Khun Sa is under no illusions that Shan independence can make any headway without a military victory over Rangoon's troops. Failing that, he hasn't a prayer of recognition by the Thai government in Bangkok.

Meanwhile, he is currying favor with the pragmatic Thais by trading with them. Thai loggers do a brisk business in the Shan territory, which is laced with roads bulldozed by the loggers. Shan's world-famous ruby mines are a magnet for dealers from all over Asia. And of course, there is the smack, which travels into Thailand on pack mules.

Now, Khun Sa believes he has found a substitute that can help take the place of the poppies as a cash crop: shiitake mushrooms. The first thing one encounters on entering the 10 km-long mountain valley where Homong, Khun Sa's lair, lies is a shiitake mushroom farm. These pricey fungi are cultivated in the bark of the mai kaw tree, abundant in Shan. Under soccer-field-size plastic tents, rows of sections of the tree are stood on end in racks for four months after being plugged with a spore.

Three additional shiitake farms are planned. That will increase yearly production to 250,000 kilos--at $50 a kilo--catering to voracious Asian demand, particularly from hotels in Thailand.

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