Challenges in Operating Integrated Cold Chain for Horticulture : The Journey of FHEL

1. Challenges in Operating Integrated Cold Chain for Horticulture : The Journey of FHEL Fresh & Healthy Enterprises Ltd Farm-to-retail Agri-logistics

2. Why FHEL? Why set up a Company dealing with fresh Fruits & Vegetables Nearly 30-40% of fresh produce, valued at Rs.70,000 Cr wasted in country due to inadequate cold chain infrastructure, multi-layered marketing, etc. Huge quantities of imported fruits coming to India At present the business is almost entirely with unorganized sector The above scenario present both a challenge and a business opportunity

3. INTRODUCTION FHEL is a Public Sector Undertaking (PSU), set up in Feb 2006. The first PSU to start in open competition with Private Sector Promoted and wholly owned by Container Corporation of India (CONCOR)

4. OBJECTIVES To set up world class Cold Chain Infrastructure in the country and provide complete logistics services for fresh produce. Develop long term linkages with farmers, agricultural institutes and government agencies to improve quality of produce, yield, storability and shelf life of variety of fruits and vegetables to enable availability for longer durations and at reasonable rates.

5. CA Store at Rai First Project. Capacity 12,000 MT, 78 Chambers, computer controls for temp., humidity, oxygen and CO2. Primarily for apples but successful for many other F&Vs Facility has latest Computerized Control Fully AIR CONDITIONED sorting / grading /packing facility to retain best quality at all stages. Grading, Sorting and Packing on automatic lines. Facility for mechanized packing for both Retail and Bulk.

6. What we do? Apples : Himachal Procure, move in the shortest possible time to Rai, sort / grade and store at Rai Market apples across the country almost during the whole year Provide technical knowledge and tools, equipments etc to growers

7. What we do? -- II Store Rice in Controlled Atmosphere (CA) for exporters Store Kinnows, Orange and carrots in CA for sale in off-season Ripen mangoes. Plan to ripen papaya as well. Done trials with pears for long term storage Develop supply chain of guava and strawberries

8. ACHIEVEMENTS Till now handled more than 35,000 MT of apples from Himachal Largest supplier of Kinnaur apples. Developed long term linkages in large parts of Himachal Pradesh. Preferred supplier of apples to many retail chains. FHEL is now a successful brand in the market, known for quality, integrity in operations and scientific packing.

9. NEW INITIATIVES Successful trials done with oranges, grapes, Kinnows, lemons and carrots. Successfully storing Rice in CA, before its export. Major value addition to exporters. Setting up a Procurement Centre in Himachal. To facilitate exporters setting up a CFS in the facility. Developing a modern banana / mango / papaya ripening facility at Azadpur in Delhi. Later we plan to enter complete logistics of these fruits. Setting up a Modern pack house for F&V at Nasik

10. FRESH PRODUCE LOGISTICS IN INDIA AND THE DEVELOPED WORLD

11. FRESH PRODUCE LOGISTICS IN  INDIA -- PRESENT SCENARIO Production of nearly 190 million MT, valued at over Rs.2,00,000 Cr Produce reaches nearby mandies, sold through commission agents to wholesalers, sub-wholesalers and then to retailers Often when the produce is re-directed to other stations, one or two more agents are involved and there is re-sorting / grading Handling �both in the farms and mandies - manually mostly by untrained labour. Most of the risk in supply chain is that of farmer

12. FRESH PRODUCE LOGISTICS IN  INDIA -- PRESENT SCENARIO -- II RESULT : Huge wastages (value: Rs.70,000 Cr), poor quality - customer preferring imported fruit, high cost of production � we need protection of import duties Buyers at all levels factor-in losses in the supply chain and so farmers even pays for the losses in supply chain. Farmers often made to sell produce at low rates and do not get fair share Customers are used to accepting poor quality Productivity-wise India is very low in rank

13. HOW THIS BUSINESS WORKS IN DEVELOPED COUNTRIES Mostly organized with turn over of major companies : $3-10 billion. Each company works with its set of farmers Companies employ number of specialists to properly plan and execute scientific pre-harvest and post-harvest management systems to ensure that productivity and quality is good, products are handled & packaged well and are marketed on time with sufficient shelf life Most of the farms & cold chain may not be owned by companies

14. APPLE BUSINESS IN INDIA Production : 20 Lakh MT in 2007-08 Value : Rs.7000 Cr Imports in 2008-09 : Estimated at 1.25 Lakh MT Value of imports : >Rs.1000 Cr Countries of import : USA, China, Chile, New Zealand, Australia, Turkey Duty on import of apple is 50% Productivity of Indian orchards is 6-10 MT per hectare while that in USA is above 40 MT

15. Progress of Cold Chain for Horticulture 6 companies have set up CA stores in India for apples Total capacity at present is approx.40,000 MT Some have been buying apples, storing in CA and selling in off-season for the last 4 years and this has tremendously benefited the farmers and customers Progress in productivity and quality of produce Substantial capacity built up for ripening bananas

16. Requirement of Facilities For approx. 20 lakh MT of apple production, India needs about 8-10 Lakh MT CA storage capacity For 2000 MT of bananas arriving in Delhi per day, we need at least at least 1000 MT ripening capacity per day In season, Delhi gets 250,000 MT of mangoes. No capacity to ripen with ethylene

17. TRENDS, CHALLENGES AND THE WAY FORWARD

18. Some Trends Quality fruit is in demand round the year India imported more than 1,25,000 MT of apples in 2009-10 Price of imported apple is almost 3 times that of Indian apples in the season, yet the imports are growing @30%+ every year. India is also importing large quantities of grapes, kiwis, pears, etc.

19. Major Challenges Limited expertise available in the country in orchard care and post-harvest management Protocols need to be established for every commodity and variety At all stages, manpower involved in logistics and marketing is not fully aware of produce requirements, leading to loss in quality and value Rural infrastructure is very poor, affecting transport

20. Winds of Change Thanks to entry of imported good quality fruits, the sector seen as a good business opportunity 40,000 MT of CA Storage capacity established in the last 4 years Demand of reefer transport has increased manifold. This is now a major constraint

21. The Way Forward Organized players have started entering this sector. The organized players should make a difference in the next 1-2 years and then the sector should see major investments Expect substantial improvement in quality, productivity and reduced losses in Fresh Produce supply chain Perhaps a mix of co-operative and corporate model should work best for this sector Role of Subsidies may have to be studied for effecting growth.

22. Thank You