Price of Poppy Seeds Plummets: Afghanistan Accused of Dumping

With US bread sales suffering from the proliferation of low-carb diets, poppy producers have another headache to deal with. An organization of seed producers has complained to the Bush administration about the dumping of subsidized poppy seeds on western markets by Afghanistan. Since the liberation of Afghanistan, the price of poppy seeds on international markets has plummeted nearly 50%, from about $1000 per kg to just under $600. Producers in Holland and Canada have joined in the complaint which accuses the government of Hamid Karzai of violating the WTO anti-dumping agreement by subsidizing poppy seeds exported to western markets.

Afghan Agricultural Minister, Manuel Noriega, said that his agency was looking into the charges. While poppy products account for 50% of the GDP of Afghanistan, the Karzai government was unaware that cultivation had continued under its leadership. Noriega explained that continuing violence had kept officials so busy, they hadn’t had much chance to leave Kabul since being installed by the CIA in 2002.

US seed producers are not waiting, however, and have asked the Bush administration to impose import tariffs on Afghani poppy products. “Christmas is our biggest season,” said John Santo, director of the US Seed Council. “Most small producers don’t become profitable until December. We can’t afford to wait until Karzai trips over some poppies over there. If Osama was hiding in a poppy field, they’d never find him.”

Nevertheless, the Bush administration does not appear eager to play Santa Claus this year. US Trade Representative Robert Zoellick claimed that, until there was some confirmation from the Karzai government of poppy cultivation and export, there could be no legal basis for WTO action.

According to the WTO’s Committee on Anti-Dumping Practices: “If an investigation shows dumping is taking place and domestic industry is being hurt, the exporting company can undertake to raise its price to an agreed level in order to avoid anti-dumping import duty.”

As there are apparently no exporting companies in Afghanistan, that puts the ball back in Zoellick’s court. WTO rules allow for measures to be taken against products imported from member countries, whether or not those countries have exported them. “The importing country can launch its own investigation and ultimately charge extra duty (known as “countervailing duty”) on subsidized imports that are found to be hurting domestic producers.”

Judging by the obvious reluctance of the Bush administration to take economically damaging measures against the still fragile democracy in Afghanistan, US poppy seed producers will certainly be hurting this Christmas.

“Tracking down poppy growers in Afghanistan would take all kinds of expensive equipment like planes and helicopters, not to mention hundreds of personnel on the ground,” said Zoellick. “Where would we find them?” US government offices would have to be established in Kabul, and trade representatives sent out to the war-torn countryside. “That kind of government spending won’t be good for either of our economies,” Zoellick insisted.