Afghanis: beholden to the markets

The UNODC recently released its annual report concerning opium cultivation in Afghanistan. Unsurprisingly, levels of opium production have continued to rise despite more efforts made at eradication. In fact, the amount of area under opium poppy cultivation has risen to some of the highest levels ever seen. So what exactly is driving this rise in production levels? The simple answer is the opium market, which like every other market is driven by supply and demand.

According to the UNODC report, the area under opium cultivation has now risen to 131,000 hectares. An increase of 8,000 hectares over the previous two years. This led to a 61 percent rise in opium production from 3600 metric tons in 2010 to 5,800 mt in 2011. Much of this expansion of the opium market can be explained by market mechanisms. When demand is high and the commodity is scarce, prices will rise.

This is exactly what happened in 2010 when a disease blighted much of the poppy crop, causing a steep rise in the farm gate price of opium. Between 2009 and 2010, dry opium prices increased by 164 percent from $64 per kilo to 169. This increase continued into 2011 with prices rising to a high of $241 per kilo. As with any other commodity, these high prices were one of the main factors which contributed towards farmer’s deciding to grow the crop.

The UNODC report also documents this reasoning in their report. According to a survey which was conducted, 59 percent of farmers admitted that the reason they had decided to cultivate opium was due to its high sale price. The second and third most popular answers were due to poverty or to improve living standards. Meanwhile 50 percent of farmers returning to the opium trade reported that high prices were the main reason for doing so. Again this shows the economic importance of the opium poppies, especially when it is compared to other crops.

Opium is far more profitable than other crops grown in Afghanistan. In fact according to the report, per hectare opium is worth 11 times more than wheat. No wonder Afghans are continuing to cultivate the crop. This is especially understandable when we realise the sheer poverty that most farmers endure. Opium may provide a slightly better livelihood but it by no means makes farmers rich. One farmer commented in 2007 that “"I am 20,000 rupees [$350] in debt and I cannot earn even 50 rupees [$1] a day, so I have to plant poppies -- because I am anxious…I know that it is a bad thing and the Holy Prophet Muhammad says that 'all intoxicants are forbidden.' But we need it [to survive] and so it is fine to plant it in a situation like ours." (Afghanistan: Poor Helmand Farmers Find Themselves In Eye Of Drug Storm, Radio Free Europe, 10/10/07)

Farmers in Afghanistan receive very little assistance from the government and many are themselves in debt. 41 percent of farmers have outstanding loans of an average amount of $1,046, a huge amount in Afghanistan. Many farmers therefore desperately need the extra money that opium brings. The UNODC report also notes the fact that many opium growing villages are often much further away from local markets compared to non-poppy growing villages. For these more remote and often poorer areas, reliance on opium is often a necessity as it is the only crop which is bought at the farm gate.

Given the fact then that most farmers were drawn into opium production out of necessity and the fact that diminished supplies drive up prices, is eradication really the best way to tackle the problem?

The answer is a firm no. Eradication has been shown time and time again to be an ineffective policy that only serves to deepen poverty. Studies have shown that in many cases poorer farmers whose crops are eradicated suffer adversely and often end up more dependent on opium. Banning opium cultivation in poor areas, where farmer have few if any alternatives, results in a severe decrease in income which often means that farmers are forced to sell assets and take out further loans. This only deepens their reliance on opium poppies as it is the only crop profitable enough to get them out of their financial misery.

Eradication also fails because it is done on such a patchy scale. If the crops are eradicated in one area, then the trade merely moves to an area under less government pressure. This seems to have been exactly what happened in Helmand province this year. Strong efforts were made in eradicating opium in central Helmand with some sizable reductions achieved. These ‘gains’ though were offset by steep rises in northern and southern areas of the province.

What the UNODC report therefore best illustrates is the redundancy of current polices. Eradication can never hope to achieve its aims and the trade will always be driven by market prices and poverty. In fact, if eradication was ever launched on a truly massive scale it would only result in a massive increase in prices. This was witnessed when the Taliban implemented their ban in 2000 which resulted in prices rising 1000 percent! The subsequent American led invasion merely led to a massive increase in cultivation the next year due to this.

In reality though the idea of sustaining a countrywide ban would be absolutely ludicrous and the amount of money and resources that would have to be dedicated to it would be astronomical. The only way in which reliance on opium cultivation can be diminished is through proper economic development which offers real alternatives to farmers. The current policies do the exact opposite and push farmers further towards the drug trade.