Decoding the Cold-chain
By Pawanexh Kohli
In agriculture, post-harvest management is the first stage in any produces’ market lifecycle, immediately following harvest. In case of perishable crops, post-harvest handling includes aggregation, preconditioning (cleaning, sorting, packaging, precooling, etc.) of the produce and is important to extend the marketable life of the harvested crop. Post-harvest handling does not change the essential characteristics of the agricultural produce but determines quality and the market value of a crop.
In case of produce like fruits and vegetables, the most important aspects of post-harvest management are the operations that maintain its freshness whilst reducing the field heat of the freshly harvested crop, and avoiding physical damage such as bruising while preparing for the trip to markets. Farm-level traceability and hygiene are the other important factors in scientific handling, both to safe-guard the consumers’ health and extend the produce’s marketable life.
‘Freshness’ simply explained is moisture retention, which is also vital to keeping the fresh produce metabolically active, alive!
Once the fresh produce is prepared and precooled under controlled humidity conditions, the next central phase in the cold-chain is its temperature controlled transport. Reefer transport is used to consolidate volumes at a receiving market linked cold store. The cold store would typically serve as a distribution platform for delivery to the front end.
A few crop types, may follow a different sequence of activities to suit specific constraints. For e.g., potato cannot be pre-cooled but is directly stored in bulk format in refrigerated warehouses, to be warmed up when exiting storage and dispatched to market in ordinary transport systems. Cereals/grains need not require a temperature controlled phase, though for long duration inventories, that too is recommended.
However, in all cases, the post-harvest care and environment parameters maintained are critical to the marketability and quality of the produce. Each crop type has an optimal range for storage temperature and humidity. This individuality in effect means that certain crops cannot be stored together as unwanted cross contamination and tainting can result. Segregation is a harsh necessity in the cold-chain.
All infrastructure created for Post-Harvest Management (PHM) contributes to Gross Capital Formation in agriculture, adding to growth and development. Investment in PHM brings substance to the core domain i.e. agriculture and the marketing of produce. Cold-chain is integral to modern PHM practices and is increasingly critical to the future of food distribution.
The preconditioning of produce occurs through a series of activities that are commenced at a pack-house. This can be a simple shed, providing shaded workplace with running water, or at a larger scale; sophisticated, modern facility with sorting, grading, waxing and packing stations, pre-coolers and dispatch cold rooms. Services for preconditioning of farm produce are exempt of service tax under India's Finance Act.
Furthermore, under the Finance Act, value-added tax (VAT) is not applicable on cold-chain for farm produce. This is because cold-chain undertakes no value-addition on the product but merely takes custody of the value and conveys it to market; Cold-chain brings value to the producer and does not directly change the value of the product under care. These tax benefits are expected to continue under the new GST regime.
In cold-chain too, as with other post-harvest logistics activities, the essential characteristics of the product is not changed, unlike in case of food processing technologies wherein the product is used as raw material and converted into a new product (the essential characteristics of produce is altered). In effect, the cold-chain does not interfere with the farmers' harvested value but is an interface that safeguards such value and helps to directly link the farmers with a choice of consumers.
This ability to link with more consumption points empowers the producers as it permits them a choice of conducting transactions higher up in the value realization cycle.
The cold chain allows agri-business decisions in the hands of the producer and creates direct market links. In case of other technology intermediation, farmers are paid off at first instance - the intermediary then changes the fresh produce into a processed product under new ownership and this completely delinks the primary producer (farmer) from any future scope to develop a direct interface with the consumer-end of the market.
Cold-chain can take agriculture from peasant mode to agri-business mode.
Cold-chain offers modern post-harvest practices and transformational changes to the way agri-business is conducted. At the first instance, it promotes the consolidation of produce at farm-gate, thereby also promoting collaboration and cooperation at the back-end, including in cultivation. This effectively drives farmers to achieve a minimal logistical economy of scale, even by clubbing together small land holdings.
Modern PHM practices aim to empower value-based decision making at farm-end as produce is required to be sorted by marketable quality or value. The mere presence of an aggregation and preconditioning center (a pack-house) at the back-end, encourages market linked decision making to the farm-gate.
Cold-chain management allows the opportunity for the farmer to extend his/her market footprint as it expands the saleable range of perishable produce. It also allows opening up of new markets, where otherwise, the produce could not reach using traditional means. Perishable produce can boldly go where none could go before - the range of agri-business expands.
Food loss is greatly reduced if deploying cold-chain, not only because of the cooling and care but by using it to increase market reach - technology aided logistics permit surplus fresh produce to access more consumers. Reduction in food loss in the supply chain means an increase in sales for farmers.
Having such a logistics bridge from farm to markets feeds productivity at farms. Such a system also allows for businesses to structure the diverting of non-marketable, culled or non-table variety produce mini feeding food processing units and thereby extract the most value from what would otherwise have been discarded.
Requiring a certain economy of scale, cold-chain is inherently the harbinger of consolidation and drastically changes the way farm produce is traded.
All post-harvest management systems should be developed with the aim to bring improved value to the harvester, by enabling the farmers to reach more markets, across geographies and with reduced losses. This, in turn, makes farming more viable in the long run, both at the commercial and environmental levels. Agri-business systems have to be looked at all afresh - not primarily for trading in food commodities but for the delivery of food and for sustainable agriculture.
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