, after a number of crop failures among wheat-producing nations. From a 10:1 advantage in profit margins over wheat, opium had shrunk to about 3:1 or even 2:1 by mid-2008.
The proportion of income spent by the average Afghan on food rose from about 50 per cent to 85 per cent in 2008. Many subsistence farmers opted to focus on basic food production. It is a trend that is likely to continue when the UN announces new figures for the 2009 Afghan opium harvest in a few months. Reports this summer suggest that opium prices hit a low of $30 ( £18 ) a kilogram, down from more than $200 in 2004.
Some of the drop can be credited to improving government and security force control. The value of the trade shrank from $4 billion to $3.4 billion, but drugs still account for about 30 per cent of Afghanistan’s illicit economy.
Most striking in the figures was the correlation visible between drug production areas and provinces affected by the Taleban insurgency — 98 per cent of Afghan opium is produced in just seven highly unstable southern provinces.
But is the drop in production sustainable? Most experts think that in the short-term it is not. Wheat prices are dropping again and a sustained fall in heroin reaching the world market will begin to push the price up again. The drugs trade is free-market economics in its purest form; the one constant is the demand of drug addicts and until their numbers are reduced the trade will continue.
Link!
Tom Coughlan
The Times
6.25.09
A 19 per cent drop in Afghan opium production has cheered the international community after a succession of record harvests since 2001.
However, self-congratulation on the part of the West should be tempered by an acknowledgement that elementary market forces were as significant a factor in the reduction as the billions poured into counter-narcotics programmes in the country.
Afghanistan’s drug industry has become a victim of its own success. Last year it probably outproduced world demand for heroin by about 30 per cent. Hence, the price of opium for Afghan farmers has been falling since a peak in 2004.
At the same time global food prices — in particular for wheat — reached unprecedented highs during 2007-08, after a number of crop failures among wheat-producing nations. From a 10:1 advantage in profit margins over wheat, opium had shrunk to about 3:1 or even 2:1 by mid-2008.
The proportion of income spent by the average Afghan on food rose from about 50 per cent to 85 per cent in 2008. Many subsistence farmers opted to focus on basic food production. It is a trend that is likely to continue when the UN announces new figures for the 2009 Afghan opium harvest in a few months. Reports this summer suggest that opium prices hit a low of $30 ( £18 ) a kilogram, down from more than $200 in 2004.
Some of the drop can be credited to improving government and security force control. The value of the trade shrank from $4 billion to $3.4 billion, but drugs still account for about 30 per cent of Afghanistan’s illicit economy.
Most striking in the figures was the correlation visible between drug production areas and provinces affected by the Taleban insurgency — 98 per cent of Afghan opium is produced in just seven highly unstable southern provinces.
But is the drop in production sustainable? Most experts think that in the short-term it is not. Wheat prices are dropping again and a sustained fall in heroin reaching the world market will begin to push the price up again. The drugs trade is free-market economics in its purest form; the one constant is the demand of drug addicts and until their numbers are reduced the trade will continue.
Link!
