Afghanistan Analysts Network – English

Context and Culture

Drugs, plots and stockpiles: Afghanistan’s failing poppy crop

Kate Clark 5 min

A mysterious desease is spreading through Afghanistan’s poppy fields: Is it a secret counter-narcotics operation or simply caused by nature? And what do ‘the markets say’? Answers given by Kate Clark, AAN Senior Analyst

‘Reports of a “mysterious” fungus that has damaged opium poppy crops in Afghanistan have hit international headlines’ writes a breathless commentator in The Guardian as she gives a quite extraordinary account of an Uzbek/British/American/UN plot to poison Afghanistan’s opium crop (see here). Afghanistan’s poppy harvest is (sort of) failing this year and conspiracy theories are spreading like disease on a heavily fertilised, poorly rotated crop.
Lab results on the disease are not yet back, but it seems to be a soil fungus, possibly spread when farmers tried to encourage ailing plants by giving them more water. There are also infestations of black aphids, an insect which can both spread disease to healthy plants and multiply fast on sick plants whose resistance has already been weakened.

The poppy crop has been hit across the south and many farmers believe it is the foreigners who are responsible. Farmer Haji Mohammad in Nawzad speaking to the BBC described the fungus as an ‘aerial spray. [It]… has affected my wheat cultivation and my chickens and other animals as well,’ he said. ‘The powder sprayed has a white colour and I think it is chemical and if you squeeze it in your hand, water comes out of it.’

Meanwhile, some commentators are cheering, believing that anything which reduces opium production is good. They should all look at the figures more closely.

Estimated infection rates, according to the United Nations Office on Drugs and Crime (UNODC), are as much as 50 per cent in northern Helmand, between 20 and 30 per cent in southern Helmand, 15 to 20 per cent in Kandahar and possibly a bit less in Uruzgan and Zabul. In other words, this is not complete catastrophic crop failure and the reduced harvest is pushing prices up so sharply that farmers may still enjoy a bumper year financially.

If this was a deliberate attempt at chemical eradication, as the conspiracy theorists contend, it was done shockingly badly. A professional sprayer would aim at 100 per cent crop destruction. But as a consequence of pushing soils and crops to their limits, using chemical fertilisers to promote high growth (see last year’s bumper yields) and poor crop rotation, an outbreak of disease is natural and to be expected. Indeed, they are a recurrent feature of poppy cultivation in Afghanistan (with various diseases or pest infestations hitting the south in 1998, Helmand and Nangrahar in 2004 and Badakhshan and Takhar in 2005).

This is not to say the conspiracy theories are irrelevant. The perception of the truth is often more important than the truth itself and farmers who blame foreigners or the government for crop failures are more likely to support the Taleban. Gleeful commentators should also beware of other perverse consequences of the poor harvest.

‘We’re not jumping in victory at all,’ Jean-Luc Lemahieu, head of the UNODC in Kabul, told AAN. ‘We are on high alert,’ He pointed to the Taleban ban on opium cultivation in 2000 which sharply reduced opium supply, pushed up prices and lead to a boom in cultivation that has still not played out.

There are reasons why his fears may be somewhat overblown. The Taleban ban in 2000 worked: aside from opium from Badakhshan– then under Northern Alliance control – cultivation was reduced almost to zero. By contrast, disease this year will reduce the harvest by perhaps a quarter.

However, as Lemahieu points out this is a volatile,’irrational’ market where high prices are not leading to increased supply. Instead, farmers are sitting on their harvest, waiting for prices to rise even further, hoping for windfall profits. Supply shortages are pushing up demand, prices and expectations ever further. It all resembles a housing bubble of a booming, speculative stock market.

Compared to last year, says UNODC, fresh opium is 57 per cent more expensive and dry opium 35 per cent more. Fresh opium acts like a futures market, ie people buy at the price they think the opium will be worth, as a dried product, in the future. So that sharp increase in the fresh opium price is ringing alarm bells.

It may even be that UNODC has underestimated the price hike. Reports from the field say that, three weeks ago in Helmand, the price of a man (4.5kg in this region) of fresh opium was 58,000 Pakistani rupees. Now it is 70-80,000 PR. So even a farmer who has lost 50 per cent of his crop, if he sells now, would still be making more money than last year.

One puzzle remains though: UNODC believes there are huge stocks of Afghan opium out there, enough to supply addicts, globally, for 18 months even if no more opium was produced. Why are those sitting on these stockpiles (who could be Afghan officials, politicians, smugglers or Taleban) not cashing in their ‘savings’ at this time? UNODC thinks they believe market is still rising – and that this is a further evidence that we are in the grip of an irrational market. But the lack of opium coming onto the market may be evidence that the stockpiles simply do not exist.

UNODC has calculated the existence of huge, not yet consumed stockpiles by subtracting what it believes is a steady global demand for opiates from its estimate of recent harvests. But has global demand really been steady? In the West, maybe, but opiate use in Russia and the booming economies of China and India seems likely to have been underestimated. AAN put this to Lemahieu and he conceded that UNODC’s demand estimates are much weaker than their production estimates and that global consumption of opiates may well be higher and stockpiles could be far smaller. But says Lemahieu – and this may be counter-intuitive -, ‘One thing we now do hope – there are sufficient stockpiles which will kick in to moderate the price.’

In other words, the extent of stockpiles will affect how far the opium price goes up and when selling by a few leads to a wholesale rush to sell, an increase in supply and a levelling off or reduction in price. This in turn will affect, not only the incomes of farmers, dealers, corrupt government officials and Taleban this year, but what farmers decide to sow next year. UNODC is worried that the overall effect of speculation, disease and continuing insecurity, will be a major increase in poppy planting in the south. And if instability worsens elsewhere in Afghanistan, it says, provinces that are currently opium-free could actually start growing again.

Even in less difficult times, opium does not necessarily behave according to standard market rules. Like other crops, it can be sold to provide an income, but when dried, it stores for 5 to7 years without losing all its value, so it also functions as capital and savings. Its real worth, however, comes in times of trouble, when all hell is being let loose and yet, the market for opium is still functioning. Farmers who grow licit crops have to get them to market, risking their year’s income travelling through a war zone and getting past check posts manned by thieving policemen. If they grow opium, the buyers come to them. Opium is a low risk crop in a high risk environment, a natural choice for farmers living with an insurgency.

In normal conditions, farmers would switch away from any crop so badly diseased, but in Afghanistan, this may not be the case. This is different from the more benign rise in wheat prices and falling poppy prices over the last two years which led to a reduction in poppy cultivation. Afghan farmers have to weigh up a range of factors when deciding what to sow: insecurity, inaccessibility of markets for licit crops, threat of displacement and the need to have transportable assets (where poppy is a plus) versus the threat of disease and risk of eradication (where poppy is a minus).

What does the coming year offer farmers in Afghanistan’s poppy-growing heartland? There is the risk of disease again next year of course, but also impending ISAF military operations and Taleban vows to fight back make insecurity more likely, plus there is the hope of disease-induced shortages pushing prices ever higher.

For further reading: Mansfield, David (July 2009) Where have all the flowers gone? Assessing the Sustainability of Current Reductions in Opium Production in Afghanistan Briefing Paper Series, Afghanistan Research and Evaluation Unit.


Drug Trafficking Taleban