Financing Opportunities in Cold Storage (Cold Chain) – a techno-economic analysis

1. HARSHAL SURANGE ACR PROJECT CONSULTANTS PVT LTD www.acrconsultants.net Financing Opportunities in Cold Storage (Cold Chain) – a techno-economic analysis

2. From to FARM CONSUMER • NOT NEW TO INDIA – FAIRLY WELL ESTABLISHED FOR MILK & MILK PRODUCTS • -- TO SOME EXTENT FOR FISH, MEAT AND POULTRY PRODUCTS • - - STILL AT INFANCY FOR FRUITS AND VEGETABLES COLD CHAIN

4. CONVENTIONAL COLD STORAGE PACKHOUSES, PRECOOLING & COLD STORAGE C.A.STORAGE FROZEN FOODS PLANTS A.C / VENTILATED STORAGE DISTRIBUTION CENTERS SUPER MARKETS / RETAILERS REFRIGERATED TRANSPORT DIFFERENT COMPONENTS OF THE COLD CHAIN

5. FARM I BULK PACKING   I TRANSPORT   I   I CLEANING SORTING GRADING PACKING   I TRANSPORT I COLD-STORAGE   I (DRYING) I   I TRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER • NEW PRODUCTS GETTING ADDED LIKE TURMERIC, CARROTS etc ROUTE – A --CONVENTIONAL COLD STORAGE

6. Cold Store - 1971 TYPICAL CONVENTIONAL MULTI-FLOOR STRUCTURE WITH MANUAL LOADING MODERN MULTIPRODUCT MULTI FLOOR STRUCTURE WITH MECHANISED LOADING

7. FARM   I BULK PACKING   I TRANSPORT   I   I CLEANING (WASHING) (DRYING) SORTING GRADING PACKING   I PRE-COOLING   I COLD-STORAGE   I   I REFRIGERATEDTRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER • PRECOOLING IS A PROCESS OF ACCELERATED COOLNG IMMEDIATELY AFTER HARVESTING • THE ITEMS, WHICH, USUALLY, FOLLOW THE PRECOOLING ROUTE, ARE GRAPES, STRAW-BERRIES, POMEGRANATES & ALSO FLOWERS - PRECOOLING WITHIN A SHORT TIME AFTER HARVESTING • NUMBER OF UNITS ESTABLISHED IN MAHARASHTRA, KARNATAKA ANDHRA, U.P, M.P ETC,. OTHER STATES ARE FOLLOWING SUIT. • GRADING & PACKING - MANUAL / MECHANISED ROUTE – B -- PACK HOUSE WITH PRECOOLING AND COLD STORAGE

8. PROCESSING FACILITIES

10. FARM   I BULK PACKING   I TRANSPORT   I I I    I CLEANING SORTING GRADING PACKING I   I  C.A  SORTING I I REFRIGERATED TRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER • USED TO EXTEND THE STORAGE LIFE OF SEASONAL PERISHABLES. • INVOLVES DELAYING THE NATURAL RIPENING PROCESS. • LARGELY USED IN DEVELOPED COUNTRIES ESPECIALLY FOR APPLES AND TO SOME EXTENT FOR PEARS AND PLUMS (APPLES CAN BE STORED UPTO 8 MONTHS) • CA TECHNOLOGY IS AT IT’S INFANCY IN INDIA AND THE ESTIMATED PRESENT CAPACITY IS AROUND 50000 MT • IT HAS A GOOD POTENTIAL FOR GROWTH ROUTE - C - CONTROLLED ATMOSPHERE STORAGE

13. FARM I  BULK PACKING   I TRANSPORT   I CLEANING SORTING GRADING PACKING I SHORT TERM USAGE I PROCESSING I (PACKING) I FREEZING I BULK PACKING I FROZEN FOOD STORAGE I I REFRIGERATED TRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER • FROZEN FOODS • PROCESSING, (PACKING) & FREEZING • STORAGE IN FROZEN STATE • POPULAR ITEMS ARE : • GREEN PEAS, • CORN, • OKRA, • MIXED VEGETABLES, • TOMATO PUREE, • MANGO PULP, • MANGO SLICES • DICES, • PINEAPPLE SLICES ETC • FISH, MEAT, POULTRY PRODUCTS, DAIRY PRODUCTS & COOKED FOOD ROUTE – D -- FROZEN FOODS

14. MODERN MEAT PROCESSING PLANT

16. FARM   I BULK PACKING I  TRANSPORT I     I PROCESSED PACKED & FROZEN FOOD   I REFRIGERATED TRANSPORT FROZEN FOOD STORE I I REFRIGERATED TRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER PRE-FROZEN FOODS • UNDERGO PROCESSING AND FREEZING AT THE MAIN PROCESSING PLANTS • ITEMS LIKE ICE CREAMS, BUTTER, CHEESE, FISH, MEAT AND POULTRY PRODUCTS • TRANSPORT THROUGH-OUT IN REEFER VANS/ CONTAINERS TO DISTRIBUTION CENTERS / SUPER MARKETS • NORMALLY LOCATED AT CONSUMER CENTERS AND ARE A PART OF MULTI-PURPOSE COLD STORES ROUTE – E – STORAGE OF PRE-FROZEN FOODS

17. PRE-FROZEN FOODS

18. FARM I  BULK PACKING   I TRANSPORT   I I   I   I PROCESSED AND PACKED FOOD   I I I AIR CONDITIONED OR VENTILATED STORAGE I I I TRANSPORT DISTRIBUTION CENTER/ SUPER MARKET / RETAILER VENTILATED STORAGE • SOME PROCESSED AND PACKED ITEMS NEED AIR CONDITIONED STORES (Eg. CHOCOLATES,CONFECTIONERY PRODUCTS, TOBACCO) • CONTROLLED VENTILATED STORES ARE BEING USED FOR ONIONS ALSO. ROUTE – F – A.C. / VENTILATED STORAGE

19. Latest technology(Irradiation)

20. FOOD DISTRIBUTION CENTERS • RELATIVELY A NEW CONCEPT IN INDIA • CARRY OUT THE FUNCTION OF • PROCUREMENT OF LARGE VARIETY OF FOOD AND RELATED ITEMS • INVENTORY MANAGEMENT • PROCESSING AND FREEZING FOR SOME ITEMS • LOGISTICS • THEY WOULD PLAY A VERY IMPORTANT ROLE IN THE COMING YEARS DISTRIBUTION CENTERS

21. A TYPICAL FOOD DISTRIBUTION CENTER NORMALLY PROVIDES FOR: • (A) DRY GOODS STORE FOR STORAGE OF NON- PERISHABLE GOODS WITH VENTILATED AND AIR-CONDITIONED AREAS • (B) RAW MATERIAL RECEIPT AND STORAGE BLOCK • (C) PROCESSING, FREEZING AND PACKING ZONE • (D) CLEANING, DRYING, GRADING, PACKING / PRECOOLING ZONE • (E) RIPENING ROOMS • (F) COLD AND FROZEN FOOD STORAGE • (G) DELIVERY DOCK • (H) SERVICES FOR WORKMEN, UTILITY SERVICE BLOCK AND ADMINISTRATION ETC.

22. THE CENTER HAS TO HANDLE BOTH THE FRESH VEG AND NON-VEG FOODS WHICH HAVE TO HAVE DIFFERENT PATHS FOR PROCESSING, COOLING / FREEZING AND STORAGE. UTILITY SERVICE BLOCK PROCESSING & FREEZING RAW MATERIAL RECEIPT & STORAGE BLOCK COLD & FROZEN FOOD STORAGE BLOCK DRY GOODS STORE SERVICES FOR WORK-MEN CLEANING, DRYING, GRADING, PACKING / PRECOOLING BLOCK ADMINISTR- ATION DOCK TYPICAL LAYOUT FOR FOOD HANDLING / PROCESSING / STORAGE AND DISTRIBUTION FACILITY TEMPERATURE REQUIREMENT VARIES WIDELY FROM 20 DEG. C TO (-) 30 DEG. C FOR VARIOUS APPLICATIONS.

23. The perishable food production in India is estimated as: Milk : 115 Million MT (No.1 in the world) F & V : 200 Million MT (No.2 in the world) Fish : 6.4 Million MT (No.6 in the world) Meat : Largest cattle population in the world Poultry : One of the largest in the world current capacities of the cold storage & food processing : Cold Storage : Around 6000 nos - Capacity : 26 Million MT Food Processing : 5 to 6 % of production. Current scenario in the Cold Chain sector

25. With the growing fruit & vegetable production there is a great potential for development of Cold Chain in F&V sector. • Food processing recognised as a Priority sector by Govt. • Incentives offered by the govt. • Multi-products Cold Stores – more and more products such as carrots, turmeric are being added in this category. • Food Parks –designed for overall development of the food handling, processing & storage facilities. Govt. promoting 30 Mega Food Parks • Terminal markets managed both by APMCs & Private players.. • Pack Houses with Precooling facilities for relevant products in different regions. Opportunities

26. Controlled Atmosphere Stores for Apples, Pears etc. • Frozen food plants for fruits & vegetables, milk products, fish, meat & poultry products. • Scientific Ripening for Banana & Mango. • Development of Refrigerated Transport for processed & preserved food. • With the changing lifestyles of small nucleus families, demand for processed & refrigerated food is increasing • National & International Food chains setting up Food Malls/ Food courts & stores in various parts of the country . Opportunities

27. INDIA TO BE SOURCE BASE FOR PROCESSED FOOD?

28. Excise concessions, Service Tax exemption, Govt. grants, incentives etc thru’ NHB/NHM/MoFPI/APEDA • Latest move by Govt is FDI in cold chain / retail sector - Food (Fresh & Precooled) covers 62% OF Retail. • Task force on development of cold chain • National centre for development of cold chain - NCCD Govt initiatives

29. Govt initiatives NHB – TECHNICAL STANDARDS - TECHNICAL SCRUTINY NCCD - TRAINING

30. Lack of quality Road network in most areas. • Rising cost of land • Shortage and erratic supply of power in most areas • Rising energy costs - a cause for concern as the plants are energy intensive. • Availability of required quantity & quality of water in most regions. ChallengesintheColdChainsector

31. Inconsistence in quality & quantity of food production –Dependence on weather. Excessive use of pesticides. High initial project costs (Break-even period almost 5 to 6years) Lack of training on good agricultural practices, pre & post harvest technology & hygiene. Lack of availability of trained personnel for plant operation. Lack of awareness about maintenance, hygiene, safety issues & energy efficiency aspects. ChallengesintheColdChainsector

32. COLD STORAGE COSTS : AROUND 12000 ~ 15000 RUPEES PER MT FOR POSITIVE TEMP • AROUND 22000 ~ 25000 RUPEES PER MT FOR FROZEN FOOD STORES • RETURNS : NORMALLY IN THE RANGE OF 200 ~ 400 RUPEES PER MT PER MONTH FOR POSITIVE TEMP STORES • FROM 600 ~ 1200 RUPEES PER MT PER MONTH FOR FROZEN FOOD STORES • POWER REQUIRED VARIES SIGNIFICANTLY DEPENDING ON VARIOUS FACTORS AND IS DIFFICULT TO MAKE A GENERIC STATEMENT ECONOMICS OF COLD CHAIN

33. CHALLENGES Article which appeared in Times Of India dtd.15.12.04 (Front Page)

34. EXCISE EXEMPTION PROCEDURES RELAXED • CONCESSIONAL (AGRICULTURAL) ELECTRICAL TARIFF IN ALL STATES. • A CENTRALISED REGISTRATION PROCESS FOR ALL COLD CHAIN PROJECTS. • IMPROVED ROADS & TRANSPORT FACILITIES. • SPECIAL INCENTIVES FOR USE OF “GREEN TECHNOLOGY”’. WHATS NEEDS TO BE DONE?

35. Conclusion Conclusion Conclusion Conclusion • Where as huge opportunities exist in the development of Cold Chain as a whole, there are issues such as high project costs, high energy requirements & infrastructure aspects • . • The need for training of personnel on operational & food safety aspects etc. has to be addressed. • There is a strong case to promote the concept of “Green Cold Chain” to ensure ecofriendly & energy efficient plant construction & operation. • Govt. initiatives with financial incentives & thrust on sound technology & energy efficiency is a welcome feature, which will hopefully, bring in a healthy development in the Cold Chain.

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