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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

Despite the reported profitability of the opium trade all respondents indicated that they had made losses on opium trading both in the initial years of trading due to inadequate knowledge regarding the quality of opium, and throughout their trading career due to deceptions, the rapidly fluctuating price of opium, and the changing value of the Afghani.

The majority of traders in the east reported that they had suffered losses during the initial years of trade due to purchasing poor quality opium. Traders reported that there are three qualities of opium in Nangarhar: Spin, barani and sur. Both spin and barani are considered poor quality, the former affected by excess groundwater and the latter by rainfall during its collection. At the time of fieldwork spin and barani opium were selling in Ghani Khel for $27.00 per kg. Sur or red opium is considered high quality and was earning approximately $55.50 per kg at the time of the fieldwork. The quality of sur is denoted by its consistent dark red or brown colour and its sticky texture.

Respondents in the south referred to the different qualities of opium in the south as tor (black), sur (red) and jar (yellow). At the time of fieldwork the highest quality opium, tor, sold at the farmgate for between $60.30 to $62.20 per kilogram, whilst the poorest quality, jar opium, was being bought at the farmgate for the equivalent of $44.00 per kg. The best quality dry opium was being bought for $82.50 per kg. Respondents indicated that there is a preference for storing opium wet in polythene bags of 4.5 kg in the south. The reasons for this were varied, including the high moisture content of opium in the south, the preference for retaining the weight of opium for selling purposes, and the comparative profitability of wet and dry opium.

There was general consensus amongst both respondents and key informants that the best quality of opium was obtained from the first lancing of opium poppy that is grown in high dry areas. It was suggested that the opium produced from subsequent lancings had a higher water content. There was also agreement that areas with a high water table such as those near rivers or canals typically produce lower quality sur/spin and jar opium.

In the south it was suggested that by carefully mixing poorer quality opium with that of a higher quality it was possible to disguise poor quality opium and sell it at higher price. Respondents indicated that this was a particularly skilled job and was most commonly undertaken with sur and jar opium.

Moreover, traders also reported that adulterants were added to opium by cultivators and traders alike. In Nangarhar the locally produced black sugar known as gur, raisins and rice flour are reportedly added to opium to increase its value to weight ratio. Adulterants of wet opium cited by respondents in the south, included black tea and Diammonium Phosphate and sugar boiled in water.

Given the prevalence of mixing the different qualities of opium the use of adulterants, testing the quality of opium was seen as a pre-requisite by respondents in both the south and east. Testing was seen as particularly important when respondents purchased from opium cultivators and traders who they were not familiar with.

Three methods of testing opium were cited by respondents. The first test referred to by traders in both the south and the east involved smearing the opium on the hand and checking the consistency and texture of the opium to test for adulterants. In the heat of the sun the opium can be rolled-up and returned to the chakai or bag. The second test consisted of spreading the opium on a metal plate with a knife and heating it over a flame, thereby removing all the moisture from the opium. The opium was then scraped onto the knife and heated once more. Respondents indicated that the number and type of the bubbles this final heating produced denoted the quality of the opium. The final test involved pressing the knife with the heated opium firmly against a cloth and slowly drawing the knife away. The heated opium fixes itself to the cloth producing strands of opium between both the knife and the cloth. Respondents suggested that the longer and more numerous these strands the higher the quality of the opium.

A number of respondents in the southern region reported making significant losses. Few of the traders admitted to making losses on purchasing poor quality opium, suggesting they were too skilled in identifying the different qualities of opium to be deceived. However, reports of significant losses were reported by respondents involved in selling opium at the border with Pakistan and Iran.

The most obvious losses emanated from deceptions where cross-border traders agreed to pay a higher price if they were allowed to take the opium across the border and return to pay after an agreed time period. Once across the border with the opium, the trader was not seen again. A number of respondents had experienced this deception. For instance, one respondent had lost almost 3 mt of opium to three cross-border traders. To try and regain his lost opium, or the money he was owed, the respondent had kidnaped two family members of the cross border traders involved.

The majority of those involved in selling opium at the border reported suffering losses as a consequence of fluctuating exchange rates. Respondents indicated that the relatively high price of opium, the use of the Iranian toman and Pakistani Rupee for payment at the borders, and the growing strength of the Afghani, had led many traders to take a more cautious approach to trading. Indeed, there was great concern that the continued strengthening of the Afghani would result in traders receiving a lower real price at the border, after converting tomans and rupees to Afghanis, than respondents had initially paid at the farmgate.

Similarly, in the east the rapidly fluctuating price of opium meant that all the traders had incurred losses, selling opium at a lower price than which they bought it. Although traders recognised that retaining the opium until the price rose would allow them to avoid such losses, the majority indicated that they could not delay the sale of opium due to their immediate cash requirements.

Even those farmers that had provided advances to farmers reported making losses. The majority of occasions that losses were incurred related to a dramatic fall in the price of opium at harvest time, resulting in the level of advance exceeding harvest prices. However, a number of traders also reported that they had experienced a number of defaulters. Although most of these defaulters had repaid the following year at twice the rate agreed at the time of the advance, one farmer had never repaid his debts and the matter was being determined by the jirga in his absence.