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Mar 9, 2012 | 20:28 GMT

Criminal Commodities Series: Black Tar Heroin

Stratfor

Editor's Note:  This is the first installment of a special series examining the limitations of Mexico's most-trafficked illicit drugs: marijuana, cocaine, methamphetamine and black tar heroin. 

Mexico continues to be an important conduit for and producer of U.S.-bound illicit drugs. Much of our Mexico coverage tends to focus on Mexican criminal organizations and how their operations pertain to the United States. It is important to note that these criminal organizations, like licit entities, operate within geographic, political and economic constraints, and the commodities on which they profit likewise are constrained by a variety of factors.

Mexican criminal organizations traffic four major illicit drugs: marijuana, cocaine, methamphetamine and black tar heroin. This series will examine the limitations involved in producing each drug and how those limitations affect the business interests of Mexican criminal organizations.

It should also be noted that analyzing black market commodities is more challenging than analyzing white market commodities. With the former, producers manufacture their products illegally, which insulates them from market regulations and accountability. Unlike licit commodities that are cultivated — wheat, rice and corn, for example — black market commodities do not lend themselves to acreage data or crop yield statistics; many figures used in this series are estimates from sources like the United Nations Office on Drugs and Crime. Thus, precision is much more elusive in the world of black market commodities than legitimate economies.

We begin the series with black tar heroin.

Black Tar Heroin

Over the last seven years, Mexican heroin production has increased dramatically, rising from an estimated 8 metric tons in 2005 to 50 metric tons in 2009. The vast majority of this heroin has been intended for export to the United States; by 2010, 58 percent of all heroin seizures in the United States were on the southwest border with Mexico.

Much of this increase has been attributed to the growing prevalence of black tar heroin, a less refined opiate derivative than its better-known cousin, white heroin. Mexico's main opium-growing region is along the Sierra Madre Occidental and Sierra Madre del Sur, stretching from Chihuahua in the north to Oaxaca in the south. The Mexican cartels that control this territory, particularly the Sinaloa Federation, are using it to diversify their drug trafficking enterprises beyond marijuana, cocaine and methamphetamine and increase their production of the highly profitable black tar variety of heroin.

The Opium Poppy

Originally native to western Asia, opium poppies were introduced to Mexico as a crop in the 1930s for the production of morphine and other opiate-based pharmaceutical drugs. One of Mexico's advantages in poppy cultivation is its mild climate, which allows many farmers to get two poppy harvests per year instead of just one. Poppies grow best in Mexico along the Sierra Madre Occidental mountains, located in the states of Chihuahua, Sinaloa, Durango, Nayarit, Jalisco, Michoacan, Guerrero, and Oaxaca. In the Sierra Madre Occidental, the poppies grow along ridges above the 1,000-meter mark where the air is dry. Poppies are generally known to be hardy plants, but they do not flourish in very wet conditions, which makes Mexico's eastern coast a less suitable growing locale due to the high rainfall and tropical climate.

Poppies require some maintenance. They ususally need irrigation and, since they are annual plants, have to be re-planted every season. However, being annual crops also provides an advantage to growers, since it is fairly easy to re-plant a field and still get a harvest in time if the initial crop is eradicated or dies.

Poppies are typically planted in the early spring and take about three months to mature. "Maturation" for the opium poppy means that it produces a seedpod at the end of the stem. Farmers harvest opium gum from these pods by puncturing the surface and extracting the fluid that seeps out. This raw material is the foundation of opium, from which morphine, heroin or black tar heroin (among other opiate products) can be made.

From Flower to Drug

While most opium gum in Afghanistan, Southeast Asia and Colombia is synthesized into white heroin, groups in Mexico have developed a shortcut in the processing phase that makes black tar heroin cheaper but still very potent. White heroin is made by isolating morphine from opium and then synthesizing heroin from morphine. This is a complicated and expensive procedure compared to the production of black tar heroin, which skips the intermediate step of morphine isolation and synthesizes heroin straight from the opium.

In addition to being faster, it appears that producers can replace the expensive and heavily regulated acetic anhydride, which is required to process the drug, with acetic acid. Diluted acetic acid is essentially vinegar, so it is cheap and easily accessible in large quantities (it takes about $50-worth of acetic anhydride to make 1 kilogram of heroin but only $10-worth of acetic acid). As a result, black tar heroin is not as pure and does not look as clean as the white heroin, but it has a comparable effect. It can also be consumed by smoking or snorting, in addition to being injected — the primary method of consumption for white heroin.

The main ingredient in black tar heroin is raw opium. The U.N. Office of Drugs and Crime does not possess statistics on the price of raw opium in Mexico; however, the office has priced that of Colombia — the closest major producer geographically. The price of raw opium in Colombia is $310 per kilogram, and Mexico's price is likely similar.

The U.S. Drug Enforcement Administration estimates that black tar heroin sells for around $30 per gram, compared to $50 per gram of white heroin or equivalent doses of prescription drugs with similar effects like oxycodone. However, in some parts of the United States, black tar heroin can cost as much as $15 per 1/10th of a gram when it is delivered directly to a person's home by distribution networks, many of which have links back to Mexico. Sales in these smaller amounts make the drug extremely lucrative.

Mexican poppy growers had a capacity for producing 125 tons of black tar heroin in 2009, according to U.S. State Department estimates. Using the same $15 per 1/10th of a gram estimate above, this would mean Mexico's total crop had a potential street value of around $17 billion. However, the actual profit margin is likely much lower due to differences in sale price, eradication and interdiction efforts by the Mexican government and trafficking expenses.

Exploitation

Currently, Afghanistan is the world's largest opium producer and is responsible for roughly 90 percent of the world's heroin supply. However, Mexico is increasing its share and is estimated to be the world's second-largest global producer of heroin. As of 2009, Mexico was thought to be growing enough poppies to supply about 7 percent of the world's heroin market. Also, Mexico's opium yield has room to grow. In 2009, Mexican opium producers required 46 hectares to produce one metric ton of opium — down from 90 hectares in 2000. Global averages have ranged between 20 and 40 hectares per metric ton for the past 10 years, so it appears that Mexico's opium yields will be able to increase, and there is the potential for growth in total area of opium poppy cultivation.

Based on the geographic location of the poppy cultivation areas in Mexico and the trafficking routes that black tar heroin would have to traverse to get to the United States, it appears that the Sinaloa Federation would benefit the most from the black tar heroin trade in Mexico — indeed, many black tar heroin traffickers arrested in the United States have had links to the Sinaloa Federation in Mexico. However, Sinaloa's main rival, Los Zetas, are not cut out of the heroin market completely; the Interstate Highway 35 corridor leading into South Texas (known Zetas territory) also sees a good deal of heroin trafficking. There is also a pocket of poppy cultivation in southwest Mexico under the control of Cartel Pacifico Sur, which is affiliated with Los Zetas. Geographically, it does not appear that the Sinaloa Federation has total control over poppy cultivation (and therefore black tar heroin production), but the group does appear to have an advantage.

The U.S. State Department estimates that the area of poppy cultivation in Mexico increased seven-fold from 2002 to 2009, rising from 2,700 hectares to 19,500 hectares. That growth likely increased Mexican black tar heroin production from the double digits to triple digits in tons. There is no reason to believe production has dropped off since that period, and given the growth rate of poppy cultivation, actual black tar heroin production may be much higher than the 50 metric tons estimated in 2009. Meanwhile, seizures of heroin along the U.S.-Mexico border increased nearly threefold, from 228 kilograms in 2005 to 642 kilograms in 2009. Seizure data is always imperfect, since the increase in seizures could be explained by other factors such as new law enforcement tactics or intelligence. Because this increase is lagging behind the increase in production, however, Mexican heroin production is very likely on the rise — as are the profits derived from the trade.

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