To boost agricultural productivity and earnings of smallholder farmers and reduce greenhouse emissions and food losses, there is a requirement for scaling low-cost, decentralized small capacity refrigeration units. This will help to preserve fresh produce at the farm-gate, make Indian agriculture resilient to shocks and boost rural development.
In India, agriculture and its allied sectors are the mainstays of its rural population. 70% of rural households primarily depend on agriculture as their primary source of income. The vast majority of farmers are small and marginal, meaning that they own less than two acres of farmland. Smallholder farmers play a significant role in the Indian agricultural value chain as they contribute to over 40% of the country's grain production, and over half of its fruits, vegetables, and oilseeds production. Due to inadequate farm-to-market logistics, a significant proportion of fresh produce is lost or spoiled. It has been estimated that around INR 92,651 crore per annum (around USD 11.8 billion) is lost to post-harvest losses, out of which 68% is attributable to poor storage facilities.
According to the research conducted by the Indian Council of Agricultural Research on crop losses in India, post-harvest losses are quantified as 3.9% to 6% in the case of cereals, 2.8% to 10.1% for oilseeds, 4.3% to 6.1% for pulses, 6.9% to 13% for vegetables and 5.8% to 18.1% for fruits. These losses occur during both harvesting and post-harvesting phases. The reasons for these losses are a combination of the absence of cold storage facilities, an inefficient cold-chain network, poor infrastructure, and inaccessibility to smallholder farmers, especially in rural areas. This forces farmers to sell their perishable horticultural produce immediately after harvest and usually at the lowest prices – which is known as a ‘distress sale’.
Even if cold storages are available, they are majorly used for bulk storage and mostly for a single commodity such as potato or apple, at a single temperature and for the long term (6 months or more). In addition, a farmer typically has to travel a substantial distance to avail of conventional cold storage facilities which are located in large towns, adding to the transportation cost and time. The other factor that ails the sector is an unreliable power supply as most cold storages are run on grid electricity or diesel generators, which limits the reliability of these systems. Further, the volatile diesel fuel prices and dependence on carbon-intensive sources of energy pose a hindrance in the scaling of the cold storage industry.
The food and energy nexus
To feed the growing population, agricultural productivity has to be increased. This means putting immense pressure on growers and the land to produce more, and thus will require increased access to reliable energy sources on-farm – from input to production. Presently, each step of the food value chain relies heavily on fossil fuels to operate. Reportedly, 8,186 on-grid/diesel cooling chambers are running across the country with a total capacity of 37 million MT used for storing perishable products. However, 75% of these systems are used for a single commodity – potatoes – whereas only 25% of them are used for multi-commodity storage, typically storing tomatoes and onions.
It is estimated that between 5% and 18% of fruits in India are lost during harvesting and post-harvesting phases due to low market- price and lack of availability of cold storages at the farm gate level.
Cold storage: Benefits, challenges, and prospects
The solutions available for reducing losses of perishable produce take the form of cold storage facilities or warehousing. These chambers, in which temperature and humidity can be controlled at the optimum for extending the shelf life of produce, help to reduce losses, avoid market gluts, reduce transport bottlenecks during peak production periods, and ensure the overall quality of products. The importance of cold storage in post-harvest management as well as in the economic development of the nation is evident. To date, the development of the network of cold chain solutions has followed a ‘one-size-fits-all’ approach. However, for a diverse country like India, there is a requirement for decentralized and customized solutions considering the needs of smallholder farmers and local needs.
In addition, there has been also uneven distribution of cold storage in India geographically speaking: the states of Uttar Pradesh, Gujarat, and Punjab have the highest number of cold storage facilities, whereas Bihar and Chhattisgarh account for just 3% and 1% of installed units, respectively. To address these challenges, it is proposed to set up small-scale decentralized cold storage systems either close to farms or at the mandi (vegetable and fruit market) level.
Need for DRE-based cold storage
As most of the cold storage facilities in India are of large capacity and are located in urban centers, there is a critical need for decentralized facilities to meet the varying need of farmers, especially for cooling products having a short shelf life. These systems can be run by harnessing solar PV or bio-waste materials - or other form of decentralized renewable energy (DRE) - that are easily available in rural areas, lowering the operating cost compared to fossil energy sources. The off-grid solar refrigeration sector not only holds the key to preventing food loss but can also generate local employment for installers, operators, maintenance technicians, transport providers, etc. The total addressable market for off-grid solar refrigerators in India to store perishable produce at the farm gate level is a staggering USD 15 billion.
Despite the immediate requirement and business opportunity of deploying such systems, off-grid solar refrigeration technology has yet to reach wide-scale adoption and commercial maturity. Perhaps the key barrier faced in the uptake of such systems is the high upfront cost. For instance, micro solar-powered cold chambers (<10 MT) manufactured in India typically retail at INR 2,00,000-4,00,000 per MT (USD 2,500-5,000 per MT) of storage capacity, excluding transport and taxes, and such units are manufactured only by a handful of private companies with limited competition. In addition, the low purchasing power of some smallholder farmers, limited access to finance, and limited availability of micro cold storage products that match the needs of rural customers are other challenges to overcome. The limited policy focus on ‘productive use’ appliances, lack of awareness among customer segments, and the uncompetitive market have also hindered the adoption of decentralized off-grid cold storages. As the development, operation, and maintenance of these systems are mostly carried by private players, it becomes imperative for the government to engage with the private sector to remove market barriers, foster market linkages, provide market intelligence and raise consumer awareness.
As the uptake of decentralized cold storage increases, further innovation in viable business models to speed up the adoption of this technology among smallholder farmers and low-income customers is necessary. Innovators should take into account factors such as the seasonality of demand, ability and willingness to pay of consumers, need for high reliability, and limited consumer awareness when preparing to introduce and scale clean cooling among energy-starved rural segments.
Finally, sharing knowledge, experience and best practices of sustainable cooling models would go a long way in helping to accelerate adoption of this transformative service.