India’s food industry held back by cold storage shortfall

By Mike Stones

- Last updated on GMT

Related tags Food Food processing

A shortfall of 10m tons of cold storage facilities for agriculture produce is holding back the nation’s food industry including its rapidly developing food processing sector, according to a new report from financial specialists KPMG and Assocham; the country’s chambers of commerce.

India’s existing food cold storage facilities can accommodate 21.7m tons of produce compared with a requirement for more than 31m tons, says the report.

Commenting on the report, Sajjan Jindal, Assocham’s president said: “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.”

The report highlights a particular lack of facilities at export points. “Indian export related infrastructure for agri produce is grossly inadequate especially at seaports and airports,”​ it says.

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

Poor capacity utilisation

Cold storage facilities now available are mostly for single commodity like potato, orange, apple, grapes, pomegranate and flowers etc. which result in poor capacity utilization, said Jindal.

To remedy the storage short-fall, Assocham is pressing for more cold chain facilities for other products and warehousing facilities to be funded through public and private finance.

Although there are strong government incentives to establish cold storage and ware house facilities with capital subsidies, the acquisition of land is blocking progress, said the association. “The Ministry of Agriculture and Food Processing should facilitate land acquisition so that a good number of cold storage facilities are put up near sea and airports to reduce transaction costs,”​ says the report.

Consistent quality

Assocham and KPMG complain that the entire Indian food supply chain is dominated by what it describes as: “…unorganized players and 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.”

A long supply chain also means that each level of the supply chain is unaware of the requirements of next level and thus there exists disconnect between farmer and processor, it continues.

Meanwhile, the report recommends more fiscal incentives towards upgrading food processing technology. It also recommends the government introduce fiscal and other incentives to encourage companies to invest in the latest food processing technology.

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