‘Armed groups, coca crops and death’: how prices crashed for cocaine’s raw material

A record crash in the price of Colombian coca leaves, the main ingredient in cocaine, has impoverished thousands of rural farmers as structural changes cause a glut in the illicit industry.

Experts struggling to explain the oversupply and price crash suspect that a leading factor is the fallout from the disbanding six years ago of the Revolutionary Armed Forces of Colombia (Farc) guerrilla group, whose virtual monopoly kept prices stable. Another is innovation in the business: vertically integrated growing and processing operations may have cut traditional farmers out of the loop.

“We used to wait by the side of the road and people would pass by to buy coca,” said farmer Hugo Rodríguez, whose name has been changed at his request, in the town of Caloto in western Colombia. “Now nobody comes.”

In recent years, Rodríguez received about 70,000 pesos ($18) for each 2.5kg bushel of coca leaves, he said, but now the price had fallen to 30,000 pesos, the lowest he had known. 

Across the country, which is the world’s top exporter of cocaine, similar price collapses have been reported. Coca paste — another extract of the coca leaf needed to make cocaine — has fallen from about 4mn pesos ($1,013) per kilo in 2017 to about 2.4mn pesos.

The dive in the coca price has resulted in part from an increase in supply. In Colombia, which produces 61 per cent of the world’s coca, crops were grown on a record high land area of 230,000 hectares last year, up 13 per cent from 2021, according to the UN Office on Drugs and Crime. Coca cultivation is also rising in Peru and Bolivia, the second and third-largest producers.

At the same time, producers in laboratories appear to have become better chemists, say analysts, and are extracting more cocaine from the coca they process than in earlier years. UNODC figures state that “potential cocaine output” in Colombia surged 24 per cent year on year to 1,738 tonnes in 2022, its highest level in two decades.

There have also been political shifts. Since coming to power last year, Colombian president Gustavo Petro — the country’s first leftist leader and a member of the leftist-nationalist M-19 guerrilla group in his youth — has labelled the war on drugs waged by Washington and his predecessors a failure. He blames the glut of coca on increased fentanyl use in the US.

Yet with 21mn worldwide users, according to the UN, global cocaine use is estimated to be at its highest-ever level. Markets in Brazil and Asia are growing rapidly, leading analysts to believe the collapse of the Colombian coca market results from excess production.

“We’re seeing the same thing that you’d expect in any other market,” said Pedro Arenas, co-founder of Visa Mutop, a Bogotá-based think-tank that works on drug policy. “If you have a product stored that you cannot shift, you’re going to lower the price until it sells. It doesn’t matter if it’s potatoes, plantains or coca.”

The average price for a gramme of cocaine on the streets of the US, adjusted for purity and inflation, has largely remained stable — varying between $194 and $168 from 2017 to 2021.

“There’s enough people around the world who want to keep using cocaine to keep the business profitable,” said Toby Muse, author of Kilo: Inside the Deadliest Cocaine Cartels. A recent analysis by Bloomberg Economics predicted that cocaine would soon overtake oil as Colombia’s largest export.

That has left analysts searching for explanations for the glut. A recent report by the Washington Office on Latin America (WOLA), a US think-tank, listed 12 hypotheses. 

Among them was a switch in the Colombian government’s strategy from coca crop eradication to seizures of cocaine exports at sea. This year, Colombian police targets for eradication fell 60 per cent to 20,000 hectares. In 2015, the government stopped aerial fumigation of coca crops with herbicides because of health concerns.

Another factor was the increased use of vertically integrated “enclaves” for cultivation and processing, cutting out many traditional coca farmers.

The think-tank also suggested the coca market was still adjusting to the fallout from the demobilisation of the Farc guerrilla group in 2017. 

Over six decades of war which claimed more than 450,000 lives, the Farc became leading players in the drug trade to fund their political ambitions, establishing a de facto monopoly over the production of coca and coca paste, which kept prices stable. 

With the Farc now out of the business, other armed groups have moved in on their territory, prompting a race to the bottom on prices.

Meanwhile, Petro’s administration is pursuing surrender agreements with drug-trafficking organisations and peace deals with armed groups as those groups expand their presence in the drug trade and seek to strengthen their position at the negotiating table.

“It was clear who the buyers were back then,” said Roberto Peña, a farmer in Caloto, which is located in Colombia’s Pacífico region where coca leaf production is highest. “Now everything is rising: armed groups, coca crops and death.”

At a recent summit on drug policy in Colombia, Petro spoke of a need to approach the drug trade as “a health problem for society”, though his rhetoric has not yielded tangible policies to aid the estimated 200,000 households that rely directly on coca for a living. 

One indigenous leader in Caloto said that with an abundance of unsold coca, addiction to coca paste is rising in the community while families go hungry without income.

Some plantations across the province have been left to grow untended, as farmers consider their options. That means picking work for locals has dried up.

With the costs of energy and fertiliser rising, farmer Rodríguez says he is unable to turn a profit on the three acres of land he dedicates to coca. If the price did not bounce back, he would “rip out the shrub” and plant rice, he said.

“We’re always chasing the next crop that will keep the community alive,” said Antonio Seque, a member of the indigenous Nasa community which had seasonally picked coca to make a living.

“In the ’80s and ’90s, it was coca, then it was marijuana, and who knows, now maybe we’ll make a living by growing food.”