After reading the new report from Stratford Global Intelligence, I must report to you their analysis of the drug trade and the economics of cocaine. You may also read the full report from the mentioned author but this will be condensed. Understanding the cartels actions and the interactions between them, needs to acknowledge that at their core they are businesses and not politically motivated militant organizations. This means that although violence between and within the cartels grabs much of the spotlight, a careful analysis of the cartels must look beyond the violence to the business factors that drive their interests — and their bankrolls.
Several distinct factors have a profound impact on cartel behavior. One example is the growing and harvesting cycle of marijuana in the Sierra Madre Occidental. Another is the industrialization of methamphetamine production in Mexico and the increasing profit pool it has provided to the Mexican cartels in recent years. But when we are examining the transnational behavior of the Mexican cartels, the most important factor influencing that behavior is without a doubt the economics of the cocaine trade.
Growing the cocaine leaves is popular in Peru, Bolivia and Columbia. Farmers receive from $1.30 to $3.oo per kilogram. Producing one kilogram of cocaine base takes about 450 to 600 kilograms of coca leaf. After processing, a kilogram of cocaine base cost $585 to $789. The cocaine base is converted to cocaine.
Cocaine increases in value from $2,200 a kilogram to $200,000 per gram. Cocaine leaves the countries that accomplished the processing are in purity of 85 per cent and when the “cutting” starts it has reached 30 percent at the retail level. So you can see where the profits are and how the money flows to the cartels. I suggest that reading the report by Stratford will give you a better insight as to the ” how and whys” of the cartels. Cocaine selling at 10 times the cost of acquisition and more after production, you can understand why there is competition among the cartels for the smuggling corridors through Mexico to the United States and other countries.
“<a href=”http://www.stratfor.com/weekly/mexicos-cartels-and-economics-cocaine”>Mexico’s Cartels and the Economics of Cocaine is republished with permission of Stratfor.”