Investment Decisions for Cold Chain Technologies
Investing in cold chain technologies has been shown in mature economies to be a cost-effective way to connect farmers and growers with higher value market options as well as reduce post-harvest losses of perishable produce, thereby improving incomes for producers and meeting increasing demand for food. However, the capital spending required for the deployment of these technologies can be a significant barrier in the developing world. From a purely commercial perspective a positive decision to introduce cold chain technology for a given perishable product will depend largely on whether the value of the produce saved exceeds the cost of investment and operation, including pre-cooling, chilling or freezing, cold storage, cold transport and retail refrigeration. The investment is clearly more likely to be made in this way for higher value produce, such as fresh berries, snow peas, seafood and flowers, but may be difficult to justify for lower value staples without accounting for the broad societal benefits of increased well-being and health that agricultural development brings. In such cases there is a role for government intervention and subsidy to reduce the risks for early adopters and encourage deployment to a point of critical mass. In India for instance, the government currently provides subsidies of up to 50% through the National Horticulture Board (NHB) and the Ministry of Food Processing Industries (MOFPI) to help cover the upfront costs of deployment.Eligible investments include plastic crates, packing houses, pre-cooling facilities, cold storage and refrigerated vehicles.
For newly emerging economies the cold chain raises the prospect not only of reducing produce losses and strengthening food security, but also of upgrading agricultural ‘value chains’ to underpin development. Agrarian societies will be able to increase their income by growing higher value produce for a broader range of market options, and ensuring that as much of that product as possible reaches the marketplace and consumer, thereby helping realise a shift from poverty-based subsistence farming to increased well-being founded on agricultural production. The African Union has made value addition, functioning markets to facilitate trade, and investment in agricultural value chains core areas to be addressed in the coming decade.Countries in sub-Saharan Africa such as Mali and Kenya have already carved out a profitable niche supplying high value horticultural goods including mangoes and cut flowers to the mature economies of the world and poorer developing nations such as Tanzania have aspirations for similar initiatives. In this regard cold storage has already been built at Kilimanjaro Airport to facilitate horticultural exports and a new container port at Bagamoyo, due to open in 2017, could increase agricultural exports to encourage development. In these circumstances there is a strong case for cold chain investment through a partnership combination of overseas donor development aid (particularly ‘aid for trade’ investments), national government subsidy and intervention, and private investment both corporate and philanthropic.