US fights Afghan drug biz with cash

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As part of its Afghanistan strategy, the U.S. and Great Britain have begun making moves against the narcotics trade. Over the years, the region's economic dependence upon opiates has left it vulnerable to tribal chieftains and the Taliban. In order to combat this, the Western allies are hoping to supplant the drug-based economy.

They aren't going so far as to buy the poppy crop, MSNBC reports, though the idea has been kicked around. For now, they are using a variety of incentives to help convince Afghan farmers to commit to other crops. Wheat seeds and fruit saplings are being offered for next to nothing, and cheap credit is being extended to the farmers.

In addition to pushing for a switch between crops, this move is also encouraging a shift between bankers. Traditionally, drug traffickers and warlords have served as the region's economic underpinning, lending money to farmers so they can make it through the brutal winters. America's effort to win "hearts and minds" replaces a rather unsuccessful Bush-era program that focused on destroying the poppy crops. In addition to flushing hundreds of millions of dollars (probably more than the crop itself was worth), it wound up reinforcing the farmers' relationships with the Taliban. Further, the destruction of crops would have left them more beholden to the traffickers who lent them cash for the winter, essentially requiring the farmers to double down on their poppy reliance.

It's clear that the method by which money is disbursed is important, particularly in light of the earlier, unsuccessful attempts to eradicate crops. Rather than simply pumping money into the local economy, the current plan provides incentive for work: farmers can buy seeds and supplies at discounts of up to 90% and cash will be paid for work or be given in the form of credit.

While policymakers have considered simply buying up the poppy crop, U.S. officials believe that doing so would fuel competition and ultimately become counterproductive. The large influx of capital into the poppy market would increase prices, pushing more farmers to get into the poppy business next year. Worse yet, it could lead to a bidding war with those in the drug trade.

Of course, the results of this program are far from assured. The high-profile crop-substitution programs that the United States attempted in Colombia since the 1990s haven't done much to stem the production of cocaine. However, the involvement of U.S. military personnel is expected to provide farmers a measure of security, while giving the Afghan military time to train, grow and mature. In Colombia, stabilization due to the presence of a U.S.-trained military has been noticeable, indicating some promise for this model in Afghanistan.

There's a lot at stake with the poppy economy in Afghanistan. More than 365,000 households participate in this market, generating $730 million in sales. This may not be the lion's share of a $3.4 billion world poppy economy, but it's on par with Afghanistan's official revenue number of $750 million. Families farming opium poppy earned 53 percent more than those growing non-opium poppies.

On average, an opium poppy farmer can expect to pull in around $2,000 for his efforts. The cost to produce is approximately $900 (45%), and then there are taxes of 10% (another $200). So, the $2,000 the farmer earns will cost him $1,100, leaving $900 in his pocket. Based on these estimates, a non-opium poppy farmer would be good for $1,300. Production costs of 45% and taxes of 10% would leave only $585 for the farmer.

The $315 gap is what the United States needs to overcome – by a factor of 365,000.

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