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Development of Cold Chain Supply in India

A presentation prepared on the developement of Cold Chains in India and future recommendations for sustainability

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Development of Cold Chain Supply in India

  1. 1. Development of Cold Chains in India
  2. 2. Development of Cold Chains in India Prepared by: M. Farhan Khan Mohit Chaurasia Sumanta Chatterjee Vishu Vishal S.P. JAIN INSTITUTE OF MANAGEMENT AND RESEARCH, MUMBAI
  3. 3. • What is Cold Chain Supply ? • Current Status of Cold Chain in India • Industries using Cold Chains in India • Trends in Food Consumption Patterns – Growing Scope of Cold Chains • Challenges & Issues for Cold Chain in India • Key Issues with Cold Chain development in India • Government Policies and Initiatives • FDI in Cold Chains • Recommendation
  4. 4. A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used to help extend and ensure the shelf life of products such as fresh agricultural produce, seafood, frozen food, photographic film, chemicals and pharmaceutical drugs. What is Cold Chains ? Logistics Transportation Inventory Warehousing Information Management Packaging Security Source: Global Agri System Pvt. Ltd. Report
  5. 5. What is Cold Chain? The Cold Chain Supply Infrastructure Supply Procurement • Precooling System • Farms (Rural Markets) • Manufacturers Transport • Refrigerated Trucks • Refrigerated Railway Wagons • Refrigerated Cargo Containers Storage • Cold Storage • Warehouses Transport • Refrigerated Trucks • Refrigerated Railway Wagons • Refrigerated Cargo Containers End Customer • Retail, Terminal, Markets, Factory, Ports, Airport LOGISTICS TEMPERATURE CONTROL (REFRIGERATION) COLD CHAIN LOGISTICS
  6. 6. 30% of the fruits and vegetables grown in India get wasted because of lack of cold storage facilities and energy infrastructure. Only 8% of the produce is processed in India Cold Chains growing at 20-25 per cent CAGR Source: IBEF Commodity Cold chain capacity (Percentage) Potato 92.82* Multi purpose 7.63 Fruit & vegetable 1.07 Fish 0.73 Meat 0.15 Dairy & milk 0.68 Others (Pharma, Life sciences) 0.36 Cold Chain: India Commodity wise Capacity Utilization, 2012 Source: Global AgriSystem Pvt. Ltd. Report
  7. 7. Industries using Cold Chains Fruits & vegetables Ice cream sector & confectionery Dairy products Meat & Fish productsFloriculture Pharmaceutical Products
  8. 8. Cold Chain in Food Sector Industry Temperature Standards Banana 13 C Chill 2 C Frozen -18 C Deep Frozen -29 C
  9. 9. Agriculture Sector Product % World’s Production Fruits (50 million MT) 9% Vegetable (90 million MT) 15% Mango 41% Banana 23% Cashew nut 24% Onion 10% Cauliflower 30% Green Peas 36% Diverse agro-climatic zones across the country Blessed with round the year sunshine. Huge potential to cultivate a vast range of agricultural products INDIAN SCENARIO
  10. 10. Agriculture Sector 40% of the fruits and vegetables grown in India (40 mT worth $13 billion) get wasted every year. Huge enough to feed countries like Brazil and Vietnam Wide gaps exist in the cold chain Infrastructure not existing for the produced capacities Transportation (temperature controlled) is inefficient Services of cold stores are used with archaic storage technology No dominant players in the market and the market is dominated by Domestic players Isolated stores without logistics Support
  11. 11. Pharmaceutical Industry Cold chain management is looked more in terms of regulatory compliance rather than its role in product quality and patient safety The ideal pharmaceutical cold chain should be capable of: •Dealing with changing product portfolios •The requirements for Good Storage and Distribution Practices •Current regulatory trends, •Quality management and •Temperature monitoring Ageing Population Downward pressure on public healthcare costs Growing patient demand for leading edge medical technology
  12. 12. Floriculture Industry Airlines do not prefer to carry cargo which is seasonal, perishable, voluminous yet not in such large quantity Because of the small volume of flowers they mostly have to be transported on regular flights which have limited cargo-space Florist trade Nursery plants Extraction of essential oils from flowers Bulb and seed production The industry has been growing at a CAGR of 25% over the past decade The industry comprises of:
  13. 13. Dairy Industry ‘Operation flood’ has made India the world’s largest milk producing country with a mammoth 95mT capacity Milk Farmers Dairy cooperatives Distribution centres Milk parlours or retail outlets •Inadequate institutional and infrastructure facilities like no cold storage, non existence of modernized processing equipments • Inefficient supply chain • Lack of organized marketing of milk • Lack of scientific and profession management • Lack of capital investment
  14. 14. Poultry, Meat and Fish Industry India produces about 4.9 million tonne of meat annually (8th in World) Buffalo meat is surplus in India India exports both frozen and fresh chilled meat to more than 54 countries in the world The meat processing industry is still nascent There is large scope for meat processing in poultry as well as in red meat Ready to eat (RTE)/chicken products is growing at a rate of 10-15 per cent The total market for non-vegetarian value-added products (for example; nuggets, kababs, etc) is Rs 150-180 crore Poor infrastructure and cold chain facility are the major stumbling blocks in the path of growth Need to improve retail infrastructure and educate retailers about these products
  15. 15. Poultry, Meat and Fish Industry India ranks second in the world fish production with an annual fish production of about 6.9 million metric tonnes. Frozen shrimp contributes 66.97 per cent of India’s total marine product export India exports both frozen and fresh chilled meat to more than 54 countries in the world Only five per cent of India’s seafood exports are in processed form More than 60 per cent of India’s exports to south-east Asia are re-exported after processing Unorganized state of the suppliers Inability to form a cartel similar to the oil cartel Dependency of several poor southern countries on fish as a valuable foreign exchange earner have relegated southern seafood exporters to price takers
  16. 16. Trends in Food Consumption Patterns – Growing Scope of Cold Chains Region 1964- 1966 1997- 1999 2030 World 24.2 36.4 45.3 Developing countries 10.2 25.5 36.7 Near East and North Africa 11.9 21.2 35 Sub-Saharan Africaa 9.9 9.4 13.4 Latin America and the Caribbean 31.7 53.8 76.6 East Asia 8.7 37.7 58.5 South Asia 3.9 5.3 11.7 Industrialized countries 61.5 88.2 100.1 Transition countries 42.5 46.2 60.7 Source:www.fao.org (Food and Agricultural organization of the United Nations) Meat (kg peryear) As a nation develops, its dependence on cereals for dietary energy reduces and the demand for meats and fresh vegetables increases Efficient cold chains are required to ensure the value of developed supply capacity is passed on to the consumer and vice versa for the producer One of the key reasons for high food inflation in India is the lack of efficient supply chains for food, of which cold chains form an integral part.
  17. 17. Challenges & Issues for Cold Chain in India Lack of Uniform Technology standards Consolidation Capital Investment and Technology Incumbency advantages independent of size Economies of scales Human Capital and Domain Skills Lack of logistical Support Uneven Distribution of cold stores
  18. 18. Key Issues with Cold Chain development in India Increase in Domestic and Export demand Benefits of growth in demand is not passed on adequately to the farmer
  19. 19. Government Policies Encourage Investments – Agri food is identified as priority sector. Encourage organized sector- ECB route opened, Import duty relaxed. Liberalize Marketing Norms- Focus on increased retail, improved supply chain. Rationalize Tax Laws- Moving towards uniform VAT/GST. Provide Grants and subsidies- VG funding, Grants, Infrastructure status Ease foreign investment- 100% FDI in food sector. ECB for cold chain
  20. 20. Government Initiatives Excised waved on F&V, meat preparations, ice-cream, other RTE food mixes. Automatic approval for 100% foreign equity in processed food items Duties reduced on imports; Zero service tax on installations EOI floated for 30 mega food parks National Highway Development Program Partnering with Indian railways to establish cold chain infrastructure Integrated food law(FSSA) notified and ready for implementation. Development of National centre for Cold Chain Development (NCCD) NCCD • Training and Capacity Building • Research and Development • Building standards through International benchmarking • Development of cold chain infrastructure and trade in perishable
  21. 21. FDI in Cold Chains These facts are recognized by the Indian government and 100% 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 It takes a truck 6 days to travel the 2219km from Delhi to Bangalore Lack of Investment in much needed transportation between growers, storage and customers 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% 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.
  22. 22. Recommendations Implementation of GST Removal of perishable agricultural products from the purview of state APMC acts. Wide scale Implementation of Horti Trains.
  23. 23. Thank You