Archive for August 2010


Barriers to growth of cold chain industry in India.

Cold storage reduces the rate of biochemical changes in fresh foods and also slows down the growth of contaminating micro-organisms. The reason for storing perishables in a cold store is therefore to extend their life beyond the harvest season. This may be because they can achieve a higher sale price out of season or for food security reasons.

The paradox called India – Incredible India – is not unconcerned about shelf life extension, higher price realization or food security. Than why cold storage industry is not growing in India. Read on…

Are there any wastages? This is a myth.  Every things sell in India. In my 20 plus years career with organized fruit and vegetable trade I have not yet seen the so talked about wastages to an extent of 30 to 40% as physical waste. No one however considers or is bothered about the value loss. Every thing physical sells. Sadly this demand driven market phenomenon where value loss is not considered either by customers or planners is what clouds everyone’s perception and prevent cold chain growth in India.

Lack of cold chain demand makes the cold chain infra costly (more demand – more competition – lesser price), the additional cost (in comparison with non cool chain products) eventually gets loaded on the products serviced through high cost cold chain. Now, if supposedly some inferior product is available at a lesser price, very few in India shall buy a superior product serviced through cold chain, particularly when product in question is considered “fresh” only when it comes outside the controlled atmosphere (read cold store). Remember – fresh peas here sells @ Rs 150 a kg during off seasons against frozen at Rs 50 Kg. You need to have customers. Period..

Therefore, I am of the view that future demand for cold chain in India shall be driven not by fresh foods but by foods and pharmaceutical categories which compulsorily requires cold chain. Ready to eat frozen products, frozen vegetables, imported fruit etc comes to mind here. If these categories grow in India – infra to handle this shall automatically grow. Increased growth of cold chain shall drive down the cold chain price for more adopters to follow, reducing the cost. I can foresee a strong correlation between cold chain growth with growth of microwave ovens. At the end of the day it is all about markets.

It is not only the demand of right products that hinders the growth of cold store industry in India, services too share equal blame. Let me explain.

Few years back we built a world class cold storage infra for potatoes and apples at the only clock auction market for fruit and vegetables in India. This cold stores had all the modern bells and whistles like pallets, forklift, screw compressors et al. Know what happened. Third party apple storage for trading at this store turned out to be a non-starter as apple trading in India is based on samples for small lots which could not be drawn out for inspection by traders as quickly as they are drawn out in an ambient environment or a traditional cold store. Moral of the story. Trade’s service demand dictate the cold storage needs.

What majority of us overlook is integration of technology with dynamics of fresh trade, which is tricky and complicated in India when compared to trade in mature economies. Otherwise, how almost negligible onion / garlic cold storage with just 4-5% loss can be explained against a backdrop of 30% plus losses from traditional onion storage in India. A country that invented zero surely understand the huge differential and potential savings from cold storage with ventilation to store onions at much lesser loss but still continuing with traditional storage.

May I also add here that it is for the similar reasons we don’t see many grain storage silos in India. Though not directed linked to cold chain industry, the point could lead us to some realistic assessment as regard to ‘Why cold storage industry is no growing in India’.

We let our grain go waste on open air plinths or shoddy warehouses but don’t build grain silos because that would entail disturbing the existing trade which is deeply entrenched with elements like commission agents, thekedaars, palledars, gunny bags et al. These elements and the way they operate in the market place, shall never let silos happen in India unless someone carrying a big stick and with loads of political will comes up and reform agricultural marketing scenario in each individual Indian State. (BTW Agriculture is a state subject in India). Because Silos, in comparison with existing trade, demands altogether different material handling, shipping and trade requirements. Silos are more transparent way of handling and accounting grains is just incidental.

Like butterfly effect, these small differences in service demands of dynamic market systems produce large variations in the long term behavior of infrastructural needs for products and planners.

In a similar vein – many years back while planning a trial shipment of Indian potatoes from Tuticorin in State of Tamil Nadu in India to Colombo in Sri Lanka through refrigeration mode, I discovered a very disturbing fact. Cost of a 40′ reefer container at Tuticorin for Colombo was much more for an overnight sea journey between these two locations than it was for Antwerp (Belgium) and Colombo, a journey that took more than 25 days. Reasons for this variation were not very hard to seek.

WE WERE NOT IMPORTING ANYTHING IN REFERS AT TUTICORIN. So the containers had to be specially brought in at Tuticorin for our trial – raising the cost. So TO EXPORT MORE IN REFERS YOU HAVE TO IMPORT MORE IN REFERS. Reverse logistics.. Common sense..but see the impact.

It was no surprise when I visited John Keels and Cargills’ (Supermarkets in Colombo, Sri Lanka) few days thereafter, I could not find even a single box of Indian Apples though India is the nearest apple growing country and Kinnaur apple won hands down at a blind tasting session which I conducted at both these supermarkets.

Strange are the ways of bazzars….Quite often you need to hit North to correct South.

Who shall bell the CAT, please?

The plight of a banana loom..

India transports thousand MTs of banana looms every day some 1500 to 2000 kms away to consumption areas from source of production though either rail or road.

Looms (for uninitiated) are banana bunches as they grow at the plantations, that is, clusters of bananas (technically called hands) with the inedible stalk portion (6 to 10% of loom weight).

At consumption centers, one has to pays to physically cut and remove the inedible portion till landfills – Obviously, one also pay avoidable shipping charges to transport this useless byproduct over a long distance.

Apparently, it would make more sense and value adding to use the stalk (read bio-mass) at the production source itself to be recycled as organic manure.

But is it a right solution? The answers become hazy when one starts calculating the direct, indirect and environmental cost of alternatives – use of CFB Cartons and plastic container etc.

Any suggestions to resolve this banana dilemma? Remember – banana is a poor man’s fruit across India.