Guar gum exports to decline on lower output estimates

India produces around 80% of the world's guar gum output which used as a thickening and binding agent

Lower sowing and a decline in demand from a major buyer, America, due to development of a substitute for a key use is likely to mean a 10 per cent fall in export of guar gum this year.

It was once familiar for a sudden upsurge in demand from the US and raising of prices thereby to unjustifiable levels some years earlier. However, it is no longer the only sprinkler used in the fracking process at shale gas wells.

Data from the Agricultural & Processed Food Products Export Development Authority showed its export jumped 12.5 per cent to 235,066 tonnes in the first four months (April-July) of the current financial year, from 208,899 tonnes in the same period last year. Owing to a fall in prices, however, the value of export fell 45 per cent to $533 million in the period over last year.

“This export gain in volume terms, however, will soon turn negative due to increasing demand of the substitute (in fracking) i.e. sleek water products, of which consumption in the past few months has increased 25-30 per cent. Therefore, we cannot rule out a 10 per cent lower export this year,” said Purushottam Isaria, president, All India Guar Gum Manufacturers Association.

India is the leading producer of guar seed and demand for the gum had shot up in recent years as an environment-friendly and biodegradable product used in the fracking process. The US is the largest producer of shale gas, with a reservoir of 665 trillion cubic feet estimated. Fuel production in the US is expected to increase to the level of self-sufficiency in coming years.

A recent report by Religare Retail Research forecast India’s guar seed output at 1.8 million tonnes in the crop year 2014-15 (July–June), a decline of 33 per cent from 2.7 mt the previous year.

The month and more of delay in monsoon rainfall resulted in lower sowing, at 3.8 million hectares this year as against 5.6 mn ha in the previous year.

“Because of lower acreage, production will be lower this year, resulting in a cascading effect on export,” said Ravikant Kanoongo, firector, Hindustan Technosol, one of the largest producers and exporters of guar gum in Rajasthan.

India produces around 80 per cent of the world’s guar gum. It is used as a thickening and binding agent in the food, textile, paper, pharmaceutical and oil industries. In food, it is used as a thickener and to prevent ice crystal formation in frozen desserts. The pharmaceutical industry uses it as a laxative in diabetic treatment and ointments.