Cold chain comes with a price
An efficient cold chain system in the country for fruit and vegetables is possible only when it is viable. And it will come at a cost. The existing cold chain industry has to upgrade the standards and practices. The consumers have to share the burden of additional cost to manage the cold chains.
India is one of the world’s largest producers of several fruit & vegetables. It is second only to China in terms of total production. With a total production of about 270 million MT of fruit & vegetables, it even surpasses the combined volume of rice & wheat together. But if you look at the extent of processing, it processes just about 2% of the production, while for China it is 40%, US 65% & Malaysia 85%. Hence, most of the fruit & vegetable that is produced in India, is consumed in fresh form.
Cold Chain Scenario in India
The large quantity production is also associated with a very large quantity of wastage. Eighteen per cent of India’s fruit and vegetable production – valued at Rs 13,300 crore – is wasted annually, as per Central Institute of Post-Harvest Engineering and Technology (CIPHET). The commodities contributing to major losses are Grapes, Apples, Mango, Potato, Tomato and Onion. Of these, Potato, Onion, Tomato & Mango alone contribute to an extent of 63%. While the reasons of losses are many, one of the simple & easiest explanations given is that the post-harvest losses are due to lack of the cold chain facilities in India.
According to industry estimates, approximately 104 million metric tons of perishables are transported between cities each year.
Of this figure, about 100 million metric tons moves via non–reefer mode and only four million metric tons is transported by reefer.
Of this, majority of the refrigerated vehicles (>80%) are utilized for milk and milk products transportation.
The percentage movement of fruit & vegetables through cold chain is negligible, while in USA it is around 80-85%, in Thailand 30-40%.
Potato which occupies 75% of the volume of the cold store does not use reefer transport either for inward or outward movement from the cold stores.
Now the million dollar question is that despite the huge wastage, why is the cold chain engagement is so low in India? India with its diverse climate can produce any kind of Fruit & Vegetable at any point of time at some location or other. To cater to the fresh demand, the crops are grown round the year, but the production geographies keep changing as per the crop-climate requirements. Typically, any consumption point has to undergo 3-4 season/supply arrangements during a year for the same crop. From a perspective of logistics, simple transportation is a nightmare for such a situation, leave alone the cold chain. The cost of the cold chain transportation becomes prohibitively higher (about 2/3 times) than the ambient transport. One of the reason for high freight is also because of the non-availability of the reverse load. The other issue with cold chain is that, inadequacy of the first & last mile connecting infrastructure. These are almost non-existence. We grossly lack pre-cooling facilities at the farms. Similarly our vegetable vendors lack temperature controlled outlets. So there are question marks around the cold chain integrity for movement till the consumer.
India has about 7100 cold stores with holding capacity of 33million MT. Potato occupies 75% of volume of these but, it generates only about 20% of revenue. Whereas the multi-commodity stores which account for 23% of capacity generate 54% of revenue. Technically speaking, single commodity potato cold stores are not viable. But their survivals are owing largely to the potato trading & money lending business rather than rental on storage. The farmer’s stored potato serves as collateral to banks for financing the cold stores owner. The cold store owner uses the finance to buy & stock potato or lend it to the farmers against his potato stock. As the stocks move to the cold stores, it gets consolidated at a fewer hands who happens to be owners of the cold store. These handful of people are in a position to influence the price. This leads to volatility in potato prices despite maximum cold store utilization and even for normal production year.
Onion not only brings tears to the eyes of the house wife but also has history of bringing down the government. The story is quiet opposite here. There is lack of right kind of technically correct, ventilated & air circulated cold stores. Most of the storage done in Nashik, Bhavnagar or Indore are not the cold stores but open Chaals, which allows free flow of natural air. Although most widely used, these stores do not provide enough confidence for safe storage. These kind of storage is subject to environment conditions. With the passage of time from May to Oct, the deterioration increases. The losses could be as high as 35% in Oct.
For Tomato, cold chains are not in operation. It is transported on the basis of maturity at the time of harvest. If tomato is in green stage, it is sent to the distant market, if red consumed in nearby market & extreme red goes for processing. With more than 90% of water content, the shelf-life of the product is less than 7days. So the trade does not retain its ownership for long, instead it is preferred for early disposal. If the cold chain is to be worked out for the same, it needs to start from the seed varieties which have less water, higher dry matter & longer shelf–life. This means that the orientation of the existing supply chain has to shift completely.
Controlled Atmosphere Storage
For Fruit & Vegetables, the cold chain is not just bringing temperature down but it also has to manage an entire range of the other parameters which could impact its life. Fruit& Vegetables in general are live products & they continue to respire. There are a host of parameters like Humidity, Ethylene, Carbon dioxide, Oxygen & Nitrogen which can impact the life of a particular item. Certain items may need multiple parameter management while for many investments cannot be justified on the back of the low product value. But for the products like Apples which are single season, such Controlled Atmosphere (C.A.) management is beneficial as it can improve the shelf life up to 10months as against life of 2-3 months in ordinary cold store. The constrain in apple is that there are not adequate cold stores available in the major growing areas like Jammu & Kashmir, which has the production to the tune of 17Lakh MT whereas the available storage is just 70K MT, similarly in Himachal the production is 7Lakh MT & the storage available is 53K MT. The CA storage capacity is even much less.
Building cold chain for Fruit & Vegetables is not just adding fleets of reefer trucks or adding cold store capacities. There is a lot of technology involved in managing & maintaining the temperature & other parameters. The frozen Fruit & Vegetables segment of the reefer transport even today falters in maintaining the required -18deg C temperature. The existing cold chain industry also has to transform to more reliable, capable & technically competent. The standards and practices have to be evolved & percolated down, even to the levels of truck drivers.
Any cold chain for Fruit & Vegetable has to be a viable cold link between farmers & consumers. Both the production centers & consumption points need to be planned for appropriate crop, season, price, quality & freight. The cold chain must appreciate the product shelf-life, storage requirements, demand & supply situation. These can provide price stability, reduce volatility & wastage which would benefit both consumer & farmers, but these will come at a cost. The consumers should be willing to pay for the additional cost required to manage the cold chain, least these cannot be sustained.
(The author is the General Manager (SCM) with Mother Dairy. The views expressed here are personal in nature and are not the views of the organization.)
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