Cocaine: A Changing Landscape - Part One

Latin America Correspondent Jon Bonfiglio analyzes the fall in price of cocaine, and what the shifting panorama of production and movement of the product has to tell us.

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Transcript

Hi everyone, and Merry Christmas - cocaine price is down!! I’m not sure how many active consumers  of snow, sugar, charlie or blow we have among the listenership, but for any of you out there who are in the game, you’ll likely have noticed that prices have gone through the floor, and - well - it’s a simple case of supply and demand. 

Fundamentally, supply chains are now so successful that we’re now in a period of oversupply. In part this boom in supply, which factors in growth right across the chain, from production, to evolving transport systems (drones, narcosubs and the like) as well as - which we have talked about extensively over the last year - the development of international systems of collaboration between transnational criminal organizations - has meant that the cocaine industry has never been as fluid, unimpaired and uncontained, leading to… (among other things) a fall in its price at point of delivery. 

In terms of production, we’re largely talking about growth in Colombia - which along with Peru and Bolivia are the three countries which overwhelmingly produce the world’s cocaine. And in Colombia, there are three main factors which have led to massively increased production. 

In the first case, public policy - and international policy - as regards the containment of the coca crop, has simply failed. This is not new news for anyone who has been paying attention. 

The second factor - which relates to that most frustrating life rule of unintended consequences - emerges from the significant successes in bringing a relative end to Colombia’s three-generation-old civil war. The end of the violence and the handing over of arms has meant that political insurgent groups who controlled vast tracts of Colombia - and yes, who produced cocaine, but as a means to self-funding, not as a driver to the mass production of the drug per se - are no longer in control of those territories, and as a result the especially avaricious and hyper-driven transnational criminal organizations have moved in. And these groups are driven by maximum profit, without political objectives. Although politics ends up playing a part, but it’s not an entry point driver for them. These groups have ramped up production.

And the final point is linked to this, because these groups are continually evolving their processes, especially as regards innovative mechanization of the crop. The overriding motive is profit, the avenue to that motive is yield, the key to increased yields is cutting-edge agriculture. 

And these innovative systems also feature in the transport of the product to market, which also - increasingly - is mechanized and can travel further, for longer, with fewer people involved. 

It’s the way the world is going, so it’s little surprise that drug production and transport systems are going the same way. 

What we’re now seeing in a number of countries is cocaine being stockpiled for future sale in destination economies, in an attempt to control the market, and also as a ‘rainy-day’ contingency, because although these groups have never been as strong as they are now, there is also - again, as with businesses the world over - deep uncertainty as to what lies over the horizon. So TCOs (these transnational criminal organizations) are in something of a holding pattern. Where even a year or eighteen months ago they were spending like it was about to go out of fashion, now they are holding tight onto what they have. 

Of course, the global generator of chaos in all of these sectors is one and the same: Donald Trump’s White House. 

Another interesting by-product of the transport evolution lies in the outsourcing of the shipments to specialized companies, not directly linked to the cartels, but which are in service to, much like DHL or any other private courier. These groups are many, and they are divested from one another and they evolve transit strategies, in order that any one seizure or impediment not affect the broader system. These structures, therefore, are in-built and stress-tested to be holistically resilient. 

They are fascinating networks, always moving, always shifting, and given that they are not beholden to imposition of tariffs or established global economic agreements, they are just about the most nakedly capitalist systems that exist. Everything - even human lives, especially human lives - are in service to their profit motive. 

And the profit motive is huge. As many of you will have heard me say in the past - but which I mention here again for new listeners - the total GDP equivalent of the global cocaine market is equivalent to a small country. And that is just cocaine, in a sea of other drugs, and just a fraction of that drugs market in an ocean of other revenue streams within the economies of these transnational groups. 

There’s also an interesting statistic which leads to more questions than answers, but does give a sense of the scale of things, and that statistic is that 80% of all cocaine seizures happen in shipping containers, and that only 10% of these containers are surveyed by customs officials. Now, the usual interpretation which accompanies these figures is that most cocaine comes in through cargo but that 90% is not checked and as such, whatever is discovered in the 10% of containers can be multiplied by 10 to achieve a total figure of what flows through the international ports network. 

But it seems to me that this is a naive interpretation, because we know that there is a vast infrastructure of connections to these organizations which also involves law enforcement, port workers, customs officials and on. So what we can basically say is that the 10% of containers surveyed is only likely to have an amount of cocaine seized which is acceptable to the criminal organizations. What is seized is allowed to be seized, and is either an offering to distract from the rest of what flows through, or is a magic trick by which those who seize the product are then highlighted as being at the pinnacle of counter-narcotics. In other words, the seizures serve - to - cement the processes and the people involved in the movement of product, not the other way around. By that same token, what you can certainly say - therefore - is that what is seized in the 10% of containers is not 10% of total product, but a minor, deliberate imbalance of the total amount, and that what is moved through the other 90% of containers is much, much more. Of course the numbers are impossible to measure, but it wouldn’t be a surprise if the real figure was - literally - thousands of per cent more. 

There’s also a couple of other things which have happened in the last few years which have served to evolve the cocaine market. The first of these is the emergence of Balkan criminal organizations, in particular their foothold in Ecuador, which has been one of the main factors in the destabilisation of what is one of Latin America’s smallest countries and which historically was always one of its safest. Well, not any more, and the arrival of Balkan criminal groups in the country has certainly been a factor. These same groups have also been instrumental in shifting the paradigm of transport for cocaine, especially to Europe, where a significant proportion of product now first reaches land in west Africa, before moving on to Europe through north Africa. Of course west Africa is relatively unpoliced, and where it is it has a tendency to be easily corruptible - and is open to alternative financing streams. There are also a lot of islands off west Africa, so shifting patterns related to landfall is relatively straightforward. 

Then the final thing to say for the moment, related to shifting patterns is not one which is entirely new, but relates directly to how cocaine and other highly lucrative criminal economies, driven by first-world demands, has seen the invasion of some of the world’s most remote, pristine environments, among them, the Amazon. 

More of which in the next episode of the series, and don’t forget, if you know of friends or colleagues  who may be interested in this regular journey through all things Latin America, please do share details of the podcast. I suspect that 2026 may be quite the year.

Goodnight!