The United States has signed an agreement giving $38.7 million to 27 Afghan provinces that have eliminated or significantly reduced opium production in the world’s biggest supplier country.

“This is a very serious problem which expands? the world, but also a problem for the Afghan society as well, with one of the highest addiction rates in the world,” said US embassy official Anthony Wayne.

The memorandum of understanding extends $38.7 million to Afghanistan’s counter-narcotics ministry, which will disperse the cash to the 27 different provinces to finance development or alternative crops to grow.

Destitute Afghanistan produces around 90 per cent of the world’s opium, used to make the heroin sold on the streets of Europe and central Asia, with profits helping to bankroll the Taliban in an eight-year insurgency.

Wiping out the crop has been a key component of Western efforts to stabilise Afghanistan - labelled a “narco state” by US Secretary of State Hillary Clinton - since the 2001 US-led invasion removed the Taliban regime.

“This money will benefit 20 provinces (out of 34) which are poppy free and seven provinces where poppy cultivation has significantly decreased over the last year,” said Afghan Counter-Narcotics Minister General Khodaidad.

“We expect that in 2010, four to five more provinces will be poppy free. We hope in the future all of Afghanistan will be poppy free.”

President Hamid Karzai made a similar pledge during his inaugural speech last week after being sworn in for another five years in power.

In 2005, only three Afghan provinces did not grow poppies, said Khodaidad.

Experts link the fall in production, however, to a surplus that has outstripped world demand and lead to sizeable stockpiling.

A UN report in September warned that illicit drug stockpiles may have reached 10,000 tonnes, enough to satisfy two years of world heroin addiction.

Wayne said the southern province of Helmand would receive the largest amount of money - for reducing poppy cultivation “by 33 per cent, the equivalent of the overall reduction in Afghanistan throughout that period”.

Helmand is a bastion of Taliban insurgents and is the biggest-opium producing province in the country.

Mohammad Gulab Mangal, Helmand governor, said authorities had worked hard to convince the public that poppy is an illicit drug.

“The first focus of our strategy was a public awareness campaign with the help of tribal elders, he said.”

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