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Cold Chain Conundrum

How do we sustainably feed nearly 10 billion people by 2050? This is the pressing question recently faced by WRI and partners from the World Bank, UNDP and UN Environment as they launched the ‘World Resources Report: Creating a Sustainable Food Future’.
This follows the outcome of the EAT-Lancet Commission report released earlier this year, led by an international group of leading academics, which considered how we can deliver healthy diets for such a large number of people from a sustainable food system.

WRI estimated that we will need to produce 56 per cent more food in 2050 than we did in 2010. But alongside defining demand, supply and diet, there is the tricky fourth dimension of economically effective market reach. Without efficient physical connectivity, production cannot and does not translate into supply.

A well organised and sustainable food logistics network is absolutely critical to supply the production, with minimum product losses, and feed the 10 billion, and without such a distribution network, the other three dimensions are largely a matter of academic conjecture.

Cold-chain infrastructure is essential to economically effective market reach through efficient connectivity. According to UNFAO, “the lack of sufficient and efficient cold-chain infrastructure is a major contributor to food losses and waste in NENA (Near-East, North Africa), estimated to be 55 per cent of fruits and vegetables, 22 per cent of meats, 30 per cent of fish and seafood, and 20 per cent of dairy”.

As one example, UNFAO estimates that 35 per cent of fish caught is lost, noting that “most of the losses are due to a lack of knowledge or equipment, such as refrigeration or ice-makers, needed to keep fish fresh”.
Given that most food loss and waste in developing countries occurs during production and after it is harvested, the greatest potential for reduction is investment in infrastructure related to storage, transport, cold-chains, and distribution.

Both the WRI and EAT-Lancet studies equally recognise the important role of cold-chains and market connectivity in matching increased supply to increased demand. As one example, both set targets for reducing food loss and food waste by 50 per cent and cold-chains are an essential enabling technology in helping to reach such an outcome.

The total food that is lost and wasted across the world today represents a combined 1.3 billion tonnes, or the production of nearly 30 per cent of the world’s agricultural land, and hence WRI goes as far as to call for the target to be met by 2030.

However, neither piece of work, nor indeed the IFC nor UNFAO, tries to quantify what would actually be required to successfully meet these targets – let alone transport, store and distribute nearly 6 billion tonnes of food by 2050, a substantial portion of which will be fresh and temperature sensitive produce – in terms of the physical numbers and capacity of temperature-controlled road vehicles, cargo ships, multi-modal containers, domestic refrigerators, chilled display cabinets, cold storages, pack houses, ripening chambers, pre-coolers and a plethora of other cold-chain supporting equipment and infrastructure in the energy, transport, retail and food logistics sectors.

Furthermore, appropriate business operating models, cold-chain management systems and training and skills development will be needed too.

As to an indication of the size of the challenge, currently 70 per cent of food in the mature developed markets of the world passes through a cold-chain at some point on route from the point of production to our table. By comparison, in India barely 10 per cent of the produce that could benefit from using the cold-chain actually does so – with 1/20 of the population of India, the UK has 10x more refrigerated vehicles alone.

India is the world’s second largest producer of vegetables and fruit and among the top ten in fish and meat, but the bulk of these perishable products face risk on the journey to the consumer due to exposure to high temperatures, inadequate handling and logistical support. Reportedly, upwards of 25 per cent of such produce is lost due to a lack of farm-gate preconditioning including precooling, refrigerated vehicles and shipping containers and other supply chain bottlenecks.

Importantly, this infrastructure deficit restricts market expansion which in turn dissuades efforts to improve productivity. Any efforts to produce more food, without concurrent logistics enablement, means higher supply at markets in immediate proximity to production points at time of harvest, and a lower product valuation as these markets are in surplus.

Given the use of refrigerants and insulation in cold-chains, the sector is important not only for its effect on our ability to deliver the Paris Agreement on Climate Change but also for a successful outcome to the Montreal Protocol and Kigali Amendment.

In this regard, other than a commitment to achieving zero-carbon cold-chain logistics with no emission of pollutants, neither the WRI nor EAT-Lancet reports consider the potential environmental impact if we do not achieve such a laudable aspiration, let alone the infrastructure investment required to make it happen or the scale of the clean energy resources needed to deliver on it.

Alongside providing enough nutritious food to feed nearly 10 billion people and delivering it using clean energy, we must simultaneously improve the livelihoods of the nearly half a billion small and marginal farmers who are essential to today’s global food system and the major stakeholders in its future. According to the Africa Agriculture Status Report (AASR), 80 per cent of Africa’s 51 million farms are smaller than two hectares. In combination they produce 70 per cent of the continent’s total food requirements.

Elsewhere, smallholder farmers provide around 80 per cent of the food consumed in Asia and this statistical pattern is repeated in developing economies around the globe. Overall, the EATLancet study identified that currently, small and medium sized farms provide more than 50 per cent of the essential nutrients in the global food supply.

The deployment of cold-chains does not just enhance food security, in terms of increasing reliable access to a sufficient quantity of nutritious food, it also allows farmers to earn more by ensuring the quality of their produce and providing the efficient and effective connectivity needed to sell it further afield – reaching consumption centres in distant cities and urban conurbations.

Such capacity is both empowering and galvanising as the farmers can begin to consider growing higher value produce for new markets. It also provides opportunities to produce and sell food better suited to new growing conditions as they emerge, thereby, helping them to build capacity for resilience and adapt to a changing climate.

The central philosophical challenge to be addressed is that feeding the world is largely perceived today as a large-scale industrial enterprise, with land consolidation into larger, mechanised production units being the default business model for economic efficiency. But for sustainability we need new radically innovative models which economically empower the marginal and small farmer – and create rural employment and resilience, in alignment with existing human backdrop and current on the ground reality.

The cold-chain is at the heart of this and India has recognised it as such in the deployment of integrated cold-chains is identified as a key pillar to fulfil Prime Minister Modi’s vision of doubling farmers’ incomes by 2022. The reality of business dictates that no matter how appropriate a shift in philosophy might be, cold-chains will only be taken up by small and marginal farmers and associated supply chain players if they are affordable within the local economic context.

There are a range of price points within the various options, including shading or simple evaporation cooling. But the investments will likely increase in scope as operations increase in size and complexity. Given the high capital requirement, marginal and small farmers across economies are likely to adopt “pay as you use” type services and funding models will need to be innovative, driven through empowered Farmer Producer Organisations (FPOs), be they as Farmer Producer Companies (FPCs) or co-operatives.

Equally key is to enable small and marginal farmers through FPOs and other knowledge transfer channels to understand how to avail services of the integrated components of pre-cooling, storage and transport to gain the economic advantages available from cross-geography access, distance-price arbitrage, time-arbitrage and cross-seasonal trading. This is where new value is created and logistics management is as important as the physical infrastructure required to enable the flow of food from point of production to point of consumption.

Cold-chains can be an essential contributor to the United Nations Sustainable Development Goals – not least SDG 1 (End Poverty); SDG 2 (Zero Hunger); SDG 3 (Good Health and Well Being; SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action), the Paris Agreement on Climate Change and the Kigali Amendment to the Montreal Protocol.

The key question we need to answer is: “How do you create the local and global, temperature controlled “field to fork” connectivity to feed 10 billion people sustainably from hundreds of millions of small-scale farmers whose livelihoods and well-being are often dependent on only 1-2 hectares, as well as ensure they are climate change adaptation ready and resilient … all without using fossil fuels?

Toby Peters,
Professor of Cold Economy
University of Birmingham