Trouble keeping Indian agriproduce cold

Wednesday, 02 December, 2009

Cold storage facilities for storing agri-produce in India fall short by 10 million tons. The country has nearly 21.7 million tons of such facilities but needs more than 31 million tons if it is to prevent 30% of agriproduce being lost in fields post harvest, claims a joint report brought out by KPMG and Assocham (Associated Chambers of Commerce and Industry of India).

The report Food Processing and Agri Business adds that Indian export-related infrastructure for agriproduce is grossly inadequate especially at seaports and airports.

“More than 30% of produce from fields is lost to poor post-harvesting facilities and lack of cold chain infrastructure. India has nearly 21.7 million tons of facility whereas it needs over 10 million tons more of such capacities,” according to Assocham President, Sajjan Jindal.

The problems are compounded by the limited uses of such facilities that are available, the report continues.

Most of the cold storage facilities currently available are for single commodities like potatoes, oranges, apples, grapes, pomegranates and flowers etc which results in poor capacity utilisation.

To remedy the storage shortfall and utilisation problems, Assocham is pressing for more cold chain facilities for other products and warehousing facilities for the storage of agriproduce to be funded through public and private finance.

The Indian Budget for 2009-10 has provided a number of incentives for setting up of warehousing and cold storage facilities with capital subsidies. However, land acquisition for setting up of such facilities is still a large bottleneck because, without government intervention, land cannot be acquired for creation of such facilities as it is an area which falls in the state list.

The Ministry of Agriculture and Food Processing needs to facilitate land acquisition so that cold storage facilities can be erected near sea and airports to reduce transaction costs.

Indian agribusiness is renowned for its long and fragmented supply chain and the inefficiencies in the supply chain are contributing to the huge losses caused by wastage and shrinkage of perishable commodities.

Currently the entire Indian supply chain is dominated by disorganised players and an absence of any structured market to ensure correct price discovery and availability of consistent quality produce. Several middlemen add to wastage from the farm to the consumer, retailer, processor or exporters.

The long supply chain also means that each level of the supply chain is unaware of the requirements of next level and thus there exists a disconnect between the farmer and the processor.

The report has also recommended more fiscal incentives towards technology upgrades in food processing. Companies that are constrained by finances need to receive an incentive and tax breaks to encourage them to upgrade to the latest food processing technologies if the country is to initiate substantial technological changes. Ultimately this will lead to enhanced quality and better value addition.

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