Nov. 23 (Bloomberg) -- Sugar production in India, the world’s second-largest grower, may be 11 percent more than estimated after farmers boosted planting and yields improved because of increased fertilizer use.

Output may jump to 17.68 million metric tons in the season started Oct. 1, according to interviews with 631 farmers across six states by Geneva-based SGS SA for Bloomberg. The farm ministry and the Indian Sugar Mills Association have estimated 16 million tons. The SGS survey used a figure of 16.1 million tons for the previous year.

A bigger harvest may help India pare its reliance on imports and curb the 90 percent rally in global prices this year. A shortage turned the country, the biggest consumer, into a net buyer for the first time since 2006 and sent prices to a 28-year high in September.

“If India’s production turns out to be better than expected because of higher recovery and yield, it could prove to be mildly bearish for prices,” said Leonardo Bichara Rocha, an economist at the London-based International Sugar Organization.

India’s cane harvest this year may increase 9.8 percent to 297.95 million tons, bolstered by a 3.8 percent increase in acreage and a 5.7 percent improvement in yield because of better irrigation and fertilizer application, the SGS survey showed. The survey by five teams between Oct. 20 and Nov. 3 covered six main cane-growing states including Uttar Pradesh and Maharashtra, the biggest producers.

Sugar production may total 16 million tons this year, Agriculture Minister Sharad Pawar said Nov. 4.

Price Dispute

Mills in Uttar Pradesh, the biggest cane grower, haven’t begun crushing because of a price dispute with farmers, while rains hampered harvests twice this month in Maharashtra, the second-largest cane grower.

Reporting of “bad crop” conditions increased this year in the states of Tamil Nadu and Andhra Pradesh, while the health of fields in Maharashtra and Gujarat states wasn’t affected, the survey showed. Pest attacks on the standing crop fell in Uttar Pradesh and Maharashtra, compared with the prior season, it said.

While 97 percent of the farmers reported dry weather, high prices encouraged them to intensify irrigation and increase the use of fertilizer to boost yields, the survey showed.

Prices at Vashi in Mumbai, India’s biggest market for the commodity, have surged 82 percent this year, reaching a record 3,536.65 rupees per 100 kilograms () on Nov. 7. Raw sugar in New York and white sugar in London have almost doubled this year.

‘Highly Optimistic’

Indian cane growers remain “highly optimistic” about prices this year, with 64 percent expecting more than 2,000 rupees () a ton. Prices will determine crop acreage next season, the survey said.

Opposition lawmakers stalled parliament twice last week, demanding farmers must be paid more than the rate of 130 rupees per 100 kilograms fixed by the government. Mills in Uttar Pradesh offered 180 rupees, which opposition parties say isn’t enough. Growers want 280 rupees.

The country’s 50 million cane farmers are a powerful voting block, and Uttar Pradesh sends the largest number of lawmakers to parliament.

“We haven’t factored the fallout of political developments related to sugar in our forecast” of 17.3 million tons for the country, International Sugar Organization’s Rocha said.

India extended duty-free purchases of raw sugar by nine months to Jan. 1, 2011, to bridge a shortfall. White, or refined, sugar can be bought without paying taxes until March 31, a four- month extension.

‘New Highs’

“India’s deficit will extend into the next season, and I expect global prices to hit further highs,” said Krishnakumar Srinivasan, a fund manager at Sundaram BNP Paribas AMC Ltd. in Chennai. Purchases may total 4 million to 5 million tons this year, he said. The fund manages .9 billion and owns shares of Shree Renuka Sugars Ltd. and Balrampur Chini Mills Ltd., the nation’s top producers.

The world may have a surplus of 500,000 tons of sugar in the 2010-11