Peru Coca Output Tumbles and Prices Soar on Eradication Efforts

Jun 11, 2014 12:30 pm ET

June 11 (Bloomberg) -- Coca production in Peru fell at the fastest pace in 14 years in 2013 and cocaine prices soared as the government stepped up eradication efforts, United Nations Office on Drugs and Crime said.

The area under cultivation dropped 18 percent to 49,800 hectares (123,058 acres), Flavio Mirella, head of the agency’s Peruvian office, said at the presentation of its annual coca report. The price of pure cocaine made from coca leaves surged to $1,310 a kilogram, a 15-year high, from $993 in 2012.

President Ollanta Humala increased spending on eradication and crop substitution after Peru overtook Colombia in 2012 to become the world’s largest grower of coca leaf. It is not clear whether the country retains that title as the agency hasn’t yet published surveys of coca cultivation in Colombia and Bolivia for 2013.

Coca eradication has been expanded to parts of the country “previously considered untouchable” such as the Monzon Valley, “an area dominated for more than 40 years by drug traffickers and coca growers, and where the local population traditionally violently rejected any intervention by the state,” the report said.

Peru, Colombia and Bolivia are the world’s biggest producers of coca leaf, Mirella said. Cultivation in Peru fell 3.4 percent in 2012 after expanding for seven straight years.

The price of cocaine from Peru doubles as it gets to the border with Bolivia, one of the transport routes for the drug, Mirella said. On the streets of New York the drug sells at around $30,000 to $40,000 a kilogram, while in cities in Asia the price rises to about $80,000 to $100,000.