Future prospects of Cold Storage in India

Prasanna Raju

“Improving macro-economic conditions have got the country’s top logistics players excited and many of them are attempting to become integrated cold chain service providers”- Prasanna Raju, co founder, Godamwale.com

The cold storage business started around the 1800s, but during that time the only industry using it were the breweries and they mainly rely on the unsanitary practice of ice-harvesting.

By the 1900s, the idea of cold storage had dribbled into the meat packing business, until finally in the mid 20th century; these refrigeration facilities have been installed on trucks which were used to transport perishable foods to long distances

India’s cold chain sector is anticipated to reach Rs. 624 billion ($13 billion) in 2017, according to 2014 estimates. Barely 5 percent of this is organised.

Almost 40 percent of India’s total food production is lost in transit, wasted by consumers or damaged (according to the United Nations Development Program), and about 75 percent of medicines produced lose their potency due to inferior temperature controls during transport.

There are a few challenges for Storage in India. 

The first problem is that there aren’t enough Cold storages. The government is offering some subsidies to try to perk this up, but it is still rather capital intensive. There are also very different business models at play.

There is a need for godowns.

This need is towards storing grains and selling it at a better price once the harvest season is over. Turmeric for example climbs as high as 3 – 4 times off season and is very easy to store. Most  farmers don’t do it, because they don’t have space to store it.

There is a need for temperature controlled godowns. 

Certain produces are temperature dependent. You would need lower than or constant temperature – coffee beans for example needs constant temperature. Tea leaves are the same. Spices need constant temperature as well – sudden dry spell and moisture can ruin these things. Groundnut for e.g. also requires a space where temperature can be controlled.

There is a need for Cold storage.

Fruits and vegetables for example, need to be frozen. Apple is a seasonal crop and we get it throughout the year. We could do something like that for mangoes if we have cold storage.

Tomatoes, onions, a lot of stuff that go through rapid price fluctuations are because of lack of adequate cold storages.

There is a need for cold-chains.

Cold chains – think cold storage on wheels.

Be it frozen meat / food / processed milk or food, and also cases, where fast food restaurants like subway is trying to deliver meat and ingredients  to hotels, they need cold chains. We have an utter lack of them. They exist but not nearly in the size and volume that is needed.

First of all, the infrastructure side of the problem. There is so much demand for storage that some of the storage units in tier II, tier III cities have political alliances  around them – that they only let their farmers store etc.

What the industry lacks is an app to map the idle space & make it easily available to Consumers. It is here that startups like Godamwale.com bridge the gap bring this much needed information to the internet.

Godamwale as a startup has also introduced time share in the market, where you can book Cold storages on the go.

Around 75% of the Cold storages in the country are used to store Potatoes, and that too most of the farmers use them as a seed bank. We have bought hundreds of Cold storage players only and have helped many of them increase their business.

Experts say cold storage companies are moving towards becoming integrated service providers because it is a highly lucrative business model.

To be sustainable you need to be integrated. Improving macro-economic conditions have got the country’s top logistics players excited and many of them are attempting to become integrated cold chain service providers. 

Growth Drivers Just as the need for an efficient cold chain logistics sector cannot be overemphasized, the drivers to its growth are clearly visible.     

  • The growing demand for processed foods as a result of higher disposable incomes would lead to a requirement of robust cold chain distribution system.
  • Growth of retail market in India and the entry of multinational retail giants will be a major driving force.
  • Increasing production of horticultural products that require cold storage facilities.
  • Establishment of new and modern cold storage facility will necessarily push up demand for refrigerated vehicles.
  • The cold chain monitoring space in the country has seen growth and the emergence of multiple players. 

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