|Coca Leaf Prices Reach a High|
|Topic||Supply and Demand/Equilibrium|
|Key Words||Price, supplies, incentive|
Peru is a major coca leaf producing country. Coca leaves are a fundamental ingredient in making cocaine. In 1995, the Peruvian Government shot down a number of planes that were suspected of trafficking drugs, and intercepted others. This caused the price of coca leaf to fall by 60 percent. This policy was reinforced by educating farmers about how to grow alternative crops, and by the building of roads to take those crops to market. Many farmers swore not to grow coca again.
Since March 1998, the price of coca has risen again, regaining two-thirds of the initial reduction in price. The use of coca in Peru has increased, Bolivian supplies have been scaled back, and trafficking has been re-established through new routes. As a result, the farmers in Peru have more incentive to restart growing coca leaf.
Not surprisingly, the Peruvian Government is stepping up its interdiction efforts, with the help of U.S. aid.
(Updated November 1, 1999)
|Source||Clifford Krauss, "Peru's Drug Successes Erode as Traffickers Adapt," The New York Times, August 19, 1999.|
Return to the Supply and Demand
©1998 South-Western College Publishing. All Rights Reserved webmaster | DISCLAIMER