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Cold storages: Nearly 50-fold rise in projects approved by govt incentives

Dilip Kumar Jha/Mumbai 14 Mar 18 | 01:04 AM

Investment in cold storages have seen a sharp increase over recent years, partly due to the government’s increased focus on conservation of agricultural produce for better shelf life and a higher return for farmers, by selling their produce in the lean supply season.

Data compiled by the Union ministry of food processing showed the government approved 93 projects worth around Rs 28.3 billion in calendar year 2017, compared to three projects with an investment commitment of nearly Rs0.6 billion the previous year.

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In January-February this year, 14 projects worth Rs3.3 billion have been approved. The sharp increase, in number of projects and investment commitment, indicates investors’ growing confidence here on higher return. 

Still, even this pace is insufficient to meet the requirement. An estimated 30 per cent of horticultural output is lost due to poor post-harvest management, lack of cold storage facilities and lack of connectivity between farmers and consumers.

“Nevertheless, we have started scratching the surface. A cold storage facility in India is backed primarily by the need for either captive or commercial use. For example, dairy, pharmaceutical or food and beverage products that cannot survive without cold chains are properly supported by backward and forward integration. Still, independent commercial cold storages are lacking today due to the fear of lower occupancy. Thus, we have a long way," said B Thiagarajan, joint managing director at Blue Star, the country’s largest central air conditioning and commercial refrigeration entity.

The majority of cold chains are in the segments of bio pharmaceuticals, dairy, seafood, meat, food and beverages. All these directly serve large processed food producers and export-centric segments. To reduce spoilage of farm commodities, however, many collateral management companies have started looking at cold chains aggressively, resulting in the annual 30-plus per cent growth of this industry estimated for the next few years.

“We are also looking cold chains aggressively, with massive investment on the cards," said Sanjay Kaul, managing director of National Collateral Management Services, without citing any numbers.

Jaipur-headquartered Star Agriwarehousing and Collateral Management owns and manages around 100,000 tonnes of cold storage facility across various states. According to its executive director, Amith Agarwal, “we focus primarily on spices, with 80 per cent of average occupancy of the entire cold storage capacity". The investment has been encouraged by government initiatives. Apart from infrastructure status, it has announced a 40 per cent subsidy for setting up cold storages.

A recent study from ratings agency CRISIL suggests the cold chain pie would double in five years. Driven primarily by three segments – meat, seafood and biopharma. Dairy, food and beverages have also drawn investors. According to an estimate, less than one per cent of India’s farm produce is processed for value addition. The first advance estimate by the Union ministry of agriculture showed fruit and vegetable output at 305.4 million tonnes in 2017-18, about 1.6 per cent more from the previous year.

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