Opium not so profitable for Afghan farmers

The United Nations's Opium Survey 2009, published last week, fills in some of the gaps found in the Summary Findings, published in September. It confirms that opium cultivation in Afghanistan decreased by 22 per cent, while production fell by 10 per cent to 6,900 tons.
The number of people involved in opium production, at 1.6 million, is a drop of one third since the previous year and the number of poppy-free provinces is up from 18 to 20 (out of 34).
New information includes the fact that the potential gross export value of Afghanistan's opiates is down 18 per cent, from $3.4 bn in 2008 to $2.8 bn this year. Opium now accounts for around a quarter of Afghanistan's GDP, compared to a third last year.
Antonio Maria Costa, Executive Director of the UN Office on Drugs and Crime, makes a personal plea to President Karzai in the report: "For the sake of a viable future, the Afghan government must regain control over the main opium growing regions, bring major drug traffickers to justice, and promote more honest government."
The survey produces some interesting information. Part of the reason for the fall-off in cultivation is the low prices opium is fetching, due to a glut. In 2009 the ratio between gross income from opium and gross income from wheat was 3:1. The ratio between the net income from opium and wheat was even smaller, at 2:1. Compare this figure to 2003, when farmers could earn 27 times more gross income per hectare of opium than per hectare of wheat.

Mystery of the missing opium crop

Some remarkable figures today in the 2009 Afghan Opium Survey from the UN Office on Drugs and Crime report. The main finding is that "the bottom is starting to fall out of the Afghan opium market", with opium cultivation down 22%, production down by 10% and prices at a ten-year low.
The number of poppy-free provinces have increased from 18 to 20 and drug seizures, while still tiny, are rising. Cultivation has fallen from 193,000 hectares to 123,000 hectares. Opium production is calculated at 6,900 tons. It has not fallen as sharply as poppy cultivation because farmers are extracting more opium per bulb. They do this by taking several crops from each bulb. This allows them to harvest 56kg of opium per hectare, compared to just 10kg/ha in the Golden Triangle of South East Asia.
The real mystery in these figures concerns the issues of stockpiles. World demand for opium is stable at around 5,000 tons - much less than what Afghanistan produces each year. UNODC Executive director Antonio Maria Costa says "Stockpiles of illicit opium now probably exceed 10,000 tons - enough to satisfy two years of world heroin addiction or three years of medical (morphine) prescription."
As a result of this over-supply, prices are falling. Wholesale prices in Afghanistan have fallen by a third in the past year, from $70/kg to $48/kg, the lowest prices for ten years. So despite higher yields per acre, farmers are receiving less per acre for their crop due to the falling prices.
Even at these lower prices farmers are receiving a total of $438 million at the farm gate. Once the opium is refined and sold on, the amount of money in this business multiplies many times. It is little wonder that stocks of opium are being kept off the market in order to shore up prices.
Opium production has become increasingly bound up with the Taliban who are known to tithe farmers and also to receive funds for protecting crops as they are delivered to laboratories where the raw opium is turned into heroin. Money from this business is then used to finance the insurgency - and to make various warlords and middlemen very rich indeed. Much of the financing for this business is done in the Gulf states, which is also where the proceeds are invested, mostly into real estate.
Some obvious questions that should be asked:
What is being done to find out who is stockpiling the excess opium?
Does it make sense to interdict or destroy the opium crop when it is already an over-supplied market. Won't that create more demand and help sustain the industry?
As I have asked before, where are the fatwas from religious scholars forbidding the opium trade? Do they not realise that the majority of victims are moslems? The UNODC report notes that there are now an estimated three million addicts in Iran alone.
Who is following the money trail? Don't banks in the Gulf have 'know your customer' rules?