U.N. report: Prices for Afghan opium soar amid drop in production

The rapid turnabout in Kabul Bank's fortunes has led Afghans to question Western-style free-market capitalism.
By Ernesto Londono
Washington Post Foreign Service
Thursday, September 30, 2010; 8:09 PM

KABUL - Profits from Afghanistan's opium trade rose markedly this year despite a sharp drop in production, according to a U.N. report released Thursday.

A plant infection that struck poppy crops in Helmand and Kandahar provinces slashed production in half, but the drop in supply sent prices soaring, the U.N. Office on Drugs and Crime said.

"This is good news but there is no room for false optimism," Yury Fedotov, the head of the agency, said in a statement. "The market may again become lucrative for poppy-crop growers."

Afghanistan produced enough poppy plants this year to make an estimated 3,600 metric tons of opium, the lowest yield since 2003, the report said.

Cultivation remained relatively steady across the board, including in southern districts where the United States has attempted to wipe out the crop in an effort to choke off the insurgency's financial lifeline.

The supply shortage sent the price of a kilogram of dry opium up from $64 last year to $169 this year, the report said. For farmers, that represented a $4,900, or 36 percent, increase in revenue per hectare (about 2.5 acres), according to the report.

Afghanistan produces roughly 90 percent of the world's opium, a highly addictive narcotic used to make heroin.

Since the Taliban was toppled in late 2001, U.S. and other Western officials have sought to provide crop alternatives to Afghan farmers in districts in the south and west, where the bulk of the country's poppy is grown.

But the Taliban's dominance in poppy-growing regions, high unemployment and the sinking prices of other crops have kept the opium trade strong.

"We are concerned that in combination with the high price of opium, a low wheat price may also drive farmers back to opium cultivation," Fedotov said.

Among the most striking findings in the report is a 30 percent spike in cultivation in Kandahar, the birthplace of the Taliban movement and a province that the U.S.-led international force is struggling to secure.

Cultivation in neighboring Helmand province, another key battleground for NATO troops, fell by 7 percent this year. However, Helmand remained the epicenter of Afghanistan's poppy industry, with 65,045 hectares (or more than 160,000 acres) of cultivated poppy.

Countrywide, 123,000 hectares (more than 300,000 acres) were cultivated.

The report noted that the 20 provinces declared poppy-free last year remained so in 2010.

The U.N. report on Afghanistan's opium industry is released yearly about this time. The data is published in the fall because harvesting takes place in the summer.


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