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Opium Trading Systems in Helmand and Ghor

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Opium Trading Systems in Helmand and Ghor Afghanistan Research and Evaluation Unit Issues Paper Series Opium Trading Systems in Helmand and Ghor Adam Pain Funding for this research was provided by the World Bank January 2006 © 2006 Afghanistan Research and Evaluation Unit (AREU). All rights reserved. The views and opinions expressed in this report do not necessarily reflect the views of AREU. About the Report This paper was commissioned and funded by the World Bank on the basis of jointly agreed Terms of Reference. The findings, interpretations, and conclusions in the paper are the author’s and do not necessarily reflect those of the World Bank. About the Afghanistan Research and Evaluation Unit The Afghanistan Research and Evaluation Unit (AREU) is an independent research organisation that conducts and facilitates action-oriented research and learning that informs and influences policy and practice. AREU also actively promotes a culture of research and learning by strengthening analytical capacity in Afghanistan and by creating opportunities for analysis and debate. Fundamental to AREU’s vision is that its work should improve Afghan lives. AREU was established by the assistance community working in Afghanistan and has a board of directors with representation from donors, UN and multilateral organisations agencies and non-governmental organisations (NGOs). Current funding for AREU is provided by the European Commission (EC), the United Nations Assistance Mission in Afghanistan (UNAMA), the United Nations High Commissioner for Refugees (UNHCR), Stichting Vluchteling and the governments of the United Kingdom, Canada, Denmark, Switzerland and Sweden. Acknowledgements I am deeply grateful to the assistance of various agencies and individuals who supported me in this fieldwork. For obvious reasons they should remain anonymous. The critical comments and thoughts of Bill Byrd, Paul Fishstein, David Mansfield and colleagues from AREU on an earlier draft of this report are greatly appreciated. Adam Pain, November 2005 Table of Contents 1. Summary.........................................................................................1 2. Background......................................................................................2 3. Provincial Contexts ............................................................................5 4. Opium Poppy Production and Potential Trading Volumes ...............................8 4.1 How many opium traders are there and who are they?........................11 4.2 Opium traders and trading volumes ..............................................13 4.3 Trading stock .........................................................................15 4.4 Trade routes..........................................................................16 4.5 Trading networks ....................................................................16 4.6 The value chain ......................................................................18 5. Trading Risks ..................................................................................19 5.1 Risks associated with price fluctuations .........................................19 5.2 Risks of theft and seizure ..........................................................20 5.3 Risks of adulteration ................................................................20 6. Institutional Dimensions .....................................................................21 7. Conclusion .....................................................................................23 References..............................................................................................25 Map of Study Area: Helmand and Ghor, Southwestern Afghanistan Map reproduced with kind permission of ISAF Opium Trading Systems in Helmand and Ghor 1. Summary This report focuses on the opium market at dominant role they might play in shifting district and provincial levels in two provinces production from Helmand to Ghor and beyond. of Afghanistan, Helmand and Ghor, and is Some patchy data on value chains was based on a series of field interviews with collected, but it allows few quantitative opium traders and key informants, as well conclusions to be drawn. Returns appear to as drawing on secondary data. Helmand has be a modest 10 percent close to the farmgate, long held a dominant position in Afghanistan with margins increasing closer to the border. as an opium producer, accounting for around More understanding was generated with 25 percent of the national opium poppy respect to trading risks: there were persistent cultivated area in recent years, while culti- references to risk due to short-term daily vation of opium poppy in Ghor is more recent price fluctuations of up to 30 percent in what and accounts for only around 3 percent of appears from long-term price data to be a total area. Helmand is essentially a plain fairly stable market. These fluctuations economy dominated by a river irrigation appear to be driven by the periodic nature system while Ghor has the classic features of demand from outside buyers and some of a remote mountain economy. degree of collusion by larger traders. Risks Based on a review of cultivated area, associated with theft and seizures were also production figures and assumptions about widely reported. A common thread running cross-province trade, the level of total trade through the study is the engagement of key through Helmand is estimated to be 2000 provincial authorities in the opium economy: tons (up to half of Afghanistan’s opium both interdiction and eradication measures production), however it must be stressed this may have contributed to these actors gaining is not a statement of truth but a hypothesis tighter control over distribution and trade. to be challenged. Ghor, on the other hand, Key conclusions of the study relate to the supports both a transit trade in opium from historical continuity of trading systems, and the north as well as production in its own evidence of a fragmented rather than unitary right amounting to 100–200 tons per year. market for opium in Afghanistan. Relevant These production and trade levels are policy implications focus on the consequences matched against reported numbers of opium of eradication and interdiction measures, traders, grouped by categories defined by and the need to address informal regulation trading volume, seasonality, stock manage- in markets across the board. There is a case ment, geographical reach and other criteria. for the development of major programmes Estimates of opium trade based on trader with alternative livelihood goals to anticipate numbers and categories fit broadly with the the spread of opium poppy. A thread that supply estimates determined from the runs through the study is evidence of a production data, while particular attention fragmented and regional (rather than is drawn to the issue of inventories and the national) market and the critical role that different reasons for which they are held. kinship and ethnic identity play in trading The development of the transit trade through systems. Comparative work on drug markets Ghor offers insight into the expansion of at this level in Europe show that they have Helmand-based trading networks and the similar features. Afghanistan Research and Evaluation Unit 1 Issues Paper Series 2. Background The role and impact of opium poppy understood about price formation and how production on the livelihoods of landowners, it relates to market structures and actors, sharecroppers and migrant labour in while even less is known about the informal Afghanistan is increasingly well understood. institutions that regulate opium trade. Research into the incentives and entry/exit strategies of rural households growing opium A key gap in the understanding of the opium poppy is in progress and attention is beginning production economy (OPE) relates to the functioning of opium trading systems and the to be turned building a better understanding linkage between markets at village, district of risk and uncertainty in relation to farmers’ and provincial level. Little is known about decisions and opium poppy cultivation. traders at the local (village and district) level Through its annual surveys, the United Nations and their linkages to provincial trade systems. Office on Drugs and Crime (UNODC) provides There is scant information on numbers or information on the spatial and temporal knowledge of how opium trading fits within distribution of opium poppy cultivation. an overall portfolio of trading, what the Less attention has been given to the conditions and incentives are to move in and out of trading opium, what the competition functioning of opium markets and trading is, and how networks are established and systems at village, district and province level. maintained. Knowledge of market risks and UNODC’s 1998 report The Dynamics of the how these influence trading behaviour with Farmgate Opium Trade and the Coping respect to the maintenance and deployment Strategies of Opium Traders concluded that of stocks is limited. A particular point of quite different trade structures operated in interest is how opium trade networks have Nangarhar in the east from those in Helmand been established in areas that have only 1 in the south. The latter appeared to have recently moved into opium poppy production a more open and competitive market, while – who is trading opium in these places and the former seemed more vertically integrated. how have linkages been built with the external Since 1998 when the study was undertaken market? opium
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