of the opium poppy cultivated area are produced by UNODC<sup>1</sup> on an annual basis using remote sensing supplemented by a survey, although estimates of yields (and therefore of opium production) are less reliable. Opium price data also are collected on a regular (monthly) basis in an increasing number of provinces. Moreover rural households, smaller drug traders, and _hawala_ (informal money transfer) dealers have been accessible for careful interviewing and information collection. Thus overall, data issues have not prevented meaningful research on Afghanistan’s opium economy (see Byrd and Buddenberg, 2006, p. 4).

# **Cultivation and Production**

Keeping in mind data limitations, summary information on opium in Afghanistan is presented in Table 1. Among the various estimates, those of the total area under opium poppy cultivation are the most reliable but still have significant margins of error.<sup>2</sup> Yield estimates have a greater margin of error, particularly when disaggregated to the provincial level. Compilation of the estimated farm-gate opium price introduces a further, though likely smaller, margin of error, so the end result is that the estimated farm-gate income has a considerably larger margin of error than the cultivated area estimate. Assumptions about border prices, from which the total potential export value and (as a residual) the gross income beyond the farm level are calculated, introduce substantial further unreliability into these numbers.

**<u>Table 1: Summary Statistics on Afghanistan’s Opium Economy</u>**

||**1995**|**2000**|**2001**|**2002**|**2003**|**2004**|**2005**|**2006**|**2007**|
|---|---|---|---|---|---|---|---|---|---|
|Production (tons)|2,300|3,300|185|3,400|3,600|4,200|4,100|6,100|8,200|
|World Market share (%)|~52|70|11|74|76|87|87|92|93|
|Number of provinces producing<br>opium|8|22|11|24|28|34|26|28|21|
|Area under opium poppy<br>(thousand ha)|54|82|8|74|80|131|104|165|193|
|As % of total agricultural land|n/a|N/a|n/a|n/a|1.6|2.9|2.3|3.65|4.27|
|Area under poppy / Area under<br>cereals(%)|2.0|3.2|n/a|3.2|2.8|5.9|n/a|n/a|n/a|
|Gross farm income per ha (US$)|1,000|1,100|7,400|16,200|12,700|4,600|5,400|4,600|5,200|
|Gross potential value of opiate<br>exports(US$million)|n/a|850|n/a|2,500|2,300|2,800|2,700|3,100|n/a|
|Gross farm income from opium<br>(US$million)|50|90|60|1,200|1,000|600|560|760|1,000|
|Downstream income in<br>Afghanistan(US$million)|n/a|760|n/a|1,300|1,300|2,200|2,140|2,340|n/a|

_Source: UNODC (2003); UNODC and Government of Afghanistan (2004, 2006, 2007)._

> 1 The US also produces annual estimates of the total area devoted to opium poppy cultivation, which in recent years have been fairly similar to UNODC’s estimates.  However, there are wide discrepancies between US and UNODC estimates of the opium poppy cultivated area in individual provinces.  For convenience and consistency, UNODC estimates are used throughout this paper.

> 2 For example, in the case of the 2004 estimate of 131,000 ha of opium poppy cultivation, UNODC (2004, p. 21) indicated that the “range” of possible estimates was from 109,000 ha to 152,000 ha, implying a margin of error (90% confidence interval) of around plus or minus 16-17%.  In 2006 the range of estimates was somewhat smaller, between 150,000 ha and 180,000 ha, for a margin of error of plus or minus 9% (UNODC, 2006, p. 115).

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