South American Drug Trade Deja Vu

After overtaking Colombia as the world’s top producer of coca, cocaine’s main ingredient, in 2013, the United Nations Office on Drugs and Crime (UNODC) announced this week that Peru greatly decreased cocaine cultivation, reducing coca production by 17.5 percent. U.N. officials herald it the "most remarkable reduction rate achieved in the last 14 years."

But no one is declaring victory in the war on drugs quite yet: Although Peruvian yields are down, the price of coca leaves has increased by 30 percent. Similarly, the price of base cocaine has increased more than 17 percent. Most importantly, the street form — cocaine hydrochloride — increased almost 32 percent from 2013 prices, according to the UNODC. Though authorities have squeezed the supply of coca and its products some, demand remains high. Moreover, if the Andean drug trade’s history is any indication, supply will simply shift to another country.

Drug researchers call this the "balloon effect" — where pressure from the authorities in one country or region pushes drug production elsewhere. Squeezing the balloon at one end causes drug producers to compensate and expand into another. Since the U.S.-led war on drugs began in the 1980s, the balloon effect has shaped the cocaine trade.

In 2013, fumigation and forced eradication of coca crops in Colombia finally hit a turning point and the South American nation bequeathed its crown as the world’s top coca producer to its neighbor, Peru. Both the United States and the U.N. declared it a milestone. Unsaid was that the Colombian government’s efforts to crack down on production — in part under the banner of Plan Colombia, the U.S.-backed effort to combat left-wing guerrillas and drug traffickers — simply shifted production to Peru.

Colombia and Peru have swapped the coca-producer champion crown for decades. In the mid-90s Peru launched an intense eradication campaign and Colombia was back on top. In 1990, Colombia was only responsible for 19 percent of the global coca market, behind top producers Bolivia and Peru. By 1997, it was the world’s top producer. See the pattern here?

Growing global demand is a big factor in shifting supply locations. Even though demand for cocaine is dropping in the United States — still the world’s largest cocaine consumer — it’s up in Brazil, Europe, and Africa, according to the 2013 U.N. World Drug Report. Colombia is the United States’ largest cocaine supplier but Brazil — the No. 2 cocaine market and No. 1 crack-cocaine market — and Europe are supplied by Peru and, to a lesser extent, Bolivia. Peru’s crackdown will undoubtedly move coca central again but exactly where is unclear. History makes Colombia and Bolivia top contenders. Coca growers in Chile, Argentina, Ecuador, and Brazil are trying to increase production in those countries.

Meanwhile, Brazil is also becoming a vital transit route for shipping cocaine to West Africa and Europe, where markets are growing. Brazilian consumption, as well as trade of the substance, will only open up more emerging markets to the high of cocaine. And as incomes rise in Asia, cocaine consumption there will likely spike, possibly more than making up for Americans’ shrinking appetite.

As before, the South American drug trade will find a way to persevere.