Mr. Grono and Ms. Nathan of the International Crisis Group have written a new article in the Christian Science Monitor about the two most prominent debates concerning Afghanistan's opium/heroin economy. They accurately note that neither poppy eradication nor legalizing pharmaceutical-end use poppy cultivation looks like a workable idea–they’re right. They target instead the corruption of Afghanistan's officials: they’re right about that too. As they point out, no one solution is sufficient. Opium eradication, which sounds like a simple and straightforward process involving a backhoe and a flamethrower or two, is anything but simple.
Economic, not political roots
Repeatedly, the experts and their public have indicated that poppy cultivation provides income to Afghanistan's agriculturists, warlords, terrorists, and corrupt government officials. Immediately after ceding this point, it then turn to military and enforcement solutions which do not address the underlying economic causes of poppy production. This is the biggest mistake of them all in regard to analyzing opium-related conflict and opium trade. For the length of this post, I’d like to ignore the criminal or undesirable elements of this product, its political and military effects, and its moral dimension. Instead, I want to look at opium trade like any other market trade. Of course everything swept out of this analysis make compelling arguments that can't be excluded for long. Yet our concentration upon these aspects means we constantly fail to understand why opium cultivation so obdurately persists.
Cash crops for agricultural reconstruction
A 2003 Asian Development Bank (ADB) report stated that 7.5 million hectares of land could be utilized: 60% of that land could be irrigated; and 20% double-cropped, say with a summer grain season, and winter wheat in the opposite cycle. However, due to irrigation infrastructure problems, even land with double-crop capability might not be best used in cereals production. The ADB doubts the wisdom of a full self-sustainability in wheat. Instead, they recommend that Afghanistan turn much of its farming efforts to cash crops in order to build export income and purchase grain in return. While this policy prescription may be subject to debate, in fact that is what has occurred with poppy agriculture: the ne plus ultra of revenue agriculture.
Under no conditions, however, would any development agency consider the growth of one cash crop to the exclusion of all others. In general, a mono-product economy is doomed to suffer whatever cyclical booms and busts that affect a market. The reason to have a diversified economy is to have an economy where the bust in one sector is overcome by the boom in another, keeping the economy at a stable growth level. In luckier societies, then, governments can still provide services through revenue/taxes, and labor switches to new industries that suddenly need work.
Nevertheless, on a macroeconomic level, opium/heroin is a product in high demand, and increased supply has not driven down its price in a boom-and-bust cycle. Eradication efforts elsewhere have left Afghanistan the prime supplier of world opium. As Grono and Nathan point out, attempts to eradicate this crop only drives the price higher, and makes the entry of new agricultural producers more likely.
Since opiates are highly addictive, there is little substitution of other goods for opium derivatives (an inelastic, or more vertical demand curve than shown in diagram). Increased rates of addiction, in the meantime, have raised demand (see new demand curve above). On a macroeconomic level, poppy growing looks like a pretty sure bet. But by looking at local conditions or microeconomically, the crop looks like one that is bound to meet most needs of Afghanistan's farmers in a high-risk, poverty-ridden, and low-security environment.
A. Initial Investment: Afghanistan used to be known for a more varied agriculture. But unlike, say, fruit trees, poppies do not take a long-range time investment to grow. Unlike cereals production, they do not require the same amount of irrigation infrastructure. Nor does the investment in propagation require the same dollar investment. Poppy cultivation also does not require agricultural mechanization; though arduous, its harvest is not so difficult as that of say, labor-intensive cotton harvesting by hand. Furthermore, opium is a crop that can be harvested repeatedly from the same field, over a growth cycle of 120 days. Wheat, on the other hand, is one yield per planting in most areas due to irrigation constraints, and it gives one payment per season. In an area of poor security, and few financial institutions, small amounts of money more often is more secure than one windfall that has to be guarded all year.
B. Risk/security aspect: World-wide, agriculture is conducted under risk conditions: flood or drought; fire and hailstorms; infestation by insects. This poverty-stricken region does not have crop insurance, which is a kind of social spending that ensures a baseline rural economy. Furthermore, it is a land with poor security, where these risks increase. Crops can be damaged from Acts of War as well as Acts of God; or through secondary effects of war and poor security, such as refugee or insurgent or soldierly traffic. Herd animals are portable (easily stolen) and mortal (easily killed) ; they also rely upon forage which is affected by the same problems as end-use crops. All of these risks refer back to investment, but with one important distinction: some of these crops cannot be replanted until the next year. With a high-value crop, the farmer's planting risk is also reduced: whatever of that crop survives, it is more likely to create a sustainable income. Furthermore, as a valuable crop, all stakeholders involved in opium sale and transmission are likely to protect it from violence and damage in a way that other crops or farm programs are not respected.
C. Price signals/competition: The crop is saleable right away, and it fetches a price that creates sustainable income for the farmer. As stated above, demand is increasing and inelastic, positively affecting farmhold income and household buying power. As an export/commodity crop, opium will not directly feed your family, but it will give you cash to buy food and even some disposable income–the very same solution that the ADB pointed out, although, not with poppies.
The purpose of running through these items is not to depress the reader, but to give an idea of the powerful economic incentives involved in poppy cultivation. Unfortunately, most of the discourse that we get doesn't really look at opium cultivation economically, much less from the farmer's point of view. Until we understand the economic pressures that these stakeholders face, then we won't really be able to monitor or evaluate the programs that might make the difference–or, suggest viable alternatives.
A good read:
ADB report, pdf, 40 pages: Rebuilding Afghanistan's Agricultural Sector
IRIN's March 2007 article on pay rates for agricultural workers in poppy fields
See previous post on agricultural methods, explained
Photos & diagrams: UNY-Rochester; US Embassy, Bangkok; der Spiegel
The good news is that many involved in the mitigation of poppy crops through alternate economic development seems to understand these vectors and problems quite well. Tomorrow, Part 2: Examples of present work toward sustainable alternatives
