Guar

Managing Risk in the Supply Chain

Case Scenario #2: Guar

Summary

Guar is recording high prices in the past year and as a company we need to analyze our future plans for replacement or to find other resources for guar. The demand for guar gum rose from 250,000 metric tons to 480,000 metric tons per year mainly due to the oil and gas industry using guar for hydraulic fracturing (fracking). The crops potential for droughts this year could cause a shortage of supply and raise prices even more. With the Forward Markets Commision (FMC) of India closing all contracts for now and reducing exports to the US means for urgent attention to this matter. This will significantly impact our business as over 90% of our products use guar.

Introduction and Growing Area

Guar, a legume has been cultivated in India and Pakistan for ages and accounts for 80% of the world’s production. Best results for the plant to grow is frequent rainfall but it has a high tolerant for drought conditions and thrives in semiarid regions. Guar has many uses and can be eaten as a green bean but is mainly used as a source of guar gum, a gel like substance that is used in ice cream, cheese, cold meat, and dog food just to name a few. It was once used to feed cattle but that has become rare due to the rising cost. Guar gum is an emulsifier, thickener, and stabilizer approved for use in a wide range of foods, cosmetics, and pharmaceuticals. It is sold as a white to yellowish odorless powder, which is available in different viscosities and different granulometries depending on the desired viscosity. Its thickness is a function of temperature, time, and concentration.

Guar is grown in arid zones of Rajasthan, some parts of Gujarat, Haryana, and Madhya Pradesh. Jodhpur City in the North Western state of Rajasthan in India is the most important processing centre of Guar Gum and contributes approximately 40% of the world's Guar Gum supply.

This crop is a drought tolerant, warm...