MARKET POTENTIAL

The Cold Storage Market size is estimated at USD 151.68 billion in 2024, and is
expected to reach USD 190 billion by 2029, growing at a CAGR of 4.61%
during the forecast period (2024-2029). The market has benefitted significantly
from the stringent regulations governing the production and supply of
temperature-sensitive products.
 Its expansion can be linked to rising demand for cold storage in
commercial and industrial organizations, as well as regulatory
compliance demands. The majority of the expansion was seen in
emerging nations such as India, China, Brazil, Indonesia, and Mexico,
among others.
 According to the cold storage industry, 53% of enterprises want to
enhance their cold storage capacity. Increasing demand for food and
pharmaceuticals, as well as a greater emphasis on safety, has resulted in a
rise in demand for cold storage space.
 In 2022, the frozen category led the market, accounting for around 77.3%
of worldwide sales. Increasing frozen food consumption in emerging
nations such as India and China is pushing the frozen food industry in
particular. Warehouses in this category keep their storage temperatures
between -10°F and -20°F. They hold frozen vegetables, fruit, fish, meat,
seafood, and other items.
 The absence of infrastructure necessary to support the cold chain is
expected to provide a significant hurdle for enterprises looking to grow
into emerging economies. Furthermore, the unavailability of power hook-
ups for reefer trailers at transportation hubs and ports may stymie
industry expansion in these areas. COVID-19 caused lockdowns and
travel restrictions in numerous regions of the world, affecting the supply
chains of many industries. The consequences of COVID-19 have had a
considerable impact on the market.
Rapid Growth in Import and Export Activities of Food Items
Cold storage facilities are witnessing rapid growth in demand owing to the
increasing import and export activities. The cold storage market is booming
with increasing global trade and the corresponding need for secure storage
infrastructure.
India accounts for 5.92% of the worldwide pharmaceutical and medicine
market. Formulations and biologics accounted for most of India's exports
(73.31%), followed by drug intermediates and bulk medicines. In 2021-22, the

country exported pharmaceutical items worth USD 24.62 billion, a 2% increase

over the previous year. Exports increased by 18% yearly to USD 24.4 billion in
2020-21.

In March 2022, India exported USD 2.4 billion worth of drugs and
pharmaceuticals, a 23% increase from USD 1.97 billion in February 2022. The
USA, UK, South Africa, Russia, and Nigeria are India's top five export
destinations.
In December 2022, China's pharmaceutical product exports totalled USD 990
million, while imports totalled USD 3.29 billion, resulting in a USD 2.3 billion
negative trade deficit. From December 2021 and December 2022, China's
pharmaceutical exports fell by USD -3.04B (-75.4%) from USD 4.03B to USD
990M, while imports fell by USD -423M (-11.4%) from USD 3.71B to USD
3.29B.

COLD STORAGE LANDSCAPE

Due to the constantly changing consumer dynamics, cold chain warehousing is
on the brink of significant growth and progress. As an agricultural country,
India is responsible for meeting the demands of its rapidly increasing
population. The country’s diverse nature necessitates the transportation of
perishable goods between states, which creates a need for efficient cold storage
facilities. To address this demand, industries must prioritise the development of
robust active and passive cold storage infrastructure supported by advanced
dehumidification solutions. Establishing a strong network of high-quality
storage facilities and warehouses is crucial.

Moreover, India is a notable exporter of premium products such as mushrooms,

apples, mangoes, cherries, and broccoli. The country is also emerging as a
significant global hub for seafood, with states like Telangana, West Bengal, and
Kerala being prominent exporters.

Additionally, consumer purchasing patterns have significantly shifted in recent

years, with a growing preference for online food shopping and increased
demand for meat and frozen products like prawns, lobsters, peas, and corn.
Online food aggregators must ensure the seamless operation of storage
warehouses and excellent cold storage facilities throughout their supply chains
to guarantee safe, high quality, and hygienic food for consumers.

Furthermore, the pharmaceutical and flower industries are experiencing

remarkable growth, further driving the need for cold chain warehousing. The
demand for loose flowers has seen a steep increase, leading to the emergence of
commercial floriculture as an industry. cold chain warehousing and emphasise
the need for dehumidifiers to preserve the freshness and quality of the products.

The cold chain industry has undergone significant changes due to the shift
towards frozen commodities and the widespread use of technology. Automation
has played a crucial role in upgrading various processes within the industry.
Previously done manually, tasks such as sorting, grading, drying, and cleaning
are now automated. Spoiled or decayed products can be separated automatically
during sorting. Integrating innovative technologies like AI, ML, and IoT has
enabled grading based on size, weight, diameter, and other factors. Packaging
processes have also been automated, opening doors to agri-retailing.

Industry 4.0 has further improved operations by allowing real-time temperature

and humidity monitoring using dehumidifiers. Remote monitoring of
dehumidifiers facilitates efficient decision-making based on live data.

To enhance the shelf life of products, various solutions are available. Bry-Air
offers compact desiccant dehumidifiers that control moisture, prevent ice
buildup on evaporator coils, and minimise issues like fogging, slippery floors,
and damaged cartons. This reduces wastage, accidents and improves operational
efficiency.

The Bry-Air Ethylene Scrubber (BES) inhibits the over-ripening of fruits and
vegetables. Ethylene, a major contributor to spoilage, is continuously removed
from the air emitted by the produce.

Other offerings from the group include Treated Fresh Air (TFA) units, which
help maintain proper CO2 levels and reduce energy consumption, and ARCTIC
Coolers, which increase the ideal humidity (RH) value in passive cold stores
over time.

According to the IMARC report, the Indian cold chain market was valued at
INR 1814.9 billion in 2022. With the growth of various industries, it is
projected to reach INR 3798.7 billion by 2028, representing a growth rate of
12.3 percent from 2023 to 2028. The pharmaceutical industry’s international
expansion emphasises the need for cold chain warehousing and logistics to
ensure the quality of drugs and medicines throughout their shelf life.

The market is also evolving with the changing trends. To meet the seasonal
demand, fruits, vegetables, grains, etc., are produced in bulk, following which it
becomes a prerequisite to store them in warehouses. Consumers these days are
very much aware they seek quality and hygienic products. Owing to this, there
is a constant responsibility to increase the shelf life of the products so that the
quality is kept intact for consumption. As a result, industries across the verticals
are constantly looking for refrigeration warehouses that are well-equipped with
advanced dehumidification technologies to maintain a certain temperature to
enable cold storage in the warehouse.

Integrating advanced technologies like AI, ML, robotics, and IoT has
revolutionised cold storage infrastructure, ensuring resilience and efficiency.
The industry offers two types of storage: Active and Passive. Active cold
storage caters to everyday products with dynamic storage applications and
multiple temperature zones within a single warehouse. On the other hand,
passive cold storage is designed for long-term storage of perishable goods.

Cold Storage Landscape In West Bengal Vis-A-Vis Potato Storage

The first cold storage unit was set up in Kolkata in 1892(NCCD 2015). Post-
independence, the cold chain industry was regularised and promoted under the
aegis of Cold Storage Order enacted by the Central Government in 1964 and
later amended in 1980.

States like West Bengal, Uttar Pradesh, Punjab, and Haryana have enacted
individual legislations concerning cold storage regulations and management.

The cold storage facilities in West Bengal are plagued with poor capacity
utilization due to its single commodity (potato, apple, orange, grapes, et cetera)
based designs and availability schedules. (Rais & Sheoran, 2015).

The average capacity of a cold storage unit in India is around 6000 Metric
Tonnes (MT).

In West Bengal, over 90% of cold storage units cater to potatoes, with an
average capacity utilization of 100% during the peak season. The average
capacity of a potato cold storage unit in West Bengal is around 11,000 MT.
With 514 active cold storage units, West Bengal ranks fifth in terms of the
number of active cold storage units and second in terms of average storage
capacity, which remained at about 5.9 MMT since 2014.

The loading of potatoes in cold storages begins towards the end of February and
closes by the end of March. The unloading, driven by the market demand,
typically starts from May/June onwards and continues till the end of the storage
season in November. Annual maintenance at most cold storages units is carried
out in December. Capacity utilization at peak seasons is 100% of the total
storage capacity, which gradually decreases starting from May and June as
unloading of the stock starts.
The storage rental rates in West Bengal fluctuate weekly, monthly, and annually
based on various factors and are currently pegged at INR 157 per quintal per
season4 (i.e. nine months, March-November). The monthly rental for storing
potatoes is currently INR 0.17/kg. Cold Storage entrepreneurs have requested a
revision of the cold storage rents to about INR 180/ quintal owing to increased
input and capital costs. (Munshi, S 2021).

Food Losses (Potato) Reported In Cold Storages In West Bengal

Food loss is the total quantity of food lost in the supply chain (Kashyap &
Agarwal, 2019). Potato is a perishable commodity, and its preservation requires
storing the produce in cold storages. Incorrect temperature, humidity, and air
movement in cold storages can adversely affect the quality of the stored
produce. Potatoes not appropriately stored are prone to tuber losses due to
fungal and bacterial infection.

An average of 7.32% of harvest and post-harvest losses of potatoes were

reported in India compared to 8.99% in 2005-07 (ICAR 2015). A reduction in
storage losses from 2.26% to 0.78% during this period is attributed to the better
availability of cold stores and other infrastructure. However, this study has not
been able to quantify the produce loss due to inadequacy in the storage
conditions. Inputs received from cold storage owners and operators in West
Bengal and Uttar Pradesh indicates that potato losses are significant but have
not been quantified adequately due to an absence of weighing and monitoring
systems. Potato losses while in storage mainly occur due to poor handling
practices and inadequate storage conditions with respect to the required
temperature, humidity, and air circulation parameters.

Improper handling during the loading and unloading processes at the cold
storage contribute to losses at the wholesale and retail levels. Total reported
losses within the supply chain of potatoes in West Bengal amount to 27-30% of
the harvest. Around 5% of these losses occur at the farm level, 9.5-10% of
losses occur during the storage processes, and 12-15% of losses together at the
wholesale and retail levels (Figure 7). Post-harvest losses of fresh vegetables at
farm levels can be attributed to inadequate harvesting methods (Verma & Singh,
2004).
Several storage inefficiencies and poor handling processes are the operational
cause of waste in the supply chain (Negi & Anand, 2016).
A significant portion of total wastages of fruits and vegetables occurs between
the farms and mandis, can be attributed to the poor packaging of the produce
and the lack of cold storage units (Sivaraman 2016). Figure 8 shows the
movement of potatoes produced in 2019-20 from the farmers to the ultimate
consumers in a typical post-harvest chain in West Bengal. The losses at each
step vary depending upon the technologies used in the supply chain.

Around 13.16 Million Metric Tonnes (MMT) of potatoes were produced in

West Bengal in 2019-20. According to the NSS 2011-12, the monthly per capita
consumption of potatoes in West Bengal is 3.8 kg6. In 2019-20, the total
consumption of potatoes in West Bengal amounted to 4.37 MMT7. Of this 4.37
MMT, 1.4 MMT8 potatoes bypassed the cold storages and were directly sold to
consumers via retailers buying from wholesale markets and village traders.
During the peak season, 100% of cold storage capacity is utilized for storing
potatoes. Considering the above, a maximum amount of 5.35 MMT of potatoes
can be stored in the cold storages, and the remaining 5.74 MMT are exported to
other states. During this process, 5% of losses are reported.

From the cold storage, 3.71 MMT of potatoes are sold at various wholesale
mandis in different districts of West Bengal and the remaining 1.13 MMT is
exported to the other states. Around 0.51 MMT of potato losses are reported in
the process of storing these potatoes in the traditional cold storages. Over 5.11
MMT of potato produce reaches the wholesale mandis in West Bengal (directly
and from cold storages), of which 4.85 MMT reach the retail vendors, and the
remaining 5% is lost/ written off in wholesale markets.

The retailers sell the remainder, i.e. 4.37 MMT of potato produce, after
reporting 10% losses in the intermediation process. From the farm gate to a final
consumer, a horticulture product passes through various intermediaries, which
add up to the waste and increases the commodities per unit consumption price
(Negi & Anand, 2016). The wholesale level losses depend on the number of
participants in the marketing channel.

Potato losses in cold storages can be broadly classified into two categories-
evaporative losses (reduction in weight due to loss of moisture; (freshly
harvested potato contains 80% water and 20% dry matter) (FAO 2008)) and
spoilage losses (physical deterioration of potato quality). Factors such as
ambient condition, temperature and air circulation affect the shelf life of
potatoes leading to spoilage. Both types of losses increase with longer storage
periods. Table 1 shows the percentage of traditional cold storage losses
compared to a modern facility, assuming linear unloading.

Potato losses due to spoilage alone could be as high as 6% in the traditional

bunker coil type cold storages by the end of the storage season. The seasonal
average (assuming linear unloading) potato losses could be 10% in traditional
cold storages, which is quite significant as losses in modern cold storages
following correct handling practices and maintaining prescribed storage
conditions amount to only 2.5%. It is estimated that a seasonal average
evaporative loss of up to 5% is widespread in traditional cold storages. The
evaporative losses could be reduced to up to 2.5% in modern cold storages. No
spoilage losses occur in modern cold storages with state-of-the-art refrigeration
systems and handling best practices as compared to over 6% in traditional cold
storage units. It is estimated that there would be a 75% reduction in losses if
traditional cold storage units are retrofitted to modern cold storages. A detailed
description of the difference between a traditional and a modern cold storage
facility is presented in section 5.

Around 32% of West Bengal’s cold storages are more than 30 years old (Hansa
Research Group 2014). Of the 514 cold storages existing in West Bengal in
2020, 95%9 of cold storages are traditional bunker coil type, while the
remaining 5% have modern refrigeration systems handling multiple
commodities. The lack of modern cold storage technology is working against
the potato farmers, leading to substantial quantitative10 and monetary
losses11while storing potatoes.
The lack of modern cold storage units is working against the potato farmers in
West Bengal, leading to financial losses amounting to the north of INR 200
crore every year. At a national level, financial losses of more than INR 2000
crores are reported every year since 2014 except in 2020, where losses
increased to INR 3174 crore owing to an upswing in wholesale prices.

Conclusion and Way Forward

Fruits and vegetables are highly nutritious agricultural produce but have a short
shelf life due to their delicate nature. They require care and proper post-harvest
handling practices to minimize the quality deterioration while extending their
shelf life. Cold chains can preserve the quality loss of perishables (and reduce
loss) and increase the distance to which the produce can be economically
transported. Gaps in cold chain infrastructure (including pack-houses and
refrigerated transport) coupled with traditional refrigeration design and outdated
operational methodologies employed at cold storages are the most significant
contributor to food loss in India (Emerson, nd). Reduced food loss can lead to
increased food security, reduction in hunger and malnutrition (Chauhan, 2020).
Controlling food loss is a broader problem and is beyond the scope of individual
farmers and consumers. Reduction of post-harvest food loss requires focused
government intervention and pronounced action by all stakeholders in the cold
chain sector.

In 2017-18, West Bengal was the second-largest horticulture producing State in

India, growing approximately 15% of the country’s total vegetables.
Worryingly enough, an agrarian household’s average annual farm income is the
least in West Bengal compared to other states. There has also been a notable
rise in the State’s malnutrition index as the percentage of underweight children
(under five years) have increased from 31.6% in 2015-16 to 32.2% in 2019-20,
which is ironic given West Bengal’s status as a food surplus state.

Considering all of the above, it is therefore imperative to invest in the cold

chain infrastructure facilities. Cold storages play a vital role in post-harvest
management functions, including the storage and distribution of perishable
commodities and food products. Food loss at the storage level has several
implications in West Bengal, where more than 95% of the farmers are either
marginal or small. Food losses lead to an increase in food prices for the
consumers and means lost income for the small farmers. Poor cold storage
infrastructure affects the freshness and quality of the produce, leading to food
losses and below par price realization.
The cold storage ecosystem in West Bengal is working in a controlled
environment and has not been able to take off due to restrictive policies and
regulations by West Bengal’s Government.

Nationally, West Bengal ranks second in terms of cold storage capacity (5.9
MMT), 90% of which is utilized for storing potatoes. The majority of the cold
storages in West Bengal are designed with a traditional single chamber with
multiple mezzanine floors that do not provide the flexibility to store multiple
products that are already grown or grown/sold in West Bengal. Different
produce requires different storage conditions in terms of temperature and
humidity levels, which the traditional single chamber cold storages are unable to
cater to. As a result, storage for other fruits and vegetables are grossly
inadequate. The lack of multi-commodity cold storages disincentives farmers
from diversifying their cropping patterns.

Multi-commodity cold storage facilities can cater to various perishables such as

fruits, vegetables, spices, et cetera. Modern multi-commodity cold storages will
help the farmers diversify their horticulture crops and make seasonal
adjustments without having to worry about suitable storage options. With
separate chambers operating at different temperatures, these cold storages save
cost, space and deliver high profitability with greater net capacity utilization.
However, investing in a modern cold storage unit of about 5000 MT from
scratch can cost up to INR 5 Crore (Mohite & Patil, 2020). Therefore,
retrofitting-cum-modernization of the existing cold storages comes across as the
next best cost-effective solution that offers better net-capacity utilization at
lower capital and operational expenses.

It is assumed that modern cold storages will bring new marketing avenues by
attracting the food processing industries back to West Bengal. A case in point
worth mentioning is Gujarat, where a potato farmer nets INR 9.5 to 12.5 per kg
by producing 1 kg of processed variety for the food processing industry. In
contrast, by producing the table variety of potatoes in West Bengal, a farmer
barely breaks even. Multi-purpose cold storages in West Bengal will encourage
the farmers to diversify their crop production and focus on better quality
production, thus yielding higher revenues.

The latest produce handling, energy management, automation and control

technologies in the modern multi-purpose cold storages can help maintain the
product’s quality and minimize the losses attributed to human error. The
freshness and shelf life of perishable commodities such as fruits and vegetables
can be significantly increased by storing them in a controlled atmosphere by
regulating the temperature, humidity and diluting the built-up of carbon dioxide
levels. This process can delay the softening, evaporation, and quality changes of
potatoes and other horticulture commodities.
To conclude, retrofitting-cum-modernization of the existing cold storages into
multi-purpose one’s will stretch the marketable time of potatoes for a longer
duration and diversify the farmer’s crop production. Modern cold storages can
verily transform the lives and livelihoods of small and marginal farmers of West
Bengal. It will help realize a more significant economic value for their produce.
The modernization of cold storages will boost farmers’ income in West Bengal
and incentivize them to use modern equipment for agricultural production- a
win-win situation for the farmers and the consumers.

West Bengal, a prominent horticulture producing state in the country, should set
the pace for other states to follow. West Bengal Department of Food Processing
Industries and Horticulture should develop a cold chain action plan outlining the
approach and benefits of a modern, environment-friendly cold storage value
chain in the State. The policy document should introduce state-level subsidy
support to supplement the central MIDH as Viability Gap Finance to make the
retrofitting-cum-modernization scheme financially viable.