Guar gum market remains in transition

Hydraulic fracturing uses vast amounts of guar gum, making it tough for food manufacturers to secure a steady supply and price for this vital ingredient

For the many users of guar gum, the market has been pretty … er, slippery … for some time now. And though it has somewhat stabilized recently, no one seems ready to say it will remain so.

Guar gum comes from the seed of the guar plant, a leguminous shrub, and is one of the most powerful known water binders and viscosity enhancers. It is used as a thickener and stabilizer in thousands of food and nutraceutical applications from baking to beverages, dairy to dry soups.

For years, guar has been the go-to gum for so many consumer products. Until last year it was cheap and plentiful, selling for as little as $0.89 per lb. More than 80 percent of guar comes from India, and Indian farmers were barely making a living by growing it at those prices.  

Then the hydraulic fracturing industry began booming. Guar is an ideal ingredient, mixed with water and chemicals, to extract gas and oil from shale rock deep in the earth. As it does in salad dressing, guar gum keeps things from settling – sand, in the case of fracking. It forms a thickening gel that carries sand down a well and into the cracks that fracking creates. Companies such as Halliburton and Baker Hughes, which help companies drill oil and gas wells, swooped into India and bought up as much as they possibly could – millions of pounds – reducing supply and pushing up the price. Thousands of poor farmers were able to pay off debts, build new homes and buy things they’d never had. Traders got rupee signs in their eyes, saw an opportunity to make even more money, and began holding back supplies. The price skyrocketed into the $10-$17 per lb. range.  

“Then, I think, those people started hearing guar gum users at various conferences talking about finding alternatives,” said Joshua Brook, vice president of sales at the Arizona company, Gum Technology, which supplies numerous gums under the Coyote brand. “The suppliers began to realize they were hurting themselves by their actions.” Indeed, even the fracking companies began scrambling for alternatives as they watched their profits shrink on rising guar prices.  

Then prices began to fall again. By January, guar had somewhat settled in at around $4 per lb. “It’s sort of like what happened with gasoline prices,” Brook said. “They soared and everyone freaked out, but then the prices settled down to a point higher than they started, and people felt like they could at least live with the new price.”  

The bad news is that no one is sure how long prices will remain stable. The fracking business is still expanding at a breakneck pace, so much so that the U.S. is on track to become a net exporter of natural gas within a decade. So far only the U.S. and Canada have seriously pursued the technique, but that picture is changing. Shale gas reserves have been identified in 32 nations around the world. Russia and China are now ramping up operations, as are Australia and Argentina.  

To meet growing demand, Indian farmers planted thousands more hectares of guar. However, according to Vignesh Proddaturi, business development manager of USA Guar Gum, a Houston-based supplier of guar gum to the fracking industry, “I don’t think the price is going to remain as it is now. Most of the current crop has been infected by a fungus due to late and insufficient monsoons. So it is going to be harder to find good quality, as well.”

Seeking alternatives

Guar reportedly represents about 30 percent of the cost of fracking. Estimates of how much guar gum is used in any one well range from 8,800 to an astounding 20,000 pounds (to compare, that higher figure is approximately how much guar gum is needed to produce 600,000 gallons of ice cream). Halliburton’s oil field services sector reported it used the guar from about 3 billion pounds of seed in 2011. Some relatively small efforts have been made to locate suitable land and dry conditions in which to grow a useful variety of guar, but it seems apparent that meeting rising demand with only guar is becoming less and less tenable. 

These conditions led Halliburton and Baker Hughes to file patents in June of last year for two alternative polymer-based fluids that could eventually replace guar gum for fracking, labeled AquaPerm and PermStim. Unfortunately, there is general agreement in that industry that nothing works for fracking quite as well as guar.  

Food ramifications

For the food and nutraceuticals industries, spiraling costs have opened the door for new hydrocolloid formulations, blends that use less guar and more of other gums such as tara and xanthan. “In some cases,” Brook said, “these work better for some formulations, and for some applications they sell better.”  

“Some companies are actively moving to formulate away from guar,” said Terry Van Winkle, former vice president of sales at TIC Gums, and now a consultant to the industry through his own company, Solutions. TIC Gums, he said, has been working on a number of guar alternatives, using xanthan and CMC [carboxymethyl cellulose], for instance, to duplicate guar’s flow properties.  “However, these are not considered natural, whereas guar can be labeled organic, so there are some drawbacks.”

Michael Eliason, Danisco’s (Dupont) regional product manager for hydrocolloids, said that even in the wake guar’s price instability, so far only the big bakery companies have moved to using alternative hydrocolloids such as CMC. “Some efforts are being made to find suitable formulations for replacements like locust bean and xanthan gum, or combinations of these, but such a change requires a lot of R&D work, label changes and so on. Most companies are simply waiting to see what’s going to happen with the market on guar before they make these big changes. Right now it looks as though only the bakery industry in the long term is likely to stay with CMC.”

But, he notes, other events also will be contributing to the complicated picture. For instance, companies that have moved to formulating more with xanthan gum are going to see a steep rise in prices this year. That’s because Chinese imports are being slapped with high import fees due to findings that the Chinese were dumping supplies in this country. Some estimate that xanthan prices could increase in 2013 by as much as 120 percent.

Companies such as Gum Technology are already letting the industry know that they have developed alternative stabilizers to xanthan gum, using blends that include CMC, tara gum and citrus fiber. Other possible replacements for guar and xanthan gum may include oat fibre, potato starch and psyllium in bakery products. Carrageenan has been suggested as a guar gum replacement in shake mixes, hot cocoa, meal replacement and sports supplements, and in dairy products.

TIC Gums touts a line of alternatives, including Ticaloid GR5420, which provides dough texture and batter viscosity equivalent to guar gum. GR8700 is for use in instant cereal, nutrition bars and beverages. Ticaloid GE 306 is for use in instant powdered beverages, such as lemonade. 

Since guar prices began rising, Glanbia Nutritionals has been promoting its “clean-label” flaxseed-based ingredient OptiSol 5000 as a replacement in tortillas, breads, sweet baked goods and batters.

What's a formulator to do?

As slippery as this hydrocolloid market has been, some industry analysts believe that the magic of the marketplace will take care of things. As growers in North America, Australia and Africa respond to the growing demand and potential profits from guar, we should expect more guar crops, they say. Some also predict that the food and fracking industries will uncover or develop effective more natural and synthetic alternatives to guar gum, which should have a stabilizing effect on the market. 

None of this is expected to happen soon, however. Thus the wise formulator would do well, rather than wait and see how things turn out, to have in place plans B and C to cover his needs during this time of uncertainty.



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