Opium Production in Afghanistan - The Afghan Economy and Opium

The Afghan Economy and Opium

The 2004 United Nations Development Programme ranked Afghanistan number 173 of 177 countries, using a human development index, with Afghanistan near or at the bottom of virtually every development indicator including nutrition, infant mortality, life expectancy, and literacy. Several factors encourage opium production, the greatest being economic: the high rate of return on investment from opium poppy cultivation has driven an agricultural shift in Afghanistan from growing traditional crops to growing opium poppy.

Opium cultivation on this scale is not traditional, and in the area controlled by the Helmand Valley Authority in the 1950s the crop was largely suppressed.

"Despite the fact that only 12 percent of its land is arable, agriculture is a way of life for 70 percent of Afghans and is the country's primary source of income. During good years, Afghanistan produced enough food to feed its people as well as supply a surplus for export. Its traditional agricultural products include wheat, corn, barley, rice, cotton, fruit, nuts, and grapes. However, its agricultural economy has suffered considerably Afghanistan's largest and fastest cash crop is opium."

Poppy Cultivation and the Opium Trade have been said to have had a more significant impact on the civilians in Afghanistan than the impact of wheat farming and livestock trading. As farmers in Afghanistan were once heavily reliant on wheat farming to make sufficient income, the development of poppy cultivation has given many of these farmers a boost in capital, even though the Opium Trade may be a more dangerous product to distribute. In addition, as the demand for Opium has elevated, women have more opportunity to work in the same setting as their male counterpart.

Afghanistan's rugged terrain encourages local autonomy, which, in some cases, means local leadership committed to an opium economy. The terrain makes surveillance and enforcement difficult.

Afghanistan's economy has thus evolved to the point where it is now highly dependent on opium. Although less than 4 percent of arable land in Afghanistan was used for opium poppy cultivation in 2006, revenue from the harvest brought in over $3 billion—more than 35 percent of the country's total gross national product (GNP). According to Antonio Costa, "Opium poppy cultivation, processing, and transport have become Afghanistan's top employers, its main source of capital, and the principal base of its economy." Today, a record 2.9 million Afghanis from 28 of 34 provinces are involved in opium cultivation in some way, which represents nearly 10 percent of the population. Although Afghanistan's overall economy is being boosted by opium profits, less than 20 percent of the $3 billion in opium profits actually goes to impoverished farmers, while more than 80 percent goes into the pockets of Afghan's opium traffickers and kingpins and their political connections. Even heftier profits are generated outside of Afghanistan by international drug traffickers and dealers. Traditionally, processing of Afghan's opium into heroin has taken place outside of Afghanistan; however, in an effort to reap more profits internally, Afghan drug kingpins have stepped up heroin processing within their borders. Heroin processing labs have proliferated in Afghanistan since the late 1990s, particularly in the unstable southern region, further complicating stabilization efforts. With the reemergence of the Taliban and the virtual absence of the rule of law in the countryside, opium production and heroin processing have dramatically increased, especially in the southern province of Helmand.

According to the United Nations Office on Drugs and Crime (UNODC) 2007 Afghanistan Opium Survey, Afghanistan produced approximately 8,200 metric tonnes of opium – nearly double the estimate of global annual consumption. In an April 25, 2007 op-ed in the Washington Post, Antonio Maria Costa, Executive Director of UNODC, asked "Does opium defy the laws of economics? Historically, no. In 2001, prices surged tenfold from 2000, to a record high, after the Taliban all but eliminated opium poppy cultivation across the Afghan territory under its control. So why, with last year's bumper crop, is the opposite not occurring? Early estimates suggest that opium cultivation is likely to increase again this year. That should be an added incentive to sell.

He speculated, "So where is it? I fear there may be a more sinister explanation for why the bottom has not fallen out of the opium market: major traffickers are withholding significant amounts.

"Drug traffickers have a symbiotic relationship with insurgents and terrorist groups such as the Taliban and al-Qaeda. Instability makes opium cultivation possible; opium buys protection and pays for weapons and foot soldiers, and these in turn create an environment in which drug lords, insurgents and terrorists can operate with impunity.

"Opium is the glue that holds this murky relationship together. If profits fall, these sinister forces have the most to lose. I suspect that the big traffickers are hoarding surplus opium as a hedge against future price shocks and as a source of funding for future terrorist attacks, in Afghanistan or elsewhere."