America’s shale gas boom brought Rajasthan farmers a fortune, but now that is being taken away – Quartz

The source of that new prosperity was a processed powder called guar gum, which is used in fracking, a method of extracting shale gas that involves pumping pressurised gas into the ground. Guar gum is derived from a crop called guar. India is the world’s largest producer of guar.

India is, thus, also the world leader in guar gum. Derivatives of guar gum are used in several industries, including textiles, pharmaceuticals, food processing and oil extraction. But it was because of shale gas that India’s exports of guar gum shot up from Rs 121 crore ($20.2 million) in 2003-04 to Rs 21,287 crore ($3.5 billion at exchange rate of Rs60 to a dollar) in 2012-13, even occupying the top spot in India’s agri-export basket in fiscal 2013.

According to PK Hissaria, president of Indian Guar Gum Manufacturers Association, in the last three years, nearly 80% of Indian guar-gum exports were directed to shale-gas producers in the US. Guar-gum powder has unique binding, thickening and emulsifying qualities, which make it suitable for fracking.

The demand spike caused a 10-fold increase in price. From about Rs3,000 (around $50 at today’s exchange rate) per 100 kg five years ago, the price of guar gum crossed Rs 30,000 (or $500) in 2012—a ten fold rise in five years.

The price increase helped once-impoverished farmers build homes, feed their children and fund lavish weddings. “There were visible signs of prosperity among farmers,” adds Hissaria. “Farmers were able to clear their debts.”

Ashok Gulati, former chairman of the Commission for Agricultural Costs and Prices (CACP), an Indian government entity that recommends the minimum price at which government can buy foodgrains from farmers, said farmers bought big-ticket items too . “I have heard stories of farmers with hordes of cash buying SUVs (sports utility vehicles) and luxury cars,” he says. Manufacturers and traders of guar gum also reaped a windfall.

via America’s shale gas boom brought Rajasthan farmers a fortune, but now that is being taken away – Quartz.