The United Nations Office on Drug Crime (UNODC) released its 2009 Afghanistan Opium Survey. Many of the findings are promising and optimism is high, but so is the looming threat of an influx of cheap opium and heroin into the world markets due to illicit stockpiles and over-supply.
Mountainside Addiction Treatment Center a leading center for heroin addiction in United States has summarized many of the findings of the UN Report and comments on its findings.
Weather conditions in Afghanistan in 2009 were favorable for the opium crops that mark many of the province’s mountain tops. The bumper crops, combined with new phenomena, are resulting in lower wholesale prices for poppy and opium in the area. The over-supply at the source, combined with lower market penetration (in Europe), are driving down the prices of opium in the country that accounts for more than 90 percent of the world market. Historically, this type of environment has led to increased heroin addiction and overdoses worldwide.
The average opium yield in Afghanistan per hectare increased 14.95% annually to 56.1 Kilogram per hectare of poppy in 2009 compared to 48.8 Kilogram per hectare in 2008. The high yield per hectare of Afghan opium dwarfs that of the Golden Triangle by more than five times. This increase in opium yield offset the 22% year over year opium cultivation decline of 34,000 hectares - from 157,000 hectares in 2008 to 123,000 hectares in 2009.
On average it takes approximately 10 kilos of opium to produce 1 kilo of heroin. As the prices of opium fall there is a growing fear among many that this will find its way into lower priced and more potent heroin. Heroin addiction has become a burden for many individuals throughout the United States and has increased the need for drug rehab programs.
This year In Afghanistan the average prices for wholesale opium have dropped substantially (1/3 or 33%) for a kilo of fresh and also for dry opium. A kilo of fresh opium that went for $78 in 2008 can now be bought for $48, while a kilo of dry opium that went for $95 in 2008 is now traded at $64. Opium prices have not been this low since the 1990’s. The pressures that have driven prices down (over-supply and lower market penetration) may very well continue in the near future.
In the 1990’s the Taliban was in power in Afghanistan and overall opium production was half of what it is today, due to the Taliban’s stringent opposition to the cultivation of opium. The production of the drug flourished since 2001 due to overall instability, corrupt political environment and lack of government enforcement. In 2009 many changes have contributed to the decline in opium production, and many are hoping this is the beginning of a trend. 33% of farmers asked by UN pollsters for the primary reason that they stopped cultivating opium stated that it was due to the Government ban on its cultivation. This more restrictive political environment combined with the logistical hardship – as it is harder to get the drug out of the country, has resulted in increased supply and depressed prices.
Some are hoping for a negative feedback loop to start a trend of continued cultivation decline. As the prices fall for a kilo of opium, the farmers who cultivate the crops see a reduction in income, thus removing some of monetary benefits of cultivation. The newly restrictive regulatory environment and the current military operations have increased the risks of drug-trafficking, thusly making it more dangerous to cultivate and move the drug. These phenomena have titled the risk/reward balance, at least temporarily, making it less attractive and more dangerous for farmers to grow poppy.
Annual world demand for opium is approximately 5,000 tons and annual production regularly exceeds demand. In 2009 it is estimated that just less than 7,000 tons were produced or 2,000 tons of excess supply from Afghanistan. Another opium producing country, Myanmar, has seen a 50% increase in its poppy cultivation since 2006. Overall it has been estimated that there may be more than 10,000 tons of opium being held in illicit stockpiles – or approximately 2 years worth of world heroin addiction. Currently these stockpiles are a matter of concern for many, who worry that, for a variety of reasons, if the stockpiles were to hit the market – it would result in an overall crash of prices.
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