A strange thing happened in Afghanistan this month. The Taliban outlawed poppy cultivation. On the surface, that decision would appear to be a bold, counter-narcotic move. Many argue that the policy will send the fragile Afghan economy further down the drain. Or will it?
The breadseed poppy (papaver somniferumis) is the most important crop in Afghanistan. It ties the nation firmly to global markets, albeit from an illicit point-of-view. Opium and its derivatives are sourced from the gum that can be found inside a mature seed pod. Consider these points:
Primary Supplier. Afghanistan is responsible for as much as 80%-to-90% of the global supply of illegal opium. Led by the United States, mitigation policies were ineffective over the past decade.
Major Industry. Experts suggest that the Taliban earned over $400 million per year from poppy cultivation prior to its takeover, accounting for maybe 10%-to-15% of national output.
Household Income. Poppy fields in Afghanistan can generate as many as 350,000 full-time jobs across 23 out of 34 provinces nationwide, according to the UN Office on Drugs and Crime.
The timing of the policy—and its likely coercive implementation—aligns with the start of what could be a robust poppy harvest. That outlook provides some hope for an economy that is among the most destitute in the world. In addition to direct proceeds, the poppy harvest fuels residual components of the economy. In a recent on-the-ground interview with Voice of America, an Afghan farmer asserted, “Neither wheat nor vegetables can make us this much income.”
Black-market context aside, the Taliban announcement has fueled international criticism because of its universal impact on a faltering, impoverished country. An official in Kabul, however, might find utility in banning the harvest, at least publicly. We run the risk of sounding academic in our logic:
Demand Pricing. The value of opium and its derivatives have likely gone up in international markets, given expectations of diminished supply. That will generate more revenue on a per unit basis than the government would have seen under legacy conditions.
License Fees. The right to poppy cultivation can be doled out through permits to selected loyalists. These agent privileges of course would carry an extreme hard-currency price tag. The Taliban has essentially become a modern-day toll master at the national level.
Diplomatic Posture. Kabul can assert moral authority in establishing diplomatic ties, claiming that it is working hard at great cost to reform its economy. The approach may be one way to recover from backsteps in failing to guarantee educational rights for women, among other matters.
Outlawing poppy cultivation appears to be a counter-intuitive, if not frenzied, attempt to stabilize an economy in dire straits. According to a report released by the World Bank in mid-April, some 15 years of economic development have been erased by the Taliban takeover. Per capita income will be one-third lower at the end of 2002 than it was two years ago. Humanitarian aid trickles in, but the nation is bereft of foreign aid. Some 37% of Afghans do not have enough income to cover basic food costs.
On a global note, Myanmar is the swing player in global opium markets; farmers there can easily benefit from changes in global supply routes. Poppy cultivation in this Southeast Asian nation has moderated in recent years, but the domestic political crisis provides a launch pad for heightened cultivation in the northern Shan states. ■
Our Vantage Point: The ban on poppy cultivation in Afghanistan is being interpreted as a misfire for a floundering, isolated government, further undermining the agricultural sector. We think market mechanisms may validate this desperate tactic.
Learn more at the World Bank
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