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, is it Worthwhile?

Eminent people from pvt sector in govt positions
Business Standard - 16 July 2013

Can the government retain domain expertise they tap onto... should they?

Occasionally, some say more frequently of late, the Indian government asks experienced minds from 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 persons, whom the government assigns certain tasks to.

I was recently touted as one of these so called experts functioning alongside senior bureaucrats, lucky to get featured with some far bigger names. In fact it was with great trepidation that I took on a leadership role as Chief Advisor on matters "cold-chain" and to help incubate the National Centre for Cold-chain Development (NCCD)... my attempt to add value as-and-where capable.

Anyone in any supply chain or logistics trade will tell you that there are no experts and that learning on their fronts is evergreen and each instance co-exists with a series of activities - a life long firefight. 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.

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.