Project for Alternative Livelihoods in Eastern Afghanistan (PAL) 1 Understanding Rural Livelihoods and Addressing the Causes of Opium Poppy Cultivation in Eastern Afghanistan Abridged Version 1. Introduction A dramatic, enforced reduction in opium poppy will have devastating effects on the most vulnerable households, reducing their incomes by 5-9% Contents Introduction 1 Key Findings 1 Conclusions 8 Recommendations 9 PAL IS A PROJECT FUNDEDED BY THE EUROPEAN UNION, PARTNERED BY THE MINISTRY OF RURAL RECONSTRUCTION AND DEVELOPMENT And MANAGED BY gtz Opium has become the dominant cash crop in Eastern Afghanistan. An absence of law and order, drought, population pressure, and a lack of secure markets for alternative enterprises has made opium poppy the cash crop of choice for Afghan farmers. Opium can tolerate drought conditions, has a high value, is easy to transport and to store. This study aims to provide a better understanding of the way opium poppy cultivation contributes to the overall diversity of rural livelihoods in Eastern Afghanistan. The focus of this study is the household (those living within the same compound and sharing income and expenses); 186 household interviews were conducted to collect the data. Seven districts along the Kabul River were selected to include wealthy and poor households, with both high and low levels of dependence on opium cultivation. Within districts, villages were chosen close-to, and far-from, provincial centers, with various types of access to irrigation water and overall socio-economic status. In each village, nine households were purposively sampled and interviewed, with three households from landlord, owner-cultivator, and landless socioeconomic groups. 2. Key Findings 2.1 Household size and numbers supported 2.2 Poppy has displaced wheat 2.3 Labour 2.4 Opium the crop-of-choice for Afghan farmers 2.5 Opium growing households much betteroff than non-opium growing households 2.6 Rents 2.7 Farm Incomes 2. Key Findings Income from opium 2.1 Household size and numbers Off-farm and non-farm income supported Total cash income Two-thirds of households support than 2.8 Household Expenditure one family; on average, 14.7 people live in a household. 2.9 Credit Households with land tend to support Growing opium helps to secure credit people than households with smaller landholdings. For example, on average, Sources of credit and level of debt households with 2 jeribs or support 22.9 people and 3.5 families; compared to 2.1 Many households face serious net cash 11 people and 1.6 families for households deficits with 2.5 jeribs or less. Households have on average 4.8 economically active people; this figure is similar This document is an abridged version of the across socio-economic groups. PAL Internal Document No. 2 "Diversity and Dilemma: Understanding Rural Livelihoods Households with smaller landholdings support people per jerib (Figure 1). and Addressing the Causes of Opium Poppy Cultivation in Nangarhar and Laghman, Across socio-economic groups, landlords Eastern Afghanistan" by David Mansfield, farm the most land, although they tend to December 24. The field work was employ others to farm the land and spend undertaken by Co-ordination for Afghan Relief time in off-farm or non-farm employment (Figure 2). (Continued on page (CoAR), in September 24. 2)
Number of persons 6 5 4 3 2 1 Figure 1: Number of persons per Jerib by socio-economic group, and for area of land cultivated by farm households 1.4 3.5 Owner cultivator 2.8.9 2 Jeribs or 1.3 1 Jeribs or 4.4 5 Jeribs or less 5.5 2.5 Jeribs or less are self-sufficient in wheat production, have a better history of self-sufficiency, and are likely to be self sufficient in future than owner cultivators or landless households (Figure 3). On average, respondents self-sufficient in wheat production grow poppy on 25% of their winter land; whereas those not self sufficient, grow poppy on 55% of their land. Only 3% - 7% of cash income is from farm production, other than opium poppy, across household socioeconomic groups 2 Land area in Jeribs 3 25 2 15 1 5 Figure 2: Total land area cultivated, and land cultivated in winter, by socio-economic group 25.4 16.1 2.2 Poppy has displaced wheat Because poppy is a winter crop, it has displaced wheat as the dominant winter crop. Districts with the most households growing opium poppy and districts with the highest number of people per jerib of farmed land, have the smallest proportion of households growing wheat. Households under the most financial pressure have turned to opium as their main income source. This is because opium poppy is the most profitable crop and can be used to secure credit. Because poppy cultivation is eight times labour intensive than wheat cultivation, it provides employment for households with unemployed labour. Family labour reduces cash production costs. Wealthier households (landlords and households cultivating that 2 jeribs) grow wheat than landless households and those farming less than 2.5 jeribs. Now, only 5% of households are self-sufficient in wheat; this used to be 56%. The reason for this reduction in self sufficiency is i. an increase in the area planted in opium; this displaces wheat ii. drought, iii. an increase in the availability of cheap imported wheat, iv. an increase in family size; this increases financial pressures on families who then look for better-paying alternatives to traditional crops. Where water for irrigation is limiting, households give priority to opium poppy and restrict wheat to areas that can be irrigated only during periods of good rainfall. 5.4 13.6 8.8 8.4 Owner cultivator Total area cultivated Winter cultivation Percentage of households 8 7 6 5 4 3 2 1 Figure 3: Percentage of households self-sufficient in wheat production by socio-economic group and time horizon 11 2 4 72 7 49 22 2.3 Labour Seasonal work in opium poppy fields (mostly weeding and harvesting) is an important cash income source for many households. Based on the area of opium grown in 23/4, the hired labour market is worth US$ 11.7 million, equivalent to 3.4 million labour days, in Nangarhar alone. Most hired labour comes from the three districts in which opium poppy has the longest history (Khogiani, Achin, and Shinwar all in Nangarhar province, Figure 4). Children frequently work on opium crops and are withdrawn from school to do this work. 59 3 Currently Historically Potentially Owner cultivator
Percentage by source 6% 5% 4% 3% 2% 1% % 51% Own village Figure 4: Source of hired labour 28% Same province 18% Another province 2.4 Opium the crop-of-choice for Afghan farmers 94% of households grow opium poppy; in some districts all farmers grow opium poppy. In the last 2 years, 52% of households have increased the amount of land cultivated for crops, and of these 95% increased the area in opium poppy. Only 8% of households want to increase the amount of vegetables grown, stating drought, limited markets, and poor infrastructure as reasons. Overall, 32% of the cultivated land (farmed in winter and summer) is in opium poppy (Figure 5). This is equivalent to 52% of winter land. The percentage of cultivated land in opium poppy varies little by landownership class or by area of cultivated land (about one third is in opium poppy). However, households with less than 2.5 jeribs of cultivated land tend to devote of it to opium (4% of the land is in opium), as do households that cannot grow summer crops (54% of land is in opium), and households that are short of water (88%). The proportion of land planted in opium poppy varies with district. 2.5 Opium growing households much better-off than non-opium growing households Households most dependent on opium poppy tend to be the poorest and have the fewest livestock. 3% Pakistan For poppy growers, off-farm and non-farm income is, on average, 19% of total cash income; whereas for nonpoppy growers 81% is from off-farm or non-farm sources. Poppy growers spent 36% every month than nonpoppy growers (US$ 219 compared to US$ 161). Households that grow opium poppy tend to borrow than households that don t grow opium poppy and have higher accumulated debts (US$ 112, compared to US$ 764). Non-poppy growers, on average, had a net deficit of US$ 1185, compared to a positive net cash income for poppy growers overall (US$ 33). The opium poppy households grow the better-off they are. For poppy growing households with than 75% of their land in opium poppy the net cash result (Income less all cash expenditure before new borrowing) is positive. For those poppy growing households with less than 5% of their land in poppy the net cash result is negative (a deficit) (Figure 11). The cash income for poppy growers is US$ 3475, or 3.4 times greater than for non-poppy growers (US$ 117). Non-poppy growing households are the poorest. Total cash income for this group is only US$ 117 per household, or US$ 7 per head. For non-poppy growing households, income is mostly from off-farm and non-farm sources (probably wage labour on other people's farms) and only 19% is from the cash sale of farm products. 2.6 Rents High rental values for land, on which to grow opium poppy, are making it uneconomic to grow other legal crops. Rents in Qarghai are highest; respondents blamed tenants from Khogiani wanting to grow poppy in Qarghai for this. As an example, high rental values are 49 kg of wheat per jerib in winter and 28 kg of maize in summer. This compares to a low value of 14 kg of wheat or 17 kg of maize. In some cases, farmers from Khogiani are providing loans of between US$ 1 and US$ 15 to secure land for share-cropping, on which to grow opium; in addition to giving a share of the crop, for long-term arrangements, these 'loans' can be free of interest. 3 Figure 5: Percentage of total land cultivated in different crops Percentage of total land 35 3 25 2 15 1 5 32 26 19 14 3 4 1.6 Opium Poppy Wheat Maize Rice Cotton Clover Vegetables The eradication of opium poppy makes already vulnerable households vulnerable; they are the least able to withstand loss of income
2.7 Farm Incomes 4 Income from opium 98% of all crop sale income comes from the sale of opium (only 1% of households sold crops other than opium) (Figure 6)., on average, sold 34 kg of opium (worth US$ 4214) and landless households 11 kg (worth $1457). Refer footnote Households with 2 jeribs or of cultivated land (2/3 of these are landlords) earned US$ 6116 from opium sales, or 6 times that of households with 2.5 jeribs of cultivated land or less (US$ 898). By contrast, for non-poppy growing households, the value of all cash crop sales is only US$ 59. Figure 6: Poppy income as a percentage of total income from the sale of crops, by district Total cash income Percentage of cash crop income 12 1 98 96 94 92 9 88 94.7 99.7 Off-farm and non-farm income 75% of households had at least one family member earning income off-farm or from non-farm work (off-farm work includes working on other peoples' farms for wages). 36% of landlord households had at least one family member with a government job, compared to only 1% of landless households. earn on average US$ 119 per household, from off-farm and non-farm income, compared to US$ 364 for landless households and US$ 668 for owner cultivators (Figure 7). For landlord households, 54% of off-farm and non-farm income came from government employment, compared to only 12% for landless households, and 22% for owner cultivators. 96 93.4 Mehtarlam Rodat Kama Surkhrud Bati Kot Qarghai Shinwar 99.7 99.9 On average, 74-78% of total cash income is from opium poppy sales across socio-economic groups (Figure 8). have the highest cash income per household US$ 5314 (US$ 313 per head); owner cultivators US$ 398 (US$214 per head); landless households US$ 1922 (US$ 15 per head). (Figure 8). 92.8 Cash income for those with larger landholdings (2 jeribs or ) is 11 times greater than the cash income for those households with 2.5 jeribs or less (US$ 7 compared to US$ 1641). Generally, the greater percentage of the land in opium poppy, the higher the cash income per household and the greater the income from poppy. Only 3% - 7% of cash income is from farm production, other than opium poppy, across household socio-economic groups. 94% of households grow opium poppy; in some districts all farmers grow opium poppy. The proportion of land planted in opium poppy varies from district to district. High rental values for land, on which to grow opium poppy, are making it uneconomic to grow other legal crops. Footnote: Because field staff suspected that households would under-report opium sales, but not the area planted in opium, opium income was calculated for each household growing opium, based on: area planted in opium, a yield of opium of 6.4 kg per jerib (32 kg per hectare), an adjustment for the percentage of the crop sold, an assumption that households sold all their opium production in the same year, the reported sale price (average US$127 / seer; range US$11 to US$22).
Figure 7: Household off-farm and non-farm income, by source 5 12 1 Income (US Dollars) 8 6 4 Daily Wage Labour Construction Government Carpentry Shopkeeping Driving 2 Landlord Owner c ultivator Mehtarlam Rodat Kama Surkhrud Bati Kot Qarghai Shinwar Figure 8: Cash income per household by source of income for socio-economic group, farm size, and for poppy and non-poppy growing households 8 7 Income (Dollars) 6 5 4 3 2 Off-farm & Non-farm Other farm income Opium 1 Owner cultivator 2 Jeribs or 2.5 Jeribs or less Non poppy Poppy
2.8 Household Expenditure Non-poppy growing households spent US$ 22 per year, compared to US$ 46 for households with 2 jeribs or (less than half the expenditure). However, for these same groups, income was US$ 7 for households with 2 jeribs or, compared to US$ 117 for non-poppy growers (almost a sevenfold difference). Of monthly expenditure, households spent the most on food (63%), health (16%), and fuel (6%). Only 9% of monthly expenditure was spent on farm inputs (Figure 9). households spent less than other socioeconomic groups, US$ 2936 per year, compared to around US$ 35 for other groups. Households with 2 jeribs or spent 85% than households with 2.5 jeribs or less (US$4 596 compared to US$ 2 489). Disadvantaged / poor households spend less money, compared to wealthy households, on food, health, building maintenance, debt servicing / repayment, farm and capital expenditure. Opium poppy eradication programmes exacerbate unpaid debts as lenders seek to recover losses by increasing lending margins. In 23/4 it became increasingly difficult to obtain credit against opium because of fears of eradication programmes. Lenders favour lending to households with secure assets and lend less to higher risk households; they also expect greater margins from higher risk households. 57% of households borrowed money over the previous 12 months; for those that borrowed money the average loan was US$ 812. borrowed on average US$ 178; owner cultivators US$ 884; and landless households US$ 498. Sources of credit and level of debt 69% of households borrow money from family or friends, 16% from shopkeepers, 12% from traders, 3% from landlords, and 1% from other sources. Often interest is not charged if loans are from relatives or friends, and there is greater flexibility concerning repayment period. Households tend to borrow from traders than from other sources, possibly because it is tied to a share of the crop production. 6 Figure 9: Annual expenditure by type of expenditure 18 16 14 Dollars per year 12 1 8 6 4 2 Food Health Fuel + Power Clothes Fertiliser Labour Water supply Build & maint. Debt Taxes Capital equip. HHold equip. Land dispute Social Expenditure type 2.9 Credit Growing opium poppy helps to secure credit Seasonal credit is typically obtained as an advance against a fixed quantity of crop sale to the lender (at a fixed price). This system is known as Salaam. Opium is the preferred crop on which to advance money. The value of an advance is typically 5% of the expected harvest value of the crop. Because the price of the crop, given to the lender in payment for the advance, is fixed on the day of the agreement it is significantly less than the price at harvest. Households with only a little land can sometimes sell, in advance, their entire crop in return for a loan. 58% of the sampled households have accumulated debts. For those households with debt, accumulated debts are greatest for landlords and least for landless households (Figure 1). 74% of those with outstanding debt planned to repay it from income made from growing opium poppy; only 14% from wage labour. There is some evidence that increasing debt is forcing households to mortgage or sell land. Disclaimer: This publication has been produced with the assistance of the European Union and the gtz IS. The content of this publication is the sole responsibility of the consultant and can in no way be taken to reflect the views of the European Union or the gtz IS.
Figure 1: Amount of seasonal and accumulated debt by socio-economic group, and size of holding 7 12 1124 139 1 893 Loan amount (Dollars) 8 6 4 665 462 457 328 532 721 632 359 463 385 345 Seasonal Accumulated 2 Owner cultivator 2 Jeribs or 1 Jeribs or 5 Jeribs or less 2.5 Jeribs or less Figure 11: Cash income and expenditure, and net cash result (before new borrowing) by socio-economic group, farm size, and for non-poppy and poopy gowing households 9 7 5 Dollars 3 Cash Income Cash expenditure Net cash result 1-1 Ownercultivator 2 Jeribs or 2.5 Jeribs or less Non-poppy growers Poppy growers -3
2.1 Many households face serious net cash deficits For many households there is insufficient cash income to cover cash expenditure (Figure 11); so the result is a net cash deficit., farmers with larger landholdings, and poppy growers (overall) have positive net cash incomes (before borrowing); whereas owner cultivators, landless households, households with little land (2.5 jeribs or less), and non-poppy growing households, all have net cash deficits (before borrowing) (Figure 11). Disadvantaged households (the landless and farmers with 2.5 jeribs or less) are only able to continue to meet their living costs by borrowing money and becoming indebted. Anecdotal evidence suggests that wealthier households take advantage of worse-off households because of this indebtedness; they can acquire land, assets, and the daughters of poor families, at lower than market prices, and extend further credit on unfavorable terms. Many non-poppy growing households are tempted to grow opium poppy because they can not meet their basic needs by legal means. most populous, and politically and economically influential provinces of Afghanistan are so dependent on poppy cultivation; as are some of the most powerful and influential power brokers. These powerful elites have been able to capture most of the economic benefits from growing opium, trading opium, and from controlling credit and production. Whilst opium poppy cultivation has allowed wealthier socioeconomic groups to prosper and diversify incomes, for the majority it provides only a short term coping strategy by which to meet daily needs and to manage debts, by providing preferential access to credit. Opium poppy cultivation is most concentrated amongst households with limited access to land and irrigation. These households support the most people and have the highest food insecurity; for these households growing other crops is not a viable option. For those most dependent on cultivating opium poppy, working on other peoples' opium crops can provide the only form of offfarm income. By contrast, for those with the most land, growing opium poppy increases total income, although it remains only one source of income together with income from other crops, livestock, and non-farm sources. 8 In districts worst hit by drought, and for households with insufficient irrigation water to grow two crops a year, as much as 8% of winter cultivatable land is in opium. Years of drought have exacerbated opium production. With drought, households have sold capital livestock and reduced forage / feed crops, thus making way for an increase in the area planted in opium poppy. Despite wheat still being an important food crop, wheat cultivation is not a viable cash crop for many households. Returns from wheat are significantly lower than for opium and imported wheat has depressed prices and made households less dependent on wheat for food security. 3. Conclusions The lack of secure alternative sources of income, drought, security problems, and population pressures have created an environment where few households in Eastern Afghanistan can meet their needs without cultivating opium poppy. Opium poppy provides, on average, 75% of household incomes; 94% of households grow opium poppy, and 32% of the total area cultivated by households is in opium poppy. In uncertain times, households give priority to short-term, lowrisk livelihood strategies, such as opium poppy cultivation, rather than to longer-term investments. Reducing widespread opium poppy cultivation can only be undertaken as part of a wider process of nation-building and reconstruction. This involves creating the legal and economic environment in which legal livelihood opportunities can be promoted. A major obstacle to achieving this transformation is the degree to which large proportions of the population in some of the Of great concern, is the lack of viable alternative farm enterprises and business options for farmers. The sale of vegetables accounts for only 2% of cash incomes; whereas, off-farm income and non-farm income contributes 2% of cash income (on average). For resource poor farmers, much of this off-farm income is derived from working on other peoples' opium crops. A further problem is that the high value of opium and competition for land is forcing up land rentals, making alternative crops even less viable. Based on the data from this and other studies, the hired labour market for cultivating opium is worth US$ 11.7 million per year, equivalent to 3.2 million labour days in Nangarhar Province alone. For many households, economic circumstances are not sustainable even with the growing of opium poppy. On average, landless households, households with 2.5 jeribs of land or less, and non-poppy growing households had substantial deficits even after borrowing. There is no "fast-fix" solution to improving incomes and eradicating opium poppy. In fact, eradicating poppy, without measures to assist affected households, will exacerbate social, and law and order problems, especially for the already disadvantaged. The diverse range of circumstances for opium growing households, that reflects the different land tenure arrangements, the quality of the land resources (soils and water), and the area of
land farmed by households, requires a range of policy measures designed to: Address equity issues, especially access to land, Improve the legal system and law enforcement, Provide a safety net to the most disadvantaged, Identify new business enterprises, and markets, Provide banking and credit institutions, Encourage women to participate fully in economic life, Improve the capacity of institutions at all levels, including community development organisations, Provide infrastructure. In particular, social measures and assistance should be targeted at the disadvantaged by providing access to land, credit, non-farm business opportunities, and off-farm employment. These efforts are needed as part of a wider nation-building and reconstruction effort. A targeted approach is likely to be successful in delivering on both drug and development objectives. A dramatic, enforced reduction in opium poppy will have devastating effects on the most vulnerable households, reducing their incomes by 5-9%. Such a reduction leaves households unable to meet basic needs. For these households, eradicating opium poppy will result in the sale of land, assets, and daughters into marriage. Many will migrate in search of wage labour, or to avoid the violence and intimidation resulting from unpaid debts. However, opium poppy cultivation is illegal and when grown as the dominant crop, inhibits the development of a legal, alternative economy based on agriculture, livestock, off-farm employment and non-farm businesses. 4. Recommendations Eradicating poppy without measures to assist affected households: 1. If forced eradication of opium poppy is to continue, social measures and assistance should be targeted at vulnerable and disadvantaged households by providing access to land, credit, non-farm business opportunities, and off-farm employment. In an illicit market, powerful elites capture most of the economic benefits: 2. Creating a viable legal economy and alternative livelihoods for rural households can only be achieved if the powerful elites, who capture the benefits of the illegal processing and trade of opium, are dealt with and encouraged to become part of the legal economy. Justifiable force should be re-directed at these elites; who are not the vulnerable or disadvantaged groups. No "fast-fix" solution to improving incomes: 3. The diverse range of social and economic circumstances require a range of policy measures designed to address equity issues, improve security, provide an improved business environment including access to credit and markets. Self-eradication: 4. Rather than the forceful destruction of existing opium poppy crops; communities should be encouraged to eradicate their own opium poppy in return for incentives that replace the income from opium. Interventions need to be designed so that farmers do not increase the area planted in opium in order to maximize the benefits from eradication. Credit: 5. The provision of credit is a priority. Formal credit arrangements give households the opportunity to make investment decisions on their own behalf, independent of government, community and NGO programmes. A suitable communitybased credit and savings group system needs to be immediately investigated and implemented. Monitoring: 6. The impact of opium poppy eradication and alternative livelihoods development should be monitored. The priority groups for monitoring are non-poppy farmers, households growing opium poppy but not dependent on opium (less than 5% of income from opium), households dependent on opium poppy ( than 5% of income from opium), households highly dependent on opium poppy ( than 75% of income from opium). 9 Managed by the International Services (IS) PAL Management Unit JALALABAD, Afghanistan Phone: +93 ()767829 (Team Leader)