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The Dynamics of the Farmgate Opium Trade and the Coping Strategies of Opium Traders

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STRATEGIC STUDY #2

Final Report October 1998

All of the farmgate traders interviewed owned land, ranging from one fifth of one hectare to twelve hectares. Moreover, all had other sources of income other than that derived from trading in opium, including agriculture, livestock, transportation, timber, and shopkeeping.

Whilst most of the traders indicated that they had larger than the average landholdings within their particular area, the majority argued that they had insufficient land to satisfy the basic food requirements of their family. A number of respondents in the south indicated that there were more than 30 family members within their household. However, respondents claimed that these large households had particularly high dependency ratios and rarely contained more than 4 or 5 working family members. Indeed, one respondent who claimed to purchase 20 metric tons (mt) of opium per annum, the largest amount of any of those interviewed, shared the equivalent of 6 hectares of land between 30 family members.

Approximately 60% of those interviewed in Shinwar and Achin traded less than 100 kilogrammes (kg) of opium per annum, concentrating their trade around the harvest period in the eastern region. The other respondents traded between 200 kg and 500 kg per annum buying and selling opium throughout the year if their cash flow permitted. However, in the south it was possible to interview opium traders who claimed to purchase and sell significant amounts of opium, ranging from 270 kg to 20 metric tons. Most of these respondents appeared to be influential members of the community, having performed Haj, received a relatively high level of education and possessing large landholdings.

Indeed, over one half of those traders interviewed in the south had been educated up to 16 years of age, whilst a number of respondents in both the east and south were former teachers and government workers. With the breakdown in the civil administration, many respondents in the south argued that there were very few income earning opportunities available to those who had received an intermediate level of education. Many respondents suggested that trading in opium was a natural choice for those who had received an education, whilst cultivating opium was the obvious livelihood strategy for those without a formal education.

The vast majority of those interviewed in Shinwar and Achin were less than 30 years old and claimed to be the first generation of their family to be trading in opium. Only 2 of the 12 respondents from Shinwar and Achin claimed to have been trading for 10 or more years. The other ten respondents reported that they had traded in opium for between 3 to 5 years. In the south, the majority of respondents were over 40 years old and claimed to have been trading in opium for between 4 to 8 years. However, almost 20% of those interviewed in the south, indicated that they had been purchasing opium for between 25-30 years, witnessing a considerable expansion in the number of individuals trading in opium over that time.

In the south, it was particularly noticeable that 22 of the 26 opium traders interviewed had performed Haj. Indeed, two respondents were mullahs, suggesting that economic priorities are given precedence over Islamic strictures.

All of those interviewed in the south owned at least either a car, a motorcycle or a tractor, many had all three. Moreover, half the respondents had married a second wife, and some had married for the third time. It is possible that the prominence and wealth of these traders within their respective communities may influence other members of the community in the choice of livelihood.

5. Raising the initial investment funds to begin opium trading

In both the east and the south those traders who only bought and sold opium during the harvest period typically used the opium cultivated on their own land as a source of funds with which to begin their periodic trading in opium. In Shinwar, the proximity of Ghani Khel allowed these traders to sell direct to the wholesale traders in the bazaar at the time when the price for opium was relatively high. Each year the proceeds from this sale would then be used to purchase opium in outlying districts where the price of opium was less competitive.

Respondents who traded in opium throughout the year tended to raise their initial investment costs through loans from family members and friends, trading in other goods, or from shopkeepers. For instance in Shinwar, a respondent reported taking an initial loan of the equivalent of $543 from a shopkeeper in Ghani Khel to begin trading in opium.2/ After ten years of trading in opium he estimated that his investment funds for purchasing opium during the 1997/98 season were almost $3,300.

In the south respondents and key informants indicated that advances for initial investment in the opium trade were obtained through a commission system that operates at all levels of the opium trade in the southern region.3/ For instance, in Musa Qala one trader claimed that his initial investment in the opium trade was made in 1994 and was the equivalent of approximately $270. This was obtained from a Baloch trader as an advance for the purchase of opium. By 1998 he claimed that he had almost $9,000 available for the purchase of opium.

A minority of those interviewed in the south also traded in other goods, such as groceries and fertiliser. These traders had used the profits from this trade to finance their move into the opium trade. This was also the experience in Achin, where all three of the traders interviewed used their trade in general goods and cloth to subsidise their diversification into the opium trade. Other traders reported selling luxury items to raise the necessary finances to begin trading in opium.

2/ At the time of fieldwork in the eastern region there were 46 Pakistan Rupees to one US Dollar, whilst at the time fieldwork was conducted in the south, there were 56 Pakistan Rupees to one dollar and 625 Afghanis to one Pakistan Rupee.

3/ See Section 9.