The cold chain industry in India is still at a nascent stage. Despite the large production of perishables, the cold chain potential still remains untapped due to the high share of single-commodity cold storage facilities, high initial investment (for refrigerator units and land), lack of enabling infrastructure such as power and roads, lack of awareness with respect to handling perishable produce, and lapse in service either by the storage provider or the transporter leading to poor quality produce reaching the mandis and consumers. It is a highly fragmented industry and the unorganised sector accounts for an 80-85 per cent share of total capacity. Wholesalers and organised retailers are the key user segments of cold chain services with a share of 70-75 per cent and 10-15 per cent respectively. Also, erratic power supply, unavailability of skilled manpower, inefficient handling of perishables, and lack of availability of technology and financing options impact the industry adversely. More recently, increasing urbanisation and growth of organised retail and food processing sectors are boosting the growth of the cold chain industry in the country. The trend is shifting towards establishing multipurpose cold storage facilities and providing end-to-end services to control parameters throughout the value chain.
Size and growth
According to the latest available data, as on December 31, 2019, there are 8,064 cold storages across the country with a cumulative capacity of 36.95 million tonnes (mt). Of the total, 5,381 cold storages with a capacity of 24.45 mt were established before 2009, while the remaining 2,683 storages with a capacity of 12.5 mt were established between 2009-10 and 2019-20 (till December 2019). Between 2013 and 2019, cold storages grew at a compound annual growth rate of 5 per cent in terms of numbers to reach 8,038 units and at 3 per cent in terms of capacity to reach 36.77 mt in 2018-19. While 1,783 cold storage units were added during the six-year period (2013-19), capacity addition has been about 4.95 mt, implying an annual average addition of only 0.85 mt. This can be attributed to the addition of several smaller capacity units, primarily in the unorganised sector.
Pack houses are used for handling and processing of all horticultural produce, fresh fruits, vegetables, etc. for export. As on March 11, 2019, there were a total of 212 recognised pack houses in the list issued by the Agricultural and Processed Food Products Export Development Authority. Of these, 145 were active pack houses (as of January 10, 2020). Further, there were 72 registered pack houses for export of fresh fruits and vegetables to countries of the European Union, as of January 22, 2020.
As per industry information, there are 13,000-14,000 reefer vehicles in the country. The fragmented nature of the cold chain industry also contributes to lower rentals, while the lack of availability of return loads leads to inefficient utilisation of reefer vehicles. Besides, stiff competition and low preference of end-user industries to transport via reefers (as it increases costs) restricts private players from investing in the segment.
Ripening chambers are a front-end facility in the cold chain, used for the controlled and hygienic ripening of certain fresh produce. In India, these are used extensively for ripening fruit such as bananas, mangoes and papayas on a commercial scale. A ripening unit usually has four compartments, each with a capacity of around 10 mt. Controlled temperature of 15-20 °C with elevated humidity levels is typically maintained in the refrigeration unit and a facility could have multiple such units. There are presently about 1,000 ripening chambers in the country, that serve around 9 per cent of the current requirement as per assessments carried out by the National Centre for Cold-chain Development.
Supply chain disruption owing to the COVID-19 lockdown has hurt both farmers and consumers. Shortages of labour and closure of transportation facilities compelled many farmers to throw their produce. Further, lack of adequate cold storage infrastructure also added to the farmers’ woes.
Key trends and developments
- Budget 2020-21 announcements: The government has proposed building a seamless national cold storage chain. The National Bank for Agriculture and Rural Development will map and geotag the warehouses and cold storage facilities. The government has announced the launch of special railway and flight routes for easy transportation of perishable farm produce such as milk under the KrishiUdaan and Kisan Rail schemes. It will also invest in building a cold storage channel for perishable items on a public-private partnership basis.
- Shift towards multi-commodity facilities: The clearance for foreign direct investment in multi-brand retail that mandates procurement from local markets, is expected to double food processing levels and hence contribute to an increase in the use of cold chain facilities. The focus of the industry will thus shift from single-commodity storage to modern multi-commodity facilities with scope of consolidation and introduction of better technology, thus optimising the entire supply chain.
- Increased production of perishable quality foods: There is an increase in the demand for both fresh and processed food. This is due to the awareness of the health benefits derived from consuming fresh fruits, vegetables, etc. This, in turn, has generated greater need for temperature-controlled logistics. Thus, the production of perishable quality foods such as fruits, vegetables, milk and dairy, and meat and meat products has increased significantly.
Emerging technologies redefining the cold chain industry
Blockchain meets cold chain
Blockchain, a data structure that holds transactional records and ensures security, transparency and decentralisation, can help in creating a more transparent route for fresh foods. Blockchain is attracting interest as a way to track and monitor food through the supply network, ensuring that the food has not been tampered with en route. Blockchain can increase accountability and transparency among the multiple suppliers, middlemen and retailers.
Retailers can ensure the quality of fresh foods while they are being transported by maintaining unbroken temperature control. By implementing the use of internet of things (IoT) devices and cloud-based software applications, refrigerated cargo containers can be monitored and tracked remotely.
Next-generation AI-based cold chain logistics
Smart technologies in logistics are becoming a major focus within supply chain management as faster shipping reduces lead time and transportation expenses. The application of artificial intelligence in supply chain-related tasks holds great potential in fixing the gaps in the cold chain.
Post-harvest wastage of fruits and vegetables is high at 15-16 per cent, as per the Central Institute of Post-Harvest Engineering and Technology, and this is primarily because cold storages are located near consumption centres rather than at farm gates. This calls for investment in cold storages 50-150 km from farm gates and meat production centres so that an efficient cold chain grid is built across the country. Investments in temperature-controlled vehicles, or reefers, will also be necessary. Inadequate cold chain infrastructure has hampered India’s food exports, as most developed countries across the world have stringent guidelines for import of agricultural and processed food products. There is thus an urgent need to develop a network of modern multi-chamber cold storages and cold transportation infrastructure for commodities requiring temperatures ranging from -30 °C to +25 °C.
Increased safety, global standards of quality, enhanced efficiency and higher investments need to be the foundations on which the country’s cold chain network needs to be built. Being energy intensive (due to refrigeration), these supply chains need to be carefully monitored for their impact on the environment. Moreover, there is a pressing need to create a skilled workforce to elevate the country’s standing in the global cold chain market.