Shining a light on Guar

I read an amazing stat this weekend: Farmers in the Indian state of Rajasthan are growing 11 million acres (4.5M HA) of guar this year! That’s a pretty staggering figure considering that Texas grows just 6M acres of wheat—which is considered a large-scale commercial crop (and Texas is twice the size of Rajasthan). As it turns out, guar was India’s largest agricultural export to the U.S. in 2011, according to the USDA Foreign Agricultural Service.

guar 1

Guar has been grown in Asia for centuries. Guar beans are eaten by people and animals (cattle primarily). In the US, refined guar gum is used for various food purposes including as a stiffener in soft ice cream, a stabilizer for cheeses and instant puddings. However, it remained a niche crop until the boom in natural gas drilling tripled demand for the crop. In hydraulic fracturing (or fracking) guar gum powder helps thicken the water that is pumped into the ground to shatter the rocks, releasing oil and natural gas deposits. Demand increased, prices went up and farmers followed by planting the crop in large numbers.

However, there are less obvious and more significant reasons for the guar explosion.

  1. It’s easy to grow: Guar is less labor-intensive and needs less fertilizer than other cash crops like cotton or lentils. Importantly, farmers in Rajasthan have been growing guar for a long time and knew best practices to generate good yield.
  2. It has multiple benefits: As a legume that fixes nitrogen, guar has the added benefit of being an excellent soil-improving rotation crop for cotton, sorghum and other vegetable crops.
  3. It’s easy to process: Splitting and dehulling guar beans is a relative inexpensive and straightforward process.  There isn’t an expensive biorefining process that takes money out of the farmer’s pocket.
  4. There are large and growing downstream markets: With natural gas and food markets needing guar, farmers feel comfortable that their hard work will result in a profitable venture.

In other words, it is not just demand and price that matter, but also a robust ecosystem that incentivizes farmers to grow the crop. In an earlier post I discussed how TerViva’s first commercial crop, pongamia pinnata, has similar dynamics. Read more about it here (it just might be the next 10 million acre crop!).

Sudhir Rani is TerViva’s CFO. 

ps. Check out the front cover of Time magazine which talks about the pressing bee problem which we discussed in a previous blog post

“This Land is Your (Marginal) Land….This Land is My (Marginal) Land….”

We recently came across a study by the University of Illinois at Urbana-Champaign (“UIUC”) that estimates the total global amount of marginal agriculture land (“MAL”).  The study can be found here: http://pubs.acs.org/doi/abs/10.1021/es103338e

MAL is a concept that encompasses abandoned farmland, degraded land, wasteland, and idle land, and also takes into consideration various economic, policy, and legal factors.  Other studies have estimated MAL in the past. This UIUC study uses a fuzzy logic approach – which (as I understand it) basically means: (a) taking quantifiable input data like that from USDA NRCS and the Harmonized World Soil Database, then (b) qualitatively defining it against factors to describe land quality, and then (c) re-describing the land on a quantifiable scale.

The results are interesting.  Two things caught our attention:

(1) Half of the world’s MAL is in South America and Africa.

(2) The study creates scenarios for growing biomass crops on MAL for the production of biofuel.  One scenario map is as follows.  Looking at the US, we noticed that two areas we know to have MAL – Florida and Coastal Texas – are not included.

UIUC's calculation of MAL suitable for biofuel production

UIUC’s calculation of MAL suitable for biofuel production

TerViva works with a tree species, called pongamia, that’s usable for biofuel, biochemicals, and animal feed.  A bit of lingo:  we describe this spectrum of outputs as “biobased products”, and the crops that are used to produce biobased products as “agroindustrial crops”.

There are many crops that fit into this “agroindustrial” category – from oil producing crops like pongamia and castor, to biomass crops like poplar and switchgrass, to crops with niche purposes like guar (increasing popular in oil and gas fracking fluids – see http://bit.ly/Y0LeGJ).

Guar growing in India, bound for oil fields in the US

Guar growing in India, bound for oil fields in the US

The UIUC study – in part funded by British Petroleum’s Energy BioSciences Institute – only considers the potential of biomass crops on marginal land, and perhaps as a result, produces scenarios that ignore the potential use of MAL for other categories of agroindustrial crops and other biobased products beside biofuel.

Of course, there’s nothing wrong with the UIUC study in this regard.  But it does ignore places like Florida, Texas, Arizona, California, and Hawaii, where MAL is on the rise due to new problems (e.g., droughts, pests, diseases) – and there are unique crops like pongamia that are capable of providing solutions.