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DRUGS 39



4-2d Retail Prices

4-2da US

    “The NYPD notes that retail heroin prices are down and purity is relatively high. Heroin previously 
sold for about $90 per gram but now sells for $65 to $70 per gram or less. Anecdotal information from 
the NYPD indicates that purity for a bag of heroin commonly ranges from 50 to 80 percent but can be 
as low as 30 percent. Information as of June 2000 indicates that bundles (10 bags) purchased by 
Dominican buyers from Dominican sellers in larger quantities (about 150 bundles) sold for as little as 
$40 each, or $55 each in Central Park. DEA reports that an ounce of heroin usually sells for $2,500 to 
$5,000, a gram for $70 to $95, a bundle for $80 to $90, and a bag for $10. The DMP reports that the 
average heroin purity at the street level in 1999 was about 62 percent.” (National Drug Intelligence 
Center, http://www.usdoj.gov/ndic/pubs/648/ny_econ.htm ).

The NYPD and DEA retail price figures seem consistent. The DEA price of $70-$95, with a purity of 
62 percent translates into $112 to $153 per gram of pure heroin. The NYPD figures are roughly similar 
with perhaps lower estimates for purity.

It should be noted that when heroin is purchased in very small quantities, the retail price tends to be much 
higher. In the US, purchase is often by “the bag”; the typical bag according to Rocheleau and Boyum 
contains 25 milligrams of pure heroin.(http://www.whitehousedrugpolicy.gov/publications/drugfact/american
_users_spend/appc.html )

A $10 dollar bag in NYC (according to the DEA figure quoted above) would convert into a price of $400 
per gram, each bag containing 0.025gr. of pure heroin. (op cit). In other words, for very small purchases 
marketed by street pushers, the retail margin tends to be significantly higher. In the case of the $10 bag 
purchase, it is roughly 3 to 4 times the corresponding retail price per gram.($112-$153)



4-2db UK

In Britain, the retail street price per gram of heroin, according to British Police sources, “has fallen from 
£74 in 1997 to £61 [in 2004].” [i.e. from approximately $133 to $110, based on the 2004 rate of exchange] 
(Independent, 3 March 2004). In some cities it was as low as £30-40 per gram with a low level of purity. 
(AAP News, 3 March 2004). According to Drugscope (http://www.drugscope.org.uk/ ), the average price 
for a gram of heroin in Britain is between £40 and £90 ($72- $162 per gram) (The report does not mention 
purity). The street price of heroin was £60 per gram in April 2002 according to the National Criminal 
Intelligence Service.

(See:http://www.drugscope.org.uk/druginfo/drugsearch/ds_results.asp?file=%5Cwip%5C11%5C1%5C
1%5Cheroin_opiates.html )



4-2dc The Hierarchy of Prices

We are dealing with a hierarchy of prices, from the farmgate price in the producing country, upwards, to 
the final retail street price. The latter is often 80-100 times the price paid to the farmer.

In other words, the opiate product transits through several markets from the producing country to the 
transshipment country(ies), to the consuming countries. In the latter, there are wide margins between 
“the landing price” at the point of entry, demanded by the drug cartels and the wholesale prices and the 
retail street prices, protected by Western organized crime.



4-2dd The Global Proceeds of the Afghan Narcotics Trade

In Afghanistan, the reported production of 3600 tons of opium in 2003 would allow for the production 
of approximately 360,000 kg of pure heroin. Gross revenues accruing to Afghan farmers are roughly 
estimated by the UNODC to be of the order of $1 billion, with 1.3 billion accruing to local traffickers.

When sold in Western markets at a heroin wholesale price of the order of $100,000 a kg (with a 70 
percent purity ratio), the global wholesale proceeds (corresponding to 3600 tons of Afghan opium) 
would be of the order of 51.4 billion dollars. The latter constitutes a conservative estimate based on the 
various figures for wholesale prices in the previous section.

The total proceeds of the Afghan narcotics trade (in terms of total value added) is estimated using the 
final heroin retail price. In other words, the retail value of the trade is ultimately the criterion for measuring 
the importance of the drug trade in terms of revenue generation and wealth formation.

A meaningful estimate of the retail value, however, is almost impossible to ascertain due to the fact that 
retail prices vary considerably within urban areas, from one city to another and between consuming 
countries, not to mention variations in purity and quality (see above).

The evidence on retail margins, namely the difference between wholesale and retail values in the 
consuming countries, nonetheless, suggests that a large share of the total (money) proceeds of the 
drug trade are generated at the retail level.

In other words, a significant portion of the proceeds of the drug trade accrues to criminal and business 
syndicates in Western countries involved in the local wholesale and retail narcotics markets. And the 
various criminal gangs involved in retail trade are invariably protected by the “corporate” crime syndicates.

90 percent of heroin consumed in the UK is from Afghanistan. Using the British retail price figure from UK 
police sources of $110 a gram (with an assumed 50 percent purity level), the total retail value of the 
Afghan narcotics trade in 2003 (3600 tons of opium) would be the order of 79.2 billion dollars. The latter 
should be considered as a simulation rather than an estimate.

Under this assumption (simulation), a billion dollars gross revenue to the farmers in Afghanistan (2003) 
would generate global narcotics earnings, –accruing at various stages and in various markets– of the 
order of 79.2 billion dollars. These global proceeds accrue to business syndicates, intelligence agencies, 
organized crime, financial institutions, wholesalers, retailers, etc. involved directly or indirectly in the 
drug trade.

In turn, the proceeds of this lucrative trade are deposited in Western banks, which constitute an essential 
mechanism in the laundering of dirty money.

A very small percentage accrues to farmers and traders in the producing country. Bear in mind that the net 
income accruing to Afghan farmers is but a fraction of the estimated 1 billion dollar amount. The latter does 
not include payments of farm inputs, interest on loans to money lenders, political protection, etc. 
(See also UNODC, The Opium Economy in Afghanistan, http://www.unodc.org/pdf/publications/afg_
opium_economy_www.pdf , Vienna, 2003, p. 7-8)



4-2e The Share of the Afghan Heroin in the Global 

4-2ea Drug Market

Afghanistan produces over 70 percent of the global supply of heroin and heroin represents a sizeable 
fraction of the global narcotics market, estimated by the UN to be of the order of $400-500 billion.

There are no reliable estimates on the distribution of the global narcotics trade between the main categories: 
Cocaine, Opium/Heroin, Cannabis, Amphetamine Type Stimulants (ATS), Other Drugs.







Title:Drugs White gold  SBN 978-1-326-84325-0
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