HomeNewsBriefPeru Official Attributes Drop in Coca Price to Shoot-Down Law
BRIEF

Peru Official Attributes Drop in Coca Price to Shoot-Down Law

COCA / 22 APR 2016 BY MICHAEL LOHMULLER EN

A Peruvian official said the price for coca fell by nearly half during the past year, making the questionable claim that a 2015 law permitting security forces to shoot down suspected drug planes is responsible for the price drop.

Alberto Otárola, president of Peru's National Commission for Development and Life Without Drugs (Comisión Nacional para el Desarrollo y Vida sin Drogas - DEVIDA), said there has been a "historic" drop in the price of coca, falling almost 50 percent from around $3.60 per kilogram in January 2015 to roughly $1.80 by March 2016, reported El Peruano.

"The fall in the price of coca has an explanation: aerial interdiction has been extremely dissuasive, impunity for 'narcoplanes' has ended," Otárola told the AFP.

Approved in mid-2015, Peru's aerial interdiction law allows the Peruvian Air Force to shoot down planes suspected of trafficking drugs if they do not obey orders to land.

According to Otárola, the price drop has been especially pronounced in the Valle de los Ríos Apurímac, Ene y Mantaro (VRAEM) region, where nearly half of Peru's illicit coca production takes place, reported EFE.

Otárola also credited the work of DEVIDA and local authorities in coca producing regions for reducing the cultivation of the plant. The official said Peru's alternative development strategy focuses on structural issues such as education, poverty reduction, and improving infrastructure.

"All these factors have contributed to the fall in price for coca, to the drop in demand," Otárola affirmed. "Now, farmers are looking to change to crops that generate higher revenues, such as cacao."

InSight Crime Analysis

Otárola's argument that Peru's aerial interdiction law is largely responsible for coca's significant price drop seems to contradict basic economic principles of supply and demand. That is, if Peru's shoot-down law were indeed having the effect Otárola claims of reducing aerial cocaine trafficking, it would presumably limit supply and drive prices up.

SEE ALSO: Coverage of Coca

Moreover, there is scant evidence suggesting Peru -- which serves as the launching pad for the region's so-called "cocaine airbridge" -- has managed to rein in aerial trafficking, or that the demand for coca has fallen significantly.

But even if the cocaine air bridge has been weakened, Peruvian traffickers use multiple methods to smuggle drugs out of the country. This includes land and riverine routes, providing traffickers with several options should one smuggling method encounter interference.

It's possible the drop in coca prices is due to the exact opposite cause posited by Otárola: oversupply. Peruvian authorities eradicated a record 35,000 hectares of the plant in 2015, but barely touched coca grown in the VRAEM because of security concerns stemming from the presence of insurgent group the Shining Path. Meanwhile coca cultivation has surged in Colombia, where the government halted aerial fumigation of coca fields last year for health reasons, potentially saturating the regional market for coca.

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