II. THE ECONOMY

II.1. GENERAL CONDITIONS

II.1.1. Gross Domestic Product (GDP)

The 1990 estimate of percentage of GDP contributed by sector was: agriculture 53%; industry 28.5%; services 18.5%. GDP per capita as purchasing power parity was $800 (2000 est., World Bank).

II.1.2. Labor Force

Labor force was estimated in 2000 as 10 million, employed by sector as: agriculture 70%, industry 15%, services 15% (1990 est.). The refugee situation, plus crippling injuries due to the conflict and land mines, has had an unknown effect on the labor force.

II.1.3. Economic Overview

GDP was estimated, as purchasing power parity, $21 billion in 2000. In the recent conflict situation, this has deteriorated markedly. "Afghanistan is extremely poor, highly dependent on farming and livestock raising (sheep and goats). Economic considerations have played second fiddle to political and military upheavals during two decades of war, including the nearly 10-year Soviet military occupation (which ended 15 February 1989). During that conflict one-third of the population fled the country, with Pakistan and Iran sheltering a combined peak of more than 6 million refugees. Gross domestic product has fallen substantially over the past 20 years because of the loss of labor and capital and the disruption of trade and transport; severe drought added to the nation's difficulties in 1998-2000. The majority of the population continues to suffer from insufficient food, clothing, housing, and medical care. Inflation remains a serious problem throughout the country."

"Afghanistan's economic structure has been gravely weakened, distorted, and made more vulnerable through two decades of conflict. Agriculture (including livestock), the most important economic activity, is highly vulnerable to natural conditions as is demonstrated by the current drought. Trade activities are vulnerable to the policies of neighboring countries, most notably Pakistan-in fact, there appears to have been a substantial decline in Afghanistan's unofficial re-exports to Pakistan in the recent past, probably reflecting changing policies and stronger enforcement in Pakistan. Remittances, another major source of income, tend to be more stable, but nevertheless they are vulnerable to changes in economic conditions in the source countries. The Taliban's recent complete ban on opium poppy cultivation, which was a positive move and has been largely effective, has sharply reduced the incomes of those small farmers and rural wage laborers who were dependent on poppy cultivation and related work. Foreign aid, another important albeit smaller source of income, has increased sharply in the wake of the drought but also is subject to fluctuations and severe logistical constraints. The ongoing conflict has led to a transformation of social and economic networks. Although the majority of the territory of Afghanistan has not been constantly at war, economic distortions and vulnerabilities affect the entire country, and there is a pervasive sense of insecurity. (World Bank Afghanistan Approach Paper, 2001).

II.2. ECONOMICS OF THE RURAL POPULATION

II.2.1. Farm size

There are large land holdings, but most farms are small and family-size. Before 1978, some 2.7 or so million ha were irrigated annually, and 1.4 million ha of rainfed land were cultivated. This 4 million ha of land were cultivated by some 1.2 million farm families (Trutmann).

In the 3 provinces (including Bamian and Wardak) served by Solidarites, small landholders make up 80-90% of the farm population, with 1-10 jeribs of land. Big landholders (10-20%) operate 10-20 jeribs, some up to 20 ha (100 jeribs). One Jerib is 0.2 ha, or about 0.5 acre.

In some interviews, it was reported that the average farm family cultivates about 2 Jeribs (about 1 acre). Average farm family size was said to be about 9 persons (7 children). In Ghazni Province, for example, it is reported that the average family farms about 5 jeribs or 1 ha of land.

II.2.2. Land Ownership and Tenancy

Most farmers own their own land. An estimated 20% are landless tenant farmers; in this case, the landowner often provides land, seed, water, most tools, fertilizer, equipment, etc., and gets 2/3 of the crop yield. The tenant provides labor, and gets 1/3. A number of other arrangements were reported.

II.2.3. Average Farm Family Income

National annual per capita income has been reported as approximately US$ 300, prior to the recent conflict. The rural population is reported to be significantly below this.

Most farm families produce for their own consumption, and many do not fill their own food needs. Aside from the opium poppy situation, fruits and vegetables appear to be the farm family's primary cash crop.

In most contacts with farmers, farmers did not have enough cash to buy seed to plant, or enough leftover grain to use for seed. "Rural families are characterized by abysmally low income levels, not even adequate to ensure a minimum quality of life compatible with physical well-being (FAO, 2001). Drought and political instability have devastated Afghan agriculture, especially in rainfed areas. The drought affected almost every sector of farming-draft oxen, fertilizer use, sheep, goats, etc. Smallholders, especially in the "unfavored environments" of rainfed agriculture, "have lost all worldly possessions and are waiting for some miracle" (FAO).

II.2.4. Family Production for Market

Most rural people produce to meet their own food needs; most don't produce enough. Most farm families are thus involved in subsistence agriculture rather than market-oriented crop production.

In some villages visited, it was reported that their sole cash income was from selling fruits and surplus crop production to dealers/truckers who come to the villages, buy the "standing" fruit crop, and then truck it to city markets. Some of these merchants were reported to be from Pakistan.