The government is taking measures to tackle the problem
Production rose by six percent on last year, to around 3,600 metric tonnes, the UN Office on Drugs and Crime found.
Agency director Antonio Maria Costa said the country was at a crossroads and risked falling into the hands of "drug cartels or narco-terrorists".
Afghanistan is the world's leading producer of illicit opium.
Terrorists take a cut as well. The longer this happens, the greater the threat to security within the country and on its borders
Antonio Maria Costa
It found that though new measures by Hamid Karzai's administration had helped cut production in some traditional poppy growing areas, cultivation was rapidly spreading in new areas.
Afghan opium farmers and traffickers brought home about $2.3bn in 2003, said the report.
"Out of this drug chest, some provincial administrators and military commanders take a considerable share," said Mr Costa.
"The more they get used to this, the less likely it becomes that they will respect the law, be loyal to Kabul and support the legal economy.
"Terrorists take a cut as well. The longer this happens, the greater the threat to security within the country and on its borders."
Tajikistan
Guards on the Afghan-Tajikistan border say they seized a tonne of narcotics in October, which is an eight-fold increase on the year before.
Tajikistan has become a critical export corridor from the Afghan poppy fields to the markets of Europe and the United States, says the BBC's Monica Whitlock who travelled to the region.
Afghan opium trade Afghanistan provides around 75% of the world's opium output Two-thirds of all opiate takers use drugs of Afghan origins The 2003 harvest is the second highest recorded in Afghanistan since surveying began in 1994
Men and women works as carriers relaying tiny amounts for the middle men - some of those caught die in prisons forced to swallow the bags they smuggled - and local drug addiction is growing.
Mr Costa said he would like to see international military forces in Afghanistan do more to intercept traffickers and dismantle drug laboratories.
"Some countries believe that the military should not be involved in the destruction of trafficking," he said. "Other countries think otherwise.
"I believe that the war against terrorism, leaving aside addiction, will not be won unless we control the opium economy of Afghanistan".
Opium poppy. Photo by Catherine Giayvia
Most heroin sold in Europe comes from Afghanistan's poppies. This past week, the 2005 opium harvest was in full view and going full speed in Afghanistan. The cultivators gathering resin from the crop are operating even near the main road through Kandahar and the farmers are out gathering resin from opium poppies in full view.

Last year 80% of the world's opium came from Afghanistan and production is up over 239% since 2003, according to U.S. government estimates.  Afghanistan is the world's largest producer of illegal drugs.

In 2002  ads, the White House sent out the message that "drugs fund terrorists".  Doug Wankel, a former U.S.  (DEA) official, says the opium industry is "financing terrorism. It's financing subversive activities. It's financing warlordism... And if it's a threat to the government of Afghanistan, it's a direct threat to the national security interests of the United States."

"The Bush administration has decided not to destroy the opium crop in Afghanistan," stated a U.S. intelligence official returning from Afghanistan in relation to the 60% smaller 2002 crop. The source, who requested that he not be identified, noted "U.S. forces could destroy the crops using aerial spraying techniques, but no such actions are planned."

U.S. plans to spray the crops were canceled at the request of Afghan President Hamid Karzai, who has called for  or "holy war", but is concerned that aerial spraying could be harmful to the health of Afghan villagers.  The U.S. claims that the spraying would be safe, but is granting Karzai's request.

Karzai has indicated that he may change his mind if other U.S. strategies fail to halt the opium. Congress budgeted $774 million for anti-drug operations in Afghanistan just this year.
Black tar (raw) opium seized in Afghanistan, spring 2005. Photo by Bentlogic.
==== Estimating the value of the crop ====

The CIA reports in ''From Flowers to Heroin that'' it takes 10 kg of opium to make 1 kg of 90% pure heroin. The CIA states that impurities are introduced into the processed heroin before it hits the street, making the purity of the end consumer product about 40%.  That implies that 10 kg of opium makes about 2.25 kg of 40% pure heroin.

The Guardian reports that the 2002 opium harvest was 3400 metric tons. Using the conversion supplied by the CIA, 2002's 3400 opium harvest could be converted into 765 metric tons of heroin.  According to the International Narcotics Control Board, the 2003 opium harvest was 3600 metric tons.  Using the estimated 239% increase of the present harvast over 2003, it means that the 2005 harvest is about 8600 metric tons.

The 2002 street price of heroin in the UK was about 60 £ per GRAM, or (assuming the present 1.89 USD to 1 £ exchange) 113.40 USD per GRAM. As the supply goes up the price will come down some, so for this calculation only the 2002 figures will be used. If all the opium harvest is converted into heroin and all of it is sold at the UK street price, the total street value of the harvest is 86.7 billion USD. (765 metric tons x 1000 kg/metric ton x 1000 grams/kg x 113.4 USD/gram = about 86.7 billion USD.)  To the extent the 2002 numbers are valid today, the street value of the 2005 harvest should be roughly twice the street value of the 2002 harvest, about 173 billion USD.

To put these numbers in perspective, the total market capitalization of Ford, General Motors and Daimler Chrysler combined is about 76 billion USD. The total market capitalization of Toyota and Honda combined is about 167 billion USD.

==== No Statement by the Financial Action Task Force  ====

The Financial Action Task Force (FATF) was formed to promote harmonization of international antimoney laundering (AML) laws. Despite the fact that tens of billions of USDs are generated from the Afgan opium harvest alone, the FATF has not added Afghanistan to its blacklist of uncooperative nations.  One has to wonder, therefore, what the poppy farmers are doing with their share of the money that escapes the notice of the banking system and the FATF.