Guar industry seeks Centre’s help to deal with crisis

The guar industry has called for the Centre’s help to deal with a crisis situation developing from the impact of a failed South-West monsoon on the guar crop in North-West India.

It has also called for a ban on futures trading to allow the commodity to stabilise to an affordable price level for all segments of end-users.

The failed monsoon has left many farmers completely broke, says Dilip Soni, Director of the Jodhpur-based Shree Ram Gum and Chemicals, a renowned producer of guar gum and derivatives.

What looked like a bumper crop after the first round of rains frizzled in the heat as rains failed during second half of the monsoon, he told BusinessLine . Farmers with irrigation facility salvaged some of the crop but only so much.

Guar is primarily grown in Rajasthan, but is also present in Haryana, Punjab, Gujarat and Madhya Pradesh. Rajasthan accounts for over 70 per cent of the total crop in the country.

Guarseed is a raw material for producing guar gum which is used as a thickening agent and additive in food products.

Guarseed has industrial applications in the paper and textile sectors, ore flotation, explosives manufacture and fracturing of oil and gas formations.

Guar gum has been in demand for fracking of shale gas, particularly in the US that accounts for 25 per cent of the world trade.

The operation of the fracking technology has a base cost. There are several estimates about the average cost but processes and associated efficiencies vary from service provider to service provider.

With the glut in the oil price and no new investment in the exploration and extraction of oil, service providers have been forced to cut operations, Soni said.

The drop in rig count has been mounting as the US curtailed operations in view of the inability of a poor world economy for absorbing the production.

This has had an adverse effect on the local guar industry, as a whole. Over the past year, lack of demand from the oil drilling industry has spelt doom for several investors.

According to Soni, many have sold out, surrendered their electric connections or mothballed their factories. Livelihoods of thousands of workers employed in the industry and ancillary industries have been affected.

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