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COLD CHAIN DEVELOPMENT-KEY FOR PROCESSED FOOD INDUSTRY GROWTH

Development of an efficient cold chain is instrumental for the growth of agro industry. This can in turn complement the growth of processed food industry in India. An OEM Update report.
 
One of India’s most compelling strengths is in its horticultural diversity, which can transform it into a global hub for processed food and fresh produce sourcing. India is the largest producer of fruits and second largest producer of vegetables in the world, with total production of 63.5 million tonnes of fruits and 125 million tonnes of vegetables. It is the largest producer of milk with 105 million tonnes a year, produces 6.5 million tonnes of meat & poultry and 6.1 million tonnes of fish.
 
However, due to the lack of post harvest management facilities, deficiency of suitable cold stores and lack of organized distribution system; wastages in fresh produce in India are high as 35-40 percent.
 
India’s rapid economic growth and consumer boom have contributed to the growth of the organized retail food sector. It is estimated that 25-30 percent of fruits and vegetables produced are wasted due to lack of proper post harvest handling and cold chain facilities, the loss amounting to $ 10 billion to $ 15 billion.
 
Why Cold Chain?
One of the weaknesses of supply chain is that it is a multi layered marketing channel lacking in infrastructure. The lack of infrastructure and efficient supply chain is affecting the growth of the agro sector. A good cold chain network will help in reducing post harvest losses in fruits and vegetables and in turn provide impetus to the growth of the processed food sector.
 
The cold storage and distribution sector is possibly the largest and most diverse sector of the integrated cold chain, representing the initial link from farms to the fork and includes aggregation, transportation, storage distribution and regulatory oversight. Depending upon the marketing channel, there are several players involved resulting in high potential for cold chain exploitation.
 
Interpreted in simple terms, it means development of appropriate cold chain infrastructure along the entire chain with emphasis on technology to minimize energy requirements yet maintaining the quality and freshness of the produce and on human resource as they play a vital role in handling and operations of the infrastructure required to be developed.
 
Efficient cold chain facilities can provide a big impetus to the growth of processed food sector by enhancing the quality and freshness of the produce, Overall generating higher employment and increasing export opportunities.
 
Present Scenario – The Challenges
The cold chain network was practically non existent a few years back with stand alone facilities passing as cold chain networks. The cold storage industry in India started in early nineties with the first commercial store for potato. Presently, the Cold chain infrastructure is in the initial stages of development and growth has been much slower than expected on account of various factors.
•      Firstly, the facilities are being set up as stand alone units without backward of forward linkages which invariably results in breakage of cold chain and restricts the growth of processed food industry.
•      Secondly, the market is limited and utilization of the infrastructure is limited due to seasonality of produces whereas capital investment is high. Thus suppliers of cold chain services are forced to charge high prices setting up a vicious cycle of low demand and high cost low demand.
•      The third point is somewhat related to the second. Due to the cycle of low demand-high cost, the return on investments is low and as such the private sector does not find it attractive for investment.
 
Sporadic Development
Although there has been no broader initiative in establishing integrated cold chain so far, the cold chain infrastructure has evolved over time in different sectors as direct response to specific needs of those sectors.
 
Today cold chain for milk and dairy products, frozen foods, meat, poultry and marine products is well established as these cannot move outside the cold chain and take on the incremental cost. According to the Central Government estimates, as of December 2008, there were 5,386 cold storages with a total capacity of 23.66 million tonnes which cater to less than 15 percent of the produce.
 
In existing cold stores, 56 percent of cold stores and 77 percent of installed capacity are used for storage of potato. Industry estimates that 104 million tonnes of perishable produces are moved in a year, of which only 4 percent (4 million tonnes) transported through reefer transport.
 
Further, 50 percent of the perishable cargo movement by reefer is for export, domestic retail market accounts for one million tonnes with the remaining one million tonnes going to the cold storage.
 
Inadequate and Inefficient Facilities
India has about 250 reefer transport operators which include organized and unorganized players involved in the business of transportation of perishable products. About 25,000 vehicles are involved and dairy (wet milk) constitute about 80 percent, thereby leaving a fleet of only 5,000 refrigerated transport vehicles for all other categories. This fleet of 5,000 refrigerated trucks are available for transportation of all perishable commodities put together which includes both domestic and export demands, while as per the World Bank report, over 3,000 reefer trucks are required for domestic production of fresh produce alone by 2017.
 
In spite of growth in the numbers and capacity of cold storages, the space available for per tonnes of fruit and vegetable production remains at only 0.098 cubic metre in India while the same stands at 1.122 cubic metre in the US. There is a wide gap for refrigerated warehousing and storage facility in the country, compared to a total production and requirement.
 
In addition, in most of existing cold storages, technology used is outdated and design not suitable for handling multi commodity. The outdated technology and poor handling not only impact quality but also increase operating cost due to inefficiencies.
 
Opportunities
The short shelf life of fruits and vegetables and poor post harvest handling practices negate the gains achieved in production. These are aggravated by poor road connectivity, proper storage, handling and transportation between production areas and consumption centers, located far off from each other. All hindering the growth of the agro industry and in turn the growth and development of processed food industry.
 
The need of the hour is an economically viable cold chain solution that will create total integration of the food supply linkages from production centers to consumption centres, thereby reducing physical wastages and loss of value of perishable commodities which in turn leading to the development of the processed food industry. The chain needs to start at the farm level and cover up to the consumer level or at least the retail level.
 
Today, led by rapid urbanization consumers are developing a preference towards processed food. Tilt towards processed food is dovetailed with the consciousness of quality, hygiene and freshness of food. This consciousness is driving the growth in organized food services and retail. The developments include, introduction of post harvest treatments, sorting and grading, packaging materials and storage techniques, containerization road transport, temperature control, together with marketing and retail developments such as distribution terminals and large retail chain. 
 
In tune with this, to provide impetus to the development of processed food industry and organized retail as well, cold chain is pre-requisite towards the distribution of perishable products such as dairy products, meat, fish, frozen vegetables and vaccines.
 
The Union Government has identified cold chains as a major thrust area and plans to support large scale investments essential for developing and effective and integrated cold chain infrastructure, which would ultimately lead to larger incomes in the hands of the farmer and overall customer satisfaction.

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