STREET PRICE OF COCAINE FALLS DESPITE U.S. EFFORTS

The drop in value has some drug experts questioning a $4.3 billion federal
strategy to stem the supply from Latin America

Since last year, federal drug officials have touted the success of a $4.3
billion program they say has slashed the production of coca in Latin
America by a third.

But federal data released Thursday showed that the price of cocaine on the
street was lower in 2003 than when the program began.

Drug experts say the data raise serious questions about the ability of the
Andean Counterdrug Initiative to choke off the supply of cocaine.

"There is no evidence in these data, any more than there's been evidence in
the previous 20 years of data, that massive enforcement succeeds in pushing
mass market prices up," said Mark A.R. Kleiman, director of the drug policy
analysis program at UCLA.

The statistics on cocaine contrast sharply with the outcome of efforts
against the methamphetamine supply during the 1990s, when the government
produced significant shortages of the drug at a fraction of the Andes
initiative's $730 million annual price tag.

The Oregonian's five-part series "Unnecessary Epidemic" in October
pinpointed two periods when meth prices rose in response to attacks on the
international pipeline of meth's essential ingredients ephedrine and
pseudoephedrine. As a result, meth use across the West declined temporarily.

Despite the government's efforts in Latin America since 2000, cocaine
prices are down.

In a report prepared for John Walters, the White House drug czar, the Rand
Corp. estimated that the price of a pure gram of powder cocaine dropped
from $161 in 2000 to $107 in the first half of 2003. The price of crack
cocaine fell from $219 per pure gram in 2000 to $190 in 2003.

Aides to Walters declined to comment on the report Thursday. State
Department officials also declined to be interviewed.

Less coca, cheaper cocaine

Rand's new figures offer the most authoritative look at how the U.S. supply
of cocaine has changed since the launch of the Andes initiative, which pays
for spraying Roundup from airplanes and snaring shipments of finished cocaine.

The Andes initiative has been criticized by some congressional Democrats
who say it damages the environment and promotes human rights abuses by
Latin American governments. Walters, the drug czar, has stood by the
program, describing it earlier this month as a prime example of U.S.
strategies that can raise the cost of using drugs.

United Nations officials estimate the Andes initiative has succeeded in
reducing coca cultivation 30 percent from 2000 to 2003, based on satellite
photography. Walters has cited similar U.S. estimates showing a decline
since 2001 as a sign the government's program is working.

"When Colombia is producing one-third less cocaine than it was just two
years earlier, there simply is less to go around," Walters testified before
a congressional subcommittee Feb. 10.

But less cocaine should translate into higher -- not lower -- prices, drug
experts say.

"The underlying theory of enforcement is that enforcement increases price
and price reduces demand," said Alfred Blumstein, a professor at
Pittsburgh's Heinz School of Public Policy and Management.

Blumstein, who served on a national panel to improve the use of data in
studying outcomes of drug policy, said the fall in cocaine prices "is
obviously contradictory to the intended effect" of programs like the Andes
initiative.

The Rand estimates were based on a Drug Enforcement Administration database
of drug seizures and undercover purchases. The prices were adjusted for
inflation and purity. Since cocaine is typically only 70 percent pure on
the street, actual purchase prices are lower.

The study did show an increase in powder cocaine prices from 1999 to 2001.
However, that predated the biggest declines in Latin American coca
cultivation from 2001 to 2003. During those years, powder cocaine prices
plummeted, reaching their lowest level for any period since 1981.

Potential reasons

A shrinking coca crop that fails to produce a shortage of cocaine sounds
like a paradox. Kleiman, the UCLA professor, offered two possible explanations.

First, coca growers grow probably more than they expect to sell, providing
a potential surplus in the market that can absorb a reduction in the
acreage of crops.

Second, cocaine is an unusual commodity. Much of its price comes not from a
scarcity of raw material, but the fact that smugglers and dealers demand
compensation for the risks they take to deliver the finished product.

U.N. data show that Colombian coca base, material extracted from the coca
leaf, costs just $360 per pound in 2003 -- up substantially over 2000 when
the U.S. crop reduction program began. But it remained a tiny fraction of
the cost of pure cocaine in the United States: roughly $17,000 per pound
among major distributors, $48,000 per pound at the retail level.

For that reason, Kleiman said, even major increases in crop prices are
unlikely to ripple through to the price of cocaine on the street.

Demand changing?

Experts said the decline in cocaine prices could indicate a decline in the
demand for cocaine, independent of the Andes initiative and changes in
supply. For instance, tastes might be shifting away from crack as the drug
gains an increasingly negative image.

But federal data offered few signs that the number of cocaine users changed
radically from 2000 to 2003.

The Monitoring the Future survey found about 2.1 percent of high school
seniors reported using cocaine in the past 30 days in 2003, the same figure
as in 2000.

Rehab centers reported seeing 239,000 cocaine users in 2002, essentially
unchanged from 236,000 in 2000. Cocaine-related traumas and overdoses,
meanwhile, rose in 2001 and again in 2002.

The Rand Corp. report is available online at www.whitehousedrugpolicy.gov.