Hard News by Russell Brown

30

Drugs, development and reality

The United Nations has been encouraging development of alternative crops in poorer drug-producing countries for more than a decade and a half as a way to reduce global supply. Results have been very much mixed, unfortunately. I looked why in the following feature for the latest issue of the New Zealand Drug Foundation's Matters of Substance magazine.

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By the hit, by the gram, by the kilo reads the website of one local coffee company. It’s an old joke: cast the daily, socially sanctioned fix of caffeine in the spicy language of illicit drugs. But it has a real-life resonance in the fitful, difficult business of drug supply control.

In 1998, a special session of the United Nations General Assembly devoted to the global drug problem anointed a phrase that became a strategy: “alternative development”.

In one of the endless sentences characteristic of such consensus statements, the assembly defined the alternative development policy as:

A process to prevent and eliminate the illicit cultivation of plants containing narcotics and psychotropic substances through specifically designed rural development measures in the context of sustained development efforts in countries taking action against drugs, recognising the particular socio-economic characteristics of the target communities and groups, within the framework of a comprehensive and permanent solution to the problem of illicit drugs.

In real terms, that means giving farmers, often indigenous people, in Latin America and Southeast Asia and Central Asia viable, legal alternatives to the plants that economically sustain them, chiefly coca bush, opium poppies and cannabis. The hope is that cash crops such as cacao (the core ingredient of chocolate), coffee and palm oil can replace the crops that are turned into illicit drugs for the world market.

On the face of it, it’s a considered policy that recognises that the farmers at the foot of the drug ladder need economic alternatives that won’t simply appear on their own. Reduction of poverty, improvement of food security and general rural development all play a part in the strategy, which accounts for a significant part of the operational activity of the UN Office of Drugs and Crime (UNODC).

Long before the General Assembly statement, the UN was actually working along these lines through crop substitution projects in Thailand in 1972. So has the strategy worked? If so, where, why and how?

A 2012 story in Time declared that “finally, one of Washington’s most frustrated drug-war priorities” alternative development, was “starting to bear fruit” in the Yungas Valley of Bolivia, where the local people had for years expanded their traditional cultivation of coca in service of the cartels that turn coca into cocaine.

Two things helped. One is that coca growers receive only a tiny proportion of the billions paid by western cocaine users – there is no fair trade in the drug business. The other was a sharp spike in the international price of coffee beans. If the farmers could get a fair share of the returns, it was more profitable to grow coffee than coca. Alongside the Bolivian Government, the American federal agency USAID showed farmers how to grow and prepare the high-quality beans that fetch a premium internationally.

There is no such good news, however, in Afghanistan, which produces 90 percent of the world’s illicit opium. In 2001, after a religious edict from the Taliban, the country’s opium production plummeted to only 185 tonnes. Since the US-backed invasion in that year, production has spiralled, reaching 8,200 tonnes in 2007 before subsiding somewhat. The 2013 Afghanistan Opium Survey, published in November, found “a worrying situation” with the area in cultivation up 36 percent and production up by nearly half on 2012, at 5,500 tonnes.

There seem to be two reasons for the surge. One is straightforward economics: opium is easier to transport and fetches far, far more than any other crop. The farm-gate price of fresh opium was $US181 per kilogram last year. The price for wheat was 44 cents. The other is security: a subsequent UNODC statement speculated that farmers “may have driven up cultivation by trying to shore up their assets as insurance against an uncertain future resulting from the withdrawal of international troops next year”.

Although the UNODC survey mentions crop eradication as a positive solution more than 30 times, forced eradication was officially halted – after a change of management at the White House – by then US Ambassador Richard Holbrooke in 2009. Holbrooke described eradication as a “failed” policy that “just helped the Taliban”, echoing a 2007 paper from the US Army’s Strategic Studies Institute, which said:

While the process of eradication lends itself well to the use of flashy metrics such as ‘acres eradicated’, eradication without provision for long-term alternative livelihoods is devastating Afghanistan’s poor farmers without addressing root causes. The United States should put less emphasis on eradication and focus more attention and resources on the other pillars of the counternarcotics strategy.

Yet it’s unclear how much has changed since then. Two-thirds of Afghan villages in cultivating regions received no development support last year. Without that support – particularly in processing and marketing – substitution with high value crops like saffron (where, as with coffee and illicit drugs, almost all the value is captured after it leaves the farm) remains little more than a nice idea.

In his book Opium: Uncovering the politics of the poppy, Pierre Arnaud- Chouvy suggests that, on its own, crop substitution has had relatively little impact – even in apparent success stories such as Thailand, where opium production has plummeted. He argues the elements of alternative development that did work were those that increased national cohesion and brought former drug-growing areas into the national mainstream. In other words, better schools and hospitals were more effective than crop substitution programmes. Eradication programmes, like those still active in Afghanistan, were generally counterproductive.

The Thai project “also had, very importantly, the royal blessing”, says Sanho Tree, Director of the Drug Policy Project at the Institute for Policy Studies, “which means tremendous mobilisation of resources which simply don’t exist or are politically unfeasible in other parts of the world.”

Tao Rattana, a Thai New Zealander who runs the specialty coffee supplier Papaya Salad, also emphasises the role of the Royal Family. As far back as the 1980s, he says, successful crop substitution programmes have been linked to royal initiatives. His own company handles high-value, organic specialty coffee, mostly from farms of less than two hectares.

“The Thais made a commitment to this in the way the US has never made a commitment,” says Tree. “We do it as an afterthought – it’s a sugar coating on the very bitter pill of eradication. USAID is very much in the back seat when it comes to international drug war policies. Law enforcement, the Bureau of International Narcotics and Law Enforcement Affairs (INL), is very much in the driver’s seat.”

The key player in Asia is China, which has poured huge resources into Burma and Laos, where the export market for illicit opiates is not the West but China itself. But China’s version of alternative development– focused on large mono-plantations of rubber, sugar cane and tea – has resulted in both shifts and increases in opium production, according to the 2010 Transnational Institute (TNI) report Alternative development or business as usual? China’s opium substitution policy in Burma and Laos.

Such a strategy fails to benefit the people most likely to grow opium: the “poorest of the poor”, the report says. To the extent that new initiatives marginalise these communities, they achieve the opposite of their aims.

A subsequent TNI report in 2012 was withering: “China’s opium crop substitution programme has very little to do with providing mechanisms to decrease reliance on poppy cultivation or provide alternative livelihoods for ex-poppy growers. Financing dispossession is not development.”

TNI has also been sharply critical of efforts by the UN and the International Narcotics Control Board to bind Bolivia to the “unjust and unrealistic” requirement of the 1961 Single Convention on Narcotic Drugs that the traditional practice of coca leaf chewing “must be abolished” – a confrontation the Bolivian Government won last year.

It was, says Tree, “a silly demand”.

“It’s been going on for thousands of years, and coca in its natural state, as used by Bolivians, is actually very healthy. There’s nothing negative about it. It’s full of nutrients, vitamins and minerals – things that are hard to find at 15,000 feet elevation. The US Embassy’s own website used to recommend travellers (at altitude) should have coca tea when they landed to avoid altitude sickness.”

Tree says the Bolivian region of Chapare, which underwent forced eradication of coca and an “annual cycle of violence” through the 1990s and 2000s, changed after the election of the Morales Government, which granted local families the right to grow a cato (an indigenous unit of measure, about 40 metres by 40 metres) of coca bush.

“What that does is give them food security and predictability,” he says. “If you don’t know what tomorrow will bring, you’re not going to expand and diversify. You’re not going to take risks. But if you guarantee them they’ll have that cato to sell, you free up a lot of mental space. For the first time, they’re able to think about diversifying their local economies – and I’ve watched this happen. You see a mechanic open, then a restaurant, then a little hotel. People start to take risks and they start to transition away from coca – which is what we’ve been wanting them to do for decades!”

Matt Graylee of Wellington company Flight Coffee, who has been working on a scheme to raise returns for coffee farmers in Colombia (see below), saw a similar dynamic when he met farmers in Ethiopia.

“Where people are growing other substances, generally they’re pushed that way because it’s economically viable,” says Graylee. “You can never hold that against them, because when you visit them, you find that their father grew coffee and his father before him and they’re not legally allowed to sell the land and they’ve only got 1 acre and they’re trying to get their children to university.

“If they choose to, say, grow khat in Ethiopia, where you can harvest several times a year – which is a matter of breaking off some branches and going down to the market and selling a bunch for the equivalent of $5 – the quick maths says that’s about 40 times what you can get for coffee. And it’s legal within the country. So why wouldn’t you? If I had to choose between khat, flowers, strawberries or coffee, I’d choose khat every time if I had to look after my family.”

Another problem with forced eradication, says Tree, is that it may cause farmers to adapt with unpredictable consequences. After visible coca crops in Colombia were repeatedly wiped out by US spray planes in the early 2000s, “farmers began to intercrop and shade-grown varieties of coca were introduced, along with new processing and extraction techniques with high yields. The varieties they were replanting with were more productive than the old ones – varieties that were suited to cocaine production rather than chewing.”

And then there are the basic economics of scarcity.

“When you’re talking about wide-scale eradication, what that does is act as a price support for drug producers. It’s a crop subsidy. We eradicate just enough to elevate prices, which is good for a lot of these farmers, as long as they’re not the ones that get hit.”

The 1998 General Assembly statement noted that poor farmers faced “the constant threat of forced eradication of their crops” and said that “suitable alternatives” must be offered. And yet, 15 years on, this lesson remains elusive, it seems – if you want marginalised people to quit drug cultivation, you must offer them the security to make that choice for themselves.

The Helena project

Two years ago, the crew of Wellington roastery Flight Coffee began working with a Colombian farm called Helena.

The aim was to demonstrate alternative ways of growing, processing and trading coffee through a new green coffee social enterprise called New Zealand Specialty Coffee Imports (NZSCI).

It wasn’t because no one knew how to grow coffee. Despite its chaotic reputation, the Colombian Government has, since 1927, marshalled the country’s producers into an effective, quality-controlled commodity coffee export business, via the National Coffee Growers Federation.

“But we saw an issue with the commodity market,” says Flight and NZSCI Director Matt Graylee. “For a long time, prices had been falling and farmers hadn’t been able to cover their costs of production through traditional markets.

“Helena was our opportunity to try out all the agronomic techniques we’d learned over the years and see if we could raise the quality of coffee into a specialty realm from a traditional Colombian farm, provide specialty market access, then include other farms.

The NZSCI project isn’t directly replacing coca crops, but by making coffee growing profitable, it is an incentive to choose coffee over narcotics. At its core is a spreadsheet.

NZSCI works backwards to figure out the price. The price people are willing to pay is stable and coffee quality it established by cupping scores, a standardised process that measures coffee quality on a scale of 1–100. A score above 80 is considered specialty.

“We buy at a set rate for an 85, and for every point above we add an extra 50,000 Colombian peso (COP$), above 90 comes with another COP$100,000 per point. Price predictability is of utmost importance.

“At 90 points, they’re up to a million COP$ for raw parchment coffee before any milling. This season, it costs about 612,000 COP$ to produce the highest quality coffees. We know the margins the farmers we buy from this season range between 42% and 71%. It’s actually better than ours or anyone else in the middle. There are not many primary-level industries than can boast this kind of margin.”

Graylee says the many fair trade labelling initiatives are “fantastic” but also “they are deliberately middle-of-the-bell-curve targeted programmes” having huge impact through focusing on commodity coffee. He’s chosen to target those most marginalised – farmers who can’t participate in fair trade schemes but produce amazing coffee.

And while fair trade generally sees farm earnings rise by about 25 percent over five years, the NZSCI model triples or quadruples earnings.

For Flight and NZSCI the payoff is being able to sell coffee that might normally be reserved for competition as part of its general range.

“All the money we’ve spent on the coffee actually exists inside the coffee. So the quality is through the roof.”

New Zealand Specialty Coffee Imports has already expanded to other regions in Colombia, and the next territory will be Mexico, before Graylee revisits Africa. In the meantime, he says, NZSCI’s system is available to anyone who wants to use it.

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