Prof. Haritha S
Cold Chain
Cold chain can be defined as a temperature controlled supply chain cold storage and distribution in which agricultural produce are preserved afresh and their shelf life is extended to a greater period of time. Cold chain is a necessity for not just for the agricultural produce but also for horticulture, floriculture, dairy, confectionary, pharmaceuticals, industrial chemicals, poultry and meat processing. India has seen a significant growth in production of perishable products like fruits, vegetables, meat & poultry products but this was not accompanied by a proportional growth in improved supply chain systems. This disproportional growth has led to widespread price fluctuations and inflation. The existing sub-optimal farm-to-market logistics has contributed to huge losses in perishable foods.
Cold chain process has been explained below
Source: Rodrigue, Dr Jean-Paul and Notteboom, Dr Theo (2014)
Generally refrigerated trucks with 100 percent GPS, insulated doors which can maintain products in temperature ranging from -25 degree Celsius to 25 degree Celsius are used. Cold chain serves the important purpose of keeping food fresh for extended periods. Temperature control depends on different kinds of products. Dry ice (Solid carbon dioxide at -80 degree Celsius) is used to maintain foods at sub-zero temperature. In case of pharmaceuticals & medicinal shipments, large portions are classified as chilled products where a temperature range between 2 degree Celsius and 8 degree Celsius has to be maintained, gel packs are the most preferred in this case.
Ensuring that shipment remains frozen also depends on the type of the container used. The choice of the container depends on duration of transit, size of shipment, external temperatures. Containers used are classified as validated & pre-qualified. Validated packages are specifically tested to transport a certain product under controlled conditions. Pre-qualified containers offer a specific temperature range, but it is not tested for a specific product. The refrigerated trucks are referred to as reefers.
Opportunities
India falls in the second place globally in terms of fruits and vegetable production. India produces about 85 million tonnes of vegetable produce annually. Out of which a whopping 40 percent gets wasted. With an annual produce of 100 million tonnes of milk, India is the largest producer of milk which accounts to 17 percent of the global production, however 10 percent of this annual produce is lost due to dismal storage facilities. Food & Agriculture Organization of the UN has stated , every year about 1.3 billion tonnes of food is lost which amounts to 1/3rd of the total food produced. This clearly indicates a significant gap in the Indian cold chain industry. This gap can be translated into a golden opportunity for the service providers as well as the farmers. The demand in cold chain industry is also due to the pharmaceutical industry, vaccine market in India is growing at a rate of 25-30 percent, vaccines require temperature controlled
The Government of India has also noticed this gap and is striving to support the cold chain industry by starting several initiatives. One such initiative was started by Ministry of Agriculture which launched “Mission for Integrated Development for Horticulture” in 2014, this initiative gave significant importance to cold-chain development. Ministry of Food Processing Industries (MoFPI) had started a program exclusively for cold chain “scheme on cold chain, value addition & preservation infrastructure”. CAGR of 19 percent growth is expected from 2017-2022 in the cold chain industry. Another study conducted by YES bank in 2014 mentioned that market share in cold chain was divided into 88-90% with cold storage and 10-12% with refrigerated transport. One of the biggest advantages of cold chain is the fact that food industry is able to take advantage of seasonal variations. Government of India has opened up 100 percent FDI for cold chain. Since 2011-2012 cold chain has been given infrastructure status. National Centre for Cold Chain Development has been established to aid the growth of the same. Cold chain manages and safeguards the products till it reaches its destination, however there is no value add to the product as such, this was recognized by the Finance ministry and hence they did not impose VAT and service tax on activities for handling, transporting storage and marketing of agricultural produce.
Challenges
One of the most important challenge of cold chain is the significantly higher operating costs, the cost of per cubic meter storage in India for cold storage is $ 60 as compared to the $ 30 in the west. According to recorded data (2014), India had about 31.82 million tons of cold storage space, there was a gap of 3.28 million tons in cold storage space out of which only 26.8 million tonnes was in operation which lead to a gap of 8.25 million tons. One of the most important challenge for the cold chain industry is the establishment of the infrastructure which is required for the effe
ctive integration at various stages. Few of the components which need to be developed are
ctive integration at various stages. Few of the components which need to be developed are
1. Static infrastructure which includes infrastructure at farm-gate like modern-pack houses with pre-coolers, bulk cold warehouses and cold distribution hubs.
2. Mobile infrastructure – like reefer trucks, reefer containers.
3. There is also a dearth of standards and protocols that has to be developed along with skilled human resources.
4. Another major challenge, Indian cold chain industry faces is the shortage of consistent power supply, the cold chain companies have to invest separately in the power backup as well.
5. Fuel costs in India constitute around 30% of operating expenses of cold storage in India as compared to the 10% in the west.
6. One of the most important reason for cold chain industry not booming is the significant real estate costs, the real estate costs have risen by 280%. Apart from the real estate costs a cold storage would require a minimum investment of INR 50 million.
7. The average capacity utilization in the industry is just around 30 percent.
Current Scenario
According to industry estimates of 2015, India has about 250 reefer transport operators that transported perishable products in less than 30,000 refrigerated vehicles. Most of the refrigerated vehicles are used for the transportation of milk and milk products transportation.
In December 2016, India had about 6,300 cold storage facilities, there was no uniform distribution of these facilities. Most of these cold storage facilities were used for storing potatoes. The highest concentration of cold storage facilities are in Uttar Pradesh and West Bengal. The major players of cold chain industry in India are Coldex Pvt Ltd, Dev Bhumi Cold chain Ltd, Gati Kausar India Ltd, Snowman Logistics and Future supply chain Solutions Ltd. Due to the high initial investment costs, small players are not able to enter this industry easily.
Future Prospects
Given the changing macro-economic factors in India, cold chain industry has a huge scope to grow. GST acted like a boon, by eliminating the redundant and time consuming check posts. Before the GST companies preferred to establish warehouses in tax-friendly zones. Implementation of GST has reduced transportation delays like e-way bill, multiple checkposts. Tech innovations like smart sensors, data loggers connected to GPS can track real time temperature, pressure and humidity readings. Due to the exponential growth in E-commerce and food tech industry, there is a huge demand for cold chain. The strong collaboration between e-tailers and food tech supply chain industry has strengthened research and development in the cold chain industry. At a macro level, we have noticed several policies implemented by the Government, which have already been discussed. There is also significant growth of private sectors, and huge amount of consolidation is expected in the near future. Pharmaceutical industry is also driving a huge demand for cold chain industry , temperature controlled vehicles deployed fo
r pharmaceutical industries is expected to reach a staggering 17.1 US million dollars in the next 5 years.
r pharmaceutical industries is expected to reach a staggering 17.1 US million dollars in the next 5 years.
Conclusion
Due to changing lifestyles and demand in processed foods, cold chain is the need of the hour. It is high time since we curbed the huge losses of perishable food stuffs and initiate cold storage and cold transport facilities within vicinities of the farms. Cold chain can be integrated into the logistic processes of most of the companies, companies can start taking advantage of the initiatives and support being given by the Government of India.
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