KABUL - Afghanistan's production of opium poppies will likely decrease in 2009, but cultivation of the illegal crop remains entrenched in the country's most unstable southern provinces, the UN said in a report released Sunday.

The low price of opium and high price of wheat -- along with drought and pressure from the government -- brought production down in most of the country in 2008, the UN's Office on Drugs and Crime said in its annual winter survey.

The survey anticipates a further decrease in opium cultivation and yields this year but doesn't predict how much it will drop. Of Afghanistan's 34 provinces, 18 have been declared poppy-free.

However, the country remains the world's largest producer of opium, the main ingredient in heroin, accounting for 90 per cent of the world's production. The UN said last year that up to $500 million might line the pockets of Taliban fighters and criminal groups.

"The drug trade remains a major source of revenue for anti-government forces and organized crime operation in and around Afghanistan," Antonio Maria Costa, the UNODC chief, said in the report's preface.

"The drug money is also a lubricant for corruption that contaminates power," Costa said.

The UN report estimates the total export value of last year's crop to have been $3.4 billion.

In a sign that the military alliance sees the drug trade as a strategic threat, NATO defence ministers authorized troops in Afghanistan last year to attack drug barons deemed to be supporting the insurgency, but there have been no public reports of this order being carried out.

However, the price of opium has fallen by about 20 per cent over last year, the report said.

"This can be attributed to the massive glut on the opium market due to major overproduction during the past three years," Costa said.

Opium prices at the farm market level were well above $100 per kilogram until early 2007. The average price in November 2008 was $55 per kilogram, the lowest recorded since the UN started price monitoring in Afghanistan, the report said. Meanwhile, the cost of wheat and maize has risen nearly 50 per cent, in part because of a global wheat shortage.

The high price of wheat was the top reason cited by farmers who said they didn't intend to grow poppies in 2009, the report said.

The production of opium dropped six per cent in 2008 to 7,700 tons, cultivated by one million fewer farmers than the previous year, it said. Virtually all the remaining poppy fields in Afghanistan's in the south and southwest where the Taliban-led insurgency is most active.

The UNODC annual winter survey is carried out in 484 villages, including the seven key drug-producing provinces, which produced 98 per cent of the country's total output in 2008.