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Opium production down 22% as price tumbles

Latest update : 2009-09-02

Opium production in Afghanistan has dropped by almost a quarter as prices drop and farmers switch to other crops, according to a UN report, which warned that large stockpiles do remain as a source of Taliban funding.

Reuters - Opium cultivation in Afghanistan fell by 22 percent this year as prices for the drug tumbled causing farmers to switch to other crops, the United Nations said on Wednesday.


Some 800,000 fewer Afghans are involved in the illegal drugs trade compared to last year, according to an annual U.N. report, a rare bit of good news for Western efforts in the country, where an eight-year-old war against the Taliban is at its most violent.


Western officials say the illegal narcotics trade funds the insurgency, fuels rampant corruption and crime, and undermines the Afghan state they are trying to prop up.


Afghanistan has long been the producer of about 90 percent of the world's opium, a thick paste from poppy that is processed to make heroin. In 2007, it broke all records, but cultivation has since started to decline.


"The bottom is starting to fall out of the Afghan opium market. These results are a welcome piece of good news and demonstrate that progress is possible," said UNODC Executive Director Antonio Maria Costa in the report issued on Wednesday.


This year, 123,000 hectares were used to grow opium poppy, compared to 157,000 hectares in 2008, the U.N. Office on Drugs and Crime (UNODC) said.


Most of the reduction took place in the country's most violent province, Helmand, the opium growing heartland and main focus of U.S. and British war efforts. Cultivation there fell by a third to 69,833 hectares, from 103,590 hectares in 2008.


Despite cultivating just 78 percent as much land, Afghan poppy farmers still produced 90 percent as much opium as last year, because of record yields caused in part by good weather.


The 6,900 tonnes of opium Afghanistan produced is far more than the 5,000 tonnes the world's addicts consume, leading to a glut that has depressed prices to lows unseen since the 1990s.


"All of that has created stocks, an excess supply, and on the whole has driven conditions such that it has become less and less attractive for farmers to cultivate opium," Costa told Reuters.

Economics drives down price

The fall in price drove the total value of Afghanistan's opium crop down 40 percent to $438 million. Opium now makes up just 4 percent of Afghan GDP, compared to 7 percent in 2008 and a record 27 percent in 2002, a year after the Taliban were ousted.


Still, Costa said it was "too early to tell whether the decrease in cultivation and production over the past two years is a market correction that could be reversed, or a downward trend".


The crash seems to be a result of simple economics, rather than law enforcement efforts. Only 4 percent of the crop was eradicated and 2 percent of the harvested product was seized.


Last year food prices soared even as opium prices tumbled.


Where farmers could earn 27 times as much per hectare growing opium as growing wheat in 2003, and 10 times as much in 2007, since last year, they have been able to earn only three times as much, no longer necessarily worth the extra effort and risk.


With Afghanistan still producing more opium than the world can consume, there is a risk that massive stockpiles of the drug could fund instability for years to come.


"There are stocks ... in south of Afghanistan, certainly in Pakistan and elsewhere. These stockpiles could be a very important way of funding terrorism worldwide, not only in the region," Costa told Reuters.


Date created : 2009-09-02