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Fight Opium; Help Afghanistan's Wheat Farmers
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I'm developing an economic plan to combat Afghanistan's drug trade, which is the main driver of the war. In a nutshell the plan is to compete directly with opium farming by paying enough for licit crops (wheat at first) to make them more profitable than opium.
How much will this cost?
It can be tested fairly cheaply, but driving the opium mafia out of business, without damaging the economy would cost about as much as current drug revenues, about $4 billion per year, or 6% of the U.S. military budget.
Almost all farmers grow wheat, and it is the crop they typically move out of when switching to poppies.
As opium becomes scarce on the black market, its price would triple back to the 2002 level. At this price, production would at least triple, resulting in a cost of $9 billion per year. This is wasteful, as opium farming is very labor intensive.
(1) A 50% cut in Taliban income after about three years. (2) A larger and faster reduction in drug-lord income. (3) A huge reduction in benefits to corrupt government officials. (4) Vastly improved U.S. relations with 80% of the population.
Will too much wheat be produced?
By the time this happens, other crops can partially replace wheat in the subsidy system. Afghanistan imports wheat. The population has too little to eat and prefers wheat. The poppy acreage is less than 10% of the wheat acreage. Afghanistan used to export wheat and could again.
Not many so far. But here's the list. Let me know, if you know of others.
Not at all. Everything we are now doing will still need doing, but with $3.5 billion less money working against us and far more popular support, everything will be easier.
How can $4B in subsidies be given safely?
For now, the only answer is NATO troops. And that's another reason for wheat. The subsidy process will happen at 20 or so flour mills around the country (10 already exist). These will be supervised and guarded by NATO troops. After the wheat is purchases, it is milled to wheat flour, so there is no chance of double subsidies.
Why is this better than standard agricultural programs?
Such program are tiny because they are relatively complex and rely on lots of NATO manpower. The advantage of wheat subsidies is that they will be large enough to be irresistible. So Afghans will organize there own businesses for getting wheat to market and producing more wheat. And with the extra money they make, they will re-stock their farms with livestock and begin other improvements. The subsidy is not "free market" but once the money is in the hands of farmers the free market will take over and work wonders. And the money will "trickle up," so the whole economy will profit.
Why is there "extra" money?
Farmers get about 20% of the opium revenue, the rest goes to traders, morphine/heroin labs, and various protection rackets. All that money will be replaced by the wheat subsidy, and all of it will go directly to farmers before it trickles up.
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http://stoft.com/p/118.html | 03/12/10 01:25 GMT
Modified: Tue, 19 May 2009 01:47:55 GMT
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