Punjab's cold storage owners struggle to stay in business

"We have increased the share of potatoes in the meals served to schoolchildren and jail inmates in the last few months,” says Rahul Gupta, joint secretary of Punjab Agriculture Department. The reason is not to improve their dietary needs but, as Gupta explains, to solve a peculiar crisis faced by the state. Most potato farmers have abandoned their produce in cold stores for over a year now, and storage owners are paying from their pockets to dispose the old stock to make space for fresh crop, which are ready for harvest.

Jaswinder Sagga, a cold storage owner in Jalandhar, says over 1,000 potato bags (each of 50 kg capacity) have been lying in his facility for almost a year now. Usually they get lifted by the end of November. “That’s also the time when farmers pay us the rental. I charge around Rs 80 - Rs 110 for storing a bag of potatoes for a season. I know I would not get it this time,” says Sagga, who has recently sold the stock to Mohammad Rafi, a transporter from neighbouring Gurdaspur, for just Rs 25 a bag or 50 paise a kg.

Just a few weeks earlier, Rafi had transported five trucks of discarded potato from Jalandhar to Jammu, where he sells it as fodder. “Some cold storage owners are willing to sell the stock for just Rs 10,” says Rafi. “The situation is such that we are not even able to recover the maintenance cost,” says Ajmer Singh Khalsa, owner of the Khalsa cold storage in Jalandhar.

On an average, the owner of a cold storage with the capacity of 100,000 potato bags spends about Rs 60 lakh on electricity, employee’s salary, gas and other maintenance expenses. This comes to Rs 55-60 for maintaining a bag of potato for the entire season. “Most of us are now surviving on bank loans,” says Khalsa.

Jugraj Singh, owner of another cold storage in Jalandhar, has changed his strategy from this year. “I plan to take 50 per cent of the rental in advance from farmers at the time of storing the harvest.”

Farmers plead helplessness. “Immediately after demonetisation was announced, trucks loaded with potato returned from the market as there was no cash,” says Manjit Singh, a farmer from Jandu Singh village in Jalandhar district. The situation has turned for the worse since. Punjab, the sixth largest producer of potato which is also famed for producing seed potato, has had bumper harvests in the years after demonetisation. In 2016-17, the state produced 2.4 million tonnes (mt) which went up to 2.6 mt in 2017-18, according to the July 2018 report by the Centre’s Department of Agriculture, Cooperation and Farmers Welfare. This dampened the demand. So far, Manjit Singh has managed to sell only half of the 7,000 bags of potato harvested from his 14 hectare farm. The remaining was lying in three cold storages across the district, which he believes, would have been disposed of by now. This is a loss of Rs 7 lakh for him.

While Gupta says the Punjab government is also exploring options like exporting potatoes and selling it to southern states, analysts say the problem lies in the way cold chain supply system has been planned and managed in the country.

Problem of poor planning

Just like Punjab, which has “excess” cold storage capacity, as per the 2017 report by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), India’s refrigerated warehousing capacity is a massive 150 million cubic metres, the largest in the world, followed by USA and China. Yet, every year the country loses Rs 50,473 crore of perishable products such as fruits, vegetables, meat, fish and milk, notes the report. In a country where 40 per cent of children are malnourished, the amount is way more than what was allocated for the health budget in 2018— Rs 48,852.5 crore.

An effective cold chain solution integrates the supply chains for agricultural commodities from their respective production centres to consumption centres, thereby reducing physical waste and loss of value of perishable commodities. Other than cold storage facilities, it includes modern pack houses, where the produce can be kept before transporting those to cold storage or market; refrigerated vehicles for safely transporting the goods; and fruit ripening chambers. While India has sufficient cold storage units, there is a yawning gap between the demand of requirement of ancillary facilities that play an equally important role in storing the goods, as well as easing supply glut in situations like Punjab’s potato crisis by transporting the produce to markets where the demand is high (see ‘Limited capacity’).

Even the available cold storage units are unevenly distributed. For instance, most of the cold storage units in the country are concentrated in Uttar Pradesh, West Bengal, Gujarat, Punjab and Andhra Pradesh, while states like Bihar, Madhya Pradesh have insufficient facilities. Besides, most of the cold storage units were established decades ago and are designed for storing a single commodity at a time. “Every commodity has to be stored at different temperature and humidity levels. But close to 90 per cent of our cold storages were built only to store potatoes,” says S K Chauhan, food industry development officer, State Horticulture Mission of Uttar Pradesh, which is the top potato producer in the country. “This is the reason, most cold stores remain idle for almost half of the year.” The ASSOCHAM report says almost 25 per cent of the installed cold storage units remain unutilised, resulting in huge loss of agricultural commodities.

Jugraj Singh, however, says it’s time the government employed technology to forecast production and share it with farmers. That could have helped Punjab farmers avoid growing bumper potato crops year after year and avert the glut in the market.

(This article was first published in Down To Earth's 16-28 February, 2019 print edition)

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