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Journey starts from farmgate...


‘Cold Chain Solutions forTomorrow's India’

A panel discussion organised by

The Free Press Journal and

Moneycontrol.com

in association with

On March 16, 2018 at IMC, Mumbai

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Preface

Agriculture can do better

India has the misfortune of being blessed by nature, but cursed byits planners.

True, India has become the largest producer of severalagricultural products (see table). But the success on this front hasbeen marred by two problems:

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Largest agricultural products in India by valueFigures for India Most productive

country

Commodity Value (US$ bn), Avg yield Avg yield Name of2013) (tonne/ha, 2010)* (tonne/ha, 2010)* country

Milk 46.83 - - -of which - - - -Buffalo milk 27.92 0.63 23.7 IndiaCow milk 18.91 1.2 10.3 IsraelRice 42.57 3.99 12.03 AustraliaWheat 13.98 2.8 8.9 NetherlandsMangoes, guavas 10.79 6.3 40.6 Cape VerdeSugar cane 10.42 66 125 PeruCotton 8.65 1.6 4.6 IsraelBananas 7.77 37.8 59.3 IndonesiaPotatoes 7.11 19.9 44.3 USATomatoes 6.74 19.3 524.9 BelgiumFresh vegetables 6.27 13.4 76.8 USABuffalo meat 4.33 0.138 0.424 ThailandGroundnuts 4.11 1.8 17 ChinaOkra 4.06 7.6 23.9 IsraelOnions 4.05 16.6 67.3 IrelandChick peas 3.43 0.9 2.8 ChinaChicken meat 3.32 10.6 20.2 CyprusFresh fruits 3.25 1.1 5.5 NicaraguaHen eggs 3.18 0.1 0.42 JapanSoybeans 3.09 1.1 3.7 Turkey

Notes: Average yield for milk/meat/eggs is per head of species; except for buffaloes where Indiahas no other competitor country, yields are terribly poor.ha=hectare

Source: "Food and Agricultural commodities production / Commodities by country / India:".FAOSTAT. 2013; http://faostat3.fao.org/browse/root_0/commodities_by_country/E;https://en.wikipedia.org/wiki/Agriculture_in_India


First, agricultural productivity remains quite low. Agricultural universitieshave their work cut out on ways to increase yields. Infrastructure supportin the form of irrigation and education in good agricultural practices isurgently required as well. Second, most people don’t realise the need for cold chain solutions in India.They think that having a cold storage unit merely at the wholesellers’centres and refrigerated outlets at retail outlets should suffice. But coldchain refers to end-to-end solutions where the nutritional and aestheticvalue of the produce is not allowed to falter at any given stage.India learnt this lesson quite harshly when it found that its polioprogramme was failing. The government then realised that havingrefrigerators at the chemist’s and and at the stockist’s was not enough.Even an hour’s lapse in refrigeration could degrade the vaccine. It was onlywhen the entire end-to-end solution was put into place that the polioprogramme worked. This needs to happen with agricultural produce aswell. Somehow, the urgency and a sense of need are missing.As a result, almost 50 per cent (Page 7) of the produce is wasted, and getsdestroyed. For the farmer it is income loss. For India it is an opportunitylost in climbing the global value chain for agricultural exports. The notable exception is milk, thanks to the late Verghese Kurien. Heensured that the farmer remains the main beneficiary (he gets 80 per centof the market price of milk). He also took ownership in preserving the valueof milk and created end-to-end solutions for the procurement, processingand distribution of milk, and subsequent value addition of the milk thatremained unsold. Each crop needs to have a champion like Kurien to ensure cold chainsolutions, where the farmer remains the biggest beneficiary, and all stakeholders (and the country) then prosper because of him.

R.N. Bhaskar, consulting editor

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Status on cold chain

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Cold facts

- BY PANKAJ JOSHI

Cold chain is an aggregation of storage, packaging and transport activitiesdone within a temperature-controlled environment. Items handled arepredominantly agri-produce and pharmaceuticals, wherein therequirement is to maintain their freshness, quality and overall utility. Innature of assets, the industry is segmented into temperature-controlledwarehouses and temperature-controlled vehicles, generally termedreefers. This means that the produce have to be kept under controlledconditions from end-to-end.

Globally, the activity of cold chain is a huge supporting industry. Globaltrade and growth in retail and pharma are the bedrock of this sector.

• Another big trigger is elimination of waste in food produce. Revenue-wise, the global cold chain industry stood at USD 82 billion in 2008, which went up steadily to USD 159 billion in 2015. It is expected to touch USD 229 billion by 2020 and USD 293 billion by 2023.

• Growth triggers include increased globalisation of the food industry, rapidly changing consumer preferences, rapid communication of trends across nations and regions and lately climatic change which has seen disruption in cropping patterns.

• In 2011, as per Yes Bank report, developing nations had around 36 per cent in global cold storage capacity which was expected to grow to 57 per cent by 2017. The USA holds the highest cold storage capacity, with India and China coming at second and third respectively.

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Reefer trucks: An investment opportunity

SOURCES: E4TECH, UNIVERSITY OF BIRMINGHAM, WEB SEARCH

Note: *Estimates


India’s cold chain story is an enigma

• Despite being a top name in assets, India still has only 2 per cent of theglobal industry share.

• Around 85-88 per cent of total investment in the sector has been into warehouses and a mere 12-15 per cent into reefers.

• When it comes to production of fruits and vegetables, India ranks among the top three countries and yet it exports less than 2 per cent of the total domestic produce. It is estimated that around 15-17 per cent (worth Rs 15,000 crore) produce is wasted.

• Rather than catering to highly-perishable items, around two-thirds of India’s cold storage facility is used for storage of potatoes.

• Instead of agri-producers or even retailers, it is actually wholesalers (read middlemen) who are the biggest clients. Organised retail has a 10-15 per cent share and wholesalers account for 75 per cent of the domestic revenue generation.

Even in the industry itself, the organised sector has a marginal presence,accounting for a mere 7 per cent of revenues as of 2014. Within thewarehousing assets, a mere 3 per cent are owned by organised players. In thatcontext, India is underserved as a whole by its assets. The data alongside showsthe deficit in terms of each category of assets.Overall, market trends have an inclination towards the organised sector, makingit a serious play going forward. It is estimated that by 2025, the organised sectorwould account for a quarter of the industry revenues. Regulatory measuressuch as breaking the APMC procurement monopoly and establishment ofmultiple mega food parks are a big catalyst. Large local retailers (Reliance,Future Retail, Aditya Birla, Bharti) and even warehousing companies (ContainerCorporation, TCI, Gateway Distriparks) have all committed money to this sector.Even overseas players like Spire are looking at the Indian market.

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SOURCE:DFI

Product-wise primary channels to monetise output

Producer Farmer/ Farmer Group

Note: Fresh whole farm produce (fruits and vegetables, milk,meat) or other consumable agro-products (yoghurt, processeditems, chocolates, textiles etc)


The importance of cold chain

An important metric is wastage reduction.• In India, total annual food wastage is around Rs 50,000 crore, out of that

fruits and vegetables stand at Rs 15, 000 crore and grains is around Rs 35,000 crore.

• An analysis on the wastage in India reveals that a good percentage of wastage occurs in harvest and post-harvest stages, as compared to post-monetisation stage (at the consumer level) wastage in developedcountries. Clearly, India does not have proper management of its agri-output.

• In that context, design of a proper cold chain structure helps in cutting down this wastages.

Another is widening of market and improved monetisation. The imagealongside clearly shows all the options that are available to cultivators tomonetise their output. A cold chain solution would enable the cultivators to stagger the sale andimprove realisations, rather than opt for the fire-sale method before theoutput becomes inedible. It also enables them to search new buyers, orwiden their geographic market spread. At the macro level, it can generateimmense employment.

In a nutshell, cold chain offers the following significant benefits:• Monetise the output for cultivators: Waste reduction and price discovery• Better options for consumers: Greater edible output; more choices; and

visibility of sustained availability• Macro level: Waste reduction improvement reflects in the GDP of

region/ state/ nation; boost to employment; inducement to investment in food processing; and local economic prosperity and ripple effect

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Value needs to flow to cultivators in India

SOURCE: CII-FACE ANALYSIS, PLANNING COMMISSION, DFI

+ + + =

+ + + =

Note: Farmer gets 28.5 per cent and 31.5 per cent of what consumer paysin case of fruits and vegetables repectively.


Constraints in the current environment

• Primary constraint is the customer’s mindset— be it cultivator or the large middleman. The focus is on top rung of fruit and vegetables. Most clients of the cold-chain industry are not very keen on usage of cold chain for basic and low-ticket items, which ironically have much lower shelf life and wastage ratios.

• Clients either do not want to invest in value upgradation of the basic items (through sorting, grading and similar activities) or have not traversed that road sufficiently to be able to create differential value and generate increased revenue streams in those categories.

• The APMC angle—hitherto all buyers of agri-produce had to go through the APMC route, which was a monopoly in a different way. The APMC Act has been modified last year, however the reality, in terms of buyer mindset and the on-ground grip of the middlemen, would take time to evolve.

• Another constraint is the lack of manpower at the industry level to be able to maintain the complexity of the activity pattern, broaden the canvas of revenue streams and also to be able to deliver the understanding of value by unlocking it to all in the ecosystem.

• Farmers are also often unaware of various government schemes and other initiatives. All this indirectly hampers their share in the total output monetisation, their income growth and thus, their inclination to spend more on cold chain services. Till the time benefits do not flow more to the producer—who generates the output which keeps all others in business—there is not going to be much change in mindset.

• With all these constraints, there is some level of hesitation for investment. Ironically, government’s direct investment in cold chain capacity is low to the point of being negligible. This is despite the understanding of its advantages and the socio-political commitment to increase agricultural incomes.

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SOURCE: DFI

Role of cold chain and its capacity building story

SOURCE: ASSESSMENTS KOHLI, 2016

SOURCE: DFIOperating cycles in India


Thinking needs to evolve

• Throughput, not output, is the key measure (see the data alongside). For instance, reefer transport unit of 10 tonnes would be used in 52 discrete cycles and therefore can handle 520 tonnesannually.

• Hence, capacity calculations should ideally focus on time in and time out of each product and then measure the cost. Build-up of capacity should see the throughput time.

• A primary user is different from an end consumer. The upfront service cost is paid by the primary user and the understanding of the benefit metric has to penetrate across two or sometimes more levels.

• It is also important to understand the viability of activity on a different scale. Each item of produce must be focussed to a specific market, from which the incremental value-add can be obtained. That estimate would determine whether the item needs cold storage at all.

• The utility can be mapped out in three ways—higher realisation, greater geographic breadth and lower wastage. It is well-documented that till 1980, polio medicine shots in India had an average potency of 50 per cent. This was because the medicine did not have cold chain transportation, which meant that in spite of refrigeration at the manufacturers’ and the chemist’s end, there was quality deterioration in the intermediate stages.

• With government regulation specifying cold chain transport, these losses dropped to negligible levels and the mission to control and eradicate polio incidence in India became so much more effective. There have been similar policies put in place for organ transport. Whether the same method will work for food items has to be seen. Some policy intervention is undoubtedly required.

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Investment space and income mechanism

Note: Calculations of GVA-FPI for 2015-16 is based on the assumption that the per centage share of GVAfrom FPI in total GVA from food products, beverages and tobacco for 2015-16 is same as per centageshare of GVA from FPI in total GVA from food products, beverages and tobacco for 2014-15.

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Approach to developing an ecosystem

It is clear that cold chain industry must put the cultivator at the centre of thebusiness model. The cultivator must be educated to appreciate and harnessthe benefits from cold chain adoption.• In the post-harvest period, the approach to a higher realisation value is

mainly in the form of lower wastage, differential quality product offering, convenient logistics to better markets and showcasing a business case for good operating practices.

• The benefits of branding, grading and other such activities must therefore be understood. Likewise the cultivator’s own marketing abilities must be developed with support from the cold chain industry.

Processing capacity is another area where work can be done.• Value-addition in food processing at national level is Rs 1.5 lakh crore on

sustained basis, as per data from the ministry of food processing.• Technology-wise, dehydration and similar processes have improved in India.• Local produce and local cuisine generally go in sync. A small-scale model

can sustain on this combination.• Food processing by and large is low on investment and high on

employment. It needs sustenance via input availability.

The DFI report has the following to suggest as a holistic approach:• Facilitate planned production • Organise logistics flow to reach multiple primary markets • Manage food losses by diverting agri-produce to agro-processing • Expand market reach for growth, link growth to production It is estimated that a total investment of nearly Rs 90,000 crore fordeveloping integrated cold chain is needed.


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Recommendations

There are some things to focus on mostly at the mindset level.Producer• He must understand that he is a multi-category seller in every single

product. Product categorisation is his responsibility.• If he wants the benefits of categorisation, the marginal cost

responsibility must be his. It is he who has to be the key initiator for the cold chain industry.

• If better realisations are desired, he has to be taking up a part of the marketing function.

• As an entrepreneur, he has to measure the utility of each combination (product and target market) and whether the cold chain is relevant.

End-consumer• He has to stop taking cost as the only benchmark.o Understand the quality and hygiene benefits of the cold chain product.o Benchmark costs vis-a-vis healthcare benefits.o That is the only way export-quality output can be sold locally.

The cold chain industry• The industry must appreciate the need to inculcate the sales mentality in

the producers.• Likewise, they need to explore long-term offtake arrangements with

clients like large food chains. This would help the throughput velocity.o Setting and overseeing quality standards would give them some control on

the process.o It would also help cultivate producer loyalty and growth, which is a highly

desirable combination.


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• The industry players could get into strategic partnerships with large producers for overseas markets.

• The entry of bigger players will gradually improve the occurrence of multi-product facilities.

• On the cost front, power is a major cost head. o Solar is an immediate solution.o Studies indicate gas-based cold chain technologies can be a cost-effective

solution.

The government• There must be a strategic leaning towards the industry, preferably through

investment.o In this case, land cost will be negligibleo They have the flexibility of locations such that underserved points can be

coveredo With a lower cost structure, they can service low-value perishable items

successfully• The investment can be strategically benchmarkedo The purpose should be to phase out the support price mechanismo They can have the benchmark of capitalising a 7-10-year MSP support

programme• Even otherwise, they can look at supporting the industryo Trained manpower generation will not only help industry growth but also

generate employmento Solar installation incentives again will dovetail into national mission targetso The implementation of the modifications in the APMC rules has to be

more effective.At the end of the day, as dairy has so visibly demonstrated, money has toflow to the producer.


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Panel discussion on Cold Chain

(L to R) B Thiagarajan, JMD, Blue Star Limited; Ravichandran Purushothaman, President,Danfoss India; R N Bhaskar, Consulting Editor; Pankaj Khandelwal, MD, InI Farms; KiranMalla, Director, Corporate Finance Strategy, EY and Pawanexh Kohli, CEO, NCCD at the

panel discussion.


Panel discussion (Edited Excerpts)Background and current status

Pawanexh Kohli: Cold chain is an amalgamation of separate activitiesworking together to move value as produced, either at farm gate or factorygate, to a point where value is realised. The infrastructure comprises of coldstores, reefer transport, pack houses, last-mile delivery system, anddistribution hubs. India has the world's largest footprint in cold stores,around 130 million cubic metres, which translates to 30-35 million tonnesof storage.

China, producing twice as much as India, has around 70 million cubicmetres, and America has around 150 million. Storage by itself makes nosense— there has to be movement of goods, but our refrigerated transportcapacity is barely 4-5 million tonnes with 12,700 refrigerated trucks. If youproduce something and then you can buffer it, but if you don't have ameans to supply, your business will suffer. Also today 90 per cent of storageis used for bulk storage of potatoes, dried chillies and so on.

Earlier, government policies were designed around multi-commodity coldstores. Even the subsidy mechanism offered Rs 1,000 and more if your coldstore was multi-commodity. But in reality, the majority of perishableproducts that we consume do not have long-term storage like milk. Coldstore is like railway platforms— providing access to consumption markets.

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PAwANexh KohlI,Ceo, NCCD

“India has the world's largest footprint incold stores, around 130 million cubic

metres, which translates to 30-35 milliontonnes of storage. China has around 70million cubic metres and America has

around 150 million.


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Our data shows capacity utilisation at 75 per cent and above which ismainly from enhanced imports of foreign produce. It is foreign produceaccessing those stores which were created for domestic produce to accessour consumers. So what went wrong— we did not have source points. Asupply chain has to have a point of origin and a cold storage is not that, it isjust a transit point. We did not create such source points at the farmgates—say ticket booths to enter the cold chain.

Kiran Malla: At the beginning, the cold chain sector was driven largely bysubsidies. The people who developed 30-35 million tonnes capacities werelargely unorganised/traders. Therefore the evolution was not holistic,which shows when you look at the products being served or the quality of facilities, or the break-up of farm produce which cold chain addresses.

Challenges in the economic viability

Malla: Regarding investments, let us tell you how corporates in this spaceare doing. Snowman is a Rs 200 crore-sized company which is a listedcompany and in operations for around 25 years. However, there is a lot ofinterest recently from overseas investors around three things— lowpenetration, solutions needed in the space and huge socio-politicalrelevance since farmers are linked to this sector.

KIRAN MAllADirector, Corporate Finance Strategy, eY

“At the beginning, the cold chain sector wasdriven largely by subsidies. The people whodeveloped 30-35 million tonnes capacities

were largely unorganised/traders.”


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The behaviour of the Indian consumer is not working here. He may wantthe Mercedes Benz quality, but if given the option, would pay the value ofa Nano. For the consumer, cold chain is a desirable part of logistics. Inreality, it is a necessity aspect. The question would be: If the consumer iswilling to pay. This is why traders mostly (barring high-value items likeapples) would not want products to move through cold chain becausethey see it impacting their margins.So there is an opportunity but no willingness to pay, how does theinvestment grow? Take any corporate in the cold chain business, they areall in red in terms of profits. And the reason is that they do not getproduce to store, the utilisation levels are low, trucks which need to runloads both ways run only one way. It is not about a small percentage ofconsumers buying imported apples, but about the bulk of consumerswilling to pay an extra rupee or two to ensure the product moves throughthe cold chain all throughout.

Pankaj Khandelwal: We sell a high-value product to a global market.However, I cannot sell that in India, not because of buyer’s unwillingnesson price, but because of lack of discipline to manage a sensitive product.One cannot mishandle or mistreat the products once it enters the coldchain, it is then a sensitive product. If you export a sensitive produce tothe USA, there is a three-month process, defined standards, handlingtechniques, trial runs, education of all those involved in the chain.

PANKAj KhANDelwAlMD, InI Farms

“My customer will pay my price but even ifwe deliver 99 per cent of the time, but if we

have 1 per cent failure then it is a branddisaster. We trained people at the retail

outlets to carry our products but six monthsdown the line they quit.”


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In India if I go with the same product to a retailer, he would say fine, Ineed this tomorrow in my stores. We said we would need 2-5temperature and the retailer assured that. Next day I sent my person tomonitor 20 stores in Mumbai and not one had maintained thattemperature. We had to curtail the arrangement. My customer will paymy price but even if we deliver 99 per cent of the time, that 1 per centfailure takes place then it is a brand disaster. We trained people at theretail outlets to carry our products but six months down the line thosepeople were no longer there.

Ravichandran Purushothaman: Danfoss has classified challenges intothree sets. First is pre-harvest— even in this 287 million tonnes producewe have, we abuse resources, we abuse natural water and we do not dothings the right way. Another problem is produce quality, and another isthe process-able variety.Now in the post-harvest set. You look at who is your customer and howfar away are they, when should one get the produce to that end point, toappreciate what has to go through a cold chain. Traditionally in agriculturewe are only producing, producing, producing but the farmer needs toknow what is he producing, when and for whom and how much quantityhe needs to produce? More value must flow to the farmer. Post-harvesttechniques must also be looked into.

RAvIChANDRAN PuRuShoThAMANPresident, Danfoss India

“Traditionally in agriculture we are onlyproducing, producing, producing but the

farmer needs to know what is he producing,when and for whom and how much quantityhe needs to produce? More value must flow

to the farmer.”


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The third most important thing to look for is increasing value in brandingand information. Consumers awareness is rising about what theyconsume – where is it produced, when it is produced, if it is organic, whatis the farm identity, fresh water, chemicals etc.

Kohli: Mumbai airport handles around 35 million passengers. Any idealairport handles 300 million tonnes of horticulture, 165 tonnes of milk, 80million tonnes of meats, fish and poultry. Now if I want to build anairport catering to just 50 per cent, that airport would be catering to 15million people, and that would be the Greater Bombay area. This notionof doing 270-300 million tonnes and storage of at least 25 per cent ofthat production in storage is nonsensical. It is about throughputs, moreso when production like chicken or meat is harvested daily. Reportssaying that ‘60 million tonnes of capacity is needed’, are sorts of reportsthat push the subsidy programme and the government in the wrongdirection.India produces 1.14 billion tonnes of agri-produce— around 306 milliontonnes sugarcane, 300 million tonnes horticulture, 275 million tonnesfood grains, 32 million tonnes oil seeds, 14 – 18 million tonnes ofdifferent meats, then you have tobacco, fiber crops, cotton so on and soforth. You cannot eat grain. It is processed into wheat. I had heard that Franceprocesses 70 per cent of their fruit and vegetable output, but actually itprocesses only 15 per cent. In France, when anything is changed – cut,broken, mixed or added something— it is called processing. By definition80 per cent of our grapes are being processed.Also, India thrives on fresh produce and has the world’s largestconcentration of vegetable eaters. If you analyse Indian plates, 95 percent by mass is fruit and vegetables; only 5 per cent is meat, including


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fish. We have a certain consumption base which receives foods withcertain amount getting destroyed because we are not looking after it.Anything we do to minimise that means more value flowing back.

what are the developments to savour?

Kohli: India has proven capabilities in cold chain execution andoptimisation, with one of the greenest systems worldwide. This year’sbudget made an announcement about the creation of 22,000 GraminAgricultural Markets (GrAMs), directly linked to creating source points,not necessarily transaction points. They will be outside the APMC ambit,and utilise land which is already allocated for haats. So now we needpromotion and people participation. Investments in cold chain areexpanding beyond bulk cold stores. In fact last year almost Rs 2,000 croreof investment came in across segments, creating capacity of around 1.05million tonnes. Also, cold chain has been cleared for FDI without priorapprovals.

B Thiagarajan: In manufacturing or in services, you can bring about bigchanges very fast, say in five years. But in agriculture it takes time becauseit is a very complex subject, with different policies across states. Withinthis, what we have achieved is very significant. We are among the top twoproducer nations in most fruits and vegetables category.

B ThIAgARAjANjMD, Blue Star limited

“In manufacturing or in services, big changes can happen fast, say in five years.

But in agriculture it takes time because it is a very complex subject, with different

policies across states.”


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Pankaj Mehta: Carrier Transicold deals only in transport refrigeration andhave been in India for 25 years. I think the challenges are the entry pointsand connectivity for a nation with the problem of plenty. We, with thesupport of NCCD, did a pilot project with a fruit called kinnow produced inPunjab— grown in abundance but sold on highways at cheap prices. It didnot find new markets due to perishability issues. Wastage was more than50 per cent and sales price per kg in Punjab was Rs 20. We co-investedwith the farmer, he took the fruit after pre-cooling through reefers all theway to Bangalore and it sold at an average of Rs 65 per kg and his profitswent up multi- fold. His wastage was down by 70 per cent.

Kohli: On the kinnow project, I was called fool, because the cold chainprocess was adding Rs 10-12 to the costs it could be sold at in Delhi. Butat 2,500 km down in Bangalore the prices peaked at Rs 105, never wentbelow Rs 45 and weighted average realisations stood at Rs 60-65. To thisyou add the big impact of minimised losses. Today, third year of theproject, pack houses in the region have come up from zero to 14. Thereare 450 reefer trucks.

Purushothaman: We are doing some work in Leh Ladakh, where 40 percent of the abundant apricot harvest is wasted. Amul supplies hugevolumes of butter to Leh Ladakh and these trucks come back empty.

PANKAj MehTAMD, Carrier Transicold India & South Asia

“Transicold with the support of NCCD, did apilot for a fruit called kinnow produced in

abundance in Punjab but sold at cheapprices. We co-invested with the farmer andhelp them find new market like Bangalore.”


None of the farmers thought about getting their produce graded, sortedand freighted on minimal cost. I think once you get into each and everygeography of India and do a bit of research, it can actually enable valuecreation.

Priority areas for stakeholders

Malla: One requirement is that government enforcement and inspectionshould be stricter. The trade can focus on improving packaging likeReliance has tried. So that consumer perceives the difference, saybetween an apple which has been in cold chain all throughout, and onewhich comes from a mandi. The farmer must understand that cold chaingets higher prices and reduces wastage. My view is that maybe thecapacity needed is 60-70 million tonnes against the 30-35 million we have.

Kohli: I beg to differ. The capacity the country needs is 35 million and we are within 10 per cent of that figure. NCCD studies recommend thatthere is no need for a higher cold chain capacity except the must-dosegments. Consumers for cold chain products are mainly urban. However, today the cold chain does not grade produce by size forconsumer appeal but for being packaged together for better capacityutilisation. If you sell your produce within a 200 km radius, anyway coldchain movement is not needed.

Thiagarajan: The end goal of value creation should be the farmer gettingmore money and consumer affordability should increase, which canhappen through value-addition and market expansion. Maybe FDI inmulti-brand retail would be the solution, but meanwhile FDI in foodprocessing and cold chain activity can move us towards that goal.Processing is an employment generator and catalyst for cluster

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development. The 22,000 GrAM initiative could be a game-changer.Similarly, it is better if we impart more marketing knowledge to farmersand their family units. In technology, Danfoss is a pioneer in equipmentand a good amount of reduction has happened in energy consumptiondue to this. Regarding systems and operational guidelines, a good amountof enabling work has been done by the NCCD.

Today production is not so much of a worry, today it is all about theforward and backward linkages up to the markets. I have the view that, infive years, whether multi-brand retail sees FDI or not, market will open upand all concerned will see benefits. When all these come together, we willnot have youngsters thinking anything negative about agriculture sectoras a career prospect.

Kohli: Our cold chain development has been market-driven like exports.India is the world’s largest beef exporter and third largest across meats,third largest in fish, among the largest in grapes – and there cold chain isparticipative throughout. We have seen imports in India growing andwhat consumers are paying for. Even the potato is not natural to India, but brought over by the Britishfrom Ireland. Thanks to the cold store segment, potato has become astaple national diet.We must be clear about the consumers, the price points etc. We have tostart expanding the selling cycle. When cold chain comes in, it buys timefor a sale and waits for a market. You use technology to move to wherethere is a market.

Purushothaman: In coconut we add value only like Rs 60 per nut,whereas other nations like Indonesia add around Rs 170, which speaks ofthe need for R&D (research and development). Also we need to build

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models which work in India’s five climatic zones. Within each zone, theagro-climatic zones are even more. We need to put more investment intoR&D and innovate using affordable technologies. We need more packhouses to grade products and reefer trucks. Such small interventionscould be a big game changer for our farm produce.I am as optimistic as Mr. Thiagarajan that this will be a sunrise sector,creating more jobs than software. If you create good practices in the pre-harvest side, build business models in such a way that it reaches to theright customer at right price points, coupled with branding andtraceability. Use technology wisely, we can create USD 3 billion or USD 4billion in each commodity as enterprises.

Devendra gupta: In perishables, you do not have availability all-round theyear. After the harvest for three-four months is when those assets areutilised. In Nashik, after the grape exports are done, the pre-coolingchambers are lying empty. Then we provide those chambers in lease to farmers for four-five monthsand then target other commodities like litchi which do not otherwise getan entry into the cold chain. We have to encourage consumers to look atcold chain sourced products for better nutrient content. Perhaps theNCCD could promote five-star labelled products which enhance energyefficiency.

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DeveNDRA guPTACeo, ecozen Solutions

“We have to encourage consumers to look atcold chain sourced products for better

nutrient content. Perhaps the NCCD couldpromote five-star labelled products which

enhance energy efficiency.”


Kohli: The Northeast is a wonderful area, naturally fertile and chronicallyorganic. Its produce should typically fetch more value, but value ismeasured at the point of delivery. The government keeps gettingproposals to open up FDI in the Northeast, but the opportunity here liesin either pack houses or the GrAMs, and getting onto the railways foroptimum movement. The Northeast already gets 15 per cent highersubsidy than the rest of the country – all we need is connectivity.

Purushothaman: We are doing some work in Northeast. For instancekiwis in Arunachal which I think are much better than those in NewZealand. We are trying to find a solution to move kiwis to newer markets.It is just connectivity issues and there is the need for more pack housesthat segregate what goes to Delhi, to Calcutta, and what can beprocessed.

Kohli: Cold chain is a pipeline or conduit to move goods from one place toanother place, if the other place fetches you more value, it justifies yourinvestment. I think tomorrow’s solution would be embracing greentechniques. Can it be more energy efficient? Will it be less polluting? Willit help create new business models where India’s village connects with theglobal village? Those are solutions for tomorrow.

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R N Bhaskar, consulting editor, starts the discussion with his opening remarks

Ashok Karnani, Director, FPJ presents a memento to Pawanexh Kohli, CEO, NCCD

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Ashok Karnani, Director, FPJ presents a memento to Ravichandran Purushothaman,President, Danfoss India

Students, entrepreneurs and agriculturists participated in the ‘Cold Chain’ discussions

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Memento given to B Thiagarajan, JMD, Blue Star Limited on behalf of The Free Press Journal

(L to R standing) Ashok Karnani, Director, FPJ; Pankaj Mehta MD, Carrier Transicold India& South Asia; B Thiagarajan, JMD, Blue Star; Ravichandran Purushothaman, President,Danfoss India; R N Bhaskar, Consulting Editor; Pankaj Khandelwal, MD, InI Farms; KiranMalla, Director, Corporate Finance Strategy, EY and Abhishek Karnani, Director, FPJ.

(L to R seated) Devendra Gupta, CEO, Ecozen Solutions and Pawanexh Kohli, CEO, NCCD.


Editorial coordinator jescilia KarayamparambilLayout by Sanju BhogateInfographics by Abhishek Sarfare

...Ends with the consumer


Free Press House, Free Press Journal Marg, 215, Nariman Point, Mumbai-400 021.

Tel: 22874566, Fax: 022-22874688.

E-mail: [email protected] • Website: www.freepressjournal.in

...Ends with the consumer


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