Coca Price Collapse Offers Opportunity in Drug War

Coca prices have collapsed in Peru and Bolivia, giving the United States an unprecedented opportunity to strike the traffic in cocaine at its source by helping farmers say no.

A crackdown on drug lords in Colombia and tougher enforcement in Peru and Bolivia have reduced demand for coca leaves, the source of cocaine, and prices have come down as a result. Now, thousands of farmers are looking for alternate crops and for help to make the switch.

“It is a window of opportunity, there is no question about it,” one U.S. diplomat in Bolivia said.

But unless the farmers get the aid they need--to raise substitute crops, process them and get them to market--the window could slam shut.

Yet in Peru, sources say, the United States and other cocaine-consuming countries appear to be letting the opportunity slip by. Under the policy adopted by Washington, development projects in the coca-growing zones have been virtually shelved because of security problems. U.S. policy emphasizes police and military action against the traffickers and leftist guerrillas operating in the coca zones.

Here in Bolivia, U.S. aid is supporting crop substitution in the Chapare Valley, the country’s principal coca area. But farmers have little faith in it, saying the move does not go far enough.

Joaquin Valderrama has torn out some of his coca bushes and is planting pineapples, coconut palms and macadamia trees. But Valderrama, who heads the Eteramazama Civic Committee, said that aid to farmers is slow in coming--and there is no market in sight for new products.

“If we are going to produce something that has no market, we are back where we started,” Valderrama said.

Together, Peru and Colombia produce the bulk of the world’s coca, most of which is refined into cocaine and smuggled into the United States and Europe by Colombian traffickers. According to U.S. estimates, Peru grew 296,000 acres of coca in 1989, Bolivia raised 133,000 acres, and Colombia had 99,000 acres.

Last August, in a move that had an almost immediate impact on the economics of cocaine, Colombian authorities declared war on the trafficking networks and timed it to coincide with a stepped-up drive against growers and shippers in Peru and Bolivia. Officials say this action has sharply reduced the demand for cocaine paste, a semi-refined product in the cocaine process. And as demand has fallen, these officials add, so too have prices.

Last August, the price of coca leaf in Bolivia was the equivalent of about 85 cents a pound. By April, it had plunged to about 12 cents. It costs the farmers about 30 cents a pound to plant, nurture and pick the leaves.

“We are ruined,” Fortunato Arnez, 45, a stout man with a friendly smile, lamented in an interview. “Everyone trusted only in coca. They shouldn’t have done that.”

Arnez, sitting with friends at a red Formica table in an open-air restaurant-bar in Eteramazama, said he is surviving thanks to his home-grown oranges, bananas and coffee.

“Other people are starving,” he noted.

Nearby, in the village of Chipiriri, a government agricultural extension center provides training for farmers who want to raise animals or grow crops other than coca.

“Before, we had one person in a week or 15 days, but now three or four a day come looking for information and technical assistance,” said Franklin Lastra, the director.

Outside, two farmers waited to talk to him about signing up for a course on raising pigs. One of the men, Julian Guevara, 26, said they had walked 9 miles, sleeping by the roadside. Guevara said he has 2 acres of coca leaves ready to be picked, but that he was not harvesting much because it is not worth anything.

“For almost six months coca has been down, and we are low on funds,” he said. “That is why we want to raise pigs.”

But his companion, 32-year-old German Jimenez, a sharecropper who destroyed more than 5 acres of coca two years ago, said he has trouble making a living with other crops, such as watermelons.

“Prices are low,” he said. “There is no market to go to, and the roads are bad. If we don’t get help, we are going to plant coca again.”

Many Chapare coca farmers are shifting to other crops but keeping some coca too. Hilario Claros, 29, said he hopes 1 1/2 acres of coca will help tide him over while he waits for his new macadamia nut trees and coconut palms to mature.

“Even though it isn’t profitable, coca is our only cash crop,” Claros said. “We can’t give it up.”

Still, depressed coca prices have helped persuade record numbers of Bolivian farmers to eradicate coca bushes. So far this year, 8,400 acres of coca are reported to have been pulled up, compared to 6,200 acres in all of 1989 and 3,500 acres in 1988.

By the end of June, the Chapare Valley’s coca acreage will drop 10%, one pleased U.S. official estimated, adding, “That’s not too bad.”

The Bolivian government pays farmers about $810 an acre for cutting back on coca, which is grown legally in parts of the country. At least part of this compensation can come from U.S. aid money, but the rush to eradicate has strained the national budget.

“It’s far more than this government contemplated having to spend,” said one American official, adding that the U.S. Embassy in La Paz is seeking more funds from Washington to support the program.

Peru, on the other hand, has no important development or substitution programs in the Upper Huallaga Valley, the heart of its coca region. While Bolivia is at peace and economically stable, Peru has been ravaged by hyper-inflation and a war against leftist guerrillas from Sendero Luminoso (Shining Path). The conflict has been even more difficult since the guerrillas linked up with the peasants who grow coca.

A year ago, peasants in the valley were paid 90 cents to $1.35 a pound for their coca leaf. Now, according to Iban de Rementeria, who until recently headed a United Nations development program in the region, the price is about 13 cents a pound.

Any price below 45 cents a pound means selling at a loss, he said, so the moment is ideal to rush in with alternatives.

“I have been insisting on this for six months,” Rementeria said, “but the United States doesn’t want to do anything until the Peruvian government develops a policy.”

He said promoting development in the valley would undermine the Sendero Luminoso guerrillas, whose image already has been marred by their inability to check the fall in coca prices.

The rebels lost considerable influence last September when U.S. and Peruvian officials abandoned the policy of forced eradication, which the guerrillas had used to rally peasant support. Now, the government eradicates only nurseries of coca seedlings, hoping to limit new growth.

By law, Bolivia is committed to eradicating 12,350 acres of coca this year through a voluntary program, and the goal must be met to avoid reductions in U.S. aid. However, American officials would like to see the goal surpassed.

“We’ve got a stampede going and we’ve got to take advantage, or excuses aren’t going to hold,” said Donald Ferrarone, head of the U.S. Drug Enforcement Administration’s mission in Bolivia.

Meanwhile, the U.S. Agency for International Development has been trying for more than five years, through a crop substitution program, to wean Bolivian farmers from coca. Joe Lopez, an agronomist from New Mexico, helps run the program under a contract with Experience Inc., a Minneapolis-based development consulting firm.

Lopez, 45, has helped the Bolivian government’s Regional Program for Alternative Development import seeds and plants: black pepper, passion fruit, oil palms, coconut palms, starfruit, macadamia nuts, pineapples, papayas, plantain, ginger, and other spices and crops.

The program’s 25 technicians and 17 extension agents are training more than 100 “promoters”--farmers who operate demonstration farms and help others learn how to cultivate the substitute crops, available at community nurseries.

When coca was king in the Chapare Valley, Lopez recalled, few farmers were interested in the substitution program. But five years of struggle have made it possible to provide the services now in demand.

“If we had waited until last year, we wouldn’t have been prepared for this sort of thing,” he said.

Nevertheless, there are problems. Farmers working with the program produced 40 tons of ginger in March, but little of it has been sold, according to Jose Decker, the Bolivian executive director of the Program for Alternative Development.

“Now I am trying to stop ginger production because I don’t know where I will sell it,” he said.

Decker worries that the loss of income from coca will create social and political problems. Before the price collapse, he said, coca brought $500 million a year into Bolivia, the poorest country in South America. He estimates that $300 million a year is needed in foreign aid to develop a “substitute economy.”

This year the United States is sending $31 million in drug-related aid to Bolivia, and the amount is scheduled to triple in fiscal 1991, which begins Oct. 1. In Peru, U.S. aid for the drug program will rise from $3 million to $63 million--but none of the new money is destined for the coca-growing zones. Instead, it will go to programs designed to shore up the national economy and replace the $800 million to $1.2 billion a year that coca has brought in.

As part of the program in Peru, the United States has offered $35.9 million in military aid to help the army deal with the Sendero Luminoso. Most of the funds will go for equipment and training of combat troops by U.S. Special Forces.

But according to official sources, lame-duck President Alan Garcia is not likely to sign a military aid agreement unless it is accompanied by a substantial economic development program. Alberto Fujimori, the front-runner to succeed Garcia, also has talked about the importance of reviving the coca area’s economy to reduce its dependence on the crop.

In the meantime, the coca farmers’ cooperative is begging for support for crop substitution programs, promising to give up coca once realistic alternatives are offered.

“While they give war, war and more war, we are offering development,” said Justo Silva, manager of the Upper Huallaga Agrarian Cooperative, which has 42 town committees in the valley. “There has never been a better moment than now to attack the problem of coca from the perspective of development.”

One U.S. Embassy official acknowledged: “We do have an opportunity, and we’re not going to take it. We’ve become so bureaucratically hidebound and inept that we’re not going to do anything.”

At the same time, he blamed the Peruvian government for failing to draft a coherent development plan that the United States can support.

“The police are huddled down in Santa Lucia,” the valley’s anti-drug base, he said, and the valley is “effectively in the hands of Sendero Luminoso and other traffickers.”

Gen. Juan Zarate, commander of the Peruvian anti-drug police, told The Times that he and other officials have devised a pilot program for the valley that is ready to begin as soon as the money is made available.

He said the plan, which would cost about $20 million, would provide farmers with seeds and seedlings, technical advice, small processing plants, better roads to markets and financial credits.

“The money we might have spent to pull out coca plant by plant we are going to invest in these lands, fostering development,” he said. “At the end of one year, lifestyles will start to change, and the people will abandon coca--the coca will die by itself.”