Why invest in Cold Storage Business?
Cold storages have become an integral part of supply chain management for the storage and transportation of temperature-sensitive goods. As you can imagine, India is the second largest country for the production of vegetables and fruits in the world. Though per capita availability of vegetables and fruits is quite low because of losses which accounts for about 30% to 35% of production. Most of the problems relating to fruits and vegetables industry such as high marketing costs, market gluts, price fluctuations arises because of their perishability. By keeping fruits and vegetables in low temperature, perishability can be considerably reduced and thus the importance of cold storage projects is significant.
Total annual production of fruits and veggies in India is about more than 130 million tonnes, which is 18% of total agricultural output. According to the recent report 11% of world’s total vegetables production is accounted by India . Due to diverse climatic conditions and increasing availability of infrastructural facilities, the production is rising day by day. In recent years various opportunities are arising due to the increasing production in agriculture industry, although the lack of cold storage and cold chain projects are becoming major obstruction for these opportunities.
Total annual production of fruits and veggies in India is about more than 130 million tonnes, which is 18% of total agricultural output. According to the recent report 11% of world’s total vegetables production is accounted by India . Due to diverse climatic conditions and increasing availability of infrastructural facilities, the production is rising day by day. In recent years various opportunities are arising due to the increasing production in agriculture industry, although the lack of cold storage and cold chain projects are becoming major obstruction for these opportunities.
Cold Storage Business Market in India
India consists of more than 6,300 cold storage units which are spread across the country, with the capacity of nearly 31 million metric tonnes. And this is only half the amount of cold storage project facilities that India should have as per the latest report. This means in India cold storage capacity needs to be at least 62 million metric tonnes. This lack of cold storage units amounts to a big loss in the food industry along with creation of enormous opportunities at the same time. Moreover, the food processing industry which significantly relies upon cold chain industry accounts for 32% of India’s total food industry.
Saurabh Goyal of "Thinklink SCS" that specialises in the investment advisory, consulting and project management in the supply chain and logistics sector including cold chains, informs that, “The potential for cold chain development in India is huge, rate of food processing in India is low and is growing, waste in the perishable F&B category is a key point that needs to be addressed, and there are a number of other sectors apart from food which also rely on reliable cold chain development, expected market size for cold chain services in India is expected to reach US$ 10 billion in the next 5 years”.
Saurabh Goyal of "Thinklink SCS" that specialises in the investment advisory, consulting and project management in the supply chain and logistics sector including cold chains, informs that, “The potential for cold chain development in India is huge, rate of food processing in India is low and is growing, waste in the perishable F&B category is a key point that needs to be addressed, and there are a number of other sectors apart from food which also rely on reliable cold chain development, expected market size for cold chain services in India is expected to reach US$ 10 billion in the next 5 years”.
Cold Storage Project Capacity / Commodity in India
(Approximate)
Commodity |
Units |
Capacity (Lakh Tonne) |
Potato |
2,931 |
218 |
Multi Purpose |
1837 |
71 |
Fruits & Vegetables |
342 |
1.24 |
Meat & Fish |
527 |
2.57 |
Milk & Dairy Products |
239 |
1.17 |
Others |
94 |
0.43 |
Opportunities
India’s cold chain industry is still evolving and is operating way below the required capacity. Large number of global food and retail chains are targeting the India markets. The total value of cold chain industry in India is Growing annually at astonishing 20 - 25%. In 2016-17 total fruits and vegetable production in India amounted to 287 million tonnes. Moreover, packaged food industry is at the booming stage and food precessing industry is growing at 7% per year in India.The consumption of fruits, vegetables and ready to cook packaged food is increasing day by day and it's never going to stop.
Cold storages are very essential for extending the shelf life, avoiding oversupply, reducing transport limitations during peak period of production and for maintaining the quality of food products. The development of cold storage industry has therefore an important role to play in reducing the wastage of the perishable commodities and thus providing remunerative prices to the growers.