What’s New: How is the cold chain growing in developing countries?

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What’s New: How is the cold chain growing in developing countries?

By |2019-05-16T13:12:44+00:00August 14th, 2018|

The cold chain – constituted by pre-cooling, refrigerated storage, and refrigerated transport –  is one of the pillars of the postharvest handling chain. It is considered to be the backbone of any postharvest industry (developed or developing) and an essential set of technologies for reducing food losses. Despite this, the cold chain is still weak or non-existent in some countries. According to the World Cold Chain Summit, only about 10 percent of perishable foods are refrigerated worldwide.

While global cold chain capacity is still low, there is encouraging news as well. Cold chain infrastructure has increased significantly in recent years. The Global Cold Chain Alliance estimates a 250% increase in global capacity over the past ten years – from 248 million cubic meters in 2008 to approximately 616 million cubic meters in 2018.

It is estimated that the cold chain had a compound annual growth rate (CAGR) of around 8.7% during that ten-year period, and it is anticipated that the cold chain will grow at a compounded annual growth rate (CAGR) of 13.9%  by 2020. However, much of this growth has occurred in developed countries or a relatively limited number of larger developing countries: in developing regions the cold chain is fragmented or in some cases nonexistent.

The global growth of the cold chain is due to many reasons, such as: increased consumer demand for higher quality and safe produce; a major increase in the trade of perishable foods; a major increase in concerns about health and health-related problems that can be prevented or reduced by refrigeration; and increases in the market share of grocery sales by modern supermarkets globally. This growth suggests also a worldwide trend towards increasing capacity driven by a greater reliance on the cold chain to meet growing trade and consumption rates of perishable products.

Establishing an unbroken chain of temperature-controlled storage from the point of harvest to the marketplace is required in order to avoid produce spoilage and to connect farmers with higher value market options overseas or in distant urban centres. This type of investments help improve farm incomes, enabling farmers to invest and thereby drive economic development forward.

The first, and in many cases critical, step in a cold chain is that of pre-cooling  produce as close to the point of harvest as possible, so as to retain nutrients, prevent dehydration, and in turn, extend shelf life. The subsequent steps in cold chain management are cold storage and refrigerated transport to continue the preservation process, boosting food safety and maintaining quality. In most developing countries, the cold chain is broken, and in most cases, is missing key steps, namely pre-cooling.

The growth of cold chain capacity in developing regions varies from one country to another. In most developing countries, such as South Africa, Mexico, and Kenya, the cold chain is concentrated in the urban centres and transport terminals – such as airports – where exporters might be based.

In developing countries, most of the cold storage capacity for fresh produce consists principally of large pack-houses with cold storage rooms. As well, most developing countries lack well-developed third-party logistics (3PL) for cold chain facilities or transport services, which according to the Global Cold Chain Alliance, is the key indication of industry maturity.

In rural areas of developing countries, most farmers lack pre-cooling, cold storage, and ripening facilities. This cold chain gap results in high levels of postharvest losses and is the key obstacle to exporting or selling into formal supermarkets and impedes reaching significant volumes of produce. Some of the cooling solutions used by agribusinesses in rural areas are rented reefers and brick and mortar facilities with large compressor systems. These solutions present a number of hidden operational costs, due to inefficiencies of their energy systems. Also, most of the existent on-farm cold storage is not HACCP –  compliant, as adaptations are costly.

The use of a cold chain for reducing perishable food losses is low in developing countries, impeded by a wide variety of issues and challenges, especially for producers and traders based in the first mile of agricultural supply chains[1]. Some of those issues and challenges are:

  • Difficult agroclimatic conditions (high temperatures or extreme heat) that increase the costs of cold storage construction and energy supply.
  • The required infrastructure and investments in needed facilities, equipment, and management skills, are generally lacking in developing countries.
  • Social customs can affect the use of a cold chain since fresh can mean food harvested and eaten the same day.
  • Adoption can be limited by a lack of access to reliable and affordable power, no access to an electric grid and requiring a reliance on diesel fuel, which is expensive.
  • Renewable energy is still perceived as being expensive and unaffordable.
  • Farmers can be very conservative and often have limited capacity for infrastructure investments. To make an investment decision in cold chain elements, the producer, handler, or trader must be confident that the market will reward that investment.
  • Producers often perceive cooling be the responsibility solely of traders or buyers.
  • Cold storage that complies with food safety certifications can be costly for small farmers.
  • Difficult to access affordable financing options for smallholding farmers.

Although many of the required solutions for making a continuous cold chain are already available, a major challenge to moving forward is making people aware of the existence of new technologies. This is particularly true for new technologies that improve energy efficiency or utilize renewable energy solutions. Costs of such technologies have been falling quickly, and it is important that the ag sector understand the different financial models associated with renewable solutions and new cooling solutions, both in capital costs and operational costs.

The development of an urban-based cold chain can be a way for expansion in local marketing and rural usage. “Where cold chains exist for exported food products, they can be used as models for education, capacity building and skill development, and expanded to include cold storage and refrigerated distribution of perishable foods for domestic markets and rural production points”[2]

[1] Kitinoja, Lisa. Use of Cold Chains for Reducing Food Losses in Developing Countries. The Postharvest Education Foundation. White paper No.13-03. December, 2013.

[2] Kitinoja, Lisa. Ibid