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India Agricultural Cold Storage Industry: Ken Research

July 18, 2022

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India – An Agrarian Economy

India has high proportion of agricultural land (157 Mn hectares), diverse agro climate with 20 agro-climatic zones encompassing all 15 major climates of world, possess XX soil types in world, receives XX mm of rainfall, leading producer of milk, sugar, spices and second largest producer of fruits, vegetables, wheat, pulses; poises India as a key contributor to world agricultural output. Around XX% of annual GDP is derived from agriculture and allied activities and XX% of population is directly employed in agriculture while XX% of population is dependent on agriculture as primary source of livelihood.

Although the crop production statistics position India as a crucial contributor to world pool, India lags behind in making production accessible to its 1.3 Bn+ population and performs poorly in Global Hunger Index. It is estimated that wastages due to poor post-harvest management solutions costs annually around INR XX Lakh Crores.

Demand and Supply side Cold Storage Trends

One of the key reasons for looming wastages is the lack of availability of required cold chain infrastructure – pack houses, reefer vehicles, bulk and hub cold storage units. While cold storage units not only increase the shelf life of produce but also preserves the nutrient value and aids in better price discovery of farmers. In India, Potato is the single largest crop being stored in such units, followed by Tomatoes, Brinjal, Onion, Apple, Pears, Banana, and Oranges etc. Depending upon the type of crop and recommended practices, different types of cold storage type and temperature is required, For instance, Apples are best stored under Controlled Atmosphere equipped cold storage units for 3-10 months.

As per government study conducted in 2015, India had a massive requirement of XX pack-houses, XX Mn MT capacity of cold storage units, XX reefer trucks against the availability of mere XX reefer trucks and XX Mn MT capacity.

Overview of Cold Storage Capacity in India

With the push by government via various incentive led schemes and recommendations of NCCD (2015), number of cold storage units have increased to XX in August 2020 with an average capacity of XX MT. The total cold storage capacity has also increased at a CAGR of XX% during 2010-20.

Pain Points In Indian Cold Storage Industry

While, the improvement in cold storage infrastructure at an aggregate level is noteworthy, the problems lies within different segments of aggregate level. It is noted that top 5 states contribute XX% to total cold storage capacity and XX% of these units are decade old, rendering them as outdated for storing multiple commodities (only XX% of capacity is equipped with multi-commodity storage). Majority of the units are used for storing fruits and vegetables with little storage contribution made by livestock, poultry, sea food and dairy products. Only XX% of capacity is equipped with controlled atmosphere technologies, which is required for storing apples, pears and Kiwi etc.

Further, at farm-gate level; there is a dire need to upgrade the availability of modern pack-houses (for grading, sorting, pre-cooling and packing produce) and link such establishments with cold chain transportation infrastructure. At present, most of the farmers carry their produce in trolleys, tractors and take it to urban areas (Tier I cities) to store in cold storage facilities, which adds to the travel and transportation costs and also increase loading/transportation/unloading wastages.

Snapshot of cold storage Industry in Uttar Pradesh

Agricultural Snapshot: Total geographical area of UP is 29.4 Mn ha with cultivable area being XX Mn ha. The net sown area is XX Mn ha with XX Mn ha being sown more than once with a cropping intensity of XX%. The key crops produced in the state – Wheat, rice, potato and sugarcane accounts for XX%, XX%, XX% & XX% of country’s produce respectively and western region contributes XX% to state’s output. Till 2020, total of XX Mn Kisan Credit Cards have been issued to the state farmers with a total outstanding INR XX Crores.

Western UP is a key Potato growing region with Agra, Farukkhabad, Badaun, Hathras, Aligarh, Urai, Hamirpur etc. having excess Potato storage facilities. Other produce stored in cold storage units include Mango, Milk, Meat, Tomato, Brinjal etc. Majority of Potato produce is sold to traders directly or via Mandi’s while the focus has been increasing towards contract farming since 2017. Some of the key state government’s initiatives include:

UP horticulture department has taken an initiative to set up XX cold storages with a subsidy of INR XX Cr split between Centre & State.

Interest subsidy for purchase of reefer vehicles and mobile pre-cooling vans, upto a maximum of INR XX Lakh.

Trends and developments in Cold Storage Industry

Growing food processing industry and shift in cropping patterns to horticulture are key growth drivers for uptake in demand for cold storage solutions. Further, the past decade has also witnessed the entry of many Agri-tech startups focusing on solving industry problems including lack of irregular electricity supply, fixed structures of cold storages and some sector-specific challenges as well.

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Support by Indian Government to Promote Cold Storages

Indian Government is focused on establishing a robust cold chain infrastructure to enhance the farmers’ income by preventing supply chain losses by bringing and implementing favorable policies such as new agriculture laws – The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Bill, The Essential Commodities Act (Amendment) Bill, The Farmers Agreement of Price Assurance and Farm Services Act – are in the right direction, and aim to transform the sector to make it more liberal and encourage private investments in the sector.

Impact of COVID-19 and Future outlook of Industry

The impact of COVID-19 restrictions – temporary closure of Mandi, unavailability of rural labor during harvest season, supply chain restrictions for inter-state movement of goods took a toll on occupancy rates of cold chain units. While, revenue was hindered, continuation of operational expenses (electricity, water, facility rent) also impacted profitability of cold storage units with closure of highly indebted units.

Government’s push along with each state’s agricultural capabilities is the key to define regional landscape in next 5 years, backed by strong momentum witnessed in sub-segments of controlled atmosphere technology, mid-chill temperature and high capacity utilization levels from different end user- meat, sea-food & dairy products.

Key Topics Covered in the Report: –

Snapshot of Agriculture in India (State wise Production statistics of Cereals, Horticulture, Meat, Livestock and Poultry)
Situation of Farmers in India (Profile of Farmer, Role in Value Chain, Problems and Issues faced in storage of produce)
Overview and Segmentation of Cold Storage Units (By Storage Temperature, Technology, Regional & State wise Distribution)
Demand side and Supply side Indicators of Cold Storage Solutions
Growth Drivers and Challenges to growth of Cold Storage Industry
Cold Storage Demand-Supply Profile of Key States – Uttar Pradesh, West Bengal, Gujarat, Punjab and Andhra Pradesh, Maharashtra, J&K and Himachal Pradesh
Trends and Developments
Union and State Government Support to Cold Storage Sector
Impact of COVID-19 and Future Outlook of Industry
Business Attractiveness at Farm gate level
Recommendations for operating Sustainable Business