Myanmar: Opium Production Down, Synthetic Drugs on the Rise

The United Nations Office on Drugs and Crime (UNODC)’s annual surveys of opium cultivation in Myanmar have long been an invaluable resource for those following developments in a region that is both difficult to access and central to the global narcotics trade. The latest Myanmar Opium Survey, released on February 11, was no exception, offering worrying evidence that the COVID-19 pandemic has done little to impact the business of Asia’s drug cartels.

According to the report, opium production in Myanmar declined for the seventh straight year. Partly this was due to the disruption of trade caused by COVID-19, but it also comes as “the region’s synthetic drug market continues to expand and diversify.” While most international attention is consumed by the Myanmar military’s recent coup and its tumultuous aftermath, this is a trend with dire implications for the country’s longer-term political trajectory.

For years, opium production in Myanmar has been falling alongside a spike in the production of synthetic drugs. According to the UNODC report, an estimated 405 metric tons of opium were produced in Myanmar in 2020, representing less than half of the 870 metric tons estimated to have been produced in 2013, while the area of opium poppy cultivation declined from 33,100 hectares in 2019 to 29,500 hectares last year, a decrease of 11 percent.

The vast majority of opium production occurred in Shan State, whose interlocking patchwork of ethnic rebel territories, militia fiefs, and conflict zones has long provided the ideal conditions for the illicit drug business. Shan State accounted for 84 percent of the total of opium production in 2020, followed by Kachin State, which was home to 12 percent, the report found.

Alongside the decline in production, the price for fresh opium is also falling, a trend “correlating with the decline in demand for opiates produced in Myanmar for the regional drug market.” The report noted that the value of raw opium has more than halved since 2015, squeezing the livelihoods of the hardy upland villagers who tend the opium poppies to flower at high altitudes, before selling the black opium gum to local middle-men. Poppy growers have never earned much from the trade. Even before COVID-19, farmers earned less than 10 percent of the revenue generated by the opiate economy in Myanmar prior to COVID-19. According to UNODC, “these trends signal that opium poppy farmers will continue facing downward pressures on income for their subsistence.”

What’s bad for poppy farmers is not necessarily bad for Myanmar’s drug cartels, however. On the contrary, one of the UNODC’s most interesting – and worrying – observations is the extent to which opium has been displaced by the production of synthetic drugs, particularly the family of amphetamine-type stimulants, but also synthetic opioids.

In itself, this is not a new development. As Bertil Lintner and Michael Black documented in their 2009 book “Merchants of Madness: The Methamphetamine Explosion in the Golden Triangle,” the Golden Triangle’s heroin syndicates in the region began making the switch to synthetics in the 1990s, when economic integration with China opened up new markets, and more importantly, access to the precursor chemicals necessary to produce methamphetamines and other hyper-stimulants. Part of the reason, too, was that synthetics were less reliant on the vagaries of the climate, and were thus a sounder “investment.”

According to U.S. government and UNODC figures, opium cultivation began to decline in the mid-1990s, reaching a low in 2006. It then recovered slightly and rose to a modest peak in 2013, before beginning to decline again. Throughout this period, there a was rapid expansion in the production of methamphetamines in the Golden Triangle – the hilly region where the borders of Myanmar, Laos, and Thailand meet – which flooded Southeast Asia with cheap methamphetamine pills, known in Thai as yaba, or “crazy drug.”

Heroin remains a profitable business for the region’s drug producers: Total domestic heroin consumption totaled an estimated six metric tons last year, valued at between $144 and $315 million, while the export of heroin to neighboring countries was valued at between $500 million and $1.6 billion. But this is now dwarfed, and increasingly so, by the flood of cheap methamphetamines from the drug labs of northern and eastern Myanmar.

This growth is reflected in the region’s drug seizures. Authorities in Asia confiscated a record 139 tons of meth in 2019, up from 127 tons in 2018 and 82.5 tons in 2017, according to UNODC data – even though such seizures appear to do little to impact the trade. Last year, UNODC reported that the price of methamphetamines in East and Southeast Asia had dropped to its lowest level in 10 years, as the market became glutted with supply.

Myanmar’s Shan State is now one of the largest global centers for the production of methamphetamines. Most of this takes place in regions controlled by militias linked to the Myanmar military, or Tatmadaw, as well as in regions controlled by non-state armed groups, like the United Wa State Army. The International Crisis Group (ICG) puts the total value of the Golden Triangle drug trade at $40 billion per year.

On top of this, the UNODC has also recently highlighted a potentially decisive new development. Crime syndicates in the Golden Triangle region have recently developed the ability to produce the ingredients to manufacture various synthetic drugs, enabling them to avoid restrictions on the import of precursors such as pseudoephedrine and ephedrine, particularly from China.

Since “pre-precursors” such as propionyl chloride are far less tightly regulated and much easier to obtain, this development has allowed transnational criminal networks to flourish and grow, despite the COVID-19 pandemic. “It is increasingly clear organized crime are using pre-precursors and have particularly impressive capacities in place to produce their own precursors – something nobody understood until recently,” Jeremy Douglas, the UNODC’s regional representative for Southeast Asia, told Reuters last month.

In addition to the dire human and social impacts of drug use, the illicit drug economy has seriously hampered Myanmar’s efforts to establish peace, particularly in the country’s various conflict zones controlled by armed ethnic insurgents. In the ICG’s words, the drug trade “has become so large and profitable that it dwarfs the formal economy of Shan State, lies at the heart of its political economy, fuels criminality and corruption, and hinders efforts to end the state’s long-running ethnic conflicts.” 

Given that these conflicts have provided the underlying justification for the army’s central role in Myanmar politics, they bear in important ways on the political crisis that has erupted since the military’s February 1 coup. Indeed, there is an argument to be made that what happens in the drug labs and rebel zones of eastern Shan State will have as much impact on the country’s long-term political development as what is unfolding in the streets of Myanmar’s towns and cities.