India Agricultural Cold Storage Growth Strategy Market Report

The production levels in the Indian agricultural sector have been growing steadily over the years. This production level has not been met correspondingly in terms of storage for food, which outlines an existing whitespace in the Indian Agricultural Cold Storage Industry.
Despite being an agrarian state, India suffers from huge food losses annually ranging from INR 90,000-100,000 due to poor post-harvest management and lack of proper cold storage infrastructure.
The government has been taking steps to promote development in the agricultural cold storage sector by introducing a plethora of schemes and providing grant in aid, along with special preference to the states lagging behind in terms of infrastructure.

It is no wonder that India is a key contributor to agriculture sector worldwide with 308.6 Mn Tonnes food-grain production during FY’21 (ranks second after China), 198.4 Mn Tonnes of Milk in FY’20 (world’s largest milk producer) and dominant producer of horticulture produce as well. After all, India has an arable land of ~160 Mn hectares and 58% of population is dependent on agriculture for its livelihood.

However, the situation on per capita consumption of food grains, fruits, vegetables and milk is not good. As per the Global Hunger Index (GHI) in 2020, India ranked 94 out of 107 countries and malnutrition was found to be the leading risk factor for death of children <5 years age. Further, prevalence of Anaemia was noted to be among 53% women of all reproductive age and 54% among girls aged 15-19 years. What is the root-cause problem behind this irony?

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Upon a deep dive research and data analysis, analysts at Ken Research were able to find that poor post-harvest management policies of agriculture, especially Horticulture, is a key contributor to this grim situation. An estimate shows that India incurs an annual loss of INR 90,000-100,000 crores every year in wastage of agricultural and horticulture produce owing to poor post-harvest management policies. Further, 35-50% of such economic loss happens due to lack of required cold chain infrastructure at farm-gate and hub level.

Before ready for final consumption, produce of fruits and vegetables produce is harvested, pre-cooled, sorted, graded into different categories and stored in cold storage rooms for specified duration. Cold Storage facilities do not allow bacteria formation, retains humidity and moisture; thereby increasing the shelf life of produce while retaining the nutritious value. A study conducted by NCCD and NABCON in 2015 highlighted the differences in the requirement of cold chain infrastructure and actual availability of infrastructure. The key findings are summarized below in the table:

Table: Key findings – All India Cold Chain Infrastructure Assessment Study by NCCD & NABCON (2015)

Type of Infrastructure	Requirement (2015)	Existing Capacity (2015)
Integrated Pack-houses	70,000 numbers	250 numbers
Reefer Trucks	62,000 numbers	<10,000 numbers
Cold Storages (Bulk + Hub)	35 Mn Tonnes	32 Mn Tonnes
Ripening Chambers	9,000 numbers	800 numbers

But, how is the situation in 2021?

Although the cumulative cold storage capacity has augmented in the past decade from 23.4 Mn MT in 2010 to 37.4 Mn MT in 2020 (surpassing the requirement of 35 Mn MT in 2015), a further deep dive tells us the disproportionate growth and inefficiencies at the grass root level. More than 75% of the cold storage capacity is concentrated among the top 5 states (UP, West Bengal, Gujarat, Punjab and Andhra Pradesh) while 73% of total capacity is suitable for storing single commodity only. 68% of cold storage capacity across India is suitable for storing Potato only (foregoing economic benefits of storing milk, livestock and other high value crops) and 92% of such units are being operated by private players, characterizing an unorganized and fragmented industry unwilling to undertake capacity expansion or invest in modernization of facilities.

Is there an opportunity to enter this industry and solve the problem?

With high growth expected in food and diary processing industries, rising urbanization, shift in cropping patterns from agriculture to horticulture, surging demand for nutraceutical products, maturing ecosystem with new age Agri-tech startups and increase interest from PE/VC fraternity, analysts at Ken Research believe that agricultural cold chain industry is poised for strong growth with an estimated capacity addition of 6.5 Mn MT by 2025.

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Are there any incentives provided by government to promote the industry?

There are plethora of schemes and benefits implemented by union and state governments to seek participation from private players and augment cold chain infrastructure in India. The PM Kisan SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Centers) Yojana, approved by Cabinet in May 2017, provides financial assistance in the form of grant-in-aid at the rate 35% for general areas and 50% for North East States, Himalayan States, ITDP areas and Islands for storage and transport infrastructure and at the rate of 50% and 75% respectively for value addition and processing infrastructure subject to a max of Rs.10 crore per project for setting up integrated Cold Chain projects in India. Through the Mission for Integrated Development of Horticulture (MIDH), financial assistance is provided to set up cold storages for various horticulture – fruits, vegetables, root & tuber crops, mushrooms, spices, flowers, aromatic plants, coconut, cashew, cocoa and bamboo. As on 31^st January 2021, a total of 325 cold storage projects (214 completed and 111 on-going) are operational across India with a total project outlay of INR 8,893 crores while the GoI has approved a cumulative grant–in aid of INR 2,478 crores via its various schemes under MOFPI & NHB. With support from government, strong tailwinds from end-users and favorable economic conditions, cold storage units could help to solve hunger crisis and ensure a protein, iron and nutrient rich diet accessible to 1.4 Bn Indians.

Key Topics Covered in the Report: –

Snapshot of Agriculture in India (State wise Production statistics of Cereals, Horticulture, Meat, Livestock and Poultry)

Situation of Farmers in India (Profile of Farmer, Role in Value Chain, Problems and Issues faced in storage of produce)

Overview and Segmentation of Cold Storage Units (By Storage Temperature, Technology, Regional & State wise Distribution)

Demand side and Supply side Indicators of Cold Storage Solutions

Growth Drivers and Challenges to growth of Cold Storage Industry

Cold Storage Demand-Supply Profile of Key States – Uttar Pradesh, West Bengal, Gujarat, Punjab and Andhra Pradesh, Maharashtra, J&K and Himachal Pradesh

Trends and Developments

Union and State Government Support to Cold Storage Sector

Impact of COVID-19 and Future Outlook of Industry

Business Attractiveness at Farm gate level

Recommendations for operatiqng Sustainable Business

For More Information, refer to below link: –

India Agricultural Cold Storage Industry

Related Reports:-

India Agritech Market Outlook to FY’2025-By Nature of Services (Input Market Linkage & Farming as a Service, Supply Chain, Post-Harvest Management & Output Market Linkage, Precision Farming, Advisory & Analytics and Agri Fintech)

Business Potential for Cold Storage Facility in JNPT Outlook to FY25 – Driven by increasing Trade of Food Products and Pharmaceuticals along with growth in QSR

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