Afghan opium crop may rise after "cash bonanza"

By Jonathon Burch

KABUL (Reuters) - Opium prices in Afghanistan more than doubled last year after disease cut production in half, the United Nations said, creating a "cash bonanza" for many farmers that could drive up cultivation of the drug in 2011.

Production of opium, a thick paste from poppy that is processed into heroin, fell by nearly 48 percent in 2010 due to an unidentified blight, causing prices to soar and raising the average annual income of poppy farmers by more than a third, the U.N. drug agency UNODC said Thursday in an annual report.

Afghanistan has long been the world's leading supplier of opium and, despite last year's drop, still managed to produce almost 80 percent of global supply. It was 90 percent in 2009.

Most of the drug is exported in a thriving world trade worth billions of dollars. Taliban-led militants are believed to derive $100-$400 million a year in revenues from production and trafficking of the drug, fuelling insecurity across the country.

"There is cause for concern. The market responded to the steep drop in opium production with an equally dramatic jump in the market price to more than double 2009 levels," said Yury Fedotov, Executive Director of UNODC, in a statement.

"If this cash bonanza lasts, it could effectively reverse the hard-won gains of recent years."

OPIUM ECLIPSES WHEAT AS MONEY-SPINNER

While the overall amount of land used for growing poppy in Afghanistan remained unchanged from 2009 -- 123,000 hectares -- some areas showed "alarming" increases in cultivation including the eastern province of Nangarhar with a 145 percent spike.