Is the Drop in Afghan Opium Production a Sign of Success?

As Nick Gillespie noted this morning, a new report from the U.N. Office on Drugs and Crime (UNODC) says Afghan opium production fell 10 percent between 2008 and 2009. Is this good news, finally, for the drug warriors who are always trying to eradicate the poppies that become the opium that becomes the heroin that ends up in the noses and veins of Europeans and Americans? Not exactly:

United Nations officials said this year's decline stemmed largely from a steep drop in the value of opium amid a huge supply glut; high prices last year for some other crops that caused farmers to switch; and more aggressive counternarcotics actions by Western and Afghan forces.

They said it was not clear whether the decline would continue, especially if the difference between prices for opium and other crops were to widen to previous levels. Just two years ago, for example, an acre of opium fetched 10 times as much as an acre of wheat, but that ratio has diminished to three to one.

Whatever impact "aggressive counternarcotics actions" have had, they have not succeeded in raising retail prices (which have fallen dramatically since the early 1990s) or reducing heroin consumption. The "steep drop in the value of opium" is due not to a decline in demand but to oversupply:

"Lower opium prices in Afghanistan reflect the continuing high levels of opium production, which is thought to exceed global demand for opium and its derivatives," according to the 42-page report issued today. "Annual world demand for illicit opium has never exceeded 5,000 tons."

Yet even after the 10 percent drop, Afghanistan produced some 6,900 tons of opium this year. Where does all the extra opium go? The answer worries the UNODC:

United Nations officials…reported that perhaps more than 10,000 tons of illegal opium—worth billions of dollars and enough to satisfy at least two years of world demand—is now secretly stockpiled. They said they were concerned that part of this stockpile could be a "ticking bomb" in the hands of people who could use it to pay for "sinister scenarios."

Opium is easily smuggled and stored and "is an ideal form of terrorist financing," Antonio Maria Costa, the executive director of the United Nations Office on Drugs and Crime, said in an interview. "It's a huge amount of money to have in the wrong hands."

To sum up: After years of crop eradication and other "aggressive counternarcotics actions" in Afghanistan, production routinely exceeds worldwide demand, prices are lower than ever, and terrorists are sitting on "a huge amount of money" that would not exist but for the risk premium created by prohibition.

The UNODC report is available here. In a July column, I discussed the Obama administration's plans to move away from crop eradication in Afghanistan, which special envoy Richard Holbrooke called "a waste of money" that "just helped the Taliban." More Reason coverage of Afghan opium here.