* Stocks are high and prices are lower
* Farmers are switching to soybean or paddy
* Exports may fall by 10 percent in next financial year
By Meenakshi Sharma
MUMBAI, June 26 (Reuters) - Turmeric acreage in India, the world's biggest producer and exporter of the yellow spice, is likely to fall 30 percent this season, reducing exports in 2013/14 even though total overseas sales are still expected to be above average.
There have been bumper crops of turmeric in the last two seasons as planting boomed after prices soared in 2010 due to lower output and dwindling stocks. Now, stocks have mounted and prices this year have slumped 30 percent for the 2011/12 crop.
"Farmers did not even get what they had invested. Why would they sow turmeric and wait for nine months, when there are no returns?" said R.K. Vishwanath, a trader from Erode in Tamil Nadu.
Turmeric takes nine months to mature so crop planted in June mostly shows up in exports for the next fiscal year.
It is labour-intensive, needing to be boiled and it can take up to five-six days to dry out under the sun. Sowing starts by end-June and extends until August. The new crop starts appearing from February.
"I am cutting down the area under turmeric to just one acre and the rest of the land I will allot to soybean and maize," said N. Ganga Reddy, a 48-year-old farmer from Nizamabad district of Andhra Pradesh.
"Most of the farmers of our district are either switching to soybean or paddy," he added.
Reddy, who has grown turmeric for many years, had cultivated turmeric under 2.5 acres of land in the previous year. The high prices had also encouraged farmers with no experience of the crop to try their hand.
Industry players expect turmeric exports to touch a record of around 75,000 tonnes in the year to March 31, 2012 after they already smashed a 50,000 tonnes target from the Spices Board of India in January.
Traders have estimated a bumper output of more than 600,000 tonnes in 2012, up from 490,000 tonnes the year before.
Given high stocks and harvesting in February, industry players say exports could stay above 65,000 tonnes in the 2012/13 fiscal year.
EXPORTS MAY FALL
India, which supplies 80 percent of global turmeric exports, sells mainly to the United Arab Emirates, Malaysia, Japan and the United States. Quantities, however, are small in comparison with India's 300,000-400,000 tonnes annual consumption.
Lower acreage sown from now will hit 2013/14 overseas sales even though they should stay above recent averages of 50,000 tonnes, three exporters and four analysts said.
A slow start to the June-September monsoon rains means farmers with irrigation facilities have started sowing in some pockets but cultivators dependent on the monsoon are waiting for one or two spells of rains to commence sowing.
"Exports may fall by 10 percent in the next financial year if output drops," said Shailesh Shah, director, Jabs International, an export firm based in Mumbai.
If a fall in output pushes prices higher, it could also hurt overseas sales, some exporters said.
Turmeric, also known as yellow spice due to its colour, is cultivated by planting rhizomes or pieces of rhizome and these are harvested after 8-9 months. It competes for acreage with shorter-duration crops like soybean, pulses and tobacco and perennial crops like sugarcane.
Soybean acreage in India is expected to rise by 7 percent in 2012/13 driven by record high prices.
"Farmers should get at least 10-15 percent return from their crop otherwise they would switch to other crops such as soybean and sugarcane," said Vishwanath.
At Nizamabad, a key market in Andhra Pradesh, turmeric was trading at 3,653 rupees per 100 kg, more than 50 percent below prices a year ago.
(Additional reporting by Ashok Kumar K in HYDERABAD; Editing by Jo Winterbottom and James Jukwey)
((meenakshi.sharma@thomsonreuters.com)(+91 22 6180 7179)(Reuters Messaging: meenakshi.sharma.thomsonreuters.com@reuters.net))
Keywords: INDIA TURMERIC/SOWING
