FAQs of Cold Storage Business

What is Cold Storage Business?

Cold storages are the high sized freezer, which is commonly used to storage purposes. Cold storages are used to store fruits, vegetables, processed meat, Dairy Products, Spices, Dry fruits, jaggery, pulses, frozen foods, and pharmaceutical uses. Post-harvest management is a very important aspect of farming because all vegetables and fruits which are produced can’t be sold fresh at the same time. The quantity of production needs to be stored for further processing. Under those circumstances, cold storage becomes an integral aspect of post-harvest management techniques. Cold storages Manufacturing has an important link between farmers and consumers. Because of the rapid growth of food and related industries, the cold storages are gaining huge demand.- faqs of Cold Storage business

Cold Storages are essential binders that extend the shelf life, period of marketing, post-harvest losses and avoids transportation troubles while peak period of production and the maintenance of quality.

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Types of Cold Storages

Cold storages are mainly classified into two different categories, based on the types of items stored. Below are the types:

Food and Agri Products Cold Storages –:  These cold storages are used to store products like fruits, dairy products, meat, etc. which have high demand around the year. These cold storages are built near to the local markets and should be built with delivery infrastructure.

Off-Season Products Cold Storages:  These type cold storages are used to store products like chilies, seeds, corn, potatoes, etc., to meet the demand in the offseason. These storages are built close to the source/farms. All most all the cold storage comes into this category.

Feasibility & Problems of Cold storage Business

The loss, due to inefficient post-harvest management (cold storage) is estimated at around 133 billion rupees per year in India, out of the produce of large quantities of fruits (11.36%) and vegetables (14.04%). The present requirement for a cold storage facility is around 61 million tons in India for both vegetables and fruits, but the availability of storage now in India is just around 26.85 million tones.

Besides, rapid lifestyle changes and demand for processed or packaged food is creating the need for cold storage solutions globally.

Cold Storage Investment Cost:

The investment includes acquiring the land, building construction, obtaining permissions and licensing, arranging utilities like water, electricity, etc. Additionally, you will have to invest a major startup capital in procuring the cooling machinery. Generally, modern and updated machinery ensures better performance and long-term sustainability.

Apart from the above-mentioned fix costs, you will need to consider the working capital expenses also. The major considerations are staffing, utility bill payment, and promotional expenses.

The assumption of the investment is made in a small area and this may vary depending on the location of the cold storage. The actual cost may deviate from reality, depending on the availability and demand of materials in the market. 

Machinery and Equipment for Cold storage business

There are two important components in cold storage equipment: Machinery and Insulation Panels. The machinery includes compressors, evaporative condensers, and motors. The walls of cold storage should be fabricated with insulation panels that are made of polyurethane.

You contact the machinery supplier that takes a contract to set up the machinery, to do offers civil works and provide insulation.

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Cost Analysis of Cold Storage Business

The cost of cold storage is mainly influenced by the following factors.

The Capacity of the cold storage and the number of rooms present in the cold storage.

The types of products stored, the products stored are categorized into two types, plus temperature cold storage are used for vegetables/fruits/seeds and minus temperature cold storage are used for frozen goods. The cold storage used for storing frozen products need high cost and then the maintenance of the temperatures of the cold storage.

Other operational cost includes electricity and manpower.

Cold Storage Business Plan

The Cold Storage business is a one-time investment business. In this business, the initial investment will be a bit high, compared to other businesses. In the cold storage business, you can ensure a constant return on a long-term basis.

Cold storage is a highly profitable business, in both developing and developed countries. There is good demand for two types of cold storage as per the storage facility. One model is used for specific products and another one is for multipurpose. However, multi-purpose cold storage will have good returns and profitability overall.

Demand and Profitability of Cold Storage

The usage of fresh vegetables and fruits is huge. In food crop growing countries to keep the products fresh for more days, the usage of cold storages is high. Cold Storages are highly essential to keep the products fresh for long periods. It makes the products available in un-seasons. It also reduces the product’s wastages and solves the transport bottlenecks.

The cold storages play a key role in reducing the wastages of the perishable commodities. It also helps in providing lucrative prices to the farmers and to make products available to the consumers at competitive and affordable prices.

The demand for cold storages increased due to the change in lifestyle and increased demand for processed or packaged food. Consumers showing great interest in packed and processed food, creating the need for cold storage solutions globally.

How We will Help You?

• We will do the feasibility study.
• We will help you draft the Cold Storage Business plan for long time profitability.
• Help you to obtain related permissions & licenses.
• Assist you to get financial assistance from banks & Govt. subsides (with applying online/off-line with all the necessary documents).
• Work as your spokesperson.

Loans & Subsidies for Cold Storage

The Ministry of Food Processing Industries (MOFPI),. India is offering Financial Assistance for the Establishment of Cold storage Chain. These integrated Cold storage chains from the farms to the consumer ensures the safety and preservation of the food products.

The government offers a grant-in-aid ranging from 35% to 50% (75% For some specific region -Like J&K) of the total cost of plant and machinery installation along with pre-cooling, weighing, sorting, grading, waxing facilities at farm level, multi-product/ multi-temperature cold storage, CA storage, packing facility, IQF, blast freezers, and the technical civil work depending on the location. – faqs of Cold Storage business in India

The integrated post-harvest cold chain project can set up by Partnership / Proprietorship Firms, Companies, Corporations, Cooperatives, Self Help Groups (SHGs), Farmer Producer Organizations (FPOs), NGOs, Central / State PSUs, etc. subject to fulfillment of eligibility conditions of scheme guidelines

Cold storage business can also be done with the 80% loan from a nationalized bank. If the land is rented, the loan available is 90% of the total rental cost of the cold storage. -faqs of Cold Storage business in India

Example of Cost & Profit of a Cold Storage Business

The investment shown here is for a 10 MT cold storage as a sample with approximate estimation, as the charges may vary.

MATERIALS REQUIRED FOR COLD STORAGE PROJECT	INVESTMENT(IN Rs.) FOR COLD STORAGE PROJECT
Machinery Cost	4,65,000.00
Electricity Supply and Stabilizer Cost	1,92,000.00
Cost Of 192 sq Ft area @ 1000/sq ft	1,00,000.00
Insurance Cover	30,000.00
Other Cost Of generators, Accessories and Plastic Crates	3,90,000.00
Other Miscellaneous costs	10,000.00
Installation and tax charges	1,50,000.00
TOTAL EXPENSES	13,37,000.00

The assistance given by the government is such that 65% of the expenses should be borne by the beneficiary and 35% of the expenses would be given as subsidy to the person.

Therefore, the government pays 35% to 50% as per norms, on behalf of the beneficiary.

And the remaining amount should be invested by the individual.

The revenue generated depends on the type of product stored in the storage and the cost of storing the item per day.

For e.g., if the store is rented, then there is a possibility of renting charges approximately: Rs 0.75/kg (for 300 days).

Then the revenue generated is Rs 9, 00,000 annually.