MAKING COLD CHAINS COST-EFFECTIVE
Energy Future|July - September 2020
The loss of food produced happens differently in developed and developing countries. In developing countries like India, much of the food loss occurs at the beginning of the chain. This can be attributed to poor storage, cooling, and transport infrastructure. In this article, JofiJoseph discusses the obstacles to penetration of cold chain in rural India and the implementation of a cost-effective cold chain from the farm to the fork.
Jofi Joseph

According to the United Nations Development Programme, nearly 40% of the food produced in India is wasted from the farm to the fork. That translates to roughly ₹250 crore per day or more than ₹90,000 crore per year. These losses result in a lower income for the producer (farmer) and increases the cost for consumers. But the most significant impact is that it challenges our overall food security, as we need to feed our ever-growing population. It is estimated that saving even one-fourth of the food currently lost or wasted would be enough to feed the hungry people in India.

Food loss happens very differently in developed and developing countries. In developed countries, food waste and loss occurs largely at the end of the chain. It is estimated that in the United States, 31% of food loss occurs either at retail due to dumping of over-ordered or spoilt food or at the consumer end when they buy or cook more than they need and choose to throw out the extras. However, in developing countries like ours, most of the food loss occurs at the beginning of the chain. It occurs after harvest or during transit from the farm to the large consumption areas based in urban markets. This can be attributed to poor storage, cooling, and transport infrastructure.

Critical Elements in the Cold Chain

There are four critical elements of the cold chain that need to be implemented from the farmer to the consumer.

1. Post-harvest chilling and storage of produce in the village itself

2. Chilled transport of the produce from the village to the processing/ aggregation centre

3. Chilled transport of the finished product to the market

4. Cold storage at the distributor/ warehouse and refrigerated transport delivery to the retailer/ consumer in the city

The number of stages may vary depending on the commodity, nature of business, or scale of operations. However, implementation of all applicable elements is imperative to reduce loss due to spoilage and ensure that both the producer and the consumer benefit.

It is observed that implementation of cold chain is more prevalent in the postprocessing phase (factory to consumer) than in the pre-processing phase (farm to factory). This is in the form of investment in reefer trucks for movement of finished goods from the factory to the city or in the form of cold rooms at warehouses in the city itself. This can be attributed to processors having more control on the produce from the factory gate and the propensity to invest in cold chain for the finished products, which have more value than the raw material. However, the challenges faced in implementing cold chain infrastructure in rural areas where the food production happens are the main reasons for poor implementation of cold chain in the pre-processing stage.

Challenges in Implementation of Cold Chain in Rural Areas

The dairy industry has invested heavily in cold chain at the pre-processing stage. Owing to its perishable nature, 100% of the milk collected from farmers is chilled to 4 °C before it is taken to the processing plant. Even then, less than 20% of the milk is chilled at farms or even the village itself. The balance 80% is transported at ambient temperature in cans over long distances and chilled in centralized chilling centres.

Promethean Power Systems conducted a study in 2016 to understand why a low percentage of milk was chilled near the source. We wanted to understand the barriers to investment in cold chain infrastructure in villages. This study was focused on the dairy industry, which constituted the largest base of our customers, and was conducted through extensive primary and secondary research. The study highlighted that the barriers were capital expenditure, operating costs, managing operations, and visibility.

The biggest challenge to implementing cold chain in rural areas is the cost. The cost includes both capital expenditure and operational expenses. The chilling infrastructure has to be replicated and distributed across multiple farms in multiple villages. A very few individual farmers have the capability, skills, and scale to invest in and operate chilling equipment. The unreliable electric grid supply means that the chilling equipment has to be operated using diesel generator backup more than half the time. At the current rates of diesel and electricity, chilling cost of using a diesel generator is five times that of using grid electricity. Moreover, the management of diesel fuel (procuring, storing, and filling) to run diesel generators adds additional costs and hassles. The twin challenges of who will bear the capital expenditure of the chilling equipment and high operating costs involved due to an unreliable grid power are obstacles to penetration of cold chain in rural India.

The second major challenge is in operations. Even if the chilling equipment is installed across thousands of farms and villages, the chilled produce still has to be taken to processing/aggregation centres for value addition. This involves regular lifting and transport of the produce, while at the same time ensuring that temperature rise during this process is minimal. Here, the challenge is of scale and infrastructure. We also need feet on the ground to ensure that the whole system works effectively.

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