11 Oct 2012

Wall Street Jousts (?)

Queries raised by Wall Street Journal

- What are the hurdles for the development of cold chain in India? 
Lack of domain skills and associated expertise is a primary hurdle. We have the fuel, we have the technology... it is what lies between that is missing. The newly initiated NCCD as well as privately run organisations and universities will help disseminate knowledge and attract more professionals and skilled workers to this industry. Another hurdle is minimal manifestation of the produce owner business model in India.

A producer owned supply chain is the common cold chain worldwide. Mostly because the producer has the most vested interests. Also the cold chain is the only supply chain that directly impacts the producer's price realisation because of its inherent impact on product quality and shelf life. Branded agri-produce players should be made welcome and promoted as by virtue of owning the brand, they promote best practices and quality norms.

- What are the missing links and can FDI help?
FDI would benefit the nation primarily by helping to organise the demand side and not only through investing in the so called back end – that would invariably happen to align with and to meet concerted demand. Today the front end is disparate in procurement and hence the farming back end is limited in their outreach. The infrastructure need at domestic farm gate is not the cold stores but pack houses as primary initiators; at the front end we miss distribution centers and more of the connecting links links served through transport. What is sharply missing is the pack-houses at farm gate. This is the real reason our domestic produce cannot avail of the other components available in the cold chain.

FDI will stay a matter of debate until the foreign stakeholders up their ante and declare their supply chain strategy, one which encompasses and alleviates the scare-mongering. Yet, to date there is no supply chain person heard from their podium; their business strategy must be enumerated and in alignment with India’s growth story, including those of the small store owners. The onus is on those who wish to access Indian markets, to offer clarity about their action plans. More so, since in my opinion, the format they deploy here would require a drastic difference from the forms elsewhere; they need to be seen to be inclusive in their plans in reverse to the exclusivity that is perceived. 

- Does the budget address the transport sector in cold chain? 
No it sadly does not do so. Besides existing sops on import of reefer vehicles and parts there is no real attention to this most important link in the cold chain. Without the cold transport there is no chain! 

A reefer transport is like a cold store on wheels (instead of applying energy to a static store, why not add wheels and move closer to market), and it connects the producer to the consumer. In fact such transportation to market is most critical to viability of the cold chain. We have no fast track corridor for the movement of perishable products in India. 

At this point I would like to mention that immediate priority for perishable cargo movement is a matter of policy in all developed nations. Recently even China launched a green pass system to facilitate a thoroughfare for the reefer trucks. A fast track system that consolidates interstate paperwork minimises regulatory bottlenecks in-transit is a must for future cold chains. The cold chain basically buys time, time to store and sell by extending product life cycle. This extended time is precious as it comes with added energy cost. So, when we waste this time in transit, we cost the nation in wasted energy and added risk to perishable food, thereby defeating the very purpose of deploying cold chain. 

Remember, perishables will continue to perish, even in the cold chain - transporting perishable cargoes is as critical as rushing a baby to hospital. A fast track corridor is a must and any loss in revenue to the government can be recovered by process at origin or destination, not enroute.

- What are the regulatory hurdles to cold-chain development?
In my opinion, the hurdles to entrepreneurs and investors are minimal, especially because facilitating agri-trade fetches prime focus at every level. The recently formulated nodal agency, National Centre for Cold-chain Development has its sole agenda to facilitate the cold supply chain at both policy and implementation levels.

Responses to Queries in an interview by Wall Street Journal

The Wall Street journalist never came back for more .... the answers apparently were not spicy enough to make a good "news report"

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