U.N.: Bottom falling out of Afghan opium trade

updated 5:00 a.m. ET Sept. 2, 2009

KABUL, Afghanistan - Afghanistan's opium production fell 10 percent last year and prices are at their lowest in a decade, meaning "the bottom is starting to fall out" of the world's largest opium market, the U.N. said Wednesday.

A key finding of the 2009 Afghan Opium Survey, released Wednesday, was that cultivation in Helmand province, a Taliban stronghold where U.S. and British troops have launched major operations this summer, dropped by about a third from 2007 to 2008. Helmand produces almost 70 percent of Afghanistan's opium.

"At a time of pessimism about the situation in Afghanistan, these results are a welcome piece of good news and demonstrate that progress is possible," Antonio Maria Costa, executive director of the U.N.'s office on drugs and crime, said in a statement.

Afghanistan produces 90 percent of the world's supply of opium, the raw ingredient used to make heroin, and the multibillion-dollar crop has helped finance insurgents and criminal groups, fueled official corruption and weakened the country's central government.

The United Nations said that a "marriage of convenience" between insurgents and criminal groups is spawning narco-cartels in Afghanistan.

Because of that link, U.S. and NATO troops began actively targeting drug warehouses for the first time this year. The United Nations reported that in the first half of 2009, military operations destroyed 50 tons of opium, 7 tons of morphine, 1.5 tons of heroin, and 27 laboratories for turning opium into heroin.

British officials, who are leading counter-narcotics work in Afghanistan, estimate that the insurgents finance their operations with the help of annual opium profits that range anywhere from $100 million to $400 million.

Several causes mulled
The U.N.'s Costa and U.K. officials attributed the declines in cultivation and production to the work of local governors, eradication efforts, drug seizures by Afghan forces and programs to replace opium poppies with legal crops. However, some analysts say the production decline is due to lower world prices for the drug.

Helmand Gov. Gulab Mangal distributed wheat seed to about 32,000 households in 2008, and British officials plan to expand the project to cover a broader area, and include grapes, pomegranates and apricots.

Opium cultivation in Afghanistan peaked in 2007 and has now fallen two consecutive years. The amount of Afghan cropland devoted to opium poppy cultivation fell from about 478,000 acres in 2007 to 304,000 acres this year.

"The bottom is starting to fall out of the Afghan opium market," the United Nations said.

Opium production in Afghanistan has not fallen as fast as the decline in acreage devoted to poppy plants, because farmers are using improved strains and agricultural practices to extract more opium paste out of each bulb.

The survey reported that Afghanistan is still producing 6,900 tons of opium a year, 1,900 tons more than the world consumes. That overproduction, experts say, has saturated the market, driven down prices and made the crop less profitable — and may be behind the drop in cultivation.

Farm prices for opium this year dropped by about a quarter, according to U.N. figures.

"Intervention may be playing some role here. But this is basically market-driven," said Marvin Weinbaum, a scholar at Middle East Institute in Washington.

Weinbaum said the decline in production in Helmand may have been partly due to the increased fighting there, and that it is too early to say the overall figures point to a long-term decline in the illicit industry.

"Obviously the trend is in the right direction," he said. "But for anybody to declare any kind of success here, any victory, is premature."

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