Cold Chain intervention for fruits and vegetables distribution in India

By Tarun Arora, Director – Finance and Operations, IG International Pvt. Ltd.

March 18, 2018
India is synonymous with agriculture. With 18 percent of India’s gross domestic product (GDP) and 50 percent of the countries workforce, agriculture sector is the backbone of India’s economy.
Investments in India’s cold-chain infrastructure holds the missing key to increased agricultural produce that will lead the country towards food safety and security
Today, India ranks second worldwide in farm output and is the world’s largest producer of food staples, spices, select fibrous crops, seeds as well as fresh fruits and vegetables among other agricultural produce. The estimated annual production of just fruits and vegetables in the country accounts for 18 percent of our agricultural output. The diverse agro-climatic conditions, adequate availability of resources and technological advancements with packaging practices gives us an edge over many nations.
However, in a country dominated by agriculture, food worth Rs 58,000 crore is wasted every year. Therefore, the question is ‘how we can better utilize our resources’ to our advantage and avoid wastage. Investments in India’s cold-chain infrastructure holds the missing key to increased agricultural produce that will lead the country towards food safety and security. At present, the cold storage infrastructure is 50 percent less than the requirement.
Indian Cold Chain Industry – An Emerging Industry
In the last 3 years, India added about 4.5-5 million tons of cold-chain capacity. The major drivers for this growth are changes in the lifestyle of people and the rise in consumption demand. Large retailers catering to this rise in demand of perishable goods need cold-storage facilities. Even the Government of India is giving subsidy to farmers for setting up cold rooms.
Cold chain is a Rs 62,000-crore industry in India and is growing at a rate of 20 percent. India has 6,300 cold-storage facilities with a capacity to hold 30 million tons of products. Almost one-third of the cold stores are small, with capacities below a thousand tons each, and are largely in the hands of the unorganized sector. However, the market is gradually shifting towards organised players, and becoming multi-product facilities, which serves well for not just storage but overall inventory management.
India has a huge opportunity to become a leading global food supplier only if we can achieve or rather create an agile, adaptive, responsive and efficient cold chain mechanism. It is essential for us to realize its importance and evaluate the opportunities that lies ahead with an organized cold chain mechanism for perishable goods. Cold chain system is a huge enabler in the country’s mission for doubling farmers’ income because cold rooms can prevent wastage of agricultural produce. Almost 40 percent of fruits and vegetables, worth about Rs 13,000-crore, go waste.
An organized cold chain mechanism caters to not just storage facility, but also acts as an enabler for efficient inventory management. For instance, a crucial problem faced in the case of fruits and vegetables is that of the huge enormous losses that occur because of spoilage. To tackle this situation, it is essential to have a planned cold chain system that takes care of storage, temperature control, effective packaging, handling and transportation. To serve the rising demand, cold chain solutions enable easy accessibility and smooth flow of produce from farms to table, fresh and safe.
Indian Cold Chain Industry – What Lies Ahead
The cold chain ecosystem offers a wide array of opportunities. Due to the shift in focus from increasing productivity to providing better storage and transport facility, the Indian Cold Chain Industry has gained importance. The industry has become an important part of the supply chain of products from farm to door. Cold Chain Industry offers solutions that are responsible for increasing the shelf life of products.
Tremendous opportunity lies with an organised cold chain system. Looking at the rise in infrastructure to curb wastage, the cold chain industry in India is expected to grow at a CAGR of 19 percent from 2017-2022. The major revenue contributors in the Indian Cold Chain Industry are cold stores.
There is an emerging demand for exotic fruits and vegetables in the market. To cater to the growth in demand, cold chain intervention plays a vital role in inventory management. While the demand is almost throughout the year, their supplies are only seasonal. Most of these fruits and vegetables are extremely perishable in nature and cannot be kept long under ordinary conditions of storage. With the emergence of organized cold chain solutions, we have achieved success in increasing the life of seasonal produce thereby reducing wastage.
Cold chain is the fulcrum of effective supply chain infrastructure. With the emergence of private companies integrating with state bodies, we are capable of improving the current inventory management for fresh produce. Setting up multi-product storage facility is an emerging business opportunity in India. The only barrier is upfront investment involved and capital utilization. More and more companies are realizing the opportunity that lies in this recession free industry. It will be fair to expect an optimistic growth in the years to come, with the emergence of cold chain intervention taking the import and export of fresh produce to great heights.

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