Guar: Shovels in a gold rush?

The analogy of selling shovels in a gold rush immediately came to mind when I read this:

U.S. companies drilling for oil and gas in shale formations have developed a voracious appetite for the powder-like gum made from the seeds of guar, or cluster bean, and the boom in their business has created a bonanza for thousands of small-scale farmers in India who produce 80 percent of the world's beans.

"Guar has changed my life," said Shivlal, a guar farmer who made 300,000 rupees - five times more than his average seasonal income - from selling the beans he planted on five acres (two hectares) of sandy soil in Rajasthan. "Now, I have a concrete house and a colour TV. Next season I will even try to grow guar on the roof."

In Jodhpur, under the shadow of an ancient fort, traders buy guar seed at 305 rupees a kg, a 10-fold increase from a year ago.

How big a deal is guar? Up to 30% of fracking cost and enough to send Halliburton shares down 5%, apparently.

With gas barely above $2/MMBtu, iconic producer Chesapeake shedding attractive assets to plug a cash gap, and even the oilfield services companies who do the drilling vulnerable, it seems the winners here are the farmers. But two cautionary notes. First, supply response can be rapid in agriculture - a single season - and such lucrative price fly-ups are seldom long-lived. And second, since guar grows in the desert and is susceptible to drought, I would not be surprised to find (once the dust settles) that guar is a water-hog like jatropha and hardly (like most other cash crops) a panacea for sustainable development.