KABUL - Afghanistan's opium production fell 10 per cent 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 UN 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 per cent 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 UN's office on drugs and crime, said in a statement.
Afghanistan produces 90 per cent 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 UN 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 UN 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.
The UN'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 (193,00 hectares) in 2007 to 304,000 acres (123,000 hectares) this year.
"The bottom is starting to fall out of the Afghan opium market," the UN 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 UN 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."
Officials in London warned that production could increase next year if opium prices rise. They said the Afghan government and its allies need to find new ways for farmers to earn a living in order to secure this year's gains.
"There is no room for complacency," the British government said in a statement.
One question raised by the survey is why, with rampant overproduction, global heroin prices haven't plummeted.
The reason, the UN says, is that Afghan's drug industry apparently has stockpiled 10,000 tons of opium, enough to satisfy the demands of the world's heroin addicts for the next two years. The presumed aim is to prop up prices, which have fallen a bit, but not as much as they should have, given the production rates.
But the UN's Costa called this stockpile a "ticking bomb" that could flood the world market with cheap heroin.
Almost all of Afghanistan's opium is grown in Helmand and six of the country's 34 provinces -- all areas under partial or total Taliban control.
While the Obama White House has all but abandoned the Bush administration's program of destroying poppy crops, the Afghan government continues to support poppy crop eradication efforts. A U.S. Senate report called eradication "an expensive failure," and U.S. envoy Richard Holbrooke called the practice "a waste of money."
Critics said razing poppy fields angered and impoverished rural Afghans without making a significant dent in harvests.
In his statement, Costa agreed, saying that "eradication continues to be a failure." Less than 4 per cent of the crop planted was destroyed in the past two years, he pointed out.
But some Western counter-narcotics officials say eradication discourages cultivation by raising the risk to farmers of planting the crop.
