Project Brief

All fruits and vegetables require specialized post harvest treatment, appropriate temperature and relative humidity for their storage. Establishment of cold storage provides refrigerated storage and preservation facilities for several fruits, vegetables & flowers. Because of technology advancements and logistic strategies, the cold storage of perishable items has become an important stage in the distribution between manufacturers/processors and retail locations. The cold storage will ensure the increased availability and improved quality of high value perishable fruits and vegetables for both export and local sale, which would otherwise perish or deteriorate. This project is designed for storing of potatoes and apples/ kinnu but it can be used to store multiple products, stored in different compartments of the unit, where relative temperatures for respective products can be maintained. The major clientele of this business will be the export houses and the local trading and marketing units of potato and apple/ kinnu. The project will further aim at storing fruits & vegetables even during off-seasons. The project will ultimately assist the clientele in maintaining market price equilibrium throughout the year for potatoes.

Storage of Potato
The purpose of potato storage is to maintain tuber quality and provide a uniform flow of tubers to fresh market and processing plants round the year. Good storage should prevent excessive dehydration, decay and sprouting. It should also prevent high sugar concentrations which result in dark colored fried products. Following are the requisites for efficient potato storage:

x Adequate insulation x Outside waterproofing x Inside vapor proofing x Ventilation x Air distribution x Adequate humidification x Properly designed controls for precisely maintaining the storage atmosphere.

Temperature, humidity, and air movement are the most important environmental factors affecting storability. Temperature requirements are determined by the intended use of the potatoes. Tubers should always be kept in the dark since very small amounts of light will gradually cause greening. Lights should not be used more than absolutely necessary. Surface greening is due to chlorophyll formation and is harmless. However, its presence in potatoes is undesirable because of marketing restrictions and the fact that at times an alkaloid called solanine increases with the chlorophyll. Solanine and other glycoalkaloids cause potatoes to have a bitter, undesirable flavor. Greening develops slowly in the light at 40qF or below but develops rapidly at 68qF. Potatoes are usually held in bulk piles 8 to 20 feet deep. Some are stored in pallet boxes for short periods. Pressure bruise and internal black spot are substantially

lower with pallet storage but decay is often increased because of poor air circulation within boxes/bags. The proposed project contains racking system build up by using good quality steel and wooden logs. These racks provide space for placing the potato bags & apple/ kinnu crates with sufficient intra spaces for air circulation.

Opportunity Rationale
Securing an adequate food supply has been the fundamental concern of mankind and so has been the preservation of food. The loss of food in the post-harvest system is not new; it has always been a problem for man, even in the highly scientific and technological world of today. Among all the major problems persistent in the world regarding the fulfillment of the basic needs of people, food requirement stands at the top, as without ensuring satisfactory diets, people cannot lead healthy and productive lives. In these present times of high population growth rates, food supply has become diminutive. For filling this gap between demand and supply, there is a need to conserve the food supply, in order to meet the growing and existing food requirements, especially fruits and vegetables, as these are more perishable. The problem related with food loss is more prevalent in the less developed world as compared to the developed world. The developed countries have curbed the loss of

food to a great extent by adopting new technologies and ways of storing food. Some examples of such measures are adoption and development of better harvesting equipment; establishment of collection centers at strategic points in major crop producing areas; remodeling of containers to add more protection to the produce; and more importantly the development of commercial storage plants/cold storages. As far as the scenario of food losses in Pakistan is concerned, Pakistan produces a variety of fruits and vegetables like potato, apple, mangoes, dates, banana, cherries, apricots, pomegranates, peas, carrots, etc. Pakistan's total annual production of fruits amounts to nearly 6 million tons and that of vegetables to approximately 5.3 million tons. However, it is estimated that in Pakistan 25% of fruits & vegetables produced each year are lost because of poor harvest conditions. This loss if calculated approximately amounts to 2.7 million metric tons and its estimated local market value reaches somewhere near US $ 522 million. The major reasons for this loss are careless harvesting, rough handling, inadequate transportation, and storage facilities. If we only look at the losses due to lack of storage facilities, it alone reaches 1.24 million metric tons, which values to nearly US $ 239 million. Furthermore, the purpose of storage of vegetables and fruits is to preserve and maintain the edible quality characteristics until they are consumed in the fresh state, which the cold storage serves

Market Entry Timings

The harvest season for potato is from December to February and of apple is from July to November so the best time to enter in the cold storage business is December.

Proposed Location

For retail sales, location of the cold storage must be near a major road, and the area must have adequate parking space. Proposed locations for cold storage could be from Kasur to Depalpur as potatoes are grown on this belt, apples are brought from Quetta & Kinnus are brought from Sargodha. Location of the cold storage should be done by keeping in view the following factors: x A cold storage facility must be in a well-drained area. It requires

drains to remove water from condensation, and cleaning and sanitation operations. Providing good drainage is essential. x Availability of water x Availability of Electricity x Three phase of electricity is necessary when more than 10 tons of

refrigeration is needed. x Wastewater disposal facility x Appropriate sewage collection and disposal system must be considered.

If any of above facility is not available the arrangement for the same must be done prior to construction of cold store.

Proposed Capacity
The proposed cold storage facility has a maximum storage capacity of storing 60,000 bags of potato or 180,000 crates of apple at any given time. It will be operational for potato storing period from February to July and will be available for

apple/ kinnu storage in December & January. It is also proposed that owner should maintain a stock of 7,200 bags of potato (15% of total capacity and keep on increasing the capacity by 5% uptil 30%) of his own that will earn extra profits in peak season and remaining 85% capacity will be utilized on rental basis.

Project Investment
The proposed project of potato cold storage needs a capital investment of about Rs. 75,214,920, which includes Building (civil work), machinery, Insulation of Expanded Polystyrene (EPS) with Plaster layer, Racking and pre-operational expenses of Rs. 2,908,000. Rs. 7,136,000 would be required as working capital and cash requirement for purchase of 7,200 potato bags. The total project cost amounts to Rs. 82,350,920.

Proposed Product Mix

In the proposed cold storage there would be a capacity to store 60,000 bags of potato from February to July and 180,000 apple/kinnu crates would be stored in December & January.

Key Success Factors

Following are some of the major factors, which contribute towards the success of the potato cold storage.

Better insulation technology and compartmentalization of cold

storage as compared to the rest of the cold storages in Pakistan. Energy efficient construction hence low operating/fuel costs due to

efficient insulation. Compartmentalization i.e. compartments has the provision of storing different commodities at their respective temperatures

Strategic Recommendations
It is recommended to develop a chain of dealers who put potato bags and apple/ kinnu crates on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in view the number of bags/ crates taken out from cold storage on agreed terms. In case the dealer is unable to pick the agreed number of bags/ crates on a particular day, the amount is deducted from his security. For earning higher profits it is recommended to the seller that he should send fruit & vegetable to Karachi, Lahore & Islamabad for sale.

CRUCIAL FACTORS & STEPS IN DECISION MAKING FOR INVESTMENT SWOT Analysis
1

A SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or business venture. Strengths and weaknesses are internal to the company whereas the opportunities and threats originate from the external environment. A SWOT analysis is usually performed early in the project development process, and helps organizations evaluate the environmental factors and internal situation facing a project.

Strengths and Opportunities

Fairly good price. Use of machinery that is durable and feasible. Low operational cost because of energy efficient construction. Compartmentalization provides opportunity to store different commodities at their respective temperatures. Extend product range. By using effective marketing strategies cold storage business can attract more growers and traders. The establishment of wholesale market and cold storage facilities would enhance the pace and volumes of business by providing market place for commercial transactions for the domestic and international trade. Sufficient quality control and reduction of waste will directly enhance availability of the produce. Further, the cold storage facilities would result in supplies during off-season which otherwise may not be possible.

Timely placement of products in the cold storage will help preserve their quality and improve shelf life. It will also avoid food contamination caused by microbial activity thus assuring availability of quality food products.

Weaknesses and Threats

Irregular government policies e.g., abnormal tax increase. x Fluctuation or unexpected increase in electricity tariff Failure of potato crops due to natural calamity. Ruthless competition by other business adversaries.

SECTOR & INDUSTRIAL ANALYSIS

Global Perspective
Worldwide average food grain losses have been put at 5 percent. In the developed countries, losses have been generally at 1 percent while 10 to 30 percent losses have been reported for developing countries. Increase need for potato cold storages is because of increase in the demand of potatoes through out the world. It is caused by following factors: Increase in purchasing power Increase in population. Mishandling and wastage of fruits & vegetables.

Local perspective
Although potato was grown on the Indian subcontinent from the late 16th or early 17th centuries, at Pakistan's foundation in 1947 cultivation was restricted to a few thousand hectares and total annual output was less than 30,000 tones. In the decades since independence, the aalu has become the country's fastest growing staple food crop. Thanks to strong gains in cultivated area and average yields - both made possible mainly by irrigation - output rose between 1995 and 2010 from one million to a record of more than 2.6 million tones. The lion's share of potato production comes from the Punjab, where spring and autumn crops account for 85 percent of the national harvest.

There are total 533 cold storages in Pakistan which have installed capacity of 892,000 tons13 out of which 104 units of cold storage/ ice factory having installed capacity of 1,905,907 bags/ crates, 25,208 blocks/ day are in proposed location Okara.

MARKET INFORMATION
Market potential
Most of the existing local Cold Storages are constructed on locally developed methods, which maintain a uniform temperature for all commodities stored. The goods are not stored at their recommended relative storage temperatures and life, and because of this the quality of stored commodity is badly affected. Potatoes require specialized post harvest treatment, appropriate temperature and relative humidity control for their proper & optimum storage, which most of the existing local cold stores lack.

Target customer
Following are the potential customers of cold storage: Growers

Traders

COLD STORAGE TYPES AND INFRASTRUCTURE

There are two types of cold storages being used in Pakistan 1. Traditional type cold storage (Insulated brick walls) 2. Pre-fabricated cold storage (Walk in type)

Insulation
The insulating material that is traditionally used is Expanded Poly-Styrene (Thermopore) having a thickness of 4-6 inches. A recent development in insulating material is Poly-Urethane. The later is 4-6 times efficient than the former.

Refrigeration system
Two types of refrigeration systems are used depending on product type and cold storage area. Ammonia Based System This type of system is manufactured locally. After sale services and spare parts are readily available. This also contributes low capital investment. No need of highly skilled operators. Freeon Based System

This system normally utilizes imported compressors. High initial cost and require highly skilled operator for smooth operation.

Racking
This includes combination of steel racks and wood logs etc. for storing of potato or any other products.

Pre-Fabricated Cold Storage

This type of cold storage is being used for delicate products that are mainly focused for export purposes. Polyurethane injected panels are manufactured at factory and are fixed together at project site using panel locking system. This type of clod storage requires less civil work (only roof for low heights). The initial cost is higher than the traditional cold storage (more than double). This cold storage provides better hygienic environment for delicate food products and have easy future expansion feature. The cold storage building consists of Pre-fabricated refrigerated (Walk-in type) structure. This type of structure is highly superior to any form of refrigerated storage construction previously available in Pakistan due to its better technology and energy efficiency. Polyurethane insulated panels are used to erect the building because these panels are metal clad and can be easily dismantled for relocating the cold storage site. The cold storage building has a roof of insulated corrugated sheet of galvanized mild steel to protect it from direct sun and rain. The floor has a surface of polyurethane insulated galvanized steel material. The floor is strong enough to

withstand the distributed load. An automatic monitoring system is installed in the storage compartments for maintaining relative humidity and temperature and to eliminate any chances of human error during the refrigeration period

HUMAN RESOURCE REQUIREMENTS

MACHINERY AND EQUIPMENT DETAILS

LAND AND BUILDING

Land
It is recommended that the new storage facility site be located as close to the fields as possible, minimizing handling, preserving product quality and limiting transport costs. The site for proposed business place could be on Kasur to Depalpur belt. Approximately 1 Acre of land would be required for this cold storage

Infrastructure requirements

The project will have the following infrastructure components

PROJECT ECONIMICS
Project Costs
The cost of the project will be as follows:

Estimated time frame for project Completion

The estimated time frame for the completion of the project is eight months.

PROJECTED INCOME STATEMENT

PROJECTED BALANCE SHEET

PROJECTED CASH FLOW STATEMENT