Trends and Economic Dynamics of Guar Gum Powder
The global production of guar seed is estimated at about 1.0 – 1.6 million tonnes annually. There have been wide fluctuations in the production levels mainly depending on the climatic conditions in the major production countries such as India and its neighbours. The Indian sub continent produces over 80% of the global production. The nation of Pakistan is the next largest producer at 15% of the global production. The other production countries include United States, Brazil, South Africa, Malawi, Zaire, Sudan, Australia and China. The recent increases in the global prices of the guar have encouraged more nations to enter into production.
Products derived from guar are classified as mucilage’s and thickeners, in the harmonised system nomenclature. These products include the guar meal, guar gum refined splits and guar gum treated and pulverised. These are the products with significant international trade. The global imports have been at an all time high at 588,229 metric tonnes in the year 2014 onwards. The US has been the largest importer of guar products for a long time and it has had continuous dominance. In 2014 the USA accounted for 65.5 % of world imports by quantity and 67 % by value. Other major importers include Germany, Japan, China, Russia, UK, Denmark and Netherlands.
Trends and Dynamics in Prices of Guar in India
The guar, being a rain fed crop, production is subject to rainfall fluctuations. The global supply of the guar gum powder is dependent on fluctuations in Indian supply while the demand is largely affected by the level of exports to the USA. The long storability of guar seeds enables stock withholding from the markets in speculation of better prices in the future. The unusual spike in guar prices in the 2011 – 2012 had a big impact on the demand and supply of guar products. This price hike made the products unviable for many industries such as the food processing and textiles thus substantially reducing demand.
Trends in Prices
The guar prices have witnessed monthly and seasonal price fluctuations between the years. It is expected that the prices of the products will continue increasing, after increased imports around the world boosted by increased oil mining activities in the United States. The textile industry in India has also played an important role in affecting the domestic prices.
Issues and Challenges to Guar IndustrySome of the challenges that have affected the guar supply chain include;
- Erratic production supply chain
- Low productivity levels in terms of the yields per hectare
- Lack of research and development facilities and dissemination of information
There has been a lack of market intelligence, and no reliable source of market information on the overseas demand for the guar. On this background, the production is never market driven which can lead to over production and under production. Trade barriers for some countries such as china is also a major challenge.
With increased exploration of shale gas in the United States in the year 2017, the demand levels of the guar is likely to continue to increase. This is also likely to create a long term demand for the guar products.