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Apr 25 2018. 09 50 AM Wed

Can there be a viable value chain for fresh fruits and vegetables?

India has seen large investments in supply chain of apple by way of controlled atmosphere cold stores in which oxygen levels are reduced from about 21% to 2% and temperature maintained at about 0 to 1 degree Celsius

Establishing a horticulture value chain is tougher than milk, but we do have success stories in potato, frozen green pea and apple. | Photo: HT

Is it possible to set up a cost-effective value chain for fruits and vegetables and repeat the success achieved in the milk sector? This question is often asked as India loses crops and other food products worth Rs92,651 crore every year. I believe the success story of milk can be replicated.

In this year's budget speech, the finance minister announced Operation Green and provided a token amount of Rs500 crore for it. Establishing a horticulture value chain is tougher than milk, but we do have success stories in potato, frozen green pea and apple. 40 years ago, green pea was available only in winters, but introduction of individually quick freezing made it possible to freeze fresh pea and store it for sale round the year.

Similarly, India has seen large investments in supply chain of apple by way of controlled atmosphere cold stores in which oxygen levels are reduced from about 21% to 2% and temperature maintained at about 0 to 1 degree Celsius.

About 135,000 tonnes of controlled atmosphere cold stores have been set up. Now, apple is available almost round the year and farmers are realizing higher price. The success of storage of potato in cold stores is well known and despite crash of prices in glut years, farmers and consumers have benefitted. Supply chain of banana is improving and farmers will realize better price in future.

Every product needs a different strategy as physiological characteristics differ. According to a study conducted by the National Centre for Cold Chain Development, at all-India level, the requirement of additional cold storage capacity is 3.26 million tonnes (mt), which was just about 12% of about 26.85mt capacity in 5,367 working cold stores as of 2014. India has just 12,800 reefer vehicles against the requirement of about 62,000. India needs about 70,000 pack houses, but have just about 350. Most losses take place immediately after harvesting and they can be reduced by pre-cooling the crop.

A study sponsored by the National Horticulture Board found that out of total cold storage capacity of 31.82mt, Uttar Pradesh and West Bengal had 13.63mt and 5.9mt, respectively, and Jharkhand had just 0.21mt capacity.

As on 31 January, out of 232 cold chain projects approved by ministry of food processing with subsidy of up to Rs10 crore per project, Maharashtra got 52 projects, at an investment of Rs1,420 crore, while Jharkhand could not attract a single project (see chart). It is clear that states have to make efforts to attract investment in post-harvest sector.

Stable supply of electricity at reasonable rate and good road network are key. Solar energy-based cold stores can also become viable if states develop policies for buying surplus power for grid.

Storage losses of rabi onion can be cut to 5-10% by keeping them in cold storages.

Allround India, a subsidiary of Dutch company of same name is working closely with cold store owners in Mahua, Gujarat. If their technology is successful, we should see the first success of 'Operation Green' in the next few years.

Mother Dairy and Hopcoms kiosks in Delhi and Bengaluru provide a model for successful operations to deliver perishables. Other big cities should also provide subsidized space so that a high mark-up in prices from mandi to consumers can be checked. Urban India will continue to buy fruits and vegetables from weekly markets, carts and roadside vendors for years to come.

Therefore, a reduction of losses will be possible by involving such vendors and shops. Some start-ups are working in this area. New models of supply chain will hopefully evolve out of these new experiments.

Siraj Hussain was secretary, ministry of food processing. He is visiting senior fellow, ICRIER, Delhi.

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