There has been a huge increase in the output of cocaine from Columbia in the last 12 months. The country’s production of the coca plant which is used to produce cocaine increased by 14% last year to 1400 metric tons. More and more agricultural land in Columbia is being turned over to the production of cocaine with a 43% increase to 204,000 hectares.

It takes two years for the newly sowed coca plants to yield a crop so the supply of cocaine entering the world market is likely to keep increasing in the coming years.

For many farmers in Columbia growing the coca plant is the most profitable way to provide for themselves and their families. The price Columbian farmers receive for producing the coca plant is significantly higher than the other agricultural products produced in Columbia such as coffee (Columbia is the fourth largest coffee producer in the world), cut flowers, bananas and sugar. The coca plant is easier to grow than other crops and it has more frequent harvests. Growing coca for the drug cartels comes with challenges, there is the risk of violence and investigation by law enforcement agencies, but the drug cartels do support the farmers they use with finance (growers often struggle to raise money because of limited access to banking services) and they also manage the transport of coca which is challenging for producers.

The most recent report by United Nations states 284 million people in the world were using illegal drugs in the last year with around 21 million of them using cocaine. The price of cocaine has increased over the last 10 years but has fallen back in the last 12 months as the supply of the drug has increased in world markets. Lower prices have led to an increase in the consumption of cocaine which comes with significant social costs to society. In the last 12 months in the United States, there were 100,306 drug overdose deaths and 18% of federal prisoners in US jails were arrested for violent crimes committed whilst getting money for drugs.

This brings with it big challenges for policymakers and law enforcement agencies. Countries like Malaysia, China, Vietnam and Thailand have some of the strictest laws on recreational drugs with death penalties for dealers. However, such a strict approach leads to high enforcement costs and the problem of criminalising many people who some believe have a health problem rather than a criminal one. Some countries have a more liberal approach to recreational drugs with Portugal, Netherlands and Mexico allowing the use of cocaine for personal consumption. The problem with a more liberal approach to drugs is that it can lead to a significant increase in consumption and all the social costs associated with this.  

Possible questions to discuss with a class

1. What impact might the rising price of cocaine have on the supply of agricultural products like coffee, bananas and sugar?

2. How does the price mechanism lead to an increase in the supply of cocaine when its price increases?

3. Discuss the social costs of the consumption and production of a recreational drug like cocaine.

4. What do you think is the most effective government policy to deal with the problem of recreational drugs?