COLD SRORAGE

Cold Is Hot

India needs better cold chains and warehousing


Its estimated that nearly 40 per cent of the countrys fruits and vegetables are wasted while moving from farms to retail outlets. That a developing nation grappling with poverty, hunger and malnutrition should waste so much fresh produce is obscene. Improved post-harvest technologies especially storage and transportation facilities are a must for a nation thats the worlds second largest producer of fruits and vegetables and where agriculture and allied activities account for around 17 per cent of GDP.
Its good that Budget 2009-10 promised investment-linked tax incentives in order to attract private funds in the cold chain and warehousing sector. More so, since existing profit-linked tax breaks to which investors are entitled dont seem to have worked magic so far. In theory, sector-specific tax incentives risk distorting efficient resource use. But, given the woeful inadequacy of cold chain and storage infrastructure, public policy has to make some practical concessions to a critical sector of the economy. Increasing the shelf life of perishables is key to supply mechanisms whether we talk of fruits, vegetables, milk and milk products, meat and meat products or processed foods. To create a cross-country network of godowns and integrated cold chains, capacity building is required in farms, food processing units, refrigerated storage and distribution hubs as well as retail outlets, apart from temperature-controlled transportation.
All of this represents capital-intensive infrastructure. However , while industry has welcomed the investment-linked tax sops, these may not be sufficient. There should be a multipronged strategy to raising resources, in light of the huge growth potential of organised retail in India. It would make sense to relax rules on FDI in multibrand retail. Along with big domestic firms, several multinationals are keen to enter the field. That supermarket chains, foreign or home-grown , can boost farmers income by eliminating middlemen isnt their only advantage. Getting greater numbers of organised sector players into farm-to-fork retail would automatically boost business stakes in improving the infrastructural logistics of the rural farm and non-farm sectors.
We also need a holistic look at related infrastructural shortcomings . Investors may baulk at pouring money into a sector where returns could depend on factors beyond their control. Electricity, for instance, is the lifeline of cold storage. If ensuring uninterrupted supply meant resorting to power backups, it would hike operational costs. Movement of goods also demands good roads and highways. Finally, a common market as sought to be created by the goods and services tax regime would spur demand for cold chain and storage facilities. That, needless to say, would have to be combined with an overhaul of our creaking agricultural marketing infrastructure.