Myanmar's Economic Meltdown Likely to Push Opium Output Up, Says UN
By Zsombor Peter May 31, 2021
The United Nations Office on Drugs and Crime is warning that opium production in Myanmar may rise again if the economic crunch brought on by COVID-19 and a February 1 coup persists, with fallout for much of the region.
Myanmar is the world's second-largest producer of opium, the raw material for heroin, after Afghanistan and the main supplier for most of East and Southeast Asia.
UNODC figures show Myanmar's opium output falling steadily since 2014, down to 405 metric tons last year. But the U.N. agency says the trend is likely to reverse as more farmers and out-of-work laborers turn to tending poppy to make ends meet.
"The opium economy is really a poverty economy; it functions in a sense the opposite of what the licit economy does. As people exit that economy and they need to make money, they are going to be looking at places they can make it, and often people that are in poor areas and poverty-stricken areas look to make money from the opium economy," said Jeremy Douglas, the UNODC's representative for Southeast Asia and the Pacific.
"Probably 12 months out, 18 months out, we're going to be looking at an expansion unless past history is wrong. There's a cycle of this happening in the country over its history," he added.
Douglas was speaking on a virtual panel hosted by the Foreign Correspondents Club of Thailand in May about the potential for a spike in criminal activity in post-coup Myanmar.
Already bruised by months pandemic-induced lockdowns, Myanmar's economy was hit hard again in February by the coup.
Facing a spate of new Western sanctions aimed at hurting the military junta now running the country, and widespread work strikes to protest the putsch, the World Bank expects the economy to shrink 10% this year. Fitch Solutions, an international credit ratings agency, says the contraction will be twice that.
The United Nations Development Program is predicting the downturn to leave nearly half the population of Myanmar, some 25 million people, in poverty by 2022.
As those who left the opium-growing regions of Myanmar head back for a lack of jobs in the cities, some will try their luck in neighboring Thailand, "but at least some of them are going to go back into the opium economy," Douglas said.
Alongside opium's decline, the dominant drug story in the region over the past few years has been the dramatic rise in methamphetamine production, most of it also pouring out of Myanmar. Compared with the synthetic, lab-made narcotic, though, growing opium takes far more work, which means more potential jobs.
"Methamphetamine is not an employer," said Douglas. "People are going to go back to opium to make money, to feed themselves, potentially feed their families. They're not going to be able to do that with methamphetamine."
'Many hungry mouths'
Most of Myanmar's opium is grown in the northeastern states of Kachin and Shan.
Dan Seng Lawn, executive director of the Kachinland Research Center, a local think tank that studies the country's drug trade, agreed that opium production was well poised to rise again.
"Opium cultivation has never stopped. It's come down, but now I think it seems to be a good time to expand the cultivation," he told VOA. "There are many hungry mouths, so, I think if the opium farmers can employ these manual laborers or things like that, they will go there."
Opium farmers don't earn what they used to. UNODC figures show prices falling steadily since 2016, along with output.
But over the past few months, prices for many other domestically grown and consumed crops have fallen faster. Wholesale prices for potatoes, onions, beans and other staples were down 22% to 48% in April compared with a year earlier, likely due to lower demand from cash-strapped shoppers, according to the International Food Policy Research Institute, based in Washington.
Dan Seng Lawn said poppy is also easier to store than many other crops and delivers a reliable, if diminishing, profit.
In hard times, he said, "opium is the best cash crop that these borderland communities can [use to] sort out their subsistence problems."
Opium farming has long been a "survival strategy" in the northeast, and often not an either-or option, said Myanmar analyst David Mathieson. Speaking to VOA, he said many farmers in the region grow some opium on the side to shore up their savings and hedge against potential problems with their other crops.
Supply and demand
The coup may end up working in the opium trade's favor in other ways too.
Dan Seng Lawn said police forces distracted by an increasingly armed resistance to the ruling junta are likely to spend less time on stopping the flow of drugs, leaving opium farmers and traffickers more room to ply their trade.
And with some of Myanmar's many ethnic rebel armies joining the popular resistance movement, analysts say the junta may try to shore up support among the militias that shelter many of the country's drug networks by cutting deals that let them ramp up production.
"If you look at the security situation, there's a lot of militias that the military now needs to be on their side, and it's a lot of the militias that are involved in protecting opium cultivation. So, that's something to look at," Mathieson said. "For a lot of militias, it's like, well, if the military is now going to turn a blind eye and not come after our opium cultivation, we can tell more people to do it and we can sell more on regional markets."
Mathieson said he still expected any additional production to be relatively modest but added that more supply could also boost demand if it lowers prices.
Whatever the bump in output, Douglas, of the UNODC, said any extra supply would have little trouble finding a market in a region with a long history of heroin use and well-plied trafficking routes to move it through.
"Two-point-six billion people in the neighborhood of this country, and the best heroin in the world," he said. "So, there will be demand for it, if not in the region, outside the region, and they'll meet that demand, there's no doubt about it."
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