UPDATE 1-K+S says recovery in demand could take until 2011

* Unit head says crumbling potash prices to trigger demand

* Industry deal with India could precede deal with China

* If talks drag on for longer than August, prices could rise

* K+S price cuts led to some revival, no "heaps" of orders

* Shares down 2.7 percent

(Adds details, background, unit head's quote)

MANNHEIM, Germany, July 2 (Reuters) - German fertiliser maker K+S (SDFG.DE) expects lower price in its main product, potash, to help revive demand from farmers later this year.

It remained uncertain, however, whether sales volumes would return to levels seen in 2007 as soon as next year or whether the recovery would take until the first half of 2011, the head of K+S's main fertiliser business told Reuters on Thursday.

"Nobody in our industry will have a normal business this year," Joachim Felker said. "But by the end of the year we should see prices again (at levels) that the farming industry can work with."

Demand for potash, one of the three minerals vital for synthetic fertilisers, have tumbled as farmers ran into hard times and as the market awaits the outcome of price negotiations with China's import monopoly, the world's largest potash user.

Global potash makers, dominated by Canadian and Russian miners, have reined in production but prices have still started to crumble in recent months.

K+S, which also announced price cuts in June, had previously said the farming industry was holding off on fertiliser orders because growers were eager to see prices fall further.

"Our customers have not heaped new orders on us since (the recent cuts) but at least we are back in talks again with our trading partners," Felker said, adding farmers and fertiliser traders had, until recently, drawn on inventories.

Felker also said India, one of the world's largest potash users, was likely to come to an agreement with suppliers over bulk contracts first, possibly in mid-August, and China could follow suit within weeks, albeit at a lower price than India.

Should negotiations drag on much longer, global potash miners were likely to cut output beyond the 13.6 million tonnes in cutbacks already announced for 2009, he said.

That could see China and India scramble for the remaining supply on the market.

K+S does not depend on exports to India and China but the outcome of the bulk contract talks will have repercussions on what it can charge.

The German miner, the world's fourth-biggest potash maker, said last month it was bracing for a more significant drop in earnings and sales this year than previously forecast as farmers continued to hold off on potash orders.

Prices of agricultural commodities followed the boom and bust of financial markets over the last two years, as investors rushed in and later abandoned the asset class, also buffeting fertiliser demand.

K+S has announced plans to reduce potash production in the second half by up to 2 million tonnes, following a first-half reduction of 2 million tonnes.

Cutbacks at the German mining company came in the wake of similar moves at global rivals, including Potash Corp (POT.TO) and Mosaic Co (MOS.N).

K+S shares were down 2.7 percent at 40.289 euros at 1140 GMT (Reporting by Ludwig Burger; Editing by Dan Lalor)