11 May 2013

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?

Government ought not to be viewed as the sole 'financier' to all businesses. It is a facilitator and functions to do so across various strategic interventions in our country. Of course, this sum could well be sufficient to start with. This Rupees 5000 crore (a billion USD) is equivalent to multiples; it will be for the industry to lever this to factor in other sources and options too. I would counter by asking how much is the industry putting up! Is their participation sufficient? Remember the government is providing a financing window to industry, a direction setting for the roadmap, it is not declaring that this sum is the total investment required.

3.  What are the challenges other than infrastructure faced by this sector? 

Lack of leadership, knowledge and experience within the industry; a learning is happening at the cost of consumer, producer and their own profitability. This is typically natural to all new developments. Sadly this need not be the case here, as the technology exists, the demand is palpable, the tactics are standard; only the concept and strategies are misunderstood. If the Leadership vacuum is filled with guiding experience, all else will follow.

4.   And, what are the opportunities ahead?

Probably greater and larger than in other sector! Cold-chain involves energy, industrial infrastructure, transportation, skilled manpower; it involves health safeguards and compliance, traceability and an evolved supply chain; and in India, it has scope to service the needs of a billion plus people. Not an opportunity that can be scoffed or that needs to be spelled out.

Our production and yield of processed food and fresh produce are touching new highs; and not because there is capacity to produce more – it is because there is cognisant demand from consumers; and yet the demand remains unsated! Because some gets wasted and in other cases there is no pipeline to reach the massive consumer base. I think this query is unnecessary for anyone who lives in India. The entire globe is coming here to sell, and we need not doubt the need for food, healthcare and specialised products….ergo the need for cold-chain. Very soon we shall be amongst the largest exporters of bio-pharma and even food. 

This cold play is here to stay!

....responses by Pawanexh Kohli
to queries raised by an industry reporter.

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