Ravichandran Purushothaman cites a success story in Tamil Nadu to explain why there is a need for cluster-based models in India to conserve food wastage and improve farmer profitability.
Banana cultivators in Theni, Tamil Nadu, are a happy a lot these days. Over the past few years, empowered with technology know-how, knowledge on good cultivation practices and supported by post-harvest technologies, they have managed to triple their profits. However, this wasn't the case three years ago. croreIndia is the second largest producer of vegetables and fruits after China. India on an average produces 85 mt of vegetables and 45 mt of fruits annually. But India's overall contribution in world trade is quite dismal as the country loses more than a third of its fruits and vegetables due to infrastructure bottlenecks especially in the facilities that are required from farm to fork. In a country of 1.2 billion, 40 per cent of food is wasted every year. According to a recent report, the total market value of the Indian cold chain industry is expected to reach Rs 64,000 crore by the end by 2017. Two of the biggest contributors to food losses are the lack of both refrigerated transport and high quality cold storage facilities for food manufacturers and food sellers.
A success model
Need to create a win-win situation for primary stakeholders: Replicating the Tamil Nadu model to sensitise farmers and stakeholders in other states
State governments are waking up and trying to arrive at solutions that can help arrest food wastage and control inflation. There is also the added pressure to ensure that Agriculture continues to be a viable profession for many.
Many states, including Karnataka and West Bengal, have started initiating dialogues with private enterprises, and have announced interest in seeking investments from the private sector to improve the cold chain infrastructure in the State. Given the need, stakeholders need to collaborate in order to address gaps that will benefit all in the value chain rather than tip one party favourably.
Case in point
Tamil Nadu accounts for the largest production of bananas in India with an estimated 9 million tonne (mt). Broadly 30 per cent of this is wasted due to inefficient post-harvest practices which include absence of cold chain infrastructure. Today the productivity of Banana in the southern district of Theni is amongst the highest in the world. Farmers in Theni have more than doubled their income after incorporating best pre and post-harvest practices and this has further contributed to employment generation. Danfoss, along with CII, worked closely with the stakeholders in Theni to understand their success and are working towards replicating this model. Organised pre-harvest technologies, focused supply chain and branding create higher profits for farmers and better prices and quality for consumers.
Conservative 20 per cent food loss on a production of 9 Mt is draining Tamil Nadu of Rs 2,700 crore annually. However, by appropriate use of technology, especially cold chain solutions and following the cluster approach, we can attempt reducing food loss by 10 to 12 per cent which can help save close to Rs 1,500 crore. This cluster approach would require establishing central pack houses across the state (8-10 in number) with an estimated investment of Rs 500 crore. In addition to reducing the post-harvest loss this would also lead to employment generation in these belts of 5,000 in each cluster i.e 50,000 across the state. The break even for the pack houses in itself could be around four years.
A fivefold plan
1. Need for multi-commodity cold storages
2. Innovation closer to clusters and customers
3. Clusters should be connected to the consumption centres
4. Government should be an enabler
5. Right branding required for fruits and vegetables
Power-efficient: Independent research reports suggest India's high energy costs as a deterrent for private players from investing in cold storage units given its power consumption.
A typical cold storage of 5,000 tonne capacity costs around Rs 12 crore which uses dated technology, especially the systems which can be automated. An automated cold storage with best global technologies will cost 30 per cent more. It is important to note that 60 per cent of the operating cost of a cold storage is due to electricity and this cost could be anywhere close to 1.5 crore per annum. However, technology to reduce electricity costs by up to 50 per cent is available-Danfoss has developed customised products for the Indian environment that enhance shelf life at lower costs.
Challenges specific to fruits and vegetables in India
The author is President at Danfoss Industries (India), a global refrigeration & air conditioning, heating & water, and motion controls major, servicing food processing and infrastructure industries in India.