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A cold chain is a temperature controlled supply chain cold storage and distribution in which agricultural products are preserved afresh and shelf-life is extended for a longer period of time. With increasing food demand and changing lifestyle, cold chain has become the focal point for the government and investors. This industry facilitates long distance transport of various perishable products and seasonal fruits available for the entire year. It’s a kind of linkage between the farmers and consumers. This integrated system helps in maintaining quality in terms of nutritive value, crispness, freshness, taste and appearance. India is one of the largest producers and a leader of various agricultural products. But due to fledgling cold supply chain, there is a heavy loss of food and other resources. These losses have been stated to be as high as USD 8 to 15 billion per annum from the agriculture sector alone. There is a need to develop cold chain sector to avoid these problems. The cold chain industry has been growing at a CAGR of 20 per cent for the last three years i.e. from 2014 to 2016. The cold chain market in India is anticipated to reach Rs 624 billion (USD13 billion) by the end of 2017. Cold stores are the major revenue contributors of the Indian cold chain industry. But it still lacks proper infrastructure as India has capacity below 1,000 MT of products. However, lack of proper and adequate food storage, processing and cold chain logistics remain a serious challenge. Though, the Indian Government is one of the driving forces in developing the cold chain industry and supports private participation through various subsidy schemes and grants. Investment in cold chain in India was also opened under the automatic route for 100 per cent FDI participation.

Efficient Supply Chain Management (SCM) is an essential feature that is responsible for the rapid growth of any county’s economy. As the competition has increased globally, developing countries like India have now shifted their focus to producing non-traditional agriculture goods. This change has improved not only their export capacity but also the enough availability of food within the country. Despite having such an increased agricultural capacity, a huge part of Indian population is still struggling to fulfill their basic needs. The actual concern that has to be addressed is not the food producing capacity but the capability of storage and distribution. This has led the governments of many countries to think about the various means of food safety. This would also enable the government to give away the benefits of revenues through agricultural products to the farmers. The farmers in many developing countries including India usually come across many challenges in identifying and accessing the economical ways of diminishing the risks to their produces and stand in the match with the big food producers who can produce in moderate quantity. Such a jeopardy condition leads to the increased requirement for efficient supply chain management. Cold Chain Supply is the best possible option to fulfill this requirement.

India is a fast-growing economy with a large agricultural base. But lack of transport infrastructure, cold chain facilities and non-application of supply chain management principles is making the agri-business in general and the food processing sector in particular very inefficient. Recognising this, the Government of India has initiated several steps including creation of a separate ministry for food processing industries, opening up the agriculture sector for foreign direct investment through the agri export zones and special economic zones, and in several other ways. India aims to be the food factory of the world and increases its share in global food trade from 1 per cent to 3 per cent.

Figure 1: Cold chain supply network

Cold chain supply

Cold Chain Supply (CCS) is relatively a recently adopted concept in the supply chain management. It is significant to understand the concept appropriately to execute the operations of Cold Chain Supply (CCS). The literature defines the CCS or also known as Cold Chain Management (CCM) as:

“A network of refrigerators, cold stores, refrigerated trucks, freezers and cold boxes organised and maintained so that the perishable items are kept at the right temperature to remain fresh and intoxicated during their transportation, storage, and distribution from factory to the point of use.”

An environment-controlled logistics chain, ensuring an uninterrupted care from source-to-user, consisting only of the activities related to storage, and distribution in which the inventory is preserved within predetermined environmental parameters. The Cold Chain does not alter the essential characteristics of the produce or product handled.

The cold chain supply has proved to be a suitable and uninterrupted storage as well as distribution model for food safety concern of the country. Every year, a huge quantity of perishable goods like as food, vegetables, flowers, meat, fruits, and medical drug or vaccines, etc. gets wasted only because of unavailability of on-time storage and distribution capability in India. Cold Chain Management or Supply (CCM/CCS) has a significant impact on farmers, and the companies working in food industry. Modernised cold-chain development with controlled temperature generally focuses on one supply chain and not on the network of channels (Figures 1 and 2). As shown in figure 1 and 2, CCS is a separate series of storing and supplying activities leading to scheduled delivery of the product to end consumers, and consequently satisfy them as shown in Figure 3.

The cold chain industry in India is still at a nascent stage. Although, there is a large production of perishables, still the cold chain potential remains untapped due to certain reasons like high share of single commodity cold storage, high initial investment (for refrigerator units and land), lack of enabling infrastructure like power and roads, lack of awareness for handling perishable produce and lapse of service either by the storage provider or the transporter leading to poor quality produce. However, increasing urbanisation and growth of organised retail, food servicing and food processing sector are boosting the growth of cold chain industry in India. The trend is shifting towards establishing multi-purpose cold storages and providing end-to-end services to control parameters throughout the value chain.

As Food and Agricultural Organisation (FAO) estimates that a 45 per cent increase in food production and availability needs to be achieved by 2030 as shown in Figure 4. It is to ensure adequate food supply to over nine billion inhabitants by 2030 which would be a huge challenge for the world. Thus, it is vital to explore every possible means of achieving progress, particularly, the reduction of post-harvest losses. Losses of perishable foods are the most important in developing countries where over 80 per cent of the global population lives, and where about one quarter of the production is lost due to a lack of an incomplete cold chain. These losses represent more than 400 million tons per year. Large post-harvest losses affect food security to the rural economies by markedly widening the gap between consumer prices and the amounts the producers are being paid at the end. They make products less affordable for consumers, and reduce farmers’ income, thus, discouraging them from producing and supplying markets. Table 1 shows the range of temperature of the food product storage. Also, it has competencies in the cold chain management, particularly, in the storage and transport of food items and in managing their supply and demand networks.

Figure 2: Cold chain supply cluster with all stakeholders
Figure 3: Process in cold chain supply of food

Benefits of Cold Chain Supply

Having compared the system requirement of cold chain supply, the advantages are summarised as follows:

  • Better product quality in terms of nutritional value, colour, texture.
  • No bacteria formation takes place due to proper cold storage conditions.
  • Maintenance of hygiene.
  • Maintained humidity.
  • Longer storage of product or extension of shelf life.
  • Value for money.
  • Development of packaging industry.
  • Address the issue of traceability.
  • Better handling and Hygiene practices.
  • Inventory management and automation.
  • Palletised handling and racking.
  • The growth of refrigerated transport industry.

Challenges to Cold Chain Supply

The key challenges to the growth of this sector are:

High Energy Consumption Cost: Operating costs for the cold storage business in India are approximately Rs 80-90 per cubic foot per year as compared to Rs 40 per cubic foot per year in the West. Energy expenses alone make up about 30 per cent of the total expenses for the cold storage industry in India compared to 10 per cent in the West. These factors make the business of setting up of cold storages a high entry barrier.

Rising Real Estate Costs: A fully integrated cold storage facility with one million cubic foot of storage space will require an area of an acre to build, which could cost between Rs 1 crore and 1.5 crore, constituting 10-12 per cent of the project cost. Cooling units are not mobile units, and so location becomes a key factor, and with India’s small land holdings, getting large tract of land to build a cold storage unit becomes a major additional constraint.

Lack of Logistical Support: Cold chain industry in India is fragmented and it will require heavy investment in building technology enabled cold storage facilities to cover entire value chain from procurement to transportation in refrigerated trucks to retail outlets in cities.

Large and Unpredictable Variations in Quality

Uneven Distribution of Capacity: A majority of investment in setting up cold storages in India has been in states like Uttar Pradesh, Uttaranchal, Maharashtra, Gujarat, Punjab and West Bengal. Secondly, cold storages that have been set up can cater to single commodities only which are major bottleneck.

Strategies to Overcome Challenges Faced by Cold Chain Supply

  • Easing of import rules for cold chain equipment including refrigerated vans.
  • Developing FPOs and FIGs and enabling them to develop direct market links.
  • Developing improved business models by promoting producer owned supply chains.
  • Amendments to APMC aimed at enabling direct market driven supply chains and opening options through alternate market channels.
  • Continue extant grants and subsidy schemes for cold chain infrastructure development and extend the schemes to include the logistics and transport sector.
  • Develop multi-model cold chain links through rail and highways; aiming at a fast track green corridor for perishables.

Conclusion

Innovations in packaging, fruit and vegetable coatings, bio-engineering (controlled ripening), and other techniques reducing the deterioration of food products have helped shippers extend the reach of perishable products. For food products such as fruits and vegetables, time has a direct impact on their shelf life and therefore, on the potential revenue a consignment may generate. Concomitantly, new transport technologies have permitted the shipment of perishable products over longer distances. Various parameters have been recognised by the Indian Government and 100 per cent FDI in the cold chain has already been permitted country needs to ensure that their production does not go waste and returns fair value to producers and consumers There must be a better linkages and way of transportation between growers, storage and customers. There is absence of a single dedicated perishables gateway or fast track corridor for perishable cargoes. Consumer food retail sector is the fastest growing in the country, worth around 15 billion USD 40 per cent of fresh produce is wasted due to lack of satisfactory handling in the supply chain Indian cold chain business is fragmented in a big way.