Afghanistan produces more than 90 percent of the world's illegal opiates from its mammoth crop that continues despite an internationally-funded eradication drive and funds much of the Taliban's insurgent activity.

The UN said that cultivation of the poppy crop reached 131,000 hectares in 2011, seven percent higher than in 2010 "due to insecurity and high prices", in its annual opium survey released by the UN's Office on Drugs and Crime (UNODC).

And with the crop yield per hectare up markedly from last year's blight-hit harvest, overall production would potentially rise by 61 percent on last year, the report said.

The price of dry opium rose 43 percent this year compared to 2010 and total farm-gate income is set to increase by 133 percent to reach $1,407 million in 2011, the report added.

"Buoyed by higher speculative prices arising from volatile security conditions, the farm-gate income of opium farmers rose markedly," it said.

"We cannot afford to ignore the record profits for non-farmers, such as traders and insurgents, which in turn fuel corruption, criminality and instability. This is a distressing situation," UNODC country head Jean-Luc Lemahieu was quoted as saying in the report.

About 78 percent of cultivation was concentrated in southern Afghan provinces, the heartland of the Taliban-led insurgency.

Another 17 percent was produced in the lawless and remote southwest regions also under the influence of the insurgency and beyond the reach of central government, the report said.

"This confirms the link between insecurity and opium cultivation observed since 2007," the report said.

Afghanistan authorities have been trying to rid the country of illicit opium production with help from its international allies since the Taliban were ousted from power in a US-led invasion in late 2001.