Suggestions regarding Cold Chain to contain the losses of perishable produce

1. Integrated Holistic Approach with Focus at Farm level infrastructure

required
The cold chain does not mean cold store only. By simply creating cold store
capacities the problem of post-harvest losses will not be solved. To get the desired
results; Integrated Holistic Approach with Focus at Farm level infrastructure is
required. In India cold chain has been successful in Milk Sector because the
network at production (farm) level has been very strong.
Present Position

In horticulture sector the facility at farm level is insignificant. The farmer is not
linked to the chain.

NHB/NHM are disregarding the holistic approach. They have standalone

schemes for various components of cold chain under MIDH, which are not
giving the desired results. Under MIDH, there is a standalone scheme for
refrigerated trucks. The cost of refrigeration cost in total cost of refrigerated
trucks, is less than 20%. There are instances where transporters take
advantage of 50% subsidy and then use trucks as ordinary trucks. In a way
ordinary trucks are being subsidised under cold chain scheme. Similarly cold
stores are also being used for non-cold store purposes.

MoFPI has a holistic approach it is supporting integrated cold chain projects.

Only the integrated cold chain projects having processing facility/ CA Store with
backward linkages (farm level infrastructure) and forward linkages (marketing
infrastructure) are assisted by MoFPI. This is the reason projects assisted by
MoFPI are giving the best results.

Suggestions
The need is to increase & develop cold chain capacity not simply cold store
capacity.
i.

More emphasis be given on farm level infrastructure. The first thing required
is to connect the farmer to the cold chain. The Government Grants are given
to support those projects which are economically justified but fall short of
financial viability. So the focus of government grants should be on those
projects which have larger economic benefits. The infrastructure at the farm

level should get the maximum government support. It has the maximum
economic benefits. It has a high multiplier effect.
ii.

Refrigerated transport is a financially viable business without any

government support. Some people with background in transport business
may support this business but this sector does not need Govt. support.

iii.

Collection centers capacity at farm level is required to be increased on

priority so government subsidies must be linked to creation of collection
centers.

iv.

Projects having processing facilities, grading facilities at farm level be given

preference through some mechanism.

v.

The model of MoFPI of integrated cold chain facility should be followed by

MIDH also.

2. Cost Norms
In absence of any professional body as on date, government agencies are unable
to fix realistic cost norms. So fixation of cost norms by DAC is proving
counterproductive.
Present Situation

The project cost norms are being arbitrarily fixed by DAC. There is no basis for
fixing costs. One year the cost is revised upwards, in subsequent years it is
revised downwards. For some components like Refrigerated vehicles it is
revised upwards every time. A lobby having background of transport business
is working to promote subsidies for transport vehicles. In case of ripening
chamber earlier the cost fixed by DAC was Rs. 6000/MT. Now it has been
revised to Rs. 1.00 lac/MT. It shows how arbitrarily costs are being fixed
showing certain biases.

In case where the project cost is fixed at less than the actual cost either the
project is not completed or underprovided, incomplete projects are set up. The
government money is wasted as projects do not take off. There are number of
CA projects of NHB which are not operational. The CA Cold stores are ready
the cost of Bins was not included in the project cost as fixed by the NHB; so
projects are non-operational as there are no storage bins to store the produce.

In case of those components where the costs are fixed abnormally high; the
machinery supplier take advantage of this. The government money is diverted
from the intended purpose.

MoFPI has a practical commercial approach. It does not fix any cost norms for
the project. The project cost as appraised by the professional agencies like
bank is considered for the project. So good, energy efficient, safety compliant,
fully operational projects in sync with latest technology are set up.

Suggestions
The need is good, energy efficient, safety compliant, fully operational projects in
sync with latest technology are set up.
i.

The model of MoFPI of not fixing the cost norms but accepting cost as
appraised by bank be followed by NHB and NHM also.

ii.

Some checks & balances are applied so that some unscrupulous

promoters do not misuse the scheme in connivance with the bank. But
genuine projects & promoters cannot be penalized by fixing unrealistic
project costs.

3. Pattern of Assistance
The Government Grants/subsidies are given to support those projects/sectors
those have huge economic benefits but fall short of Financial Viability. In the
nascent years private investment is not forthcoming without government support in
some sectors. The government continues to support the sector till it becomes
financially viable and self-sustainable. The quantum of support is decided with the
objective that the supported project becomes financially viable.
Present Situation

DAC has an inconsistent and ad hoc approach regarding pattern of (quantum

of) assistance. The quantum of subsidy is changed every now and then for NHB
& NHM schemes. Some year it is 25% another year it is 55%.

The quantum of subsidy is not based on any impact evaluation. It is not fixed in
accordance with requirement of the sector. The fixation of quantum is divorced
from the reality. If the subsidy support is inadequate to make the project
financially viable; there are no takers for the schemes. The momentum of
progress in the sector is broken. The allocated budget to NHB schemes remain
unutilised. As knee jerk reaction the quantum of subsidy is again increased.

Now MIDH has reduced the quantum of subsidy. There are very few takers for
some of its schemes. The funds will remain unutilised in many schemes.

The MoFPI has a consistent approach regarding Quantum of Grant. Its scheme
of cold chain is very successful. It is able to utilise its allocated budget; rather it
seeks more & more budget every year. It is giving 50 % grant in normal areas
with a provision for increased grant in difficult areas & Himalayan states. The
grant is released through bank but is considered part of the finance. So
quantum of bank finance is reduced and it becomes easy for the promoters to
access bank credit.

Suggestions
i.

The pattern of assistance of MoFPI of integrated cold chain facility be

followed by MIDH also; as it is giving best results.

ii.

There has to be a consistent policy regarding quantum of subsidy otherwise

people those have inside information regarding the schemes take undue
advantage.

iii.

The quantum of assistance should be adequate based on rational

assessment that makes the project financially viable (the objective with
which it is given). Inadequate support is counterproductive.

4. Crop Specific Cold Storage facilities are required to be created

The cold storage facilities requirement vary from crop to crop. A typical example is
the post-harvest losses are for tomatoes and the system creating storage facilities
for apples; it is waste of govt. money.
Present Position

In the last few years many CA cold stores have been set up in the country and
many are under implementation. 90% of these stores have availed subsidy from
NHB/NHM. All these CA cold stores are for Apple. In near future excess
capacity will be created for Apple CA stores; with the result the government
grant will not give the desired results. The situation is such that; just to meet the
targets NHB/NHM is giving subsidies to Apple CA cold store projects in such
areas and states where Apple is not grown. Such facilities are neither beneficial
to the farmers nor reduce post-harvest losses.

The reason for this situation is that Storage Protocols suitable for other fruits
and vegetables are not available to the public. This problem was recognised
and NCCD was created with the mandate to prescribe technical standards for
cold chain infrastructures for fresh fruits & vegetables. High salaried people
were appointed in NCCD; with high salary of Rs 3 lacs per month & other perks.
The persons having background in Finance, Marketing were appointed. But
unfortunately not even a single person having background & qualification in
Horticulture, Post-Harvest Technology was appointed to NCCD. The result is
NCCD has not recommended technical standards for even a single crop.

On the other hand many research institutions in country are working on

developing Cold Storage Protocols suitable for other fruits and vegetables. The
need is commercialization of technologies developed by these institutions.

Suggestions
i.

All efforts must be made to take advantage of work being done by various
research institutes in the field. The crop specific Storage Protocols already
developed by them must be commercialized. The information should be
disseminated to the industry. The slogan of our Honble Prime Minister Shri
Narendra Modi ji Lab to Farm must be brought to practice. The research
institutes working in this field must be encouraged and supported. DARE
can act as nodal agency for this. An exercise must be made to contact all
research institutes working in the field. An advertisement may be given; with
wide publicity that research institutes working in the field of Post-Harvest
technology contact DARE.

ii.

NCCD must be reconstituted; hiring persons from the field which is related
to its mandate. Persons having background & qualification in Horticulture,
Post-Harvest Technology should be appointed.

iii.

Performance audit of NCCD must be carried out.

5. Selection Process for the Project

i.

The selection process adopted by MoFPI through EOIs is the best & most
transparent method to select the best and most suitable projects.
Professional agencies (PMAs) are used for evaluation of projects, to assist
the competent authority in the approval process. It should be followed by
NHB & NHM also to ensure transparency and to avoid subjectivity.

ii.

The firms on one hand giving consultancy to private promoters and on

another hand doing the evaluation on behalf of government agencies should
not be appointed as PMAs. It is clear case of conflict of interest.