Freezing Opportunity

Developing a robust cold chain in the context of our hinterlands mean creating millions of economic opportunities. Very nascent the stage with which India has begun its journey, Team R&M explores its future.
Freezing Opportunity

At least on government files, Aryapur Khera, a peri-urban town in Western Uttar Pradesh is well connected through road to the rest of the country and in fact, there is a road that connects this sleepy town to district Mainpuri. But a ride from Mainpuri to this sleepy town will tell you how badly the road has been damaged. The thin potholed coal tar strip makes the journey of twenty five kilometer into a two hour nightmare.

Interestingly, in this town, where reaching after dusk is almost impossible due to security reasons, one can get packaged milk of almost all brands and children can be seen buying chocolates from the shops. It is fascinating to see such products in a town where electricity and road connectivity are abysmally poor. Then how do these products reach there and who takes them there?

Shaukat Ali Farooqui of Coldstar India has the answer. The logistics company supplies packaged food across the country and provides range of solutions to store perishable products in an ideal storage condition. Philippe Beyries, agriculture counsellor in the French Embassy in India says that India is an ‘ideal place’ for developing cold chain industry. In India, the biggest success story for cold chain logistics is that of packaged milk. One can buy milk of regional as well as national brands in any part of the country. So is the case of chocolates. Medicines and apples are two other products, which use the cold chain to reach places and have been successful. Despite the need and potential, the cold chain industry in India is only 3 per cent of the world and is at a very nascent stage.

The easy availability of new technology in farming has increased production of agricultural produce by manifolds and companies like ITC and Walmart, PepsiCo etc are buying these products directly from farmers. Many highly perishable commodities in horticulture like tomatoes, apples, peas cannot last for long if they are not stored in a controlled climate. Safal, an initiative by leading Milk brand Mother Dairy has over 350 outlets in the country, where one can find fresh and packaged fruits and vegetables. Its ‘ safal’ peas is one of the most successful example of cold chain in India. One can buy packets of peas at few retail outlets in towns.

Ice-cream companies are another excellent example of strong cold chain usage in India and companies like Cream bell has strong presence in smaller towns of India. According to ML Arora, VP (supply chain management) in the Cream bell, the company has fleet of 250 refill trucks, which are fitted with latest technology to keep the ice-cream ‘fresh’. The company sends its products in 22 states in the country and range of his company’s ice creams are available in many hilly terrains of Uttrakhand and Himachal, where travelling is not that easy. Veerender Singh Thakur, GM of Global AgriSystem feels that there’s a huge opportunity in the sector as India is still underdeveloped in this area.

Global AgriSystem sends apples and carrots through trucks, which use cold chain technology. He says that industry is evolving and there are lots of new innovations, which have made the transportation easy and efficient. He says that the right approach in the cold chain system is to use the technology right from the storage till it reaches to the consumer. However, in India, as he terms it, almost all the food and vegetable products get the ‘temperature shock’ because, they are not always stored in a similar temperature. Take the case of potato, it is preserved at freezing temperature in the cold storages but once it is out of the store and is sold in the retail market, it is open to heat, at times crossing 40 degree celsius.

Potatoes are grown widely and one of the major areas, where farmers grow it at a larger scale is in Farrukhabad in Eastern UP. In this small town, one can find as many as 150 cold stores just to acco-mmodate potatoes. The packaged food industry is growing and with the support from the government it is expected to grow at a faster rate than assumed earlier. Rise of the middle class population has also contributed to this rising phenomenon

The last mile reach has always remained a major worry for companies and their problems are multiplied when these companies have to transport their products to the rural areas. Many companies have addressed the issue of supply of their products through cold chain in rural India but there is a huge gap between demand and supply.

Pawanexh Kohli of Cross Tree Technovisors says, “Challenges of this industry are similar to any other industry. In rural, the biggest challenge is that of electricity and road infrastructure and it will improve gradually.” He said that in some cases that challenges has already been mitigated but many challenges remain and are waiting for government intervention to address it.

On the other side, people who send their products through these trucks said that drivers switch off the compressors to save diesel. It affects the quality of the products. Global AgriSystem has installed data loggers to keep a track on the variations in the refrigeration inside the vehicle. “This is how way we keep a track on the drivers and they do not switch off the refrigerators,” says Thakur.

Capt. Jatin Sharma, GM, Foods, FMCG and Cold chain division at MJ Logistics said, “I do agree that drivers can do that just to make some quick money but as far as our company is concerned, we have ensured that such wrongdoings do not take place.” He added that his company uses leased transport to send dairy products and processed food to shorter distances, so there’s are not much opportunity for the drivers to do anything like that. Talking about the challenges, Jatin said that power outages at frequent intervals are one of the biggest challenges for the industry. Apart from this, road infrastructure, rising costs of fuel and variations in taxation policy in different states are the areas, where government should intervene. He demanded that government should ensure the supply of electricity to the industry at subsidiesd rates. Arora also echoed similar concerns and said that his company has set up warehouses in almost all 22 states because, roads are in very bad condition in parts of the country and there are huge climatic variations in the country.

Manpower is a big concern for the industry. Neither drivers nor those who are working at the warehouses or in the cold storages are trained to handle technical issues. Harshal Surange of ACR Project Consultants says that there’s a dire need to design courses that can train people for the sector. He says that there is a huge gap in demand and supply in the case of manpower in the industry. He says, “Farmers in India don’t know their potential, because they are not exposed to the export market by the middle men. Now that FDI is here, they too will be able to realise their true potential.”

Rakesh Kacker, secretary in the ministry of food processing industries said that it is true that industry is not finding skilled workforce. He also highlighted that government is supporting universities and institutions to start new courses in food technology and for it, the ministry release funds to such institutions. The Secretary emphasised that developing cold chains is crucial for long-term development of the food processing industries. “The ministry is working closely with the Department of Agriculture on developing cold chains. Development of sub-zero cold chains will be monitored by the food processing ministry and those above-zero temperature will be looked after by the department of Agriculture,” he added. The government has started the Indian Institute of Crop Processing Technology at Thanjavur, which has already started functioning, added he. Jatin said that corporate should come forward and actively participate in designing the courses that suit their requirements.

Despite the odds that industry faces, experts believe that there is a bright future waits for the cold chain industry. There’s has been lot of innovations in the technology and with the help of countries like France and the Netherlands, India is making a foothold on the global map. Indian government is also extending its support to the industry. Under its Cold Chain, Value Addition and Preservation Infrastructure scheme, ministry of food processing industries is offering Subsidies up to 50 per cent of the total cost of plant and machinery and technical civil works limited to Rs 10 Crore in General Areas; and 75 per cent of project cost limited to Rs 10 Crore for NE region and difficult areas (North East including Sikkim and J&K, Himachal Pradesh and Uttarakhand).

ML Arora said, “This is the right time for cold chain business to take off along with retail chain and food processing sectors.” He showed optimism that the industry will grow to have a larger share of 15 per cent by 2020, which at present is somewhere between 2 to 3 per cent. Surange feels that cold chain industry is a sunrise sector and there is a huge potential exists for the sector. He says that it will see exponential growth in the next 5-10 years. Ministry’s focus is also showing optimism in this regard. India is collaborating with countries like Israel, France and the Netherlands to develop cold chain infrastructure in the country and also to give a push to horticulture products. National Horticulture Board is opening many sectors in the country, where advanced varieties of fruits and vegetables seeds will be grown. The poor storage infrastructure is an opportunity for the cold chain industry and people in the business feel that India will see an exponential growth in this area.

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