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Perpetuating fallacies - more on market research

Yet another spate of research reports were sent to me, some having quoted the National Centre for Cold-chain Development (NCCD); almost all referring to out-dated data and sadly, confidently extrapolating that into futuristic scenarios.

I cannot help but point out some of the errors and omissions, else yet another set of documents, poorly understood and researched would be bandied about as gospel (distorting whatever they aim to propound)!

Perpetuating misinformation or inexperienced interpretations is the biggest threat to India's cold-chain development. Worse… when they are given guise of authoritative alignment. More so, because these studies are frequently lapped up by the gullible who buy this largely to make plans and strategise their businesses.

These theorised documents would be agreeable and pass muster if they were but reports or outputs from study groups... if only they did not attempt to lend their secondary collation undue legitimacy aimed at decision makers.

Market for Fruits in India

Fruits-Banana-Apple-Orange
India is viewed as a steady state consumption market, including for fruit produce…and it has lived up to this perception! Over the last 10 years, imports into India of apples, kiwis, pears, grape have seen phenomenal growth; not merely doubled or quadrupled, but more than 10 fold growth has been witnessed.

On the domestic front, Indian farms repeatedly break production records but one does not see a likewise increase in trade volumes from these domestic source points. What prevents our own produce from spanning the sub-continent and emulate the growth our imports have witnessed?

Is it that our consumers have a penchant for imported fruit, a specific flavor, a specific brand?

Fish for food!


Fish farms or aquaculture farming is catching on in a big way in India. This is because of rising health awareness and demand for fish meat, and increased logistics bottlenecks along traditional fish sources and lower catches from those regions.

So, new catch is being developed in hinterland fish ponds, the idea being that a long term source of alternate food and earnings can be developed in our farm lands.

The whole idea of modern fish farming is to enhance productivity, thereby the supply, and therefore commercial returns to our farming community.

Cold Chain scenario in India?

Good Better Best What is the Cold Chain and what is its importance for the Agriculture sector? What is the overall scenario of Cold Chain in India? What are the challenges before us, where we stand in comparison to other developed countries? What kind of technological & infrastructural and knowledge up gradation logistic companies need to do to meet the demand of goods in the future? What are the challenges do you see in front of logistic companies to reach the rural areas and how can it be tackled? Wal-Mart has parted itself from Bharti very recently, how will it affect the India’s retail and supply chain industry and its infrastructure? What is NCCD doing and its future goal?

Above are a series of questions thrown my end, with some quick responses in revert.

Cold-chain is a series of interlinked chain of activities that link perishable goods from source point to destination. Inherently cold-chain must involve a market linkage and a product life cycle matrix.

Delhi gang rape - Guilty!

Guilty said the court, and in my opinion rightly so! Personally, I feel the crimes these rapists committed last year in December, deserve them the death penalty. The Nirbhaya case, as it is called, is heading to its conclusive end.

Yet, when I listen to the TV channels clamouring for death, it disappoints me to hear the baying for blood! It is only after courts pronounced them guilty, could we confidently and freely attribute the crime to them. In similar line, whether these criminals get sentenced to death or another penalty, is again a decision for those who understand such matters. I do not find it wholesome to hear phrases like, “the country awaits for Friday to see if justice is truly served”, “the youth wants to know if the courts will give justice”, etc. These are poor insinuations and calls that go against our judiciary.

What’s with Solar panels and their usage…

Why do stand alone SME industrial units, homes and I include cold storages, shy away from installing solar panels to generate electricity?

Yes, cost is a factor as always. But that is one factor that is continually showing a downwards trend. (Today, if reports are true, the selling price per watt of solar photo voltaic is about 0.50 USD. Reports also suggest that this price is expected to come down to 36 cents per watt in 5 years. Past records show that in 1977 the price per what stood at USD 76 per watt).

SolarFeedThe other reason quoted is the hassles of operations and maintenance. This is typically because the implied concept of Solar PV panel requires the use of a bank of batteries to store the cheap electricity. And batteries need to be replaced every now and then. The electricity that is generated from solar insolation would need to be stored in batteries, which in turn would be sourced to create AC power for use in common utilities. Another limitation for industries is that they may need 3 phase input into their machines.

But why store this electricity, why bother with batteries and et al? What if the solar power is fed directly into the local grid. I am not talking about sharing the surplus generated with the grid… the concept is to feed ALL that the sun generates for you, straight into the grid.

Focus development in Rural India

Rural India as the source, not just as a destination market

India’s Cold-chain sector was traditionally driven by the industrial infrastructure and equipment providers and various documents output by industry bodies like CII and FICCI and large consulting firms drove across the need for greater storage infrastructure required in this sector. The country followed through, and over years developed an enviable capacity in cold storage, amongst the largest in the world. Yet, our cold-chain is still considered nascent and troubled. As a follow-up, the government of India constituted the NCCD; sanctioned by the cabinet in February 2012, envisaged as a think tank to policy makers, involving participation from cold storage providers, technology & equipment providers, consultants and grower associations.

Ever since its incubation, the National Centre for Cold-chain Development (NCCD) has moved the understanding that mere storage of produce is not the final solution to food distribution. Cold-chain means market linkage and it involves a series of inter-weaved activities and has an expanded horizon beyond temperature controlled storage. NCCD thereby opened its participation base to include educational institutions, farmers and producers, traders and sellers, self-help groups, consumer groups, student groups, agri-entrepreneurs and enterprises involved in air, sea, rail & road logistics, finance, retail, research, packaging, marketing, etc.

Today, besides the equipment providers & store owners, the entire cold-chain user base, including who are impacted by it and those who add value in form of knowledge or R&D, now have opportunity to contribute directly to future developments. Through such collective participation from a wider stakeholder base, more conjoined inputs for holistic development is resulted and made this unique brain trust (NCCD) even more inclusive across all cold-chain segments.

Efforts were then undertaken to identify what were the major missing links in India's cold-chain, specifically in relation to fresh agricultural produce. Various options were put forth…

Perishable Business concepts

Enabling Horticulture Trade

I am frequently asked to assess studies and the strategies that will help develop a revenue multiplier for farmers-producers, to save food wastage and safe guard national resources; truly a laudable Vision. This vision is typically presented alongside tactical options that will enable farmers to store their weekly or periodic produce, so as to avoid peak season price drops and distress sales that stem from low shelf life of perishable produce. Ergo the cold stores, conceivably offering safe storage and extending the sale opportunity onto a more favourable future date.

Sadly, the glorious vision cannot be served merely by storing produce, abiding to ‘time the market’ for the ‘right price’. This tactic lends itself to the core premise that the local buyer will pay a higher value at a later date, when supply patterns are low - the market remains the local buyer/mandis, specific to the growing region. This concept is true to an extent but does not leverage cold chain technology to the fullest. This is not an in-depth solution by far, and is a business notion that will perish!

Viability Gap Funding (Cold chain)

This commentary is intended to present queries on the concept and the need for Viability Gap Funding (VGF) for the cold-chain industry in India. It is hoped that views; both for and against, shall be generated to allow a more cohesive debate on the matter and to allow policy makers to understand the need if any, the policy constraints if any and possible solutions to the agenda of faster cold-chain development in the country.

There is only one preliminary premise in this discussion, that we need more of the cold-chain and that this should happen with private sector participation.

First, a quick review of what are the five measures within the underlying principles of Viability Gap Funding (VGF)-
  1. The task should be clearly understood as a Public Service. This also implies that a captive need exists; in business terms a steady long term “revenue stream”.
  2. The project is undertaken under PPP mode and state government participates through provision of necessary land.
  3. The Project has pre-determined user tariff indices, basis which revenue returns are assessed.

Private-Public Shift

Can the government, should the govt retain domain expertise they tap onto?

Pawanexh Kohli
Occasionally, some say more frequently of late, the Indian government asks people with experience in the private sector to take on a role with them, to help devise, advise or in some case execute some policy decisions. I am not talking of tendered projects but about individual people, that the government assigns certain tasks to.

I was recently touted as one of these so called experts functioning alongside senior bureaucrats... attempting to add value as-and-where capable. In fact it was with great trepidation that I took on the role as Chief Advisor on matters "cold-chain" and to help incubate the National Centre for Cold-chain Development (NCCD).

Anyone in any supply chain or logistics trade will tell you that there are no experts and that learning on the logistical front is evergreen and each instance and each co-existence with a series of activities is a life long fire fight. The grass root, hands-on experience, if applied defensively, will only lend to pat-on-call excuses, ready-reckoners of sorts to explain failure.

CA cold stores

The concept “Controlling the atmosphere”

Cold stores alter the temperature inside an enclosed chamber through the use of refrigeration. To save operating costs of the cooling equipment, insulation as a thermal barrier is used to minimise external heat ingress. Depending on the product types stored, the cooling is distributed inside the chambers using fans which circulate cool air – in case of frozen temperature ranges, the cold air need only shield and isolate the cargo from the exterior peripheral walls & other heat ingress.

In case of living fresh produce, the cold air must additionally envelope each individual product piece and penetrate interstitial space in storage to evacuate other gases & heat produced due to respiration. This is ordinary storage and does not involve tampering with natural atmospheric composition.

Controlled atmospheres are essentially those which deviate from the normal air composition of 21% oxygen, 78% nitrogen and 380 ppm of carbon dioxide (Other gases present are normally too small a concentration to have a prime effect on stored produce). Controlled Atmosphere cold stores best understood as cold storages designed and fitted with additional equipment such as to actively change and control the atmospheric content inside the closed chamber.

Food Production & market opportunity

From a talk at Thaifex 2013 - World of Cold-chain Conference

No one can deny that India’s food industry is undergoing massive transition and its intention of being a major player in the global supply of food.  In order to achieve this goal, policy makers are looking across the board at the daunting task at hand whilst recognising the need to also bring the agriculture sector in to the 21st century.

at world of cold chain, 2013
Yet it does not matter how good a product is, or how sophisticated or productive an agricultural area is, if a farmer or manufacturer cannot get their product to market or on the retail shelf… all their efforts turn out in vain.

Currently the progress in the food industry is quite uneven. The ever growing middle class with their specific demands, local and international food companies all wishing to meet those aspirational needs, the regulatory agencies making massive strides towards a complete overhaul of the food industry is all inextricably coupled to the struggling logistics infrastructure already pushed to the limits.

Budget & Infrastructure: Questions


1.  As this is a well known fact that this sector leads to wastage in agricultural produce due to lack of cold storage infrastructure, what infrastructural framework is required to boost the growth of this sector? 

Infrastructure that is developed should complement the concept of cold-chain. The query itself reflects the nascency in understanding and the prevalent misconceptions by limiting the concerns to the storage aspect alone. A cold storage warehouse is merely the middle link in the chain. If the initiators of cold chain are missing, the storage will automatically function only for select products and those that happen to originate in the cold chain (ie. imports). Our cold-chain, as it has developed, serves well for imported produce and for processed foods. For similar benefits to accrue to our domestic agricultural produce, cold chain originators and other complementary links should be the first priority.

2.  FM has taken an initiative to make Rs 5000 crore available to NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store agricultural produce, both in the public and the private sectors this year. What is your take on this? Is this figure is sufficient for the warehousing sector?

India-USA Bilateral Cooperation

Bilateral Cooperation between USA and India: Cold-chain & Agriculture.

The US Secretary of State, Mr. John Kerry is expected in Delhi in June 2013, to co-chair with our minister of external affairs Mr. Salman Khurshid, the fourth round of India-US strategic dialogue. The focus is bilateral cooperation and partnerships between the two nations and targets five principal pillars: 

  •   strategic cooperation;
  •   energy and climate change;
  •   education and development; 
  •   economics, trade and agriculture;
  •   science and technology, health and innovation.

Cooperation in Cold-chain and PHM (Post Harvest Management)” would automatically meld a few of these topics.

Frequent Questions about NCCD (National Centre for Cold-chain Development)

About NCCD

1.    Could you please provide some highlights about the initiatives undertaken by the NCCD for the development of cold chain infrastructure in India?

See Wikipedia Article on NCCD
NCCD under its agenda of inclusivity has held various interactions with stakeholders from inception, for inputs to develop its roadmap to targeted conclaves to receive recommendations to ease the roadblocks to further development. These stakeholder interactions are followed up for directed interventions by the government. Of notable achievement is that NCCD has already redressed some concerns by project implementers by providing ready response to interpretations of subsidy guidelines. NCCD has brought about an improved understanding in allied sectors on the opportunity and remedial options in this sector.

In another initiative, NCCD has opened participation to a wider base of stakeholders by including educational and research institutions, farmer producer organisations, self-help groups, student groups and other allied industry sectors. Please go through attached criteria document – we are surprised that some industry stakeholders who habitually profess interest in supporting cold-chain development have not walked-the-talk by partaking in NCCD. The industry at large must realise that the government is a facilitator to support the ground action that they hope to fulfil. NCCD was formed to supporting them... and as a measure of their interest. We feel the initiatives need to arise from business enterprises in tandem with government interventions.

NCCD is also advising on the XII Plan period assistance programs and aims to bring technology interventions and more support to participants from the logistics sector.

2.    What are the achievements of NCCD so far, you would like to highlight?