Prime Numbers: Doped

The disaster drugs: heroin and cocaine.

By Beau Kilmer and Peter Reuter

October 16, 2009, 8:45 PM

Additional Sourcing

Additional Sourcing

1. Following the money

This table demonstrates how the purity and price of illegal drugs changes through the distribution system. It costs less than $1,000 to purchase enough coca and opium from farmers to produce a pure kilogram and that amount fetches well over $100,000 on the streets. In general, at each stage in the distribution chain the purity decreases as suppliers add adulterants to the product. The price per pure kilogram also increases at each link in the chain, with large jumps occurring when the product is smuggled across borders. Since price and purity data are limited and the values can fluctuate dramatically within a year and within a country, these estimates should be considered reasonable rather than precise.

Reasonable price and purity estimates for 1 kilogram of cocaine and heroin through the distribution system, circa 2007

	Cocaine-1 kilogram				Heroin-1 kilogram
Stage	Raw Price	Purity	100% Pure	Location	Raw Price	Purity	100% Pure	Location
Farm-gate¹	$800 ²	100%	$800	Colombia	$900 ⁷	100%	$900	Afghanistan
Export	$2,200 ³	91% ⁵	$2,400	Colombia	$3,400 ⁸	73%¹²	$4,700	Afgn. neighbors
Import/ Wholesale (Kg.)	$14,500 ⁴	76% ⁴	$19,000	Los Angeles	$10,000 ⁹	58%¹³	$17,000	Turkey
Mid-level/ Wholesale (Oz)	$19,500 ⁴	73% ⁴	$27,000	Los Angeles	$33,000¹⁰	50%¹⁴	$66,000	England/Wales
Typical retail price-Country	$78,000	64% ⁶	$122,000	U.S.	$105,000¹¹	44%¹¹	$239,000	U.K.

Notes: These figures come from several publicly available sources and are rounded to highlight the uncertainty. If ranges are available or information is derived from multiple sources, estimates presented based on the midpoint. The raw price represents the value of a typical kilogram with adulterants included. When we divide the raw price by typical purity we generate the price per pure gram (100% pure).

Based on the amount of product that must harvested to produce a pure kilogram
High: 1 hectare = 5800 kg leaf = 6.6 pure kilos › 1 pure kilo = 878 kg leaf. UNODC (2008a) reports that average prices of coca leaf in Colombia is $1.20/kg (Table 40). Multiplying 878 by $1.20 = $1054. Low: From UNODC (2008a): “Based on updated information available on conversion rates established by the “Operation Breakthrough”, conducted by the United States in 2003 and 2004, 375 kg of sun-dried coca leaf are necessary to produce one kilogramme of cocaine HCl of 100% purity” (p. 128). Multiplying 375 by $1.20 = $450.
Average wholesale price of cocaine in Colombia cities in 2007 (UNODC 2008a).
From the Office of National Drug Control Policy (2008a): “In December 2006, powder cocaine prices in Los Angeles were as follows: $12,000-$17,000/kilogram, $500-$600/ounce and $80/gram. The purity of powder cocaine in the city was reported as 73%-76% pure.” We use the upper bound for the import purity and the lower bound for the mid-level purity.
Wholesale purity for 2006 in Colombia from the UNODC (2008b) ranged from 87 to 95% (p. 262). We use the midpoint as the reasonable estimate.
Average price per pure gram of powder cocaine in 2007: $121.82 (ONDCP 2008b, p. 63). Note, this is generally consistent with the retail info reported for the Los Angeles HIDTA: $80 per raw gram (ONDCP 2008a). ONDCP assumes average purity for a retail gram of cocaine in 2007 is 64%. $80/.64 = $125 per pure kilo, which is very close to estimate from ONDCP.
Based on the assumption that it takes 7 units of opium to generate 1 unit of heroin, UNODC (2008c) reports that average farm-gate price (weighted by production) of dry opium at harvest time was $122/kg in 2007. Multiplying this by 7 generates the $854 farm-gate value for a kilo of heroin from Afghanistan.
The average export price of heroin in the border regions of neighboring countries was $3,394 in 2007 (UNODC 2008c).
For 2003, data from Atasoy (2004) that was published in Paoli et al. (2009) suggests that the minimum price for a kilo of heroin #3 was $6,000 and the high price for heroin #4 was $14,000. This consistent with the wholesale range for 2005 presented by UNODC (2007; $9,749.8 – $10,693.3). Thus, we consider $10,000 per kilo to be a reasonable estimate.
High: Matrix (2007) puts this value at 20,500 (GBP 2006) based on 18 observations. Accounting for the exchange rate in 2006 (1GBP = $1.85), this gives us $37,925. Low: From the UNODC for 2006 (2008b).
According to the EMCDDA (2008), the average price per raw gram of brown heroin in the UK in 2006 is 81.7 euros (mode=74.3) and this is based on 30 observations. The mean and mode for purity are 43.5% and 43%, respectively, and this is based on n=4250.
From UNODC 2008c: “Heroin produced in Afghanistan, however, is not 100% pure; purity levels usually range from 40%-85%, typically slightly above 60%.” UNODC, The Opium Economy in Afghanistan, An International Problem, New York 2003, p. 133. Based on what we see in the retail markets in London, anything below 60% in 2007 would be an anomaly. Thus, we take the midpoint of the range 60%-85%~=73%.
Wholesale purity for 2005 in Turkey ranged from 35-80% in the 2007 World Drug Report. We take the midpoint of this figure (58%), but note other figures suggest that this purity level may be closer to the lower bound. Data from Atasoy (2004; reported in Paoli et al., 2009) shows the purity fluctuating between 35% and 42% for 2002-2003. Paoli et al. (2009) summarize this source and note: “The purity data come primarily from seizures of 1 kilogram or more. Given that Turkey has a small domestic heroin market, these are likely to be seizures related to the international trade.”
Average purities of HM Revenues and Customs drug seizures in England and Wales, analyzed by the Forensic Science Service for 2005. They fluctuated between 45% and 55% and we use 50% as the reasonable estimate.

Sources

Atasoy S. The opiate trade in Turkey. Report submitted for the project Modeling the World Heroin Market: Assessing the Consequences of Changes in Afghanistan Production. Istanbul: Mimeo, 2004.

European Monitoring Centre for Drugs and Drug Addiction. 2008 Statistical bulletin. Lisbon, European Monitoring Centre for Drugs and Drug Addiction, 2008

Matrix Knowledge Group. The illicit drug trade in the United Kingdom, Home Office Online Report 20/07, 2007.

Office of National Drug Control Policy. Los Angeles, California Profile of Drug Indicators. http://www.whitehousedrugpolicy.gov/statelocal/CA/losangeles.pdf, 2008a.

Office of National Drug Control Policy. Price and Purity of Illicit Drugs: 1981-2007. http://www.whitehousedrugpolicy.gov/publications/price_purity/price_purity07.pdf, 2008b.

Paoli L, Greenfield V, Reuter P. The world heroin market: can the supply be reduced? New York: Oxford University Press, 2009.

United Nations Office on Drugs and Crime. 2007 World drug report. Vienna, United Nations Office on Drugs and Crime, 2007.

United Nations Office on Drugs and Crime. Coca cultivation in the Andean region. A survey of Bolivia, Colombia, and Peru. Vienna, United Nations Office on Drugs and Crime, Illicit Crop Monitoring Program, 2008a.

United Nations Office on Drugs and Crime. 2008 World drug report. Vienna, United Nations Office on Drugs and Crime, 2008b.

United Nations Office on Drugs and Crime. Afghanistan Opium Survey. Vienna, United Nations Office on Drugs and Crime, Illicit Crop Monitoring Program, 2008c.

United Nations Office on Drugs and Crime. 2008 World drug report. Vienna, United Nations Office on Drugs and Crime, 2008a.

Peter Reuter is Professor in the School of Public Policy and the Department of Criminology at the University of Maryland. He is the editor of Draining Development? Controlling Flows of Illicit Funds from Developing Countries, a new collection of World Bank research papers.