9 Feb, 2018
As per research company Crisil the key segments like meat, seafood and bio-pharmaceuticals will be growth drivers for the cold chain industry estimated to go grow by 13-15 per cent in the next five years. These three segments cater mainly to the export markets, where organised players are preferred due to stringent quality requirements and regulations, it added.
The study report stated that “cold-chain industry can witness an annual growth of 13-15 per cent in the five fiscals through 2022, compared with 11-13 per cent in the previous five.”
This will swell the industry to Rs 47,200 crore in fiscal 2022 from Rs 24,800 crore in fiscal 2017.
In the meat segment, growth would be led by buffalo meat, which has the largest share of exports at 45 per cent. While in seafood segment, growth would be led by shrimps, which contributed 38 per cent in volume and 65 per cent in value terms to total seafood exports in 2016-17.On its part, the bio-pharmaceuticals segment is heavily dependent on cold chains.
This is particularly so because stringent US FDA regulations necessitate those products such as vaccines, serums, and blood plasma be monitored critically. Biopharma exports are expected to grow by 18-20 per cent in value terms between 2017 and 2022 lifting share of exports in the segment to 55 from 45 per cent in FY17. Significant demand is also seen coming from fruits and vegetables, particularly the exotic varieties, which fetch higher margins.
As per the Agricultural and Processed Food Products Export Development Authority (APEDA), the share of fruits and vegetables in exports, among principal commodities, increased to 22 per cent in FY17 from 14 per cent in FY16. Also, between FY13 and FY17, exports of fruits and vegetables increased by 11-12 per cent in volume terms. Still, wastage in fruits and vegetables is high at 15-16 per cent as per the Central Institute of Post-Harvest Engineering and Technology, mainly because cold storages are located near consumption centres rather than farm gates.
The report further said there is intense pressure on reefer rentals especially in sea food, meat, and ice cream, as a large number of unorganised players cater to the segment.
While most players operate in multiple segments for better margins and diversification, a few target only the pharmaceutical and biopharmaceutical segments where margins are higher as quality has to be maintained.
Crisil Research Director Binaifer Jehani said that “Investment in cold chains and reefers suffers due to lack of first and last mile connectivity. Besides, stiff competition and low preference of end-user industries to transport via reefers (as it increases costs) restricts private players from investing in the segment. We believe greater adoption of the integrated cold chain model will help improve utilisation and draw investments.”
Crisil Research Senior Director Prasad Koparkar said “This calls for investment in cold storages 50-150 km from the farm gates as well as meat production centres so that an efficient cold chain grid is built across India. Investments in temperature controlled vehicles, or reefers, would also be necessary.”