Brazil: The world's second-largest cocaine market

Brazil is the sixth-largest country in the world, with the sixth-largest economy in the world, and, according to the International Monetary Fund, the fifth-largest food exporter in the world.

Little known is the fact that, according to its own government, the country has the most cocaine consumers in the world, after the United States. It is also one of the most violent — with a murder rate of 30 per 100,000 inhabitants. In 2018 alone there were some 60,000 murders, nearly double the number of people killed in the drug cartel war in Mexico that year.

Read more: Outside Brazil's big cities, police impunity is rife

The complex situation in Brazil is a case study that should be of global interest. It has consequences for the US, as a lot of American-made weapons end up in Brazil. It also has consequences for Europe, as organized crime outfits such as the Italian 'ndrangheta (or the Juarez Cartel from Mexico) have found fertile soil in Brazil for money laundering — and a springboard for the cocaine trade in Europe.

Alarming data

From August 20-22 I was invited to an interdisciplinary seminar organized by the Brazilian federal police on the topic of "intelligence service work in the fight against criminal organizations."

It was Brazilian police who carried out the high-profile "Lava Jato" operation. It showed how a corruption network between the state-run oil enterprise Petrobras and private companies such as Odebrech spread throughout Latin America, and even reached as far as Africa.

Now the Brazilian federal police appear to have a new target: Based on the experience of other countries such as Mexico and Italy, they want to better understand how three of the most important criminal organizations in the country work. Because of the ongoing violence they cause, and the danger they pose to territorial control for the government, they are viewed as the greatest threat to Brazil's national security.

One of the police directors, in a private conversation, spoke about cocaine consumption in Brazil and the data was impressive: The second largest market for cocaine? Yes, confirmed the police director. But how could it have come this far?

On the one hand, the country shares 11,000 kilometers (6,800 miles) of border with 10 other countries, three of which — Bolivia, Peru and Colombia — are the world's cocaine suppliers. Bolivia produces 10%, Peru 20% and Colombia 70%, according to a report by the United Nations Office on Drugs and Crime.

Read more: Why is Colombia's cocaine production so high?

Production in the region is growing steadily, while the US consumer market is declining. Around 1.46 million Brazilians consume cocaine. If you incorporate consumers of all cocaine derivatives, such as crack for example, the number of consumers rises to 5.6 million.

The price of a pack of cigarettes

One reason for these figures is that the sale price for a gram of cocaine in the three producing countries is only $1. In Brazil the price is $5, the equivalent of a packet of cigarettes. In the US, 1 gram of cocaine costs between $30 and $50. The transport costs to Brazil via a very porous border are clearly much lower. In many countries, cocaine consumers belong to the upper-middle class. In Brazil, however, everyone has access to the drug and its derivatives.

Read more: Uruguay, the new global drug trafficking hub

The business risk of cocaine trading for Brazilian criminals is minimal. The cost-benefit calculation is ice cold and simple, says sociologist Gabriel Feltran, who authored a book on the First Capital Command (Primeiro Comando da Capital, or PCC), one of Brazil's leading criminal gangs in the national drug trade.

In Brazil, cars are often stolen to finance the purchase of cocaine and weapons. The majority of stolen cars are sold on the black market in Paraguay, where until recently they could easily become legalized and then sold in other parts of the country or across the border. A fairly new Toyota Pickup can fetch around $3,000 (€2,700) in Paraguay. That's enough money to buy 3 kilos (6.6 pounds) of cocaine in Colombia, Bolivia or Peru, which can bring a return of $15,000 when sold in Brazil. This money is re-invested in the purchase of more cocaine and weapons, or in cigarette smuggling.

The PCC was founded in 1993 in Sao Paulo by a group of prison inmates who wanted to protest against conditions at the facility where they were incarcerated. Although the leaders of the PCC have been behind bars for 20 years, they have continued to oversee their gang, which controls the majority of prisons in other Brazilian federal states. According to the Brazilian authorities the PCC has more than 20,000 members and produces an annual turnover of $200 million.

Although the prisons where the PCC was founded in 1993 continue to be the most important drug trafficking spots, the organization has expanded its sphere of influence, including to Europe.  A few weeks ago in Sao Paulo the Brazilian federal police arrested Nicola Assisi, an key agent of the Calabria-based 'ndrangheta. The Italian mafia imported, via its middleman, cocaine to Europe. The PCC was the supplier and chalked up profits worth millions.

This text is the first in a series of thoughts on organized crime in Brazil, based on research by the Brazilian federal police and scientists such as Gabriel Feltram, sociologist Sergio Adorno and Camila Nunes Dias.