How can Guar seed farmers make profit ? ( PART-2 )

Guar seed farmers can make extra profit from their corp with collective decisions and better marketing strategies.

Go for warehouse receipt funding. 

Farmers require money after harvest. Instead of selling to Traders at the time of lower prices, farmers should store his commodity in bank approves collateral managed warehouses. Bank will finance to farmers up 80%-90% value of commodity. Interest rates are very low for farmers. they can complete their financial need from that financed money. Commodity will be under control of farmers. Once the prices of Guar increase in market. Farmers can repay the funding to bank and get his commodity out from warehouse and he can sell the commodity in open market. He can directly sell that commodity to commodity exchange while commodity remains laying in warehouse.

Formation of farmers group. 

Instead of selling commodity in small lots. Farmers should make a group and make a big lot for selling. It will reduce the operational and transportation cost. It is easy to store the big lot in ware house. It easy to weight it in one lot. 

How can Guar seed farmers make profit ? ( PART-2 )

Farmers group should take the weight of their commodity before selling 

Some notorious traders and processors make manipulation in weighing. Farmers should take the weight of their produce at known weighing bridge before selling. 

Put the commodity on the plastic sheet for auction. 

Generally, farmers put the guar commodity on auction platform without any plastic sheet. If commodity in not auctioned on time, then it keeps scattering. If will be put of plastic sheet, then farmer can cover his commodity in case of non-auction. Sometimes open laying commodity leads to unnecessary moisture loss. Farmers can cover his commodity if commodity remains laying, they can save the wastage and moisture loss.

Farmer can directly sell to processors/factories. 

There are some schemes where processor don’t need to pay the MANDI tax if farmers are selling directly to them. Processor don’t entertain the small quantity. There are many points where farmers need to be careful like percentage of wastage declared by the processors, actual weight of commodity, deduction of weight of packing bags. 

Value addition of guar seed. 

Though there is nothing to value addition with farmers except agriculture production of guar seed. If farmers make some strategy group level then they can get the guar seed processed any closed processing factory at Job work. They can store the guar gum with NCDEX. If future prices of guar gum are good, then they can hedge the guar gum prices. They can sell the Guar Churi/ korma in open market to farmers / Cattle feed manufacturer. Always there is some margin at every point of value addition. Farmers should try to go for value addition as much as they can if they find some additional margin.

Instead of individual approach farmers should go for collective approach and strategy. With collective approach farmers can make minimize the operation cost of commodity selling process. Always avoid distress selling. If prices fall below the expectation, then there is always possibilities that prices will bounce back in near future.

How can Guar seed farmers make profit ?

Guar is a arid crop it is grown only in one climatic belt of world. More than 90% are of that belt comes on Indian and rest 10 % Area is in Pakistan. Guar is an industrial crop. It is processed into guar gum powder. Guar gum powder is used many industries due to its unique chemical and physical quality. 

Guar Farmer should take Guar as secondary crop. 

Guar farmers should not take it as a primary crop. Once it become the secondary crop then cost of cultivation will come down and opportunity cost of land increases. Profit from low cost cultivation crop will be always high. It will control the supply of crop in market. Priority crop for selling by farmers is always primary crop. Farmer will not go for urgent selling of guar crop. Commodity will be stored with farmer and there will be leverage with farmers if prices goes up. 

Don’t sell complete crop produce after harvest 

Farmer should not sell his complete production of Guar in market just after harvest. It will control the flow of produce I market. In first lot farmers should sell only 30% commodity. In the case of price rise after peak arrival. Farmers will have some quantity to encash the increased prices. 

Always go for cleaning and Grading. 

At the time of peak arrival sell the low category material. When there is peak arrival all the material is considered as low quality. Farmers will get good price of lower quality. At the time of increased prices good quality material gives good rates over the increased prices. Generally, traders will try to negotiate at quality at increased prices to get the produce from farmers at cheaper price. 

Monitor Crude oil prices. 

Major portion of guar gum powder goes to oil and natural gas well drilling activities. If Farmers get an overview that crude oil prices are keep increasing continuously then he should hold the Guar as much as he can. It will give good return after the peak arrival. 

Monitor Guar Churi & Korma prices 

Guar Churi is by product of guar gum processing industry, which is produced up to 70% of quantity of guar seed. It is rich in protein content. Farmers purchase churi korma for their cattle regularly as cattle feed. If the prices of guar Churi Korma is increasing in market, then it is indication that prices of animal feed protein are increasing, and it is indication that Guar seed prices are stable at lower side. Guar Churi Korma is substitute of Soya Meal which is used as animal feed protein. 

Monitor prices on NCDEX. 

NCDEX is forward market. In case of future demand prices of forwards contracts remains higher than current month. Farmers will have an idea about future demand and price movement. If Future prices are poor, then there is prediction of poor demand and downside movement in coming future. Farmers can make alternative strategy in case of poor demand. 

Hedging the future high prices. 

Hedging is good strategy to manage the risk of future price fall. NCDEX provides free training to farmers for commodity trading. Farmers should make tradable (10MT / 100 Quintal in NCDEX) lot of their commodities and hedge the prices. In the case of future downfall in prices. Farmers will safe and they can sell the Guar as per hedged price. Generally hedging is opted to avoid the risk price fall.

Guar gum prices will rise with Increasing crude oil price above USD 70/Barrel.

Crude oil prices are going up with increasing tension between Saudi Arabia and Iran. Saudi prince is in the USA for further discussion on power balance with IRAN. USD is also weak in the international forex market. Price of Brent crude oil has reached the level of 69.47 USD/barrel and WTI crude oil has reached to the level of 65.71 USD/barrel. Guar is an industrial commodity. This is the demand driven commodity. Major portion of guar gum powder is used in Oil and Natural Gas Industry in the fracking process. Currently, fracking activities are active in USA. Guar gum is used in bulk quantity in the fracking process. 

As per available export data, export of guar gum has increased by 49.17%. Arrival of Guar has almost gone down. It is time for Rabi harvesting. Remaining arrival of guar in market will also stop. There is news that speculators are active and trying to manipulate the market. Farmers and Traders must keep away from speculative news, this year Guar will perform as per strong fundamentals. Production and demand both are positive for strong future of guar.

Guar seed and guar gum are strong in the local market. Guar seed and guar gum are quoted high in the local market. Future trading is also strong since yesterday. Good quality of guar seed is traded at Rs 4300/100Kg and average quality guar seed is traded at Rs 4200/100 Kg. Standard quality guar gum is traded at Rs 9000/100 kg. In interior location, guar is traded up to 4000/100 Kg. guar seed is being traded strongly in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) guar seed-10MT is being traded at Rs 4223, 4243, 4291 higher by 1 percent or INR 42/100 Kg, 0.81 percent or INR 34/100 Kg, 0.29 percent or INR 12.5/100 Kg with open interest of 125290, 30830, 3590 for April May and Jun month.

Guar gum is being traded strong in the future market. At NCDEX (National Commodity & Derivatives Exchange Ltd) Guar gum- 5MT is being traded at Rs 9010, 9125, 9212 higher by 0.9 percent or Rs 80/100Kg, 1.04 percent or Rs 94/100, 0.56 percent or Rs 51/100 Kg with an open interest of 56345, 10150, 45 for April May and Jun month contract.

Export of Guar Gum products has increased by 49.15 % till January 2018,

As per export data released by APEDA value of export of Guar gum has increased by 49.15%. During this financial year, Guar gum export from April-17 to January-18 was 4,05,625 MT. Last year during the same period from April-16 to the January-17 export of Guar gum was 3,12,949 MT only. There is an increase of 92,676 MT or 29.61 % in quantity of Guar gum products for the same period from April- to January. Last year from April- 2016 to January-2017, we exported Guar gum, values of INR 2305,00,00,000 (2305 crore) or 343 Million USD, for the same period during this year from April-17 to January-18 India exported Guar gum value of INR 3290,00,00,000 (3290 Crore) or 511 Million USD. Last year from April-16 to the January-17-unit value of Guar gum export was 1095 USD/MT this year for the same period from April-17 to the January-18-unit value of Guar gum export is 1260 USD/MT. In Indian rupees, there is an increase of 42.75% INR and in USD it is an increase of 49.15% in value of export of guar gum.

Only in the January-18 month, there was an export of 40,170 MT of Guar gum. Export of Guar gum will keep increasing with increase and stability of crude oil prices. Crude oil prices have stabilized during February month. Oil companies in the USA are continuously increasing their production of crude oil through hydraulic fracturing/fracking process even OPEC has decided to cut the oil production. Prices of crude oil are stable due to production cut by OPEC even Shale oil production in USA is increasing.  Shale crude oil production industry in the USA encashing the scenario of crude oil production cut by the OPEC.