10/28/16

Fluctuations in the Heroin Market

The 2016 World Drug Report (2016 WDR) is a good-news bad-news source of information on global opiate statistics. The good news is that global opium production fell by 38% in 2015. The decrease was primarily the result of a decline in opium production in Afghanistan, which fell 48% compared to 2014. This was mainly because of poor yields in the country’s southern provinces. Despite this, Afghanistan was still the world’s largest opium producer, accounting for 70% of global opium production.

The bad news is that despite the drop in production, the global number of opiate users has remained relatively stable. And opium production in Latin America, mostly in Mexico, Columbia and Guatemala, more than doubled from 1998-2014. Central and South American production accounts for 11% of the estimated global opium production. Also, in North America, heroin use and heroin-related deaths have continued to rise. In both cases, the increases were roughly three times the 1999 levels. See the following chart from the 2016 WDR.

In 2014, the largest seizures of opiates were in South-West Asia, with Europe next in line. The Islamic Republic of Iran reported the largest opiate seizures worldwide, accounting for 75% of global opium seizures and 17% of global heroin seizures. The next largest heroin seizures were from Turkey (16% of global heroin seizures), China (12%), Pakistan (9%), Kenya (7%), the U.S. (7%), Afghanistan (5%), and the Russian Federation (3%). Iran is the first stop on the so-called “Balkan route” of opiate distribution. From there the route travels into Turkey, and onto South-Eastern Europe, where it is distributed throughout Western and Central Europe. “Seizure data suggest that the Balkan route, which accounts for almost half of all heroin and morphine seizures worldwide, continues to be the world’s most important opiate trafficking route.”

The massive decline in opium production of almost 40 per cent in 2015 is unlikely, however, to result in a decline of the same magnitude within a year in either the global number of opiate users or the average per capita consumption of opiates. It seems more likely that inventories of opiates, built up in previous years, will be used to guarantee the manufacture of heroin (some 450 tons of heroin per year would be needed to cater for annual consumption) and that only a period of sustained decline in opium production could have any real effect on the global heroin market.

In 2015 Bloomberg published an article with three maps of global drug smuggling routes. The major opiate producers are: Afghanistan, Myanmar, Laos, Mexico and Columbia. The opiate map illustrates the vast reach of the so-called Balkan route. The Americas are primarily supplied with opiates grown in Mexico and Columbia. More than 70% of all heroin and morphine seizures in the Americas were in the U.S. between 2009 and 2014. Seizures more than doubled from around 2 tons per year from 1998-2008 to 5 tons per year from 2009-2014. Heroin trafficking and use was seen in 2015 as the main national drug-related threat in the US, according to the 2015 National Drug Threat Assessment (NDTA).

The 2015 NDTA reported that heroin was available in larger quantities, used by larger numbers of people, and caused more overdose deaths than 2007. The increased demand and use of heroin is driven by greater availability and controlled prescription drug (CPD) abusers switching to heroin. Cheaper prices for heroin contribute to the switch as well.

Increases in overdose deaths are driven by several factors. The purity of heroin has increased in some areas. New heroin users switching from prescription opioids are used to the set dosage amounts potency of prescription drugs. Illicitly–manufactured drugs can vary widely in their purity, dosage and adulterants. Over the past few years the use of highly toxic adulterants like fentanyl (20 to 40 times stronger than heroin) in certain markets has also added to the increase in overdose deaths. Then there are heroin users who stopped using for a while (from treatment or incarceration) whose tolerance has decreased because of their abstinence.

Most of the heroin in the US today comes from Mexico and Columbia. Columbian heroin is still the predominant type available in the Eastern US. While Southeast Asian heroin, largely from Afghanistan dominates the global market, very little makes its way to the US. Southeast Asian heroin was the dominant supplier of heroin in the US at one time. But it no longer can compete with the transportation and distribution networks of the Mexican and Columbian drug cartels. Se the following chart from the 2015 NDTA.

The Mississippi River has been a dividing line in the US heroin market for the past 30 years, with Mexican black tar and brown powder heroin west of the Mississippi and white powder heroin from South America in the East. There is increasing evidence that Mexican drug cartels are processing their own white powder heroin and mixing white heroin with Mexican brown powder heroin to create a more appealing product to the Eastern US markets. See charts 12 and 13 in the 2015 NDTA for further information on the availability of heroin types purchased in Eastern and Western cities.

The suspected production of white powder heroin in Mexico is important because it indicates that Mexican traffickers are positioning themselves to take even greater control of the US heroin market. It also indicates that Mexican traffickers may rely less on relationships with South American heroin sources-of-supply, primarily in Colombia, in the future. If Mexican TCOs [transnational criminal organizations] can produce their own white powder heroin, there will be no need to purchase white powder heroin from South America to meet demand in the United States. This would also reinforce Mexican TCOs’ poly-drug trafficking model and ensure their domination of all major illicit drug markets (heroin, cocaine, methamphetamine, and marijuana) in the United States.

Mexican TCOs have been increasing their cultivation of opium poppies, to an estimated 17,000 hectares in 2014. This can potentially produce up to 42 metric tons of heroin. Switching to opium cultivation from marijuana cultivation may be at least partly due to the lowered demand for illicit marijuana in the US because of the legalization movement. See “The Economics of Heroin” for more information.

The number of heroin users reporting they used heroin over the past month increased 80% between 2007 and 2012. Of the total number of heroin-related treatment admissions in 2012, 67.4% reported daily use and 70.6% reported their preferred route of use was by injection. Heroin treatment admissions were consistently highest in the New England and Mid-Atlantic states. There are also high rates of repeated treatment among heroin users. Eighty percent of the primary heroin users admitted to treatment in 2012 reported previous treatment; 27% had been in treatment five or more times.

Most opioid users in the 1960s began by using heroin. But that steadily changed until 75% of heroin-users in the early 2000s reported they began by using prescription opioids. The number of people using illicit prescription opioids who switched to heroin was a relatively small percentage of the total number of prescription drug abusers at 3.6%. But it represented 79.5% of new heroin users. Heroin use was 19 times higher among individuals who had previously used pain relievers non-medically.

The reformulation of OxyContin in 2011 is seen as helping to curb the abuse of the drug. In 2011 emergency department visits involving oxycodone declined for the first time since 2004. Overdose deaths from opioid analgesics also began to decrease in 2011. But remember, CPD abusers have been switching to heroin and seem to be contributing to the dramatic increase in overdose deaths from heroin.

The number of heroin overdose deaths increased 244% between 2007 and 2013. Keep in mind that heroin deaths are undercounted. This occurs because of the differences in state reporting procedures for reporting drug-related deaths; and because heroin metabolizes very quickly into morphine. A metabolite unique to heroin, 6-monoaceytlmorphine (6-MAM), quickly metabolizes into morphine erasing the biochemical evidence for heroin use. So many heroin deaths get reported as morphine-related deaths. So what does the future hold for heroin use in the US? The 2015 NDTA concluded the current outlook for the near future is more of the same.

Heroin use and overdose deaths are likely to continue to increase in the near term. Mexican traffickers are making a concerted effort to increase heroin availability in the US market. The drug’s increased availability and relatively low cost make it attractive to the large number of opioid abusers (both prescription opioid and heroin) in the United States.

The United Nations Office on Drugs and Crime (UNODC) publishes a yearly report giving a global overview of the supply and demand of various drugs and their impact on health.

05/27/16

Opium and the Taliban

Reporting for The New York Times, Azam Ahmed described a successful raid by Afghan special operations forces on July 12, 2014. Two vehicles were intercepted in the desert of southern Nimruz Province in Afghanistan. They were attempting to deliver a cache of weapons and drugs from Helmand Province to Nimruz Province. They seized a metric ton of opium, three AK-47 assault rifles, a PKM machine gun, a rocket-propelled grenade and a man who was the Taliban shadow governor of Nimruz Province, Mullah Abdul Rashid Baluch.

Rashid was said to embody the changing face of the Taliban in Afghanistan. He’s held leadership, logistical and financial support roles for the Taliban since at least 2007. By mid-2013 he was serving as a liaison officer to al-Qa’ida (AQ), arranging planning meetings between Taliban senior leadership and AQ members in Karachi, Pakistan.

In mid-2013, Rashid ordered the emplacement of an improvised explosive device (IED) in Nimruz Province which resulted in an explosion that killed one U.S. soldier. Additionally, Rashid transported IEDs to Afghanistan that were used by the Taliban to target Coalition Forces. As of early 2008, Rashid and a Taliban associate facilitated the movement of three suicide bombers for attacks in Nimruz Province. He has also played a role in the deployment of suicide bombers to conduct vehicle-borne IED attacks on senior Afghan government officials and non-governmental organization workers.

Rashid was also involved in multiple narcotics-related financial activities, including delivering funds collected from narcotics traffickers to Taliban commanders. He collected payments for the coordination of Taliban protective services for narcotics shipments and disbursed payments to Taliban subordinates. Azam Ahmed commented that picking him up during a drug raid, and not a counterterrorism operation, was a fitting end. “He was, in the eyes of many, more of a criminal than an insurgent ideologue.” Rashid is now serving an 18-year prison sentence.

Mullah Rashid is just one of dozens of senior Taliban leaders who are so enmeshed in the drug trade that it has become difficult to distinguish the group from a dedicated drug cartel. While the Taliban have long profited from the taxation and protection of the drug trade in Afghanistan, insurgents are taking more direct roles and claiming spots higher up in the opium chain, according to interviews with dozens of Afghan and Western officials, as well as smugglers and members of the communities where they reside.

According to UN monitors, the new Taliban leader, Mullah Akhtar Muhammad Mansour, has amassed a huge personal fortune from sitting at the top of a hierarchy of tribal drug traffickers. Reportedly, he used some of his drug money to buy off rivals when he claimed the supreme leadership of the Taliban in the summer of 2015. “This trend has real consequences for peace and security in Afghanistan, as it encourages those within the Taliban movement who have the greatest economic incentives to oppose any meaningful process of reconciliation with the new government.”

In “How Opium Profits the Taliban,” a report for the United States Institute for Peace, Gretchen Peters described how the poppy trade has played a critical role in bankrolling the Taliban and corrupting and destabilizing the Afghan government. When the U.S. invaded Afghanistan in October of 2001, a Taliban ban on poppy cultivation had been in place for fifteen months. Throughout the southern part of Afghanistan, there were essentially no poppy fields under cultivation. Most of the 185 metric tons of opium produced in Afghanistan that year came from northern provinces outside of Taliban control. However, by 2008, nearly 98 percent of the Afghan poppy crop was grown in six southern and southwestern provinces, Farah, Helmand, Kandahar, Nimroz, Uruzgan, and Zabu.

The 2015 World Drug Report said that in 2014 opium cultivation for Afghanistan was at its highest level since estimated first became available. Global opium production was at the second highest level since the late 1930s. The following graphic, taken from 2015 World Drug Report, puts the significance of Afghan poppy cultivation in context. Except for the one-year anomaly due to the Taliban’s temporary ban on poppy cultivation, Afghanistan has been the largest worldwide producer of opium by a large margin since at least 1998.

The 2015 Afghanistan Opium Survey, from the same UN Office on Drugs and Crime, reported that in 2015 there was a 19% decrease in the total area under opium poppy cultivation. But it was still the fourth highest level since the estimations began in 1994. The Fix reported Afghanistan produces 85% of the world’s supply of heroin and morphine, an estimated 380 tons annually. It’s worth an estimated $4 billion.

In “How Opium Profits the Taliban,” Gretchen Peters described how the drug trade became a central part of the Taliban’s Afghan activities. She said many people who encountered the Taliban at their beginnings said they were well intentioned, “even if their methods were medieval.” Their initial commitment to stamp out the opium trade was dropped as the need for funds overcame their original objectives. She said the Taliban’s rise to power had more to do with their reliance “on the financial backing of an unholy alliance of drug smugglers, traders, and trucking groups” than the grace of Allah, as they claimed.

She concluded that while opium has played a long-standing supportive role in the Afghan conflict, “today the drug trade has moved to center stage.” Not only have narcotics corrupted the Afghan government, they have begun to transform the nature of the insurgency “from one based on ideology to one increasingly driven by profit.”

It is crucial that the international community stop thinking of Afghanistan’s drug problem as Afghanistan’s drug problem. The poppy may be grown there and processed into morphine base or heroin along the border, but to a significant degree, the southern Afghan poppy trade is managed from Pakistan. Drug profits get laundered between Karachi and the United Arab Emirates, and U.S. financial crime experts who have studied the trade believe some funds end up in Western banking institutions. A successful strategy to combat the issue must take into account both the multinational nature of the opium trade and work to dismantle financial flows keeping insurgent fighters funded and armed.

Peters argued that the best strategy against the Taliban is not to try and wipe them out militarily, but to make them irrelevant, by offering Afghans and Pakistanis a better alternative. “The ultimate goal should not be the end of the Taliban and al-Qaeda, but the creation of a prosperous and stable Afghanistan and greater region.” And this will mean helping the locals grow a better cash crop then opium poppies.

04/13/15

The Economics of Heroin

I live in the suburbs of Pittsburgh. At least nine times each week I drive past a retail store where someone I know once told me they shot up heroin in the store’s parking lot. The store sits on a busy street. This incident was a few years ago, but I’m pretty sure that wasn’t the only time someone used heroin in my neighborhood, because it’s happening all around me.

A teacher from the Montour School District was recently charged with two counts of possession with intent to deliver. Police said he was selling heroin out of his home. The school district suspended him immediately. The school district’s solicitor said there was no evidence that the man possessed or sold drugs on school property. The accused has been a math teacher for at least a decade. The ironic twist is that he rented his home from the Robinson Township police chief, who said he’s never had any problems with the accused … until now.

The Pittsburgh Post-Gazette reported at the end of February 2015 that three people from Armstrong County were charged in connection with an overdose death linked to fentanyl-laced heroin known as “theraflu.” I work part time at an outpatient treatment center in Pittsburgh and remember when the theraflu scare was going on in January last year. Seventeen people from around Pittsburgh died of overdoses in a week. A local medical examiner at the time said it was “major public health crisis.”

An ongoing investigation of drug trafficking in Homewood and other communities in the Pittsburgh metro area recently added 14 new defendants to the 40 who were originally indicted in October of 2014. US Attorney David Hickton said they were “important cogs” in a multi-state drug distribution ring. “They would be the Pittsburgh connection to this organization that has reach far beyond out state.” The trafficking involved heroin, cocaine and crack cocaine coming from Los Angles to Homewood via Cleveland. Harold Hayes of KDKA said: “The FBI says the long-term investigation has led to the indictment of more than 100 people and the seizure of more than $1 million.”

The 2014 National Drug Threat Assessment Summary (NDTS) published by the DEA stated that the threat posed by heroin in the US has been increasing across the country, particularly in the Northeast and North Central regions. The two major geographic areas for heroin supply in the US are Mexico and South America. Together they account for 96% of the heroin analyzed by the DEA in 2012. The NDTS reported that heroin seizures increased 87 percent in five years, from 2009 to 2013.

The observed increase in demand for and abuse of heroin is said to be the result of individuals who used to abuse prescription opioids switching to heroin. Reasons given for the switch include: the relatively lower cost of heroin than prescription opioids; the decreasing availability of prescription opioids versus the increasing availability of heroin; the reformulation of OxyContin, making it more difficult to abuse. My own experience with people abusing heroin is that the switch is mostly market driven, by the cost differential and the availability of heroin.

In 2013 and 2014, the Northeast and Midwest reported a spike in overdose deaths from fentanyl being sold as heroin. Fentanyl is 30 to 50 times stronger than heroin. The overdoses include both new and experienced users. Thinking they are buying heroin, the users typically don’t realize they are buying fentanyl or a fentanyl-heroin mixture. Between 2005 and 2007 over 1,000 overdose deaths were traced back to a single laboratory in Mexico. The lab was seized and destroyed. The recent outbreak, noted above, covered a wider geographic area than in 2005-2007 and involved both fentanyl and fentanyl analogs.

In Mexican states like Sinaloa and Guerrero, poor farmers living in wood-plank, tin-roofed shacks with no indoor plumbing are growing the poppies that eventually become the heroin sold in American cities like Pittsburgh. Jake Bergman, reporting for the PBS show Frontline, noted how Sinaloa has been the breadbasket for Mexico for decades. Now it a drug-rich area, “the cradle of the biggest traffickers Mexico has ever known.” They even have their own “patron saint”—Jesus Malverde. Malverde’s legend says he robbed from the rich and gave to the poor. Nevertheless, he was hung by the governor of Sinaloa in 1909. His “sainthood” is not recognized by the Roman Catholic church. Father Antonio Ramirez said: “Nobody has become a saint robbing and killing, he was a bandito.”

Nick Miroff reported last year for the Washington Post that the drug trade in Sinaloa has been going through a transition lately. Farmers who used to grow cannabis are now planting opium poppies. Rodrigo Silla, a lifelong cannabis farmer, said it’s not worth it anymore. The wholesale price for a kilogram of cannabis dropped from $100 to less than $25. “I wish the Americans would stop with this legalization. . . . There’s no other way to make a living here.” The Silla family consists of three generations of drug farmers.

A kilo of the raw, sticky opium sap that is used to make heroin sells wholesale for $1,500 in the northern Sierra Madre, nearly double its 2012 price, according to growers. With fertilizer and favorable weather, a well-tended poppy field can yield eight kilos of sap per acre, nearly enough to make a kilo of raw heroin.

David Shirk, a researcher at the University of California at San Diego said that the farmers are simply diversifying because they have a product losing its value. “The wave of opium poppies we’re seeing is at least partly driven by changes we’re making in marijuana drug policy.”

Sinaloa has grown opium poppies since the time of the arrival of Chinese settlers in the last half of the 19th century. But large-scale production did not begin until World War II. Japan controlled the Asian opium market and the US military needed morphine for its soldiers. During this time, many Sinaloans made a fortune. Everyone was growing it. Even some government officials got into the opium export trade. After Japan was defeated, the US no longer wanted the inferior Sinaloan opium. “But many farmers continued to produce opium and heroin; operations became more clandestine, and a smuggling network was set up.”

Writing for the Associated Press, Mark Stevenson reported that farmers in Guerrero don’t like growing opium poppies, but it’s the only thing that will guarantee them a cash income. Humberto Nava Reyna, the head of a group promoting development projects in the region said: “They can’t stop planting poppies as long as there is demand, and the government doesn’t provide any help.” Residents say there are no local users. “It all goes for export, a lucrative business mostly run by the Sinaloa Cartel.”

So it’s sounding like the war on drugs needs to begin changing tactics. Instead of spending so much time and energy on chocking off the supply routes, there should spend more time and energy on drug treatment and prevention to dry up the demand. And there should be some funds given to Humberto Reyna and others like him to help the multi generational drug farmers transition to non-drug crops. And I think I’ll start praying for the Silla family and other drug farmers when I pass by that retail store in my neighborhood.

Faith Seeking Understanding

Charles Sigler, D.Phil.

Tag Archives: opium growers

Fluctuations in the Heroin Market

Opium and the Taliban

The Economics of Heroin