Rise in acreage, good rains support guargum prices

Guargum manufacturers of Gujarat are a happy lot these days after prices stabilised in the range of Rs 1,660-1,644 a quintal.

Following a good monsoon, productivity is expected to increase to 500 kg a hectare from 375 kg in the corresponding period last year, according to government figures.

The country's total guarseed production this year is likely to touch the 100 lakh tonnes mark. Last year, the cumulative production of the major guarseed producing states "" Rajasthan, Haryana, Punjab and Gujarat "" was around 87 lakh million tonnes.

Guargum powder was stable at Rs 50 a kilo and guargum split at Rs 44. Acreage is also projected to increase by 1 lakh hectare this year.

However, everything was not so hunky dory. Prices of the commodity had soared 20 per cent late last year and continued the trend early this year, resulting in the closure of many manufacturing units. Besides, high input and production costs dented exports.

Mahendra Bhanushali, president of the Gujarat Guargum Manufacturers' Association, said, "There are around 50 guargum manufacturing units in the state, which produce guargum refined split and guargum powder. Many of these units were forced to close down following a steep increase of around 20 per cent in guarseed prices last year. Speculators and stockists used to drive the market prices. Prices had touched the ceiling of Rs 2,200 a quintal in December 2006. Now, the prices have stabilised between Rs 1,660 and Rs 1,644 a quintal."

"Around 90-95 per cent of the total produce from India and Pakistan is exported to the US and China. The rate has been fixed at $1 a kilo, but the raw material cost was so high that we could not afford to export at that price. Also, prices doubled with production expenses such as workforce and power," Bhanushali added.

This, he said, was resulting in Pakistan getting a major share of the exports as it could afford to export guargum at that rate. "Now the export business has come back to India," he said.

India and Pakistan account for 70 per cent of the global guargum market, which is estimated to be around 250,000 tonnes.

The US consumption is estimated to be around 40,000 tonnes a year. India's annual exports are around 115,000 tonnes, while the domestic consumption is about 25,000 tonnes.

Rajasthan, the largest producer of guarseeds, is expecting a production growth of 3.23 lakh million tonnes this year (kharif) over the total production of 8.27 lakh million tonnes of guarseeds in 2006.