UPDATE 1-India~s rice, sugarcane planting dips-minister

Jul 28 2009 8:07PM

* India's sugarcane area shrinks 2.5 percent

* Output may diminish 1 pct every day unless it rains

* Rains forecast in India's top sugarcane state

(Adds detail, quote)

By Mayank Bhardwaj

NEW DELHI, July 28 (Reuters) - Sugarcane planting in India has fallen 2.5 percent so far this season but output may fall more steeply, widening India's sugar deficit and increasing prospects of imports.

Expectation of Indian imports have been a key factor in the global sugar market, helping lift raw sugar futures.

India has contracted imports of 115,563 tonnes of white sugar and 2.5 million tonnes of raws, the government said. [ID:nDEL47973] .

Farm Minister Sharad Pawar told parliament on Tuesday that India's sugarcane area had contracted to 4.27 million hectares from 4.38 million hectares a year ago as a prolonged dry spell, particularly in the top cane producing state of Uttar Pradesh, hurt the crop.

Officials in Uttar Pradesh, which produces more than half of India's sugarcane, said 35-40 percent of the crop had already been damaged as two-thirds of the state's districts were drought hit.

"This is a crisis time and every day counts. Each day which goes without rain causes at least one percent damage to the crop," said Ashok Kumar Sinha, chief publicity officer of the Sugarcane Development Department of the Uttar Pradesh government.

The state has received barely half the normal rainfall so far, but it is likely receive good rains in the next two to three days, J.P. Gupta, director of the local weather office, told Reuters.

India's monsoon rains revived in July after a dry June, but rainfall in Uttar Pradesh and key grain-producing states of Punjab and Haryana has been below normal even this month.

A U.S. Agriculture Department attache in New Delhi has forecast a fall in output of rice, peanuts, soybeans and sugarcane. [ID:nN27539727].

Pawar said rice sowing was likely to be affected more than other crops.

He said there was no fear of any scarcity as the country had grain stocks for 13 months, helped by bumper harvests in the past two years, which had helped state agencies buy record amounts of wheat and rice from local farmers.

He said rice sowing fell to 15.57 million hectares from 21.6 million hectares because of weak monsoon rains.