Shekar Swamy, Hindu Businessline dt/17/1/12
Instead of handing over our markets and cold chain infrastructure to foreign companies, we can create our own inclusive solution that will be the envy of the world.
The word “reform” is a euphemism for big foreign capital to gain access to Indian domestic markets in a policy framework that is conducive to their success. The announcement on foreign direct investment in multi-brand retail, currently in ‘pause' mode, is one such example.
One of the major reasons cited for such foreign investment is that this alone is the answer to building our nation's cold storage chain, to reduce wastage of fresh fruits and vegetables.
Let us look at two simple low-cost solutions, both of which can be indigenously developed, tested and deployed on a mass scale.
LESSON FROM NIGERIA
This inspiring example comes from the region around Kano, in northern Nigeria, an area characterised by hot days, low relative humidity and low rainfall that is concentrated within three months.
The region is home to a third of Nigeria's population of over 150 million people. The people are mostly small farmers and cattle-rearers. The area suffers from poor roads and power shortage, making cold storage difficult (a description that applies to vast tracts of India).
Consequently, farmers had to sell their produce at low prices, since they could not hold the produce.After studying the problem in depth, Mohammed Bah Abba, an enterprising lecturer at the Jigawa State Polytechnic, Dutse, came up with a unique solution. Hailing from a family of potters, he invented the pot-in-pot system of cooling (called zeer in local language).
The pot-in-pot technology consists of two earthenware pots of different diameters, one placed inside the other. The space between the two pots is filled with wet sand that is kept constantly moist, thereby keeping both pots damp. Fruit and vegetables are put in the inner pot, which is covered with a damp cloth. The phenomenon that occurs is based on a simple principle of physics: the water contained in the sand between the two pots evaporates towards the outer surface of the larger pot where the drier air is circulating.
The evaporation automatically produces cooling, causing a drop in temperature of several degrees in the inner container, extending the life of the perishable foods inside. In tests conducted, the temperature in the inner pot was reduced by 6-8 degrees C in 12 hours, and could be maintained by keeping the sand moist.
The shelf life of the produce improved significantly, as shown in the table.
The impact of the pot-in-pot was a reduction in the wastage of fresh fruits and vegetables. Farmers could hold the produce longer and sell on demand at higher prices. The cost of a pot-in-pot unit is around $5 (less than Rs 300).
Will this work in India? Tests can be run in different States to answer this question. The concept is not new as it is similar to matka-cooled water served in many parts of our country. More than 30,000 units are being sold annually in northern Nigeria. This can't happen unless it is successful.
The cooling required for many perishables is much more than what can be achieved in the pot-in-pot. However, this inexpensive non-electrical system can be the first level of storage in the farmers' homes, for produce which are amenable to this system. Lakhs of these of varying sizes can be deployed at a very low cost.
We all know how a bank locker works. We rent space as required, have access to it when we want, and pay a modest usage fee.
Now, imagine a cold storage room at the village level of size 20' width x 25' length x 10' height – 5,000 cu ft of space. Experts refer to this as a walk-in cooler.
BANK LOCKER EXAMPLE
A cold storage space of this size can be set up for a capital cost of under Rs 7 lakh (land excluded), for a cooling level of 5 degrees C, which will cover most fresh fruit and vegetables. (Temperature and moisture requirements do vary. Meat, for example, needs to be frozen. Even that can be set up.) Each cooler can be run by an owner-operator, throwing up lakhs of rural employment opportunities.
The electricity cost for such a storage locker (5 KW per hour, running 18 hours a day) is estimated at Rs 4,000 per week. Farmers can rent space in the cold locker on usage basis.
The rental cost per 100 cu ft will be just around Rs 400 per week (assuming 50 per cent capacity utilisation, and a target revenue of Rs 10,000 per week to cover electricity cost, manpower and return on investment).
The government can guarantee a return on this infrastructure investment, like it has done for fertiliser plants.
(The real challenge will be access to continuous supply of electricity, a problem that is common to all.)
India can set up 100,000 (500 million cubic feet) of these cold storage lockers in the villages and mandis for a cost of just Rs 7,000 crore.
To put this amount in perspective, the government is spending Rs 40,000 crore on the National Rural Employment Guarantee Act (NREGA), which shows we have the resources.
India can build the largest disaggregated ground-level cold storage chain in the world.
I spoke to two experts in cold storage to collate and verify this information. They were excited that this could be done. One of them even offered to build a prototype to prove the point.
TRANSPORTATION COLD CHAIN
The cost of adding refrigeration to a 7-9 tonne truck is around Rs 6 lakh. An expert in trucking whom I spoke to confirmed that truck operators will add this to their trucks, once they understand the higher rentals they can charge.
For a modest investment which can be indigenously funded, we can create a fleet of tens of thousands of refrigerated trucks plying all over the country. The pot-in-pot system, the cold storage locker chain, the refrigerated trucks, and presumably other simple ideas – all of these can be created easily.
FDI in multi-brand retail, with the massive damage it will cause to farmers and traders and the entire ecosystem, is not required to address the cold storage issue.
Instead of handing over our markets and cold chain infrastructure to foreign companies, we can create our own inclusive solution that will be the envy of the world.
(The author is Group CEO, R K SWAMY HANSA and Visiting Faculty, Northwestern University, USA. blfeedback@thehindu.co.in. The views are personal.)
(This article was published on January 16, 2012)
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