Cold Storage Story

Cold storage sector which is still untapped nudges to wake up to the call and turn the temperature(business) from frigid cold to hot !
cold storage

In a supply chain, a produce hauls at different stages before finally reaching the end user, i.e from farm to factory to retail to end users. And at each small haul, it needs to be oxygenated so as to preserve its freshness and stretch its life. This breath of life is provided by cold storage. Produce, seafood, meat, pharmaceuticals and biomedical products are some items that need cold storage.

 

Story of Mc Donald’s Cold Chain:

Through a unique cold chain, Mc D reduces maintenance and waste and keeps the freshness and nutritional value of raw and processed food. This is related to the procurement, storage transport and retail sale of perishable products, all under controlled temperature.The chain constitutes:

  • Schreiber Dynamix Dairy Industry -suppliers of cheese.
  • Vista Processed Food Pvt ltd provide high class services like de boning, blending, forming, coating, frying and deep freezing.
  • Mrs. Bector Food Specialties – supplies Buns, Liquid Condiments, Batter & Breading.
  • Radhakrishna Foodland (P) Ltd.  – logistics and distribution partner.
  • Amrit Food, (A division of Amrit Corp Ltd.)  - suppliers of Dairy based products (Soft Serve Mix and Milk Shake Mix).
  • Innovative Foods – supply fresh Fish.

 

Status of Cold Storage and its potential in India

The estimated annual production of fruits and vegetables in the country is about 130 million tonnes accounting to 18 per cent of our agricultural output.  Moreover, the lack of cold storage and cold chain facilities are becoming major bottlenecks in tapping the vast potential. The cold storage facilities now available are mostly for a single commodity like potato, orange, apple, grapes, pomegranates, flowers, etc. which results in poor capacity utilization.

 

Commodity wise distribution of cold storage capacity

Commodity

Units

Capacity (lakh tonnes)

Potato

2,012

92.82

Multi purpose

447

7.63

Fruits and Vegetables

 

198

1.07               

Meat

23

0.09

Fish

360

0.73

Meat & Fish

30

0.15

Milk & Dairy Products

272

0.68

Others

101

0.36

 

Out of the above 3443 cold storage units, 2975 are in private sector, 303 are in co operative sector and the rest are in public sector.

 

As per a retailer, "India's vast produce rot due to lack of cold storage resulting in increased cost of the same produce as they die before they could even enter the market".

 

Super market products

Some super market products from the trusted cold storage company Carrier  Airconditioning & Refrigeration Ltd are multideck, semi multideck, servicecase, service counter, iron freezer and chiller freezer combo.

 

 

Why cold storage is not at par as its foreign counter part?

Rene Bach Larsen, MD of GEODIS Overseas Pvt Ltd. feels that consumers in India is still not quality concious and thus not willing to pay the added cost of refrigeration. Moreover, India still lacks the correct startegising of cold storage. For example, cold storage are conspicious by their absence in Airports that are centres of whirring activities. Moreover, India is a direct producer of perishable goods so the consumption is also direct unlike in abroad that survives on imports.

 

 

Why foreign investors give cold shoulder to cold storage?

Although, there is a lot of potential in this sector yet the foreign investor is shying away from taking the risk. Rene cites the reasons," It is primarily lack of infrastructure like road, proper distribution chain and the high cost of setting up a cold storage unit. He also feels that barring a few Indians, others are not willing to pay high price for quality goods as is in abroad where produce are highly outsourced and hence demand more cold storage” .

 

Even Vineet Kanojia's, GM, Safexpress, take on this problem is not different from Rene,as he believes that cold storage is still in a nascent stage and thus evolving. The viability has to come both from Consumer side and Service provider's side. He concludes that, "May be in the future we will see some improvement as the government is promising lot of aid to this sector".

 

 

Conclusion:

In India, less than 2 per cent of the fruits and vegetables produced are processed as against 65 per cent in the US and 70 per cent in Brazil, as per farm ministry estimates. 

 

Moreover, wastage of fruits and vegetables due to poor post-harvest management and lack of cold chain facilities have been estimated to cost up to Rs 500 billion annually, as reported in the fifth and final report of the National Commission of Farmers.

Sensing the large gap and to provide solution, Finance Minister Pranab Mukherjee announced a number of schemes to attract investment in this sector as he wants to bring down "difference between the farm gate prices, wholesale prices and retail prices”. He also said that, "External Commercial Borrowings will henceforth be available for cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat”.

 

And to further ease the problem, he has exempted customs duty on crucial refrigeration units needed to produce refrigerated vehicles. He also allows extending of hiring private warehouses by state run Food Corp to seven years from five years to meet the storage deficit.

 

Saurabh Goyal of Thinklink services that specialises in investment advisory, consulting and project management in the supply chain and logistics sector including cold chains,  informs that, “the potential for cold chain development in India is huge, rate of food processing in India is low and is growing,  waste in the perishable F&B category is a key point that needs to be addressed, and there are a number of other sectors apart from food which also rely on reliable cold chain development, expected market size for cold chain services in India is expected to reach US$ 10 billion in the next 5 years”.

 

Advice to new investors

After weighing the pros and cons, the advice from the Industry for those who would like to enter into this sector is, "Plan your network well and invest with a long term view in scalable systems and technology, if possible work with local partners".


 

 

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