It has been a dismal story for Guar producers in 2020. Guar prices were already negative affected in 2019 by weak demand from global markets, and in 2020 the ongoing COVID-19 pandemic made the situation far worse for the Guar seed industry.
Demand from the oil rig companies where usage of guar gum to extract oil is higher, halted. World markets had turned sluggish mainly because of a slump in demand from the largest buyer, the US, and reduced application in shale oil fracking due to lower crude prices. Guar gum, a processed product of Guar seed, has a higher export demand due to its utility in the Crude Oil Industry.
India enjoys the leading position in production as well as export of this product in the world market. Approximately 80 % of global demand is contributed by India. Xanthan gum is a common additive found in everything from cosmetics to ice cream, and acts as a thickening agent, binder, as well as emulsifier.
Guar seed production over the year has dropped considerably in recent years as farmers preferred sowing in pulses and oilseeds because of good prices prevailing in both. Guar is an annual legume plant that grows in semiarid regions. Guar is drought-tolerant and can be eaten green like snap beans, fed to cattle or used as a green manure.
Guar gum is used largely in food and industrial applications. Basically Guar is a short duration crop and is mainly rainfed. Rajasthan and Haryana are the main producing areas, with Rajasthan contributing nearly 72 per cent of world’s guar production.
The trade tensions between the US and China in 2019 and 2020 pushed down oil drilling activities in the US. As such the Guar seed trade situation turned discouraging for the Indians in terms of exports. Guargum exports to European Union and Russia continue but the quantity has not been that significant till now.
Guar producers are optimistic about their prospects in 2021. The sown area has been consistently dropping over the last two years. In 2019-2020, the country produced approximately 5 lakh tonnes of guar as against 9-10 lakh tonnes in 2017-2018 and 2018-2019. They are expecting better prices in 2021 once the US crude refining goes up.