Cold Chain Management

Indian Agricultural Industry

As per FICCI report, India is
• Second highest fruit and vegetable producer in the world
(134.5 million tons) with cold storage facilities available
only for 10% of the produce.
• Second highest producer of milk with a cold storage
capacity of 70,000 tons.
• Fifth largest producer of eggs. Investments in cold chain
required to store 20% of surplus of meat and poultry
products during 10th plan requires Rs. 500 Crore
• Sixth largest producer of fish with harvesting volumes of
5.2 million tones. Investment required is estimated to be
Rs. 350 Crore
 Reality Check
• India is second largest producer of fruits & vegetables in the
world
• Per capita availability of fruits and vegetables is low
– post harvest losses
– about 25% to 30% of production
• Quality of a sizable quantity of produce deteriorates by the
time it reaches the consumer
• Perishable nature of produce requires cold chain arrangement
– to maintain the quality
– extend the shelf life if consumption is not meant immediately after
harvest
• In the absence of a cold storage and related cold chain
facilities farmers are forced to sell their produce immediately
after harvest
– glut situations
– low price realisation
Refrigeration Market Size
Of the 3443 cold storage units, 2975 are in private sector, 303 are in
cooperative sector & the rest are in public sector
 Cold chain
• Cold chain is a logistic system that provides
series of facilities for maintaining ideal storage
conditions for perishables from the point of origin
to the point of consumption
• The chain needs to start at the farm level (e.g.
harvest methods, pre-cooling) and cover up to
the consumer level or at least to the retail level
• A well organized cold chain
– reduces spoilage
– retains the quality of the harvested products
– guarantees a cost efficient delivery to the consumer
given adequate attention for customer service.
Cold Chain Logistics Infrastructure
• The Cold chain logistics infrastructure generally
consists of
– Pre-cooling facilities : several temperature levels to
suit different types of products - frozen, cold chilled,
medium chilled, and exotic chilled
– Surface Storage : It consists of refrigerated
warehouses for storage
– Refrigerated Transport : Involves usage of
refrigerated transport vehicles/ refrigerated carriers for
transportation
– Packaging
– Warehouse and Information Management systems
– Traceability & Tracking
 Economic Size of Unit & Land
Requirement
• Cold storage units can be used to store either a single
commodity or multiple commodities
• Entrepreneur's financial health
– store the produce entirely owned by him
– on rental basis
– combination of the two
• NABARD encourages cold storages where 70% of the
capacity is available to farmers for storage on rentals
• Financial viability of a unit depends upon the intended
pattern of use and rental rate prevalent in an area
• Considering 70:30 utilisation of the capacity for rentals
and own use, a 5000 MT capacity unit is considered
ideal
 Technology
• Cold storage unit incorporates a refrigeration system to maintain the
desired room environment for the commodities to be stored
• Refrigeration system works on two principles:
– Vapour absorption system (VAS)
– Vapour compression system (VCS)
• VAS
– comparatively costlier than VCS
– quite economical in operation
– adequately compensates the higher initial investment.
• VCS
– comparatively cheaper than VAS.
– Three types of VCS systems depending on cooling arrangements in
storage rooms
• diffuser type
• bunker type
• fin coil type.
– Diffuser type is comparatively costlier and is selected only when the
storage room heights are low
 Heat load factors
• Heat load factors normally considered in a cold storage
design are:
– Wall, floor and ceiling heat gains due to conduction
– Wall and ceiling heat gains from solar radiation
– Load due to ingression of air by frequent door openings and
during fresh air charge.
– Product load from incoming goods
– Heat of respiration from stored product
– Heat from workers working in the room
– Cooler fan load
– Light load
– Aging of equipment
– Miscellaneous loads, if any
 Structural requirement
• Storage space provision will vary according to the room
height and technology being selected
• Normally, a provision of 3.4 m3 per MT of potato is
considered for finalizing the room size
• For other commodities, space adjustment should be
made with relation to their bulk density as compared to
potato
• Proper soil testing and rack design need to be ensured
• The rack system and its foundation should be strong
enough to support weight of commodities.
• Normally, raft foundation is preferred for racks.
 Insulation
• All the sides of the cold storage room need to be
insulated in order to maintain the required temperature
inside.
• Insulation of side walls, partition walls, floor and roof
• The most commonly used insulation material is
thermocoal and sometimes Poly Urethane Fibre (PUF)
panels are also used
• Thickness :
– two layers of insulating material are used for insulation.
– Minimum 100 mm thickness of low density thermocoal need to
be used for sun facing walls and roof
– 80 mm thickness of low density thermocoal may be used for
other two walls.
– Partition walls need to be insulated with 40 mm low density
thermocoal
– 80 mm high density thermocoal is necessary for floors.
 Utilities
• Availability of soft water and dependable
power supply
• In case power available is not dependable,
provision of a Diesel Generator set
• If water at site is not soft & its hardness is
within limit for treatment, a softening plant
has to be installed of matching capacity
 PHYSICAL OUTLAY
1) Land
2) Site development including leveling, fencing, road,
drainage, etc.
3) Civil structures including main cold storage building,
rack provisions, drying shed, machinery room, store for
consumables, generator room, office, security cabin, etc.
4) Insulation of main cold store building
5) Machinery for cooling, air movement, loading, grading
and weighing
6) Electric supply arrangement including installation of
transformer and deposits
for requisite connection
7) Standby electric supply arrangement / DG set
8) Water supply arrangement and treatment plant, if
required
9) An ice manufacturing plant to utilize the recycled
water
10) Pollution control and waste disposal equipment
BROAD TECHNICAL PARAMETERS
FOR A 5000 MT COLD STORAGE  
• Land requirement 2 acres
• Storage space requirement 17000
cubic metre 
• Technology preferred Gravity circulation/
Bunker type/ Fin-coil 
• Cold storage room height 12.2 to 18.5 m
 Cold Chain in India
• Cold chains market in India is at a nascent stage
– only 2% of products that should be temperature controlled are
handled this way today
• Private players dominate the market though state owned
players are also present
• Current state of cold chains market is dismal:
– Fragmented and unorganized
• lack of awareness about proper handling & storage, poor
infrastructure, insufficient cold storage capacity, unavailability of
cold storages in close proximity to farms, poor transportation
infrastructure
– Inefficient capacity utilization
• cold storage facilities are mostly for a single commodity like potato,
orange, apple, grapes, pomegranates, flowers, etc.
– Lack of logistical support
– High operating and capital costs
 Market Opportunities
• The total cold chain market in India is worth Rs. 21,375 million, which is
equivalent to US $ 475 million. (taking 1US$= Rs 45)
• Chiller Segment, which includes F & V packhouses, Potato, apple contributes
Rs 16050 Million (US$ 357 Million) to the cold chain market.
• The remaining market is segregated into:
Segment Value
(US$ Million)
Imported Fresh Fruits & Vegetables 1.67
Exports By sea (Seafood, Meat, Poultry, Fruits & Vegetables) 46.00
Chocolate Industry 2.00
Dairy Industry 2.67
Meat & Poultry (domestic) 1.33
Ice-cream Industry 4.90
Processed potato 4.45
Frozen F & V 1.67
Emerging segments (RTE, RTS, RTC, flavored milk/yoghurt) 13.33
Cool Chain Transportation 40.00
• It is at a threshold of exponential increase due to developments taking place in
food and retail industry of India.
 Product Mix
• Characteristics of Indian CCM market for important
product segments are summarized
.
Product Characteristics
Potato Accounts for almost 90% of existing cold storage capacity
Chocolate Highest outsourcing demand among various product segments.
Large variation in peak and non-peak demand.
No dominant player among service providers
Poultry Almost 100% demand captured by Snowman and RK Foodland
both pan India players
Fruits & Vegetables Stable and High demand throughout the year.
No dominant player yet.
More than 60% demand met by small/ local/regional players
Dairy products Substantial demand throughout the year
(Butter & Cheese) Major players not very active
Significant share of small players
Ice Cream Highly seasonal High demand in peak season
High growth
35% demand shared by small players
 Government Initiatives
• Foreign equity participation of 51% is permitted for cold
chain projects.
• There is no restriction on import of cold storage
equipment or establishing cold storages in India.
• National Horticulture Board (NHB) operates a capital
investment subsidy scheme (CISS) which provides 25%
(maximum Rs.50 lakhs) subsidies to the promoter.
• Recommended the creation of additional cold chain
facilities at an investment cost of Rs. 2500 crore of which
Rs. 625 crore are to be provided as subsidy and the rest
has to come as private investment.
• Suggested modernization of existing facilities with an
investment cost of Rs. 2100 crore of which Rs. 525 crore
are to be subsidy and the balance to come as private
investment.
 Risks in owning a cold chain
• infrastructure capital outlays are high
• returns are long term
• country risk
• monsoon risk
• crop or raw material supply failures due to
pests, diseases,etc.
• partner risk
 Opportunities
• Cold chain infrastructure.
– Investments in real estate and cold chain infrastructure are
capital intensive and will yield slow returns.
– 100% foreign direct investment (FDI) is allowed in this sector.
– The Infrastructure consists of Coolers, Warehouses,
Refrigerated Trucks, Carriers, Shopping malls, etc.
– One needs to study of the potential risks and the ROI for this
activity
• Third Party Logistics
– The food supply chain is temperature sensitive and manual
handling reduces the product quality and life.
– Logistics providers with air conditioned trucks, automatic
handling equipment and trained manpower will provide end to
end support.
 Opportunities
• Retail
– Globally more than 72% of food sales occur through
super stores
– In India there are 12 million outlets selling food &
related items including push carts, wet markets &
neighborhood kirana stores.
– The kirana stores are generally located in small
space & have no cold storage facilities
– Indian retail sector is estimated to have a market size
of about $ 180 billion; but the organized sector
represents only 2% share of this market
 Opportunities
• Cold Storages
– Requirement of cold storage in the next five years
may be in excess of 12 lakh tonnes.
– New cold storage capacity for fruits, vegetables and
multi commodity as 15 lakh tonnes
• 13 lakh tonnes in private sector,
• 1.5 lakh tonnes in cooperative sector
• rest 0.5 lakh tonnes in public sector.
Thus, there remains a vast potential to be tapped.