COLD CHAIN INFRASTRUCTURE – CHALLENGES AND OPPORTUNITIES

PRESENTED BY:SUPRIYA RAI(10020242028)FATIMA TAIBA RASHID USMANI(10020242035)NEHA CHAUDHARY(10020242039)

Cold chain: for value preservation

Need for cold Storages

Food products begin to deteriorate the moment they are harvested, so it is essential for cold chain logistics to insure that the produce is kept in optimum storage conditions so that shelf life and therefore commercial potential is maximized.

Although temperature is the most important factor mitigating the perishability of a food product, respiration and ethylene production are also significant for produces. This process results in ripening, which alters many attributes having a commercial value such as color, flavor and texture.

As storing a commodity above optimal temperature reduce its shelf life, storing at temperatures below optimal may also cause damage such as discoloration and improper ripening.

Relevance of cold storages in INDIA

Agriculture is the major industry of India and about 70% of Indian Population is engaged in activities connected to agriculture. The total agricultural output amounts to approx. 40% of the National Income.

Most of the agricultural produce is perishable in nature and requires certain levels of temperature and humidity to hold the horticultural

produce in good condition for longer periods.

It is estimated that due to lack of proper facilities of transportation and storage, about 33% of produce, especially fruits and vegetables are

wasted i.e. about 20 million tons.

During the peak harvesting season, excess produce gets over flooded and many -a-times, due to lack of storage facilities –gets damaged and totally wasted. Thus an artificial scarcity gets developed during non-harvesting periods and prices soar and many times, we have to import

these goods at exhorbitantly high prices.

shelf live of dominant perishable food products if kept under optimum storage temperature

Product Shelf Life (Days) Optimum Temperature (Celcius)

Apple 90-240 0Bananas 7-28 13.5Bell Peppers 21-35 7Cabbage 14-20 1Eggs 180 1.1Onions 30-180 1Lettuce 12-14 0.6

Fresh Meat (beef, lamb, pork, poultry) 14-65 -2

Oranges 21-90 7Pears 120-180 -0.6Potatoes 30-50 10

Seafood (shrimp, lobster, crab) 120-360 -17.8

Strawberries 5-10 0.6Tomatoes 7-14 12

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WASTAGE IN THE CURRENT SCENARIO

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Source: NHB

PRESENT SCENARIO IN INDIA

While statistics suggest that India has around 5381 cold storages, the actual no of modern facilities are less than 30 in total, with one company Snowman’s (a subsidiary

of Gateway Distriparks) accounting for majority of them. The Cold chain industry is highly fragmented with most

cold storages being family owned which offer conventional warehousing whereas the organized players extend more modern warehousing facilities.85% of cold

store facilities in India are used for storing potatoes.

( Source: http://agmarknet.nic.in/coldstorage.htm)

India is not like other markets. The low level of land holdings (below 1.5 hectares) means that that the average

farmer needs to recycle his produce to cash in a short cycle. As a general rule of thumb Indians consume

vegetables from within a 150 kms radius making the need for storage and transport of vegetables in cold chains un-necessary. Indians like to touch and feel their vegetables and consider ‘frozen’ as not fresh – quite to the contrary

PRESENT SCENARIO IN INDIA

Large scale production demands storage and distribution capabilities which are only just beginning to develop. Considering that less than 10% of retail in India is modern, there hasn’t been an incentive to develop the infrastructure.

Modern Retailing will have important consequences for development of cold chains.

Retailers have spent millions of dollars on expensive temperature control and display units at their stores. But when produce are received at 35-40 deg temperature, it is extremely difficult to bring down the temperature at the retail unit. The expensive machinery has no been able to handle the loads and has suffered breakdowns and write-offs.

The entire chain needs to be cool which includes investment in refrigerated trucks. The micro size of land holdings means that small storage units of 5-7 ton’s need to be developed which can be used by local farmers to keep produce at much below ambient temperature

PRESENT SCENARIO IN INDIA

The high cost of operating cold storages in India is a dampener. In Uttar Pradesh, where the maximum conventional cold storages are located, load shedding during summer months can be as high as 10 hours a day. If the facility has to rely on expensive backup power it throws the economics out of gear.

In the west and in china, cost of industrial electricity is less 30-50% less than in is one reason where the development of cold storages has started out as company owned initiatives such as the Adani Fresh and Healthy cold stores in Himachal and Rajasthan.

For 3rd Party initiatives to prosper, customers of the 3rd party providers–in this the retailers and manufacturers will need to share the savings with suppliers.

Since price points for food in India are relatively low at the wholesale end, there is tremendous pricing pressure on facilities. Most unorganised players resort to shutting off cooling units in the dead of the night as the temperature drops to save on electricity.

• Uneven distribution of cold storage• 90% capacity is used for potato(NHB)• Limited power supply• High power costs –energy intensive industry• Import of technology, so they are not suitable for India.• Nascent, limited knowledge, limited experience• High capital cost• Poor awareness of benefits of pre cooling amongst farmers• Prohibitive lead time from adoption to benefits• Price sensitivity of Indian consumers • Safety issues in cold storage

Challenges

ChallengesTechnological challenge

Poor design not suitable for multiproduct storageTemperature logging deviceMinimize number of door opening events

Lack of human capitalOperators and managersTechnicians and maintenance engineersCold chain logistics and transportAgri experts

Existing knowledge sharingDisconnected from operatorsDisconnected from India’s farming patterns

GOVT. INITIATIVES

With a view to ensuring faster development of cold storage capacity and to encourage entrepreneurs to invest more in this sector

The scheme would be implemented by NABARD/NCDC/NHB. National Horticulture Board is providing capital subsidy to entrepreneurs for construction, expansion and modernization of cold storages for horticulture products.

A subsidy of 25% of the project cost subject to a maximum of Rs.50 lakh per project will be availed under this scheme.

However, for the projects in the northeastern States, maximum subsidy admissible would be Rs.60 lakh @ 33.33% of the project cost.

Include access to external commercial borrowings, 100 per cent FDI and provision of up to 25 per cent project costs involved in setting up cold storage facilities

CAPITAL INVESTMENT SUBSIDY SCHEME [CISS]

SCHEME FOR COLD CHAIN, VALUE ADDITION AND PRESERVATION INFRASTRUCTURE

• In Financial year 2009 – 10, Ministry of Food Processing Industries has sanctioned 10 cold chain projects

• Setting up of National Centre for Cold Chain Development (NCCD)

NCCD Activities are:•     Training and Capacity Building•     Research and Development•     Building standards through International benchmarking•     Interaction with National / International bodies for

development of cold chain infrastructure and trade in perishables.

OTHER SCHEMES

• Budget 2011-2012 provided infrastructure status to the cold chain sector.

This opens up the sector for perks like viability gap funding. • The Budget also exempted air-conditioning equipment and

refrigeration panels used in cold chain infrastructure, including conveyor belts, from excise duty.

• A Special Purpose Vehicle has been set up for the Cold Chain Logistics.

Measures in future• The key factor that will decide how the cold chain sector grows

over the next few years would be how strong, and how sustainable, the investment flow into the sector is.

• Increasing investments from large business houses to create a backup for their interests in the retail sector

• Increasing willingness on the part of consumers to pay a premium for higher quality of food products helping in equitable distribution of the cost of a strong cold chain infrastructure

• Innovation in product.• Operational excellence

solutions

CUSTOMER

Seamless gap free Cold Chain

solutions

• Govt. giving subsidies for opening cold storages at the production areas• Public Private Partnership model can be employed in creating new warehouses• Human Capital Development through academia-industry interaction• Use of Solar Power

• Reefer boxes

According to a new market research report oncompaniesandmarkets.com, the total market for cold chains in India is estimated to reach INR 400 billion in 2015.

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