Kashmir’s cold chain sector is gradually emerging as an impressive growth story. With Rs 2500 crore investment already in the sector and another Rs 9000 crore at different stages of implementation, the sector has started changing the way, Kashmir washes, packages and sells its apple, reports Masood Hussain
Unlike in the recent past, most of south Kashmir gets invisible after dusk. After spending a long day in apple picking, they remain busy in the post-harvest process within their home enclosures. However, if somebody wishes to see life thriving at midnight, Lassipora is the destination.
Projected to be the biggest apple industry cluster in India, Lassipora reports sort of seasonal insomnia as the workforce operates round the clock. The crop can arrive at any time even at 2 am.
Right now, Kashmir is hugely busy as the apple picking has peaked. With the peaks surrounding Kashmir already having the season’s first small snowfall, the growers are rushing against time. There is no shortage of workforce but the wages have suddenly surged. The national highway has also not reported any major crisis, which is a major boost to the apple trade.
The sector that has emerged as the key mover and shaker of the peripheral economy is, at the same time, facing some interesting challenges this fall. This makes 2023 a very different harvest year.
Low Production
Apple production in India saw a very disturbing situation in 2023. The debilitating floods in Himachal impacted the connectivity at a time when the state was busy harvesting its apples. It seriously disturbed the demand supply chain as a result of which the Kashmir apple rates appreciated at the very start.
Kashmir itself is facing a low crop year. Unlike last year, when Kashmir produced nearly 2.5 million metric tonnes, this fall it may not be even 15 lakh tonnes. “We may have less than half of the yield of 2022,” one apple grower in remote south Kashmir said. “This year, unlike 2022, we have a good portion of the crop that falls neither in category A nor B.”
As the market is reporting an impressive appetite, the rates have improved further. A section of the growers is keen to harvest, pack and supply the market well before the huge Kashmir supplies trigger a glut and dent the price line.
Mechanical Intervention
This panic has led to an interesting development. People have started adopting mechanical grading and packing over the time-consuming traditional system. The grading and packing lines are modern, efficient and fast unlike the hugely labour-intensive traditional system.
“There are two major developments that I noticed this season,” Majid Aslam Wafai, who heads the Jammu and Kashmir Fruits and Vegetables Processing and Integrated Cold Chain Association (JKPICCA), said. “One, people have started using the grading and packing lines that our cluster offers. I see a good demand and the trend is picking up. Two, people now prefer packing of 10 kgs at our facilities.”
Every cold atmosphere store (CAS) has its own grading and packing line. Unlike the traditional system, it washes, grades on the basis of almost half a dozen parameters, and then packs the produce – all under one roof and in the shortest possible time. People are now bringing their produce for this process and then loading it in the trucks and sending it to the market.
“This saves a lot of effort and helps to manage things faster and in certain cases it is costly because we have to bring the produce into the facility, unload and then load again,” grower Shabir Ahmad from a Pulwama village said. He got his truckload of apples to the facility at around noon and by evening he was loading it again for Delhi. “It saves a lot of time,” he added.
Wafai said though the system is mechanical it still has a huge labour requirement from unloading to packing in trays. “Usually it costs Rs 10 per kilogram, and could go up or below that depending on various factors,” he said. “The good thing about this is that all this is happening under one roof and within a day or two.” In traditional packaging, washing does not happen and in automatic systems, people avoid using wax because Kashmir apple has adequate wax naturally.
Since the growers require driving their produce to the plant, some enterprising people have acquired grading lines that move to the places where it is required. There are at least two such lines already in operation in south Kashmir which move as per the requirement of the market.
Major Cold Chain Cluster
Ever since FIL Industries roped in the best CAS innovator in Europe and set up its maiden plant in Rangret, the cold chain in Kashmir has moved at the speed of wind. Now Kashmir has perhaps the biggest cold chain cluster in India. Though it is spread across Kashmir, the key cluster is in Lassipora.
“We have already crossed the 300 thousand-ton capacity of CAS in Kashmir,” Wafai said. “It is expected to add up to 200 thousand tons is the next year to reach half a million tonnes.”
So far, the investment in the sector has touched Rs 2500 crore and it is growing. There is not much land resource available in Lassipora so the people have set up their plants on private lands outside the industrial estate as well.
Earlier, the investors were very apprehensive about the sector as it was all about perishable fruit. They would start with modest facilities. Now that has changed. There are at least four investors whose CAS capacities have crossed 10,000 tons each. Al-Noor chain has 16000 tons and Shaheen Agro is adding to its 13000 ton capacity.
New Investments
Going by the official data, Kashmir is witnessing a race for investments in the cold storage chain. Right now, a senior officer in the Jammu and Kashmir government said there are 44 stores operating in Kashmir. These include 24 in Pulwama, four in Baramulla, two in Budgam, one in Anantnag, seven in Srinagar and six in Shopian.
“We have allotted land to 259 units in the cold chain sector and the land is around 4339.30 kanals,” one government officer said. “The project reports they have submitted indicate that it will be an investment of more than Rs 9000 crore.”
Of the new units, 135 are coming up in Puwlama, 32 in Anantnag, seven in Bandipora, 18 in Baramulla, six in Budgam, nine in Ganderbal, 39 in Kulgam, one in Kupwara, nine in Shopian and three in Srinagar.
“Right now, nearly 40 of these units are under the advanced stage of implementation and would add up another two lakh tons to the existing capacity,” the officer said. “Some of the investors who got no land in industrial estates created the facilities on private lands and are running their plants on diesel generators.”
Impressive Growth
The cold chain cluster has emerged as an impressive activity that the Jammu and Kashmir administration ensures that it is showcased to everybody who flies from Delhi. Recently when Priya Ranjan, Joint Secretary (Agriculture and Farmers Welfare), visited Srinagar to attend the National Centre for Cold Chain Development (NCCD) Cold Chain Conclave, he had a good time at Lassipora and was impressed by the progress that Jammu and Kashmir has made.
At an interaction with the stakeholders in Srinagar, Rajan was told that the investors face a number of problems and the government will have to look into these on priority. One issue they talked about was the delay in the release of the subsidy component. A cold chain association member said that the delay in release costs them a fortune by arranging the same funds from the bank which adds to their cost.
Initially, the subsidy was 50 per cent on the basis of a calculation that creating a ton of CAS capacity requires Rs 70,000 per ton. This would fetch investors Rs 17.50 crore on a 5000-ton CAS facility. After the initial investors took off, the government revisited the scheme and calculated that it takes only Rs 20,000 per ton plus add-ons which reduced the subsidy component to Rs 5 crore. The investors moved to the then-state government and explained how the initiative was becoming unviable. The government drafted a scheme enabling the investors to get an additional Rs 7.23 crore from the Jammu and Kashmir government. Now, under the revised system, for every 5000-ton CAS facility, the investor gets Rs 12.23 crore subsidy from the central and Jammu and Kashmir government.
The investors are not unhappy but they are seeking its timely disbursal so that they are able to manage a balance in their finances.
The second issue they discussed was a crippling expansion crisis. All investments up to 5000 metric tons CAS capacity are being managed by the Mission for Integrated Development of Horticulture (MIDH). The process is simple, the proposal goes to MIDH, it approves and the work starts. On the basis of the MIDH approval, the subsidy component is released by the central government and the Jammu and Kashmir government.
In case of investments beyond 5000 tons, the proposal goes to the National Horticulture Board (NHB). Once it is approved, the investor gets a subsidy element from the centre but the Jammu and Kashmir government is not offering the support that it offers to the plants of up to 5000 capacity. “We wanted the MIDH system implementation in NHB as well,” one officer bearer of the association, who was part of the meeting, said.
The third issue that they talked to the top officer about was the costly credit they were subjected to. They told the visiting officer that they were getting credit at a cost of 10 to 13 per cent simply because they were looking at only one bank. They said they could shift to other banks but the Government of India should shift the subsidy element to the new bank they can work with.
A senior State Bank of India officer, who was also accompanying the Joint Secretary, told the cold chain stakeholders his bank would provide them credit at around 8.5 per cent. The officer said the government will make it flexible so that the investors have the right to choose the bank they are comfortable with.
Demand and Supply
Kashmir’s experimentation with the cold chain has been very good. Instead of triggering a glut in the markets by supplying more than the demand, the growers are now retaining part of the best produce for the lean season. The last apple box harvested in Kashmir, this fall, will go to the market later June in 2024 and will fetch better prices.
However, the stakeholders suggest that fresh investments need to be capped given the availability of the raw material. “Even if we presume that in a normal year, Kashmir produces 15 lakh tons of A and B-grade apples, how much of it must remain in stores?” one stakeholder asked. “What will the new investments reap five years later when Kashmir will have a million-ton capacity in place”.
People supportive of more investment in the cold chain suggest that since Kashmir is getting into a high-density apple at a better pace, production is going to increase substantially. However, they insist that the next change in the cold chain policy must have two major elements – one, moving to areas which lack infrastructure and, two, devising a scheme where the growers can have small 100-200 ton facilities within the accessible orchards.
