Can the U.S. Government do anything right ?

Robert Waldmann

I hate to type that headline given the health care reform debate, but I am alarmed by Karen DeYoung’s article in the Washington Post about new efforts to get Afghans to stop producing opium — all new this time with carrots.

The problem is that the price of wheat is too low.

The average Helmand farmer cultivates less than an acre of land, with about half an acre planted in poppy yielding a gross income of about $2,000. After paying 45 percent of that in production costs, and 10 percent in local taxes, he nets about $900, more than twice what he would earn from wheat at current, albeit rising, prices.

OK if there is one thing the US government can do it is drive up the price of wheat to subsidize wheat farmers. So what’s happening ? Check after the jump.

First, the program is funded at $300 million out of the total Afghan effort of
$65 billion. Odd proportion there.

Still that’s a lot of money given that Afghan farmers don’t make much growing opium

More than 365,000 Afghan farm households earned about $730 million from poppy last year

Hmmm and they grow opium because they would make half as much growing wheat so buying wheat forward at twice the world price would mean paying 730 million for about 365 million in wheat costing oh about 365 million so what the hell is the problem ? Now obviously this will also involve buying wheat from people who currently grow wheat (smaller crop than opium by value so even if no targeting is possible this will less than double the cost so it is still chicken feed compared to the cost of the war). I guess the people smuggling opium out of Afghanistan will maybe smuggle wheat on the way back, but, you know, at twice the world price a kilo of wheat is still not worth much.

My proposal is to buy wheat forward at a high enough price that farmers will be busy growing it and not have time for opium.

The problem is that that would be welfare and not for US farmers. So we must have no “subsidies” and instead sell fertilizer for one tenth of its market price (good think poppies just hate fertilizer) plus low interest loans which do no good at all to opium farmers (except that they do). The program is complicated (sounds like it was designed by Ira Magaziner) the key point is that it is based on vouchers. Huh?

“The way [the assistance] is offered is important,” said the senior U.S. military official, one of several who spoke on the condition of anonymity because they were not authorized to discuss the program on the record. “We are not providing subsidies . . . we are not just handing out cash.” Farmers will have a “stake” in the program, he said, buying vouchers for seeds and fertilizers for about 10 percent of their value. Cash will be distributed only as credit or for work performed, the official added.


The timeline is daunting. A planned “civilian surge” of hundreds of U.S. aid officials and agriculture experts has been slow to arrive. A micro-finance loan program is in the planning stages, and although $300 million in aid has been set aside for “rapid response” initiatives, including voucher programs for seeds and fertilizer, distribution has been sluggish. Mohammad Gulab Mangal, the governor of Helmand, whom U.S. officials have praised for encouraging local communities to turn away from poppy, held the first of eight scheduled outreach meetings only last week.

US policy is damaged by the strangely different rules for military operations and for aid. Killing people is urgent and collateral damage is acceptable, but giving money to people uh oohhhh we have to worry about creating dependency (which is, you know, the whole point of the operation).

in conclusion

Wages in Helmand for lancing, $15 a day, are the highest in the country.

“What we’re looking for is a way to compete with that,” the senior military official said of the opium economy. “This is not easy. . . . There is no silver bullet.”

The US government can’t afford to compete with people who pay $15 a day?!?

I’d say a less pathetically low amount of silver is the silver bullet.