Cold Chain in the Aftermath of Demonetization
Demonetization came as a sudden announcement and sent shock waves in the industry, with people facing a number of issues especially where cash transactions are the order of the day. The hot topic of discussion in the last couple of months has been demonetization and its impact on various industries. Cold store industry also faced a lot of challenges, especially in the potato belt where there are dealings with farmers. In our opinion, it is overall a laudable move with the right intentions. We have been speaking to various stakeholders in the cold store industry, and are giving below our views on the short-term impact based on their feedback.
Impact on City Based Cold Stores
Sales have slowed down due to shortage of cash. Existing stocks, therefore, have not been moving. Due to the adverse impact on harvesting, fresh stocks may not come into cold stores in sizeable quantity. Imports have also reduced. Owners are finding it difficult to pay the labourers, since many of them do not have access to banking. Payments from customers have slowed down, affecting the working capital.
Impact on Farm Based Cold Stores
Capacity utilization will be a challenge due to slowdown in harvesting operations. Farmers generally pay in cash due to limited access to banking; this has become a challenge now. This increases the risk of farmers not coming to pick up their stocks, which may deteriorate as a result. Labour and working capital have been adversely impacted.
Round up of Events
An important development has been the Paris Agreement, which came into force in November 2016. Readers may recall that we had mentioned in this column, in an earlier edition, the possibility of India joining an agreement for HFC phase out. The Paris Agreement has confirmed the phase out, though over a very long time frame. The base years are 2024-2026, and reduction over the next 20-25 years will be based on usage during the base years. As such, no change is expected in the use of HFCs in the near future; the change will begin in 8-10 years. Which brings us to the question, ‘what next?’ Ammonia, with its toxicity, would always be the target of opponents citing its leakage hazard and potential injury threat. However, ammonia is here to stay, considering its zero Ozone Depletion Potential (ODP) and practically zero Global Warming Potential (GWP). ODP is the reason why HCFCs are currently being phased out, and GWP is the reason why HFCs are planned to be phased out at the global level despite their zero ODP. CO2, though low in energy intensity, will always be a hazard due to being a very high-pressure refrigerant: pressures to the tune of 50-60 bar are encountered for low temperatures and 150-160 bar for medium temperatures. As such, a solution that fits all is still elusive, though a lot of research has been going on to find the right refrigerant for medium and low temperature operations. We understand that some research is also being carried out to create a form of ammonia that will not be toxic. We sure await the outcome of that! ACR TrendZ, ISHRAE Pune’s flagship event with one full day dedicated to Refrigeration and Cold Chain, went off very well this year with the number of delegates crossing 150 on both days. A separate note on ACR TrendZ appears in the Journal. RACON, organized by ISHRAE Kolkata, also had a portion dedicated to Refrigeration and Cold Chain. Senior members from the HVACR fraternity who have completed more than 50 years of service to the industry were felicitated during the event. One of the authors, Arvind Surange, was among those felicitated. The dates of RACON coincided with another event – ICE Expo, which was organised by Global Cold Chain Alliance at Indore. Arvind Surange was awarded for his long service to the industry at ICE also. This award was received on his behalf by the other author, Harshal Surange due to the timing overlap. A person being awarded at two places simultaneously may be unprecedented. ICE Expo also included a conference where both the authors made presentations. In addition, Harshal represented ISHRAE and spoke at the AGM of the Federation of Cold Storage Associations of India (FOCSAI), which was held at the same venue. ISHRAE Chennai held RefCon, which made a good debut. RefCon had to be shifted to Pune last year at the eleventh hour due to the floods in Chennai. India Cold Chain Show was held in October in Mumbai and saw a good turnout in terms of exhibitors as well as participants. This was the event’s third consecutive appearance in Mumbai, which is emerging as a preferred venue – with the next year’s show again being planned there. The event included a conference and an entrepreneurship workshop for cold chain start-ups. A full report on ICCS 2016 appears in What’s Happening in this issue. Internationally, the World Food Waste Summit organized by Carrier was held in December at Singapore, with delegates from all over the world attending. It highlighted research on fossil fuel free engines for cold chain, which may be commercialized soon. Cold chain possibilities in mature and maturing markets were discussed. Chillventa, which takes place once in two years, was held in October at Nuremberg this year. The primary takeaway from the show was that the European market is moving in the direction of ammonia, CO2, propane and newer refrigerants in refrigeration systems.
New Policy Initiative
The Ministry of Food Processing Industries launched the 2016 version of its cold chain scheme, which got a good response from prospective promoters. A total of 100 projects for food processing and cold chain will be sanctioned in various food sectors including milk, F&V, meat and seafood. An interesting aspect of the scheme is that it requires a necessary component of almost one third of the total project cost being invested in a farm level facility, which would help create infrastructure at the farm level – an area where India lacks significantly. Hence, the push for increasing investment at the farm level is indeed significant. The projects would typically range from Rs. 30 to 40 crore. A back-of-the-envelope calculation shows that farm level investment would be to the tune of Rs. 1,000 crore over the next few years, if all projects are executed through this scheme. The scheme closed on November 15.
The Refrigeration and Cold Chain Pavilion at ACREX is now looking at newer heights, and a lot of effort is being made to scale it up into a larger event. A professionally generated database is being created for reaching out to prospective end users and converting them into actual footfall. ACREX, due to its tie-up with other organizations through the Build Fair Alliance (BFA), would be a big turnout event and is expected to have many spillover visitors to all areas. We appeal to all the readers who are interested in the refrigeration and cold chain field to attend ACREX and visit the Refrigeration and Cold Chain Pavilion. Details on its outcome would be covered in this column in the next issue.