UPDATE 1-Colombia 2012 coca crop falls as illegal mining surges -U.N.

BOGOTA/VIENNA Thu Aug 8, 2013 3:41pm EDT

BOGOTA/VIENNA Aug 8 (Reuters) - Coca planting in Colombia fell by a quarter last year as the government bolstered efforts to stop the crop being turned into cocaine and crime gangs shifted to other ways of funding their operations, the United Nations said on Thursday.

Coca, the raw material for cocaine production, covered 48,000 hectares of Colombia in 2012, down 25 percent from the year before, according to the annual report by the United Nations Office on Drugs and Crime (UNODC). The figure is the lowest since records started in 2001.

One of the world's top cocaine producers, Colombia has been battling drug-funded rebels and criminal gangs for decades. Even as a U.S.-backed military offensive has helped improve security, coca output and drug trafficking continues to help finance a 50-year conflict that has killed more than 200,000 people.

"We have noticed that terrorists are looking for other sources of funding, but drug trafficking continues to fund their operations," Defense Minister Juan Carlos Pinzon told reporters.

Insurgent groups such as the Revolutionary Armed Forces of Colombia and the National Liberation Army, as well as criminal bands, have moved into illegal mining for gold as an easier way to pay for their operations, Bo Mathiasen, the UNODC representative in Colombia, told Reuters.

Coca leaf yield per hectare also declined last year. The United Nations estimates that potential cocaine production in 2012 was 309 tons, down 10 percent from 345 tons in 2011.

The drop in cultivation followed an increase of 3 percent during 2011. This year's number is far below Colombia's 2001 peak, when coca fields occupied more than 140,000 hectares.

The government's crackdown on the drugs trade and a steady increase in metals prices in recent years, including a fivefold jump in gold prices over the last decade, has led criminal gangs to seek easier profit in the illegal extraction of minerals such as gold, coltan and tungsten.

Cocaine is no longer a sufficient source of funding for 8,000-member FARC because distribution - the most lucrative side of the cocaine market - is now largely controlled by Mexican cartels, said Adam Isacson, an analyst at the Washington Office on Latin America, a U.S. non-governmental organization.

He said it was easier for rebel bands and criminal gangs to operate an illegal mine than a coca field.

"There is no risk of fumigation and the United States is not complaining, so the government doesn't feel pressure to crack down on unlicensed mines," Isacson said.

The U.N. report estimated the farm-gate value of coca leaf and its derivatives, such as coca paste and cocaine base, at $370 million in 2012 - down from $422 million in 2011. It said it amounted to just 0.2 percent of Colombia's economic output.

While prices were mostly stable for cocaine base and paste, the coca leaf yield per hectare fell, and 3 percent fewer households were linked to coca production, the report said.

"With the average gross income of a farmer selling coca leaf estimated at $1,220 per year, coca production does not fetch the same lucrative rewards as in the past," the report said. (Additional reporting by Luis Jaime Acosta; Editing by Brian Ellsworth and Doina Chiacu)

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