U.S. drug war in Afghanistan is failing, new report says --- (CNN) -- America's drug war in Afghanistan is failing badly, a U.S. government watchdog says in a new report. -- Afghan farmers are growing bumper crops of opium poppies -- an unprecedented 209,000 hectares in 2013 -- even though U.S. agencies spent $7.6 billion to stop narcotics production in the nation. -- Afghanistan is the source of 80% of the world's illegal opium, the U.S. government says, yielding $3 billion in sales in 2013, up from $2 billion from the previous year. -- U.S. authorities say a big chunk of that money funds Afghanistan's insurgency and terrorism. -- As NATO winds down its war effort in the nation, the trend would appear to bode ill. Since 2002, the chief factors that appear to have caused temporary drops in poppy production were crop disease and high prices for wheat, an alternative crop for farmers, according to the report by the Office of the Special Inspector General for Afghanistan Reconstruction. -- "The recent record-high level of poppy cultivation calls into question the long-term effectiveness and sustainability of those prior efforts," the report says. "Given the severity of the opium problem and its potential to undermine U.S. objectives in Afghanistan, I strongly suggest that your departments consider the trends in opium cultivation and the effectiveness of past counternarcotics efforts when planning future initiatives." -- The report says last year's 209,000-hectare record surpasses the previous high of 193,000 hectares of opium poppies grown in 2007. The report relies on figures from the United Nations Office on Drugs on Crime. -- The report says that areas that were once models for successful counterinsurgency and counternarcotics efforts are now booming poppy producers. -- The report cites Nangarhar province in eastern Afghanistan, which the United Nations declared "poppy-free" in 2008 but saw a fourfold increase in opium poppy production between 2012 and 2013. -- The inspector general sent the report to the State, Defense and Justice departments, which fund anti-drug efforts in Afghanistan. -- The State Department called the findings "disappointing" and blamed the increase in opium poppy production on shifts in the Afghan government's own security efforts. -- The Pentagon asked the inspector general to remove Defense Secretary Chuck Hagel from receiving the report because the military plays a secondary role to other U.S. government agencies in thwarting drug production in Afghanistan. -- "In our opinion, the failure to reduce poppy cultivation and increase eradication is due to the lack of Afghan government support for the effort," Michael Lumpkin, assistant secretary of defense, wrote to the inspector general. -- "Poverty, corruption, the terrorism nexus to the narcotics trade, and access to alternative livelihood opportunities that provide an equal or greater profit than poppy cultivation are all contributors to the Afghan drug problem." -- Evan Perez, CNN