By Jack Kimball
KABUL (Reuters) - The price of opium cultivated in Afghanistan is set to rise as the security forces step up their eradication efforts and a fungus ravages the poppies that yield it, squeezing supply and stirring violence, the country's drug chief said on Tuesday.
Zarar Ahmad Muqbel Osmani, the Minister of Counter Narcotics, said the expected price rise coupled with increasing demand from regional nations would make poppy cultivation more attractive to cash-strapped farmers, forcing the government to intensify its fight against the trade.
"The price hike will definitely pressure us a lot," Osmani told Reuters through an official translator inside his heavily-barricaded ministry, the walls of which were decorated with posters of eradication efforts across the country.
"The tendency towards cultivation will grow, it will create resistance, law and order issues, and it will raise the casualty rate (for the Afghan security forces)," he said.
Afghanistan supplies about 90 percent of the world's opium, from which heroin is made, and its poppy-driven economy helps fuel the decade-long war, lining insurgents' pockets with more than $100 million annually and earning traffickers billions more.
Eradication efforts - favored by top opium consumer Russia but condemned by the United States - and a fungus that leaves the poppy bulb without the liquid form of raw opium are now threatening to give insurgents even more cash by cutting output and driving up the price, Osmani said.
The fungus is hitting the poppy crop in the top producing provinces of Farah, Helmand and Kandahar, he added.
Osmani said low seizure rates of opium abroad posed a major problem to controlling production, with drug barons and insurgents in land-locked Afghanistan shipping tonnes of drugs annually through Iran, Pakistan and former Soviet central Asia.
The seizure rate in central Asia is only 4 percent while it is 3.5 percent in Pakistan and 9 percent in Iran, he said.
There is a foreign-funded push to wean farmers off poppy, a hardy crop that needs relatively little water, by offering incentives - such as subsidized seed and fertilizer - to grow legal crops, though the lure of poppy is proving hard to break.
In 2011, the farm-gate value of opium production more than doubled from the previous year to $1.4 billion and now accounts for 15 percent of the economy, the United Nations said.
With foreign combat forces leaving by the end of 2014, and with much of their cash and air power expected to go with them, the Afghan government will need more help fighting poppy cultivation, experts say.
According to the United Nations, opium is emerging as a new gold standard in Afghanistan, where traders and farmers are hoarding the drug as a source of ready cash to hedge against the risk of a power vacuum when foreign troops leave.
(Reporting by Jack Kimball; Editing by Amie Ferris-Rotman and Andrew Osborn)