“Cold chain has to be looked upon afresh, as a mode that extends the selling range of the produce, and thus expands the farmers’ market footprint. Efficient agri-logistics enhances market linkage and justifies efforts to produce more and brings overall growth to agriculture,” asserts Pawanexh Kohli, Chief Executive and Advisor, National Centre for Cold-chain Development (NCCD).
Your views on the transformation of the agriculture sector in India…
As the country develops and its citizens become more affluent and health aware, we are witnessing a shift in food preferences. Demand is no longer about carbohydrates & calories, but incorporates proteins, minerals and micro-nutrients. The shift in consumer orientation is effectively the prime driver in shaping an associated transformation of the agricultural sector. Many of these opportunities can only be tapped with required systemic and policy changes. These, however, need to be calibrated to suit the type of produce in demand and to empower the farmers to supply such demand. From the supply chain managers’ perspective, the systemic changes must cater to the requirements that are specific to the varied kind of produce that need to be handled.
Pre- and post-independence, when focus was on cotton and grains, agri-markets were termed as assembly points, or zones where farmers would aggregate with their farm outputs, so that the flow of trade was monitored, regulated and taxed. However, today’s farming eco-system generates surpluses, and while other markets have been liberalised, restrictive regulations have remained in case of farmers’ markets. Under this system, the farmers are expected to monetise their produce at a near farm mandi, which has area demarcated market jurisdiction. This market architecture essentially delinked the farmers from the best possible valuation, which typically is seen at terminal destination. This is like forcing all factories to sell at factory gate, instead of being allowed direct consumer access.
The transformation of agricultural economy calls for evolving a new market architecture, one that endows the farmers with the tools to physically communicate their produce, in their name, to transact at terminal markets. The forward connectivity will also require logistics infrastructure in the form of first mile aggregation hubs, co-located to villages. These would primarily bring immediate and gainful organisation in the post-production supply chain.
But can farmers manage this themselves?
The physical connectivity can be provided as a service, against revenue sharing or other service level agreements with farmers. It is a misnomer to imagine that farmers would manage the entire logistics chain which can run across geographies. However, farmers will intrinsically be the key beneficiaries from such services. If you can courier a parcel to any location in the country today, why cannot a group of small farmers use services to dispatch their produce to a market location of choice?
Yes, to do so, the farmers will have to collaborate and generate sufficient load at source, so that their production can be transported by most viable mode. To do this, an aggregation hub is required at village level, or one that covers a few villages. These hubs will also create employment for the rural communities, in jobs that are inherently linked to the core activity of farming. Such aggregation hubs or pack-houses will set off a virtuous cycle of economic growth. Without such back-end organisation, the agricultural eco-system will continue to face chaotic development.
Is it not easy for a farmer to vertically integrate with a food processing factory?
Sure, vertical integration with any agro processor is an easy option. And this is typical and already happening. However, their growth is not linked to their immediate effort, but on the growth of the factory they are vertically linked with. The only option is to expand their consumer from one nearby factory, into multiple factories and this again will require back-end aggregation of produce, in enough volumes to supply to far-away demand.
In case of high-value foods, such as fruits, vegetables, dairy, meat items, the Indian market is predominantly fresh. Here, the producers also could horizontally integrate, with multiple markets of choice. Especially as here, the markets have a more rapid, near daily, selling cycle. For example, a farmer group in Bihar, should be able to precondition and connect their litchi to terminal markets of Delhi, Mumbai or Chennai, of their own volition. Hence, their growth is not limited to the growth of the industry that they supply into, but by the scope of how they expand their market.
Food wastage has been one of the biggest challenges that the industry needs to circumvent. How can we resolve the issue?
Mere presence of cold-chain infrastructure does not stop food loss. Food loss occurs primarily because food or food product is not connected to consumption before it perishes. In case of fresh produce, this can happen when the time to reach market is beyond the marketable life of the food item. Most fresh fruits, vegetables, fish, meat do not have a long saleable life in normal conditions. They either should be harvested on demand (as usually in case of meat) and/or have to be sold quickly. Unless, the selling cycle falls within their natural saleable life, cold-chain intervention is required, especially when markets are concentrated across longer time-distance spans.
The cold-chain not only extends the marketable life span of whole produce, it also brings organisation and standardisation to post harvest food handling. This ensures that fresh produce is packaged and preconditioned to withstand road stress or damage, promotes modern material handling practices, provides relief from damage due to uncontrolled exposure and safety from external diseases. All of this allows for a larger quantum of farmers’ produce to reach consumers, thereby mitigating food loss. Key to reducing food loss is holistic development of agri-logistics to connect more food with more consumers, be it fresh or processed. All other aspects are secondary.
How does cold chain system maintain the safety and quality of produce at the desired level?
Palletization of a load facilitates safe multi-modal handling, whilst transporting and when in cold stores. Pallet handling is best done by mechanized means, which ensures quick & easy operations, reducing the loss that occurs due to mishandling. Cold stores are preferred when they are equipped to handle pallet-based cargoes, i.e. forklift types, roll-on/roll-off ramps, pallet based put away racks, etc.
At the last mile, retail shops also need strengthening to handle cold-chain routed fresh produce. In all, the complete chain enhances the produces’ usable life, retards loss of freshness, sustains nutritional value to the maximum and contributes enormously by extending the value chain system beyond traditional regions and limitations. The most phenomenal gain is drastic reduction in physical loss, through organised practices, when compared to the traditional multi-layered logistics chain.
How can marketing enhance the reach of perishable food?
An effective marketing and logistics network require developing an efficient link between an Origin (farm-source) with Destination (consumer-market) - ‘OD pair’. Lack of modern packhouses at points of origin, deflected the existing refrigerated transport and cold storage distribution hubs into the limited role of aiding the marketing of certain processed foods and the fresh imports arriving in the cold-chain.
A common example of efficient source level aggregation is the milk pooling or collection point. This is the first step to value-realization though a chain of market linking logistical activities. Post-production activities that safeguard the value of the harvest and deliver the maximum quantity of produce to end-consumers without degradation of quality, would have a positive trickle down effect on farmers’ income.
An effective agri-logistics infrastructure network design is required for perishable produce, at first instance needing source points, as pack-houses to serve as aggregation or pre-conditioning centres, normally developed at village or farm-gate level, to organize an effective farm-to-fork supply system. However, the planning approach should follow an inverse flow from fork-to-farm.
Please highlight the Inverse Approach “From Fork-to-Farm”.
To function in agri-business mode, there is need to adapt to demand triggered supply chains. The farm-to-fork connectivity tends to infer, that farmers or a producer will directly interact with the consumer. Adopting an inverse, FORK-to-FARM strategy, means to work out the demand from wholesale destination market, and accordingly work backwards to assess the requirement for distribution space, transport, aggregation at origin and where possible even harvesting and sowing. A well-designed strategy will plan to capture new markets so that subsequent ramping up of the production can be monetised optimally. Effectively, there is need to work backwards from demand, providing information that can intelligently direct the physical flow of foods to linked markets. The immediate concern is to connect the produce with as many markets as possible and the business model requires linking the source backward from the target markets to plan and organize a delivery or settlement mechanism after farm-gate procurement. Fork-to-farm strategy means that agriculture, like most other business enterprises is developed with sufficient agility to respond proactively to market demand and associated logistics.
What technologies are used in Cold Chain?
Technology in cold-chain is primarily used to manage activities across the product’s life cycle, most being common to dry warehousing, such as management systems for warehousing, fleet, energy efficiency, tracking and tracing, asset upkeep, trade processes, etc. These include FEFO (first expire-first out) based inventory management viz FIFO or LIFO. The holding environment is also managed at a more precise scale since temperature, humidity, and at times atmospheric parameters (oxygen and other gases) are critical to safe custody. Energy load being higher than conventional warehousing, its use and leakage is also closely monitored.
Since a breach in the cold-chain can impact the integrity of the good under care, monitoring can range from simple data loggers to thermo-chromatic labelling. Besides, cold-chain deploys more stringent monitoring of its core technologies, ie., refrigeration, insulation and product packaging. Packaging can range from vacuum-sealed packs to breathable polymers to ventilated cartons. Since fresh produce is liable to external microbial and biological contamination, technologies like ozoning of closed spaces, fumigation, hypochlorite or vapour washes, etc., play an important role. Photocatalytic air recycling is also a technology that can be used to destroy microbes in cold rooms.
Industrial refrigeration technology itself is undergoing changes. Today, cooling systems include vapour absorption, vapour adsorption, peltier based; refrigerants are changing to more environmentally friendly gases. Essentially, cold-chain from its birthing has been about efficient management of the goods under care, staying dynamic enough to counter time distance matrices and maximizing on its inputs.
Can energy requirements for cold chains reduce using superior technology?
All technology-based applications can help reduce energy load in the cold-chain. At first step, the insulation is an important barrier to heat load. Secondly, the type of refrigeration can reduce energy load. Technology that hastens operations and minimize breaches in thermal integrity like dock shelters also reduce energy consumption. Similarly, various thermal barriers, automation and efficient facility designs also reduce energy requirement.
On the other hand, alternate energy sources cannot reduce the energy requirement. Usually dual energy sources are used for cold stores and diesel-based systems for periodic and/or transport based systems. At the moment, systems that deploy or hybridise with solar thermal, solar photo voltaic, geothermal energy, along with grid and generator-based electricity serve as energy sources. Capturing of stranded cold, such as during regasification of liquid natural gas (LNG), is another opportunity being explored.
How can companies unlock the potential of investment through structured cold chain implementation from harvest to retail?
In case of food grains and similar commodities, a modern warehouse is a safe supply point for onwards distribution to points of consumption (food processors, consumers). Since this raw produce is amenable to bulk storage, the lots are stored in bulk format (silos, etc.). The infrastructure in the form of transport and storage for food grains is well recognized and future development is to modernize and follow advancements in storage technology. The required capacities may be reassessed, incorporating stock liquidation cycles.
Modernization of warehousing is needed to extend the holding life of the food grain inventory. This extended inventory holding period, needs to be fruitfully utilised, or else the stock will still perish at the end of holding period. Along with infrastructure modernisation, efficient stock rotation into markets / distribution system has to be upgraded to ensure that the investment in modernisation has a gainful outcome.
How can we modernize Infrastructure for Agri-logistics?
With rapid technological developments, there is need to modernize our basic post-production infrastructure, especially those infrastructure components that help safeguard value (warehouses and cold-chain) and provide an opportunity to spread the supply to suit the demand. The same would also apply to infrastructure that helps to recover value from the non-saleable produce or that makes the produce fit for consumption (processing units). There is need to modernize storage and movement of grains, by moving towards modern silos and containerization. Modernizing the storage and handling can double the usable life of the inventory, though the eventual liquidation to market and PDS/ OWS, etc., will still be needed.
There is a greater need for hybrid systems that share the load with the grid, as well with other renewable energy sources. For large cold stores, the optimal option is to design for use with clean grid energy, to maintain improved viability in operations. In the milk chiller installations, a large number of units have also innovated with gobar-gas (bio gas) based electricity generators. Other possible technologies to generate cooling are solar thermal solutions, vapor absorption based systems and hybrids of electricity source inputs. Thermal storage (PCM – Phase Change Materials) also help reduce the energy risk in bulk milk chillers.
The use of program logic control (PLC) based systems has an immediate impact on energy used and is easily implementable. Similarly, upgrading the insulation of temperature-controlled spaces has high energy saving impact. The ensuing automation of energy intensive applications can reduce operating costs up to 20-25% in old cold storage units.
Except for rail mode of transport, all other modes cannot be connected to the electricity grid; and the transport on road, ship and air are reliant on availability of fossil fuel. Therefore, technologies that can reduce the energy load in transport are equally, if not more important to the overall food chain.
What are NCCD’s recommendations to achieve the desired goal post?
It is recommended that modern pack houses at village level be promoted as a priority infrastructure. The bane of Indian agriculture is not so much the fragmentation of farms, but that the output from the farms remains fragmented. Pack-house units can serve as signalling centres to decide the harvesting activities depending on market linkage. This signalling can be made robust by application-based information messaging to the registered farmers. To fulfill existing demand, the access and logistics connectivity for greater market outreach is the immediate priority for gainful production activities.
Integrated pack-houses are created at village level also called farm-gate aggregation hubs and are necessary if the farmers are to expand their reach into markets. A modern packhouse is the nerve centre of the fruit and vegetable supply chain. Initially, pack-houses were used for exports, but increasingly domestic market is also showing preference for good quality fresh whole produce. The main enabler for growth in imported fruits and vegetables is that source farms abroad, have recourse to modern pack-houses, to prepare and initiate the produce for the long travel to reach distant importing countries.
What are the plans to enhance the prospects of cold chain?
First & foremost, cold-chain must be looked upon afresh, as a mode that extends the selling range of the produce, and thus expands the farmers’ market footprint. This extended marketing range allows for a higher throughput or traffic to the consumers and a matching growth in value realization and socio-economic development. As global population increases & nutritional security comes to the fore, making environmental security imperative, is where cold-chain helps to battle these concerns. Cold-chain ensures that fresh whole produce reaches gainful end-use and therein mitigates food loss, minimizing thereby the negative impact of agriculture on climate and Earth’s depleting natural resources. Efficient agri-logistics enhances market connectivity and linkage and justifies efforts to produce more and brings overall growth to agriculture.
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