Cold Chain Summit 17 18 December 2010


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  • Thanks for your response, however i am looking forward to recieving the presentation on Logistics Challenges - Management of Perishables C. Maheshwar Fleet Management Limited Two day Summit on Cold Chain Management Mumbai 17-18 December 2010.
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  • We focus on economic aspects of inland transportation and storage of high value fruits & vegs
  • How about the cost of storage for such long periods assuming that the tech is there.
  • They are attracted by high profitability of f&v compared to alternate crops without adding the post harvest losses and carry over charges of storage- When we take these into consideration, what is the true picture like?
  • What is the capacity (volume) of RC and the economics (capital +running costs) per cu.ft./pm
  • Dairy (Amul) model appropriate but here we deal with a mix of low value high volume f&v and all may not justify carry ver cost per tom
  • Compared to milk, f&v seems can easily absorb another 10% cost escalation to save 30% that is going waste and mitigate farmers’ miseries through wild price fluctuations (as in onions etc.)
  • The third above can be disputed. If purchase parity is considered instead of exchange value of rupee, operating costs and energy requirements can be tweaked with purposeful subsidy management to substantially augment the share of agri in GDP and even significantly compete in the international markets! Can we make some estimate subsidy component in the initial phases?
  • This shows that the traditional marketing channels have to be restructured and modernized. This is where the private-public partnership looks promising.
  • Can the Reefer Containers avoid extensive cold storages at village level (on the lines Amul did)? How does this mechanism be made technically feasible and cost effective for Indian rural road conditions? If so, what is the optimum capacity under Indian conditions? Can the Amul pattern of self-help groups(or coops) at village level and f&v collection routes for RC with a district Federation as a Section 25 producers’ company for packaging and distribution. Our aim is to indicate a viable O&M approach….
  • CC defined to include farm level procurement points to grading/processing point to retail.
  • RC providing precooling from farm to cold storage is close to Amul model
  • I think value-addition in terms of processing will be done for national markets before export- This is also true of Amul model.
  • This is where Amul model can provide answer!
  • Retai segment is emerging under separate corporate structure. We can perhaps concentrate from farm to retail as government’s responsibility under Horticulture Mission but should aim for 360q+0 defect concept for it.
  • Quality check points from farm to packaging may be built into the infrastructure as it evolves
  • Cold Chain Summit 17 18 December 2010

    1. 1. Logistics Challenges - Management of Perishables C. Maheshwar Fleet Management Limited Two day Summit on Cold Chain Management Mumbai 17-18 December 2010
    2. 2. The Power of Reefer Technology <ul><li>The apples that are available in today’s supermarkets in India could be as old as six years and could have been grown in apple orchards in New Zealand and stored in cold storages using Controlled Atmosphere. </li></ul><ul><li>They would look and taste as if they were plucked from the apple orchard yesterday. </li></ul><ul><li>That is the Power of Reefer Technology! </li></ul>
    3. 3. This presentation is dedicated to the thousands of Indian farmers involved in growing fruits and vegetables who have committed suicide in the last ten years due to market compulsions and post harvest losses.
    4. 4. The life cycle of the Indian farmer
    5. 5. Some Naked Truths <ul><li>About 100,000 farmers have committed suicide between 1993-2003. </li></ul><ul><li>In every subsequent year, there are about 16,000 suicides. </li></ul><ul><li>The reason is poor returns due to excessive dependence on natural elements, market compulsions and post harvest losses. </li></ul><ul><li>An average farmer gets only 28% of what the consumer pays. </li></ul><ul><li>He lives in a negative economy and needs to be upgraded into survival economy and then into positive economy. </li></ul>
    6. 6. Thousands of consignments of perishable goods are exported from India to various parts of the world. All of them do not reach their destination in the original form and quality. They end up like …..
    7. 7. This! Or This! Or This! Or This!
    8. 8. Or This! Or This!
    9. 9. VALUE OF REEFER CARGO <ul><li>The value of this lost cargo is anything from a few thousand dollars to millions of dollars per consignment. </li></ul><ul><li>In a typical 40 ft Reefer Container, the value of the cargo of Fruits, Vegetables and Plants is in the range of about US$ 70,000 </li></ul>
    10. 10. India – a land of contradictions! <ul><li>Second largest producer in the world of fruits and vegetables - 135 million MT </li></ul><ul><li>Second highest producer of milk </li></ul><ul><li>Fifth largest producer of eggs </li></ul><ul><li>Sixth largest producer of fish – 5.2 million MT </li></ul><ul><li>Cold storages available for only 10% of the produce. </li></ul><ul><li>Milk cold storage capacity of 70,000 tonnes </li></ul><ul><li>Investments required to store 20% of surplus-US$100 million_ </li></ul><ul><li>Needs US$ 75 million investment to preserve. </li></ul>The story goes on and on…………
    11. 11. Indian Horticultural Sector <ul><li>In spite of the vast natural resources and abundant agricultural produce India ranks below 10th in the export of food products. </li></ul><ul><li>Conservative estimates put processing levels in the fruits and vegetables sector at 2%, meat and poultry at 2%, milk by way of modern dairies at 14%, fish at 4%, bulk meat de-boning is to the tune of 21%. </li></ul><ul><li>Currently, the food processing sector, though in the nascent stage, constitutes 14% of manufacturing GDP amounting to products value of Rs.2,80,000 Crores. </li></ul><ul><li>It employs 130 lakh persons and is supposed to increase at an annual rate of 7%. </li></ul>
    12. 12. The Indian Cold Chain <ul><li>About 30% of India’s production of fruits and vegetables gets wasted because of poor post harvest management practices. </li></ul><ul><li>The value is about US$ 13 billion every year. </li></ul><ul><li>Tomatoes, Cauliflowers, onions and watermelons are thrown on the highway because it is not worth the effort to transport it to the markets. </li></ul><ul><li>Cold storages are uneconomical to run, inadequate and are located far away from the farms and harvested products have to endure the ambient heat. </li></ul>
    13. 13. Where is the Indian cold chain?
    14. 14. The Onion Case <ul><li>India produced about 6.4 million tonnes of onion in 2005, out of which, 3.3 million tonnes was used for domestic consumption, 0.3 million tonnes as processed products, 1.1 million tonnes was exported and the remaining 1.7 million tonnes perished as waste. </li></ul><ul><li>There is an enormous wastage of the highly perishable onion crop due to abysmal or virtually non-existent storage facilities. </li></ul><ul><li>Maharashtra, producing almost a quarter of the country’s onion output loses about 50% of production each year due to poor storage facilities. </li></ul><ul><li>Suicides of onion farmers in Maharashtra is no longer a shocking news. </li></ul>
    15. 15. The Onion Case <ul><li>Rajasthan, the fourth largest producing state does not have a single cold storage unit and farmers are forced to dump their produce at distress prices, leaving them at the mercy of the traders. </li></ul><ul><li>The retail prices of onions fluctuate between US$ 1.0 during shortage period to US$ 0.1 per kg during glut period while the farmer himself getting a distress price of US$ 0.01 (1 cent) per kg of produce. </li></ul><ul><li>Often onions are dumped along the highway as the onion prices do not cover even the transport expenses incurred by the farmers who get stuck in a vicious debt trap. </li></ul><ul><li>The onion story gets replicated for tomatoes, cauliflowers, watermelons, etc. </li></ul>
    16. 16. The Potato Story <ul><li>Potato is the world’s fourth largest food crop harvested, after maize, wheat and rice. </li></ul><ul><li>Year 2005 saw a world potato production of 323 million tonnes, with India being the world’s third largest producer of potato. </li></ul><ul><li>The world potato processing industry requires particular varieties of potato grown under custom practices which results in specifications like large tuber size, low sugar etc. and requiring Controlled Atmosphere storage. </li></ul>
    17. 17. The Potato Story <ul><li>Unfortunately, since the potato varieties grown in India do not adhere to the above specifications, they are used only for domestic consumption, but not for processing or export. </li></ul><ul><li>Further, The traditional methods of potato storage in India further degrades the quality and renders unsuitable whatever little that is good for processing. </li></ul>
    18. 18. The Mango Story <ul><li>Indian Mango varieties are the favorites of world food connoisseurs. India has exported 60,000 tonnes of mangoes, but the exports have been limited to Bangladesh and other Asian countries. </li></ul><ul><li>The major markets in UK, USA and Japan are still eluding Indian exporters. Though these countries have opened up their doors to Indian mangoes, exporters are unable to exploit the potential, mainly because of lack of treatment facilities stipulated by the importers. </li></ul><ul><li>The first consignment of mangoes to Japan after almost 20 years consisted of 4 tonnes of 6 various varieties. However, 80% of this cargo was rejected and returned because of presence of black spots. Indian mango exports to US have not yet taken off because of absence of Vapour Heat Treatment and irradiation facilities in India. </li></ul>
    19. 19. The Reliance Experience <ul><li>Realising that mangoes fetch more profits than even the petroleum products, Reliance has embarked on Asia’s largest mango plantation covering 470 acres at its Jamnagar refinery complex. </li></ul><ul><li>Out of the first year’s production of a mango crop of 387 tonnes, 384 tonnes were supplied to the company township and other retail chain stores within India. 3 tonnes were exported to Harrods, the famous London department store. </li></ul><ul><li>They plan to export about 100 tonnes next year to Harrods as against their demand of 300 tonnes. While Reliance sold mangoes at US$ 0.9 (Rs.40) per kg, Harrods was able to retail the same for US$ 55 (Rs.2,400) per dozen to the local Asian community. </li></ul><ul><li>Reliance intends to set up its own processing unit and have its own reefer vans and cold storage facilities. </li></ul>
    20. 20. Poor Maintenance of Cold Chain <ul><li>The prime reason for failure of Vijaya – APEDA (Agricultural Produce Export Development Agency) experiment in export of mangoes in 1996 has been identified, as poor maintenance of the cool chain causing a delay of 24 hours of the sea-shipment containers on the dock in high ambient temperature before leaving India. </li></ul><ul><li>It was not any one element which had failed, but the entire chain had collapsed, all the way from tree management to pack-house practice. Clearly, the problem here was not technical, but managerial and systemic. </li></ul>
    21. 21. Reasons for Wastage <ul><li>The wastage of perishables is attributed to gaps in Cold Chain such as: </li></ul><ul><li>poor infrastructure </li></ul><ul><li>insufficient cold storage capacity </li></ul><ul><li>unavailability of cold storages in close proximity to farms </li></ul><ul><li>poor transportation infrastructure </li></ul><ul><li>Lack of quality consciousness and awareness </li></ul><ul><li>This results in instability in prices, farmers not getting remunerative prices, rural impoverishment resulting in farmers’ frustrations and suicides. </li></ul>
    22. 22. Pre-Harvest vs Post-Harvest <ul><li>India wastes more fruits and vegetables than it consumes.  </li></ul><ul><li>Enough attention has been paid at the Pre Harvest stage for boosting up the levels of production by techniques like crop rotation, soil conservation, pest control, fertilizers, irrigation etc. </li></ul><ul><li>But, Post Harvest issues have been addressed inadequately. </li></ul><ul><li>Despite having achieved national food security, the well-being of over 200 million Indian farmers and farm workers who have been the backbone of Indian agriculture continues to be a matter of grave concern.  </li></ul><ul><li>Every 1% reduction in wastage of fruits and vegetables would translate into savings of US$ 0.13 billion. </li></ul>
    23. 23. Indian Cold Storages <ul><li>Operating costs for Indian Cold Storage Units reach $2 plus per cubic foot per year compared to less than $1 in the West!  </li></ul><ul><li>Energy Expenses make up about 28% of the total expenses for Indian Cold Storages compared to 10% in the West. </li></ul><ul><li>These factors make setting up of cold storages difficult, unviable and uneconomical. </li></ul>
    24. 24. Poor Export Performance <ul><li>The poor status of Post Harvest Management in India results in loss of export potential and a dismally low share of India in the export of processed fruits and vegetables (less than 1%) compared to 70% of USA and Brazil, 78% of Philippines and 83% of Malaysia as percentages of total horticultural produce. </li></ul>
    25. 25. The agricultural marketing chain <ul><li>Farmer </li></ul><ul><li> Village agent at Taluka Level </li></ul><ul><li>Market agent at Mandi level </li></ul><ul><li>Wholesaler </li></ul><ul><li>Semi-Wholesaler </li></ul><ul><li>Retailer </li></ul><ul><li>Consumer </li></ul><ul><li>Contributes to Product Deterioration, especially in case of perishable products like fruits and vegetables due to extended post harvest time lag without any value addition. </li></ul>
    26. 26. What do we need? <ul><li>What we need is a seamless gap-free cold chain. </li></ul><ul><li>About one-third of these post harvest losses of perishable products can be reduced by using Solar Powered Refrigerated Containers to transport harvested products from farms to cold storages. </li></ul><ul><li>Optimum usage of the containers can yield an annual savings of about US$ 4.5 billion. </li></ul><ul><li>The investment is US$ 2.5 billion and the payback period is just 6-9 months. </li></ul>
    27. 27. A seamless gap-free Indian cold chain
    28. 29. The Gains <ul><li>The 69% of Indian population depending upon agriculture and allied activities will be lifted up into positive economy. </li></ul><ul><li>Better quality and nutritious food for our population. </li></ul><ul><li>Better health standards. </li></ul><ul><li>Increase in awareness of the availability and use of technology for preservation of food products. </li></ul><ul><li>Better export potential and increased foreign exchange earnings. </li></ul>
    29. 30. What is Cold Chain? <ul><li>Cold chain is a logistic system that provides a series of facilities for maintaining ideal storage conditions for perishables from the point of origin to the point of consumption in the food supply chain. </li></ul><ul><li>The chain needs to start at the farm level (e.g. harvest methods, pre-cooling) and cover up to the consumer level or at least to the retail level. </li></ul><ul><li>A well-organized cold chain reduces spoilage, retains the quality of the harvested products and guarantees a cost efficient delivery to the consumer given adequate attention for customer service. </li></ul><ul><li>IF ANY OF THE LINKS IS MISSING OR IS WEAK, THE WHOLE SYSTEM FAILS. </li></ul>
    30. 31. COLD CHAIN LOGISTICS <ul><li>The Cold chain logistics infrastructure typically consists of </li></ul><ul><li>Pre-cooling facilities </li></ul><ul><li>Cold Storages </li></ul><ul><li>Refrigerated Carriers </li></ul><ul><li>Packaging </li></ul><ul><li>Warehouse and Information Management systems </li></ul><ul><li>Traceability </li></ul><ul><li>Financial and Insurance Institutions </li></ul>
    31. 32. Cold Chain Logistics and Management <ul><li>Cold chain management involves maintaining appropriate temperature regime when the product travels from the farm in Himachal Pradesh to the consumer in London or New York City. </li></ul><ul><li>That is why the logistics challenge is formidable in food chains, which is cost conscious industry. </li></ul><ul><li>There are several governmental regulations in all countries and the responsibility to maintain hygiene and standards falls on the food retailer or manufacturer. </li></ul><ul><li>The recent developments in electronic tagging could be useful for monitoring the temperatures and also the shelf life of the product. </li></ul>
    32. 33. The Reefer Export Supply Chain
    33. 34. Existing Infrastructure <ul><li>Presently, there is inefficient and insufficient usage of existing cold storage facilities due to their location, being far way from the farms. </li></ul><ul><li>The journey from farm to the cold storage is long and arduous by use of open bullock carts or unrefrigerated trucks over unmotorable roads, taking the toll on the products. </li></ul><ul><li>Usage of Refrigerated trucks is limited only to long distance transportation of the products from one city to another due to the obvious voyage economics, rather than from farm to cold storage. </li></ul>
    34. 35. Polio Immunisation Failure <ul><li>The failure of polio immunisation drive in the recent years is attributed to the failure of the cold chain in India. </li></ul><ul><li>The polio vaccine was not maintained at the required temperature from the production till final usage. </li></ul>
    35. 36. FAILURE DURING THE EXPORT PROCESS <ul><li>Perishable products meant for export often end up in a damaged condition at the consignee’s end because of failure of the cold chain during the export process itself. </li></ul><ul><li>There are innumerable instances of cargo damage testifying to the importance of the role of the export infrastructure, need for proper compliance of shipper’s instructions, maintenance of temperature and other parameters and proper documentation in the export process. </li></ul>
    36. 37. To combat this we need… <ul><li>An integrated cold chain infrastructure covering major production areas, processing units and distribution centers which will call for the following: </li></ul><ul><li>Strong fleet of refrigerated transport vehicles to connect the farm level storage facilities, the processing units and the various distribution centres. </li></ul><ul><li>At retail outlets, display cabinets for marketing of frozen food products are to be provided. </li></ul><ul><li>Need to augment cold storage facilities and container handling facilities at major ports as also an air cargo complex for targeting the global market. </li></ul><ul><li>Quality Awareness and Consciousness to compete globally. </li></ul><ul><li>WE NEED SOMETHING ON THE LINES OF 360 QUALITY AND ZERO DEFECT CONCEPT OF REEFER PRODUCTS WHICH IS BEING USED IN THE WEST. </li></ul>
    37. 38. 360 Quality Code <ul><li>The 360 Quality Code is a set of voluntary standards for specialised reefer shipping lines and their service providers. </li></ul><ul><li>The aim is to meet the needs of customers by promoting the highest standard of quality and cargo care; on reefer vessels, in port terminals and in liner trades. </li></ul><ul><li>The Code recognises that all the stakeholders in the reefer export activity like specialised reefer shipping lines and their service providers including the farmers have to work jointly to achieve this goal. </li></ul><ul><li>The 360 Quality brings transparency in the supply chain of perishables and the principle is that in a collaborative supply chain everyone involved should assume responsibility for their activities and take corrective action to eliminate defects. </li></ul>
    38. 39. 360 Quality Association <ul><li>A body dedicated to improving Food Safety and Food Quality in the specialised reefer shipping has been formed. </li></ul><ul><li>The main task of this body is to develop guidelines for the implementation of the 360 Code and develop it further to meet the needs of the market. </li></ul><ul><li>Since compliance with 360 Code requires audits by independent bodies, the 360 Quality Association has developed Uniform Guidelines for auditors and certification bodies that will audit the terminal and ships. </li></ul>
    39. 40. The various partners who can influence the supply chain are: <ul><li>Farmer/grower </li></ul><ul><li>Packing Station </li></ul><ul><li>Truck </li></ul><ul><li>Terminal or Cold store in Load Port </li></ul><ul><li>Stevedore in Load Port </li></ul><ul><li>Port Captain </li></ul><ul><li>Vessel </li></ul><ul><li>Stevedore in Discharge port </li></ul><ul><li>Terminal or Cold Store in Load Port </li></ul><ul><li>Truck </li></ul><ul><li>Distribution Centre </li></ul><ul><li>Supermarket </li></ul>
    40. 41. Farmer <ul><li>Being his livelihood, the grower/farmer takes very good care of the cargo. </li></ul><ul><li>Regular quality checks will be carried out during the various stages of the growing or production process. </li></ul>
    41. 42. Start of the Supply Chain <ul><li>Refrigeration of the product at the grower’s end is highly recommended as the grower has no control over its handling and storage after it is sold and leaves his hands. </li></ul><ul><li>It buys the growers that extra shelf life time that the wholesaler and retailer might reduce with poor handling procedures. </li></ul><ul><li>A grower who can meet the challenges of preserving the quality from field to dinner table will be able to expand his marketing opportunities and will be able to compete better in the market place. </li></ul><ul><li>If a product does not hold up in the distribution chain, often the grower is blamed for poor handling practices. </li></ul>
    42. 43. Supermarket <ul><li>Even the truck driver who takes the cargo to the final destination point - a supermarket or a local grocery store has a role to play in the Quality System. </li></ul>
    43. 44. End Consumer <ul><li>This could be our End Consumer! </li></ul>
    44. 45. <ul><li> This is not </li></ul><ul><li> THE END </li></ul><ul><li>This is a NEW BEGINING! </li></ul>
    45. 46. Thank you Namaste