By Nelson Acosta

HAVANA (Reuters) - Colombia's government and leftist FARC rebels agreed on Friday to a pilot project to replace illicit crops, mainly coca, as part of negotiations aimed at ending Latin America's last and longest guerilla war, which is fueled in part by drug profits.

Colombia is one of the world's biggest producers of cocaine, derived from the coca plant. Experts hope an end to hostilities can lead to a drop in production.

A joint statement said the United Nations-backed project would begin next month in the municipality of Briceno, Antioquia, where a joint effort to eliminate land mines began in 2015 as part of confidence building between the two sides.

Under the agreement, the government will provide security for FARC delegates to implement the agreement, as well as funding programs to help farmers transition to alternative crops.

"This joint work on the ground with local leaders and their communities has opened up the possibility to incorporate alongside the humanitarian de-mining effort the voluntary substitution of illicit crops," the statement said.

The agreement comes as the two sides are in the final stretch of peace negotiations begun in November 2012 in Havana, where all issues except for a final ceasefire, disarmament and the reincorporation of fighters into civil society have been settled.

"We made the decision to begin the transcendental and unique project before signing the final peace agreement in consultation with the farmers and with support of the United Nations," FARC lead negotiator Ivan Marquez said in Havana.

The FARC agreed in 2014 to break ties with drug traffickers, help eradicate illegal crops like coca and help fight the production of narcotics.

But authorities have accused the rebels of instead stoking resistance to the eradication of illicit coca crops and keeping up their ties to drug trafficking.

The latest U.N. figures showed a 44 percent increase in coca cultivations in 2014 to 69,000 hectares (170,503 acres) in the South American nation, a jump the U.N. linked to the peace talks, suspension of aerial spraying and rising market prices for coca.

Colombia's war has dragged on for more than half a century, leaving 220,000 dead and millions displaced.

(Additional reporting by Helen Murphy; Editing by Marguerita Choy)