Afghan men harvest opium in a poppy field in the Golestan district of Farah province. (Goran Tomasevic/Reuters)

Afghanistan's opium production fell 10 per cent last year and prices are at their lowest in a decade, the UN said Wednesday.

A key finding of the 2009 Afghan Opium Survey, released Wednesday, is that cultivation in Helmand province, which produces about 70 per cent of Afghanistan's opium, dropped by about a third from 2007 to 2008.

"At a time of pessimism about the situation in Afghanistan, these results are a welcome piece of good news and demonstrate that progress is possible," said Antonio Maria Costa, executive director of the UN's office on drugs and crime.

Antonio Maria Costa, executive director of the UN office on drugs and crime, shows the annual report on Afghan opium during a news conference in Kabul on Wednesday. (Musadeq Sadeq/Associated Press)Afghanistan produces 90 per cent of the world's supply of opium, the raw ingredient used to make heroin. The multibillion-dollar crop has helped finance insurgents and criminal groups, fuelled official corruption and weakened the country's central government.

The UN said a "marriage of convenience" between insurgents and criminal groups is spawning narco-cartels in Afghanistan.

Because of that link, U.S. and NATO troops began actively targeting drug warehouses for the first time this year. The UN reported in the first half of 2009, military operations destroyed several tonnes of opium, morphine, heroin and 27 laboratories for turning opium into heroin.

British officials, who are leading counter-narcotics work in Afghanistan, estimate the insurgents finance their operations with the help of annual opium profits that range anywhere from $100 million to $400 million US.

Decline in cultivation

The declines in cultivation and production are attributed to the work of local governors, eradication efforts, drug seizures by Afghan forces and programs to replace opium poppies with legal crops.

Helmand Gov. Gulab Mangal distributed wheat seed to about 32,000 households in 2008, and British officials plan to expand the project to cover a broader area, and include grapes, pomegranates and apricots.

Opium cultivation in Afghanistan peaked in 2007 and has now fallen two consecutive years. The amount of Afghan cropland devoted to opium poppy cultivation fell from about 193,00 hectares in 2007 to 123,000 hectares this year.

"The bottom is starting to fall out of the Afghan opium market," the UN said.

Opium production in Afghanistan has not fallen as fast as the decline in acreage devoted to poppy plants because farmers are using improved strains and agricultural practices to extract more opium paste out of each bulb.

The survey reported Afghanistan is still producing 6,260 tonnes of opium a year, 1,724 tonnes more than the world consumes. That overproduction, experts say, has saturated the market, driven down prices and made the crop less profitable — and may be behind the drop in cultivation.

Farm prices for opium this year dropped by about a quarter, according to UN figures.

"Intervention may be playing some role here. But this is basically market-driven," said Marvin Weinbaum, a scholar at Middle East Institute in Washington.

Weinbaum said the decline in production in Helmand may have been partly due to the increased fighting there, and that it is too early to say the overall figures point to a long-term decline in the illicit industry.

"Obviously the trend is in the right direction," he said. "But for anybody to declare any kind of success here, any victory, is premature."

Officials in London warned that production could increase next year if opium prices rise. They said the Afghan government and its allies need to find new ways for farmers to earn a living in order to secure this year's gains.