Cold Chain Market in India
The bulk of India’s cold storage consists of single commodities like potatoes and grains, with less than 10% of agricultural produce passing through a cold chain. Though some CCI components exist, an integrated system still needs to be added for most value chains. Most FFV losses occur between the farmgate and post-harvest handling (the first mile). But there is a 99% gap in required CCI (i.e., packhouses) at this first mile, weakening post-harvest management. This CCI gap persists in the dairy sector (~80%) and fish (70%) value chains.
Market Opportunity
Different CCI will grow at different rates for each value chain considered. Packhouses and reefer trucks are the main CCI drivers in the FFV cold chain (CAGR of 51% and 34%) 2021-2030. Government incentives will accelerate the high estimated growth and are also expected to drive the deployment of more ripening chambers. The growth rate of cold storage is likely to shrink to 2.5% for 2020-2030 since the government’s initial focus was on developing cold storage that bridged the most significant infrastructure gaps. Finally, the industry is expected to shift from single-commodity cold storage units to multi-commodity units with higher utilisation rates throughout the year. Multi-purpose cold storage accounted for only 23% of the total capacity in 2009 but has since risen to 30% in 2020.
The table below shows the Total Market (TM), Total Addressable Market (TAM) and Total Obtainable Market (TOM) for different CCI components in the FFV value chain, based on CaaS market sizing.
India is the second largest producer of fruits and vegetables in the world. The country’s horticultural produce output stood at ~312 million tonnes from an area of ~25 million hectares in 2017-181, of which 1% was exported. There are varying estimates of post-harvest food losses for fruits and vegetables across India. A comprehensive study conducted by the Indian Council of Agricultural Research (ICAR) estimates that in the case of fruits, overall losses range from 5.8% to 18% while in the case of vegetables this range is between 6.8% to 12.98%.
(MoA&FW. 2017. Report of the Committee for Doubling Farmers’ Income: Volume III. [online] Available at: http://farmer.gov.in/imagedefault/DFI/DFI%20Volume%203.pdf )
The food loss that occurs post-harvest and before connecting to markets, due to the inadequate and inefficient cold chain infrastructure, is effectively a loss of saleable volume and value. It is therefore an economic burden on the food supply system, in addition to leading to avoidable energy use and direct as well as indirect GHG emissions for the country. Cold chain infrastructure can reduce food waste, preserve quality and increase shelf life of perishable goods.
Cold chain forms a critical link between farm and market. An integrated cold chain is critical for connecting farmers to markets near and far, allowing them to extract more value from their produce, and helping improve their livelihoods, while reducing post-harvest food loss and waste. A packhouse is the first step in the cold chain infrastructure, and a key element of value chains for produce for which maintaining cold temperature is a necessity. While cold chain infrastructure can preserve quality of the produce, it cannot reverse any damage or quality loss that happens before the produce reaches the first point of cold chain. Therefore, pre-cooling the produce to ensure early removal of field heat is one of the most critical steps for preserving quality and extending the shelf life of produce. In this context, packhouses have a critical role to play – in addition to serving as collection centres for fruits and vegetables prior to distribution and marketing, they provide preparatory functions such as sorting, grading, washing, drying, packaging, pre-cooling, etc, which are essential to support downstream processing of produce. The maintenance of required conditions in cold chain infrastructure is energy intensive. The cold chain requires strict temperature control to maintain the safety and quality of produce. In addition to energy use, refrigeration and air conditioning also require refrigerants which result in GHG emissions that are significantly more potent than carbon dioxide. ICAP estimates that energy consumption by packhouses alone could grow from 2.4 TWh in 2017-18 to 5.2 TWh by 2037-38, while energy consumption from cold storage warehouses could grow from about 4.5 TWh to 4.9 TWh over the same period, in its reference scenario.
Cold chain infrastructure development in India is governed by several institutions at the central, state and local level. Over the last decade, various infrastructure development and financial assistance schemes have been launched by the Ministry of Agriculture & Farmers’ Welfare (MoA&FW), Ministry of Food Processing Industries (MoFPI), and Ministry of Commerce and Industry (MoCI), including the Mission for Integrated Development of Horticulture (MIDH), Pradhan Mantri Kisan SAMPADA Yojana, and the financial assistance scheme of Agricultural and Processed Food Products Export Development Authority (APEDA) under the supervision of the respective line ministries. The National Centre for Cold chain Development (NCCD) is an autonomous body under the MoA & FW to promote and develop an integrated cold chain in India for perishable agriculture and horticultural products, including perishables from allied sectors.