Home > Strategy > Building Cold Storage Capacity- A big opportunity in India?

Building Cold Storage Capacity- A big opportunity in India?

While reading about the supply chain infrastructure for agriculture in India, I came across a startling fact- India has only 5386 stand-alone cold storages, having a total capacity of 23.6 million metric tons. However, 80 percent of this storage is used only for potatoes. Believe it or not, the remaining infrastructure capacity is less than 1% of the annual farm output of India, and grossly inadequate during peak harvest seasons. This leads to about 30% losses in certain perishable agricultural output in India, on average, every year.

Some of the companies have already started contract farming in India. They work with the farmers right from the time of sowing the crops till the produce is ready to be shipped, refined and sold. In such kind of a framework, the companies have a lot at stake in the percentage of the produce that actually makes its way into the shopping cart of the consumer.

With the Indian Govt. opening up gates to the FDI (Foreign Direct Investment), the farmer to consumer-cart chain is set to become tighter. More the losses in the chain, lesser the margins for the food chains. When it comes to perishable agri-products, cold stores (both short term and long term), become a necessity to reduce, if not eliminate, losses-in-transit.

Now, back to where I started the post- the current cold storage capacity is good enough for less than 1% of the annual farm output. The retail chains have limited shelf space, but when the produce comes from the farms, it comes in bulk. Without proper storage facilities, the farmers tend to get rid of the perishable produce as soon as possible. Thus, getting a very low price for their harvest. Same happens with the next person in line who buys the produce. The end result of this ‘hot-potatoes’ game is that for some part of the season, there is a glut of a particular produce and for the rest of the year, it is not just available.

The wait time from the time of harvest till the produce is placed on the shelf to be picked up the the end consumer is the window where cold storage will play its part. That provides a huge window of opportunity to create and rent out cold storage capacity in India. Or, the storage capacity can be created at various stages- for the farmers at the village level, for the suppliers at the entry point of cities and the for the retailers near their outlets.

I am sure, some entrepreneur, if not already working on this idea, will pick it up soon and kick off the revolution!

Categories: Strategy Tags: , ,
  1. March 13, 2013 at 10:33 pm

    There are a lot many entrepreneurs who are entering the cold storage industry but still there is lack of awareness of post harvest management of produce. there are a very few companies which are actually doing some work to improve the system and definitely a lot still needs to be done.

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